Annual Report
and Accounts 2019
Who we are
Euromoney is a global information services business
providing essential B2B information to global and
specialist markets. We provide price discovery,
essential market intelligence and events across
our segments. We are listed on the London Stock
Exchange and a member of the FTSE 250 share index.
Our Purpose is to deliver sustainable value to
customers, returns to shareholders, opportunities
for employees and contributions to the communities
within which we operate, by bringing clarity and
insight to opaque markets.
Our Strategy is to manage a portfolio of businesses
in markets where information, data and convening
market participants are valued; and to deliver
products, services and events that support our
clients’ critical activities. We serve markets which
are semi-opaque, that is, where information which
organisations need to operate effectively is hard
to find.
We are continuing our transition to becoming a
group of 3.0 businesses, characterised by being
embedded in clients’ workflows, being part of
the industry structure, being solution-centric,
and delivering revenues based on customer
outcomes. This ensures we focus on long-term
value generation and consistent returns for
investors, benefiting all stakeholders.
Further information can be found online by visiting
our website at euromoneyplc.com
Contents
Strategic Report
02
Group at a glance
04
Chairman’s introduction
06
Our business model
08
Chief Executive’s review
12
Chief Financial Officer’s review
20
Strategy in action
22
Key performance indicators
24
Segment review
Market overview
26
Stakeholder value and engagement 28
30
Sustainability and stakeholders
38
Stakeholder engagement in action
40
Risk management
Governance
Board of Directors
Corporate Governance Report
Audit & Risk Committee Report
Nominations Committee Report
Directors’ Remuneration Report
Directors’ Report
Financial Statements
Independent Auditors’ Report
Consolidated Financial Statements
Company Accounts
Additional Information
Five year record
Shareholder information
54
56
64
70
72
92
95
106
166
173
174
We deliver products and
services that support our
clients’ critical activities
See Chief Executive’s
review on page 8
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Our
50th
year
We celebrated our 50th
anniversary as a Group
in June this year
See Group at a glance
on page 2
Our capital allocation
strategy supports our
strategic objectives
See our business model
on page 6
Financial highlights
Total revenue
£401.7m
Adjusted profit before tax
£104.6m
Statutory revenue
£256.1m
Statutory profit before tax
£29.5m
Adjusted diluted earnings per share
Statutory diluted earnings per share
77.6p
Dividend per share
33.1p
56.6p
A detailed reconciliation of the Group’s statutory and adjusted results is set out on pages 15
to 17.
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 pages 15 and 16.
Total revenue represents the combined reported revenue from continuing and discontinued
operations.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
01
Strategic Report
Group at a glance
The Group actively manages a portfolio of B2B information services
businesses. We operate where information, data and convening market
participants support our clients’ critical activities
Asset
Management
Pricing, Data
& Market
Intelligence
Banking
& Finance
Divisions
• Institutional Investor
• Investment Research
Divisions
• Fastmarkets
• Specialist Information
• Telecoms
Divisions
• Banking & Finance
Focus
Provides independent investment
research, with networks and
conferences that bring asset
allocators and investors
together, and critical industry
news and data
Focus
Provides information and analysis
critical for our clients’ business
processes and workflows,
including our price reporting
agency and our Telecoms and
Specialist Information businesses
Focus
Provides market intelligence,
thought leadership, news,
training and conferences to
the global finance industry,
including the flagship
Euromoney magazine
Our
50th
year
in review
October 2018
• Mining Indaba
disposal completed
• New ‘Fastmarkets’
brand launched for
our price reporting
business
November 2018
• 2018 results
confirmed
encouraging
performance and
strategic progress
January 2019
• Global Diversity
Week held for all
Euromoney staff
02
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
March 2019
• Leslie Van de
Walle appointed
as Chairman on
1 March
February 2019
• Annual General
Meeting
• David Pritchard,
Acting Chairman,
and Andrew
Ballingal step
down from the
Board
• Final Dividend paid
• Completion
of BoardEx
and The Deal
acquisition
• Numis appointed
as joint corporate
broker
During the year, we reported on three segments (Asset
Management; Pricing, Data & Market Intelligence; and Banking
& Finance) served by six divisions, which is reflected in the table
below. Our reporting of financial performance by segment in this
Annual Report reflects this structure.
On 1 October 2019, we changed our segmental reporting for
the 2020 reporting year. The Group is now organised into the
following three segments: Asset Management (comprising the
Institutional Investor and Investment Research divisions), which
at the date of this report is the subject of a strategic review which
continues; Pricing (the Fastmarkets division); and Data & Market
Intelligence (comprising the Financial & Professional Services and
Telecoms divisions). The Financial & Professional Services division
was created on 1 October 2019 by the combination of the Group’s
Banking & Finance and Specialist Information divisions.
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Segment revenue
£145.6m
Segment adjusted operating profit
£62.2m
Segment revenue
£196.4m
Segment adjusted operating profit
£69.4m
Segment revenue
£61.2m
Segment adjusted operating profit
£13.7m
Number of employees
Key brands
398
• Institutional Investor
• BCA Research
• Ned Davis Research
Number of employees
Key brands
1,287
• Fastmarkets
• BoardEx
• Insurance Insider
• Capacity Media
• International Telecoms Week
Number of employees
Key brands
196
• Euromoney
• Global Capital
• IMN
April 2019
• DMGT share
distribution
completed
• Tim Collier and
Kevin Beatty step
down from the
Board
• Board, governance
and committee
changes effective
• Fastmarkets attains
additional IOSCO
accreditation for
four new index
prices
May 2019
• Half Year results
• Townhall meetings
for all staff covering
financial results
and staff survey
results
June 2019
• Group’s 50th
anniversary
• Special
Euromoney
anniversary
edition published
• Euromoney@50
Charity Awards
• Interim Dividend
paid
• Fastmarkets
announces
lithium pricing
partnership with
London Metal
Exchange
• ITW Conference
held in Atlanta
with 7,000
attendees
• Inaugural meeting
of the Group’s
Employee Forum
July 2019
• Group Capital
Markets Day
• Launch of new
Group corporate
website
August 2019
• Essential Allies:
Driving Diversity
Forward joint event
for staff with Deloitte
September 2019
• Tim Pennington
joins the Board
as Non-Executive
Director
• BCA and NDR
brand relaunches
• Strategic review of
Asset Management
announced
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
03
Strategic Report
Chairman’s introduction
We have a clear strategy, a strong
executive team to deliver it and
a bright future as an independent
group. We continue to make good
progress on delivering our strategic
goals and have reshaped our
approach to governance.
Leslie Van de Walle
Chairman
Becoming a 3.0 business
B2B Information 1.0
B2B Information 2.0
B2B Information 3.0
Print
Monologue
Digital
Dialogue
Advertising-centric
Subscriptions
Embedded in workflow
Part of the industry structure
Revenues based on value to
customer
Product-centric
Customer-centric
Solution-centric
Introduction
I joined Euromoney as Chairman on 1 March, following the
retirement of David Pritchard, who served on our Board for almost
10 years and was latterly Acting Chairman. You can find more
information regarding the review processes that resulted in my
appointment in the Nominations Committee report on page 70. It is
important that all Board appointment processes are transparent,
comprehensive and robust, and the selection process led by David
impressed me.
I am fortunate to have inherited a particularly focused,
collegiate, constructively challenging and experienced set of
Board colleagues from David, each of whom bring insight, wide
experience and sharp analytical skills to our work. In terms of
tenure, we are a fairly new Board and are continually improving
the way we work in order to optimise the skills, knowledge and
experience of our individual Board members to address the wide
range of matters we have under review.
In the short period of time I have been with the Company, I have
already developed a positive working relationship with the
management team and am very supportive of the excellent work
they are doing to implement the Company’s strategy.
Independence
We announced in April that our significant shareholder, Daily Mail
and General Trust group (DMGT), had completed the distribution of
its 49% shareholding in the Group to certain of its own shareholders.
04
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Euromoney has been fortunate to benefit from DMGT’s
considerable support since Sir Patrick Sergeant founded the
business in 1969. Without that support, Euromoney would not be
the company it is today. It is to the great credit of the DMGT Board
and in particular Lord Rothermere to have seen the value which
could be created for all stakeholders through an independent
Euromoney. Our Board supported DMGT’s decision which provides
an opportunity for the Group to accelerate its strategy.
DMGT’s distribution has not resulted in a change of strategic
direction for Euromoney, but has had important, positive
implications for the Group. Firstly, the distribution considerably
broadened the Group’s shareholder base, introduced new
shareholders, and importantly increased daily liquidity in the
traded shares.
Secondly, Euromoney immediately became a fully independent
FTSE 250 group, which included DMGT’s representative directors
stepping down from the Board and its Committees on 2 April.
We thank DMGT for their support over almost 50 years and their
defining role in both creating and shaping the development of
the Group.
Board changes
I would like to acknowledge the considerable contribution made
by Board members who stepped down during the year.
Following over six years’ service, Andrew Ballingal retired from
the Board at the Annual General Meeting in February. The Board
thanked Andrew for his advice and guidance over many years
at the AGM. David Pritchard retired as Acting Chairman on
28 February having completed a characteristically comprehensive
and diligent handover to me ahead of my appointment.
David served the Board with distinction for over 10 years, initially
as a Non-Executive Director, then as both Senior Independent
Director and Acting Chairman. David also successfully chaired
the Audit & Risk Committee for many years. The Board wishes to
underline its thanks to David as he enjoys his retirement.
I would like to thank Tim Collier and Kevin Beatty for their counsel
and input during their service on the Board prior to stepping down
as DMGT representative directors in April.
Chairman on appointment, a new Senior Independent Director,
and a newly appointed Non-Executive with considerable financial
experience. Composition of our Committees is now fully compliant.
We have also strengthened a number of our board processes and
group policies, and these are discussed later in this Report.
I personally took time to shape the annual Board performance
evaluation exercise this year, which was completed internally.
The evaluation questionnaires sought to gauge opinion on the
Group’s performance, strategy, governance, my contribution since
appointment and key events in the year. I then held individual
review meetings with each director to discuss the results and any
actions. It was reassuring that the evaluations were very positive,
and identified many clear strengths. We have agreed an action
plan to make further improvements as a Board.
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Turning to the future, in September we welcomed Tim Pennington
to the Board as a Non-Executive Director and member of the Audit
& Risk Committee. Tim is a vastly experienced listed company CFO,
and is already contributing positively to the Board’s deliberations
and strategic planning.
The Board was delighted to recently appoint Jan Babiak as the
Group’s Senior Independent Director, and Jan will continue to
contribute her considerable international experience as a Non-
Executive Director on global listed company boards and her
financial, audit and systems acumen to her enhanced role.
Finally, Tristan Hillgarth has indicated that he will not seek re-election
at the AGM in January 2020, having served seven years as a Non-
Executive. Tristan continues to be a valued member of the Board and
several committees, and his contributions will be greatly missed.
Culture, values and people
There is a great diversity of experience, opinion and education
amongst Board members and we noted last year that we joined
the ‘30% Club’. We recognise that a diverse Board both improves
the quality of the Board’s debate and can influence the tone within
a company. While delighted with our continued membership of
the ‘30% Club’, diversity is of course a wider issue than gender.
While the Board should always ultimately appoint based on
merit, we acknowledge the need to ensure that our shortlists for
all appointments maximise the opportunity for the Board to reflect
a wider sense of diversity over time. This is an approach that I
know Andrew supports when hiring senior management and the
approach is starting to pay dividends across our organisation.
My first Board meeting coincided with the Group’s Global Diversity
Week and provided me with an excellent opportunity to meet
staff representing a range of grassroots groups, such as the Race
& Faith, LGBTQ&A and Wellbeing groups. More recently, the
Women@Euromoney group hosted a Board Q&A lunch. I am
impressed by the energy and vibrancy of these groups and I know
that Andrew is working hard to foster a culture which encourages
them to develop and grow.
I have enjoyed meeting a wide range of colleagues in London,
New York and Montreal since my appointment and, more recently,
in Hong Kong and China.
Governance
As you read this report, you will see that corporate governance
underpins and supports our business and the decisions we make.
I have spent time during my first few months reviewing and, I
hope, enhancing our approach to governance, particularly with
a view to compliance with the 2018 version of the Corporate
Governance Code.
Our compliance with the 2016 version of the Code is discussed
in more detail in the Corporate Governance report on page 56.
In key changes, the Board now benefits from an independent
The Board was pleased to agree the Group’s new Corporate
Purpose statement in line with the expectations of the Code.
The statement is simply an iteration of the Group strategy and
provides a succinct statement of our core objectives, which are to
better serve our clients with critical information through embedded
workflow solutions. You will find the statement on the inside front
cover of the report.
Strategy
Andrew will discuss our strategy and the related decisions the
Board has taken this year in more detail in his CEO Review.
I wanted to frame that discussion though by referring to the
two-day offsite meeting the Board held in June to conduct a
thorough and detailed health check of our strategy. I was equally
impressed by our executives’ willingness to encourage challenge
as I was by the Board’s willingness to engage in constructive and
decisive debate.
The meeting was very effective and considered a wide range of
themes, risks and opportunities, reflective of the Group’s different
businesses and markets. Importantly, it resulted in tangible outputs.
Whilst we have not made changes to our strategy, we have taken
significant decisions including to commence a strategic review of
our asset management businesses as a result. Monitoring of these
areas will be a continuing priority for the Board.
Dividend
The Board is very pleased to recommend a final dividend of 22.3
pence which subject to shareholder approval will mean a total
dividend for 2019 of 33.1 pence, a 2% increase year-on-year. This is
in line with the Group’s progressive dividend policy to pay-out
approximately 40% of adjusted diluted earnings per share.
Stakeholders
Euromoney’s success is predicated on an appreciation of the
importance of making decisions that benefit our shareholders
while taking account of the impact on our employees, business
partners, markets and the communities in which we operate.
This report therefore seeks to provide more depth, reflect a broader
cross-section of our people, and discuss matters important for our
stakeholders. I hope you find it insightful.
I have found my first few months as Chairman stimulating,
challenging and rewarding. I look forward to meeting shareholders
who can attend our AGM in January and to working with the Board
and all of my colleagues at Euromoney in the years ahead.
Leslie Van de Walle
Chairman
21 November 2019
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
05
Strategic Report
Our business model
Our business model provides an operating framework for each of
our segments, enabling our businesses to serve our customers’ needs.
We create content such as data, research, analysis and rankings,
and make them available to our customers to use in their workflows.
This creates value for all our stakeholders
Our people, brands and
products combine to enable us
to meet our customers’ needs
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 2,150 staff working in 32 offices
across more than 11 countries who contribute to
our success
Customers
• We have a global customer base with revenues
split across UK (16%), North America (41%) and
Rest of World (43%)
• 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’ workflow
• We have globally recognised and trusted brands
• We have long-standing relationships with buyers
and sellers
Agile products and technology
• We use a central stack that provides a scalable
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
We map our businesses along two
dimensions, industry structure and
cycle, to create our quadrants. We
allocate capital to the top two quadrants
and withdraw capital from the bottom two
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
• Protect and enhance
competitive position
4
Invest
• New product
development
• Invest in acquisitions
• Invest in sales and
when cycle turns
• Opportunistic
revenue initiatives
marketing
• Acquisition
• Fix any operational
• Tighten cost control
deficit
• Fix any operational deficit
• Accelerate transition
to 3.0
-
Challenged
market
1
Disinvest
• Maximise short-term
profit and cash
• Divest
• Prevent future build-up
+
2
Strong
market
tailwinds
Use the time wisely
• Modest investment to
move to top-right
quadrant
• 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 10
06
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Creating value for
our stakeholders:
Shareholders
Customers
Employees
Partners
Read about the value
we create and how
we engage with our
stakeholders on
pages 30 to 37.
>
The characteristics of our businesses mean that
our products and services are scalable, cash
generative and deliver strong, sustained earnings
>
Create once, sell many
We create content such as data,
research, analysis and rankings
across a range of different product
streams and markets that can be
scaled. This reduces production costs
and increases margin.
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.
+
>
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.
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
Subscription revenues
are the recurring subscription 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.
+
Event revenues
are fees paid by customers to attend,
sponsor or be associated with events,
conferences, training courses or
seminars.
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.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
07
Strategic Report
Chief Executive’s review
In 2019, the 50th anniversary
of the Group, we became
fully independent.
Andrew Rashbass
Chief Executive Officer
Introduction
In 2019, the 50th anniversary of the Group, we became fully
independent following DMGT’s distribution of its stake to
its shareholders.
At our Capital Markets Day in July, we reaffirmed our strategy
of becoming a fully 3.0 company, that is, one which provides
data and analysis powered workflow and must-attend events to
customers in opaque markets to enable their most critical decisions
and processes.
Our journey to 3.0 continues to accelerate, particularly in our
Pricing, Data & Market Intelligence (PDMI) segment, although we
did not achieve underlying revenue growth across our other two
segments. Good growth in PDMI was offset by weakness in our
Asset Management businesses caused largely by slow sales to
new customers at BCA Research.
We were able to make strategic progress and, at the same time,
deliver strong underlying profit growth for a third successive year,
despite those slow new sales at BCA Research by following our
strategy, making efficient use of our shared resources and tight
cost control.
We announced in September a strategic review of our Asset
Management businesses, Institutional Investor, BCA Research
and Ned Davis Research, to determine whether there is a better
owner to see through necessary changes and investment to
unlock growth opportunities. This would free up capital in line
with our strategic pillar of active portfolio management to invest
in businesses that are more clearly 3.0 today. That review is in
progress and I would like to thank the leaders in the businesses
and their teams for their hard work continuing to serve our
customers while also working on the review. We will provide an
update on the outcome in due course. In the meantime, as we
discussed at the Capital Markets Day, we have a strong plan to
address the sales and marketing issues at BCA Research and to
capitalise on the fast-growth segments at Ned Davis Research.
We continue to execute that plan.
Pricing, Data and Market Intelligence
We have heard from shareholders that you would value seeing
our price-reporting business, Fastmarkets, highlighted more clearly
in our discussions of the Company. Therefore, although we are
presenting our results in the segments we operated through during
the year (Asset Management; Pricing, Data & Market Intelligence;
and Banking & Finance), in future we will separate Pricing
(effectively Fastmarkets) and include the small Banking & Finance
segment in Data & Market Intelligence. Asset Management is
unchanged. We have restructured our leadership team to reflect
this change.
Business highlights
This year, we have made excellent progress on moving our
businesses toward our 3.0 model. As part of our strategy to
invest around big themes, our pricing division, Fastmarkets, has
committed to developing a lithium benchmark with the London
Metal Exchange. By collaborating with the LME at this early
stage – and developing a hedging mechanism with the market
– we improve the chance of our prices establishing the long-
term benchmark and a derivative that provides real value to the
lithium industry.
Simultaneously, Fastmarkets has developed a new platform that
transforms our operating model by delivering our data directly to
our customers and embedding our product in their workflow.
In October 2018, we completed the sale of Mining Indaba, and
earlier in 2019 acquired BoardEx and The Deal in line with our
strategy to actively manage our portfolio. The acquisition has
strengthened our ability to collaborate and cross-sell products and
services as well as enable us to enact future sustainable growth
opportunities and maximise our short-term profit and cash.
Financial performance
The strong performance in PDMI continued to be offset by
challenges in Asset Management. Wendy discusses the financial
performance in more detail in her Chief Financial Officer’s review.
08 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
People
We continue to deliver because of our unrivalled team. We
increased our investment in developing our people, launching
training programmes across the Group. We have introduced a
programme for all sales people to give them the skills they need
to sell 3.0 solutions. We have launched an early-careers academy
to make sure we develop staff from the start of their working lives.
Our AI academy makes sure all our technologists have the right
level of knowledge for their role. We have trained more than
100 of our most senior leaders on the unique mix of skills needed
for running 3.0 businesses. Recognising that a large part of a
colleague’s work experience is determined by their relationship
with their manager, we have trained all our managers on the
fundamentals of managing well at Euromoney.
I have been personally involved in delivering parts of these
programmes, and it has been a privilege to get to know
colleagues across the Group at all levels. It is clear to me that they
have untapped ideas and perspective that we need to hear more
– they are close to our customers and often see opportunities (and
challenges) in our markets first; they know first-hand what would
make Euromoney a better place to work. Over the past two years,
we have surveyed our staff to understand in detail what we are
doing well but, more importantly, where we can do better. This has
resulted, for example, in enhancing the opportunities to work
flexibly and in many of our training and development programmes.
In March we launched our Staff Forum as a more formal way to
engage with staff. Eighteen representatives from around the Group
will meet bi-annually to relay staff feedback from the businesses
and regions they represent, and to discuss with senior managers
the Company’s ideas and plans. The Forum members are
detailed on page 30. The Board as a whole, and individual Board
members, meet regularly with our businesses and staff groups to
hear from them about their experience of working at Euromoney.
We talk about the best-of-both worlds operational model; that
is, combining the customer-focused, nimble approach of our
businesses with the economies of scale and sharing of best
practice that come from being a corporation. Staff need to feel
fully part of both worlds – passionate about their customer-
facing brands and accountable for their business’s results, but
also excited to be part of the wider Group. We have facilitated
secondments between businesses to encourage both the sharing
of ideas and a sense of Euromoney being more than the sum of
its individual businesses. The feedback has been overwhelmingly
positive, as you can see from the case study on page 35. We have
also launched a secondment programme where early-career staff
work closely with me for three months. The early feedback from this
programme is also very encouraging.
I know the future of the Company depends upon having the best
people working here and enjoying what they do. They also need to
see that they can grow and develop within the Company. Many of
the initiatives I have already described help with that.
But we need to continue to improve the diversity of our workforce
by ensuring that there are no impediments to talented people from
any background, and of any gender, nationality, race, faith or
sexual orientation thriving at Euromoney. For example, I particularly
enjoyed participating in the Global Diversity Week events that
we held across all global locations in January. Take a look at the
case study on page 39. This was one of many events that our staff
organised and ran during the year.
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Group Management Board
There have been a number of changes to the composition of the
Group Management Board (GMB). Jeff Davis joined the GMB in
March as CEO for Specialist Information having previously been
Managing Director of BoardEx and The Deal. From 1 October, Jeff
is CEO of the expanded Financial & Professional Services Division,
which combines our Specialist Information and Banking & Finance
Divisions. Nigel Martin joined as our new Group HR Director
in June.
Wendy Pallot, who joined the Group as CFO and an Executive
Director in August 2018 is now firmly established in role and driving
a number of the strategic initiatives, which she discusses in more
detail in her CFO’s Review.
John Orchard, Divisional Director for Banking & Finance leaves us
after 25 years with Euromoney with our best wishes for the future
in his new role at a think-tank. You can see all the members of the
GMB via our new corporate website at www.euromoneyplc.com/
about-us/management-team.
The future
We are clear about our strategic priorities: creating a 3.0 Group
that delivers sustainable, profitable, underlying growth for the
benefit of our customers, staff, investors and the communities in
which we operate.
It is appropriate in an annual report to look back, but we are
well positioned to respond to the challenging global macro-
economic and political environment that I expect will continue into
2020. The Group is robust and well-funded, has a constructively
challenging and supportive Board, and benefits from exceptional
people with deep knowledge of our markets and our customers.
I look forward to the year ahead with confidence.
Andrew Rashbass
Chief Executive Officer
21 November 2019
Statutory revenue growth
+5%
Total revenue
£401.7m
Adjusted profit before tax
£104.6m
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
09
Strategic Report
Chief Executive’s review continued
Strategic pillars
Our quadrant based assessment leads to three pillars
of strategic activity:
Invest around
the big themes
Transform the
operating model
Actively manage
the portfolio
• Price discovery
• Proprietary, must-have market
intelligence
• People 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 6)
• A best-of-both worlds
operating model
encompassing three 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 is run by the
Group Management Board
where the heads of our business
divisions come together with the
heads of our functions to serve
our three segments.
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
3
Prepare for
the upturn
1
Disinvest
4
Invest
2
Use the
time wisely
Active quadrants
Non-active quadrants
10
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Strategic progress in 2019
Invest around
the big themes
Transform the
operating model
Actively manage
the portfolio
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
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 2019
• Continued investment in Fastmarkets
technology by replacing various
customer-facing websites with our
single Fastmarkets platform
• Investment in the creation of new
Fastmarkets price benchmarks,
including for the lithium market
• Deployment of resources to ensure
the successful integration of Random
Lengths into Fastmarkets
• The acquisition of BoardEx, a people
intelligence relationship mapping
platform, which is an archetypal
3.0 business
How we measure progress
• Pricing, Data & Market Intelligence
underlying revenue increased by 4%
and underlying operating profit by
5% (see page 24)
Priorities for 2020
We will continue to invest in what
we now call our Pricing and Data &
Market Intelligence segments, both
organically and through acquisitions.
We expect our Pricing segment to
further develop relationships with
exchanges to create benchmark price
indices. We are investing in product
experts and technology to improve
product development in our Data &
Market Intelligence segment, which
will include leveraging the skills in
our Chennai office. ROI will in part be
measured by our focus on creating what
we call SPUR (sustainable, profitable,
underlying, revenue) growth.
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 three segments
in 2019, we were structured as six
divisions supported by central functions.
In 2020, we have adjusted our three
reporting segments and are structured
as five divisions, again supported by
central functions.
Progress made in 2019
• Continued roll-out of our Global
Finance Transformation Programme
• The development of an Enterprise
Risk Framework, which helps manage
operational risk in a controlled,
consistent and transparent manner
• Planning for the combination of
two existing divisions (Banking &
Finance; and Specialist Information)
to create our Financial & Professional
Services division
• The launch of a sales academy
• The launch of an intra-group
secondment programme providing
our staff with exposure to new markets
and sectors
• Further meetings of our Senior
Management Group focused on
employee engagement
Recycling capital remains 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 2019
• Acquired BoardEx and The Deal
• Completed the disposal of
Mining Indaba
• Commenced a strategic review of
Asset Management
• Further developed existing and
established new relationships
with advisors
• Invested in creation of new
permanent roles in our Corporate
Development team and specialist
management resource to ensure
successful post-acquisition integration
• Successfully completed integration of
Random Lengths into Fastmarkets
How we measure progress
In 2019, we generated £28.7m through
the sale of Mining Indaba, which was
no longer aligned with the Group’s
strategy. These proceeds were recycled
in acquiring BoardEx and The Deal for
£72.5m. We completed the integration
of these businesses during the course of
the year.
How we measure progress
Priorities for 2020
In 2019, more than 434 staff attended
our Sales Academy, 262 attended our
Leading/Management 3.0 programmes,
approximately 100 attended our Early
Career Academy workshops and 246
attended Contract 101 workshops
Priorities for 2020
We will focus on leveraging the benefits
of our new Financial & Professional
Services division. We will continue to
prioritise training and development
opportunities for all our staff. Our Global
Finance Transformation Programme will
continue with the migration to NetSuite
in 2020.
We will prioritise concluding the
strategic review of Asset Management.
We continue to regard recycling
capital as an integral part of our
strategy to accelerate the Group’s
progress towards becoming a B2B
3.0 information business. We regularly
review an active pipeline of
opportunities and will progress those
which we believe will deliver value to
the Group. Where businesses do not
align with our strategy, we will continue
to consider whether they may be of
more value to a different owner than
they are to us.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
11
Strategic Report
Chief Financial Officer’s review
Underlying profit before tax grew
by 9%, driven mainly by growth
at PDMI and cost efficiencies
offsetting structural and cyclical
pressures in other segments.
Wendy Pallot
Chief Financial Officer
Total revenue (£m)1
Asset Management
Pricing, Data & Market Intelligence
Banking & Finance
Sold/closed businesses
Foreign exchange losses on forward contracts
Total revenue
Discontinued operations – Asset Management
Continuing operations
Subscriptions
Events
Advertising/
Other
Total
117.9
115.5
7.2
240.6
–
–
240.6
(117.9)
122.7
(6%)
8%
(6%)
–
16.9
61.6
45.7
124.2
2.0
–
126.2
(16.9)
109.3
6%
1%
1%
2%
10.8
19.3
8.2
38.3
–
(3.5)
34.8
(10.8)
24.0
2%
(6%)
(6%)
(4%)
(4%)
4%
(1%)
–
–
145.6
196.4
61.2
403.2
2.0
(3.5)
401.7
(145.6)
256.0
1 The above revenues are adjusted. Percentages are underlying growth rates compared to last year. Underlying measures are as defined on page 17.
Summary
The Group delivered strong profit growth in the financial year,
reflecting good cost management and continued growth in PDMI
subscription revenue. On an underlying basis, strong revenue
growth in the Group’s more 3.0 businesses was offset by the
ongoing challenges in our Asset Management businesses.
Euromoney has a well-established strategy to transition towards
a 3.0 business-to-business information services Group, which
is reflected in the Company’s capital allocation. A 3.0 business
is typically one which is embedded in its customer’s workflows,
providing significant operating leverage from “create one,
sell many” services, in semi-opaque markets, with low capital
requirements and high cash flow conversion.
Revenue
Total revenue for the year increased by 3% to £401.7m, supported
by the contribution from the acquisition of BoardEx and The Deal.
Underlying revenue was flat year-on-year with good performance
in our Pricing, Data & Market Intelligence (PDMI) segment being
offset by continued challenges in the Asset Management segment.
Statutory revenue, which excludes the Asset Management
segment, increased by 5% to £256.1m, primarily due to the
contribution from the acquisition of BoardEx and The Deal.
Total adjusted measures and underlying results combine the
results from the Group’s continuing and discontinued operations.
Detailed reconciliations of the Group’s statutory, adjusted and
underlying results are set out on pages 15 to 18.
M&A activity during the year was driven by this strategy, including
the disposal of Mining Indaba and acquisition of BoardEx
and The Deal. In this context, on 10 September, Euromoney
announced that it was conducting a strategic review of Asset
Management. That review continues. The segment is presented
as discontinued operations and held for sale in the Consolidated
Financial Statements.
Underlying subscription revenue, which makes up 60% of
total revenue, was flat year-on-year, with continued strong
growth in PDMI of 8% offset mainly by the reduction in the Asset
Management segment of 6%. Although underlying advertising
and other revenues, which makes up only 9% of total revenue,
declined by 4%, the rate slowed from a reduction of 5% in
2018, reflecting continued success in the investment in thought-
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. 2018 excludes the results of discontinued operations relating to GMID. A detailed reconciliation of the Group’s adjusted and
underlying results is set out on pages 15 to 18.
The 2018 comparatives have been restated to reflect the two prior year tax exposures and discontinued operations as outlined in note 1 of the Consolidated Financial Statements.
Underlying measures include the adjusted results stated at constant exchange rates, including pro forma prior year comparatives for acquisitions and new business launches and
excluding disposals, business closures and significant event and publication timing differences.
12
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
leadership products and directories. Underlying event revenues
increased by 2%, with growth from all segments. In PDMI delegate
marketing challenges which impacted the first half have now been
resolved, with a 4% underlying reduction in event revenues in the
first half moving to growth in the second half.
Segmental review
From 1 October 2019, a newly formed Financial & Professional
Services (FPS) division brings together complementary markets
and customers across financial and professional services,
combining brands from the existing Specialist Information and
Banking & Finance divisions. This division will have three pillars;
NextGen, IMN & Derivatives, and People Intelligence. The division
has been structured to enable optimisation of the brands
contained in each pillar, supporting our strategy of progressing
towards a 3.0 business. The FPS division and the existing Telecoms
division will form a new ‘Data & Market Intelligence’ segment.
Exceptional items
Profit on disposal
Impairment charges
Amendment to defined benefit scheme
VAT underpayments
Other exceptional (costs)/income
Continuing operations
Exceptional items from discontinued
operations – Asset Management
Cost of disposal of discontinued operations
– Asset Management
Total
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Restated
2018
£m
86.8
(3.0)
–
(5.3)
1.4
79.9
2019
£m
17.0
(2.4)
1.2
–
(9.4)
6.4
(0.8)
(3.8)
(1.7)
3.9
–
76.1
Further information on the performance of our segments is detailed
on pages 24 and 25.
During the year, the Group sold Mining Indaba resulting in a net
profit of £17.0m (note 15).
Profit and outlook
Strong performance from the Group’s PDMI businesses (49% of
total revenue) was the key driver of the Group’s 5% underlying
operating profit growth.
The adjusted operating profit margin was flat at 26%, with
revenue challenges in some segments offset by strong organic
and inorganic growth in PDMI revenues, significant cost
savings and effective capital allocation. Significant investment
in the PDMI segment in both 2018 and 2019, including the
integrations of RISI, BoardEx and The Deal, has contributed to a
5% underlying increase in adjusted operating profit to £105.4m.
Statutory operating profit reduced to £30.6m from £107.9m in 2018
due to the gain on the disposal of Dealogic in the prior year.
Adjusted profit before tax increased by 5% to £104.6m.
Underlying profit before tax grew by 9% reflecting operational
gearing, cost control and lower interest costs. Statutory profit before
tax decreased from £106.8m in 2018 to £29.5m predominantly due
to the disposal of Dealogic in the prior year.
Adjusted diluted earnings per share increased by 5% to 77.6p
(2018: 73.6p), reflecting the improvement in adjusted earnings
despite a slight increase in shares in issue.
The Group has adopted IFRS 16 from 1 October 2019. As a result,
major building assets and lease liabilities have come onto the
Statement of Financial Position. This impacts the Income Statement
by replacing rental expense with depreciation and introducing a
finance expense where the discount on lease liabilities is unwound.
We estimate this will reduce profit before tax by £1m for the year
ending 30 September 2020.
Euromoney continues to make progress towards a 3.0 business
model guided by our clear strategy, underpinned by a strong
balance sheet and excellent cash flow conversion. We continue to
expect weakness in Asset Management into 2020 but continued
good growth in the Pricing segment, and look forward to another
year of progress in the year ahead.
The Group recognised a £2.4m goodwill impairment charge
in relation to the closure of Centre for Investor Education (CIE),
which was included within the Asset Management segment.
Costs associated with this closure are included in other exceptional
costs. CIE generated £2m of revenue in the year ended
30 September 2019.
The Trustees of the Metal Bulletin plc Pension Scheme, which
is a defined benefit scheme, changed the scheme rules for the
underlying index of deferred revaluation from RPI to CPI, which
resulted in a £1.2m reduction in the net pension deficit.
Other exceptional costs include the recognition of earn-out
payments of £2.5m for the acquisitions of Site Seven Media
(TowerXchange) and Random Lengths, which are treated as
compensation costs. The acquisition-related costs of £5.4m for
Random Lengths and BoardEx and The Deal are treated as
exceptional due to their magnitude. Significant costs associated
with an acquisition project that did not complete of £1.2m are also
included in other exceptional costs. The remaining costs are as a
result of a strategic review undertaken for the major restructuring
of CIE have been treated as exceptional items. Other restructuring
costs amounting to £1.0m are included in operating profit and
have not been treated as exceptional.
The exceptional items of £2.5m for discontinued operations relate
to costs for major restructuring within Asset Management and
costs to engage with advisors to assist with the strategic review of
the segment.
Restatements
The financial statements include three areas of restatement, as
detailed in note 1 of the Consolidated Financial Statements. As a
result of the strategic review of our Asset Management segment,
this segment has been disclosed as discontinued operations and
as held for sale. The other two restatements have arisen due to
significant prior year exposures which internal processes identified
during the year. One relates to an under-payment of PAYE/NI to
HMRC in respect of contractors. The second is in respect of the
treatment of VAT on intra-group transactions. Management took
immediate steps to improve tax controls and these improvements
are part of a wider and ongoing control improvement exercise
being undertaken throughout the Group.
In addition, the adoption of IFRS 9 has led to an increase to
opening equity at 1 October 2018 of £0.4m.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
13
Strategic Report
Chief Financial Officer’s review continued
Other comprehensive income
The Group recognised £3.4m of foreign exchange losses on
revenue hedges in 2019, compared to a gain of £1.0m in 2018.
This movement reflects a strengthening of the US dollar, which is
the main currency that the Group hedges.
No translation reserves were recycled to the Income Statement in
2019, compared to £8.3m in 2018. This movement is largely due to
the fact that the Group disposed of overseas subsidiaries in 2018
(GMID).
Actuarial losses on defined benefit pension schemes were £5.2m in
2019, compared with a gain of £6.5m in 2018. This £11.7m variance
is the result of an adverse change in demographic and financial
assumptions (£18.4m) offset by a favourable movement in the
returns on pension plan assets in excess of what was expected
(£6.7m).
Balance sheet
The main movements in the balance sheet were as follows:
2019
£m
Restated
2018
£m
Change
£m
• Net deferred tax liabilities – reduced by £9.9m in the year.
This reduction is mainly explained by £12.1m of deferred tax
being reclassified as liabilities of businesses held for sale at the
end of 2019. This is offset by a £3.8m increase in the value of
deferred tax liabilities held by overseas subsidiaries as a result of
the strengthening of the USD dollar.
• Deferred income and contract liabilities – the movement
reflects deferred income increasing by £8.1m and an exchange
difference of £4.7m offset by a reclassification of £44.8m to
assets held for sale.
• Other current assets and liabilities – the movement mainly
relates to the reclassification of £10.7m of current assets and
liabilities to held for sale.
• Net assets of businesses held for sale – as a result of the
strategic review, Asset Management has been disclosed as held
for sale in 2019. In 2018, Mining Indaba was disclosed as held
for sale.
Net cash/(debt)
The main movements in the cash flow, including continuing and
discontinued operations, were as follows:
Goodwill and other intangible
assets
Property, plant and equipment
Investments in associates and
other equity investments
Acquisition commitments
and deferred consideration
Net deferred tax liabilities
Deferred income and contract
liabilities
Other non-current assets and
liabilities
Other current assets and
liabilities
Net assets of businesses held
for sale
Net cash1
Net assets
1 Excluding held for sale cash of £0.3m.
405.4
15.3
588.2
16.1
(182.8)
(0.8)
Cash generated from
operations
Capex and other movements
5.3
4.3
1.0
(2.8)
(15.5)
0.5
(25.4)
(3.3)
9.9
Taxation
Free cash flow
Dividends paid
Net M&A
(88.4)
(120.4)
32.0
(5.4)
(5.0)
(0.4)
(58.5)
(69.7)
11.2
220.8
49.8
526.0
11.7
78.3
478.6
209.1
(28.5)
47.4
Opening net cash/ (debt)
Effect of foreign exchange
rate and other non cash
movements
Closing net cash
2019
£m
92.4
(9.6)
(38.4)
44.4
(35.4)
(39.1)
(30.1)
78.3
2018
£m
Change
£m
108.6
(5.0)
(38.9)
64.7
(34.8)
195.7
225.6
(154.6)
(16.2)
(4.6)
0.5
(20.3)
(0.6)
(234.8)
(255.7)
232.9
1.9
50.1
7.3
78.3
(5.4)
(28.2)
Net cash at 30 September 2019 was £50.1m compared with
£78.3m at last year end. This decrease in net cash largely reflects
the impact of net M&A activity in the period, including the
acquisition of BoardEx and The Deal offset by the sale of Mining
Indaba. Strong underlying operating cash flows of £103.5m were
offset by dividend payments of £35.6m and net tax payments of
£38.4m, which included a one-off non-recoverable withholding
tax payment of £14.6m relating to an internal dividend arising from
the disposal of GMID that took place in 2018.
The Group’s underlying operating cash conversion for the
12 months to September 2019 was 98% (2018: 102%).
A committed multi-currency revolving credit facility of £240m,
which was undrawn at 30 September 2019, is available to the
Group until December 2021.
Currency
The Group generates approximately three-quarters of its revenues
in US dollars, including approximately 40% of UK revenues and
approximately two-thirds of operating profits.
• Goodwill and other intangible assets – the movement reflects
an amortisation charge of £27.2m, reclassification of £266.6m
to assets held for sale and impairment of £2.4m for CIE, partially
offset by a favourable exchange movement of £28.5m from the
predominantly US dollar denominated balance, additions to
intangible assets under development of £8.4m and additions
of £75.9m following the acquisitions of BoardEx and The Deal
and BroadGroup.
• Investments in associates and other equity investments –
the movement is driven by the transfer of BroadGroup from
investment in associate to investment in subsidiary (£0.7m) offset
by the fair value gain of £1.7m on the revaluation of the equity
investment in Zanbato which is measured at fair value through
other comprehensive income.
• Acquisition commitments and deferred consideration
– primarily reflects the acquisition commitment relating to
BroadGroup, as the remaining interest in BroadGroup is
subject to put and call options under an earn-out agreement.
Deferred consideration for the sale of Mining Indaba was
received during the year.
14
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
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 2019 was $1.28 (2018:
$1.35). This improved headline revenue growth rates for the year
by approximately three percentage points and adjusted profit
before tax by £4.1m. Each one cent movement in the US dollar rate
has an impact 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 2019 of £0.6m (2018: £1.5m).
Dividends
The Group’s dividend policy targets dividend pay-out ratio of
approximately 40% of adjusted diluted earnings per share.
The Directors are recommending a final dividend of 22.3 pence
per share (2018: 22.3 pence per share), which is subject to
shareholder approval at our AGM on 28 January 2020, and will
be paid on 13 February 2020 to shareholders on the register at
the close of business on 29 November 2019. Together with the
interim dividend, this makes a total dividend for the year ended
30 September 2019 of 33.1 pence per share, a 2% increase on the
32.5 pence dividend for the year ended 30 September 2018.
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 up to 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 long-term 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 2019, the Group’s
revolving credit facility remained undrawn and consequently there
were no interest rate hedges in place.
Tax
The adjusted effective tax rate is 20% (restated 2018: 21%), which
is based on adjusted profit before tax and excludes deferred tax
effects of intangible assets and goodwill, tax on exceptional items
and prior year items. The tax rate in each year depends mainly on
the geographic mix of profits and applicable tax rates.
The Group’s statutory effective tax rate, which excludes
discontinued operations, decreased to 32% compared to the
restated rate of 39% in 2018. The rate in 2018 was largely driven
by one-off items such as tax on disposal of shares in GMID and
non-recoverable foreign withholding tax which did not recur in
2019. The rate in 2019 relates largely to expenses that are capital
in nature and restructuring costs which are not deductible for
tax purposes.
Significant reconciling items between the adjusted and statutory
tax expense include: tax on exceptional items which primarily
relates to tax on the profit on disposal of Mining Indaba and prior
year items mainly US transition tax, and the gain on disposal of
GMID following the release of the relevant final regulations as part
of US tax reform. Full details are included in note 8.
The net deferred tax liability held is £15.5m (restated 2018: £25.4m)
and relates primarily to capitalised intangible assets and tax
deductible goodwill, net of short-term temporary differences
and tax losses. The reduction in net deferred tax liability is mainly
explained by £12.1m of deferred tax liabilities being reclassified
as liabilities of businesses held for sale at the end of 2019. This is
offset by a £3.8m increase in the value of deferred tax liabilities
held by overseas subsidiaries as a result of the strengthening of the
US dollar.
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
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 exposures are
explained in note 2.
Global Finance Transformation Programme (GFTP)
During 2019, we have made significant progress on our Global
Finance Transformation Programme, which will improve the quality
and efficiency of financial reporting and tighten financial control
and processes. Phase 1 includes the roll-out of a new common
Chart of Accounts and core finance system, NetSuite, which is
now live in our Investment Research Division and in the UK across
our largest two legal entities. The remaining UK legal entities
and overseas divisions will transition onto NetSuite in due course.
The GFTP encompasses our people, data systems and processes,
and most recently includes the launch of the Finance Academy to
help the ongoing development of finance staff.
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. Headcount has increased from 1,655 to
2,167, mainly as a result of the acquisition of BoardEx and The Deal
in February 2019.
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 exceptional income, charges and non-cash items.
Total and segment revenue represents the combined reported
revenue from continuing operations and discontinued operations
revenue for Asset Management.
Adjusted results include continuing operations and discontinued
operations for Asset Management. The discontinued operations
for Asset Management have been included in the adjusted results
as it was owned and managed as part of the Group for the entire
period and to aid year-on-year comparability of the Group’s
results. This treatment is consistent with that of Global Markets
Intelligence Division (GMID) when the strategic review was
announced for that disposal in September 2017. In the period of the
disposal and upon the chief operating decision maker (CODM)
not considering the discontinued operation in the review of the
business, the discontinued operation will then be excluded from
the adjusted results.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
15
Strategic Report
Chief Financial Officer’s review continued
The discontinued operations in 2018 relating to the disposal of
GMID have been excluded in the adjusted results to reflect the
basis on which the CODM reviews the business. The comparatives
have been updated to reflect this change in management’s
adjusted measures in order to provide a more like-for-like view of
continuing operations.
In December 2018, the Group engaged external advisors to
undertake an independent review of the Group’s compliance
with the off-payroll working rules. As a result of the review, the
Group has identified an underpayment of payroll taxes to HMRC
for the years ended 30 September 2013 to 30 September 2018.
A restatement has been made to recognise the historical exposure,
consisting of payroll taxes underpaid, interest and penalties.
These restatements are not excluded from adjusted measures
as the costs incurred are in the ordinary course of business and
will recur.
Adjusted figures are presented before the impact of amortisation
of acquired intangible assets (comprising trademarks and brands,
customer relationships, databases and software); exceptional
items, share of associates’ and joint ventures’ acquired intangible
asset amortisation and exceptional items; net movements in
deferred consideration and acquisition commitments; fair value
remeasurements; related tax items and other adjusting items
described below.
The amortisation of acquired intangible assets is adjusted as
the premium paid relative to the net assets on the balance
sheet of the acquired business is classified as either goodwill
or as an intangible asset arising on a business combination
and is recognised on the Group’s balance sheet. This differs to
organically developed businesses where assets such as employee
talent and customer relationships are not recognised on the
balance sheet. Impairment and amortisation of intangible assets
and goodwill arising on acquisitions are excluded from adjusted
results as they are balance sheet items that relate to historical
M&A activity rather than the trading performance of the business.
Exceptional items are items of income or expense considered by
the Directors to be 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.
During the second half of the year, the Group discovered a VAT
exposure relating to the understatement of VAT on intra-group
transactions in respect of the four years ended 30 September 2018.
This VAT exposure is considered by the Directors as being material
and non-recurring. A restatement has been made to recognise the
historical exposure and related interest. The 2018 VAT expense has
been classified as an exceptional item and the related interest for
2018 and 2019 has been treated as an adjusted finance expense
because these charges are not expected to recur.
Adjusted finance costs exclude interest arising on the uncertain
tax provisions, as the provisions relate to tax adjusting items.
In addition, for the year ended 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 had been excluded from adjusted finance costs as it would
not have crystallised had the disposal of GMID not completed.
For the 2018 reporting period, 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.
Tax on exceptional items relates primarily to the gain that arose
on the disposal of Mining Indaba which is fully taxable and
nondeductible costs relating to the acquisition of BoardEx and The
Deal. Prior year items primarily reflect true-up of deferred tax items.
These items are excluded from the adjusted tax expense as they do
not relate to current year underlying trading.
Further analysis of the adjusting items is presented in notes 3,
5, 7, 8, 12 and 14 to the Consolidated Financial Statements.
Further details of the restatements are included in note 1 of the
Consolidated Financial Statements.
The Group has applied these principles in calculating adjusted
measures and it is the Group’s intention to continue to apply these
principles in the future.
16
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
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.
2019
2018
Statutory
£000
Discontinued
operations
£000
Notes
Adjustments
£000
Adjusted
£000
Restated
Statutory
£000
Discontinued
operations
£000
Adjustments
£000
256,051
145,622
–
401,673
244,825
145,454
38,514
66,929
–
105,443
39,945
61,660
–
–
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Adjusted
£000
390,279
101,605
3
3
12
5
14
7
7
7
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
(14,215)
(10,928)
6,350
(812)
25,143
(5,538)
–
–
(11,990)
79,910
(10,749)
(3,850)
22,739
(76,060)
–
–
30,649
55,189
19,605
105,443
107,865
47,061
(53,321)
101,605
12%
38%
–
26%
44%
32%
–
26%
(88)
1,873
(2,983)
(1,110)
–
–
(99)
(99)
(38)
(126)
157
–
953
1,110
(675)
1,214
539
1,198
(1,868)
(670)
5,248
(6,454)
(1,206)
84
–
84
(4,468)
2,757
(1,711)
864
(3,697)
(2,833)
29,451
55,090
20,106
104,647
8
(9,317)
(12,349)
820
(20,846)
20,134
42,741
20,926
83,801
106,816
(41,358)
65,458
47,145
(54,079)
(8,802)
38,343
29,550
(24,529)
99,882
(20,610)
79,272
11
41,059
(42,741)
1,682
–
129,685
(38,343)
(91,342)
–
61,193
–
22,608
83,801
195,143
–
(115,871)
79,272
60,929
264
61,193
–
–
–
22,586
83,515
195,004
22
286
139
22,608
83,801
195,143
–
–
–
(115,871)
79,133
–
139
(115,871)
79,272
Diluted earnings per share
10
56.6p
77.6p
181.3p
73.6p
Underlying measures
When assessing the performance of our businesses, the Board
considers the adjusted results. The year-on-year change
in adjusted results may not, however, be a fair like-for-like
comparison as there are a number of factors which can influence
growth rates but which do not reflect underlying performance.
Underlying results include the adjusted results of continuing
operations and discontinued operations for Asset Management
and are stated:
• At constant exchange rates, with the prior year comparatives
being restated using current year exchange rates;
For example, this means we adjust for:
• Biennial events;
• Events which run in one of the current or comparative periods
due to changes in the event date; and
• Cancelled events that did not take place in the current year.
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.
• Including pro forma prior year comparatives for acquisitions and
new business launches and excluding all results for disposals or
business closures;
The 2018 comparatives have been restated to reflect the two prior
year tax exposures and discontinued operations as outlined in note
1 of the Consolidated Financial Statements.
• Excluding events and publications which took place in the
comparative period but did not take place in the current period
and, including in the comparative period at the same amount
events and publications which took place in the current period
but did not take place in the comparative period.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
17
Strategic Report
Chief Financial Officer’s review continued
The following table sets out the reconciliation from statutory to underlying for revenue, operating profit and profit before tax:
Statutory revenue
Discontinued operations – Asset Management
Total revenue
Net M&A and closed businesses
Timing differences
Foreign exchange
Underlying revenue
Statutory operating profit
Adjustments
Discontinued operations – Asset Management
Adjusted operating profit
Net M&A and closed businesses
Timing differences
Foreign exchange
Underlying operating profit
Statutory profit before tax
Adjustments
Discontinued operations – Asset Management
Adjusted profit before tax
Net M&A and closed businesses
Timing differences
Foreign exchange
Underlying profit before tax
2019
£000
256,051
145,622
401,673
(1,997)
–
–
Restated
2018
£000
244,825
145,454
390,279
2,829
(5,362)
11,438
Change %
5%
3%
399,676
399,184
0%
30,649
19,605
55,189
105,443
(443)
–
–
105,000
29,451
20,106
55,090
104,647
(443)
–
–
104,204
107,865
(53,321)
47,061
101,605
(3,906)
(2,228)
4,122
99,593
106,816
(54,079)
47,145
99,882
(5,110)
(3,408)
4,135
95,499
(72%)
4%
5%
(72%)
5%
9%
Restated
2018
£000
101,605
7,510
109,115
108,560
5,580
(2,461)
111,679
99%
102%
Cash conversion
Cash conversion measures the percentage by which cash generated from operations covers adjusted operating profit.
Adjusted operating profit
Discontinued operations – GMID
Adjusted operating profit including discontinued operations
Cash generated from continuing and discontinued operations
Exceptional items
Other working capital adjustments
Underlying cash generated from continuing and discontinued operations
Adjusted cash conversion %
Underlying cash conversion %
2019
£000
105,443
–
105,443
92,407
10,519
627
103,553
88%
98%
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 2019, exceptional items largely consist of cash payments for acquisition and disposal costs
and deferred compensation costs in relation to acquisitions. For the year ended 30 September 2018, exceptional items largely 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. The other working capital adjustments in 2019 and 2018 are largely 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, there is a further adjustment for payroll taxes in 2018.
As cash generated from operations in the Consolidated Statement of Cash Flows includes those from discontinued operations of Asset
Management and GMID, the statutory cash conversion rate has not been provided as it would not give a fair indication of the Group’s
cash conversion performance.
The 2018 comparatives have been restated to reflect the two prior year tax exposures and discontinued operations as outlined in note 1
of the Consolidated Financial Statements.
18
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Net cash
At 1 October
Net increase in cash and cash equivalents
Decrease in borrowings
Other non-cash changes
Effect of foreign exchange rate movements
At 30 September
Net cash comprises:
Cash at bank and short-term deposits
Classified as held for sale
Total cash and cash equivalents held by continuing and discontinued operations
Net cash
Average exchange rate adjustment
Adjusted net cash
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 to EBITDA ratio for continuing and discontinued operations
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Restated
2018
£000
(154,621)
57,875
167,740
(955)
8,234
78,273
78,273
–
78,273
78,273
(2,216)
76,057
101,605
1,110
2,577
2,561
721
(1,225)
107,349
0.71
2019
£000
78,273
(30,151)
–
–
1,956
50,078
49,751
327
50,078
50,078
(1,452)
48,626
105,443
(126)
1,245
2,417
–
2,425
111,404
0.44
The Group’s borrowing facilities have covenants requiring the Group’s net debt to be no more than three times adjusted EBITDA and
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.
The bank covenant ratio uses an average exchange rate in the calculation of net debt and includes discontinued operations of Asset
Management and GMID and an annualised adjustment attributable to acquisitions and disposals in the calculation of adjusted EBITDA.
When businesses are acquired after the beginning of the financial year, the calculation of adjusted EBITDA includes EBITDA attributable
to the business as if the acquisition had been completed on the first day of the financial year. The calculation excludes the EBITDA of any
businesses disposed of during the year.
The 2018 comparatives have been restated to reflect the two prior year tax exposures and discontinued operations as outlined in note 1
of the Consolidated Financial Statements.
Wendy Pallot
Chief Financial Officer
21 November 2019
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
19
Strategic Report
Strategy in action
We are excited to be partnering
with the London Metal Exchange
for their new lithium benchmark.
Raju Daswani
CEO, Fastmarkets
20
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Fastmarkets:
Building a
PRA of scale
Integration of Random Lengths
Fastmarkets has now successfully integrated Random Lengths,
which we acquired in August 2018, in line with our strategy to
be a world-leading price reporting agency. Random Lengths
is a wood products PRA with prices deeply embedded in the
industry workflow. The business provides data that further
establishes Fastmarkets’ leadership in the wood products
industry. Fastmarkets aims to further enhance cross-selling to
new and existing customers.
Lithium Benchmarking Contract
One of Fastmarkets’ key achievements in 2019 was its selection
by the London Metal Exchange (LME) to develop a new
financial benchmark for lithium. The lithium market has
evolved in recent years, with significant increases in material
demand due to growth in the electric vehicle market, creating
an opportunity for transparent and reliable pricing. In early
2018, the LME announced it would work with the market to
develop a cash-settled derivative to provide this market with a
hedging mechanism. In June 2019, the LME chose Fastmarkets
to develop the benchmark due to the widespread use of our
lithium prices and our leading pricing capabilities. We are
excited to be partnering with the LME at this early stage – and
working with the market on the hedging mechanism.
Introducing our new platform
This year Fastmarkets delivered the first version of our
sophisticated platform that gives customers access to its
universe of data while giving them the choice of how to
access it. Customers now have the choice of using our
secure Application Programming Interfaces (APIs), Desktop
Dashboard, browser Dashboard, Excel add-in and new
mobile experience. The platform is built on the latest cloud
technology, meaning it is modular in nature. This allows
Fastmarkets to deliver new capabilities to customers in
the future while maintaining a consistent data experience
regardless of delivery channel.
Raju Daswani
CEO, Fastmarkets
Joined the Group in 1995. Previous roles: Managing Director,
and previously Commercial Director, Head of Research,
Business Development (USA) and Commodities Economist at
Metal Bulletin.
The acquisition of BoardEx
and The Deal has significantly
strengthened our scope for
collaboration across the division.
Jeff Davis
CEO, FPS
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Financial &
Professional Services:
Creating our
new FPS division
Foundations for success
On 1 October 2019, the strengths and capabilities of our
Banking & Finance (IMN, Euromoney and Global Capital)
and Specialist Information divisions (Legal Media Group,
Insurance, Real Asset Finance, Derivatives, BoardEx and The
Deal) combined to create the new Financial & Professional
Services division (FPS).
The decision to combine our Banking & Finance and Specialist
Information divisions presents a significant opportunity to
integrate an outstanding collection of businesses that focus on
shared markets while serving their customers across different
product sets.
Jeff Davis will lead the new FPS division after previously
holding the roles of CEO of the Specialist Information
division and President of BoardEx and The Deal before their
acquisition. BoardEx and The Deal have strengthened our
scope for collaboration across the division. We are already
seeing the benefits this approach will bring to our clients.
Together, with our existing portfolio businesses, in particular
the financial markets focused brands IFLR, IJ Global and
Global Capital, BoardEx and The Deal, provide a strong
platform for future sustainable growth opportunities and
support the Group’s plan to actively open adjacent sectors in
the under-explored relationship mapping market. We expect
the combined division to quickly become a centre for
excellence and collaboration, driving growth.
Focus on BoardEx
BoardEx is an executive profiling and relationship mapping
platform, providing users with accurate, up to date and
in-depth profiles for over one million of the world’s most
influential business leaders. The platform’s proprietary
software is embedded in the workflows of its customers who
use it for business and corporate development, executive
board search and Know Your Client compliance activities.
Jeff Davis
CEO, Financial & Professional Services
Joined February 2019 with BoardEx and The Deal acquisition
(as President). Previously Managing Director, Barclays Inc
(Head of Global IB Client Strategy, and Barclays Wealth
Capital Markets). Over 25 years in institutional markets.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
21
Strategic Report
Key performance indicators
The Group monitors its performance against its strategy
using the following key performance indicators
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 15 to 17.
This is the financial measure for
Director’s remuneration in 2019 as set
out on page 72.
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 17.
This will become a second financial
measure for Director’s remuneration in
2020 as set out on page 73.
107.8
102.5
106.5
99.9
104.6
Adjusted profit before tax increased by 5%
to £104.6m, 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 the term loans in May 2018.
2015
2016
2017
2018
2019
3%
0%
(1%)
(4%)
(4%)
(4%)
2015
2016
2017
2018
2019
Underlying revenues were flat year-on-year
with continued strong performance from
Pricing, Data & Market Intelligence being
offset by continued weak performance in
Asset Management (in particular in our BCA
and NDR businesses). The challenges faced
by Asset Management from the reduction
in clients’ research spend have continued,
along with weaker performance in Banking
& Finance.
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%
0.4%
2015
2016
2017
2018
2019
The subscription BoB growth was broadly
flat at the end of September 2019 reflecting
the continued challenges affecting Asset
Management offsetting all of the strong
growth in Price, Data & Market Intelligence.
Subscription share of total revenues
Subscription-based products usually
have the advantage of premium prices,
high renewal rates and high margins.
55%
58%
61%
59% 60%
The Group’s proportion of revenues derived
from subscription and content-related
products has increased slightly to 60% of its
total revenues.
2015
2016
2017
2018
2019
The key performance indicators are all within the Board’s expectations and are discussed in detail in the Chief Financial Officer’s review on pages 12 to 19.
A detailed reconciliation of the Group’s adjusted and underlying results to the equivalent statutory measures is set out on pages 15 to 18. All adjusted measures combine the results of the Group’s
continuing and discontinued operations. The adjusted measures for 2018 exclude the discontinued operations relating to GMID which was disposed of in April 2018.
The underlying measures reported in 2019 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
relating to GMID.
2018 comparatives have been restated as explained in note 1 of the Consolidated Financial Statements. 2015 to 2017 comparatives have not been restated.
22
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Key
Invest around big themes
Transform the operating model
Actively manage the portfolio
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 17.
26% 25% 25%
26% 26%
The adjusted operating margin remained
consistent at 26% due to the impact of our
strategic pillars: investing around the big
themes, transforming the operating model
and actively managing the portfolio.
2015
2016
2017
2018
2019
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Adjusted diluted earnings per share
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 131.
70.1p
76.4p
73.6p
77.6p
The increase from 73.6p to 77.6p reflects the
improvement in adjusted profit before tax.
66.5p
2015
2016
2017
2018
2019
Underlying cash conversion rate
Cash conversion is a measure of
the quality of Euromoney’s earnings.
The objective is to achieve consistent
conversion of earnings into cash of
90% to 100%. This KPI measures the
percentage by which underlying cash
generated from operations covers
adjusted operating profit. The definition
of underlying cash conversion rate is set
out on page 18.
2015
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 19.
(0.16)
2015
104% 105%
118%
102% 98%
The underlying cash conversion rate was
98% (2018: 102%). Before adjusting the
timing differences and exceptional items,
the adjusted cash conversion rate was 88%
(2018: 99%).
2016
2017
2018
2019
1.26
At 30 September, the Group has net cash
of £50.1m and an undrawn revolving credit
facility of £240m.
(0.44)
(0.75)
(0.71)
2016
2017
2018
2019
Employee engagement
In 2019, we ran our second global staff survey. We were pleased that the
response rate increased by five percentage points from 62% in 2018 to 67% in
2019. This is one of the ways in which we ensure our employees have a voice
and the response rate is an indicator that we are also acting on what we hear.
Our aim is to continue to improve this KPI. The other metrics we track will vary
year to year and by business as we target progress on what matters most to
our employees.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
23
Strategic Report
Segment review
We operate as three segments which are served through six divisions
Asset
Management
Segment
Revenue
Adjusted operating
profit
Adjusted operating
margin
2019
£m
2018*
£m
Movement
%
Underlying
%
145.6
145.5
62.1
59.0
43%
41%
–
5
(4)
–
Pricing, Data
& Market
Intelligence
Segment
Revenue
Adjusted operating
profit
Adjusted operating
margin
2019
£m
2018*
£m
Movement
%
Underlying
%
196.4
168.0
69.4
60.5
35%
36%
17
15
4
5
Banking
& Finance
Segment
Revenue
Adjusted operating
profit
Adjusted operating
margin
2019
£m
61.2
63.7
2018
£m
Movement
%
Underlying
%
(4)
(15)
(1)
(7)
13.7
16.4
22%
26%
The Asset Management segment includes our brands and
businesses that serve the global asset management industry,
including BCA Research, Ned Davis Research and Institutional
Investor (‘II’). This segment provides independent research that
enables our clients to make informed investment decisions, running
networks and conferences that bring asset allocators and asset
managers together in an effective and efficient way, and providing
news and data that are critical for the industry to stay informed
and make deals in an increasingly complex world. In September,
the Group announced a strategic review of Asset Management
to ensure alignment with its strategy of transitioning towards a
3.0 business.
Revenues were consistent with 2018 at £145.6m. Underlying
revenue declined by 4% as growth in events and advertising
was more than offset by continued decline in subscriptions.
Asset Management remains affected by structural and cyclical
*
The 2018 results have been restated to reflect the movement of Global Investor from the
Asset Management segment to the PDMI segment, and the closure of the Centre for
Continuing Education (CIE) business.
The Pricing, Data & Market Intelligence (PDMI) 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 fast growing
price reporting agency for the metals, mining and forest products
industries. It also includes our businesses active in the telecoms,
insurance and airline industries.
Underlying revenue growth in the year was 4% with underlying
operating profit growth of 5%. Subscription revenue, which accounts
for the majority of PDMI revenue, increased by 8% on an underlying
basis. In Fastmarkets, our price reporting agency, a number of
factors helped drive adoption and increased use of our pricing
benchmarks including: close engagement of the business with its
clients and market; Fastmarkets being selected as the London Metals
Exchange partner to develop the lithium benchmark; and the launch
of the Fastmarkets customer platform. Our strong value proposition
*
The 2018 results have been restated to reflect the movement of Global Investor from the
Asset Management segment to the PDMI segment
Banking & Finance, our smallest segment, provides market
intelligence, news, training and conferences to the global finance
industry. It includes the flagship Euromoney magazine, which
celebrated its 50 year anniversary in June 2019. This leading
publication for the global banking sector, and the awards for
excellence, has been the arbiter of status for banks for decades.
Its conferences under the Euromoney and IMN brands are the
pre-eminent events for their industry sectors. This segment derives
75% of its revenues from its events.
Revenues were down 4% year-on-year to £61.2m mainly impacted
by the segment’s Structured Finance Industry Group event
(generating £4.1m of annual revenue in 2018) reaching the end
of its contract in 2018. On an underlying basis, revenues were
down 1% as a strong performance from IMN across 13 new events
and key repeat events helped to offset decline in Euromoney
and Global Capital events. The global backdrop of trade and
geopolitical tensions as well as financial market volatility put
24
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Revenue and adjusted operating profit are as defined on pages 15 to 17.
challenges. Whilst new sales in Europe continued to be impacted
by uncertainty around the UK’s exit from the EU, there was strong
new sales growth in Asia. In addition, underlying revenues for
Institutional Investor, where revenues are sourced from asset
management marketing rather than research budgets were flat
year-on-year.
In response to continued market and performance challenges in II,
management took the decision to reshape the senior management
and global sales teams, and close CIE at the end of 2019.
The Investment Research Division actioned a significant strategic
restructuring at the end of 2018 to combat the impact of the
declining revenues, and to reallocate some of the savings towards
reinvestment in sales resources and a revamped marketing
approach, which was in place by the end of 2019. These efforts
resulted in significant cost savings of around £7m implemented
in summer 2018 and have allowed the business to reinvest whilst
maintaining a flat underlying operating profit, an improvement on
the 4% decline seen in the prior year.
enabled us to reflect this through increased data licensing sales,
which have resulted in excellent underlying subscription revenue
growth in Fastmarkets of 10%.
Underlying events revenue grew 1%. It declined by 4% in the
first half of the year due to delegate marketing challenges, but
recovered to grow in the second half of the year. There were strong
performances from Coaltrans Asia, Capacity Europe and the Legal
Media Group, which were mostly offset by increased competitive
pressure on our Real Asset Finance portfolio and a lack of growth
at our flagship telecoms event in the US, ITW, which changed
location in the year to Atlanta.
In February 2019, we acquired BoardEx, an executive profiling
and relationship mapping platform, and The Deal, a source of
data, news and intelligence on M&A, for $83.7m. Both investments
are now fully integrated and firmly aligned to our 3.0 strategy.
BoardEx generated underlying growth of 11% in the year on a
pro forma basis.
pressure on subscriptions and advertising revenues which both
declined by 6% on an underlying basis in the year; although the
decline in advertising revenue was, in part, offset by successful
Euromoney@50 and Asiamoney@30 campaigns.
During the year, the Banking & Finance segment consolidated
its structure into three brands, Global Capital, Euromoney and
IMN, supported by an operational pillar to deliver logistics and
production efficiencies. Investment in employee costs related to the
new operating structure, together with investment in new events,
drove a decline in underlying operating profit of 7%.
To reduce the risk of impact from hurricanes in Florida, the annual
ABS East event will move from September to October in 2020
(revenue of £3.3m in 2019).
On 1 October 2019, the Banking & Finance division merged with
the Specialist Information division to form the new Finance &
Professional Services division bringing together markets and
customers across financial and professional services.
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Segment revenue by type (%)
7
12
81
Subscriptions and content
Events
Advertising and Other
Segment revenue by type (%)
10
31
59
Subscriptions and content
Events
Advertising and Other
Segment revenue by type (%)
13
12
75
Subscriptions and content
Events
Advertising and Other
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
25
Strategic Report
Market overview
We serve markets that are or have the potential to become what
we call B2B 3.0 information markets. These markets are semi-opaque,
where the information which organisations need in order to operate
effectively is hard to find
Asset
Management
Amid post-crisis quantitative easing, the industry faces
a more challenging future. New customer needs and
market structures are pushing for the adaption of value
propositions and business models. Market challenges
are shrinking the market size for investment research.
However, the pace of decline is slowing while our
specific part of the market, independent macro
research, is growing.
MiFID II and the shift from active to passive investing has
resulted in cost reductions to protect asset managers’
margins, which impacted us, although our business
remains reasonably firm. Additionally, concerns around
Brexit continue to create uncertainty in the market.
Key market drivers
• Continuous pressure on fees
amid the shift from active to
passive investment products
• Structural and cyclical industry
issues facing investment research
• MiFID II has affected the way
research buyers in the EU
organise their budgets and
commission work
Pricing, Data
& Market
Intelligence
Benchmark prices are increasingly being used for
new resources and new technology. Suppliers,
manufacturers and end-users utilise benchmarks as
a mechanism that provides pricing certainty across
product supply chains.
Banking
& Finance
The method of price discovery varies by industry but
prices are used in contracts for metal trading, telecoms
and infrastructure development among other segments.
Businesses that operate using on-demand data
through different distribution channels and evolving
product offerings are being challenged by the extensive
adoption of cloud technology across industry.
The performance of the banking and capital markets
industry has been in the hands of global central banks
with low interest rates, further quantitative easing, and
intervention measures influencing the markets.
Negative yielding bonds have created a new normal
in markets to which all participants are adapting.
Investors are chasing returns in a world where income
from traditional sources, debt and equity, is declining.
Global banks are maintaining stable performance.
However, while central bank activity is positive for banks’
own funding, it is creating pressure on profitability and
raising questions about business models, especially in
Europe. The prospect of mergers and acquisitions in the
European banking sector remains high.
Key market drivers
• The market’s increased demand
for price transparency to manage
exposure to volatility
• Increasing call for risk
management solutions
• Demand for new benchmarks
in new markets continues
to increase
Key market drivers
• Ultra low interest rates and
negative yields
• Trade and geopolitical tensions
• Trend towards green and
sustainable finance
26
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Links to strategic
pillars
Asset management income mix
Assets in US equity funds by investment type
Total (%/$billions)
$31
9 / $3
19 / $6
6 / $2
$38
15 / $6
18 / $7
9 / $3
$77
15 / $12
18 / $14
14 / $11
$74
16 / $12
18 / $13
14 / $11
$101
17 / $18
17 / $17
16 / $16
57 / $18
46 / $18
33 / $25
33 / $24
27 / $27
11 / $4
2008
9 / $3
2003
● Alternatives
● Active specialities
Source: Morningstar
19 / $15
2017
19 / $14
2018
23 / $24
2023E
● Solutions/LDI/balanced
● Active core
● Passive
How we are responding
• We have commenced a strategic
review of Asset Management
• We are growing our non-
institutional product suite to
cater to the fast growing wealth
management market
• We continue to invest in product
innovation and professionalising
our sales and marketing processes
• We are exploring how to monetise
the asset owner data we currently
capture globally
Example of price volatility
Pulp Europe USD per tonne
1300
1100
900
700
500
300
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Source: PIX Pulp Price NBSK USD Market Analysis Fastmarkets
Banking market
MSCI World Banks index
120
110
100
90
80
70
60
2015
2016
2017
2018
Source: MSCI
Links to strategic
pillars
Links to strategic
pillars
How we are responding
• We are continuing to build new
teams focused on targeting new
market segments
• We are leveraging new alliances
and products designed to deliver
data directly into our customers’
work flow
• We continue to evaluate and
launch benchmarks in growth
commodities (e.g. lithium – used
for batteries in electric vehicles)
through both organic and
inorganic investment
How we are responding
• We are focused on leveraging
synergies from integrating product
lines into a single offering
• We are increasing engagement
with clients through bespoke data
products, content and surveys
• We continue to invest in developing
products which offer increasing
value in the context of increasing
market uncertainty and volatility
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
27
Strategic Report
Stakeholder value and engagement
Our purpose is to deliver sustainable value to customers, returns to
shareholders, opportunities for employees and contributions to the
communities within which we operate, by bringing clarity and
insight to opaque markets
Recognising value for all of our stakeholders
Shareholders
The value we create
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 32.5p
to 33.1p, which represents an increase over two years of
8.2%.
How we engage and respond
• £35.6m paid in 2019 in dividends
Customers
The value we create
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.
How we engage and respond
• Thousands of customers operating across a broad range
• New shareholders welcomed following independent
of sectors
FTSE 250 status in April
• Capital Markets Day held in July
• Annual General Meeting held in February
• Over 100 shareholder meetings held during the year
• Undertook two US investor roadshows
• Products which many customers regard as non-
discretionary
• A strong emphasis on embedding our products in
customer workflows
• A global customer base mirroring our global footprint
• Must-have products and must-attend events facilitate a
subscription model
See page 38 for more information
See page 33 for more information
Employees
The value we create
We serve our three 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.
How we engage and respond
• Sales Academy and AI Academy launched in 2019;
Finance Academy to follow in 2020
• 67% of staff completed staff survey, an increase of 5% on
last year
• Thriving staff-led diversity and inclusion initiatives
covering a wide range of issues
• All divisions and functions represented globally on our
Staff Forum
• Our off-shore group staff expertise in Chennai and Sofia
enhances product development
Partners
The value we create
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.
How we engage and respond
• Continued investment working with wide range of
technology partners
• Increasing transition to cloud-based service providers
resulting in greater flexibility as well as security benefits
• Relationships with global hotel groups and other large
venue providers for the operation of our events
• A well-established roster of professional service
providers whose knowledge of our business enables
effective partnering
• Leveraging our long-standing relationships and
constantly developing relationships with new vendors to
provide innovative solutions
See page 39 for more information
See page 34 for more information
28 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Non-financial information statement
Throughout this report, we refer to the Group’s non-financial activities, including our approach to sustainability and working with our
stakeholders. This includes references to some of the policies and procedures we adopt. The table below highlights where in this report
we refer to the key contents requirements of the Non-Financial Statement (as required by sections 414CA and 414CB of the Companies
Act 2006).
Reporting requirement
Environmental matters
Supporting policies
• Volunteering policy
Annual Report reference
• Sustainability
and stakeholders
• Greenhouse Gas
(GHG) reporting
Employees
• Code of Conduct
• Our business model
• Diversity & Inclusion policy
• Chief Executive’s review
Human rights
Social matters
• Speak-up policy
• Health & safety policy
• Event Risk Framework
• Code of Conduct
• Modern Slavery Act
Transparency Statement
• Event Risk Framework
• Trade Sanctions Policy
• Modern Slavery Act
Transparency Statement
• Volunteering policy
Anti-corruption and bribery
• Anti-bribery & corruption policy
• Gifts & entertainment policy
• Speak-up policy
Principal risks and impact on business activity
Description of business model
Non-financial KPIs
• Employee engagement
• Sustainability
and Stakeholders
• Directors’
Remuneration Report
• Directors’ Report
• Sustainability
and Stakeholders
• Risk management
• Directors’ Report
• Customers
• Supplier engagement
• Risk management
• Sustainability
and stakeholders
• Risk management
• Directors’ Report
• Risk management
• Our business model
• Group Key
Performance Indicators
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Page
36
37
6-7
9
23
30
72
93
34
46
92-3
33
34
51
34
46
93
40–52
6-7
23
29
Strategic Report
Sustainability and stakeholders
We have reshaped our stakeholder and sustainability review reporting
this year to enhance our focus on how our Board considers stakeholder
interests. We will further evolve this approach to meet the enhanced
expectations of the 2018 Corporate Governance Code when this
formally applies to the Group from the 2020 financial year onwards
The reporting in this section is focused on four key themes:
People@Euromoney; Our Customers; Our Suppliers; and the
Community and Environment. These themes have been chosen as
they are most closely aligned to and reflect the Group’s operations,
key stakeholders and strategy.
These themes also allow us to complete our non-financial
reporting obligations, which cover our approach and policies
relating to staff development and engagement; our strengthening
of customer relationships; how we manage our suppliers; and the
variety of ways in which we measure the contributions made to
our communities.
People@Euromoney
Staff Survey
We wanted to respond to the two key themes identified as
important to staff in our 2018 staff survey. We have implemented
pay benchmarking across the business in phases, with a particular
focus on our staff in lower paid roles, and have introduced
programmes to support and facilitate more flexible working across
the Group, adapted to local markets. This year’s staff survey results
suggest that these improvements have been positively received
by staff.
Staff Forum
We launched our global staff forum in December 2018
and invited employees to put themselves forward as
forum representatives.
Representative area
Representative
Global
Central Functions – Global
Maria Lobato
The forum is designed to remove communication barriers and to
support collaboration, with representatives intended to cover a
wide range of geographies and businesses. Where an area had
more than one person nominated as a potential representative,
an election was held. Following the election process (in which
a significant number of staff members voted), 18 representatives
were confirmed as the global staff forum members.
The purpose of the forum is to consult with, communicate to and
generally involve staff formally in areas which affect everyone at
Euromoney day-to-day such as: working conditions, employee
relations, contractual and remuneration matters, and other
ways to make Euromoney a rewarding place to work. Staff views
on these areas will be discussed and collated, and fed back to
the Board.
Following a number of introductory sessions to discuss the
purpose of the forum with the members, we held our first
formal meeting in the summer of 2019. The CEO and CFO both
attended initial meetings to provide a link with the Board and
the CFO attended the first formal meeting. It is intended that
at least one Board member will attend all global staff forum
meetings, along with the Global HR Director and Global
Reward Director. The Board will receive regular reports from
the forum and will actively participate in shaping its remit
and approach.
The forum is currently scheduled to meet at least twice a
year with meetings following the Group’s results in May and
November, with potential additional meetings at appropriate
times between these meetings. The inaugural global staff forum
members are as follows:
30
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Americas (and some UK)
Fastmarkets – Bedford
Fastmarkets – New York
Specialist Information – US
Fastmarkets – Americas excluding
New York & Bedford
Gregory Porcaro
Tom Jennemann
Ellie Mertens
(until date of leaving)
Luis Sucupira
Investment Research – Canada and UK
Fiona Ardasinski
Investment Research – US
II – US and UK
Europe
Bulgaria
Banking & Finance – UK
Fastmarkets – UK
Tania Tagliavento
Denise Best
Nikola Peychev
Gerald Hayes
Pawel Paluchowski
Fastmarkets – Europe excluding UK
Ville Henttonen
Specialist Information – UK
Telecoms – UK
Asia & Australia
Nick Pettifer
Rachael Lupton
Banking & Finance – Asia
Specialist Information – Asia
Romeo Wang
Dave Doré
II/Investment Research – Asia & Australia Marsha Larned
Fastmarkets – Asia
Atin Kapur
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
The 2019 survey results suggest that our staff feel we are generally
making positive progress as an employer. However, there is
more to do, including further work on pay, and this year’s survey
also highlighted that more visibility of career opportunities and
a continuing commitment to improve manager capabilities are
priorities for staff.
We have also made a significant investment in our sales
capability training across the business, with 337 participants in our
‘Conceptual Selling’ course and 97 attendees at our ‘Management
Code’ focused sales training this year. Our legal team have
trained more than 246 people in ‘Contract 101’ workshops, again
held globally.
In response to our 2019 survey, our Senior Management Group,
consisting of our top 85 global leaders, spent two days in June
discussing the topic of staff engagement. This led to Nigel Martin,
our Global HR Director, co-ordinating bespoke action plans for
each division and function, by role type, and a group-wide tier of
actions to take. We hope that these plans will result in meaningful
engagement with our staff across the Group. The action plans
centre on ‘Practice what we Preach’; managers leading by
example, career management and planning, and increasing
opportunities for collaboration.
Board Engagement
The Board has taken time to attend a range of introductory
meetings, lunches and dinners with staff from across the Group.
During the year, the Board attended a lunch with the Telecoms
divisional management team led by Ros Irving, a dinner with the
North American senior management team in New York in July, and
also participated in an interactive question and answer session
hosted by the Women@Euromoney group in September. The Board
also spent time with members of senior management and advisers,
at the Board strategy offsite meeting in June. The Board enjoys the
opportunity to meet staff from across our businesses and offices,
and these meetings will continue in 2020.
Investing in Talent
Supporting the staff survey action plans, we continue to invest in
our talented people and to give our staff responsibility early in
their careers.
This year we have built on the progress made with the Early
Careers Academy in 2018, a programme now supported by our
entire Group Management Board, running thematic workshops
for our more junior staff to engage in. We introduced early career
secondment programmes, which included secondments to work
with our CEO, Andrew Rashbass, in London and New York. Two of
Andrew’s secondees this year, Francesca Brindle and Iveta Pekova,
have contributed directly to the production of this Annual Report.
The secondment programmes remain very popular with those
eligible, and have been very well received by those participating.
There is a case study about the programme on page 35.
We continue to run our Management and Leadership courses,
which focus on the core skills needed to be a successful manager
and leader at Euromoney. The courses are held in London, Hong
Kong, Montreal and New York. In 2019, 184 colleagues attended
the ‘Managing 3.0’ course, 300 attended ‘Recruiting’, and 78
attended ‘Leading 3.0’ across all locations.
Integration
We have relocated staff who joined the group with the acquisition
of BoardEx and The Deal in February, to our existing offices in New
York and London. We have integrated staff based in Chennai in
India as well.
Culture and Diversity
The Board is also actively discussing our culture in the context
of the enhanced Corporate Governance Code expectations in
this area.
We will have introduced a new Diversity & Inclusion Policy
which outlines our commitment and our approach, and how to
integrate this with our entrepreneurial heritage by the end of 2019.
In January, we held Diversity Week and the different @Euromoney
diversity groups contributed to that event. You can read the case
study on page 39.
It is important to recognise industry achievements by our people,
and we celebrate Jade Friendensohn being awarded the ‘100
Women in Finance’ Award for Effecting Change in 2019. You can
find more information regarding Jade’s award on page 32.
Our gender diversity at board level is a real strength, with 44%
female representation through the appointment of Wendy Pallot,
Jan Babiak, Imogen Joss and Lorna Tilbian appointed as Directors.
Key positions including CFO (Wendy), Senior Independent Director
(Jan), and Remuneration Committee Chair (Imogen) are held by
female directors.
We have similar representation at Group Management Board
level, with 30% female representation through Wendy Pallot
(CFO), Diane Alfano (CEO Institutional Investor) and Ros Irving
(CEO, Telecoms).
We are making progress with regard to recruiting and promoting
women to senior positions, and through networks and events such
as those held by Women@Euromoney, and which is discussed on
page 39. The charts below summarise our gender split at Board,
Group Management Board, Senior Management and Group level.
Board
Group Management Board
Male
Female
3
Male
Female
4
9
5
11
8
Senior managers
Total employees
Male
Female
Male
Female
1,016
2,167
1,151
28
86
58
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
31
Strategic Report
Sustainability and stakeholders continued
Progress regarding Gender Pay
Our 2018 analysis (available on our website) shows we have
more to do to address our gender pay gap, which continues to be
driven by the under-representation of women in more senior roles,
resulting in a lower proportion of women in the upper pay quartile.
Since April 2018, we have increased the steps we are taking to
address the underlying drivers of the gender pay gap, such as
increasing the diversity of shortlists for senior roles. As reported last
year, since this date we have also hired a number of senior women
in key roles, including Wendy Pallot who joined as Chief Financial
Officer in August 2018.
We have also taken a number of other actions on employee
engagement, training programmes, talent development, flexible
working options and parental policies, that we believe will have
a positive impact on the diversity of our organisation over the
longer-term. We are committed to closing the gender pay gap and
reducing the gender imbalance across the organisation.
Volunteer Days
We actively encourage all our staff to make use of their two
allocated volunteering days through consultancy Benefacto.
During the year approximately 90 volunteering days were
used. A wide variety of charities, community and environmental
initiatives are supported, including The Lord Mayor’s Appeal and
City Giving Day 2019, which celebrates the charitable efforts of
businesses in the City and spotlights fundraising and volunteering
activities. We discuss our volunteering activities in more detail in
the Community & Environment section on page 35.
2019 Summary
The Board is very pleased with the progress made during the year
towards making Euromoney a great place to work. This further
allows our staff, of all levels of experience and background, to
benefit from our best-of-both worlds operating model. We are
focused on attracting and retaining the right talented people to
support our approach, and in turn generate further benefits for our
shareholders and other stakeholders.
Women in Finance
Effecting
change
We are delighted that the ‘100 Women in Finance’ affinity
group has awarded Jade Friedensohn, Managing Director of
the Structured Finance Division at Information Management
Network, the WF100 ‘Effecting Change Award’ in 2019, for her
work on the IMN Women in Thought Leadership initiative.
IMN has been helping to raise the profile of women with
our Women in Thought Leadership Initiative by ensuring
that every panel at our major ABS industry events includes
a female speaker. We encourage our event sponsors to
nominate their female talent with the promise of additional
exposure via speaker roles on the programme.
IMN’s 2019 target is to increase the absolute number of
women speaking per event compared with 2018. We actively
seek gender diversity on all panels. One example of our
recent success is at the 5,000-person 25th Annual ABS
East Conference held in Miami Beach, Florida, where we
increased the percentage of female speakers from 26% to
30% year-on-year. IMN organises at least one networking
event ahead of each conference to cultivate the discussion of
pertinent business topics, illuminate issues affecting women’s
professional advancement, encourage best practices in
diversity and inclusion, and so that we can feature compelling
guest speakers.
IMN donates a percentage of the proceeds from all branded
opportunities, supported by our sponsors, to 100 Woman in
Finance, whose missions strongly align with our own. Jade will
be honoured at this year’s ‘Women in Finance’ New York
Gala, a fundraiser for the 2019 100 Women in Finance’s global
philanthropic theme: ‘Investing in the Next Generation’.
This initiative reaches, emboldens and supports pre and
early-career women who are the finance industry’s leadership
pipeline by encouraging female students to look favourably
at careers in finance and investment; creating educational
opportunities and access points for them to join the industry;
enabling ongoing peer networks for early-career women and
increasing visibility of female role models.
We are proud of Jade’s achievements and delighted that she
has been highlighted as a role model in business both inside
and outside of Euromoney.
32
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Customers
Our customers are central to everything we do at Euromoney, and
understanding their needs and embedding our products within
their workstreams is integral to our strategy.
Serving our customers’ needs
With more than 10 brands serving global markets across different
markets, the Group has a broad range of customers with
different needs. Our newly designed CRM systems will provide
us with improved management information allowing us to better
understand and predict our customers’ requirements and identify
trends and potential opportunities.
The acquisition of BoardEx and The Deal in February provided
the Group with a new product platform focused on people
intelligence. This opens up opportunities for the Group with a new
types of end user, who wish to improve their understanding of
their customers, by using the relationship mapping tools available
through BoardEx.
Following the integration of both businesses in June, and the
creation of the Financial & Professional Services division from
1 October, we are now prioritising leveraging the skills, ideas
and resources, knowledge, and customer relationships of
BoardEx across our portfolio of financial and professional services
businesses facing shared markets.
Global Finance Transformation Programme
We have made significant progress with our finance
transformation programme during the year. We discuss that
progress and related areas of focus in 2019 in more detail on
page 67.
While not a direct touch point for our customers, these
improvements to our central business processes and ethos support
our approach and strategy to embed our B2B information,
products and services and become a more agile, integrated and
focused group with 3.0 characteristics.
Contract Transformation Programme
Our Contract Transformation Programme has also been a key
priority in 2019. Led by our in-house legal team, the Programme
has entailed an end-to-end review of our legal contract processes
to introduce greater standardisation of terms, make template
documents available, streamline and accelerate the negotiation
stages of contracting, appoint ‘Contract Guardians’ as standard-
bearers for contractual terms and processes globally, and provide
supplementary ‘101’ training.
The majority of the Group’s businesses have already successfully
completed the programme, with the remainder scheduled to
complete in 2020.
The theme underpinning the programme is enabling the
businesses to better self help, a principle which is fully aligned with
our best-of-both worlds operating model.
Global Sanctions Policy
The Group operates trade sanctions policies and procedures
to ensure that the businesses are aware of, and operate
within, global trade sanctions at all times. These are integrated
into operational procedures and are available to all staff.
This is necessary because the Group’s businesses, and its
events businesses in particular, conduct business across the
globe and are continually entering into contracts with new and
established customers.
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
The Risk Committee receives regular briefings on sanctions
related developments globally, encompassing reminders as to the
implications of a breach of sanctions for the company.
Geopolitical Risks
In 2019 the Risk Committee approved a refreshed approach to
geopolitical risk management across the Group. The approach
included the introduction of a new methodology and tools to
monitor and advise the Group’s businesses regarding potential
risks in this area. The toolkit, which is available to all staff via the
Group Intranet, allows all staff to see a high level risk overview
for many of the countries in which the Group conducts business,
assessed by certain risk criteria and including a colour coded
scoring method.
The overview entails a methodical assessment of country specific
risks based on trade sanctions, travel security, country risk, and
bribery and corruption indices. The assessment draws information
from a variety of sources, both internally and externally, and
is continually maintained to ensure reliable advice for staff.
Additional governance has also been introduced to prohibit
business being conducted in restricted or high risk countries.
Quality Assurance: IOSCO
The IOSCO price reporting principles are a set of best practice
recommendations for all price reporting agencies to ensure the
pricing process is robust and transparent. Accreditation against
the principles and regular independent audit, therefore, provides
quality assurance to all customers of our Fastmarkets division who
use our prices to trade, operate their businesses and agree third-
party contracts.
The principles are: Governance and Oversight; Quality and
Integrity of Methodologies; and Accountability and Auditing.
Fastmarkets’ exchange listed prices have completed the IOSCO
assurance process and Fastmarkets first received its IOSCO
accreditation in 2017.
During the year Fastmarkets continued to receive external
assurance over its IOSCO accreditation for benchmark prices,
including lithium, cobalt, aluminium, copper, alumina and iron ore.
Fastmarkets is recognised as a market leader across its key
benchmarks and continues to define standards for the industry.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
33
Strategic Report
Sustainability and stakeholders continued
Managing risk
across the Group
Supplier engagement
We work with a wide range of suppliers and partners across
the globe of different sizes. Ensuring we select the right
suppliers for the right projects is an important aspect of our
risk management. We have created an online ‘one stop shop’
portal for our procurement teams to use when engaging
suppliers. This enables us to undertake an efficient risk-based
assessment of suppliers across areas such as data protection,
trade sanctions and anti-bribery. The portal is resulting in an
increase in the number of suppliers being assessed, enabling
a consistent and risk-based approach to supplier procurement
across the Group.
Business Information Security Officers
A key pillar of our new information security strategy is
the development of a business-wide ‘security champion’
programme, called the Business Information Security Officer
(BISO) programme. It is a voluntary programme which will
provide non-security specialists formalised training leading
to a recognised, accredited qualification. There are multiple
benefits: supported roll-out of the information security strategy;
increased awareness of information security across the Group;
increased sense of ownership of security within businesses;
and investment in staff development. The information security
team will work closely with the BISOs throughout the year to
leverage these benefits.
Suppliers
As a diverse global group with different businesses located
across the world providing a range of information services to B2B
clients, often in markets in which we do not have a permanent
presence, we rely on a network of trusted third-party suppliers
and consultants.
Profiling our Suppliers
These suppliers span a wide variety of areas, depending on
the type of business being conducted. Our subscription and
licensing led businesses increasingly rely on global technology,
communications and security providers and specialists, whilst our
events businesses rely on venue and accommodation providers,
travel co-ordinators, print design specialists and many others.
Our businesses are built on data and while our output is primarily
proprietary, we are also buyers of data from our vendors as one of
the inputs into our data creation processes.
Professional advisors
As we have discussed throughout this report, Euromoney became
fully independent during the year as a result of DMGT’s decision to
distribute its entire shareholding to its own shareholders in April.
Those events brought into focus the important role our corporate
advisers play in helping Euromoney meet its obligations as an
independent FTSE 250 group, and the Board to meet its individual
and collective duties.
Whether it is our auditors (PwC) providing independent scrutiny
throughout the year; our syndicate of banks and financial
institutions who continue to provide access to capital; our brokers
(UBS and Numis) or lawyers (Freshfields Bruckhaus Deringer
and CMS Cameron McKenna) providing input generally or more
specifically on a project basis, such as acquisition due diligence;
our communications specialists (FTI Consultants) advising on
strategic messaging or marketing approaches for our businesses;
our share registrars (Equiniti) providing support; Investis who
helped with the redesign of our corporate website; or RY, our
design agency for this and other shareholder and stakeholder
reports, we are delighted to work with them all and look forward
to further strengthening these relationships in future years.
Global Finance Transformation Programme
We discuss our Global Finance Transformation Programme,
which directly improves the onboarding and integration of our
new suppliers, and streamlines the billing and communications
formalities for our existing supplier base on page 67 of this report.
Contract Transformation Programme
Our Contract Transformation Programme, which we also discuss
in more detail on page 33, seeks to improve and streamline
contracting and communications processes with our suppliers.
Modern Slavery Act Transparency Statement
The Board takes its responsibility to review the Group’s potential
exposure to slavery risks through its operations and supply chain
very seriously. The related Transparency Statement published on
the Group website (www.euromoneyplc.com/modern-slavery-act)
provides more information regarding our supply chain together
with our procedures across broad areas such as employee
assurance, supplier assurance, our Speak Up arrangements and
our compliance approach.
34
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Trade Sanctions and Geopolitical Risks
When choosing whether to contract with a new supplier, or renew
with an existing supplier in a higher risk jurisdiction, we draw
upon the policies and procedures we have introduced to improve
our customer processes. These processes include a general
assessment of the suitability of the supplier based on the risks to the
Group measured against these key criteria.
Speak Up
We formally discuss our Speak Up arrangements, provided by ISO
27001 accredited supplier In Touch Limited (part of Expolink Europe
Limited), and the programme to refresh related communications
during the year in more detail on page 62 of this report.
We continue to benefit from an effective service from In Touch.
The Audit & Risk and Risk Committees also both receive regular
updates regarding any related Speak Up activity and potential
investigations where necessary.
2019 Review and 2020 Outlook
We have reviewed and refreshed our approaches to our customers
and suppliers through the Global Finance Transformation and
Contract Transformation Programmes. We are already seeing
the benefits of our efforts in both areas. We are committed to
completing the outstanding elements of each programme in 2020.
Community and Environment
Euromoney engages in the communities within which we
operate in a variety of ways. We are a sizeable employer in the
communities we serve; our staff volunteer in the communities where
they work and live; our staff support the charities which operate
in those same communities; as a Group we bring tax revenues to
those communities; and the nature of our business lends itself to us
having a relatively low carbon and environmental footprint.
Community
Although headquartered in the City of London, Euromoney has
offices across numerous locations worldwide in Asia, North
America and Europe. As a global, multi-brand business, we
want to recognise the benefits of being an inclusive workplace,
celebrate our different cultures and strengths, and act consistently
with the values and cultures of the countries in which we
do business.
As we have reiterated throughout this report, people are vital
to success at Euromoney. After forming our employee-led
diversity networks last year, these have continued to develop
this year. We have had more initiatives, events, workshops and
environmental and community-oriented activities, extending
support to all our staff regardless of background. You can read
more about these initiatives and plans on page 39.
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Secondment Programmes
Supporting
early career
development
This year, Euromoney began offering a range of secondments
to our staff who are within the first five years of their career
as part of the Early Career Academy. The secondments were
designed to allow staff to spend time in other parts of our
business, learn new skills and find out about other parts of
the company in order to develop their career. We also offered
three month secondments shadowing our CEO Andrew
Rashbass, which we awarded to six candidates to complete
in pairs across a nine month period.
The feedback we have received so far has been very positive,
both on a personal and professional level. Riya Bhandari,
who works for Institutional Investor in New York, completed a
secondment with Jarvis Fisher at Capacity Media in London,
who said that Riya hugely helped the team with one of their
biggest events of the year, Capacity Europe. Jarvis also
agreed with using secondments as a potential recruitment
tool, allowing both the employee and employer a chance
to see if the individual can meet the requirements of the role
before awarding the position.
Jarvis said, “I think the secondment program is excellent and
works great for both the secondee and the business they
move into. The secondee gets the beneficial experience of a
different role in an overseas office so can develop personally
and professionally, while the business they join has the benefit
of extra help on whatever project they are working on. I would
definitely recommend continuing the secondment programme.”
Adam Dar, who works for BroadGroup in London, was on
secondment with Institutional Investor in New York and said
he had been able to learn more about what Euromoney does,
which markets we operate in and what the business’ plan is
going forward. The secondment offered him the time to learn
from a great leadership team, who were incredibly insightful,
and significantly altered his perception of business and
leadership, and how to achieve the career he wants.
Kiersten Engel, who works for Ned Davis Research in Florida,
recently completed her secondment with Andrew Rashbass
and said the experience had allowed her to interact with
senior colleagues at Euromoney and participate in high-
level strategy meetings, facilitating her involvement in the
processes and decision-making that affect all Euromoney staff.
The secondment provided increased exposure to the career
and growth opportunities available at Euromoney, while
giving her the space to refine her skills.
After ascertaining that the pilot of the secondments has
delivered value both to the business and the individual,
we have decided to make this a rolling programme.
We have done this in the hope it will expose more of our less
experienced talent to the diverse, dynamic and growing
businesses in the Group and further establish why Euromoney
is a great place to work.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
35
Strategic Report
Sustainability and stakeholders continued
Anniversary Charity Awards
Euromoney@50
Charity Awards
To commemorate Euromoney’s 50th anniversary in June, we
launched the Euromoney@50 Charity Awards, recognising
our people’s amazing work across the organisation, both
individually and as part of a team, for charitable causes.
Any permanent employee from anywhere in the world
could apply or nominate their colleagues, with awards
available in North America, Asia and the EMEA region.
Euromoney dedicated £50,000 (around $65,000) to donate
among the winning nominees and their charities. Each winner
received £6,500 ($8,000) for their charity, while each highly
commended entrant was awarded £3,000 ($3,780).
In making their decision, our judges were impressed by
the variety of causes, the number of nominations and the
commitment and passion that our people show for the
projects they support. Whether supporting disadvantaged
women and children or programmes to boost literacy and
education, the scope of giving was a real reflection of the
diversity of our Company.
As a way of congratulating all winners and nominees, we
held regional celebration dinners worldwide, presented
cheques to the chosen charities and awarded our winners
with trophies.
Our regional winners were:
Asia – Morgan Davis, PathFinders
North America – Sean Mayer, Mental Health Association
of Westchester
EMEA – Petya Andreeva, Give a Book Foundation
Team Winner – Denise Best, Janice Banaria, Marcia Neverson,
Bottomless Closet
Overall Global Personal Achievement – Denise Best
We wish to thank all our employees for their outstanding
efforts in their charitable work this year.
Denise Best
Overall Global
Personal Achievement
36
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Charitable Giving
Our employees drive our charity fundraising, which is sourced
from a combination of both individual staff fundraising efforts and
the Group’s charitable budget. This budget provides a matching
contribution for fundraising efforts.
The team in New York has volunteered their time to a Resume
Review and Mock Interview event, and a Workwear Clothing Drive
for Bottomless Closet, which aims to guide disadvantaged New
York City women to enter the workforce, as well as Iris House, a
comprehensive support, prevention and education service for
women and families affected by HIV/AIDS. Our people also held
a Holiday Bake Sale with all proceeds going to Americares for
hurricane victims.
In Asia, our Airfinance Journal Events team in Hong Kong worked
with a local community charity HandsOn Hong Kong to complete
a beach clean at Silver Strand Beach in Sai Kung. This coastal
clean up activity clears debris and plastics, which are then sorted,
recorded and delivered to recycling centres. Our people also
volunteered with PathFinders at the end of 2018, helping to hand
out gifts to children and work with the company on its website and
donor materials.
In London, the Euromoney Giving network has been busy
organising charity runs, awards and events geared toward
fundraising, a Women in Business Lunch, hosted by Haven House,
as well as participating in the annual City Giving Day.
Looking to the rest of Europe, our team in Bulgaria has been
recycling plastic bottle caps as part of a charity campaign that
donates the money to funding incubators in hospitals nationwide
for premature babies. Other team members have dedicated their
time to volunteering in community kitchens that prepare food for
people in need.
Overall, through a combination of Group donations and staff
fundraising, approximately £0.3m has been raised for charitable
causes in 2019, including significant donations or pledges to
Haven House, Shelter, Multiple Sclerosis Society and others. This is
a record in terms of charitable donation generated by the Group
and its staff.
Political Contributions and Public Policy Participation
We do not make political contributions nor participate
in the formulation or development of public policy in any
global jurisdiction.
Environment
Over the last year, the Environment@Euromoney group has
been focused on reducing the Company’s total carbon footprint.
As part of City Giving Day 2019, the network held an all-natural
room diffuser workshop using fruit, essential oils, herbs and salt as
environmentally friendly alternatives to shop bought products that
use chemicals and single-use plastic.
Environment@Euromoney in London used their paid volunteer days
to help The Sussex Wildlife Trust, collecting litter from Shoreham
Beach as well as their day with Moo Canoes, discussed in more
detail below. Additionally, the network has formed an alliance with
Fruitful Office, an initiative that helps mitigate the effects of global
warming, deforestation and provide sustainable income support to
local communities in Africa by planting a tree in Malawi for every
fruit basket sold. Currently, Euromoney’s cumulative contributions to
date are equivalent to the planting of almost 1,000 trees. Our team
in Bulgaria have made efforts to reduce and more effectively
recycle their office waste. With input from an Non-Governmental
Organisation called Zero Waste Bulgaria, which educates the
public on the ways to reduce waste output, we have changed the
approach we take to recycling in the office.
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
Consolidation approach
Boundary summary
Consistency with the
Financial Statements
Assessment methodology
Intensity ratio
Greenhouse gas emission source
2016
Operational control
All entities and facilities either owned or
under operational control
The only variation is that leased
properties, under operational control,
are included in scope 1 and 2 data, all
scope 3 emissions are off-balance sheet
emissions
Greenhouse Gas Protocol
environmental reporting guidelines
Emissions per £m of revenue
Scope 1: Combustion of fuel and
operation of facilities
Scope 2: Electricity, heat, steam
and cooling purchased for
own use
Total scope 1 and 2*
Scope 3: Business travel and
outsourced activities
2019
2018
(tCO2e) (tCO2e)/
£m
(tCO2e)
(tCO2e)/
£m
300
0.7
700
1.7
1,700
4.2
1,600
3.9
2,000
5,600
5.0
13.9
2,300
5,900
5.6
14.2
Total emissions
7,600
18.9
8,200
19.8
* Statutory carbon reporting disclosures required by Companies Act 2006
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Volunteering with Moo Canoes
Environmental
volunteering
In July, the Environment@Euromoney group organised a
staff volunteering day with Moo Canoes. Moo Canoes run
litter picking paddle sessions in Hackney Wick, to reduce
pollutants in urban water spaces. Euromoney staff collected
15 large refuse sacks worth of metal cans, glass, plastic
bottles and crisp packets from the River Lea, thereby reducing
the inorganic material that pollutes rivers and damages
their natural ecosystems. We are proud of the contribution
Euromoney staff made to the local community and
environment in a busy part of East London.
2020 objectives
We are working our way toward achieving the goals we set for
the company in 2018, which aimed to strike a balance between
fostering the entrepreneurial spirit of Euromoney and the
recognition of different but equally important skills to attract and
retain the right talent.
While the 2018 Code is, rightly, requiring companies to think harder
about their corporate purpose and engagement with a wide
variety of stakeholders, at Euromoney we are fortunate to have a
cohort of staff who do this as part of their daily business. As we go
into 2020, the Board and senior management team will continue
to support their efforts and our own Code compliance in this area
will be the result of the natural interests and energy of our staff,
which we think is the best way of serving our wider stakeholders
and communities.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
37
Strategic Report
Stakeholder engagement in action
Our Capital Markets Day in
July was attended by over 90
investors and analysts.
Sarah Cooke
Head of Investor Relations
Capital Markets Day:
Our CMD
Event in July
As set out in the Chairman’s introduction, with the DMGT
distribution the Group’s shareholder base was broadened,
new shareholders were introduced and there has been
increased daily liquidity in the traded shares. In order to
provide our new shareholders and our other financial
stakeholders the opportunity to meet management and obtain
more information on the business, the Group held a Capital
Markets Day in July. The Capital Markets Day was attended
by over 90 people representing our shareholders, sell-side
analysts and the banking community. Many more also viewed
via webcast both on the day and in the weeks following.
There were presentations on the Investment Research Division
(IRD), Fastmarkets, our Price Reporting Agency, and on
BoardEx, a recent acquisition. Bashar Al-Rehany, CEO of IRD,
and Chris Ciompi, Chief Marketing Officer of IRD, provided
insight into the current challenges facing Asset Management
from MiFID and the shift from active to passive investment as
well as providing detail on the self-help steps the division is
taking to return it to growth.
Jeff Davis, CEO of our Specialist Information division, who
joined the Group following the acquisition of BoardEx and The
Deal in February 2019, gave an overview of BoardEx including
detail on its markets and customers. Jeff explained BoardEx’s
3.0 characteristics and how its growth will accelerate as part
of Euromoney.
Finally, Raju Daswani, CEO of Fastmarkets, explained the
strategy to become a world-leading PRA and how we are
building sustainable long-term growth. Raju provided insight
into their markets, what they do and how they segment
their customers.
38 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
The Townhall series, held twice
a year, provides a platform to
discuss our strategy, performance
and recent staff survey results.
Nigel Martin
Global HR Director
Diversity Week:
Prioritising
diversity globally
Global Women in Telco & Tech 2019
Our Telecoms division hosted leading industry professionals in
the Telecommunications and Technology sector at the Global
Women in Telco & Tech 2019 event, creating an engaging
networking platform that featured diversity agendas among
telecommunication and technology professionals. The event
concluded by recognising female professionals and their
achievements within the field.
Euromoney’s Diversity Networks
Women@Euromoney empowers women in the workplace.
Throughout the year, we have hosted female speakers and
networking events to address gender equality at Euromoney,
with a focus on the gender pay gap, women in business and
women in tech.
The Race, Faith, Diversity & Inclusion Network celebrates the
diverse cultures, religions and experiences within Euromoney,
and this year has celebrated Hispanic Heritage Month and
Black History Month, as well as running Lunch & Learns and a
Latin Dance Workshop.
Wellbeing@Euromoney considers the mental and physical
health of staff. The group holds regular yoga classes,
promotes Euromoney’s volunteering opportunities with
Benefacto and runs workshops addressing work-life balance,
stress management and working as a parent.
Environment@Euromoney engages staff with environmentally
friendly activities both at work and home, with initiatives
including Canoeing for Clean Water 2019, a Shoreham Beach
Clean and Fruitful Office, which plants a tree in Malawi for
every fruit basket purchased.
LGBTQ&A@Euromoney provides visibility and a space for all
members of the LGBTQ&A community, includes straight allies.
The Group promoted Pride Month during June, including
attendance at London and New York Pride, while cross-
collaborating with other networks on the ‘Essential Allies –
Driving Diversity forward’ discussions.
The Townhall Series
Held twice a year, the townhall series provides a platform
to discuss Euromoney’s strategy, financial performance
and global staff survey results. Andrew Rashbass and
Wendy Pallot conduct each meeting and cover financial
performance, strategy and the people agenda. The platform
enables transparency and inclusion among the Group as well
as encouraging staff engagement and participation.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
39
Strategic Report
Risk management
We continue to make improvements
to the Group’s management of risk
Wendy Pallot
Chief Financial Officer
Dear shareholders,
I have chaired the Risk Committee since my appointment as Chief
Financial Officer in August 2018. Over the last 15 months, I have
spent time reviewing the Group’s approach to risk management in
the context of the underlying risk profile of the business.
As CFO I work closely with the Chair and members of the Audit
& Risk Committee to ensure that the Group’s approach to risk
management and overall control environment are appropriate,
and that the Group’s operational risks are mitigated or minimised
to the extent possible. Tim Bratton, General Counsel & Company
Secretary, has day-to-day responsibility for risk, supported by a
small team of risk professionals. In terms of governance, the Risk
Committee has oversight of these areas and is attended by Colin
Day as Chair of the Audit & Risk Committee.
I believe that the Group’s approach to risk management and our
updated and improving control environment are appropriate
to the Group’s strategy, the current macro-environment and the
outlook for our markets. We have made significant improvements
over the course of the last 12 months, including the appointment
of a new and experienced Head of Internal Audit to lead a newly
resourced function, the approval and introduction of a new group-
wide Enterprise Risk Framework and a wide range of policy and
procedural updates. We are well placed to manage risk to support
our strategic objectives.
At Euromoney, the Board believes it is important to give investors
and other stakeholders a detailed explanation of our principal risks
in the context of the strategic position of the Group this year.
As we progress this company towards becoming what we call
a B2B 3.0 information services business, we face increased risks.
Our services are digital, making it easier to expand our global
footprint. The world is facing a wide range of geopolitical risks and
issues. Global M&A remains a core part of our strategy. We are
currently undergoing a strategic review of our Asset Management
businesses. As a business providing digital services we are reliant
on technology in an environment where cyber-risk is heightened
from both an operational and regulatory perspective.
The Board is cognisant of these risks and has closely scrutinised
the principal risks described below, including stress-testing how
effective our risk mitigating controls are. We have not deemed it
necessary to materially change our principal risks this year due to
the continual nature of control enhancements we make to mitigate
and minimise our principal risks. However, our underlying risk
profile has evolved, and will further change in the short-term.
It is important that you, our investors and stakeholders, are aware
of these underlying developments as we deliver on our strategy
to improve returns to shareholders through becoming a stronger
group of 3.0 focused businesses.
Wendy Pallot
Chief Financial Officer
40
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
We continue to prioritise the management and reporting of risk,
which is a fundamental part of our approach to business
Oversight of Risk
The Board maintains overall responsibility for risk management
under its schedule of reserved matters, whilst the Audit &
Risk Committee has delegated responsibility for risk. The Risk
Committee operates as a management committee and focuses
on the day-to-day management of operational risk in the Group’s
divisions and functions, and reports to the Audit & Risk Committee.
The Risk Committee is chaired by the CFO and attended by
the CEO.
Our risk team is well integrated into our governance frameworks
through regular reporting to the Audit & Risk and Risk Committees,
and when appropriate, the Board. The team will be strengthened
by the appointment of a new Director of Risk in December.
Operational Focus
The risk team works closely with the businesses operationally to
integrate risk management tools into commercial decision making
and financial planning. Our new Enterprise Risk Framework will
strengthen these processes across the Group and is expected to
provide a platform for greater consistency in 2020. The majority
of our divisions have appointed risk or compliance specialists to
manage and monitor their specific risk management procedures,
respond to divisional specific risk management needs, and also
co-ordinate Group policies and procedures.
As a Group, we also operate Business Continuity and Disaster
Recovery policies which support our risk processes and mean
we can further mitigate the potential impact of risk events should
unforeseen or unplanned events arise in the future. These have
been reviewed and refreshed during the last 12 months.
Group Risk Profile
Euromoney continues to be exposed to different risks and
uncertainties as a result of (1) the Group’s global footprint; (2) the
variety of its different products, services, markets and customers;
and (3) the Group’s approach to managing its portfolio of
businesses in accordance with the strategic quadrants discussed
in more detail on page 10. On a practical level, this means that the
Group allocates capital to assets more likely to generate a return
in line with strategy, and divests businesses no longer meeting the
3.0 characteristics chosen by the Board. The Group is therefore
frequently involved in transactional activity, which can present risks
that need to be carefully managed.
Risk Priorities for 2020
The risk priorities for the 2020 financial year are to maintain our
commitment to risk management as we execute our planned
strategic projects during the year, to further communicate and
roll-out our Enterprise Risk Framework, and to integrate the newly
appointed Director of Risk. We will also continue to evolve and
improve our policies and procedures and respond to any changes
in our underlying risk profile as necessary in the year.
Risk matrix
t
c
a
p
m
I
9
11
7
2
1
4
5
3
6
8
10
Likelihood
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 A failure to comply with law, regulation or contractual
obligations resulting in financial loss and/or
reputational damage
6 Material disruption to business operations resulting in
financial loss or reputational damage
7
Failure to execute acquisitions or disposals in line
with strategy
8 Uncertain tax liabilities
9 Failure to implement the strategy effectively due to not
attracting or retaining the right staff
10 Business risks arising from the global
geopolitical environment
11 Under-investment in products and technology
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
41
Strategic Report
Risk management continued
Risk Register
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, senior
management and executive directors, including their appetite for
the respective risk (top-down approach).
This year we held a risk review workshop with leaders from across
each of our divisions and relevant corporate teams to discuss our
principal risks and any changes over the preceding 12 months.
Our principal risks this year remain largely unchanged.
We have introduced one new principal risk, highlighting the
risk to the Group of failing to make the investment in products
and technology necessary for the Group to become a B2B 3.0
information services business. We have replaced what we
reported last year as a standalone EU exit risk with a wider risk
relating to the current geopolitical climate we operate in, which
is more appropriate for us as a global business. We have also
merged two previously standalone principal risks into one focusing
on disruption to business operations, whatever the cause.
Our people-related principal risk focuses on attracting and
retaining the right staff, rather than simply key staff, and we have
refined the description of what we consider as ‘M&A risk’.
The Audit & 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 and the governance structure for risk can
be found in the Governance section.
We also use a number of tools to analyse risks and facilitate
discussions at the Board, Group Management Board and
Risk Committee.
The risk matrix on page 41 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 below 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 radar
Established risks
Emerging risks
E
x
t
e
r
n
a
l
1
7
2
10
4
Established/known
6
5
11
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
Emerging/new
4 Information security breach resulting in challenge to
data integrity
3
8
9
Risk change
X
X
This level of risk
is increasing
No change to
the level of risk
Risk movement
5 A failure to comply with law, regulation or contractual
obligations resulting in financial loss and/or
reputational damage
6 Material disruption to business operations resulting in
financial loss or reputational damage
7
Failure to execute acquisitions or disposals in line
with strategy
l
a
n
r
e
t
n
I
Established operations
Emerging operations
8 Uncertain tax liabilities
9 Failure to implement the strategy effectively due to not
attracting or retaining the right staff
10 Business risks arising from the global
geopolitical environment
11 Under-investment in products and technology
42
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
The Group’s principal risks and uncertainties are summarised below
Key factors
Mitigation
Risk appetite
Downturn in key geographic region or market sector (cyclical downturn)
Link to
strategic
pillars
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Risk tolerant
Prior years
(relative position)
2018: Risk tolerant
2017: Risk tolerant
2016: Risk tolerant
Post-mitigation risk trend
Increasing
Description of risk change
Global economic and
geopolitical uncertainty is
continuing
• Concentration of customers in financial
• The Group actively manages cyclical risk
services sector
through its strategic framework
• Global economic and geopolitical risk
• The Group is undertaking a strategic
continues to create uncertainty in the UK
and Europe over the UK’s EU exit, the
increasingly protectionist trade policies of
the US and China and political unrest in
Hong Kong. This puts clients’ budgets under
greater scrutiny
• Market shifts in the asset management
market, including the shift towards passive
portfolio management, pricing transparency
regulation and new technologies continue
to put downward pricing pressure on fees
received by asset managers
• Downward performance in certain
commodity markets results in market
participants having less discretionary spend
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 is carrying out a strategic review
of Asset Management to assess whether
the Group remains the best owner of the
businesses over the medium-term.
review of Asset Management
• 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
• The Group’s strategy is to increasingly
provide services which are embedded
in our customer’s workflow, which
makes them more likely to be non-
discretionary purchases
• Marketing and sales operations in BCA
Research and NDR have been restructured
and increased investment allocated
• The Group operates in many geographical
markets and our businesses are
encouraged to explore new ones
• Diversification exists in sector mix and
particularly so following acquisition
of BoardEx
• Ability to cut some costs temporarily
and quickly
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
43
Strategic Report
Risk management continued
Key factors
Mitigation
Risk appetite
Product and market transformation/disruption (structural change)
Link to
strategic
pillars
Risk tolerant
Prior years
(relative position)
2018: Risk tolerant
2017: Risk tolerant
2016: Risk tolerant
Post-mitigation risk trend
Unchanged
Description of risk change
As an entrepreneurial
business, the Group is
experienced at managing
this risk and our larger
divisions are starting to
invest more in product and
client-facing technology.
• Competition from existing competitors, new
• Strategy designed to appraise and
disruptive players and new entrants
• Certain competitors can be less disciplined
in capital allocation when investing
in new products/technology than a
public company
• 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
• Inability to make acquisitions in line with the
Group strategy
Board’s view
Controls are in place, and scaling individual
businesses helps, but exposure to this risk will
remain moderate.
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
• Streamlining of operations in our
Investment Research businesses and
improved sales co-ordination in our
Institutional Investor division results
in a more joined-up approach to
understanding our customers
• Creation of larger divisions such as
Fastmarkets and Financial & Professional
Services provides those businesses with
scale and better ROI outcomes
• The Group has over 350 staff in its Chennai
and Sofia offices allowing it to access and
invest in skilled staff
Exposure to US dollar exchange rate
• Approximately three-quarters 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 would reduce profits
and dividends
• The Group also undertakes transactions
in many other currencies, although none
currently pose a significant risk to the results
• The UK’s exit from the EU may result in
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
in the event of the UK’s exit from the EU is
expected to continue for some time.
• US dollar forward contracts are used
to hedge up to 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 & Treasury Committee
• Given heightened volatility, the Group
hedging strategy is under frequent review
and includes regular impact analysis of
various exchange rate scenarios together
with internal risk mitigation such as natural
hedging of non-sterling earnings
Risk tolerant
Prior years
(relative position)
2018: Risk tolerant
2017: Risk tolerant
2016: 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.
44
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Link to
strategic
pillars
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Key factors
Mitigation
Risk appetite
Information security breach resulting in challenge to data integrity
Risk tolerant
Prior years
(relative position)
2018: Risk averse
2017: Risk averse
2016: 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.
• As an information services business,
the integrity of the data embedded in
our products is critical in terms of trust
and reputation
• The Group is a data business and creates
high volumes of proprietary, commercial
data, while also processing B2B customer
personal data and employee personal data
• Increasing number of cyber-attacks affecting
organisations globally
• 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
• Privacy regulations (eg GDPR in Europe,
Californian Consumer Privacy Act in
the US) are increasingly stringent and
regulators vigilant in relation to data
breaches, increasing the risk of a breach
and associated fine, civil proceedings or
reputational damage
• Technological innovations in mobile
working, cloud-based technologies and
social media introduce new information
security risks
• Threats such as ransomware and crypto
mining 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.
While controls are in place to detect and
prevent attacks, attacks are inevitable.
Therefore, controls must extend to effective
attack identification management as well
as mitigating impact. Controls 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.
• Chief Information Security Officer
appointed in November 2018
• Increased the size of the Information
Security team
• New Information Security strategy
approved and in process of rolling out
• Investment in ‘BISO programme’ (Business
Information Security Officers) for non-
security specialists who will attain
accreditation and know-how, leading
to increased awareness and expertise
in businesses
• Security governance provided by Risk
Committee and Information Security
Steering Group
• Approved information security standards
and policies which are reviewed on a
regular basis
• Continuing education and awareness
programmes for all staff
• 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
• Robust IT security due diligence framework
for acquisitions
• Access to key systems and data is
restricted, monitored and logged with
auditable data trails in place and
project underway for bolstered identity
access management
• Comprehensive backups for IT
infrastructure, systems and business data
• Continued investment in 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
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
45
Strategic Report
Risk management continued
Link to
strategic
pillars
Key factors
Mitigation
Risk appetite
A failure to comply with law, regulation or contractual obligations resulting in
financial loss and/or reputational damage
• The Group operates in many jurisdictions
• We invest in a central Legal, Risk &
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 its
customers may choose to rely on when
executing transactions
• Risk or reputational damage can arise from
inappropriate reliance on third party data,
errors in underlying data or content, failures
of data integrity and failure to educate
customers on appropriate usage of data
• A number of our businesses operate in an
environment where privacy regulations are
increasingly stringent
• The Group relies on third parties, usually in
non-core markets, to represent the Group
and the Group may be legally responsible
for their failure to comply with law
or regulation
• The Group conducts business globally in a
geopolitical environment in which we see
‘sanctions creep’ thereby increasing the risk
of unintentionally being in technical breach
of sanctions
• 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 the
scrutiny and remit of different regulators
• A failure to comply with regulatory
Secretariat function and employ specialists
across a range of areas to help our
businesses manage these risks
• Senior management at both a Group and
divisional level are collectively responsible
for managing risk
• Our divisions employ compliance and/or
risk specialists where required
• Event Risk Framework in place to facilitate
management of operational risk in respect
of events
• Many key company policies updated and
made available on Intranet, including a
range of different awareness initiatives
relating to anti-bribery, modern slavery,
sanctions and data privacy
• Processes and methodologies for assessing
commodity prices and calculating
benchmarks and indices are clearly
defined and documented
• 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
• Creation of online geopolitical risk
assessment tool for use by businesses
• Specialist training in media law issues
provided to relevant staff
• Company-wide Speak Up policy in place
and awareness initiative undertaken
• Comprehensive legal disclaimers in place
in contracts/within products
frameworks would result in reputational
damage, and potential regulatory censure
• Access to appropriate professional
advisers where required
• Professional indemnity insurance
Risk averse
Prior years
(relative position)
2018: Risk averse
2017: Risk averse
2016: Risk averse
Post-mitigation risk trend
Unchanged
Description of risk change
Large global
organisations face
increased regulatory and
compliance risks due
to their global footprint.
In addition, 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.
The Group is in the fourth
year of its strategy moving
towards becoming a B2B
3.0 information services
business therefore there is
greater awareness of how
to manage the associated
risks. The Board believes
that the risk profile is
unchanged.
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.
46
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Key factors
Mitigation
Risk appetite
Link to
strategic
pillars
Material disruption to business operations resulting in financial loss or
reputational damage
NB: We previously reported this risk as two separate principal risks (Disruption to operations from a business continuity failure and
Catastrophic or high impact incident affecting key events of wider business)
• The Group operates in regions with
higher risk of natural hazards, works with
suppliers based in higher risk areas and
runs large events exposed to risks such
as natural hazards, travel disruption and
security incidents
• Disruption affects customers as well as staff
and revenue, and can also adversely impact
brand reputation
• Governance oversight of risk sits with the
Audit & Risk Committee and a separate
management Risk Committee
• The Risk Committee focuses on the
management of operational risk and all
divisions and key functions are represented
• The Group Risk team carries out a detailed
assessment of divisional risk registers at
least twice yearly
Risk averse
Prior years
(relative position)
2018: Risk averse
2017: Risk averse
2016: Risk averse
Post-mitigation risk trend
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
• Prolonged interruption to business travel
would harm event revenues and disrupt
management and sales operations
• Significant reliance on third-party
technology including hosting services
• A significant incident affecting one or
more of the Group’s key offices could lead
to disruption to Group operations and
reputational damage
• Information security breach impacting wider
business operations
• Political or civil unrest in a country or
region may discourage customers from
participating or attending
Board’s view
Business disruption is an unavoidable risk
but can be mitigated if business continuity
plans are well developed and managed.
The Group provides staff with access to
training, services and other resources to
keep staff safe when travelling. There has
been no material disruption to business
operations during the year. However, the
Group recognises a need to ensure that
each of its divisions and functions is equally
consistent and robust in relation to its
business continuity planning, which will be
of increased focus in 2020.
• A new Enterprise Risk Framework has been
Unchanged
approved for roll-out
• Crisis management and business continuity
framework requires all businesses to
plan for high impact events and conduct
regular testing of plans
• Specialist security and medical assistance
services engaged to support all staff
working away from the office
• Security and risk management
training available for event staff and
business travellers
• With sufficient notice, events can be
moved to non-affected regions
• Cancellation insurance for the Group’s
largest events
• Substantial central and business group
investment in cloud-based platforms
and software
• Risk assessments for new suppliers and
technologies consider operational and
financial resilience
• Close monitoring of situations which
may disrupt events and appropriate
communication with customers
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. It also recognises
that global businesses
operating in different
countries across the
world with staff regularly
travelling are more
likely to experience
business disruption
due to ‘force majeure’
type issues. We have a
reasonably high degree
of tolerance to business
risk in operating a global
business, save in respect
of the safety and security
of our staff and customers
where the opposite is true.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
47
Strategic Report
Risk management continued
Key factors
Mitigation
Risk appetite
Link to
strategic
pillars
Failure to execute acquisitions or disposals in line with strategy
• Active portfolio management means
• M&A strategy and execution is a regular
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, including
transitioning the Group to becoming a B2B
3.0 information services business
• Increasingly high multiples and competitive
auction processes for high quality assets can
favour private equity buyers
topic of Board focus
• Investment Committee enables quick
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
• Continued investment in Corporate
Development team
• Larger transactions contingent on obtaining
• Emphasis on and investment in carrying
shareholder support
• Making multiple smaller acquisitions in
lieu of material acquisitions increases
execution risk
• Failure to integrate as intended may mean
an acquired business does not generate the
expected returns
out external, independent commercial due
diligence at an early stage
• Larger divisions facilitate effective
integration and creation of synergies
• Professional advisors well known to the
Company facilitate ability to execute
quickly and effectively
• Risk of impairment loss if an acquired
business does not generate the
expected returns
• Ongoing dialogue with investors regarding
the strategy, including our approach to
M&A
Risk neutral
Prior years
(relative position)
2018: Risk neutral
2017: Risk neutral
2016: 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.
• 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. The Board is mindful
of the importance of ongoing investor
dialogue in respect of the M&A strategy.
48 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Link to
strategic
pillars
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Key factors
Mitigation
Risk appetite
Uncertain tax liabilities
• The Group operates within many
increasingly complex tax jurisdictions
• Changes in legislation and interpretation
• Identification and disclosure of historic tax
issues relating to VAT and employment tax
Board’s view
The Company has identified two tax
exposures: (i) under-payments of PAYE and
NI to HMRC in respect of contractors; and
(ii) VAT arising on supplies made between
entities in the Group. The quantum of these
exposures, including the impact to 2019, is
£19.2m.
Over the last 24 months, the Company has
invested in developing an experienced
Tax & Treasury team and continues to
enhance controls to minimise the likelihood
of any similar prior year adjustments from
reoccurring.
The Group cannot entirely eliminate the risk
of tax liabilities due to the complexity of the
Group’s structure, the number of jurisdictions
in which it operates and an ever-changing
tax environment. However, the Board is
confident that the investment made in these
areas significantly mitigate this risk.
• Tax strategy takes a low risk and
responsible approach to management
of taxes
• Appropriate care taken to protect the
Group’s reputation and have open
and constructive relationships with
fiscal authorities
Risk averse
Prior years
(relative position)
2018: Risk averse
2017: Risk averse
2016: Risk averse
• Audit & Risk Committee and Tax & Treasury
Post-mitigation risk trend
Committee oversight
• Fully resourced tax function, including
appointment of a new Global Head of
Indirect Tax in early 2020
• Global footprint of Group has reduced in
last 24 months through disposals
• Internal Audit team leading roll-out of
tax ‘self-assessment’ questionnaires to
ensure regular and detailed review of
potential exposures
• New framework and policies in place for
engagement of contractors
• Experienced professional advisors
engaged in a range of areas
• Making financial provisions
where appropriate
Increasing
Description of risk change
The Group is experienced
at managing the tax
risks arising from its
international business
portfolio. However, the
Group has a complex
structure, large global
footprint and operates
in an ever-changing tax
environment.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
49
Strategic Report
Risk management continued
Key factors
Mitigation
Risk appetite
Failure to implement the strategy effectively due to failure to attract or retain staff
Link to
strategic
pillars
• The strategy is embedded across the Group.
Its implementation is partially dependent on
the ability to attract and retain staff
• As the Group continues to move towards
becoming a B2B 3.0 information services
business, the skills required within the Group
will change
• 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
• Competitors able to poach key talent both
provides them with a competitive advantage
and means institutional knowledge is not
built-up within our businesses
• Lack of in-house recruitment capability slows
down recruitment processes
• Failure to address specific feedback from
staff, including via staff survey and other
forums, may lead to a lack of engagement
• The Group needs to provide an employment
environment which appeals to emerging
talent as a place they want to work
Board’s view
The Board recognises the importance
of attracting and retaining the right staff
to ensure effective delivery of Group,
segmental and divisional strategies. A range
of approaches are used to manage this
risk reasonably effectively but the Board is
mindful that the Group will be constantly
competing for talent and further work is
required to improve the perception of the
Group’s ‘employer brand’.
• Salary benchmarking undertaken and
implemented for 2019 pay review with
a particular focus on lower paid staff.
Further salary benchmarking and
implementation will occur in 2020
• Senior Management Group conference
focused on topic of employee engagement
• Remuneration Committee oversight of
Group Management Board rewards
• Continued investment in training such
as Leadership 3.0 and Management
3.0 programmes
• Broadening of Early Career
Academy workshops facilitated by
senior management
• Launch of secondment programmes,
including intra-division secondments and
to the CEO’s office
• Employee forum launched, allowing for
improved employee engagement
• New recruitment policy, process and
training rolled out in 2019
• Maintaining the Group’s reputation for an
entrepreneurial approach, making it an
attractive place to work
• Sufficient businesses within each segment
in the Group to mitigate the impact
of ‘business-as-usual’ departures of
critical 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
Risk averse
Prior years
(relative position)
2018: Risk neutral
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. We have made
significant improvements
to staff engagement,
particularly in relation to
the Group’s culture and
training and development
opportunities. The Group
will continue to respond
to common themes raised
by staff in the annual
survey or in other forums
in order to further improve
employee engagement.
50
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Link to
strategic
pillars
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Key factors
Mitigation
Risk appetite
Business risks arising from the global geopolitical environment
Risk neutral
Prior years
(relative position)
This is a new risk
Post-mitigation risk trend
Increasing
Description of risk change
Geopolitical factors
are creating increasing
instability at a macro-
level, therefore this risk is
increasing.
• The US-China trade war creates
trading tensions
• US foreign policy approach to sanctions
increases risk of carrying out business in
certain countries or with certain companies
• Political and civil unrest in Hong Kong
creates uncertainty for the Group’s
operations in Hong Kong, including staff,
customers and the operation of events
• Mistreatment of journalists in certain
countries may impact journalists’ willingness
to travel
• The date and terms of the UK’s departure
from the European Union continues to
be uncertain therefore the potential
consequences are unknown
• Pending UK election creates further
uncertainty both in relation to Brexit and the
future business landscape for UK PLC
• 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 Brexit risk in particular
continues to increase for all UK companies.
The Company continues to carry out
contingency planning in a range of areas
in light of likely continued uncertainty in
the UK market during 2020. The Group’s
global footprint means that the impact
of geopolitical factors will always be a
constant macro risk, but at the same time the
size of the footprint decreases reliance on
particular countries or regions and therefore
mitigates risk.
• The Group’s global footprint means it is
not overly reliant on any single country or
region for its revenue
• The Group’s Brexit Committee has met
regularly during the year to monitor
potential impact and the Group’s stated
of preparedness
• Group management has delegated
certain decision-making to local senior
management to optimise the Group’s
management of the disruption in Hong
Kong, appropriate contingency measures
have been taken
• Trade sanctions guidance available to
Group businesses and access to internal
and external expertise where required
• Contingency plans seek to address the
key risks and leverage opportunities
we identify
• Assessments to date report no material
adverse Brexit impact on existing staff
due to small number of EU nationals in
our workforce and small number of UK
nationals working in the EU outside of
the UK
• 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
• Potential travel disruption can be mitigated
by using international locations and
planning longer lead-time for travel
• We use geographically diverse
technology suppliers
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
51
Strategic Report
Risk management continued
Key factors
Mitigation
Risk appetite
Under-investment in products and technology
Link to
strategic
pillars
• Under-investment in products and
technology will lengthen the Group’s
transition to becoming a B2B 3.0 information
services business and provide our
competitors with an advantage
• The relative size of the Company
means that significant investment can
have a material impact on the Group’s
financial performance
• The Group may be a less attractive
employer to technologists and product
specialists than other brands
Board’s view
The Board will continue to balance short-
term and long-term issues for the benefit
of shareholders, customers and other
stakeholders. The Group will continue
to invest capital in projects such as the
Fastmarkets platform where the short-term
cost impact is outweighed by the long-term
development of the Group’s products and
technology.
• Division of responsibilities between Central
Technology (back-end infrastructure) and
Divisions (client-facing UI etc.) provides
clarity for technology and product teams
on their remit
• Product capability and, in particular,
workflow technology are an important
focus when considering acquisitions
• Leveraging expertise of our staff
base in Chennai, which includes
product specialists
• Hiring product specialists at both senior
management and product owner level
• Realignment of divisional management
compensation to influence behaviours
• Success of divisional investment such as
Fastmarkets platform demonstrates ROI to
other divisions and businesses
• Management will allocate capital for
product/technology investment where
there is a clear business case for doing so
• Our strategic framework enables the
Group to allocate capital where it will be
used most effectively
• Increased scale of larger divisions reduces
impact of specific investments
Risk averse
Prior years
(relative position)
This is a new risk
Post-mitigation risk trend
Increasing
Description of risk change
This is a newly identified
risk for the Group’s
acceleration to becoming
a B2B 3.0 information
services business and
therefore is increasing.
52
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
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
and customer behaviour
• 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
• Significant reversal of the foreign exchange movement linked
to the conclusion of the EU exit on 31 January 2020, 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 Group’s net
cash position provides a strong foundation on which to model this
extreme downside scenario. This extreme scenario assumes a fall
in revenue versus the plan of 8% in 2020 and 14% in both 2021
and 2022. The scenario demonstrates sufficient resilience to these
adverse events mainly due to the Group’s robust capital position
and strong cash generative nature, before management taking
any mitigating actions to reduce the impact on the financial results.
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
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 2019 and signed on its behalf by
Andrew Rashbass
Chief Executive Officer
21 November 2019
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
53
Governance
Board of Directors
Following changes in 2019, the composition of the Board is now fully
compliant with the 2018 version of the Corporate Governance Code
Leslie Van de Walle
N R
Chairman of the Board
Appointed to the Board:
March 2019
Andrew Rashbass
Chief Executive Officer
Appointed to the Board:
October 2015
Deputy Chairman and Chair of Nomination Committee at Crest
Nicholson Holdings plc, SID and Chair of the Remuneration
Committee of DCC plc and a Non-Executive Director of HSBC UK
Bank plc. Previously, Chairman of Robert Walters plc and SIG plc.
In his executive career, Leslie was Group CEO at Rexam plc and
before that at United Biscuits plc. Earlier in his career, Leslie held
a variety of senior roles, including Executive Vice President of Retail
for Oil Products and Head of Oil Products at Shell Europe.
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
Wendy Pallot joined Euromoney in 2018. Wendy has 17 years’
experience working as Group Finance Director in UK main market
listed companies in the media sector. Between 2011 and 2018,
she 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.
Key
A Member of the Audit & Risk Committee
N Member of the Nominations Committee
R Member of the Remuneration Committee
Committee Chair
54
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Jan Babiak
A N
Senior Independent Director
Appointed to the Board:
December 2017
Imogen Joss
N R
Independent Non-Executive Director
Appointed to the Board:
November 2017
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 (ICAEW), where she served as a Council
Member from 2011 to 2019 when she termed out, while remaining
an active member of selected ICAEW working groups. Jan is also
qualified as a Certified Information Security Manager and Certified
Information System Auditor.
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.
G
o
v
e
r
n
a
n
c
e
Colin Day
A N
Tim Pennington
A R
Independent Non-Executive Director
Independent Non-Executive Director
Appointed to the Board:
March 2018
Mr Pennington joined the Board
with effect from 1 September 2019
Colin Day has significant experience in senior operational
and financial roles gained across a variety of sectors and was
appointed as Chairman of Premier Foods plc in 2019. 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 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.
Tim Pennington is Chief Financial Officer of Millicom International
Cellular, a significant international telecommunications
company listed on the Nasdaq stock exchanges in both New
York and Stockholm. Tim was previously Group Finance Director
and a Director of FTSE 100 groups Cable & Wireless plc and,
following its demerger from that company, Cable & Wireless
Communications plc.
Tim has a wide range of prior executive experience, including
corporate finance experience, firstly as Director in the specialised
financing department at Samuel Montagu & Co. Limited, and
then as Managing Director of HSBC Investment Bank within its
Corporate Finance and Advisory Department. Tim has a Bachelor
of Arts (Honours) degree in Economics and Social Studies from the
University of Manchester.
Tristan Hillgarth
A N
Lorna Tilbian
R
Independent Non-Executive Director
Independent Non-Executive Director
Appointed to the Board:
December 2012
Appointed to the Board:
January 2018
Tristan Hillgarth has over 30 years of experience in asset
management including eight years as a Director of Jupiter Asset
Management and previously 14 years at Invesco where he held
several senior positions including CEO of Invesco’s UK and
European businesses. He is a Non-Executive Director of JPMorgan
Global Growth & Income plc and a member of the Leverhulme
Investment Committee. He qualified as a Chartered Accountant
with Arthur Andersen.
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 10 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.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
55
Governance
Corporate Governance Report
Strong governance, clear policies
and procedures, and a positive,
entrepreneurial culture supported
by a commitment to diversity are
all vitally important to your Board,
myself as Chairman and the
executive team.
Leslie Van de Walle
Chairman
Dear Shareholders,
Last year, the Company made significant progress improving its
approach to governance and the Board confirmed its commitment
to continuing that work in the 2018 Annual Report and Accounts.
We are now fully compliant in all respects with the 2016 Corporate
Governance Code (2016 Code). This section of the Report refers
to the steps taken to achieve this as well as providing an overview
of our governance arrangements at Euromoney since we became
a fully independent FTSE 250 group in April of this year. We also
report on the key areas of focus for the Board and its Committees
during the last 12 months.
Let me take this opportunity to emphasise that strong governance,
clear policies and procedures, and a positive, entrepreneurial
culture supported by a commitment to diversity are all vitally
important to your Board, myself as Chairman and the executive
team. We have made considerable improvements to our
governance frameworks in the financial year, as this Report
explains, which help to underpin our financial position, strategy
and business model, and of course our progressive culture in our
many offices across the globe.
As I mentioned in my introduction to the Annual Report on
page 4, I was appointed as Chairman with effect from 1 March.
I met the criteria for independence required by the Corporate
Governance Code on appointment, fulfilling an important
compliance requirement.
I then took time following my appointment to gauge the breadth of
skills and experience among existing Board members, and found
a group of strong ability and experience, and sound judgement
already providing a constructive challenge to the executive team.
We continue to build on that foundation.
Events in April, which determined that DMGT would distribute
their significant 49% shareholding in Euromoney, meant that we
were able to take the necessary steps as an independent group to
better align our governance arrangements with the expectations
of the Code and market practice. The balance of independent
Non-Executive Directors appointed to the Board, the Directors’
individual terms of appointment, the composition of each of the
Board’s Audit & Risk, Nominations and Remuneration Committees,
56
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
and dialogue with key institutional investors have all been
addressed and are now compliant.
The Board took the further decision in July to appoint Tim
Pennington as an additional Non-Executive Director, and Tim
joined the Board with effect from 1 September 2019. Tim is already
contributing strongly to the Board and the Audit & Risk Committee.
Tim also joined the Remuneration Committee with effect from
1 October. Tim’s appointment further refreshed the Board’s
composition following full independence in April. It also allows us
to plan effectively for when Tristan Hillgarth steps down from the
Board at the 2020 AGM in January, following eight years’ service.
Following a detailed review, we were also very pleased that
Jan Babiak agreed to become Senior Independent Director
in September, and Jan and I will work more closely in 2020
as the Board monitors progress against our agreed strategy.
This marks another important achievement on our path to full
Code compliance.
More practically, the Board has reviewed, approved or updated
a considerable number of its governance and Group policies to
strengthen its frameworks, and we have been kept informed of
progress against the 2018 Corporate Governance Code (2018
Code). I also conducted a robust evaluation of the Board’s
performance over the summer.
Now that we are a fully independent FTSE 250 company we
have the governance arrangements to further support our
strategic ambitions.
Yours faithfully
Leslie Van de Walle
Chairman
21 November 2019
Approach to Corporate Governance
Code compliance
Leadership: Board composition and
individual roles
This Corporate Governance Report explains the Board’s approach
to governance in the context of the main principles of the 2018 UK
Corporate Governance Code (the ‘Code’). We have integrated the
key themes of the 2018 Corporate Governance Code as a structure
for our review on the basis that this formally applies to the Group
from 1 October this year onwards.
The Code’s key themes are:
• Board Leadership and Company Purpose are on pages 58 to 61.
• Culture is discussed on page 61.
• Composition, Succession and Evaluation: The Report of the
Nominations Committee is set out on pages 70 and 71.
• Audit, Risk and Internal Control: The report of the Audit and Risk
Committee is set out on pages 64 to 69.
• Shareholder Engagement and understanding investor views are
specifically discussed on page 28.
• Remuneration is covered in the Directors’ Remuneration Report
Following changes during the year the Board comprises a Non-
Executive Chairman (who was independent on appointment), two
Executive Directors, and six additional independent Non-Executive
Directors. Analysis of the composition of the Board can be found on
page 58.
There are clear divisions of responsibility within the Board such that
no one individual has unfettered powers of decision. The Board
approved a revised statement on the division of responsibilities
between the Chairman and the Chief Executive Officer during
the year. The newly appointed Chairman, Leslie Van de Walle,
and the Chief Executive Officer, Andrew Rashbass, have quickly
developed a strong working relationship and rapport.
There are also established procedures for all Directors to take
independent professional advice in the furtherance of their duties.
They also have access to the advice and services of the General
Counsel & Company Secretary and the Deputy Company Secretary
who joined during the year.
A summary of changes to the Board during the year and members’
key responsibilities are set out in the table below:
G
o
v
e
r
n
a
n
c
e
Andrew Rashbass
Wendy Pallot
Responsibilities
Strategy and Group performance
Group financial, operational performance and risk management
on pages 72 to 91.
Executive Directors
Chief Executive Officer
Chief Financial Officer
Chairman
Chairman (from 1 March 2019)
Leslie Van de Walle
Board governance, performance, shareholder engagement
Acting Chairman
(until 28 February 2019)
Non-Executive Directors
Independent Non-
Executive Directors
David Pritchard
Jan Babiak
Colin Day
Tristan Hillgarth
Imogen Joss
Tim Pennington
Lorna Tilbian
Board governance, performance, shareholder engagement and
leading the search for a new Chairman
Bring an external perspective,
independence and objectivity
to the Board’s deliberations and
decision-making
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
Approve material M&A transactions
in line with strategy
Leadership: Attendance
Board
The Board meets at least six times each year and there is frequent
contact between meetings. At least once a year, the Chairman
meets the Non-Executive Directors without the Executive Directors
being present. The Non-Executive Directors, led by the Senior
Independent Director, meet either together or individually, and
in both cases without the Chairman present, at least annually to
appraise the Chairman’s performance. They also meet 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 Group and its performance. During the year,
the Board met with senior management from across the Group
every other month in line with the Board cycle at informal drop-
in lunches.
The number of Board meetings and the attendance by each
Director during the year was as follows, and similar attendance
tables can be found in each of the respective Committee reports
which follow:
Leslie Van de Walle
(NB attended one of seven meetings as a guest as Chairman designate)
Andrew Rashbass
Wendy Pallot
Jan Babiak
Colin Day
Tristan Hillgarth
Imogen Joss
Tim Pennington
(NB attended one of two meetings as guest as NED designate)
Lorna Tilbian
*David Pritchard
*Andrew Ballingal
*Kevin Beatty
*Tim Collier
7/7
9/9
9/9
9/9
9/9
9/9
9/9
2/2
9/9
3/3
3/3
2/4
3/4
*
Stepped down during the year. Whilst appointed, Kevin Beatty and Tim Collier also
recused themselves from Board meetings where the DMGT distribution was considered.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
57
Governance
Corporate Governance Report continued
>
Board
>
Audit & Risk 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
external communications, and the management of risk across
the Group.
Scrutinises the work of the external and internal audit teams and
any significant accounting judgements made by management.
The Committee reports on its operations to the Board following
each meeting to enable the Directors to determine the overall
effectiveness of the Group’s internal controls system.
Page 64
Nominations Committee
Meets at least three times a year – chaired by Leslie Van
de Walle
Reviews the structure, size and composition of the Board
and its Committees, and makes recommendations to the
Board accordingly.
Considers succession planning for Directors and other senior
executives, keeping under review the leadership needs of
the Group.
Monitors Board-level and wider diversity across the Group.
Ensures that each Director is subject to a continuing
commitment and effectiveness review annually.
Monitors the results of the Board performance evaluation process.
Page 70
Remuneration Committee
Meets at least three times a year – chaired by Imogen Joss
Responsible for determining the contractual terms, remuneration
and other benefits of Executive Directors, including performance-
related incentives and pension entitlements.
Reviews and approves all remuneration related policies, ensuring
that they are clear, simple, mitigate risk and are predictable,
proportionate and aligned to culture.
Recommends and monitors the overall remuneration for
senior management.
Considers workforce remuneration and alignment of incentives
and rewards with culture.
Oversees Group-wide share incentive schemes.
Page 72
Leadership and effectiveness
Role of the Board and its Committees
Board
Meets at least every two months
and more frequently when required –
chaired by Leslie Van de Walle
Remit: Approve and monitor strategy;
identify, evaluate and manage material
risks through an effective and improving
controls environment; review financial
and commercial performance; ensure
adequate funding; review all material
corporate transactions including
potential acquisitions; approve the
Group’s purpose, culture and values;
and approve key shareholder and
stakeholder communications.
Matters reserved to the Board
and delegated authorities:
The Board maintains a schedule of
matters reserved for its approval, to
ensure it maintains oversight and control
of all material developments likely to
have an impact on the performance
or standing of the Group. The General
Counsel & Company Secretary ensures that
appropriate information is communicated
to the Board in a timely manner to enable
it to meet its responsibilities. The Board has
delegated responsibility for aspects of its
remit to standing Board Committees, each
of which operates within defined terms of
reference as we elaborate on hereafter.
58 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Management Committees
Group Management Board
Meets monthly (10 per annum) – chaired by Andrew Rashbass
A management board that operates under the direction and
authority of the CEO and comprises the Group’s divisional and
functional leaders.
Assists the CEO and CFO in implementing strategy; monitoring
financial performance of our segments; developing the Group’s
approach to managing employees and to culture and diversity;
taking shared responsibility for the Group’s approach to corporate
governance; and ensuring that the Group’s best-of-both worlds
operating model works effectively.
Tax & Treasury Committee
Meets twice annually – chaired by Wendy Pallot
A management committee responsible for recommending policy
changes to the Audit & 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
and policies.
Its members are the CEO, CFO, Deputy CFO, General Counsel
& Company Secretary and Global Head of Tax, Treasury and
Investor Relations.
All Non-Executive Directors of the Company are invited to attend
the meetings.
Risk Committee
Meets four times a year – chaired by Wendy Pallot
Oversees the Group’s strategic and operational 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 Audit & Risk
Committee to support the Directors in their determination of the
overall effectiveness of the Group’s risk management framework
and control environment.
Its members are the CEO, CFO, Chief Information Officer, Chief
Information Security Officer, General Counsel & Company Secretary,
Group HR Director, Deputy CFO, Global Head of Tax, Treasury and
Investor Relations, Head of Internal Audit, Head of Risk as well as
Chief Operating Officers from each of the divisions.
All Non-Executive Directors of the Company are invited to attend
the meetings.
G
o
v
e
r
n
a
n
c
e
Investment Committee
Meets whenever required – chaired by Leslie Van de Walle
Primary purpose is to review requests for approval by the Company
to make certain financial commitments which are between £15m
and £50m in value. Where deemed appropriate the Committee
will also review with a view to making a recommendation to the
Board in respect of any M&A activity proposed to be entered into
by the Company.
Its members are the Chairman, CEO, CFO, Chair of the Audit
& Risk Committee and Lorna Tilbian in her capacity as a Non-
Executive Director.
All other Non-Executive Directors are invited to attend meetings
by the Committee Chairman when appropriate.
>
The discussions of each of the Board Committees are summarised and reported to the Board
following each Committee meeting, together with recommendations on matters reserved
for Board decisions.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
59
Governance
Corporate Governance Report continued
Leadership: Independence
Leadership: Effectiveness
The Board has determined that each of the Directors appointed
as at 30 September 2019, and all those Directors who will be
proposed for re-election at the Annual General Meeting in
January 2020, are independent within the meaning of the Code.
They were each independent throughout the financial year or
from the date of their appointment. Tristan Hillgarth, will not be
seeking re-election at the 2020 AGM having served on the Board
for eight years.
During the year, and until the distribution of DMGT’s shareholding
in April, Kevin Beatty and Tim Collier were appointed as Non-
Executive Directors of the Company. Tim and Kevin are also
Executive Directors of DMGT, which was at that time a significant
shareholder of the Company. The Board did not believe that
these Non-Executive Directors were able to exert undue influence
on decisions taken by the Board, and did not 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 meant they were not considered to be
independent for the duration of their appointment.
David Pritchard was also not deemed independent when he
agreed to accept the role of Acting Chairman in 2018, having been
originally appointed to the Board in December 2008. The Board
was satisfied that David, as Senior Independent Director, was the
most appropriate Board member to lead the search for a new
Chairman and as such assume the role of Acting Chairman.
Following the appointment of the Chairman, the Board
completed a detailed, internally facilitated evaluation in August.
The evaluation was structured as thematic questionnaires covering
the performance of the Board and each of its formal committees,
together with an appraisal of the Chairman’s performance since
appointment. The key themes covered in each were strategy,
governance, support and key events in the year. The Chairman
personally inputted into the process, and used the outputs from
the questionnaires to inform one-to-one discussions with each
individual Board member.
No material concerns were identified through the evaluation,
and the majority of themes scored strongly. An action plan was
agreed by the Board at the November meeting reflecting areas for
improvement based on relative scoring:
Board: Maintaining effective oversight of risk management;
strengthening understanding of performance in context of peer
group; Board’s understanding of specific products, markets and
outlook; maintaining operational resources to deliver strategy;
and refreshing the approach to Board level training and
development plans.
Audit & Risk: Approach to Internal Audit in 2020, which has been
subsequently addressed by the appointment of a new Head of
Internal Audit, and the outcome of the contractor review discussed
by Wendy Pallot in her Chief Financial Officer’s review.
Board annual timeline
October 2018
• CFO Review of Results and Key Themes
• 2019 Budget Approval
• Finance Transformation Update
• Corporate Development Update
(including M&A)
• GMB Succession Planning Update
• Chair Appointment Update
• Board Committee Updates
November 2018
• Approval of Full Year Results
• Risk Management and Principal
Risk Disclosures
• Audit & Risk Committee Review Update
• Annual Report: Key Disclosures & Fair,
Balanced and Understandable Review
• Final Dividend Recommendation
• Fastmarkets Divisional Presentation
• Corporate Development Update
(including M&A)
• Board Committee Updates
January 2019
• CFO Review of Results and Key Themes
• Q1 Trading Update
• BoardEx & The Deal presentation
• Corporate Development Update
(including M&A)
• People & Reward Update
January 2019 continued
• 2018 Corporate Governance Code
June 2019
• Two day Board Offsite Strategy Meeting
Compliance Analysis
• Updated Share Dealing Code
• Appointment of Numis as
additional broker
• AGM Update
March 2019
• DMGT Distribution: Board Review
• CEO Report
• CFO Report
• Sales Academy Presentation
• Fastmarkets Divisional
Integration Presentation
• Corporate Development Update
(including M&A)
• Company Secretary’s Report
(Disclosure Policy, Modern Slavery Act,
Sharesave Invitation)
• Board Committee Updates
May 2019
• CEO Report
July 2019
• CEO Report
• CFO Report (including Trading Update)
• Institutional Investor
Divisional Presentation
• Post Strategy Meeting Update
• Corporate Development Update
(including M&A)
• Proposed appointment of Non-
Executive Director
• Board Committee Updates
September 2019
• CEO Report
• CFO Report (Results Update, Future
Dividend Strategy Analysis)
• 2020 Budget Approval
• Strategic Review of Asset Management
• Financial & Professional Services
Divisional Presentation
• Corporate Development Update
• CFO Report (including Half Year Results)
(including M&A)
• Corporate Development (including M&A)
• Company Secretary’s Report
• Investment Research: Sales &
• Board Committee Updates
Marketing Update
• Company Secretary’s Report
• Board Committee Updates
60
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Nominations: Committee composition, which has been
subsequently addressed by additional appointments to the
Committee; focus on board succession planning, which is now
planned to be addressed by the Committee following recent
appointments; clarity and appropriateness of the management
structure, which has also been addressed by changes to
our divisions discussed throughout this report; and talent
management processes.
Remuneration: Benchmarking of advice and guidance received.
Board activities
The key areas of Board focus in 2019 were:
Significant strategic developments and transactions
• Oversaw completion of the sale of the Mining Indaba events
business for £30.1m in October 2018
• Approved the acquisition of BoardEx and The Deal for $87.3m in
February 2019
• Approved the appointment of Leslie Van de Walle as Chairman
in March 2019
• Oversaw completion of DMGT’s distribution of its 49%
shareholding to its own shareholders on 2 April 2019
• Comprehensively reviewed the Company’s strategy at a two-day
offsite in June 2019
• Approved the appointment of Tim Pennington as an
independent Non-Executive Director effective September 2019
• Approved the commencement of the ongoing strategic review of
Asset Management in September 2019
Company purpose
In line with the expectations of the 2018 Code, the Board has taken
time to consider and discuss its approach to company purpose
and to formalise a statement which sets this out for shareholders
and other stakeholders. Our agreed Purpose Statement, which is
also included in the inside front cover, is:
“We deliver sustainable value to customers, returns to
shareholders, opportunities for employees and contributions to the
communities in which we operate, by bringing clarity and insight to
opaque markets.”
The Board is confident that there is considerable co-operation and
sufficient resourcing across the Group to facilitate communication
of its purpose. Its review of approach also established that there is
a level of alignment and integration between the Group’s culture
and the purpose statement. The Board has undertaken to conduct
an annual review of the purpose statement and to evolve its
approach to this important Code theme over time.
Culture
The Company is addressing its obligation to assess and monitor
culture under the 2018 Code in a number of ways. It is anticipated
that the three primary channels will be Board/staff engagement
(formal and informal), the Remuneration Committee (which
considers compensation in the context of behaviours, among
other things) and the Audit & Risk/Risk Committees (which provide
an opportunity to highlight areas of strengths and development
areas). The output from these channels will be reported on
formally to the Board at least annually.
Monitoring and oversight
Fair, balanced and understandable
The Board has responsibility for preparing and making certain
confirmations concerning the 2019 Annual Report and Accounts
and delegates aspects of this responsibility to the Audit & Risk
Committee. In accordance with the Code provision C.1.1, the
Board confirms, in line with the recommendation of the Audit &
Risk Committee, that taken as a whole, the 2019 Annual Report
and Accounts is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group’s
position and performance, business model and strategy.
Senior members of the Group Finance, Legal, Risk & Secretariat
and Internal Audit functions are involved in the preparation
of the Annual Report. The Chair of the Audit & Risk Committee
and the CFO are kept appraised of all significant information
and consulted in relation to certain specific areas, such as the
assessment of the Group’s principal risks and key judgements and
estimates. A key consideration is ensuring appropriate linkage
in the report the Group’s performance, business model and
strategy. The Audit & Risk Committee meets prior to the approval
of the report by the Board to consider if the Group has met its
reporting obligations.
The Chair of the Audit & Risk Committee reports on the process
undertaken to the full Board. A detailed paper is provided to the
Board outlining the key disclosure obligations. These steps enable
the Board to take a fully informed view as to whether the report
meets the ‘fair, balanced and understandable’ reporting standard.
G
o
v
e
r
n
a
n
c
e
Internal control and risk management
See pages 43 to 52 for the Group’s principal risks and
mitigating actions.
The Board as a whole is responsible for the oversight of risk and
effectiveness review of the Group’s system of internal control.
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
day-to-day responsibility for internal controls and financial risk
to the Audit & Risk Committee and in turn for operational risk
management to the Risk Committee, which now operates as a
Sub-Committee of the Audit & Risk Committee.
The Directors have completed a thorough 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 during the year.
Management identified certain indirect tax errors in 2019 related
to prior periods which have given rise to a restatement of prior
period comparative information in the financial statements
as described on page 114. In response to identifying these tax
exposures, management is undertaking a detailed review of the
Group’s indirect tax processes and controls. Apart from the above
tax exposures, all of the material controls operated throughout
the year, and additional controls were also 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.
During the year the Audit & Risk Committee approved a new
Group-wide Enterprise Risk Framework, to help our businesses
identify, assess, manage and report on risk in a consistent and
accessible way.
Following the appointment of new Head of Internal Audit during
the year, a comprehensive review of our approach to internal
controls and risk management is underway. A newly appointed
Director of Risk also joins the business in December to strengthen
our approach to risk management.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
61
Governance
Corporate Governance Report continued
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 2020.
A new Information Security Strategy was approved by the Risk
Committee in July.
The Board has established procedures to carry out a review of the
internal control and risk management effectiveness which were
in place throughout the year and continue to operate, and are
detailed on page 60.
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, which is further discussed on page 58. 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, the Audit
& Risk Committee, the Risk Committee, 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 month.
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.
Speak Up Arrangements
The Group operates a bespoke Speak Up hotline and website
for all staff to confidentially raise concerns and allegations
regarding potentially inappropriate, fraudulent or criminal activity.
This service is provided to the Group across its global offices
by Expolink, a recognised independent specialist in this area.
During the year there were no material concerns or issues raised
via the Speak Up arrangements.
A programme focused on refreshing global communications
around the Speak Up arrangements and ensuring their continuing
effective operation was completed during the year.
Committee Oversight
Audit & Risk Committee
The Board’s committee structures were amended during the year
to rename the Audit Committee as the Audit & Risk Committee
and to also expand its remit to encompass oversight of risk
management. This change was in line with the decisions taken by
the Board in 2018 and discussed in last year’s report.
The work of the Audit & Risk Committee is discussed in more detail
on page 64 to 69 of this Report.
Risk Committee
The Risk Committee was re-aligned as a Sub-Committee of the
Audit & Risk Committee during the year, reflecting the latter’s
expanded remit. The Risk Committee continues to focus on the
identification, management and reporting of risk as its core
responsibilities. The composition of the Risk Committee can be
found on page 64.
62
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
During the year the Audit & Risk, Risk and Remuneration
Committees each continued to collaborate. Members from all
three Committees were invited to other Committee meetings and
attended when able. The Chairs of each Committee ensured that
matters of mutual interest raised in any of these Committees were
also discussed at each meeting.
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 Group 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 Group
management team follows up these submissions as appropriate.
During the year, a meeting of Divisional Directors and other senior
managers was convened to discuss and agree any material
changes to the Group’s principal and operational risk profile.
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 & 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 strengthened its Internal Audit function during
the year with the appointment of a new Head of Internal Audit.
Following that appointment, and with the approval of the Audit &
Risk Committee, the function has: (1) finalised a refreshed Internal
Audit Plan for the 2020 financial year; (2) recruited two specialist
Internal Audit professionals to provide additional expertise and
resource; (3) agreed an Internal Audit Charter which follows the
guidelines issued by the Chartered Institute of Internal Auditors;
and (4) is now planning a thorough evaluation of the effectiveness
of the Group‘s control environment and operating procedures.
The Head of Internal Audit and the function reports directly to both
the Group’s CFO and the Chairman of the Audit & Risk Committee
and works closely with the Group’s General Counsel & Company
Secretary. An effective working relationship is established between
the team and the external auditor PwC. The function undertakes
internal control reviews across the Group, investigates allegations
of wrongdoing or inappropriate practices, and reports its findings
to the Audit & Risk Committee.
Relations with shareholders
The Chairman prioritised effective dialogue with significant
shareholders and stakeholders following his appointment in
March. Meetings with the Life President, the former Chairman and
other stakeholders were held in parallel to his formal induction
programme to gauge important historical context and background
for the Group’s position, strategy and outlook.
Separately, the CEO and CFO, and on occasion the Chairman,
meet with shareholders to discuss the annual and half year
results, to highlight significant acquisitions or disposals, or at the
specific request of particular institutions. The CEO, CFO and the
Head of Investor Relations also convene results focused meetings
for analysts and representatives of the investment community
following each set of annual and half year results.
In July the Group co-ordinated a detailed Capital Markets Day
for stakeholders. This key event in the Group’s financial year was
hosted by Andrew Rashbass, CEO. Divisional presentations were
delivered by (1) Bashar Al-Rehany and Chris Ciompi, who discussed
the products, market and outlook for the Investment Research
Division businesses BCA Research and NDR; (2) Jeff Davis, who
introduced the BoardEx business which was acquired by the Group
in February; and (3) Raju Daswani, who gave a detailed update
regarding integration of the Fastmarkets division which included a
demonstration of the new Fastmarkets platform. Wendy Pallot, CFO,
concluded the event with a presentation focused on the Group’s
outlook and strategic priorities.
All shareholders also have the opportunity to participate in the AGM
which is usually held in January or early February each year. In line
with best practice, all shareholders have at least 20 working days’
notice of the AGM at which the Executive Directors, the Chairman
and Non-Executive Directors, including all 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. The Senior Independent Director in particular is
made aware of the significant investor and external stakeholder
opinions regarding the company. All Board members also regularly
receive analyst reports about the Company to provide additional
insight into how the market perceives the Company.
Viability statement
See page 53 for the viability statement and 93 for the going
concern statement.
Statement of compliance
The Company has made significant progress during the year
in addressing the areas of previous non-compliance with the
Code. A key milestone was the appointment of Leslie Van de
Walle as independent Non-Executive Chairman with effect from
1 March 2019.
Similarly the Board has strengthened its approach to stakeholder
matters, and is actively progressing a number of initiatives with
the intention of addressing the views and interests of these
groups. The key areas of focus are workforce engagement
through the newly introduced Staff Forum, staff wellbeing through
externally designed support programmes, staff safety in the
context of geopolitical risks, supplier assessment and validation.
These aspects are discussed in more detail in the Stakeholder and
Sustainability Review on pages 30 to 37.
Compliance with the 2016 version of the Code
The Group was compliant with all provisions of the 2016 Code
as at 30 September 2019. However, for part of the review year,
and until the decisions and events described in this report and
throughout the Strategic Report, the Group did not comply with the
following provisions of the 2016 Code, which is applicable to the
Group for the 2019 financial year:
• Chairman: until the appointment of Leslie Van de Walle
with effect from 1 March 2019, the Group did not have an
independent, Non-Executive Chairman. David Pritchard was not
considered independent on appointment as Acting Chairman
having been originally appointed to the Board in 2008;
G
o
v
e
r
n
a
n
c
e
• Senior Independent Director: until the appointment of Jan Babiak
with effect from 18 September 2019, the Board did not have a
Senior Independent Director as David Pritchard had agreed to
become Acting Chairman in order to oversee the appointment
of a new Chairman;
• Senior Independent Director dialogue with shareholders: until
the appointment of Jan Babiak with effect from 18 September
2019, the Board did not have an appointed Senior Independent
Director to meet with and generally liaise with shareholders on
behalf of the Chairman and the Board;
• Terms and conditions of appointment of Non-Executive Directors:
until the DMGT representative directors Tim Collier and Kevin
Beatty stepped down as Directors with effect 2 April 2019, they
were appointed as Directors without terms of appointment with
the Company;
This progress otherwise primarily reflects the Group becoming a
fully independent FTSE 250 Company following the distribution by
DMGT of its significant 49% shareholding in the Group on 2 April
2019, which is discussed throughout this report.
• Composition of the Audit & Risk Committee: until the DMGT
representative Director Tim Collier stepped down as a
Committee member in April, the Committee’s composition was
not compliant with the requirements of the 2016 Code;
On 2 April 2019 the relationship deed that the Company entered
into with Daily Mail General Trust (DMGT) on 8 December 2016,
in light of DMGT’s substantial shareholding in the Company,
automatically terminated. The two representative directors
appointed to the Company’s Board in accordance with the
relationship deed also stepped down as members of the Board
and their respective Committees on that date, having recused
themselves from all Board and Committee meetings preceding the
share distribution in order to avoid any potential conflict of interest
or suggestion of influence on decision making.
The composition of the Board and its Committees is therefore fully
compliant with the 2016 Code as at 30 September 2019. Jan Babiak
was appointed as Senior Independent Director with effect from
18 September 2019 and as such is available to shareholders for
matters for which contact with the Chairman or Executive Directors
may not be appropriate, or generally should dialogue be sought.
The Board has specifically taken time to consider culture and
values during the financial year and on review has determined
that the Group benefits from a strong and identifiable culture
across its offices in 12 countries around the world. Euromoney is
recognised as an employer committed to diversity and has
programmes designed to help staff at all levels develop the
professional and personal skills necessary to build and sustain a
career with the Group. The specific approach taken to culture is
discussed in more detail in this report on page 61.
• Composition of the Nominations Committee: until the DMGT
representative Directors Tim Collier and Kevin Beatty stepped
down as Committee members in April, the Committee’s
composition was not compliant with the requirements of the
2016 Code;
• Composition of the Remuneration Committee: until the DMGT
representative Director Kevin Beatty stepped down as a
Committee member in April, the Committee’s composition was
not compliant with the requirements of the 2016 Code.
The Board has addressed all prior areas of non-compliance
and ended the year fully compliant with the requirements of the
2016 Code. The Company heads into the year with a significantly
strengthened governance framework underpinning the Group and
its different businesses.
Tim Bratton
General Counsel & Company Secretary
Euromoney Institutional Investor PLC
21 November 2019
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
63
Governance
Audit & Risk Committee Report
I am pleased to present the
report for the Audit & Risk
Committee for 2019.
Colin Day
Chair of the Audit & Risk Committee
Attendance tables
Audit & Risk Committee
Colin Day
Jan Babiak*
Tristan Hillgarth
David Pritchard**
Tim Collier**
Tim Pennington*
5/5
3/3
5/5
2/2
2/2
1/1
* Joined the Committee during the year
** Stepped down from the Committee during the year
The Committee’s formal remit
this year has widened to include
operational risk and it was pleased
to support the adoption of a
new Enterprise Risk Framework
by the Group. As well as the
Committee’s regular activities, a
key focus has been appointing a
new Non-Executive Director with
the requisite financial experience
and we are therefore delighted
to welcome Tim Pennington to
the Committee
64
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Chair’s Introduction
The Committee had another busy year as, in addition to its core
responsibilities, it continued to oversee the implementation of
the Global Finance Transformation Programme within certain
of the Group’s divisions, as well as monitor the BoardEx and The
Deal acquisition and the Mining Indaba disposal. To ensure
the Committee continued to be adequately apprised of such
developments within the Company, a new Head of Internal Audit
was appointed and granted further authority to increase the
in-house audit resource.
The recommendation made last year to the Board to reconstitute the
Committee to also cover Risk so that further time could be devoted to
the analysis of the Group’s Principal Risks before consideration by the
Board was also duly approved.
The principal Committee objectives are to be proactive and
provide constructive challenge of information received, particularly
regarding the integrity of the Group’s financial statements, significant
areas of judgement, other relevant financial information and overall
risk appetite. Throughout the year the Committee has received timely
and relevant information from management and both internal and
external audit. Reports were appropriate, concise and transparent,
which has enabled the Committee to discharge its duties effectively.
All the proceedings of each Committee meeting and how the
Committee has discharged its duties and responsibilities are
reported to the Board.
As noted in the Chief Financial Officer’s review, two prior year tax
exposures were identified that have resulted in the requirement to
restate the financial statements. These exposures concern treatment
of VAT on intra-group transactions and the tax treatment of payments
made for services provided by third-party contractors. Further details
of these prior year adjustments can be found on page 114.
These exposures were identified by internal processes.
Management took immediate steps to ascertain the exposure
and improve controls in these areas. The Group continues a wider
programme to review and to continue to improve internal controls
across all operations.
Committee members
The experience of the Committee members is summarised in
biographies on pages 54 and 55, and Committee attendance is
detailed on page 64. The Audit & Risk Committee Chair has held a
number of listed company roles as either Group CFO or CEO and
is Chair of the Audit Committee for two further organisations.
During the year there were a number of changes to the
Committee’s membership. The Committee thanks Tim Collier
for his service over the past 2 years. Tim, who holds the Group
CFO role at DMGT, resigned from the Committee following
DMGT’s distribution of its share in the Euromoney Group in
April. The Committee also thanks Jan Babiak, who has been
an independent Non-Executive Director of Euromoney since
December 2017, for joining the Committee on an interim basis from
1 May until 30 November. Finally, the Committee welcomes Tim
Pennington who joined the Committee as a permanent member
from 1 September.
The Board considers each member of the Committee to be
independent within the definition of the 2016 UK Corporate
Governance Code. They bring a broad and diverse range of
commercial and financial experience such that the Board is
provided with assurance that the Committee has the appropriate
skills and experience to be fully effective and meet the
Code requirement.
By invitation, the Chair of the Board, CEO, CFO, Deputy CFO,
Global Head of Tax, Treasury and Investor Relations, the Head
of Internal Audit, General Counsel and Company Secretary and
representatives from the external auditors attend the Committee
meetings. In addition, the Committee periodically, and the Audit &
Risk Committee Chair more regularly, meets separately with the
Head of Internal Audit and the external auditors without the
Executives being present. This enhances further understanding of
the key issues and ensures that sufficient time is devoted to them at
each meeting.
Responsibilities
The Committee met five times during the financial year and is
responsible for:
• Monitoring the integrity of the Financial Statements and
announcements and reviewing significant financial reporting
requirements, issues and judgements
• Reviewing the adequacy and effectiveness of the Group’s
systems and processes for internal financial control
• Reviewing the effectiveness and output of the Group’s Internal
Audit function and programme
• Overseeing the appointment, terms, remuneration and
performance of the External Auditor and the scope, results, cost
effectiveness, quality of the audit, assessment of independence
and monitoring of non-audit services
• Reviewing the adequacy and effectiveness of the Group’s risk
management systems and mitigation programmes
G
o
v
e
r
n
a
n
c
e
• Reviewing the adequacy of the Group’s Speak Up arrangements
and procedures for detecting fraud
Detailed responsibilities are set out in the Committee’s Terms
of Reference, which can be found on the Company’s website:
www.euromoneyplc.com.
Colin Day
Chair of the Audit & Risk Committee
21 November 2019
Committee Annual Timeline
October 2018
• Significant Reporting Matters
and Judgements
November 2018 continued
• Discussed the Rotation of the External
July 2019
• Significant Reporting Matters
Auditor’s Lead Partner in 2020
and Judgements
• PwC Audit Plan
• Assessed and Approved the FY18
• US Sales Tax Update
Principal Risks Disclosure
• Retirement Schemes Accounting Review
• Statutory Audit Exemptions
• Completed Annual Impairment Reviews
• Global Finance Transformation
• Internal Audit Report
• PwC Pre Year-End Update
Programme Update
• Global Finance Transformation
• Internal Audit Report
Programme Update
• Internal Audit Report
• Internal Audit Approach
• Committee Performance & Effectiveness
• Committee’s Risk Remit
• Effectiveness of the External Auditor
November 2018
• Annual Report & Accounts
• Internal Audit Effectiveness
May 2019
• Half-Year Reports
• Assessed and Approved the 2019
Principal Risks Disclosure
• PwC Half-Year Review
• Internal Audit Report
• M&A Accounting Review
• Global Finance Transformation
Programme Update
• Speak Up Update
September 2019
• Significant Reporting Matters
and Judgements
• Annual Impairment Reviews
• PwC Pre Year-End Update
• Risk Management Framework
• Contractor Review Update
• Fair, Balanced and Understandable
• Contractor Relationship Review Update
• Global Finance Transformation
Review of Annual Report
• Global Finance Transformation
• Reviewed Exceptional Items Reporting
Programme Update
Programme Update
• Internal Audit Report
• PwC Year-End Audit Findings
• Speak Up Update
• Internal Audit Charter Approval
• Review of Non-Audit Services
• Independence and Reappointment
• PwC Non-Audit Services &
Business Relationships
of Auditors
• Committee Performance & Effectiveness
• Speak Up Update
• 2020 Audit Plan Approval
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
65
Governance
Audit & Risk Committee Report continued
Key focus areas during 2019
During the year the Committee reviewed a range of topics, including the following key focus areas:
Key Focus Area
Audit & Risk Committee Input
Areas of significant financial
judgement
The Committee received regular updates from management on the areas considered to have significant
financial judgement applied. These are set out on pages 120 to 122.
Risk Management
Global Finance Transformation
Programme
Independent Third-Party
Contractor Framework
Internal Audit
The Committee undertook a review, before consideration by the Board, of the register of material risks
facing the Group and the adequacy and effectiveness of management’s risk mitigation plans in respect
of these risks. The Committee regularly reviews the plans in place by considering reports from Internal
Audit and the management committee responsible for risk on the effectiveness of controls to mitigate
such risks. During the year an enhanced ‘Risk Management Framework’ was reviewed and approved for
implementation.
The Committee received regular updates from management on the implementation of the Global Finance
Transformation Programme, which includes deployment of a global finance system to improve quality and
efficiency of financial reporting and to further enhance the control environment. Implementations in 2019
included the Investment Research Division and the largest two legal entities in the UK.
In addition, the Committee reviewed the findings of an assessment by management of the controls in place
over the engagement and management of third-party independent contractors who provide services to
the Group in the UK. As a result a tax exposure was identified for which a restatement was required to the
prior years and adequate provision was made to cover any resulting liability. Further details can be found
on page 114.
Following a review of the Internal Audit function structure, to ensure the Committee continues to be
adequately furnished with reporting on the completeness and operating effectiveness of the internal
control and risk management frameworks, the Committee appointed a new Head of Internal Audit during
the year and provided further authority to expand the in-house headcount.
Main Activities
The Committee met three times in 2019 after publication of the 2018
Annual Report and Accounts and once between the year-end and
the publication of this Annual Report. The key issues covered at each
Committee meeting were reported at the subsequent Board meeting.
The Committee routinely reviewed key financial statements and
financial announcements of the Group. At the request of the Board,
the Committee considered whether the 2019 preliminary results
and the Annual Report and Accounts were fair, balanced and
understandable, and whether they provided the necessary information
for shareholders to assess the Group’s position, performance, business
model and strategy. The Committee was satisfied that, taken as a
whole, the 2019 Annual Report and Accounts was fair, balanced
and understandable. A significant part of the Committee’s routine
work relates to monitoring the Group’s system of internal control.
Further details of this are set out in the Corporate Governance Report
on page 61.
There was no interaction with the Financial Reporting Council’s (FRC)
Corporate Reporting Team during the year.
Meetings between the Internal and External Auditor and Committee
members were held following each scheduled meeting of the
Committee. For 2020 the Committee will continue to oversee a
programme to enhance the Group’s internal controls and risk
management framework and oversee the continued implementation
of the Global Finance Transformation Programme.
Effectiveness of Internal Control Systems
The Committee maintains responsibility for reviewing the process for
identifying and managing risk and for reviewing internal controls.
It receives reports from management, the Risk Committee, and
Internal Audit, in addition to the results of any investigations performed
as a result of employee ‘Speak Up’ or otherwise. Furthermore, the
Committee reviews the external auditor’s assessment of the Group’s
financial controls framework. Besides recognising steps taken by
management to review the design and operating effectiveness of
tax controls, the Committee continues to note an improvement in the
control environment due to a number of initiatives completed during
the year including a new Enterprise Risk Framework process, the
Contract Transformation Programme and a new electronic vendor due
diligence portal.
66
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
As noted previously, the Group has continued with its implementation
of the Global Finance Transformation Programme, which will further
enhance the strength of the control environment and was subject to
both internal and external auditor reviews during the year.
Internal Audit
The Internal Audit function carried out reviews across the Group,
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 embodied in the Internal Audit Charter which the Committee
reviews and approves on an annual basis. The Head of Internal Audit
has dual reporting lines to the Audit and Risk Committee Chair and the
Group CFO.
The Committee discussed and approved the 2020 Audit Plan to be
executed by the Internal Audit function at the September Committee
meeting. Whilst risk-based, the audit plan coverage also ensures all
components of the Group are regularly reviewed. In addition, the
services of third-party co-source assurance partners are utilised to
ensure complex or bespoke areas of risk are adequately appraised.
The Committee reviews the results of the internal audit reports during
each meeting, looking in detail at any reports where processes and
controls require improvement. The Committee is also provided with
updates on the implementation of agreed actions and overall control
environment progress at each meeting. Internal audit resource is
monitored such that, if internal or external circumstances should give
rise to an increased level of risk, the audit plan can be supplemented
accordingly during the year. Any changes to the agreed audit plan
are presented to and agreed by the Committee. The effectiveness of
the Internal Audit function is reviewed on an annual basis. The review
covered the function’s independence, its experience and expertise,
the scope of the annual audit plan, the quality of reports issued and
the identification of issues. The Committee concluded that the Internal
Audit function has remained effective.
External Auditor
PricewaterhouseCoopers LLP (PwC) was appointed by shareholders
as the Group’s statutory auditor in 2015 following a formal tender
process. The lead Audit Partner will have led the audit for five years
following the 2019 audit and therefore a new Audit Partner has
been appointed in accordance with the FRC’s auditing and ethical
standards for the 2020 audit.
UK focus
Global Finance
Transformation
Programme
The Global Finance Transformation Programme (GFTP) is a
multi-year programme with the objective of creating a best-of-
both worlds Finance function that is fit for purpose to support the
Group in delivering its strategy of becoming a 3.0 information
services business. The primary goals are to reduce layers of
complexity, implement simple and standardised best practice
finance processes, improve the quality and efficiency of financial
reporting and strengthen financial control.
The GFTP encompasses our people, processes, systems and
data. A phased implementation approach has been adopted
to limit business disruption and mitigate key implementation
risks. Phase one includes the roll-out of a single global instance
of a cloud-based ERP system (Oracle NetSuite) with a common
Chart of Accounts.
A Global ERP Template was approved in July 2018, with the
first business, Ned Davis Research, going live in August 2018.
BCA Research was the next business to go live in February
2019, making Investment Research the first division to fully adopt
NetSuite and the global template. The benefits this drives
include (1) reduction of complexity and legacy global systems;
(2) improved automation and simplification through integration
with billing systems; (3) streamlined and consistent global
processes; and (4) a strengthened control environment.
In July 2019 the UK’s largest two revenue generating legal
entities, Euromoney Trading and Euromoney Global, transitioned
the core general ledger activities, Purchase to Pay (P2P) and
Record to Report (R2R), onto NetSuite. Transition of core Order
to Cash (O2C) processes will continue through 2020 in order to
gain the greatest benefits of automation and integration with
Euromoney’s customer relationship management (CRM) tools.
The remainder of the Group is targeted to migrate onto NetSuite
in 2020.
The Audit & Risk Committee continues to maintain active
and challenging oversight to ensure that the global design,
processes and controls documentation is fit for purpose, and
receives independent assurance reports from both internal and
external audit after each milestone.
Besides the NetSuite implementation, and in line with the
broader investment in people, we have also recently launched
the Finance Academy to support the ongoing development of
our team as we evolve to a 3.0 Finance function.
The external audit contract will be put out to tender at least every
10 years. The Company continues to comply with the Statutory Audit
Services for Large Companies Market Investigation (Mandatory Use of
Competitive Tender Processes and Audit Committee Responsibilities)
Order 2014 for the financial year under review.
It is the Committee’s usual practice to undertake a detailed review
of the performance and effectiveness of the External Auditor in
performing the audit, informed by the output from a questionnaire
completed by senior finance personnel across the Group. Taking into
account the nature of the feedback received from the business and the
G
o
v
e
r
n
a
n
c
e
Committee’s own experiences working with PwC during the year, the
Committee has satisfied itself that the External Auditor is providing an
effective service.
Non-Audit Work
The Committee and the Board place great emphasis on the objectivity
of the Group’s external auditors in reporting to shareholders. During the
year, the Committee reviewed its Provision of Non-Audit Services Policy
to ensure its continuing suitability and effectiveness and its compliance
with the Financial Reporting Council’s Guidance on Audit Committees
(2016) and Revised Ethical Standard (2016). The Policy recognises the
criticality of the independence and objectivity of the External Auditor
and the need to ensure that this is not impaired by the provision of
non-audit services. The Policy also recognises, however, that it may be
beneficial for the External Auditor to provide certain services because
of its existing knowledge of the business or because the information
required is a by-product of the audit process. In these circumstances,
the External Auditor is permitted to provide certain non-audit services
where these are not, and are not perceived to be, in conflict with
its independence.
The Policy identifies services that are prohibited and those that are
permitted subject to formal approval. Prohibited services include those
where the External Auditor participates in activities that are normally
undertaken by management, is remunerated through a success
fee or similar, or may be required to audit its own work (including
tax services, legal services, internal audit work and work on internal
control or risk management procedures).
Other non-audit services may be undertaken by the External Auditor
where it has the requisite skills and experience, it is considered to be
the most appropriate to undertake such work in the best interests
of the Group, the provision of such services does not impair its
independence and objectivity and the related fees – both in respect
of individual services and in aggregate – are not material relative to
the Group external audit fee. Any permitted service with a fee of less
than £75,000 must be pre-approved by the CFO. Any services with a
fee of more than £75,000 must first be approved by the Audit & Risk
Committee or a sub-committee of any two members. Once above
50% of the annual limit in any one year, any further services require full
Committee approval.
The amounts paid to the External Auditor were £1.8m (2018: £1.4m)
during the year, comprising £1.5m (2018: £1.1m) for audit services,
£0.1m (2018: £0.1m) for audit related assurance services, and £0.1m
(2018: £0.1m) for other assurance services as set out in note 4 to the
Consolidated Financial Statements. In conclusion, taking into account
the application of the revised Provision of Non-Audit Services Policy,
the Committee is satisfied that PwC was independent at all times
during the year under review.
External Auditor Reappointment
Considering the audit tender process undertaken in 2015 and the
firm’s continued performance as External Auditor, the Committee has
recommended to the Board that PwC be offered for reappointment
at the 2020 Annual General Meeting. The PwC Lead Audit Partner,
Giles Hannam, will rotate off the audit engagement in December
2019. He will be replaced by Jason Burkitt, also an experienced audit
partner, who has already started to familiarise himself with the Group.
Committee Effectiveness
The Committee undertook a review of its own performance and
effectiveness during 2019. This was facilitated by the Deputy Company
Secretary, who acts as Secretary to the Committee and who reviewed
the results with the Chair of the Committee, before a wider discussion
with other Committee members. The review concluded that the
Committee is operating effectively and is increasingly focused on key
issues, risks and controls, aided by continued improvements during the
year in the quality and depth of Committee papers and a refresh of the
annual matters calendar for the Committee.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
67
Governance
Audit & Risk 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 2019, 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 2019 Annual Report and Accounts is
fair, balanced and understandable.
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, explained and
clearly reconciled.
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 2019 Annual Report and Accounts is fair, balanced
and understandable.
Restatements
During the year, the Group identified two tax exposures: (i) under-
payments of PAYE and NI to HMRC in respect to contractors;
and (ii) VAT arising on supplies made between entities within
the Group. These exposures resulted in a restatement of the 2018
results and the opening reserves at 1 October 2017. Full details are
included in note 1 of the Consolidated Financial Statements.
The Committee considered the two tax matters identified in the
year and the significance of these items to the current and prior
year results. The Committee challenged management on the
robustness of the analysis and assumptions taken in estimating
the exposures and has considered the judgements taken
to restate the financial statements and management’s best
estimate of the exposures to be appropriate.
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.
The presentation of adjusted and underlying measures has
been restated to reflect the impact of the restatements as
outlined above in addition to discontinued operations for
Asset Management.
The Committee reviewed the 2019 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, which includes discontinued operations for Asset
Management, has clear labelling, transparent reconciliations
and appropriate explanations.
Goodwill and other intangibles
The Group has goodwill of £246.3m and other intangible assets
of £159.1m. The Group recognised an impairment charge of £2.4m
having decided to close CIE in 2019. No further impairments arose
following the review at the year end. Management undertook
a review of the Group’s cash generating units and following
further integration within the Group. The level at which goodwill
impairment was performed was reassessed resulting in CGUs
being aggregated.
68 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
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 and reviewed those businesses where headroom has
decreased. The Committee has also understood the sensitivity
analysis used by management in its review and disclosure of
impairment. The Committee has also challenged management
on its aggregation of CGUs in the year in ensuring that the
position appropriately reflects how management monitors
goodwill and considered the position to be appropriate.
The Committee concluded that no impairments were required.
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.
Discontinued operations and assets held for sale
In September 2019, the Group announced a strategic review of
its Asset Management segment. In November 2019, the Group
announced that this continues. This segment meets the IFRS 5
‘Non-current Assets Held for Sale and Discontinued Operations’
criteria to be treated as discontinued operations at 30 September
2019. Asset Management meets the IFRS 5 criteria to be treated
as discontinued operations due to its size and the fact that the
segment constitutes a major line of the Group’s business. For the
year ended 30 September 2019, its results have been included
in discontinued operations. The comparative period has also
been restated. The results for both years are included in both the
adjusted and underlying measures.
The discontinued operations in 2018 relating to the disposal of
the GMID have been excluded in the adjusted results to reflect
the basis on which the chief operating decision maker (CODM)
reviews the business. The comparatives have been updated to
reflect this change in management’s adjusted measure in order to
provide a more like-for-like view of continuing 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 continues to maintain its tax provision in
relation to an ongoing HMRC enquiry to the maximum exposure
of £10.7m. Similarly, the Group maintains its position that no
provision is required in relation to the challenge by the Canadian
Revenue Agency.
The Group has notified HMRC that a voluntary disclosure will
be made with respect to the PAYE and NI understatement and
is currently in the process of finalising this disclosure. The Group
has also notified HMRC regarding the potential VAT exposure
and discussion is ongoing with HMRC to finalise the potential
underpayment of VAT. Further details are disclosed in the
Estimates section in note 2.
The Committee reviewed the work undertaken for the
acquisition of BoardEx and The Deal, the disposal of Mining
Indaba and the related financial statement disclosures for
both matters. For the acquisition, the Committee considered
the identified intangible assets acquired and assessed the
methodology employed for calculating the fair values and
the appropriateness of the key assumptions used, including
discount rates. The Committee also considered the useful
economic lives assigned by management noting them to be
reasonable and in line with management’s policy. For the
disposal, the Committee reviewed the resulting profit on
disposal and considered the disclosures within the Annual
Report and Accounts to be reasonable.
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 2019. The Committee has
reviewed the disclosure and restated comparatives, including
the presentation of adjusted and underlying performance
measures which include discontinued operations with regards
to Asset Management.
The Committee has reviewed the disclosure and restated
comparatives, including the presentation of adjusted measures
to exclude discontinued operations relating to GMID.
G
o
v
e
r
n
a
n
c
e
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
analysis and support provided by third party experts.
The Committee agreed with management’s treatment of the
Group’s tax matters and the disclosure of tax-related matters
in the Annual Report and Accounts, including uncertain tax
positions in note 2 to the Financial Statements.
The Committee has reviewed the assumptions and judgements
in assessing these exposures and concluded that the provisions,
accounting treatment and related disclosure were appropriate.
The Chairman also attends Tax & Treasury Committee meetings
which provides valuable insight into the Group’s tax matters.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
69
Governance
Nominations Committee Report
I am pleased to report that the
Committee made good progress in
a range of areas during the year.
Leslie Van de Walle
Chairman
Diversity
Andrew and Wendy have rightly prioritised diversity across the
Group’s operations, with the Board’s full support. We discuss
the Global Diversity Week held in January and other initiatives
designed to encourage this to flourish in a specific case study on
page 39. I encourage you to take the time to read about the good
work being done across the Group. We do also acknowledge
that while the Company has made significant progress in the
last three years improving gender diversity at both Board and
Group Management Board level, the Board is aware that
diversity encompasses more than just gender and is committed to
improving the diversity of nationality, ethnicity and background
of Board members and senior management. The Committee is
mindful of the benefits of any Board being representative of the
stakeholders it represents, and while we will always ultimately
recruit on merit, any future appointment processes will take place
with this context very much in mind.
Attendance tables
Nominations Committee
Leslie Van de Walle
Jan Babiak
Tristan Hillgarth
*David Pritchard
*Kevin Beatty
*Tim Collier
4/4
8/8
7/8
4/4
3/4
4/4
* Stepped down from the Committee during the year.
Chair’s Introduction
It was a busy year for the Committee with various Board and
Committee changes taking place throughout the year for the
reasons discussed in my Chairman’s introduction (see page 4).
This time last year, David Pritchard, who was Chair of the
Committee for the first half of the year prior to his retirement, noted
that the Committee’s focus would be to appoint a new Chairman,
a Senior Independent Director, the possible appointment of
additional Non-Executive Directors and reviewing the Board’s
composition in light of the 2018 Corporate Governance
Code’s requirements.
I am pleased to report that the Committee made good progress
during the year across all of these areas as set out in the key
activities table below. I would like to thank David for the progress
made in these areas prior to his retirement from the Board, as well
as Tim Collier and Kevin Beatty for their service on the Committee
as DMGT’s representative Directors prior to stepping-down from
the Board in April.
Tim Pennington has completed much of his induction, having
met the Group’s executive team and advisers, and is already
contributing strongly to Board discussions through his financial,
listed company and telecoms experience.
We have also made changes to the composition of the Committee,
since I believe it is important for the Chairs of the Audit & Risk and
Remuneration Committees to be members. I was therefore pleased
to welcome Colin Day and Imogen Joss to the Committee in this
capacity in September.
70
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Nominations Committee: 2019 key activities
Appointment of Chairman
Appointment of Senior Independent Director
Following a comprehensive process led by David Pritchard working with Russell Reynolds,
Leslie Van de Walle was appointed as Chairman on 1 March 2019
Following an internal review and canvassing of opinions from the CEO and Non-Executive
Directors as well as discussion by the Committee, Jan Babiak was appointed as Senior
Independent Director in September 2019
Review Board composition in light of 2018 Code The Board and its Committees are fully Code compliant. The Board currently consists of two
Appointment of Non-Executive Director(s)
Executive Directors (the CEO and CFO) and seven independent Non-Executive Directors,
which will reduce to six following Tristan Hillgarth’s stepping-down from the Board in 2020
Following the resignation of DMGT’s representative Directors from the Board and in
anticipation of Tristan Hillgarth’s stepping-down at the 2020 AGM, the Committee
recommended the appointment of a new Non-Executive Director with financial expertise to
join the Board and serve on the Company’s Audit & Risk Committee. Following a recruitment
process led by the new Chairman, also working with Russell Reynolds, Tim Pennington joined
the Board on 1 September 2019
Staff Engagement
The Board has benefited from a range of opportunities to engage
with staff during the year, and this is reflected in the formation
of the Group’s Staff Forum, which is beginning to establish itself.
The Board has enjoyed hosting a range of informal meetings with
staff in both London and New York to gain a better understanding
of their businesses. We discuss the Group Staff Forum in more
detail on page 30.
Governance
The Committee has delegated authority from the Board under
the Terms of Reference which were updated and approved in
November 2019. The composition and structure of the Committee
meet the expectations of the 2018 Code which applies from
1 October 2019.
As noted above, Colin Day and Imogen Joss were both
appointed as members of the Committee with effect from
1 October. Committee composition is therefore Leslie Van de
Walle, Jan Babiak, Colin Day, Tristan Hillgarth and Imogen Joss.
Andrew Rashbass typically attends meetings of the Committee.
The Committee’s key responsibilities are to: (1) regularly review the
structure, size and composition of the Board, which includes its
skills, knowledge, experience and diversity; (2) give consideration
to Board level succession planning; (3) support the Executive
Directors with changes at senior management level; (4) keep
under review the leadership needs of the organisation; (5) co-
ordinate and recommend Board appointments; and (6) review
performance and evaluation findings.
G
o
v
e
r
n
a
n
c
e
External Search Agency
The Committee has appointed Russell Reynolds Associates as their
primary executive search consultant. Russell Reynolds does not
have any connection with the Company.
I am pleased to be able to report to shareholders that the
Nominations Committee is working effectively and meeting the
revised expectations of the 2018 Code. We will nevertheless
continue to evolve and strengthen our processes in line with our
key focus areas for 2020, as set out in the table below.
Areas of focus for 2020
• Succession planning for Executive Directors, Group
Management Board and other key person dependencies
• Implementing the recommendations of the Board’s
annual evaluation
• Reviewing the existing skills and experience of Board
members using the established skills matrix to gauge areas
for improvement
• Refining and further developing the Board’s training and
development programmes in conjunction with the skills review
• Monitoring initiatives to improve diversity and engagement
across the Group
Leslie Van de Walle
Chairman
21 November 2019
Committee Annual Timeline
October 2018
• Chairman Search Process Update
• Structure & Composition of
Board Update
• Committee Terms of Reference
January 2019
• Chairman’s Appointment of Approval
June 2019
• Appointment of Additional NED
of Terms
• Chairman’s remit
• Future Board Composition Changes
Board Recommendations
September 2019
• Appointment of Senior
Independent Director
• Committee Composition Changes
• 2020 AGM Planning – Ratification
of Board’s External Appointments
November 2018
• Chairman Search Process Update
• Remuneration Committee Composition
March 2019
• Update on Additional NED
Appointment Process
December 2018
• Chairman Appointment
Recommendation to the Board
• Committee Composition Changes
May 2019
• Update on additional NED
Appointment Process
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
71
Governance
Directors’ Remuneration Report
We will ensure our
remuneration arrangements
remain appropriate to support
the delivery of the strategy.
Imogen Joss
Remuneration Committee Chair
Attendance tables
Remuneration Committee
Imogen Joss
*Leslie Van de Walle
*Lorna Tilbian
**David Pritchard
**Kevin Beatty
6/6
2/2
2/2
3/3
3/4
* Joined the Committee during the year.
** Stepped down from the Committee during the year.
Letter to shareholders from the
Remuneration Committee Chair
Dear Shareholders,
I am pleased to present the Directors’ Remuneration Report for
2019 which has been prepared by the Remuneration Committee
on behalf of the Board.
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.
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 83.
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.
2019 performance and reward outcomes
During 2019 we made further progress on the development
of our strategy and announced a strategic review of Asset
Management in September 2019. DMGT distributed their 49%
holding of Euromoney shares in April 2019 which accelerated our
progression to a fully independent listed company. Our adjusted
profit before tax for 2019 was £104.6m, representing 9% growth
on an underlying basis. This was slightly above our target level of
£103.4m for 2019. This financial measure has a 75% weighting in
determining the CEO and CFO bonus outcomes.
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 (performance period plus holding
period). The Performance Share Plan therefore rewards the
creation of long-term shareholder value.
The remaining 25% of the 2019 annual bonus performance
measures relate to individual objectives. Information on how our
CEO and CFO performed against their individual objectives is
provided on pages 84 and 85.
The performance against these measures resulted in an annual
bonus payout of 60% of maximum for Andrew Rashbass and 57%
of maximum for Wendy Pallot. The actual amounts payable were
£675,000 for Andrew and £257,677 for Wendy. The Committee
was satisfied that these outcomes were appropriate and that no
exercise of discretion to adjust them was appropriate.
72
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
The Remuneration Committee considered whether any
adjustments should be made to previous variable remuneration
outcomes to the current Executive Directors as a result of the
restatements explained on page 114 and concluded that this was
not appropriate in the circumstances. This was on the basis that
these issues pre-dated the current Executive Directors, who not only
identified them but also took immediate steps to address them,
including the introduction of improved controls.
Our Performance Share Plan awards granted in 2016 were due to
vest in December 2019, based on performance of the 2017, 2018
and 2019. The performance measure attached to these 2016-19
PSP awards was compounded annualised adjusted diluted EPS
growth over the three year performance period. Although adjusted
diluted EPS did increase over the period, the threshold level of
performance was not met and so zero vesting applied to these
awards. A contributing factor to this outcome was M&A activity,
including the disposals early in the performance period which had
an impact on earnings, with acquisitions later in the performance
period. The Committee considered whether to exercise discretion
to adjust the performance outcome to reflect M&A activity
but it was concluded that this would not be appropriate in
the circumstances.
Board and Remuneration Committee member changes
Leslie Van de Walle was appointed Chairman from 1 March
2019 and joined the Remuneration Committee from 2 April 2019.
David Pritchard stepped down from the Committee on leaving the
Board on 28 February 2019. As a result of the DMGT distribution
of Euromoney shares during 2019, we had a number of changes
to our Non-Executive Directors, with Tim Collier and Kevin
Beatty stepping down from 2 April 2019. Lorna Tilbian joined the
Remuneration Committee from 2 April 2019 and Tim Pennington
also joined the Remuneration Committee from 1 October 2019.
These changes are explained in full on page 5.
Remuneration changes during 2019
At his request and to help support the funding of salary increases
throughout the wider employee population, Andrew Rashbass’
salary was not increased at the time of the annual salary review
and therefore from 1 April 2019 his annual salary remained at
£750,000.
Wendy Pallot’s salary was reviewed through the annual salary
review process. Based on Wendy’s performance in the role and
market data, the Committee determined that it was appropriate
to increase this in line with the rate applied to the wider employee
population. Therefore, Wendy’s salary was increased by 2.5%,
from £355,000 to £363,875, with effect from 1 April 2019.
All employee remuneration at Euromoney
Following on from the developments in 2018, we continued to
focus on pay for the wider employee population to introduce
more structure and consistency. Our April 2019 salary review
involved greater reference to benchmark data and oversight
from the central Reward function to improve alignment across
our employees. This is an area that will receive further focus
and attention over the next few years to drive robustness to our
approach in this area.
Engaging with employees
During 2019, we completed the set-up of our global staff forum.
Andrew Rashbass launched the staff forum in Town Halls in
December 2018 and invited people to put themselves forward
as forum representatives. Following an election process, 18
representatives were confirmed as the global staff forum members.
The forum was established in March 2019 with the first formal
meeting held in July 2019. The global staff forum will allow the
views of our employees on a range of matters to be fed back to the
Board and to open a two-way dialogue between employees and
the Board. Since 2017, we have held a global staff survey and the
global staff forum will complement this survey in gathering views
of our employees. Further information on the global staff forum is
provided on page 30.
Remuneration for 2020
We do not intend to make any major changes to our Remuneration
Policy or the implementation of our policy for 2020. We are
satisfied that the remuneration structures support our delivery of
the strategy. However, to ensure that the specific performance
measures applied to incentive arrangements continue to be
aligned with and support the delivery of the strategy, we will be
making a change to the performance measures for Executive
Director bonuses.
Underlying revenue growth has been a key performance indicator
for a number of years at Euromoney. Its increasing importance
as an indicator of the strength and performance of the business
has prompted the Committee to introduce an underlying revenue
growth performance measure to the Executive Directors’ bonus
measures for 2020.
The financial performance measure weighting will remain the
same, with the adjusted profit before tax measure moving from a
75% weighting to a 37.5% weighting, with the underlying revenue
growth measure being introduced with a 37.5% weighting.
Personal performance measured against individual objectives will
continue to have a 25% weighting.
G
o
v
e
r
n
a
n
c
e
Following the announcement on 10 September 2019 of the strategic
review of Asset Management we will also be making changes
to our PSP performance measures for awards due to be granted
in December 2019. We are currently in the process of consulting
major shareholders on the proposed changes. All shareholders
will be fully informed of the outcome of the consultation and
the PSP performance measures decided upon in the market
announcement of the PSP grants in December 2019, as well as in
our 2020 Directors’ Remuneration Report.
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 2020
AGM to be held on 28 January 2020. The section headings identify
the parts of this report that have been subject to audit.
Our Remuneration Policy is due to be put forward to shareholders
at our 2021 AGM and will be included in our 2020 Directors’
Remuneration Report. This policy will include post-employment
shareholding requirements for Executive Directors.
The Committee consults with its shareholders prior to any major
changes in its remuneration arrangements and will ensure that
shareholders are consulted if any major changes are proposed in
the Remuneration Policy.
Imogen Joss
Remuneration Committee Chair
21 November 2019
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
73
Governance
Directors’ Remuneration Report summary
This summary section provides shareholders with the key information
from our 2019 Directors’ Remuneration Report at a glance
2019 key performance measures
for remuneration
Adjusted profit before tax (annual bonus financial
performance measure, 75% weighting)
107.8
102.5
106.5
99.9
104.6
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 82.
2015
2016
2017
2018
2019
Adjusted diluted earnings per share (PSP award performance
measure, 75% weighting)
76.4p
73.6p
77.6p
70.1p
66.5p
CEO (£000)
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
100%
41%
31%
28%
30%
30%
40%
Minimum
In line with expectations
Maximum
● Fixed pay
● Annual bonus
● PSP
2015
2016
2017
2018
2019
CFO (£000)
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
Adjusted operating profit margin (PSP award performance
measure, 25% weighting)
26%
25% 25%
26% 26%
2015
2016
2017
2018
2019
See page 22 for definitions of Key Performance Indicators.
All adjusted measures combine the results of the Group’s continuing operations. The
adjusted measures for 2018 and earlier exclude the discontinued operations relating
to GMID which was disposed of in April 2018. A detailed reconciliation of the Group’s
adjusted results to the equivalent statutory measures is set out on pages 15 to 17.
2018 comparatives have been restated as explained in note 1 of the Consolidated
Financial Statements. 2015 to 2017 comparatives have not been restated.
74
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Single figure of remuneration summary table
A Rashbass
W Pallot
Total
Salary, Benefits1
and Pension
£
Annual bonus
£
Total before
buy-out award
£
2019
2018
2019
2018
2019
2018
997,810
921,391
397,012
51,991
1,394,822
973,382
675,000
676,350
257,677
27,734
932,677
704,084
1,672,810
1,597,741
654,689
79,725
2,327,499
1,677,466
1 Benefits restated from 2018. Full information is provided in the detailed single figure of remuneration table on page 83.
2019 CEO bonus outcome
For 2019, the CEO bonus amount is 60% of maximum, £675,000. This amount will be split as follows and was calculated based on
performance against the 2019 annual bonus performance measures, summarised below.
G
o
v
e
r
n
a
n
c
e
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
Individual objectives
Total pay-out (% of maximum)
75%
25%
100%
£93.0m
–
£103.4m
–
£113.7m £104.6m
–
–
1 A reconciliation of adjusted profit before tax is set out on page 17.
The individual objectives for Andrew Rashbass in 2019 were:
£
675,000
0
675,000
Maximum
opportunity
(% of salary)
Pay-out
(% of
maximum)
112.5%
37.5%
150%
65%
45%
60%
Objective
Book of Business
growth year-on-year
M&A Activity
Details not disclosed due to commercial sensitivity
Threshold
1%
Target
1.75%
Maximum
2.5%
Comments and/or outcome
0.4%
Underlying Revenue
Growth
People
1%
3%
5%
Succession and
development plans in
place for people and
roles defined as critical
Succession and
development plans in
place for people and
roles defined as critical
Majority of Senior
Management Group
have attended
Leading 3.0
All of Senior
Management Group
have attended
Leading 3.0
Pay-out
(% of maximum)
0%
80%
0%
100%
The acquisition of BoardEx
and The Deal was
completed during 2019 and
good progress made on
wider M&A activity in line
with the strategy. Outcome:
between target and
maximum
0%
Succession plans in
place with actions for key
individuals/roles. Reviewed
collectively by Group
Management Board in
January 2019
All of Senior Management
Group have attended
Leading 3.0. Outcome:
maximum
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
75
Governance
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 2019 is set out in the Annual Remuneration
Report, from page 83 to 91.
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.
76
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
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 macro-economic 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
G
o
v
e
r
n
a
n
c
e
• 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
contribution to a pension scheme is
15% of pensionable salary
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
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
77
Governance
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
long-term
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
78
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
G
o
v
e
r
n
a
n
c
e
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
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
• 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
• 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
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
79
Governance
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 prorated 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.
80 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
New Executive Directors are entitled to participate in the
Euromoney SAYE scheme.
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.
G
o
v
e
r
n
a
n
c
e
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 prorated 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
prorated 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.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
81
Governance
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.
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)
• Consists of total fixed pay,
including base salary, benefits
and pension
• Salary: as at 1 October 2019
• Benefits: estimated value (CEO:
£175,000; CFO: £2,000)
• Pension allowance: 10% of salary
Minimum (less than threshold)
performance
• No pay-out under the
annual bonus
(Variable pay)
Performance in line
with expectations
(Variable pay)*
Maximum performance
(Variable pay)*
• No vesting under the PSP
• 2/3rd of the maximum pay-out
under the annual bonus
• 50% vesting under the PSP
• 100% of the maximum pay-out
under the annual bonus
• 100% vesting under the PSP
There is a minimum shareholding requirement of 100% of annual
fees for Non-Executive Directors on a continuous basis.
*
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)
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
30%
30%
40%
100%
41%
31%
28%
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
82
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Annual Remuneration Report
Executive Directors (audited)
In 2019, the key elements of remuneration for the CEO and CFO, 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
unchanged
since 2015
• 150% of salary maximum
• 100%/90%1 of salary target
WM Pallot (CFO) £355,000,
increased
to £363,875
from 1 April
2019
The performance measures were:
• 75% adjusted profit before tax
• 25% individual objectives
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
PSP Annual
award of 170%1
of salary vesting
after five years2
10% of
salary per
annum,
payable
in cash3
PSP Annual
award of 150%
of salary vesting
after five years2
10% of
salary per
annum,
payable
in cash3
Private
healthcare
Life
insurance
US
assignment
support
Private
healthcare
Life
insurance
1
As explained in our 2018 Directors’ Remuneration Report, 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 2019 is 90% of salary.
2 The five year vesting period is a three year performance period plus a two year holding period, after which awards vest.
3 The maximum pension contribution rate for UK employees is also 10% of salary.
The table below sets out the breakdown of the single figure of remuneration for each Executive Director in 2019 and 2018.
G
o
v
e
r
n
a
n
c
e
A Rashbass
WM Pallot
Total
Salary1
£
Benefits2
£
Annual bonus3
£
2019
2018
2019
2018
2019
2018
750,000
750,000
359,438
45,968
172,810
96,391
1,630
1,426
1,109,438
174,440
795,968
97,817
675,000
676,350
257,677
27,734
932,677
704,084
Total before
buy-out
award
£
Buy-out
award4
£
Total
£
1,672,810
656,149
2,328,959
1,597,741
654,689
79,725
590,981
2,188,722
–
–
654,689
79,725
Pension
£
75,000
75,000
35,944
4,597
110,944
2,327,499
656,149
2,983,648
79,597
1,677,466
590,981
2,268,447
1
Wendy Pallot’s salary was reviewed through the annual salary review process and, based on market data and Wendy’s performance in the role, the Committee determined that it was
appropriate to increase this in line with the rate applied to the wider employee population. Therefore, Wendy’s salary increased by 2.5%, from £355,000 to £363,875, with effect from 1 April
2019.
2 In a change from the practice in previous years, the value of benefits provided during 2019 is the actual cost incurred in the year, rather than the most recent P11D (tax year) value. In
addition, as noted above, the Company has provided accommodation for the period of Andrew Rashbass’ short-term assignment to the US and related support around additional tax filing
responsibilities. The provision of the accommodation was originally treated as exempt from tax but that treatment was re-considered during 2019 and is now treated as taxable. Based on the
revised approach, the benefits figures for 2018 have been restated from the previously disclosed figures of £1,441 for Andrew Rashbass and £0 for Wendy Pallot.
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 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. Of the
value vesting in 2018, £140,981 related to share price appreciation of 31% from the date of award. For 2019, 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 2019 of £14.84. Of the value vesting in 2019, £206,149 related to share price appreciation of 46% from the date of
award.
Annual Bonus Plan
A Rashbass
Bonus payable in cash
Bonus deferred into shares
Total
£
675,000
–
675,000
Performance measures
Financial: adjusted profit before tax1
Individual objectives
Total pay-out (% of maximum)
1 A reconciliation of adjusted profit before tax is set out on page 17.
Weighting
Minimum
On target Maximum
Actual
£93.0m
£103.4m
£113.7m £104.6m
–
–
–
–
75%
25%
100%
Maximum
opportunity
(% of salary)
Pay-out
(% of
maximum)
112.5%
37.5%
150%
65%
45%
60%
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
83
Governance
Directors’ Remuneration Report continued
The individual objectives for Andrew Rashbass in 2019 were:
Objective
Threshold
Book of Business growth year-on-year
1%
Target
1.75%
Maximum
2.5%
M&A Activity
Details not disclosed due to commercial sensitivity
Comments and/or
outcome
0.4%
The acquisition of
BoardEx and The
Deal was completed
during 2019 and
good progress
made on wider
M&A activity in line
with the strategy.
Outcome: between
target and maximum
Underlying Revenue Growth
1%
3%
5%
0%
People
Succession and
development plans
in place for people
and roles defined as
critical
Succession and
development plans
in place for people
and roles defined as
critical
Majority of Senior
Management Group
have attended
Leading 3.0
All of Senior
Management Group
have attended
Leading 3.0
Succession plans in
place with actions
for key individuals/
roles. Reviewed
collectively by Group
Management Board
in January 2019.
All of Senior
Management Group
have attended
Leading 3.0.
Outcome: maximum
Pay-out (% of
maximum)
0%
80%
0%
100%
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 based on the performance
measures set for 2019. The Committee noted the overall strong progress of the Company and development of the strategy, led by
Andrew, not necessarily all of which is reflected in the specific performance measures.
On the basis of the above, the annual bonus will pay out at 60% of maximum opportunity and an overall bonus of £675,000 (90% of
salary). Under our Remuneration Policy, any annual bonus in excess of 100% of salary will be paid as a nil-cost option, the vesting of
which will be deferred for two years, which is not applicable with this bonus outcome.
WM Pallot
Bonus payable in cash
Bonus deferred into shares
Total
Performance measures
Financial: adjusted profit before tax1
Individual objectives
Total pay-out (% of maximum)
1 A reconciliation of adjusted profit before tax is set out on page 17.
£
257,677
–
257,677
Weighting
Minimum
On target Maximum
Actual
75%
25%
100%
£93m
£103.4m
£113.7m £104.6m
–
–
–
–
Maximum
opportunity
(% of salary)
Pay-out
(% of
maximum)
93.75%
31.25%
125%
56%
61%
57%
84 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
The individual objectives for Wendy Pallot in 2019 were:
Objective
Threshold
Book of Business growth year-on-year
1%
Target
1.75%
Maximum
2.5%
Outcome
0.4%
M&A Activity
Details not disclosed due to commercial sensitivity
The acquisition of
BoardEx and The
Deal was completed
during 2019 and
good progress
made on wider
M&A activity in line
with the strategy.
Outcome: between
target and maximum
Internal Audit and Controls
Global Finance Transformation
Project
New internal audit
team appointed;
new internal controls
framework designed
New internal audit
team successfully
embedded; new
internal controls
framework
implemented
New finance
system successfully
implemented in
one division with
satisfactory internal
audit report for
project governance
New finance
system successfully
implemented in
one division and
the UK ledger with
satisfactory internal
audit report for
project governance
New internal audit
team successfully
embedded and
internal audit
schedule completed;
new internal
controls framework
embedded
Head of Internal
Audit appointed and
embedded, internal
audit schedule
completed but new
internal controls
framework design
work in progress.
Outcome: between
target and maximum
New finance
system successfully
implemented in
one division and
the UK ledger with
good internal audit
report for project
governance and on
track to complete
roll-out by the end
of 2020
New finance
system successfully
implemented in
one division and
the UK ledger, in
line with approach
agreed with the
Audit Committee.
Satisfactory internal
audit report for
project governance.
On track for
completing roll-out
by the end of 2020.
Outcome: below
maximum
Pay-out (% of
maximum)
0%
75%
G
o
v
e
r
n
a
n
c
e
80%
87.5%
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 based on the performance
measures set for 2019. The Committee noted the overall strong progress of the Company and development of the strategy, which Wendy
has contributed a significant amount to, not necessarily all of which is reflected in the specific performance measures.
On the basis of the above, the annual bonus will pay out at 57% of maximum opportunity and an overall bonus of £257,677 (72% of
salary). Under our Remuneration Policy, any annual bonus in excess of 100% of salary will be paid as a nil-cost option, the vesting of
which will be deferred for two years, which is not applicable with this bonus outcome.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
85
Governance
Directors’ Remuneration Report continued
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.
Buy-out award for Andrew Rashbass (audited)
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. This award vested as follows:
30 September 2016: 40% (88,404 shares)
30 September 2017: 20% (44,202 shares)
30 September 2018: 20% (44,202 shares)
30 September 2019: 20% (44,203 shares)
Long-term incentives (audited)
No share plan options under the PSP will vest in the year for the Executive Directors. Andrew Rashbass held a PSP award over 141,857
shares (originally granted on 19 December 2016 and due to vest on 19 December 2021) which lapsed during the year as the performance
measure, measured over a three year period, was not met. The performance measure was compounded annualised adjusted diluted
EPS growth and the threshold level of 3% required for any vesting was not met.
Options were granted over 154,591 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.
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 2019.
Scheme interests subject to performance conditions (audited)
The table below sets out the details of the long-term incentive awards granted to Andrew Rashbass and Wendy Pallot under the PSP
on 17 December 2018. Vesting will be determined according to the achievement of performance measures that will be tested in 2021.
In addition to the three-year performance measurement period, Executive Directors have a further two-year holding period following the
performance period. No other awards under the PSP have been granted to the Executive Directors during 2019. As explained above, the
Chief Executive Officer’s PSP award level was reduced to 170% of salary (at grant) for the award granted in December 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
W Pallot
Type of
option awarded
Basis of award
Nil-cost option
170% of salary
Nil-cost option
150% of salary
Face value of
award made
£1,275,000
£532,500
Number of
shares1
End of
performance period
109,048
45,543
Sep 2021
Sep 2021
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 £11.69, 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 17 December 2018.
Details of performance measures for the December 2018 PSP awards are as follows:
Maximum opportunity
Performance measure
Weighting
Performance target
8% or more
Vesting level
Full vesting
75%
Between 3% and 8% Between 25% and 100%
on a sliding scale
3%
Less than 3%
28% or more
25%
Nil
Full vesting
Between 25.5% and 28% Between 25% and 100%
on a sliding scale
25.5%
Less than 25.5%
25%
Nil
A Rashbass: 170% of salary
W Pallot: 150% of salary
Compounded annualised EPS1
growth between financial
years 2017 and 2020
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.
86 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
The table below sets out the details of PSP awards (nil cost options) held by Executive Directors as at 30 September 2019.
Year
Relating
to
Performance
period ends
Exercisable
from
Expiry
date
Status
Award price
(pence)
Granted during
the year
A Rashbass
PSP
PSP
PSP
PSP
30 Sep 2020
18 Dec 2020
18 Dec 2025 Outstanding
30 Sep 2019
19 Dec 2021
19 Dec 2026 Outstanding
30 Sep 2020
19 Feb 2023
19 Feb 2028 Outstanding
30 Sep 2021
17 Dec 2023
17 Dec 2028 Outstanding
941.8
1,057.4
1,158.0
1,169.2
–
–
–
109,048
2015
2016
2018
2018
Total
W Pallot
2018
PSP Nil-cost option
17 Dec 2023
17 Dec 2028 Outstanding
1,169.2
45,543
Lapsed
during the
year
Exercised
during the
year
Outstanding
awards
–
141,857
–
–
–
–
–
–
–
–
159,269
–
110,103
109,048
378,420
45,543
Scheme interests not subject to performance conditions (audited)
The table below sets out the details of outstanding buy-out awards, deferred bonus awards and SAYE options held by Andrew Rashbass
and Wendy Pallot.
Year
Relating to
Award type Exercisable from
Expiry date
Status
Award price
(pence)
Exercised
during the year
Outstanding
awards
A Rashbass
G
o
v
e
r
n
a
n
c
e
2015
2015
2016
2017
2018
Total
W Pallot
2019
Buy-out award
Nil-cost option
30 Sep 2018
1 Oct 2025 Outstanding
Buy-out award
Nil-cost option
30 Sep 2019
1 Oct 2025 Outstanding
Deferred bonus
Nil-cost option
22 Dec 2018
22 Dec 2024 Outstanding
Deferred bonus
Nil-cost option
19 Feb 2020
19 Feb 2026 Outstanding
SAYE Discounted option
1 Aug 2021
1 Feb 2022 Outstanding
1,018.5
1,018.5
1,063.6
1,158.0
1,420.0
SAYE Discounted option
1 Aug 2022
1 Feb 2023 Outstanding
1,246.0
44,202
–
19,175
–
–
–
–
44,203
–
4,339
1,691
50,233
1,651
The proportion of the buy-out award (over 44,202 shares) which vested on 30 September 2018 was exercised on 17 December 2018.
Some shares (20,775) were sold to cover tax, with the balance of 23,427 shares retained. The share price at exercise was £11.76.
The deferred bonus award (over 19,175 shares), which vested on 22 December 2018, was exercised on 4 January 2019. Some shares
(9,012) were sold to cover tax, with the balance of 10,163 shares retained. The share price at exercise was £11.91.
The SAYE option granted to Wendy Pallot during the year was granted on 14 June 2019 with a market value of £20,571 and option exercise
price of £10.90 per share. The basis for the grant was Wendy’s level of savings under the HMRC approved all employee SAYE plan.
Scheme interests summary (audited)
The table below summarises all interests in shares.
Executive Director
A Rashbass
W Pallot
Awards held
subject to
performance
conditions
378,420
45,543
Awards held
not subject to
performance
conditions
(unvested)
6,030
1,651
Awards held
not subject to
performance
conditions
(vested)
44,203
–
Shares required
to be held
% of salary
Number of shares
required
to be held1
200%
200%
101,351
49,172
Number of
beneficially
owned
shares
124,646
833
Shareholding
requirement
met
Yes
No2
1
The number of shares is calculated using the closing mid-market price on 30 September 2019 of £14.80. The requirement is for the Executive Directors to hold 200% of salary within five years of
appointment. For the purposes of measuring the shareholding, shares held will be included but not unvested options.
2 Wendy Pallot was appointed Executive Director on 16 August 2018 and therefore has not yet built up shares equal to her individual requirement and has until August 2023 to build up the
required shareholding.
There have been no changes in the shareholdings or share interests of the Executive Directors between 30 September 2019 and the date
of this Annual Report and Accounts.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
87
Governance
Directors’ Remuneration Report continued
Payments to past Directors (audited)
Other than payments made to Sir Patrick Sergeant in relation to his role as Life President, there were no payments to past Directors made
in the year, As disclosed at the time Sir Patrick stepped down from the Board, in his role as Life President he is paid a fee of £50,000 and
is also provided with a chauffeur and personal assistant, and reimbursed for expenses incurred (at a cost of £103,679 for 2019). The total
costs incurred are therefore £153,679.
Payments for loss of office (audited)
There were no payments for loss of office made in the year.
Non-Executive Directors (audited)
Leslie Van de Walle was appointed as Chairman from 1 March 2019. The Committee considered the size and scope of the role and the
relevant market data and it was determined that it was necessary and appropriate to set the fee level for the new Chairman at £220,000
(an increase from the previous level of £190,000 which had been in effect from 1 February 2017).
The fees for the other Non-Executive Director roles were not reviewed during 2019, with the last increase having been effective from
1 February 2017. These current fee levels are as follows:
• 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 2020 AGM currently have an unexpired term of at least two years on their
letters of appointment.
Single figure of remuneration (audited)
The table below sets out the break down of the single total figure of remuneration for each Non-Executive Director in 2019, along with
comparable figures from 2018.
DP Pritchard (Acting Chairman from 1 February 2018, stepped down from 28 February 2019)
ART Ballingal (stepped down 1 February 2019)
TP Hillgarth
I Joss (Remuneration Committee Chair from 1 February 2018)
TG Collier (appointed 21 November 2017, stepped down from 2 April 2019)
KJ Beatty (appointed 21 November 2017, stepped down from 2 April 2019)
J Babiak (appointed 1 December 2017, Senior Independent Director from 18 September 2019)
LM Tilbian (appointed 1 January 2018)
C Day (appointed 5 March 2018, Audit Committee Chair from 16 May 2018)
L Van de Walle (appointed Chairman from 1 March 2019)
T Pennington (appointed 1 September 2019)
Total
2019 fees
£
79,167
16,667
50,000
60,000
24,762
24,762
50,357
50,000
60,000
128,333
4,167
548,215
2018 fees
£
150,000
50,000
50,000
48,3331
43,182
43,182
41,667
37,500
32,614
–
–
496,478
1
Restated from 2018 Directors’ Remuneration Report, where a figure of £41,667 was disclosed which did not include the Remuneration Committee Chair fee applicable from 1 February 2018.
Directors’ interests (audited)
Shareholding guidelines for the Non-Executive Directors were introduced last year, equal to 100% of annual fees. The interests of the
Non-Executive Directors in the ordinary shares of the Company as at 30 September 2019 (or date of stepping down from the Board, if
earlier) were as follows:
DP Pritchard
ART Ballingal
TP Hillgarth
I Joss
TG Collier
KJ Beatty
J Babiak
LM Tilbian
C Day
L Van de Walle
T Pennington
Number of ordinary shares
16,644
–
4,000
–
–
–
5,404
–
–
3,500
–
There have been no changes in the shareholdings of the Non-Executive Directors between 30 September 2019 and the date of this
Annual Report and Accounts.
88 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
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: %
550
500
450
400
350
300
250
200
150
100
50
0
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
30 Sep 2019
● 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.
G
o
v
e
r
n
a
n
c
e
CEO
2010
2011
2012
–
–
–
–
–
–
3,977
4,397
4,857
–
–
–
–
–
–
82%
82%
82%
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
PR Ensor
2013
–
1,647
–
–
2014
–
895
–
–
2015
–
576
–
–
2016
1,780
–
–
2017
1,627
2018
1,598
–
–
–
–
2019
1,673
–
–
85%
71%
60%
60%
58%
52%
17%
–
–
–
–
–
–
–
–
–
–
–
100%
100%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0%
–
–
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.
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. The negative change in the average employee salary and incentives from 2018 to 2019 is largely due to M&A activity, in particular
the acquisition of BoardEx and the Deal during 2019 which resulted in acquiring employees in a number of new markets.
CEO remuneration
Average employee
% change 2018 to 2019
Salary
0%
(4)%
Benefits
Incentives
79%
1%
(0.2)%
(13)%
Remuneration in the above table excludes long-term incentive payments and pension benefits. There is no change in salary from 2018 for
the CEO remuneration as Andrew Rashbass did not receive an increase in the April 2019 salary review.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
89
Governance
Directors’ Remuneration Report continued
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
2019
£m
153.6
35.6
104.6
2018
£m
159.0
34.4
99.9
Increase
(3.4)%
3.5%
4.8%
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 A reconciliation of adjusted profit before tax is set out on page 17.
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 2019, the Committee met six times and informal discussions were held at other times during the year. Information on meeting
attendance is provided on page 72.
Committee members
David Pritchard (resigned 28 February 2019)
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, resigned 2 April 2019)
Leslie Van de Walle (appointed to the Committee on 2 April 2019)
Lorna Tilbian (appointed to the Committee on 2 April 2019)
Tim Pennington (appointed to the Committee on 1 October 2019)
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, 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 £4,890 were payable for this advice, with fees determined based on time incurred.
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. Deloitte also provides international tax
advice to the Company. The Committee is satisfied as to the independent nature of their advice.
Committee Annual Activity – 2019
October 2018
• Market Update
November 2018 continued
• 2018 PSP Performance Targets
• 2018 Bonus – Performance against targets
• 2018 PSP Awards
• 2019 Bonus Measures
• 2018 PSP Performance Measures
• 2018 Remuneration Report
• Committee Terms of Reference
November 2018
• Market Update
• 2018 Bonus – GMB Outcomes
• 2018 Profit Share Plan – Previous CFO
• 2019 Bonus Targets & Objectives
• Approval of Directors’
Remuneration Report
• 2018 Bonus CFO Outcome
• 2019 CFO Objectives
• 2018 Bonus CEO Outcome
• 2019 CEO Objectives
March 2019
• Market Update
• 2019 Salary Review
• PSP Awards
July 2019
• Market Update
• PSP Performance Measure
Tracking Update
• Financial Year End Planner
January 2019
• Approval of fees for new Chairman
September 2019
• 2020 Bonus Performance Measures
90
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Implementation of the Remuneration Policy in 2020
Basic salary
Directors’ salaries from 1 October 2019 are:
Andrew Rashbass: £750,000
Wendy Pallot: £363,875
Salaries will be reviewed in April 2020
Pensions and benefits
No change to prior year for Andrew Rashbass or Wendy Pallot
Annual incentive (bonus)
Annual bonus deferral
Long-term incentive
The weightings for the financial performance measures will remain at 75% and individual objectives at 25%
for Andrew Rashbass and Wendy Pallot under the Annual Bonus Plan in 2020. However, underlying revenue
growth will be introduced as a new financial measure with a 37.5% weighting, with adjusted PBT reducing
to a 37.5% weighting.
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.
The value of the PSP awards due to be granted to Executive Directors in December 2019 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 are likely to be different from the previous year.
We are currently in the process of consulting major shareholders on these proposals. Shareholders will be
fully informed of the outcome of the consultation and the PSP performance measures decided upon in the
market announcement of the PSP grants (expected to be in December 2019), as well as in our 2020 Directors’
Remuneration Report.
G
o
v
e
r
n
a
n
c
e
Directors employed in the UK are eligible to participate in the SAYE.
Non-Executive Directors’ fees
There is no current intention to review Non-Executive Directors’ fees during 2020.
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 outcome on the resolution on the 2018 Directors’ Remuneration Report at the February 2019 AGM:
Directors’ Remuneration Report
Votes for
82,051,986
%
82%
Votes against
18,193,338
%
18%
Abstentions
–
The table below shows the voting outcome for our most recent remuneration policy vote (set out in our 2017 Directors’ Remuneration
Report) and voted on at the February 2018 AGM:
Votes for
93,926,490
%
92%
Votes against
8,497,841
%
8%
Abstentions
20,000
Remuneration Policy
On behalf of the Board
Imogen Joss
Remuneration Committee Chair
21 November 2019
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
91
Governance
Directors’ Report
Euromoney Institutional Investor PLC, incorporated in England and
Wales, company number 00954730, 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 and FTSE4Good
share indices.
The Directors’ Report comprises pages 92 to 94 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 53) 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 £60.9m (2018: £195.0m). The Board remains
committed to the progressive dividend policy introduced in 2017
which anticipates a dividend pay-out ratio of approximately 40%
of adjusted diluted earnings per share.
The Board is able to recommend a final dividend of 22.3p per
ordinary share (2018: 22.30p), payable on 13 February 2020
to shareholders on the register on 29 November 2019. This,
together with the interim dividend of 10.80p per ordinary share
(2018: 10.20p), which was declared on 16 May 2019, brings
the total dividend for the year to 33.1p per ordinary share
(2018: 32.50p).
Share capital
The Company’s share capital is divided into ordinary shares
of 0.25p each. At 30 September 2019, there were 109,249,352
ordinary shares in issue and fully paid. During the year, 68,623
ordinary shares of 0.25p each (2017: 79,121 ordinary shares)
with an aggregate nominal value of £172 (2018: £198) were
issued following the exercise of share options granted under the
Company’s share incentive schemes for a cash consideration of
£0.52m (2017: £0.64 m). 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 2019, the trust’s shareholding totalled
1,593,198 shares representing 1.5% of the Company’s called-up
ordinary share capital. There have been no awards transferred
between 30 September 2019 and the date of this Annual Report
and Accounts.
92
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
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. 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 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 2019 AGM, the Company did not seek authority from
shareholders to purchase its own shares. The Directors were
authorised by shareholders to allot shares up to an aggregate
nominal amount of £181,970 exclusive of the application of
pre-emption rights.
Significant shareholdings
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 as at 30 September 2019.
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 3 October
to 21 November 2019.
Nature of
Shareholder
holding Shareholding
Interest
Lindsell Train Limited Direct and
Indirect
16,266,894
14.89%
Indirect
6,263,048
5.73%
Indirect
6,023,481
5.51%
Date of
disclosure
9 April
2019
3 April
2019
4 April
2019
Heronbridge
Investment
Management LLP
Majedie Asset
Management
Limited
Standard Life
Aberdeen plc
Indirect
3,873,935
3.60% 2 October
2019
Société Générale
Direct
3,313,561
3.23%
9 April
2019
Termination of Relationship deed
The revised relationship deed entered into on 8 December
2016 between the Company and Daily Mail and General Trust
plc, the parent company of DMGZ Limited (which superseded
the agreement entered into on 16 July 2014), as required by
the Listing Rules, terminated on 2 April 2019. This followed
DMGT’s distribution of its shareholding in the Company to
certain of its own shareholders, and therefore ceasing to be a
shareholder. The Company had complied with the terms of the
relationship deed.
Employees
The performance of our employees has a material impact on
the performance of the Company. We therefore operate a robust
recruitment process to ensure we hire the right people for the right
roles. Staff retention is equally important and we therefore invest
in group-wide and business-specific training and development
programmes as well as broader initiatives which are detailed
elsewhere in this report. We have also reviewed staff pay in the
course of the year with the objective of paying staff fairly for the
role they perform.
We are clear with employees what our expectations are of
them. This aids their development and encourages the right
behaviours within both our company and when our employees are
representing our company. We have a Code of Conduct, which
sets out our expectations on ethics. Our staff handbook sets out
our requirements in relation to use of the Group’s IT resources and
how we manage customer data. We have policies to help our
employees comply with the law – for example, relating to anti-
bribery and trade sanctions.
We have a framework to help employees speak up when they feel
something is wrong. This may be informally, by seeking to create a
culture where employees feel able to speak to a manager or other
colleague. It may be formally, through the use of our grievance
process. Alternatively, it may be via a third party, through the use of
our Speak Up hotline where concerns can be raised anonymously.
Each of the Risk Committee and the Audit & Risk Committee
oversee these various policies and processes, which effectively
form part of our risk framework.
We want employees to feel vested in the financial performance
of our business, which we do through our different share and
bonus schemes.
We have a duty to look after the safety and wellbeing of our
employees, in accordance with health and safety legislation.
We do this in a variety of ways; we provide an Employee Assistance
Programme; we provide a mental health pathway service; and we
have a confidential Speak Up facility provided independently by
InTouch for all employees globally to report suspected instances of
wrongdoing for investigation and appropriate action.
We benefit if we can hire, retain, develop and promote employees
from diverse backgrounds, irrespective of gender, race, faith,
disability, sexual orientation or otherwise. We treat people equally
both in our hiring processes, our subsequent management of
them and through the facilities we make available to all of our
employees (for example, accessible buildings for disabled staff; a
reflection room for our employees of faith).
Political donations
No political donations were made during the year (2018: £nil).
Post balance sheet events
Events arising after 30 September 2019 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 56 to 63)
Related party transactions (note 29)
Waivers of dividends (page 92)
Greenhouse Gas (GHG) reporting (page 37)
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 reappoint PricewaterhouseCoopers LLP as the
Company’s statutory auditor and to authorise the Audit & Risk
Committee to determine their remuneration will be proposed at the
2020 AGM.
Annual General Meeting
The Company’s AGM will be held at the Company’s registered
office at 8 Bouverie Street, London, EC4Y 8AX on 28 January 2020
at 9.30 a.m. A separate circular comprising the Notice of Meeting,
together with explanatory notes, accompanies this Annual Report
and Accounts.
G
o
v
e
r
n
a
n
c
e
Directors
Directors and Directors’ interests
The membership of the Board and biographical details of
the Directors are given on pages 54 and 55 of the Corporate
Governance Report. The Directors serving on the Board of the
Company during the year were as follows:
Date appointed in the
year (if applicable)
Date resigned in the
year (if applicable)
Director
Jan Babiak
Andrew Ballingal
Kevin Beatty
Tim Collier
Colin Day
Tristan Hillgarth
Imogen Joss
Wendy Pallot
1 February 2019
2 April 2019
2 April 2019
28 February 2019
Tim Pennington
1 September 2019
David Pritchard
Andrew Rashbass
Lorna Tilbian
Leslie Van de Walle
1 March 2019
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 72 to 91.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
93
Governance
Directors’ Report continued
• 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.
Directors’ confirmations
Each of the Directors, whose names and functions are listed on
pages 54 and 55 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 2019
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.
In accordance with the Company’s Articles of Association and
the requirements of the Code, all serving Directors, with the
exception of Tristan Hillgarth, 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
Director’s 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 2019
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;
94
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
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 Consolidated Financial Statements and Company Accounts (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 2019 and of the Group’s profit and cash
flows for the year then ended;
• The Consolidated Financial Statements have been properly prepared in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union;
• The Company Accounts 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
Consolidated 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 2019; the Consolidated Income
Statement and 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 & Risk 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 Consolidated Financial Statements, we have provided no non-audit services to the Group or
the Company in the period from 1 October 2018 to 30 September 2019.
Our audit approach
Overview
Materiality
Audit scope
• Overall Group materiality: £4.0m (2018: £4.0m) based on approximately 5% of statutory profit
before tax from continuing and discontinued operations, adjusted for exceptional items.
• Overall Company materiality: £14.2m (2018: £14.5m) based on approximately 1% of total assets.
• We conducted work in three key territories being the UK, US and Canada. This included
full scope audits at five components with specified procedures performed at a further
four components.
• Taken together, the components at which audit work had been performed accounted for
approximately 81% of the Group’s total revenue and 67% of the Group’s statutory profit before tax
from continuing and discontinued 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)
• Restatements arising from VAT and payroll tax exposures (Group)
• Disposals and discontinued operations (Group)
• Finance transformation (Group)
• Acquisition of The Deal LLC (Group)
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
95
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
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.
Capability of the audit in detecting irregularities, including fraud
Based on our understanding of the Group and the industry in which it operates, we identified that the principal risks of non-compliance
with laws and regulations related to the failure to comply with international tax legislation and we considered the extent to which
non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a
direct impact on the preparation of the financial statements such as the Companies Act 2006. We evaluated management’s incentives
and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that
the principal risks were related to posting journal entries to increase revenue or profits, manipulation of when revenue is recognised,
the classification of exceptional items and management bias in accounting estimates. The Group engagement team shared this risk
assessment with the component auditors so that they could include appropriate audit procedures in response to such risks in their work.
Audit procedures performed by the Group engagement team and/or component auditors included:
• Discussions with management, internal audit and the Group’s legal counsel, including consideration of known or suspected instances
of non-compliance with laws and regulations and fraud;
• Assessment of the Group’s whistleblowing facility and matters reported through the facility;
• Evaluating and, where appropriate challenging assumptions and judgements made by management in determining significant
accounting estimates, in particular in relation to impairment of goodwill and intangible assets, acquisition accounting, the VAT and
payroll tax restatements and uncertain tax positions;
• Identifying and testing unusual journal entries, in particular journal entries posted with unusual account combinations; and
• Identifying revenue recognised close to year-end and verifying that the relevant performance obligations were satisfied.
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. Also, 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.
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.
96
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Key audit matter
How our audit addressed the key audit matter
Carrying values of goodwill and acquired intangibles assets
(Group)
Refer to the Audit & Risk Committee report on page 68 and to
note 12 to the Consolidated Financial Statements.
At 30 September 2019, the Group had £405.4m (2018: £588.2m)
of intangible assets, which includes £149.5m (2018: £167.8m)
of acquired intangible assets and £246.3m (2018: £414.7m) 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 £2.4m impairment
charge for the Centre for Investor Education, which the Group
has closed. In addition, there continues to be challenges within
the asset management segment following structural and
regulatory changes in the market, which were considered an
impairment indicator.
The recoverability of goodwill and acquired intangible assets is
dependent on expected future cash flows from cash generating
units (CGUs), defined as the lowest collection of assets for which
cash inflows are generated largely independently. As permitted
by IAS 36, the Group has reassessed the level at which
goodwill impairment reviews are prepared to groups of CGUs
representing the lowest level at which goodwill is monitored for
internal management purposes. This reassessment has resulted
in the impairment reviews being performed at the divisional level.
There is a risk that performing impairment reviews at this higher
level could mask impairments that would have been present at a
lower level.
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 focused on the change in the level at which goodwill
impairment reviews are performed. We reviewed management’s
internal business performance reporting to validate the level
at which goodwill is monitored. We also considered the
performance of businesses at the stand-alone (rather than
aggregated) CGU level to identify if a material impairment
would have been required at the lower level at the time the
decision was made to reassess CGU groupings.
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.
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 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 compared the multiples implied
by the discounted cash flow models to third party sources and to
multiples paid by the Group in previous acquisitions.
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 checked for any additional impairment triggers in other
businesses through discussions with management, review
of management accounts and Board minutes, review of
external sources including analyst and industry reports 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 2019 was appropriate. We have assessed
management’s disclosures in light of the impairment testing
we 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.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
97
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
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 Accounts.
We evaluated management’s assessment whether any indicators of
impairment existed by comparing the net assets of the Company’s
subsidiaries at 30 September 2019 with the Company’s investment
carrying values.
Investments in subsidiaries of £1,226m (2018: £1,232m) are
accounted for at cost less impairment in the Company
Balance Sheet at 30 September 2019.
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; and (3) 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 of any
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 charge of £6.1m was
recorded, largely triggered by an increase in the
weighted average cost of capital used to discount the
cash flows attributable to the Company's UK investments.
Uncertain tax positions (Group)
Refer to the Audit & Risk Committee report on page 69
and to note 8 to the Consolidated Financial Statements.
The Group operates in a complex multinational tax
environment in relation to direct taxes and there are
a number of open tax matters with tax authorities,
especially in the UK relating to an HMRC enquiry from
2018 and in Canada relating to a challenge by the
Canadian Revenue Agency. 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.
For those investments where the net assets were lower than the carrying
values, management prepared a valuation based on the discounted
future cash flows of the Company’s investments. 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.
We compared the multiples implied by the discounted cash flow models
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 2019.
We performed our own independent sensitivity analysis to understand the
impact of reasonably possible changes in management’s assumptions
that would result in further impairment. Where 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 audit of the Consolidated Financial Statements.
As a result of our work, we considered the £6.1m impairment charge to be
appropriate. The remaining carrying values of the investments held by the
Company are supportable in the context of the Company Accounts 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 2008 and 2009 and a
potential exposure relating to an HMRC enquiry from 2015. The maximum
exposure to the HMRC enquiry is £10.7m which was fully provided in
2018. The Group has approximately £20m of unprovided exposure for the
challenge by the Canadian Revenue Agency.
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 and we independently evaluated the likely
outcome of each dispute.
Based on the audit evidence obtained, we considered the level of
provisioning for direct taxes and the related disclosures to be appropriate
in the context of the Consolidated Financial Statements taken as a whole.
98 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Key audit matter
How our audit addressed the key audit matter
Presentation of exceptional items (Group)
Refer to the Audit & Risk Committee report on page 68 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 2019.
Overall, we found that management was even handed and
consistent in its treatment of exceptional credits and debits.
During the year, the Group presented £3.9m of net income as
exceptional items from continuing and discontinued operations,
primarily comprising: profit on disposal of businesses; offset by
goodwill impairments, professional fees associated with the
planned sale of the asset management businesses; and other
exceptional costs.
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.
Disposals and discontinued operations (Group)
Refer to the Audit & Risk Committee report on page 69 and to
note 11 to the Consolidated Financial Statements.
In September 2019, the Group announced its plan to explore
the sale of its asset management businesses, comprising BCA
Research, Net Davis Research and Institutional Investor (the
‘disposal group’).
At 30 September 2019, the sale was not completed. The disposal
group has been presented as a discontinued operation in the
Consolidated Financial Statements.
Judgement was required in determining whether the disposal
group met the IFRS 5 criteria for classification as a discontinued
operation and particularly whether it is highly probable that
shareholder approval will be received and that the sale will
complete within 12 months.
In addition, on 23 October 2018 the Group disposed of the
Mining Indaba business, generating a profit on disposal of
£17.0m
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.
We examined minutes of Board meetings, written
correspondence between the Group and the potential
purchasers and communications to the Group’s investors.
We considered that the classification of assets and liabilities
in the disposal group as held for sale and the results of the
disposal group as discontinued operations is appropriate and in
accordance with IFRS 5.
Furthermore, the carrying value of the assets and liabilities of the
disposal group has been assessed by reference to the expected
proceeds less estimated cost of disposal. The estimated proceeds
were based on discounted cash flow models and we agreed the
underlying cash flow projections to budgets and forecasts and
assessed how these projections were compiled. We compared
this valuation to the estimated disposal proceeds provided by the
Group’s third party advisors. We were satisfied that the net assets
of the disposal group were recoverable at 30 September 2019.
In respect of Mining Indaba, we obtained and reviewed the
sale and purchase agreement to gain an understanding of the
terms of the transaction and recalculated the gain on disposal.
We vouched the disposal costs to invoice and other supporting
evidence, confirming that they were directly attributable to
the disposal.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
99
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Independent Auditors’ Report to the members
of Euromoney Institutional Investor PLC continued
Key audit matter
How our audit addressed the key audit matter
Restatements arising from VAT and payroll tax exposures
(Group)
Refer to the Audit & Risk Committee report on pages 68 and 69
and to note 1 to the Consolidated Financial Statements
The Group identified underpayments to HMRC of payroll
taxes relating to off-payroll employees of £8.2m and to VAT on
recharges between UK subsidiaries of £11.3m. Management has
determined that the underpayments related to prior periods and
that comparative financial information therefore needs to be
restated to properly reflect the quantum of the exposure in each
prior period.
Management judgement is required in estimating the potential
exposures including estimating the amount of penalties and
interest that could be incurred and the look-back period
that will be applied for both matters. In respect of the payroll
tax exposure, judgement is required in determining which
contractors will be classified as off-payroll employees and
whether the listing of at-risk contractors is complete.
Deploying our indirect tax experts, we assessed the likelihood of
the VAT exposure crystallising and assessed the reasonableness
of management’s quantification of the exposure including
assessing whether interest and penalties should be applied in
determining the provision. We reviewed related correspondence
with management’s third party advisors and with HMRC.
In order to assess the risk of further VAT exposures, we obtained
and reviewed the VAT returns for UK subsidiaries and tested
management’s reconciliation of these returns to the underlying
books and records. We reviewed the returns and understood
management’s processes for determining the VAT treatment of
judgemental items. We considered what UK subsidiaries were
not part of the UK VAT group and the economic activity in those
subsidiaries to determine if additional VAT exposures existed.
We substantively tested amounts paid to contractors to invoices,
cash payments and contracts to assess the accuracy of the data
used to estimate the payroll tax provision and we performed
keyword searches of transactional level data to verify the
completeness of identified contractors.
Deploying our employment tax experts, we assessed the
period of time for calculating the payroll tax exposure and
the methodology applied by management to estimate the
exposure. We also considered the reasonableness of the
interest and penalty component of the provision by reference to
statutory guidelines.
For both matters, we have evaluated the inputs and advice
from third party experts engaged by the Company to support
management’s estimate of each exposure.
Since both matters are material and relate to prior periods, we
considered management’s decision to restate the comparative
financial information to be appropriate.
As a result of our work, we considered the £19.5m provision
for the VAT and payroll tax exposures to be appropriate.
We have reviewed the appropriateness of the disclosures
in the Consolidated Financial Statements regarding the key
assumptions used to determine the provisions and explaining
the restatement.
We evaluated the controls in place to extract, transform and load
data from legacy systems to the new ERP system including testing
balance sheet reconciliations for migrating entities to identify any
residual migration issues. We assessed the design and operation
of the new ERP’s automated functionality and the restrictions
designed in relation of segregation of duties.
Where issues were identified, we performed additional
substantive testing to address the residual risk. In the year of
migration, we maintained a substantive rather than controls
based audit approach. Based on our work, we did not identify
any material misstatements as a result of the impact of finance
transformation activities in 2019.
Finance transformation (Group)
The Group is in the midst of a period of significant change with
the continued roll-out of a new Enterprise Resource Planning
(ERP) system. The ERP implementation programme continued in
2019 with certain UK and North American businesses going live.
This change represents a risk as controls and processes that
have been established and embedded over a number of years
are changed and migrated to the new ERP environment. There is
an increased risk of break-down in internal control during
the transition.
In addition, there is a risk that data is not migrated accurately
between systems which could result in misstatements.
100 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Key audit matter
How our audit addressed the key audit matter
Acquisition of The Deal LLC (Group)
Refer to the Audit & Risk Committee report on page 69 and to
note 15 to the Consolidated Financial Statements.
On 14 February 2019, the Group acquired 100% of the equity
share capital of The Deal LLC, comprising BoardEx, an executive
profiling and relationship-mapping platform, and The Deal,
a source of data, news and intelligence on mergers and
acquisitions, activist investing, private equity and restructuring,
for £72.5m. A provisional purchase price allocation exercise has
been performed by management, assisted by an external expert.
The primary element of the valuation exercise assessed
the fair value of identifiable intangible assets in the form of
trade name (£3.0m), customer relationships (£36.8m) and
databases (£4.2m). Goodwill of £27.6m was recognised as a
result of the acquisition. Judgement was required in identifying
and valuing these acquired intangible assets and goodwill
and in determining the valuation of the other assets and
liabilities acquired.
We obtained and reviewed the sale and purchase agreement
(SPA) and due diligence reports to gain an understanding of the
key terms of (and business rationale for) the acquisition.
In testing the valuation of the intangible assets acquired, we
considered whether the identified intangible assets were
appropriate by reference to the SPA, due diligence reports and
other supporting documentation.
Deploying our valuations experts, we engaged with
management and with management’s third party expert to
assess the methodology employed for calculating the fair values
of the assets and liabilities and the appropriateness of the key
assumptions used, including discount rates.
We checked that the material fair value adjustments to the
acquired net assets were consistent with the accounting
standard requirements. Based on the evidence obtained,
we did not identify any indication that the fair value
adjustments identified by management were inappropriate
or that material fair value adjustments were omitted from
management’s assessment.
We performed certain procedures on the opening balance sheet
acquired by the Group. We reviewed management’s analysis
of the impacts of the differences between The Deal LLC’s
accounting policies and the Group’s accounting policies and
noted no material differences.
We read the disclosures in the Consolidated Financial
Statements to satisfy ourselves that they are in line with the
requirements of the relevant accounting standards.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
101
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
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 56 reporting units, each of which is considered to be a component.
We identified five 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 four 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 (UK), Euromoney Global (UK), Institutional Investor (US), BCA Research
(Canada) and RISI (US), 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 (UK) over property, plant and equipment and
related dilapidation provisions, at Information Management Network (US) over revenue, accounts receivable and contract liabilities
and at Euromoney Canada and Fantfoot (both UK) over cash and cash equivalents. 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 81%
of the Group’s total revenue and 67% of the Group’s statutory profit before tax from continuing and discontinued operations, adjusted
for 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 that cover certain of the Group’s smaller and lower risk components, which 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:
Consolidated Financial Statements
Company Accounts
Overall materiality
£4.0m (2018: £4.0m).
£14.2m (2018: £14.5m).
How we
determined it
Approximately 5% of statutory profit before tax from continuing and
discontinued operations, adjusted for exceptional items.
Approximately 1% of total assets.
Rationale for
benchmark
applied
The Group’s principal measure of earnings comprises adjusted
operating profit, which adjusts statutory profit for a number of income
and expenditure items. 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.
The asset management businesses that are classified as discontinued
operations contributed a full year’s results and remained part of the
Group at 30 September 2019. In our view, it is therefore appropriate to
continue to take the profit from discontinued operations into account
when determining our materiality.
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.
102 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
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 £3.1m. Certain components were audited to a local statutory
audit materiality that was also less than our overall Group materiality allocations. We agreed with the Audit & Risk Committee that we
would report to them misstatements identified during our audit above £0.2m (Group audit) (2018: £0.2m) and £0.2m (Company audit)
(2018: £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 about 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 twelve 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. For example, the terms on which
the United Kingdom may withdraw from the
European Union are not clear and it is difficult
to evaluate all of the potential implications on
the Group’s trade, customers, suppliers and the
wider economy.
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, 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).
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
103
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Independent Auditors’ Report to the members
of Euromoney Institutional Investor PLC continued
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 2019 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)
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 94 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 53 of the Annual Report as to 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 as to whether they have a
reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period
of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.
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 61 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 page 64 to 69 describing the work of the Audit & Risk Committee does not appropriately
address matters communicated by us to the Audit & Risk 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)
104 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Responsibilities of the Directors for the financial statements
Responsibilities of the Directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities set out on page 94, 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 about 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/
auditors and delete responsibilities. 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.
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 Accounts 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 and subsequent financial periods. The period of total uninterrupted engagement is five
years, covering the years ended 30 September 2015 to 30 September 2019.
Giles Hannam (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
21 November 2019
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
105
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Consolidated Income Statement
for the year ended 30 September 2019
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
2019
£000
Restated
2018
£000
3
3
12
5
3, 4
14
7
7
7
3
8
3
11
10
10
10
10
9
256,051
244,825
38,514
(14,215)
6,350
30,649
(88)
1,873
(2,983)
(1,110)
29,451
(9,317)
20,134
39,945
(11,990)
79,910
107,865
157
5,248
(6,454)
(1,206)
106,816
(41,358)
65,458
41,059
129,685
61,193
195,143
60,929
264
61,193
195,004
139
195,143
18.5p
18.5p
56.6p
56.6p
33.1p
60.8p
60.7p
181.5p
181.3p
32.5p
A detailed reconciliation of the Group’s statutory results to the adjusted and underlying results is set out on pages 15 to 18.
The 2018 Consolidated Income Statement has been restated as detailed in note 1.
106 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2019
Profit for the year
Items that may be reclassified subsequently to profit or loss:
Change in fair value of cash flow hedges
Transfer of losses /(gains) on cash flow hedges from fair value reserves to Income Statement:
Foreign exchange losses /(gains) in revenue
Foreign exchange losses /(gains) in administrative expenses
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
Fair value remeasurement
Tax on items that may be reclassified
Items that will not be reclassified to profit or loss:
Actuarial (losses) /gains on defined benefit pension schemes
Tax credit/(charge) on actuarial (losses)/gains 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
2019
£000
61,193
Restated
2018
£000
195,143
(5,061)
(711)
3,483
361
–
22,644
1,524
–
2,131
–
(1,037)
(409)
(2,121)
24,311
(5,642)
8,250
–
630
(5,175)
880
6,495
(1,104)
20,787
28,662
81,980
223,805
7,629
74,351
81,980
81,716
264
81,980
130,584
93,221
223,805
223,830
(25)
223,805
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
107
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Consolidated Statement of Financial Position
as at 30 September 2019
Notes
2019
£000
Non-current assets
Intangible assets
Goodwill
Other intangible assets
Property, plant and equipment
Investment in associates and joint ventures
Other equity 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
Contract assets
Deferred consideration
Current income tax assets
Cash and cash equivalents
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 and contract liabilities
Derivative financial instruments
Provisions
Total liabilities of businesses held for sale
Net current assets/(liabilities)
Total assets less current liabilities
Non-current liabilities
Acquisition commitments
Deferred consideration
Borrowings
Other non-current liabilities
Deferred income and contract liabilities
Deferred tax liabilities
Retirement benefit obligations
Derivative financial instruments
Provisions
Net assets
108 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
12
12
13
14
14
19
25
22
27
19
16
25
19
19
11
25
25
17
18
19
21
11
25
25
18
22
27
19
21
433,898
616,498
650,192
Restated
2018
£000
414,722
173,503
16,112
715
3,546
2,677
470
2,178
1,937
583
55
Restated
1 October
2017
£000
399,971
193,991
17,235
26,820
3,546
2,503
1,570
2,965
–
929
662
68,285
64,483
–
650
4,605
78,273
131
13,719
–
419
5,112
4,426
2,686
50,671
165,663
127,797
(97)
(209)
(44,931)
(31,016)
–
(64,143)
(117,088)
(2,424)
(248)
(1,994)
(262,150)
(96,487)
520,011
(175)
(125)
–
(1,348)
(3,316)
(27,553)
(4,870)
(166)
(3,872)
(41,425)
(9,904)
(350)
(38,452)
(16,117)
(387)
(67,819)
(113,487)
(1,001)
(337)
(29,998)
(277,852)
(150,055)
500,137
(3,221)
–
(168,893)
(486)
(3,491)
(23,431)
(9,954)
(230)
(2,600)
(212,306)
287,831
246,281
159,140
15,294
5,271
–
3,759
–
2,232
1,511
317
93
48,955
1,457
–
4,362
49,751
219
292,356
397,100
(986)
(138)
(43,929)
(16,564)
–
(48,562)
(87,150)
(3,578)
(785)
(71,534)
(273,226)
123,874
557,772
(1,640)
–
–
(227)
(1,278)
(17,718)
(7,723)
(293)
(2,845)
(31,724)
526,048
478,586
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
2019
£000
273
104,306
64,981
56
(19,682)
40,120
(27,087)
143,243
218,795
525,005
1,043
Restated
2018
£000
273
103,790
64,981
56
(20,462)
39,687
(27,616)
119,075
198,802
478,586
–
526,048
478,586
Restated
1 October
2017
£000
273
103,147
64,981
56
(21,005)
38,395
(23,071)
89,269
26,628
278,673
9,158
287,831
The Consolidated Statements of Financial Position at 1 October 2017 and 30 September 2018 have been restated as detailed in note 1.
The Financial Statements on pages 106 to 165 were approved by the Board of Directors on 21 November 2019 and signed on its behalf by:
Andrew Rashbass
Wendy Pallot
Directors
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
109
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Consolidated Statement of Changes in Equity
for the year ended 30 September 2019
Share
capital
£000
273
–
273
–
Share
premium
account
£000
Other
reserve
£000
103,147 64,981
–
–
103,147 64,981
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
643
–
–
–
–
–
–
–
–
–
Reserve
for
share-
based
payments
£000
Capital
redemption
reserve
£000
Own
shares
£000
Fair
value
reserve
£000
56 (21,005) 38,395 (23,071)
–
56 (21,005) 38,395 (23,071)
–
–
–
–
–
–
–
Translation
reserve
£000
Retained
earnings
£000
Total
£000
89,269 35,594 287,639
(8,966)
(8,966)
26,628 278,673
195,004 195,004
–
89,269
–
Non-
controlling
Total
interests
equity
£000
£000
9,158 296,797
(8,966)
9,158 287,831
195,143
139
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
543
1,741
–
(449)
–
–
–
(4,545)
27,349
6,022 28,826
(164) 28,662
–
(4,545)
27,349 201,026 223,830
(25) 223,805
–
–
–
–
–
–
–
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
–
(796)
(796)
–
(796)
–
273 103,790 64,981
–
273 103,790 64,981
–
–
–
–
–
56 (20,462) 39,687 (27,616)
(385)
56 (20,462) 39,687 (28,001)
–
–
–
–
–
–
119,075 198,802 478,586
443
199,630 479,029
– 60,929 60,929
–
119,075
828
– 478,586
–
443
– 479,029
61,193
264
–
–
–
–
–
–
–
–
–
–
–
–
–
516
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
780
883
–
(450)
914
24,168
(4,295) 20,787
– 20,787
914
24,168 56,634 81,716
264 81,980
–
–
–
–
–
–
–
(1,429)
(1,429)
–
(1,429)
–
–
779
779
–
883
–
– (35,586) (35,586)
516
–
(330)
–
883
– (35,586)
516
–
–
–
273 104,306 64,981
–
–
–
56 (19,682) 40,120 (27,087)
–
–
–
(124)
143,243 218,795 525,005
(124)
–
(124)
1,043 526,048
At 1 October 2017 (reported)
Restatements (note 1)
At 1 October 2017 (restated)
Profit for the year (restated)
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
(restated)
Impact of adopting IFRS 9
At 1 October 2018 (restated)
Profit for the year
Other comprehensive
income/(expense) for
the year
Total comprehensive
income for the year
Recognition of acquisition
commitments
Non-controlling interest
recognised on acquisition
Credit for share-based
payments
Cash dividend paid
Exercise of share options
Tax relating to items taken
directly to equity
At 30 September 2019
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 Employee 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 Employee Share Ownership Trust
Euromoney Employee Share Trust
Total
Nominal cost per share (p)
Historical cost per share (£)
Market value (£000)
110 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
2019
Number
58,976
1,593,198
1,652,174
0.25
11.91
24,452
2018
Number
58,976
1,656,575
1,715,551
0.25
11.93
23,091
Consolidated Statement of Cash Flows
for the year ended 30 September 2019
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 charges
Amendment to defined benefit pension plan
Profit on disposal of businesses/associates
Cost of disposal of discontinued operations – exceptional items
(Decrease)/increase in provisions
Profit on deemed disposal of associate
Operating cash flows before movements in working capital
Decrease/(increase) 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
Dividends received from associate
Proceeds from disposal of associate
Receipt of deferred consideration
Payment of deferred consideration
Net cash (used in)/generated from 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
Decrease in borrowings
Purchase of additional interest in subsidiary undertakings
Net cash used in financing activities
Net (decrease)/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
This statement includes discontinued operations (note 11).
Notes
3
11
24
12
12
13
5
5
5
5
12
15
15
14
25
25
9
23
15
11
2019
£000
30,649
55,189
85,838
883
25,143
2,099
2,744
19
–
2,410
(1,224)
(16,998)
(1,682)
(552)
(687)
97,993
6,122
(11,708)
92,407
(38,418)
–
53,989
1,128
(8,379)
(1,637)
14
(68,101)
19,653
197
–
9,671
(232)
(47,686)
(35,586)
–
(1,287)
–
516
–
(97)
(36,454)
(30,151)
78,273
1,956
50,078
(327)
49,751
Restated
2018
£000
107,865
53,602
161,467
1,487
22,739
2,908
3,356
6
432
3,048
–
(86,817)
–
734
–
109,360
(7,498)
6,698
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
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
111
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
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 Consolidated 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 Accounts present information about
the entity and not about its Group.
The Consolidated 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 Company Accounts
in accordance with Financial Reporting Standard 102.
The following amendments and interpretations were adopted in
2019. The adoption and impact of these new pronouncements
from 1 October 2018 have been disclosed within this note.
Additional disclosure has been given where relevant:
• IFRS 9 ‘Financial Instruments’ – mandatory for reporting periods
starting on or after 1 January 2018
• IFRS 15 ‘Revenue from Contracts with Customers’ – mandatory for
reporting periods starting on or after 1 January 2018
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 Consolidated
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 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
As at 30 September 2019, the following standards have not been
endorsed by the European Union:
• Amendment to definition of a business in IFRS 3 ‘Business
Combinations’ – the mandatory effective date of implementation
is 1 January 2020
• Amendments to Interest Rate Benchmark Reform – ‘Financial
Instruments’ – IFRS 9, IAS 39 and IFRS 7 – the mandatory effective
date of implementation is 1 January 2020
112 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
• Amendments to IAS 1 ‘Presentation of Financial Statement’ – the
mandatory effective date of implementation is 1 January 2020
• Amendments to IAS 8 ‘Accounting Policies, Changes in
Accounting Estimates and Errors’ – the mandatory effective date
of implementation is 1 January 2020
• Amendments to the Conceptual framework – the mandatory
effective date of implementation is 1 January 2020
IFRS 9 ‘Financial Instruments’
The Group adopted IFRS 9 ‘Financial Instruments’ on 1 October
2018. Differences in the carrying amount of financial assets
and liabilities resulting from the adoption of IFRS 9 have been
recognised in opening reserves as at 1 October 2018 and
comparatives have not been restated.
Classification and measurement of financial assets
Under IFRS 9, financial assets are required to be measured at
either amortised cost, fair value through other comprehensive
income (FVTOCI) or fair value through profit or loss (FVTPL).
The impact of IFRS 9 on the Group’s financial assets are as follows:
• The Group has elected to classify as FVTOCI the equity financial
asset which was previously classified as available-for-sale held
at cost less any identified impairment losses in accordance
with IAS 39. IFRS 9 allows for an irrevocable election on an
instrument-by-instrument basis to classify equity financial assets
as either FVTOCI or FVTPL. As a result, fair value movements are
now recorded in other comprehensive income. Gains or losses
will not be recycled to the income statement on disposal of the
investments. The classification of future purchases of equity
financial investments will be considered on an individual basis
based on their merits. A fair value loss of £0.4m on transition has
been recognised in opening fair value reserves.
• The Group classified the convertible loan note asset as FVTPL as
the contractual cash flows are not solely payments of principal
and interest on the principal amount outstanding. This asset
was previously measured at cost less any identified impairment
losses in accordance with IAS 39. At the date of transition, there
was no difference between the fair value and carrying value of
the asset.
• The Group has classified its investments in money market
funds included in cash and cash equivalents as FVTPL as the
contractual cash flows are not solely payments of principal and
interest on the principal amount outstanding. These assets were
previously classified as amortised cost financial assets under IAS
39. At the date of transition, there was no difference between the
fair value and carrying value of the asset (note 19).
Trade debt provisions
IFRS 9 introduces a new impairment model which requires the
recognition of impairment provisions based on expected credit
losses (ECL) rather than only incurred credit losses, which was
the case under IAS 39. The IFRS 9 impairment model recognises
anticipated losses evidenced by both historical recovery rates
and forward-looking indicators. The Group has applied the
simplified approach for trade receivables and contract assets
and recognised the loss allowance at an amount equal to
lifetime expected credit losses. The reduction in expected credit
loss allowance of £0.8m at 1 October 2018 has been recognised
against opening retained earnings. Deferred consideration
receivables are considered to have low credit risk and the loss
allowance is therefore limited to 12 months expected losses and is
not considered material.
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
1 Accounting policies continued
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 confirms that its existing
hedge relationships continue to qualify as hedges upon the
transition to IFRS 9.
Differences between the previous carrying amount and the restated
carrying amount at 1 October 2018 are disclosed in the restatement
table on page 114.
IFRS 15 ‘Revenue from Contracts with Customers’
The Group adopted IFRS 15 ‘Revenue from contracts with customers’
on 1 October 2018 and adopted the modified retrospective 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. There is no material impact on the timing of revenue
recognition arising from the implementation of IFRS 15.
Vote revenue and best efforts revenue are treated as variable
consideration under IFRS 15. This requires the Group to include
an estimate of the variable consideration in the transaction price
to the extent that it is highly probable that the related revenue,
if recognised, would not be reversed. Any incremental amounts
would be included in the transaction price once the confirmation
of the vote or the best efforts revenue is given. The assessment of
whether an amount of revenue is highly probable may require
significant judgement. In some instances, the amount may not be
highly probable until the Group has received specific notification of
the amount from the customer or has received the payment. In other
cases, established relationships, past patterns of behaviour or
informal correspondence with the customer may provide sufficient
evidence that at least an element of revenue is highly probable
before the amount is formally confirmed.
Where multiple services are bundled within one contract, revenue
is allocated to the different performance obligations on a relative
standalone selling price basis and recognised separately when the
performance obligation is satisfied. Where this occurs, the Group’s
treatment under IAS 18 was consistent with that under IFRS 15.
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 over time in line
with the stage of completion.
The Group recognises all costs and commissions to obtain contracts
with a term of one year or less when incurred. Commissions which
relate to multi-year contracts are recognised as an asset and
amortised in line with the proportion of the contract’s revenue
recognised in the period. The Group does not have significant
costs and commissions to obtain contracts with a term of more than
one year.
The Group does not adjust the amount of consideration for the
effects of a significant financing component if it expects that the
period between when the customer pays and when the Group
transfers the promised good or service will be one year or less.
Amounts recoverable on contracts relating to accrued income
of £1.5m, previously included within trade and other receivables,
have been reclassified to contract assets net of any loss allowance.
Deferred income has been reclassified as a contract liability as at
1 October 2018 (note 18).
The accounting policy for revenue is detailed on page 119.
IFRS 16 ‘Leases’
IFRS 16 comes into effect for accounting periods starting on or
after 1 January 2019. Therefore for the Group, the standard will be
applied from 1 October 2019.
The new standard will change the way in which leases will be
recognised and disclosed in the Group’s Financial Statements.
It also brings into scope contracts which would not previously
have been accounted for as leases. The Group also enters into
agreements which gives it the rights to specific technology assets
that in the future could be accounted for as leases under the
new standard. This change in accounting policies will result in
the recognition of ‘right of use’ assets and lease liabilities on the
Statement of Financial Position, as well as having an impact
on the Group’s Income Statement, by replacing rental expense
with depreciation and introducing a finance expense where the
discount on lease liabilities is unwound.
Upon transition, the Group will apply the modified retrospective
adoption of the standard. The right of use assets for the leases
will be calculated using a mixture of the ’simplified’ and ‘asset’
methods. Under the ’simplified’ method the right of use asset is
equal to the present value of future lease payments. Under the
‘asset’ method the right of use asset is estimated as if IFRS 16 had
always been applied. The following practical expedients will be
applied on transition:
• On initial application, IFRS 16 will only apply to contracts that
would have previously been classified as leases under IAS 17
‘Leases’;
• The Group has relied on its onerous lease assessment instead
of performing an impairment review; and
• Initial direct costs will be excluded from the measurement of
the right of use asset at the date of initial application
Following transition the Group will also apply the practical
expedient to expense to the Income Statement leases with a term
of 12 months or less; and for assets that would have cost less than
$5,000.
Based on the relevant contracts in place at 1 October 2019, an
estimate of IFRS 16’s impact on the Group’s financial statements for
the year ended 30 September 2020 is as follows:
Component of financial statements
Estimated impact
Consolidated Statement
of Financial Position at
1 October 2019
Right of use assets
Lease liabilities
Deferred tax assets
Accruals
Retained earnings
Increase of £56m
Increase of £71m
Increase of £1m
Reduction of £12m
Reduction of £2m
Consolidated Income Statement
for the year ended 30 September
2020
Depreciation
Finance expense
Operating profit
Profit before tax
Charge of £6m
Charge of £2m
Improvement of £1m
Loss of £1m
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 2019, the accounting
policies set out below have been applied consistently to all periods
presented in these Consolidated Financial Statements.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
113
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
1 Accounting policies continued
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.
Restatements
Discontinued operations
Following the Group’s decision to explore the strategic options for Asset Management, the segment has met the recognition criteria of
discontinued operations under IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ and is therefore presented as such
throughout this report. In order to comply with this presentation, the 2018 Income Statement disclosures have been re-presented.
IFRS 9 ‘Financial Instruments’
The Group has adopted IFRS 9 using the modified retrospective approach. The adjustment on transition has therefore been recognised
in opening reserves at 1 October 2018. The Group has applied the simplified approach for trade receivables and contract assets and
recognised the loss allowance at an amount equal to lifetime expected credit losses. The reduction in the expected credit loss allowance
of £0.8m at 1 October 2018 has been recognised against opening retained earnings. The Group has elected to classify as FVTOCI
the equity financial asset which was previously classified as available-for-sale held at cost less any identified impairment losses in
accordance with IAS 39. A fair value loss of £0.4m on transition has been recognised in opening fair value reserves. Further details for the
adoption of IFRS 9 are on pages 112 and 113.
Payroll taxes
In December 2018, the Group engaged external advisors to undertake an independent review of the Group’s compliance with the off-payroll
working rules. As a result of the review, the Group has identified an underpayment of payroll taxes to HMRC for the six years to 30 September
2019. A restatement has been made to recognise a historical exposure of £6.6m prior to the current financial period, consisting of £5.4m of
payroll taxes underpaid, £0.4m of interest and £0.8m of penalties. The Group notified HMRC that a voluntary disclosure will be made with
respect to the Group’s Pay as You Earn (PAYE) and National Insurance Contribution (NIC) obligations. This restatement is not excluded from
adjusted measures, as defined on page 16 of the Chief Financial Officer’s review, as the related charges are expected to recur.
Value Added Tax (VAT)
During the second half of the year, the Group discovered a VAT exposure in the UK relating to the understatement of VAT on supplies
made between entities within the Group in respect of the four years ended 30 September 2018. Based on the current assessment, the
exposure at the end of 2018 is £11.0m, consisting of £10.7m of VAT and £0.3m of interest. A further £0.3m of interest accrued in 2019.
The 2018 VAT expense has been classified as an exceptional item and the interest has been treated as an adjusted finance expense.
As a result, this restatement is excluded from adjusted measures, as defined on page 16 of the Chief Financial Officer’s review, because
these charges are not expected to recur.
The below is a summary of the restatements:
2017
2018
1 October
2017
Payroll
taxes
VAT
1 October
2017
restated
2018
reported
Payroll
taxes
Discontinued
operations
VAT
Restated
30
September
2018
IFRS 9
transition –
1 October
2018
restatement
Restated
1 October
2018
–
–
103,198
(1,593)
(22,739)
81,396
(6,034)
(51,360)
–
– (5,336)
(162)
294
(174)
906
(61,660)
39,945
10,749
3,850
(11,990)
79,910
(84)
(6,454)
8,802
(41,358)
91,342
–
–
38,343
129,685
187.18
(1.36)
(4.28)
186.96
(1.36)
(4.28)
–
–
181.54
181.32
–
–
–
–
–
–
39,945
(11,990)
79,910
(6,454)
(41,358)
129,685
Restatements
Statements
adjusted
Consolidated
Income Statement
Consolidated
Statement of
Financial
Position and
Consolidated
Statement of
Changes in Equity
Line item
Operating profit before
acquired intangible
amortisation and
exceptional items
Acquired intangible
amortisation
Exceptional items
Finance expense
Tax expense on profit
Profit for the year from
discontinued operations
Basic earnings per share
Diluted earnings per share
Trade and other
receivables
–
–
–
–
68,285
Net deferred tax liability1
(21,882)
506
910
(20,466)
(27,191)
Other equity investments
–
Current income tax
liabilities
(16,117)
–
–
–
–
–
3,546
(16,117)
(31,816)
800
–
–
–
–
1,816
–
–
Trade and other payables
(28,070) (4,913) (5,469)
(38,452)
(27,284) (6,668) (10,979)
Fair value reserve
–
–
–
–
(27,616)
–
–
Retained earnings
35,594 (4,407) (4,559)
26,628
213,833 (5,868)
(9,163)
68,285
(25,375)
3,546
(31,016)
(44,931)
(27,616)
198,802
828
69,113
(25,375)
(385)
3,161
–
–
(31,016)
(44,931)
(385)
(28,001)
828
199,630
1
At 1 October 2017, the Group’s net deferred tax liabilities were split between deferred tax assets of £1.6m and deferred tax liabilities of £23.4m. The restatements increased the Group’s deferred tax asset from £1.6m to £3.0m. At 30
September 2018, the Group’s previously reported net deferred tax liabilities were split between deferred tax assets of £1.3m and deferred tax liabilities of £28.5m. Included within the Group’s deferred tax liabilities at 30 September
2018 were UK deferred tax liabilities of £0.9m. The restatements resulted in a restated UK deferred tax asset of £0.8m. The Group’s restated deferred tax assets and deferred tax liabilities at 30 September 2018 are £2.2m and
£27.6m respectively.
114 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
(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.
1 Accounting policies continued
(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
as the difference between the consideration paid and the fair
value 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 assets 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.
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.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
115
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
1 Accounting policies continued
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:
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:
• 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 Statement of 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.
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.
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.
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.
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.
116 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
1 Accounting policies continued
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.
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
(FVTPL), financial assets at fair value through other comprehensive
income (FVTOCI), and financial assets at amortised cost.
The classification of financial assets under IFRS 9 is dependent on
two key criteria:
• The business model within which the asset is held (the business
model test); and
• The contractual cash flows of the asset (the ’solely payments of
principal and interest’ (SPPI) test.
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 FVTPL, are initially recognised at fair value plus
transaction costs.
Financial assets at fair value through profit and loss (FVTPL)
Financial assets which are held to sell the contractual cash flows
or for which its payments are not solely payments of principal
and interest are measured at FVTPL. Derivatives are measured at
FVTPL regardless of the hedge designation. Cash held in money
market funds is measured at FVTPL. Financial assets carried at
FVTPL 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 are included in the profit and loss component of
the Statement of Comprehensive Income in the period in which
they arise.
Financial assets at fair value through other comprehensive
income (FVTOCI)
Financial assets which are held to collect and to sell the
contractual cash flows and for which its payments are solely
payments of principal and interest can be measured at FVTOCI.
The Group may make an irrevocable election at initial recognition
for particular investments in equity instruments that would
otherwise be measured at FVTPL to present subsequent changes
in fair value in other comprehensive income on an instrument-by-
instrument basis based on their merits.
Financial assets carried at FVTOCI are initially recognised at
fair value plus transaction costs that are directly attributable
to the acquisition or issue of the financial asset. Gains and
losses arising from changes in the fair value are included in the
‘other comprehensive income’ component of the Statement of
Comprehensive Income in the period in which they arise. Gains or
losses will not be recycled to the income statement on disposal of
equity investments.
Financial assets at amortised cost
Financial assets at amortised cost are non-derivative financial
assets for which the contractual cash flows are solely payments of
principal and interest. The Group’s financial assets at amortised
cost comprise trade and other receivables and cash and cash
equivalents. Trade receivables are measured at amortised cost
and stated net of allowances for expected credit losses. Cash and
cash equivalents are measured at amortised cost with the
exception of cash held in money market funds which are measured
at FVTPL. Prior to the adoption of IFRS 9 on 1 October 2018, loans
and receivables were stated net of allowances for estimated
irrecoverable amounts (the incurred loss method).
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.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
117
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
1 Accounting policies continued
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:
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.
118 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
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, a 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.
1 Accounting policies continued
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.
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 subscriptions, advertising,
sponsorship and delegate fees, net of value added tax.
• Subscription revenues for print and online publications and
memberships are recognised in the Income Statement on a
straight-line basis over the period of the subscription and the
satisfaction of the performance obligation, reflecting the pattern
over which the customer receives benefits. These revenues are
due in advance on a monthly or annual basis.
• Advertising revenues represent the fees that customers pay
in advance 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. Advertising revenues for print publications are
recognised in the Income Statement when the publications have
been delivered which is when the performance obligation is
satisfied. This is the time at which the benefit becomes available
to the customer. Revenue for online advertising is recognised
on a straight-line basis over the period that the advert is run,
reflecting the period over which the customer receives benefit.
• Events revenues are received in advance and recognised in the
Income Statement over the period the event is run.
• Variable consideration is included in the transaction price to
the extent that it is highly probable that the related revenue, if
recognised, would not be reversed.
Revenues invoiced but relating to future periods are deferred and
treated as contract liabilities in the Statement of Financial Position.
The Group does not have individual long-term revenue contracts
that are material.
Amounts recoverable on contracts relating to accrued income
have been classified to contract assets net of any loss allowance.
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 Employee Share Ownership Trust and
Employee Share Trust
Transactions of the Group-sponsored trusts are included in
the Consolidated 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 Employee Share Ownership Trust and
Euromoney Employee Share Trust.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
119
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
1 Accounting policies continued
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.
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 has discussed its significant accounting judgements
and estimates with the Group’s Audit & Risk Committee. The key
judgemental areas and estimates are discussed below and 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
Following the Group’s decision to explore the strategic options for
Asset Management, the segment 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. In order to comply with this
presentation, the 2018 Income Statement disclosures have been re-
presented (note 11). Management’s judgement is that the disposal
is highly probable to be completed within 12 months and the action
required to complete the disposal indicates that the plan will not
be significantly changed or withdrawn.
On 30 April 2018, the Group completed the disposal of the
Global Markets Intelligence Division (GMID). This division met the
recognition criteria of a discontinued operation under IFRS 5 ‘Non-
current Assets Held for Sale and Discontinued Operations’ and the
2018 Income Statement is presented accordingly (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, customer relationships, databases
and software); exceptional items; share of associates’ and joint
ventures’ acquired intangibles amortisation, exceptional items
and tax; net movements in deferred consideration and acquisition
commitments; fair value remeasurements; 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 applied these principles in calculating adjusted
measures and it is the Group’s intention to continue to 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 15
to 18.
Taxation
European Commission (EC) investigation into state aid
On 2 April 2019, the EC concluded its state aid investigation into
the Group Financing Exemption (GFE) in the UK controlled foreign
company rules on the GFE and ruled that the GFE is only justified
where there are no UK activities involved in generating the finance
profits. The UK government has decided to appeal against the EC
decision but an aid recovery process has also commenced as this
is required under EU law.
The estimated maximum liability is approximately £8.0m. On the
basis that the UK government has appealed against the EC
decision, and the Group’s own analysis, no provision is being
made in respect of this issue as management judges that it is not
probable that the Group will suffer an outflow of funds.
Payroll taxes and VAT
During the year, the Group identified two tax exposures:
(i) underpayments of PAYE and NIC to HMRC in respect to
contractors; and (ii) VAT arising on supplies made between entities
within the Group. The Group has notified HMRC that a voluntary
disclosure will be made with respect to the PAYE and NIC
understatement and is in the process of finalising this disclosure.
The Group has also notified HMRC regarding the VAT exposure
and discussion is ongoing with HMRC to finalise the underpayment
of VAT. Further details are disclosed in the Estimates section
in note 2. The Consolidated Financial Statements have been
restated to reflect these two tax exposures due to their materiality
and the information being available at the time of the respective
restated years.
120 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
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 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 challenging. This is
especially the case where there has been a change in tax law in
the year. 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 Consolidated
Financial Statements in respect of these items are derived from
the Group’s best estimation. 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.
Direct tax
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 has fully provided for an exposure relating to an HMRC
enquiry, which has a maximum exposure of £10.7m. This matter
is now proceeding to litigation. The outcome of the litigation is
binary. The Group received HMRC’s statement of case in May
2019 and responded with its witness statements in September
2019. A court hearing date will be advised in due course and it
is expected that the hearing will take place in mid to late 2020.
No adjustment to the provision is being made at this time.
2 Key judgemental areas adopted in preparing
these Financial Statements continued
Equity investment in Zanbato, Inc (Zanbato)
The Group holds a 9.9% equity shareholding in Zanbato of
£5.3m and convertible loan note asset receivable of £3.8m from
Zanbato. On 26 July 2019, upon maturity of the convertible loan
note asset, the Group formally exercised its right to convert the
loan notes to equity. The conversion had not taken effect as at
30 September 2019.
While the Group’s equity shareholding remains at 9.9% at
30 September 2019, as a result of the maturity of the convertible
loan notes and the Group’s decision to exercise its right to convert,
the Group has considered whether its investment in Zanbato
constitutes an investment in an associate in accordance with
IAS 28.
A key judgement is whether the Group is able to participate in the
decision making process of Zanbato, the definition of significant
influence. The Group judges that it does have significant influence
on the basis that it has a voting representative on the Board of
Directors and as a result of potential additional voting rights
following the decision to exercise the convertible loan note.
The Group has therefore used the equity method to account for the
investments in associates from 26 July 2019.
Cash generating units
The Group conducts impairment reviews at the cash generating
unit (CGU) level. As permitted by IAS 36 ‘Impairment of Assets’,
impairment reviews for goodwill are performed at the groups
of CGUs (gCGUs) level, representing the lowest level at which
the Group monitors goodwill for internal management purposes
and no higher than the Group’s operating segments. The Group
considers monitoring of goodwill to be the level at which return on
net assets including allocated goodwill is monitored for internal
performance. Following further integration within the Group, the
level at which goodwill impairment reviews was performed was
reassessed and gCGUs aggregated (note 12).
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 assumptions in calculating
the net present value are the forecast cash flows, the long-term
growth rate of the applicable CGU groups 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 2019 was £246.3m (2018: £414.7m).
Acquisitions
The purchase consideration for the acquisition of a subsidiary
or business is allocated over the net fair value of identifiable
assets and liabilities acquired with any excess consideration
representing goodwill. Determining the fair value of assets and
liabilities acquired requires significant estimates and assumptions.
The Group recognises intangible assets acquired as part of a
business at fair value at the date of acquisition. The determination
of these fair values includes assumptions on the timing and amount
of future cash flows generated by the assets and the selection of
an appropriate discount rate. In the determination of the customer
relationships, the most material intangible asset recognised, an
attrition rate of 5% and discount rate of 12% was applied.
Additionally, management must estimate the expected useful
lives of intangible assets and charge amortisation on the
assets accordingly.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
121
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
The Group has estimated the combined potential exposure in
respect of VAT and payroll taxes to be in the range of £6.9m and
£26.4m. For VAT, the sensitivity relates to the amount of intra-group
charges that are subject to VAT. For payroll taxes, the range of
outcomes are based on assumptions around the applicable rate of
PAYE and NIC; whether the look-back periods should be four years
or six years; the risk classification of each contractor; and what
levels of PAYE and NIC have already been paid by the individuals.
Both of the exposures include estimates of interest and penalties
applicable to the underpayment.
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.
The Group operates the Metal Bulletin plc Pension Scheme
and participates in the Harmsworth Pension Scheme which are
defined benefit schemes, both of which are closed to new entrants.
The assumptions for the discount rate and mortality rates have
been reviewed and adjusted to reflect the latest market rates
increasing the net pension deficit from £2.9m at 30 September
2018 to £6.2m at 30 September 2019. An exceptional gain of £1.2m
has been recognised in the period as a result of the Trustees of
the Metal Bulletin plc Pension Scheme changing the scheme rules
for the underlying index for deferred revaluation from RPI to CPI
(note 5).
The maximum 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. The CRA views that the loss
sustained by BCA on an intra-group derivative transaction cannot
be deducted in computing income has not changed. The case
will be heard in the Tax Court of Canada, Ottawa in June 2020.
BCA has provided satisfactory security for payment to the CRA for
50% of the tax being contested of £3.5m and to Revenu Quebec
for 50% of the tax owing amounting to £3.2m. The outcome of
the case is binary. No provision is recognised based on external
counsel’s opinion that the Group’s case should ultimately prevail.
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,
excluding the VAT and payroll tax exposures outlined below.
This provision relates largely to US sales tax.
Payroll taxes and VAT
During the year, the Group has identified an underpayment of
PAYE and NIC to HMRC in respect of contractors. The Group
has notified HMRC that a voluntary disclosure will be made and
is currently in the process of finalising this voluntary disclosure.
The Group will seek to engage with HMRC to agree a settlement
during the first half of 2020. As such, the provision recognised in
the current period is subject to ongoing discussion with HMRC.
The Group considered the most probably outcome at this stage
is a cash outflow of £8.2m. A provision of £1.5m, including interest
and penalties, has been recognised in the current year. The prior
year has been restated to reflect the exposure up to the opening
Balance Sheet position in October 2017 and a provision of £1.8m
(including interest and penalties) for 2018. Further details on the
restatement are included on page 114.
During the second half of the year, the Group discovered a VAT
exposure relating to the understatement of VAT on intra-group
transactions in respect of the four years ended 30 September 2018.
The Group notified HMRC as soon as the exposure was identified
in September 2019. A protective assessment was subsequently
issued by HMRC in respect of the year ended 30 September
2015. Details of the potential exposure will be discussed and
finalised with HMRC during the first half of the 2020 financial
year. The Group considered that the most probable outcome
at this stage is a cash outflow of £11.3m, including £0.3m of
interest accrued in 2019. A prior year provision of £11.0m has been
recognised and due to the amount being considered material the
2018 comparative financial information has been restated. The VAT
element of the provision has been treated as an exceptional item
in line with the Group’s accounting policy because it is material
and not expected to recur. The interest element is excluded from
the adjusted results as it relates directly to the exceptional item as
explained in note 1 and in the Chief Financial Officer’s review on
page 16.
122 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
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 three segments: Asset Management; Pricing, Data & Market Intelligence; and Banking & Finance.
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. A breakdown of the Group’s revenue by type
is set out below.
Following the disposal of Mining Indaba (note 15) during the year, the Commodity Events segment has been incorporated into the
Pricing, Data & Market Intelligence segment. The segment information for the Mining Indaba business has been reclassified as a
sold business.
As a result of the closure of Centre for Investor Education (CIE), the segment information for this business has been reclassified from Asset
Management to closed businesses.
Euromoney Financing Events and Thought Leadership have been moved from Banking & Finance to the Pricing, Data & Market
Intelligence segment. Global Investor has also moved from Asset Management to the Pricing, Data & Market Intelligence segment.
These movements are due to the realignment of how the businesses are managed internally.
The comparative split of segmental revenues, revenue by type, operating profits, acquired intangible amortisation, exceptional items
and depreciation and amortisation has been restated to reflect Commodity Events, Euromoney Financing Events, Thought Leadership
and Global Investor being incorporated into the Pricing, Data & Market Intelligence segment and Mining Indaba and CIE being
reclassified as a sold/closed business.
The Asset Management segment has been classified as discontinued operations (note 11), therefore it is presented as such throughout
this report and the 2018 Income Statement disclosures have been re-presented. In 2018, the Global Markets Intelligence Division (GMID)
was classified as a discontinued operation and disposed of on 30 April 2018 and is therefore presented as such throughout this report.
Events revenue consists of sponsorship and delegates revenue.
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.
2019
Revenue by segment and type:
Asset Management
Pricing, Data & Market Intelligence
Banking & Finance
Sold/closed businesses
Foreign exchange losses on forward contracts
Segment revenue
Discontinued operations – Asset Management
Continuing operations
2018
Revenue by segment and type:
Asset Management
Pricing, Data & Market Intelligence
Banking & Finance
Sold/closed businesses (excluding GMID)
Foreign exchange gains on forward contracts
Segment revenue
Discontinued operations – Asset Management
Continuing operations
Subscriptions
and content
£000
Advertising
and other
£000
117,891
115,449
7,248
240,588
–
–
240,588
(117,891)
122,697
10,789
19,360
8,173
38,322
–
(3,483)
34,839
(10,789)
24,050
Subscriptions
and content
£000
Advertising
and other
£000
118,876
92,489
7,496
218,861
–
–
218,861
(118,876)
99,985
11,216
19,408
8,641
39,265
–
1,258
40,523
(11,216)
29,307
Events
£000
16,942
61,569
45,738
124,249
1,997
–
126,246
(16,942)
109,304
Events
£000
15,362
56,126
47,581
119,069
11,826
–
130,895
(15,362)
115,533
Total
revenue
£000
145,622
196,378
61,159
403,159
1,997
(3,483)
401,673
(145,622)
256,051
Total
revenue
£000
145,454
168,023
63,718
377,195
11,826
1,258
390,279
(145,454)
244,825
Continuing events revenue of £109.3m and print advertising of £13.2m are recognised at a point in time. The remaining subscription and
online advertising revenue is recognised over time.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
123
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
3 Segmental analysis continued
United Kingdom
North America
Rest of World
Eliminations
2019
£000
2018
£000
2019
£000
2018
£000
2019
£000
2018
£000
2019
£000
2018
£000
Total
2019
£000
2018
£000
–
884
145,696
144,660
–
–
(74)
(90)
145,622
145,454
Revenue by segment and
source:
Asset Management
Pricing, Data & Market
Intelligence
Banking & Finance
32,628
34,479
25,159
24,943
139,295
124,425
53,482
37,924
6,565
3,796
6,568
4,766
(2,964)
(424)
(894)
196,378
168,023
(470)
61,159
63,718
Sold/closed businesses
(excluding GMID)
Foreign exchange (losses)/
gains on forward contracts
–
7,269
(3,483)
1,258
–
–
1,073
1,997
3,484
–
–
–
–
–
–
–
1,997
11,826
(3,483)
1,258
Segment revenue
168,440
168,315 224,337 208,600
12,358
14,818
(3,462)
(1,454) 401,673
390,279
Discontinued operations –
Asset Management
–
(884) (145,696)
(144,660)
–
–
74
90
(145,622)
(145,454)
Continuing operations
168,440
167,431
78,641
63,940
12,358
14,818
(3,388)
(1,364)
256,051 244,825
Statutory revenue by
destination
41,695
36,347
105,456
90,480
108,900
117,998
–
–
256,051 244,825
Adjusted operating profit by segment and source:
Asset Management
3
150
62,148
58,739
–
–
62,151
58,889
United Kingdom
North America
Rest of World
2019
£000
2018
£000
2019
£000
2018
£000
2019
£000
2018
£000
Total
2019
£000
2018
£000
Pricing, Data & Market Intelligence
54,715
46,199
18,552
16,468
(3,860)
(2,495)
69,407
Banking & Finance
Sold/closed businesses (excluding GMID)
Unallocated corporate costs
Adjusted operating profit1
Discontinued operations – Asset Management
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
4,458
(134)
5,279
3,759
9,524
(7)
(35,899)
(33,909)
(2,807)
23,143
21,478
87,410
9,674
3,048
(3,168)
84,761
(3)
(244)
(66,926)
(61,416)
(313)
590
(1,527)
(5,110)
–
692
13,669
(908)
449
60,172
15,645
5,899
(1,923)
(40,233)
(39,000)
(4,634)
105,443
101,605
–
(66,929)
(61,660)
23,140
21,234
20,484
23,345
(5,110)
(4,634)
38,514
39,945
(7,128)
15,861
31,873
(7,609)
(7,049)
(4,343)
(9,483)
(6,739)
75,434
4,142
6,696
94,436
(38)
(2,772)
(7,920)
(38)
(14,215)
(11,990)
13,959
6,350
79,910
9,287
30,649
107,865
(88)
157
1,873
5,248
(2,983)
(6,454)
29,451
106,816
(9,317)
(41,358)
20,134
65,458
1
Operating profit including discontinued operations of Asset Management 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 15 to 18.
2 Acquired intangible amortisation represents amortisation of acquisition-related non-goodwill assets such as trademarks and brands, customer relationships, databases and software (note 12).
124 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
3 Segmental analysis continued
Other segmental information by segment:
Asset Management
Pricing, Data & Market Intelligence
Banking & Finance
Sold/closed businesses (excluding GMID)
Unallocated corporate costs
Total
Discontinued operations – Asset Management
Continuing operations
Acquired intangible
amortisation
Exceptional items
Depreciation and
amortisation
2019
£000
2018
£000
2019
£000
2018
£000
2019
£000
2018
£000
(10,928)
(11,283)
(234)
(10,749)
(8,642)
(222)
(2,494)
(7,916)
–
(2,432)
(2,853)
14,226
(266)
(273)
(25,143)
(22,739)
10,928
10,749
(14,215)
(11,990)
40
3,856
2,494
6,350
(3,850)
(5,277)
–
90,523
(5,336)
76,060
3,850
79,910
(1,181)
(907)
–
(9)
(2,746)
(4,843)
1,181
(3,662)
(1,126)
(1,374)
–
(12)
(3,752)
(6,264)
1,126
(5,138)
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
2019
£000
2018
£000
2019
£000
2018
£000
2019
£000
2018
£000
Total
2019
£000
2018
£000
102,367
104,227
139,246
303,399
4,668
7,096
246,281
414,722
42,763
45,656
115,898
127,326
4,617
5,271
5,325
4,261
10,310
10,165
–
–
155,018
159,469
265,454
440,890
479
367
–
5,514
(117)
521
622
–
159,140
173,503
15,294
5,271
16,112
4,261
8,239
425,986
608,598
(370)
(1,637)
(1,978)
Additions to property, plant and equipment
(112)
(602)
(1,408)
(1,006)
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
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
2019
£000
256,051
(59,993)
196,058
(1,461)
(163,948)
30,649
Restated
continuing
operations
2018
£000
244,825
(63,505)
181,320
(1,641)
(71,814)
107,865
Administrative expenses include items separately disclosed in exceptional items from continuing operations of £6.4m (2018: £79.9m) (note
5). The administrative expenses for 30 September 2018 have been restated to reflect the impact of the payroll taxes and VAT adjustments
(note 1).
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
125
Financial Statements
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 including internally generated assets
Depreciation of property, plant and equipment
Property operating lease rentals
Loss on disposal of property, plant and equipment
Exceptional items (note 5):
Profit on disposal of businesses/associates
Impairment charges
Amendment to defined benefit pension scheme
VAT underpayments
Other exceptional costs/(income)
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
Continuing
operations
2019
£000
Restated
continuing
operations
2018
£000
122,437
112,583
14,215
11,990
1,245
2,417
7,749
11
2,577
2,561
7,197
5
(16,998)
(86,817)
2,410
(1,224)
–
9,462
168
3,048
–
(5,336)
(1,477)
881
2019
£000
20181
£000
1,285
977
258
1,543
268
1,245
121
–
132
2
134
123
6
76
2
84
1,798
1,452
1
Subsequent to the completion of the audit of the 2018 Consolidated Financial Statements, additional audit fees for subsidiaries amounting to £0.1m were incurred, which have been included in
the 2018 fee analysis above.
5 Exceptional items
Exceptional items are items of income or expense considered by the Directors as being significant, non-recurring and which require
additional disclosure in order to provide an indication of the underlying trading performance of the Group.
Profit on disposal of businesses/associates
Impairment charges
Amendment to defined benefit pension scheme
VAT underpayments
Other exceptional (costs)/income
Continuing operations
Exceptional items from discontinued operations – Asset Management
Cost of disposal of discontinued operations – Asset Management
For the year ended 30 September 2019, the Group recognised a continuing operations exceptional credit of £6.4m.
The Group sold Mining Indaba for a profit of £17.0m (note 15).
126 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
2019
£000
16,998
(2,410)
1,224
–
(9,462)
6,350
(812)
(1,682)
3,856
Restated
2018
£000
86,817
(3,048)
–
(5,336)
1,477
79,910
(3,850)
–
76,060
5 Exceptional items continued
The impairment charge relates to goodwill of £2.4m resulting from the closure of Centre for Investor Education (CIE). Costs associated
with this closure are included in the other exceptional costs and restructuring.
The Trustees of the Metal Bulletin plc Pension Scheme, which is a defined benefit scheme, changed the scheme rules for the underlying
index of deferred revaluation from RPI to CPI, which resulted in a £1.2m reduction in the net pension deficit.
Other exceptional (costs)/income consist of the recognition of the earn-out payments of £2.5m for the acquisitions of Site Seven Media
Ltd (TowerXchange) & Random Lengths which 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 £5.4m for Random
Lengths, BoardEx and The Deal (note 15) are treated as exceptional due to the magnitude of the costs associated with the acquisitions.
Significant costs associated with an acquisition project that did not complete of £1.2m are treated as exceptional items. The remaining
costs are as a result of a strategic review undertaken for the major restructuring of CIE have been treated as exceptional items.
Normal restructuring costs are not treated as exceptional items.
The Group’s tax charge includes a related tax charge on the continuing operations exceptional items of £2.8m (note 8).
The discontinued operations have incurred exceptional costs, including engaging with advisors to assist with the strategic review of
Asset Management. These exceptional costs of £1.7m have been disclosed separately (note 11). The exceptional items incurred by the
discontinued operation relate to a strategic review undertaken for the major restructuring of certain businesses. The Group’s tax charge
includes a related tax credit on the discontinued operations exceptional items of £0.2m (note 8).
For the year ended 30 September 2018, the Group recognised a continuing operations exceptional credit of £79.9m.
The Group sold Adhesion (profit £9.8m), World Bulk Wine (profit £0.9m) and Institutional Investor Journals (profit £4.4m) which resulted in
a net profit of £15.1m. The disposal of the associate investment in Dealogic resulted in a profit of £71.7m.
The impairment charge related to a goodwill impairment of £3.0m for Layer123 Events and Training Limited (Layer123). The impairment
of Layer123 was a result of its disappointing financial performance post acquisition.
Other exceptional (costs)/income consisted 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 CIE. The acquisition related costs of
Random Lengths were treated as exceptional due to the magnitude of the costs associated with the acquisition. Acquisition costs for
smaller acquisitions were not treated as exceptional.
The 2018 exceptional charge has been restated for the VAT underpayment of £5.3m (note 1).
The Group’s tax charge included a related tax charge on the continuing operations exceptional items of £12.1m (note 8).
The Asset Management discontinued operations exceptional items related to costs as a result of a strategic review undertaken for the
major restructuring of certain businesses. Normal restructuring costs are not treated as exceptional items.
6 Staff costs
Following the disposal of Mining Indaba (note 15) during the year, the Commodity Events segment has been incorporated into the
Pricing, Data & Market Intelligence segment. Euromoney Financing Events and Thought Leadership have been moved from Banking &
Finance to the Pricing, Data & Market Intelligence segment. Global Investor has also moved from Asset Management to the Pricing, Data
& Market Intelligence segment. The comparative split of staff costs has been restated to reflect these changes.
(i) Number of staff (including Directors and temporary staff)
By business segment:
Asset Management
Pricing, Data & Market Intelligence
Banking & Finance
Central
Total
Continuing operations
Discontinued operations
Total
2019
Monthly
average
Restated
2018
Monthly
average
394
1,084
195
283
1,956
1,562
394
1,956
462
1,028
203
299
1,992
1,235
757
1,992
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
127
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
6 Staff costs continued
(ii) Staff costs (including Directors and temporary staff)
By geographical location:
United Kingdom
North America
Rest of World
Total
Continuing operations
Discontinued operations
Total
Wages and salaries
Social security costs
Other pension costs (note 27)
Long-term incentive expense (note 24)
2019
Monthly
average
Restated
2018
Monthly
average
826
644
486
1,956
1,562
394
1,956
Continuing
operations
2019
£000
107,442
10,419
3,693
883
122,437
840
644
508
1,992
1,235
757
1,992
Restated
continuing
operations
2018
£000
99,601
8,866
2,629
1,487
112,583
Details of Directors’ remuneration have been disclosed in the Directors’ Remuneration Report on pages 72 to 91. The 2018 social security
costs have been restated for payroll taxes (£1.6m) to reflect the estimated exposure as detailed in note 1.
7 Finance income and expense
Finance income
Interest receivable from short-term investments
Movements in acquisition commitments (note 25)
Fair value remeasurement
Finance expense
Interest payable on borrowings
Net interest expense on defined benefit liability (note 27)
Movements in acquisition commitments (note 25)
Movements in deferred consideration (note 25)
Interest on tax
Continuing operations net finance costs
2019
£000
1,198
–
675
1,873
(1,362)
(100)
(1,022)
(36)
(463)
(2,983)
(1,110)
Restated
2018
£000
2,870
2,378
–
5,248
(4,201)
(248)
–
(1,122)
(883)
(6,454)
(1,206)
The 2018 finance expense has been restated for the payroll taxes (£0.2m) and VAT underpayments (£0.2m) to reflect the estimated
interest related to these exposures as detailed in note 1.
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
Fair value remeasurement
Other
Continuing operations adjusted net finance costs
Discontinued operations adjusted net finance income – Asset Management
Total adjusted net finance costs
128 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
2019
£000
Restated
2018
£000
(1,110)
(1,206)
1,022
36
(675)
156
539
(571)
(99)
(670)
(2,378)
1,122
–
(455)
(1,711)
(2,917)
84
(2,833)
7 Finance income and expense continued
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 17).
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.
The Group’s convertible loan note asset is measured at fair value through profit or loss (FVTPL) (note 1). The fair value remeasurement is
an adjusting item as it relates to historical M&A activity rather than the current trading performance and is as a result of the revaluation of
the convertible loan note as at 30 September 2019.
Other items in the adjusted net finance costs consist of interest income of £0.2m (September 2018: £0.6m charge) for movements in
respect of uncertain tax positions. Finance costs of £0.3m (2018: £0.2m) as a result of the VAT underpayment are excluded as the related
charge is not expected to recur. In addition, at 30 September 2018, the other items included 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 was excluded from adjusted finance costs as it would not have crystallised had the disposal of GMID not completed.
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
2019
£000
Discontinued
operations –
Asset Management
2019
£000
Continuing
operations
2018
£000
Discontinued
operations –
Asset Management
2018
£000
9,438
1,754
(959)
10,233
(1,821)
905
(916)
9,317
–
12,638
(759)
11,879
603
(133)
470
12,349
17,661
10,596
8,063
36,320
5,694
(656)
5,038
41,358
–
12,743
(61)
12,682
(3,880)
–
(3,880)
8,802
Effective tax rate
32%
23%
39%
19%
The adjusted effective tax rate for the year is set out below:
Discontinued
operations –
Asset
Management
2019
£000
Continuing
operations
2019
£000
Total
adjusted
2019
£000
Continuing
operations
2018
£000
Discontinued
operations –
Asset
Management
2018
£000
Total
adjusted
2018
£000
Reconciliation of tax expense in Income Statement to adjusted
tax expense
Total tax expense in Income Statement
9,317
12,349
21,666
41,358
8,802
50,160
Add back:
Deferred tax on acquired intangible amortisation
Tax on exceptional items
Other tax adjusting items
Deferred 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
Adjusted profit before tax
Adjusted effective tax rate
2,258
(2,837)
(479)
(843)
(38)
54
(1,885)
7,432
–
173
–
–
–
892
1,065
13,414
2,258
(2,664)
(479)
(843)
(38)
946
3,668
(12,116)
(13,725)
(3,043)
333
(7,407)
1,364
–
1,313
–
–
61
(820)
(32,290)
20,846
9,068
2,738
11,540
104,647
20%
5,032
(12,116)
(12,412)
(3,043)
333
(7,346)
(29,552)
20,608
99,882
21%
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 15 to 18. The Group
excludes the deferred tax effects of intangible assets and goodwill, as the Group considers that this more accurately reflects its expected
cash tax payable position. The deferred tax effects on goodwill and intangible items would only crystallise in the event of a disposal and
that is not the current intention.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
129
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
8 Tax expense on profit continued
Tax on exceptional items are excluded as exceptional items are adjusted in terms of the Group policy. For the year ended 30 September
2019, tax on exceptional items relates largely to tax on gain on the disposal of Indaba of £3.2m. Adjustments in respect of prior years
are excluded on the basis that they relate mainly to finalisation of US tax reform related items which are one off in nature. 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.
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
Cost of disposal of discontinued operations
Tax at 19.0% (2018: 19.0%)
Factors affecting tax charge:
Different tax rates of subsidiaries operating in overseas jurisdictions
Share of tax on associates and joint ventures
Non-taxable income
Goodwill and intangibles
Disallowable expenditure
Disposal of businesses
Other timing differences
Other items deductible for tax purposes
US tax reform
Non-recoverable withholding tax
Impact of change in rate
Adjustments in respect of prior years
Total tax expense for the year
Continuing
operations
2019
£000
29,451
–
29,451
Discontinued
operations –
Asset Management
2019
£000
55,090
(1,682)
53,408
Continuing
operations
2018
£000
106,816
–
106,816
Discontinued
operations –
Asset Management
2018
£000
47,145
–
47,145
5,596
10,148
20,295
8,958
27
38
–
–
1,613
–
83
1,915
–
–
99
(54)
9,317
4,635
–
(9)
–
404
–
–
(1,915)
–
–
(22)
(892)
12,349
1,330
(67)
13
1,401
1,601
(3,227)
–
(1,746)
3,169
14,553
(3,371)
7,407
41,358
4,164
–
(2,257)
(181)
789
–
–
(2,202)
–
905
(1,313)
(61)
8,802
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 £4.7m (2018: £5.5.m) reflects higher profits earned in jurisdictions which have a higher tax rate than
the UK.
Disallowable expenditure of £2.0m (2018: £2.4m) relates largely to expenses that are capital in nature and therefore not deductible for
tax purposes.
Other items deductible for tax purposes reflects the tax impact of allocating group interest expense between continuing operations and
discontinued operations on a proportionate basis. There is no net impact on the total tax expense for the year.
Adjustments in respect of prior years of £0.9m (2018: £7.3m) relate to adjustments made to US tax reform related items following the
release of certain final regulations during the current period and a reassessment of temporary differences.
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:
Deferred tax (note 22)
Other comprehensive income
2019
£000
(880)
2018
£000
474
Equity
2019
£000
124
2018
£000
796
130 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
9 Dividends
Amounts recognisable as distributable to equity holders in the year
Final dividend for the year ended 30 September 2018 of 22.30p (2017: 21.80p)
Interim dividend for year ended 30 September 2019 of 10.80p (2018: 10.20p)
Employee share trusts dividend
Proposed final dividend for the year ended 30 September
Employee share trusts dividend
2019
£000
2018
£000
24,348
11,799
36,147
(561)
35,586
24,363
(368)
23,995
23,784
11,136
34,920
(559)
34,361
24,347
(383)
23,964
The proposed final dividend of 22.30p (2018: 22.30p) is subject to approval at the AGM on 28 January 2020 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
2019
£000
20,134
(264)
19,870
41,059
60,929
22,586
83,515
2019
Number
000
109,226
(1,667)
107,559
95
Restated
2018
£000
65,458
(139)
65,319
129,685
195,004
(115,871)
79,133
2018
Number
000
109,148
(1,733)
107,415
131
107,654
107,546
Pence
Pence
18.5
18.5
38.1
38.1
56.6
56.6
77.6
77.6
60.8
60.7
120.7
120.6
181.5
181.3
73.7
73.6
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 15 to 18.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
131
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
11 Discontinued operations and disposal groups classified as held for sale
Following the announcement on 10 September 2019 that the Group was to explore strategic options for Asset Management, the Group
has engaged with advisors to assess its options and the segment is being actively marketed. The Asset Management segment meets
the IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ criteria to be classified as held for sale at 30 September
2019. The assets and liabilities of Asset Management 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 2019. The segment also meets the IFRS 5 criteria to be treated as
discontinued operations due to its size and the fact that it constitutes a major line of the Group’s business. Asset Management is therefore
presented as discontinued operations throughout this report and the 2018 Income Statement disclosures have been re-presented.
On 30 April 2018, the Group completed the disposal of GMID. This division met the IFRS 5 ‘Non-current Assets Held for Sale and
Discontinued Operations’ criteria to be treated as discontinued operations at 30 September 2018.
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 (expense)/credit on profit
Profit after tax from discontinued operations
(Cost of)/profit on disposal of discontinued operation – exceptional items
Tax expense on cost of/(profit on) disposal
(Cost of)/profit after tax on disposal of discontinued operations
Asset
Management
2019
£000
Asset
Management
2018
£000
145,622
145,454
66,929
(10,928)
(812)
61,660
(10,749)
(3,850)
GMID
2018
£000
23,815
7,510
–
(969)
Total
2018
£000
169,269
69,170
(10,749)
(4,819)
55,189
47,061
6,541
53,602
–
(99)
(99)
55,090
(12,349)
42,741
(1,682)
–
(1,682)
84
–
84
47,145
(8,802)
38,343
–
–
–
43
(11)
32
6,573
200
6,773
91,263
(6,694)
84,569
127
(11)
116
53,718
(8,602)
45,116
91,263
(6,694)
84,569
Profit for the year from discontinued operations
41,059
38,343
91,342
129,685
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
Asset
Management
2019
£000
Asset
Management
2018
£000
55,090
47,145
10,928
812
66,830
10,749
3,850
61,744
132 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
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
Asset
Management
2019
£000
Asset
Management
2018
£000
35,388
(1,583)
86
33,891
58,347
(3,263)
(424)
54,660
GMID
2018
£000
(2,520)
112,639
(14)
110,105
Total
2018
£000
55,827
109,376
(438)
164,765
The main classes of assets and liabilities comprising the businesses classified as held for sale are set out in the table below. These assets
and liabilities are recorded at the lower of their carrying value and fair values less costs to sell.
Goodwill
Acquired intangible assets
Licenses and software including internally generated assets
Property, plant and equipment
Trade and other receivables
Deferred consideration receivable
Contract assets
Derivative financial instruments
Current income tax assets
Cash and cash equivalents
Total assets of the businesses held for sale
Trade and other payables
Accruals
Contract liabilities
Derivative financial instruments
Deferred tax liabilities
Total liabilities of the businesses held for sale
Net assets
Asset
Management
2019
£000
213,030
50,165
2,821
604
20,383
185
1,450
23
3,368
327
292,356
(661)
(13,769)
(44,853)
(106)
(12,145)
(71,534)
220,822
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
133
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
12 Goodwill and other intangible assets
2019
Cost/carrying amount
At 1 October 2018
Additions
Disposals
Balance at acquisition of company
Exchange differences
Classified as held for sale
At 30 September 2019
Amortisation and impairment
At 1 October 2018
Amortisation charge
Continuing operations
Discontinued operations
Impairment
Disposals
Exchange differences
Classified as held for sale
At 30 September 2019
Net book value/carrying amount
at 30 September 2019
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
Continuing operations
Discontinued operations
Impairment
Disposals
Exchange differences
Classified as held for sale
At 30 September 2018
Net book value/carrying amount
at 30 September 2018
Acquired intangible assets
Trademarks
& brands
£000
Customer
relationships
£000
Databases
£000
Licences &
software
including
internally
generated
assets
£000
Total
acquired
intangible
assets
£000
Goodwill
£000
Total
£000
205,717
151,696
13,931
371,344
19,718
462,534
853,596
–
(5,864)
4,379
9,314
–
(1,388)
38,231
8,391
–
–
5,346
754
–
8,379
(7,252)
47,956
18,459
(67)
268
933
–
(5,644)
27,639
22,168
8,379
(12,963)
75,846
41,560
(121,165)
(70,181)
(7,368)
(198,714)
(8,655)
(240,775)
(448,144)
92,381
126,749
12,663
231,793
20,576
265,922
518,291
105,253
87,561
10,686
203,500
14,059
47,812
265,371
7,034
4,669
–
(5,864)
5,006
5,742
6,259
–
(1,388)
3,918
1,439
–
–
–
481
14,215
10,928
–
(7,252)
9,405
(77,188)
(63,993)
(7,368)
(148,549)
38,910
38,099
5,238
82,247
1,245
854
–
(67)
708
(5,817)
10,982
–
–
2,410
15,460
11,782
2,410
(5,644)
(12,963)
2,808
12,921
(27,745)
(182,111)
19,641
112,870
53,471
88,650
7,425
149,546
9,594
246,281
405,421
Acquired intangible assets
Trademarks
& brands
£000
Customer
relationships
£000
Databases
£000
Licences
& software
including
internally
generated
assets
£000
Total
acquired
intangible
assets
£000
Goodwill
£000
Total
£000
210,273
150,418
13,701
374,392
17,984
467,215
859,591
–
–
5,317
618
4,022
(14,513)
205,717
–
–
5,941
–
2,973
(7,636)
151,696
–
–
–
–
230
–
13,931
–
–
3,262
(1,943)
–
–
10,205
(618)
9,351
3,262
(1,943)
21,463
–
16,991
(23,619)
(45,768)
–
–
415
–
19,718
462,534
853,596
11,258
618
7,225
(22,149)
371,344
95,964
80,474
9,602
186,040
12,345
67,244
265,629
5,572
4,610
5,542
6,139
–
–
2,192
(3,085)
105,253
–
–
1,687
(6,281)
87,561
876
–
–
–
11,990
10,749
–
–
208
–
4,087
(9,366)
2,577
331
–
(1,511)
317
–
–
–
3,048
–
1,139
14,567
11,080
3,048
(1,511)
5,543
(23,619)
(32,985)
10,686
203,500
14,059
47,812
265,371
100,464
64,135
3,245
167,844
5,659
414,722
588,225
134 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
12 Goodwill and other intangible assets continued
The individually material acquired intangible assets are as follows:
2019
BCA2
Metal Bulletin
NDR2
RISI
The Deal
BoardEx
2018
BCA2
Metal Bulletin
NDR2
Fastmarkets
RISI
Trademarks & brands
Customer relationships
2019
£000
35,426
8,851
5,751
20,390
70,418
2019
years1
2019
£000
2019
years1
17
17
12
13
4,575
36,215
12,953
24,410
78,153
1
18
19
21
Trademarks & brands
Customer relationships
2018
£000
37,380
9,892
5,889
20,791
73,952
2018
years1
2018
£000
2018
years1
18
18
13
14
9,503
4,478
36,145
50,126
2
8
19
Total
2019
£000
35,426
8,851
10,326
56,605
12,953
24,410
148,571
Total
2018
£000
37,380
9,892
15,392
4,478
56,936
124,078
1 The remaining useful economic life.
2 Included in assets held for sale (note 11).
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 (CGUs) that are expected to
benefit from that business combination.
During the year, the goodwill in respect of each of the CGUs 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.
Following the implementation of the best-of-both worlds operating model and changes to management reporting, impairment testing
was based on eight groups of CGUs which reflect the level at which goodwill is monitored by management.
The following methodologies applied and key assumptions, reflecting past experience and external sources of information included:
Value in use (VIU):
• Pre-tax cash flow budgets with a CAGR of 1% to 13% for the next three years are derived from approved 2019 budgets. These budgets
are based on historical growth rates and management’s view of expected performance. Management believes these budgets to
be achievable.
• The pre-tax discount rates derived from the Group’s benchmarked weighted average cost of capital (WACC) are weighted based
on the geographical area in which the CGU group’s revenue is generated. The long-term growth rate applied are weighted on the
same basis.
Fair value less costs of disposal (FVLCOD):
• 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 with a CAGR of -4% to 9% are derived from approved 2019 budgets. Management believes these budgets to
be achievable.
• The period of specific projected cash flows is between three and five years.
• Post-tax discount rates of 9.6% to 12.0%, derived from the Group’s benchmarked WACC of 8% adjusted for risks specific to the nature
of CGU groups and risks included within the cash flows themselves.
• Long-term nominal growth rate of 1.8% to 2.0%.
• 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.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
135
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
12 Goodwill and other intangible assets continued
The discount rates and long-term growth rates used in the calculation are as per the below table.
CGU Group
Centre for Investor Education (CIE)
Institutional Investor1
Investment Research1
Specialist Information
BoardEx and The Deal
Banking & Finance
Fastmarkets
Telecoms
Valuation method
VIU
FVLCOD
FVLCOD
VIU
FVLCOD
VIU
VIU
VIU
2019
Long-term
growth rate
%
Discount rate
%
–
1.8
2.0
2.1
2.0
2.5
2.2
2.5
–
9.8
9.6
12.3
12.0
12.5
12.6
12.4
Goodwill
£000
–
5,615
207,415
28,672
28,939
38,630
135,630
14,410
1
Included in assets held for sale (note 11). In the prior year, the recoverable value of these CGU groups were estimated using the value in use method, but given that the value of these CGUs
will now be realised via their sale, a fair value less cost of disposal approach has been taken for the year ended 30 September 2019.
For the year ended 30 September 2019, following the closure of CIE, an impairment of £2.4m for goodwill was recognised in exceptional
items (note 5). CIE is included in the sold/closed businesses segment.
For the year ended 30 September 2018, an impairment for Layer123 of £3.0m was recognised, resulting from its disappointing financial
performance post acquisition. In 2019, following the review of CGUs, this CGU was aggregated to form part of the Telecoms CGU group.
Further disclosures in accordance with IAS 36 are provided where the Group holds an individual goodwill item relating to a CGU group
that is significant, which the Group considers to be 15% or more of the Group’s total carrying value of goodwill.
The Directors performed a sensitivity analysis on the total carrying value of each CGU group.
Significant CGU groups
For Fastmarkets, for the recoverable amount to fall to the carrying value, the discount rate would need to be increased by six percentage
points, the long-term growth rate reduced by seven percentage points or the CAGR on cash flows reduced by 16 percentage points.
See the VIU section on page 135 for key assumptions and methodologies applied.
For Investment Research, for the recoverable amount to fall to the carrying value, the discount rate would need to be increased by
two percentage points, the long-term growth rate reduced by two percentage points or the CAGR on cash flows reduced by eight
percentage points. See the FVLCOD section on page 135 for key assumptions and methodologies applied.
136 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
13 Property, plant and equipment
2019
Cost
At 1 October 2018
Additions
Disposals
Balance at acquisition of new company
Exchange differences
Classified as held for sale
At 30 September 2019
Depreciation
At 1 October 2018
Charge for the year
Continuing operations
Discontinued operations
Disposals
Exchange differences
Classified as held for sale
At 30 September 2019
Net book value at 30 September 2019
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
Continuing operations
Discontinued operations
Disposals
Exchange differences
At 30 September 2018
Net book value at 30 September 2018
Net book value at 30 September 2017
Leasehold
improvements
£000
Office
equipment
£000
15,790
1,069
(113)
242
636
(1,505)
16,119
12,850
568
(3,053)
43
523
(2,208)
8,723
Total
£000
28,640
1,637
(3,166)
285
1,159
(3,713)
24,842
3,858
8,670
12,528
1,166
72
(113)
160
(1,111)
4,032
12,087
1,251
255
(3,020)
358
(1,998)
5,516
3,207
Leasehold
improvements
£000
Office
equipment
£000
14,995
801
(295)
–
289
12,177
1,177
(786)
4
278
2,417
327
(3,133)
518
(3,109)
9,548
15,294
Total
£000
27,172
1,978
(1,081)
4
567
15,790
12,850
28,640
2,558
7,379
9,937
1,059
453
(280)
69
3,859
11,931
12,437
1,502
342
(749)
195
8,669
4,181
4,798
2,561
795
(1,029)
264
12,528
16,112
17,235
There is no material difference between the property, plant and equipment’s historical cost values as stated above and their fair
value equivalents.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
137
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
14 Investments
At 1 October 2017
Disposals
Exchange difference
Provision against investment losses
Share of profits/(losses) after tax
At 30 September 2018
Impact of adopting IFRS 9
At 1 October 2018 (restated)
Fair value remeasurements
Transfer from other equity to associate investment
Share of losses after tax
Dividends
Transfer to subsidiary
At 30 September 2019
Investment in
associates
£000
Investment in
joint ventures
£000
Other equity
investments
£000
26,820
(26,194)
(81)
–
170
715
–
715
–
5,292
(88)
(197)
(451)
5,271
–
–
–
13
(13)
–
–
–
–
–
–
–
–
–
3,546
–
–
–
–
3,546
(385)
3,161
2,131
(5,292)
–
–
–
–
Total
£000
30,366
(26,194)
(81)
13
157
4,261
(385)
3,876
2,131
–
(88)
(197)
(451)
5,271
In accordance with IFRS 9 ‘Financial Instruments’, other equity investments are classified as financial assets measured at fair value
through other comprehensive income. The ‘Available-for-sale investments’ category has changed to ‘Other equity investments’ with effect
1 October 2018.
All of the above investments in associates and joint ventures are accounted for using the equity method in these consolidated
financial statements.
Reconciliation of share of results in associates and joint ventures in Income Statement to adjusted share
of results in associates and joint ventures
Total share of results in associates and joint ventures in Income Statement
Add back:
Share of tax 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
2019
£000
(88)
(38)
–
–
–
(38)
(126)
2018
£000
157
333
(266)
761
125
953
1,110
1 The share of exceptional items related to restructuring and earn-out costs in Dealogic, which was disposed of in December 2017.
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 15 to 18. The share of profit after
tax includes a finance expense of £nil (2018: £0.3m).
For the year ended 30 September 2018, the Group disposed of its minority equity stake of 15.5% in Diamond TopCo Limited (Dealogic) for
$135.0m (£100.1m) on 27 December 2017. 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 trading profit of Dealogic was £83k.
138 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
14 Investments continued
Information on investment in associates, investment in joint ventures and other equity investments:
Investment in associates
Zanbato, Inc (Zanbato)
Investment in joint ventures
Sanostro Institutional
AG (Sanostro)
Other equity investments
Principal activity
Year
ended
Date of
acquisition
Type of
holding
Group
interest Registered Office
Private capital placement and
workflow
30 Sep Sept 2015 Ordinary
9.9% 715 N Shoreline Boulevard,
Mountain View CA, 94043,
United States
Hedge fund manager
trading signals
31 Dec Dec 2014 Ordinary
50.0% Allmendstrasse 140,
8041 Zurich, Switzerland
Estimize, Inc (Estimize)
Financial estimates platform
31 Dec
July 2015 Ordinary
10.0% 43 West 24th Street,
New York, NY 10010,
United States
The Group previously held an associate interest of 49% of the equity share capital of Broadmedia Communications Limited
(BroadGroup). On 12 April 2019, the Group acquired an additional 17% of the equity share capital of BroadGroup and is subsequently
accounted for as a subsidiary (note 15).
It has been determined that the Group has significant influence over Zanbato from 26 July 2019 (note 2). The Group has therefore used
the equity method to account for its 9.9% equity investment in Zanbato.
The Group interests in Sanostro and Estimize have remained unchanged since their respective dates of acquisition.
Aggregate information of associates that are not individually material:
Group share of (losses)/profit from continuing operations
Aggregate carrying amount of the Group’s interests in these associates
2019
£000
(88)
5,271
2018
£000
87
715
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
139
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
15 Acquisitions and disposals
Purchase of businesses
The Deal, LLC (BoardEx and The Deal)
On 14 February 2019, the Group acquired 100% of the equity share capital of The Deal LLC, comprising BoardEx, an executive profiling
and relationship-mapping platform, and The Deal, a trusted source of data, news and intelligence on mergers and acquisitions, activist
investing, private equity and restructuring, for $93.4m (£72.5m). Both products are highly complementary to the Group’s existing portfolio,
serving a number of shared customer groups, particularly investors, banks and professional services firms. BoardEx and The Deal are
included in the Pricing, Data & Market Intelligence segment.
The acquisition accounting is set out below and is provisional pending final determination of the fair value of the assets and
liabilities acquired:
Net assets/(liabilities):
Intangible assets
Property, plant and equipment
Deferred tax assets
Trade and other receivables
Trade and other payables
Contract liabilities
Cash and cash equivalents
Net assets acquired (100%)
Goodwill
Total consideration
Consideration satisfied by:
Cash
Working capital adjustment
Net cash outflow arising on acquisition:
Cash consideration
Less: cash and cash equivalent balances acquired
Book
value
£000
Fair value
adjustments
£000
Provisional
fair value
£000
1,414
285
1,335
5,585
(3,411)
(10,645)
4,777
(660)
43,945
45,359
–
(547)
–
–
2,180
–
45,578
285
788
5,585
(3,411)
(8,465)
4,777
44,918
44,918
27,619
72,537
72,472
65
72,537
72,537
(4,777)
67,760
Intangible assets represent customer relationships of $47.4m (£36.8m), brands of $3.8m (£3.0m), databases of $5.4m (£4.2m) and
software of $1.8m (£1.4m) for which amortisation of $2.8m (£2.2m) has been charged for the period ended 30 September 2019.
The intangible assets will be amortised over their respective expected useful economic lives; customer relationships of between four and
22 years, databases of between one and 10 years, software of three years and brands of 10 years.
Goodwill arises from the anticipated future operating synergies from integrating the acquired operations within the Group and the
acquired workforce. Goodwill recognised in respect of the US business is expected to be deductible for US income tax purposes.
The $2.8m (£2.2m) fair value adjustment to contract liabilities relates to an adjustment to reduce the deferred revenue balance.
The related deferred tax liability of $0.7m (£0.5m) has been recognised as a fair value adjustment against deferred tax assets.
The fair value of the assets acquired includes gross trade receivables of $4.1m (£3.2m) and are expected to be fully collectable.
BoardEx and The Deal contributed $14.8m (£11.6m) to the Group’s revenue, $1.4m (£1.1m) to the Group’s operating profit and $1.4m
(£1.1m) to the Group’s profit before tax for the period between the date of acquisition and 30 September 2019. If the acquisition had been
completed on the first day of the financial year, BoardEx and The Deal would have contributed $24.6m (£19.2m) to the Group’s revenue
and $2.8m (£2.2m) to the Group’s operating profit.
140 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
15 Acquisitions and disposals continued
Transfer to subsidiary
Broadmedia Communications Limited (BroadGroup)
On 12 April 2019, the Group acquired an additional 17% shareholding in BroadGroup for a cash consideration of £0.4m, bringing the
Group’s total shareholding to 66%. The Group previously held an associate interest of 49% of the equity share capital. The Group
accounts for its increased equity shareholding in BroadGroup of 66% as a subsidiary. At the acquisition date, the non-controlling
interest of 34% is measured using the proportion of net assets method. BroadGroup is included in the Pricing, Data & Market
Intelligence segment.
On the date that the additional 17% shareholding was acquired, there was a revaluation gain of £0.6m on the associate investment,
bringing the fair value of the associate when disposed of to £1.1m.
The remaining interest in BroadGroup is subject to put and call options under an earn-out agreement, in two instalments, based on the
profits of BroadGroup for its years ended 30 September 2019 and 2020. At acquisition, the total amount that the Group expected to pay
under this option agreement was £1.4m and was recognised as an acquisition commitment (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/(liabilities):
Intangible assets
Trade and other receivables
Trade and other payables
Deferred tax liabilities
Cash and cash equivalents
Net assets acquired (66%)
Goodwill
Total consideration
Consideration satisfied by:
Cash
Fair value of associate
Net cash outflow arising on acquisition:
Cash consideration
Less: cash and cash equivalent balances acquired
–
2,865
3,364
(3,503)
–
54
(85)
–
–
(487)
–
2,378
2,865
3,364
(3,503)
(487)
54
2,293
1,514
20
1,534
395
1,139
1,534
395
(54)
341
Intangible assets represent customer relationships of £1.4m and the brand of £1.4m 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 15 years. The brand will be amortised
over its expected useful life of 15 years.
Goodwill arises from the anticipated future operating synergies from integrating the acquired operations within the Group and the
acquired workforce.
The fair value of the assets acquired includes net trade receivables of £3.0m, all of which are contracted and are expected to
be collectable.
BroadGroup contributed £2.5m to the Group’s revenue, £0.8m to the Group’s operating profit and £0.8m to the Group’s profit after tax
for the period between the date of acquisition and 30 September 2019. If the acquisition had been completed on the first day of the
financial year, BroadGroup would have contributed £3.5m to the Group’s revenue and £0.7m to the Group’s operating profit (excluding
exceptional costs).
Increase in equity holdings
Reinsurance Security (Consultancy).Co.Uk (ReSec)
On 19 December 2018, the Group made an earn-out payment of £0.1m to increase its equity shareholding in ReSec. The payment
increased the Group’s holding from 83% to 88%.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
141
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
15 Acquisitions and disposals continued
Sale of business
Mining Indaba
On 23 October 2018, the Group completed the sale of Mining Indaba. The gross consideration for the sale was £30.1m, with £20.0m
payable on completion and net deferred consideration of £8.7m received in June 2019. The settlement of the deferred consideration
has been offset against a working capital adjustment in favour of the buyer. The sale resulted in a pre-tax profit of £17.0m after
transaction costs of £0.3m, which was recognised as an exceptional item (note 5). The assets and liabilities of this business sold were
classified as held for sale and disclosed separately on the face of the Consolidated Statement of Financial Position for the year ended
30 September 2018.
The net assets of the businesses at the date of disposal were as follows:
Net assets:
Intangible assets
Trade and other receivables
Deferred income
Net assets disposed
Directly attributable costs
Profit on disposal (note 5)
Total consideration
Consideration satisfied by:
Cash
Deferred consideration (net of working capital adjustments)
Net cash inflow arising on disposal:
Cash consideration (net of directly attributable costs paid and working capital adjustments)
Receipt of deferred consideration
Total cash inflow
Indaba
£000
12,783
1,211
(2,620)
11,374
11,374
347
16,998
28,719
20,000
8,719
28,719
19,653
8,719
28,372
142 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
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
Current
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
Total
2019
£000
2018
£000
38,180
(1,588)
36,592
2,262
10,101
–
48,955
53,534
(3,153)
50,381
4,847
10,395
2,662
68,285
2019
£000
Trade
receivables
2019
£000
Loss
allowance
2019
%
Expected
loss rate
27,966
1,341
4,435
4,438
38,180
(417)
–
(62)
(1,109)
(1,588)
1%
0%
1%
25%
4%
The Group has applied the expected credit loss model required by IFRS 9, using the simplified approach for trade receivables and
recognised the loss allowance at an amount equal to lifetime expected credit losses (note 1). The expected credit loss model incorporates
forward-looking factors at the customer level in addition to the geographical level.
Trade receivables are written off when there is no reasonable expectation of recovery.
Prior to the adoption of IFRS 9 on 1 October 2018, loans and receivables were stated net of allowances for estimated irrecoverable
amounts. These allowances were recorded after identification of a loss event (the incurred loss method).
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
The Group had 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.
Movements on the Group loss allowance:
At 1 October
IFRS 9 adjustment
Increase in loss allowance recognised in profit or loss during the year
Subsequent recoveries of amounts provided for
Amounts written off as uncollectible
Exchange differences
Classified as held for sale
At 30 September
2019
£000
(3,153)
828
(1,659)
1,243
859
(54)
348
2018
£000
(3,688)
–
(2,111)
1,785
804
(18)
75
(1,588)
(3,153)
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
143
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
17 Trade and other payables
Trade creditors
Other creditors
2019
£000
2,783
41,146
43,929
Restated
2018
£000
2,687
42,244
44,931
The Directors consider the carrying amounts of trade and other payables approximate their fair values. Other creditors have been
restated, the details of which have been disclosed in note 1. The balance includes amounts relating to the payroll taxes and VAT
adjustment. Of the other creditors balance at the end of 2019, £11.3m (2018: £11.0m) relates to the VAT liability and £8.2m (2018: £6.7m)
relates to payroll taxes, referred to in note 1.
18 Deferred income and contract liabilities
Deferred subscription income
Other deferred income
Within one year
In more than one year
Additions
£000
99,721
25,509
125,230
Releases
£000
(94,273)
(22,815)
(117,088)
Foreign
exchange
£000
Classified as
held for sale
£000
3,956
779
4,735
(40,452)
(4,401)
(44,853)
2018
£000
97,589
22,815
120,404
117,088
3,316
120,404
2019
£000
66,541
21,887
88,428
87,150
1,278
88,428
The deferred income balance as at 30 September 2019 is a contract liability. All movements in deferred income in the period are due to
the timing difference between the right to consideration and the satisfaction of performance obligations. At 30 September 2019, contracts
include £31.9m relating to performance obligations that are yet to be satisfied which will be recognised over time, of which £30.6m will
be recognised within one year and the remaining balance thereafter.
144 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
19 Financial instruments and risk management
Derivative financial instruments
The derivative financial assets/(liabilities) excluding assets held for sale at 30 September comprised:
Current
Forward foreign exchange contracts – cash flow hedge
Classified as held for sale forward foreign exchange contracts – cash flow hedge
Non-current
Forward foreign exchange contracts – cash flow hedge
2019
2018
Assets
£000
Liabilities
£000
Assets
£000
Liabilities
£000
219
23
242
93
335
(3,578)
(106)
(3,684)
(293)
(3,977)
131
–
131
55
186
(2,424)
–
(2,424)
(166)
(2,590)
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 page 118 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 (pages 148 and 149).
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 147 and 148).
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 2018.
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 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 or net cash. The resultant net cash to adjusted
EBITDA ratio is 0.44 times (2018 restated: 0.71 times). Using a closing rate basis for the valuation of net cash, the ratio was 0.45 times
(2018 restated: 0.73 times).
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
145
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
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
Fair value through profit or loss (FVTPL) assets
Derivative instruments
Convertible loan note (reclassified from amortised cost)
Cash and cash equivalents – money market funds (reclassified from amortised cost)
Classified as held for sale derivatives
Amortised cost
Other equity investments (note 14) (reclassified to FVTOCI)
Convertible loan note (reclassified to FVTPL)
Deferred consideration
Trade receivables and other debtors
Cash and cash equivalents – amortised cost
Cash and cash equivalents – money market funds (reclassified to FVTPL)
Classified as held for sale receivables (including cash at bank)
Financial liabilities
Fair value through profit or loss liabilities
Derivative instruments
Deferred consideration
Classified as held for sale derivatives
Amortised cost
Acquisition commitments
Deferred consideration
Borrowings and payables
Classified as held for sale borrowings and payables
2019
£000
2018
£000
312
3,759
36,333
23
–
–
–
40,628
13,418
–
22,368
116,841
(3,871)
(138)
(106)
(2,626)
–
(72,983)
(14,536)
(94,260)
186
–
–
–
3,546
2,677
1,120
57,890
28,058
50,215
936
144,628
(2,590)
(236)
–
(272)
(98)
(91,427)
(302)
(94,925)
In accordance with IFRS 9 ‘Financial Instruments’, other equity investments are classified as financial assets measured at fair value
through other comprehensive income. Equity investments previously classified as ‘Available-for-sale investments’ are now categorised as
‘Other equity investments’ with effect from 1 October 2018.
The classification of each of the Group’s financial instruments as per the fair value hierarchy is disclosed on page 151.
The Group has derivative assets of £0.3m (2018: £0.2m) and derivative liabilities of £3.9m (2018: £2.6m) with a number of banks.
These derivatives do not meet the offsetting criteria of IAS 32, but the Group would have the right to offset same currency cash flows with
the same counterparties 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 Group has entered into an omnibus guarantee and setoff agreement with Lloyds Banking Group plc with a right to offset
outstanding credit balances against cash balances. Cash and cash equivalents include no overdrafts in either 2019 or 2018 that are
offset under the cash pooling arrangements. This agreement meets the offsetting criteria of IAS 32.
Upon transition to IFRS 9, a £0.8m reduction in the expected credit loss allowance and a £0.4m fair value loss on the Zanbato equity
investment have been recognised at 1 October 2018 against opening reserves. During the year, a fair value gain of £0.7m on the FVTPL
convertible loan note has been recognised in finance income (note 7) and a fair value gain of £2.1m on the Zanbato FVTOCI equity
investment has been recognised in other comprehensive income. It has been determined that the Group has significant influence over
Zanbato from 26 July 2019 (note 2), hence the equity method to account for its 9.9% equity investment in Zanbato as an associate.
The Group’s remaining FVTOCI investment in Estimize has a fair value of nil at 30 September 2019.
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 2019. The Group has no other material market
price risks. Market risk exposures are measured using sensitivity analysis.
146 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
19 Financial instruments and risk management continued
i) Market price risk continued
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 three quarters 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 loans to foreign operations within the Group where the denomination of the loan is not in
the functional currency of the lender/borrower.
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 endeavours 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, including assets held for sale at
the reporting date, are as follows:
US dollar
Assets
2019
£000
Liabilities
2018
£000
2019
£000
2018
£000
122,731
130,459
(26,811)
(167,253)
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 up to 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, including assets held
for sale. 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 (USD net assets in UK companies)
Change in other comprehensive income (derivative financial instruments)
Change in other comprehensive income (loans to/from foreign operations)
2019
£000
(919)
6,550
(5,824)
2018
£000
(911)
7,167
12,122
The increase in the loss from the sensitivity analysis is due to an increase in the working capital assets. The decrease in other
comprehensive income from £7.2m to £6.6m from the sensitivity analysis is mainly attributable to the exclusion of derivatives held in
entities of which the functional currency is not sterling.
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 £5.8m (2018: £12.1m). The decrease in other comprehensive income from the sensitivity analysis is due to
Group restructuring undertaken following disposals in the year ended 30 September 2018. The change in other comprehensive income
from the retranslation of loans to/from foreign operations is completely offset by the change in value of the foreign operation’s net assets
from their translation into sterling.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
147
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
19 Financial instruments and risk management continued
ii) Foreign exchange rate risk continued
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.
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 up to 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, a
series of US dollar forward contracts are put in place up to 18 months forward to hedge the Group’s Canadian operation's cost base
held in discontinued operations.
Cash Flow Hedges Sell USD buy GBP
Less than a year
More than a year but less than two years
Sell USD buy CAD1
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
2019
2018
2019
$000
2018
$000
2019
£000
2018
£000
2019
£000
2018
£000
1.319
1.269
1.372
1.346
69,930
18,700
69,400
53,035
18,300
14,734
50,587
13,595
(3,399)
(288)
(2,162)
(126)
1.310
1.322
1.271
1.292
10,567
2,448
11,148
3,863
8,497
1,986
8,427
2,969
(81)
(2)
(131)
16
€000
€000
£000
£000
£000
£000
1.119
1.099
1.115
1.104
21,515
5,890
20,000
5,230
19,227
5,359
17,930
4,738
40
88
–
(1)
102,838
98,246
(3,642)
(2,404)
1 Rate used for conversion from CAD to GBP is 1.6289 (2018: 1.6809).
At 30 September 2019, the aggregate amount of unrealised losses under forward foreign exchange contracts deferred in the fair value
reserve relating to future revenue transactions is £3.6m (2018: £2.4m). 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. The change in value of the hedged
item used as the basis for recognising hedge ineffectiveness for the year is £5.1m gain. There was no hedge ineffectiveness recognised in
profit or loss during the current year (2018: nil).
The following table represents the corresponding carrying values and nominal amounts of derivatives in a continued hedge relationship
including assets held for sale as at 30 September 2019:
Derivatives
Fair value reserves
Nominal
amounts
£000
Carrying
value of
liabilities
£000
1 October
2018
£000
Fair value loss
deferred to
OCI
£000
FX gains
recycled to
the income
statement
£000
Exchange
differences on
translation of
derivatives
£000
30 September
2019
£000
Cash flow hedges – foreign exchange risk
Forward foreign exchange contracts
102,838
(3,642)
(2,404)
(5,061)
3,844
(21)
(3,642)
During the year, the following amounts were recognised in profit or loss in relation to forward foreign exchange contracts:
Net foreign exchange (losses)/gains included in revenue
Net foreign exchange (losses)/gains included in administrative expenses2
Total net foreign exchange (losses)/gains recognised in profit before tax for the period
2 Net foreign exchange movements included in administrative expenses is entirely attributable to discontinued operations.
2019
£000
(3,483)
(361)
(3,844)
2018
£000
1,258
409
1,667
iii) Interest rate risk
It is the Group’s policy to hedge up to 80% of any long-term interest rate 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.
148 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
19 Financial instruments and risk management continued
iii) Interest rate risk continued
At 30 September 2019, the Group had no long-term debt, and as such, no interest rate swaps were outstanding, 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.
The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk section on pages 149
and 150.
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 2019 would increase or decrease by £0.5m (2018: £0.8m). This is mainly attributable to the Group’s exposure to
interest rates on its variable rate cash deposits.
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 £49.8m (2018: £78.3m)
is £36.3m (2018: £50.2m) directly deposited in AAA rated money market fund investments.
The Group also has credit risk with respect to trade and other receivables and contract assets. 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 (2018: £240m) multi-currency revolving credit facility which was undrawn at
30 September 2019 (undrawn at 30 September 2018).
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 approximately 100% 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 98%.
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.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
149
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
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 2019. The contractual maturity is based on the earliest date on which the Group may be required to settle.
2019
Deferred consideration
Acquisition commitments
Non-interest bearing liabilities (trade and other payables, and accruals)1
2018
Deferred consideration
Acquisition commitments
Non-interest bearing liabilities (trade and other payables, and accruals)1
1 Other payables exclude the impact of the payroll taxes and VAT adjustments.
Less than
1 year
£000
138
986
72,983
74,107
Less than
1 year
£000
209
97
91,427
91,733
1–3 years
£000
–
Total
£000
138
1,640
2,626
–
72,983
1,640
75,747
1–3 years
£000
125
175
–
300
Total
£000
334
272
91,427
92,033
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.
2019
Variable interest rate instruments (cash at bank and short-term deposits)
Non-interest bearing assets (trade and other receivables excluding prepayments)
2018
Variable interest rate instruments (cash at bank and short-term deposits)
Deferred consideration
Non-interest bearing assets (trade and other receivables excluding prepayments)
Weighted
average
effective
interest rate
%
2.04
–
Less than
1 year
£000
49,751
40,628
90,379
1–3 years
£000
–
–
–
Total
£000
49,751
40,628
90,379
Weighted
average
effective
interest rate
%
Less than
1 year
£000
1.11
78,273
–
–
650
57,890
136,813
1–3 years
£000
–
470
Total
£000
78,273
1,120
–
57,890
470
137,283
150 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
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 including assets held for sale. 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.
2019
Gross settled
Foreign exchange forward contracts inflows
Foreign exchange forward contracts outflows
2018
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
Total
£000
20,161
60,598
22,079
102,838
(21,214)
(63,302)
(22,415)
(106,931)
(1,053)
(2,704)
(336)
(4,093)
Less than
3 months
£000
3 months
to 1 year
£000
1–3 years
£000
Total
£000
19,377
57,566
21,302
98,245
(19,837)
(59,807)
(21,671)
(101,315)
(460)
(2,241)
(369)
(3,070)
Fair value of financial instruments
The fair value 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.
• The fair values of the Zanbato other equity investment as at 26 July 2019 (immediately prior to its transfer to investments in associates)
and the Zanbato convertible loan note as at 30 September 2019 were calculated using the Black-Scholes option pricing model.
Significant inputs include the value of Zanbato’s expected round of preferred financing and its total equity value.
• The fair value of the BroadGroup investment in associates prior to the step acquisition on 12 April 2019 (note 15) was determined by
reference to the amount paid for the minority shareholding.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
151
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
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.
The Group classifies its financial instruments into the following categories:
Financial instrument category
Derivative instruments
Other equity investments
Convertible loan note
Deferred consideration asset
Receivables
Cash and cash equivalents – cash at bank and short term deposits
Cash and cash equivalents – money market funds
IAS 39 measurement
category
IFRS 9 Measurement
category
Fair value
measurement
hierarchy
FVTPL1
Amortised cost
FVTPL1
FVTOCI
Amortised cost
FVTPL
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Amortised cost
FVTPL
2
3
3
N/A
N/A
N/A
2
N/A
N/A
3
N/A
N/A
N/A
Classified as held for sale receivables (including cash at bank and short-term deposits) Amortised cost
Amortised cost
Deferred consideration liability
Deferred consideration liability
Acquisition commitments
Borrowings and payables
Classified as held for sale borrowings and payables
Amortised cost
Amortised cost
FVTPL
FVTPL
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Amortised cost
1
Changes in fair value to derivatives designated in cash flow hedging relationships, to the extent that the hedge is effective, are taken to the fair value reserve through other comprehensive
income. Any ineffectiveness is recognised in profit or loss.
Movement in assets/(liabilities) arising from financing activities:
Net cash comprises
Cash and cash equivalents
Analysis of changes in liabilities from financing activities
Other financing items – prepaid bank fees
Interest payable
Acquisition commitments
Total (liabilities)/assets from financing activities
2018
£000
Cash flow
£000
Classified as
held for sale
£000
Interest
and other
non-cash
movements
£000
Foreign
exchange
£000
2019
£000
78,273
(31,150)
(327)
999
1,956
49,751
848
(1,358)
(272)
(782)
30
1,257
97
1,384
–
–
–
–
(296)
(1,601)
(2,451)
(4,348)
–
–
–
–
582
(1,702)
(2,626)
(3,746)
152 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
20 Borrowings
Undrawn available committed facilities
2019
£000
2018
£000
240,000
240,000
Committed borrowing facilities
The Group’s principal source of borrowings is provided through a committed bank facility available to the Group 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.
21 Provisions
At 1 October 2018
Provision in the year
Used in the year
Imputed interest
Exchange differences
At 30 September 2019
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
845
–
(465)
–
31
411
Other
provisions
£000
3,275
30
(117)
15
16
Total
£000
4,120
30
(582)
15
47
3,219
3,630
2019
£000
785
533
2,312
3,630
2018
£000
248
1,301
2,571
4,120
Onerous lease provision
The onerous lease provision relates to an office in Hong Kong that was vacated following the disposal of GMID (note 11). 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 (2018: £2.6m) 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.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
153
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
22 Deferred taxation
The net deferred tax liability at 30 September 2019 comprised:
Capitalised
goodwill and
intangibles
£000
Tax losses
£000
Financial
instruments
£000
Pension deficit
£000
Deferred tax assets (restated)
Deferred tax liability (restated)
At 30 September 2018 (restated)
Reclassification
Credit/(charge) to Income Statement
Continuing operations
Discontinued operations
Credit to other comprehensive income
(Charge)/credit to equity
Acquisitions and disposals
Exchange differences
Classified as held for sale
At 30 September 2019
Deferred tax assets
Deferred tax liability
(6,160)
(32,527)
(38,687)
(1,148)
1,415
457
–
(182)
(487)
(3,799)
13,671
(28,760)
(5,881)
(22,879)
2,509
1,020
3,529
319
(684)
(6)
–
–
1,231
(133)
(10)
4,246
2,248
1,998
389
(11)
378
11
226
–
–
–
–
3
–
618
618
–
498
0
498
–
(322)
–
880
–
–
–
–
1,056
1,056
–
Other deferred tax assets include share based payments and provisions.
Accelerated
capital
allowances
£000
588
1,199
1,787
(1,522)
147
81
–
–
44
1
(14)
524
467
57
Other
£000
4,354
2,766
7,120
2,340
134
(1,002)
–
58
(487)
169
(1,502)
6,830
3,724
3,106
Total
£000
2,178
(27,553)
(25,375)
–
916
(470)
880
(124)
301
(3,759)
12,145
(15,486)
2,232
(17,718)
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
2019
£000
1,800
1,998
448
4,246
2018
£000
1,215
1,020
1,294
3,529
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 2019 and 2038. There is no expiry date on the
other losses.
The increase in the net deferred tax liability relates to the unwind of deferred tax liability on intangible assets and goodwill and
recognition of deferred tax asset recognised on tax settlement payments, offset by significant foreign exchange movement on the Group’s
US deferred tax assets. There are no temporary differences (2018: £50.0m) relating to the unremitted earnings of overseas subsidiaries.
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
109,249,352 ordinary shares of 0.25p each (2018: 109,180,729 ordinary shares of 0.25p each)
2019
£000
273
2018
£000
273
During the year, 68,623 ordinary shares of 0.25p each (2018: 79,121 ordinary shares) with an aggregate nominal value of £172
(2018: £198) were issued following the exercise of share options granted under the Company’s share option schemes for a cash
consideration of £516,126 (2018: £642,612).
154 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
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. There are no share options exercisable at 30 September 2019 (2018: nil).
Further details of the Group’s share plans are provided in the Directors’ Remuneration Report.
2019
Incentive scheme
SAYE/Sharesave
Buy-out award
PSP
Deferred bonus – equity settled
CAP
Total
2018
Incentive scheme
SAYE/Sharesave
Buy-out award
PSP
Deferred bonus – equity settled
CAP
Total
Income
statement
charge in year
£000
Options
outstanding at
30 September
2018
Number
Granted in
year
Number
Exercised
during year
Number
Lapsed/
forfeited
during year
Number
Options
outstanding at
30 September
2019
Number
(40,939)
258,488
130
450
303
–
–
244,671
88,405
676,860
23,514
5,124
123,379
–
349,668
(68,623)
(44,202)
–
–
(309,874)
–
–
(19,175)
–
–
–
44,203
716,654
4,339
5,124
883
1,038,574
473,047
(132,000)
(350,813)
1,028,808
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
–
282,492
4,339
–
(79,121)
(44,202)
–
–
–
(34,989)
–
(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
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
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 £4.5m (2018: £3.6m).
The weighted average exercise price of options exercised during the year was £3.91 (2018: £5.21).
The options outstanding at 30 September 2019 had a weighted average remaining contractual life of 6.70 years (2018: 6.78 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.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
155
Financial Statements
Notes to the Consolidated Financial Statements continued
24 Share-based payments continued
Capital Appreciation Plan (CAP)
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 was approved by shareholders on 30 January 2014 as a replacement for CAP 2010. The minimum performance target
under CAP 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 remeasured each period. The discount is unwound as a notional interest charge
and the remeasurement of these liabilities is recognised in the Income Statement.
Acquisition
commitments
Deferred consideration
payments
Deferred consideration
receipts
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
2019
£000
(272)
(1,429)
–
–
–
97
2018
£000
(13,125)
–
–
317
–
10,130
2019
£000
(334)
–
–
–
232
–
2018
£000
(350)
(209)
–
–
1,470
–
Net movements in finance income and expense during
the year (note 7)
(1,022)
2,378
(36)
(1,245)
Exchange differences to reserves
Classified as held for sale
At 30 September
Within one year
In more than one year
–
–
(2,626)
(986)
(1,640)
(2,626)
28
–
(272)
(97)
(175)
(272)
–
–
–
–
(138)
(334)
(138)
–
(138)
(209)
(125)
(334)
2019
£000
1,120
–
8,719
–
2018
£000
1,989
–
593
–
(9,671)
(1,607)
–
–
17
(185)
–
–
–
–
–
123
22
–
1,120
650
470
1,120
The addition to acquisition commitments of £1.4m relates to BroadGroup (note 15). The remaining interest in BroadGroup is subject to put
and call options under an earn-out agreement, in two instalments, based on the profits of BroadGroup for its years ended September
2019 and 2020.
For the year ended 30 September 2018, the non-controlling interest of NDR exercised their put options over the remaining 15% stake in
NDR for a total consideration of £8.8m. The Group’s equity shareholding in NDR increased to 100%. The Group acquired the remaining
39% of Layer123 for £1.3m and deferred compensation costs of £0.7m.
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):
Remeasurement during the year
Imputed interest
Net movements in finance income and expense during
the year
Acquisition
commitments
Deferred consideration
payments
Deferred consideration
receipts
2019
£000
(1,022)
–
2018
£000
2,766
(388)
2019
£000
(36)
–
2018
£000
(1,245)
–
(1,022)
2,378
(36)
(1,245)
2019
£000
–
–
–
2018
£000
82
41
123
156 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
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
2019
£000
7,750
37,005
40,186
84,941
2,767
87,708
Restated
2018
£000
8,546
28,519
43,738
80,803
3,399
84,202
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
27 Retirement benefit schemes
2019
£000
1,127
3,546
4,673
Restated
2018
£000
441
1,583
2,024
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 for continuing operations and
discontinued operations for Asset Management, comprised:
Euromoney and DMGT PensionSaver
Metal Bulletin Group Personal Pension Plan
Private schemes
2019
£000
2,356
16
2,359
4,731
2018
£000
2,111
17
1,134
3,262
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.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
157
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
27 Retirement benefit schemes continued
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.
Following the ruling, a past service charge adjustment of £3.0m was recognised in the HPS respect of the impact of the GMP
equalisation. The Group has accounted for approximately 1% of this adjustment, reflecting its share of the total scheme's participation.
The MBPS is not affected by the equalisation ruling as it is contracted in.
Harmsworth Pension Scheme
HPS is a multi-employer defined benefit scheme operated by DMGT and closed to further accrual. The Group accounts for
approximately 1% of HPS.
A full actuarial valuation of the scheme is carried out triennially by the scheme actuary. Following the results of the latest triennial
valuation as at 31 March 2016, DMGT agreed a Recovery Plan involving a series of annual funding payments, of £13.0m on 5 October
2016 to 2018, £16.3m on 5 October 2019, £16.2m on 5 October 2020 to 2025, and £76.2m on 5 October 2026. DMGT considers that these
contribution rates are sufficient to eliminate any deficit over the agreed period. This Recovery Plan will be reviewed at the next triennial
funding valuation of DMGT’s main schemes which is 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 2018 and 2019.
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 any 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 £16.2m to the Scheme during the year to 30 September 2020 relating to the deficit funding
payments described above. In addition, following its disposal of Euromoney during the period, DMGT has made £117.0m available
from cash resources to the defined benefit pension schemes. In light of the forthcoming actuarial valuation as at 31 March 2019, DMGT
and the Trustees of the pension schemes are in discussions to finalise these arrangements. The Euromoney Group expects to make cash
contributions amounting to £0.1m during the year to 30 September 2020.
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 Scheme, the
Group considers that recognition of a surplus in the Scheme 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 contributed £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). The assumptions for the discount rate and mortality rates have been
reviewed and adjusted to reflect the latest market rates increasing the net pension deficit from £2.9m at 30 September 2018 to £6.2m at
30 September 2019.
The Trustees of the MBPS have changed the scheme rules for the underlying index of deferred revaluation from RPI to CPI, which resulted
in a £1.2m reduction in the net pension deficit (note 5).
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 2019 were £3.7m (2018: £2.6m).
158 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
27 Retirement benefit schemes continued
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
(59,862)
52,139
2019
HPS
£000
(27,724)
29,235
Total
£000
(87,586)
81,374
MBPS
£000
(44,940)
40,070
2018
HPS
£000
(24,016)
25,953
Total
£000
(68,956)
66,023
(7,723)
1,511
(6,212)
(4,870)
1,937
(2,933)
The deficit for the year excludes a related deferred tax asset of £1.1m (2018: £0.5m).
The movements in the defined benefit liability over the year is as follows:
2019
At 1 October 2018
Current service cost
Interest (expense)/income
Total charge recognised in Income Statement
Remeasurements:
Present value
of obligation
£000
Fair value of
plan assets
£000
Net defined
benefit liability
£000
(68,956)
66,023
1,158
(1,205)
47
–
1,105
1,105
Return on plan assets, excluding amounts in interest expense/income
–
16,332
Gain due to change in financial assumptions
Gain due to change in demographic assumptions
Experience gain
(22,748)
1,206
35
–
–
–
Total losses recognised in Statement of Comprehensive Income
(21,507)
16,332
Contributions – employers
Contributions – plan participants
Payments from the plans – benefit payments
At 30 September 2019
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
(2,933)
1,158
(100)
1,058
16,332
(22,748)
1,206
35
(5,175)
838
–
–
(6,212)
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
–
(8)
2,932
(87,586)
838
8
(2,932)
81,374
Present value
of obligation
£000
Fair value of
plan assets
£000
Net defined
benefit liability
£000
(74,781)
(73)
(1,246)
(1,319)
–
3,314
1,796
83
5,193
–
(7)
1,958
(68,956)
64,827
(9,954)
–
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)
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
159
Financial Statements
Notes to the Consolidated Financial Statements continued
27 Retirement benefit schemes continued
The major categories and fair values of plan assets are as follows:
Equities and diversified growth fund
Bonds
Liability Driven Investments
Property
Infrastructure
With profits policy
Cash and cash equivalents
Insured annuities
2019
£000
30,991
13,456
21,067
4,636
2,052
–
872
8,300
81,374
2018
£000
24,607
29,334
5,025
4,957
–
1,640
460
–
66,023
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 £8.2m (2018: £2.3m). The assets disclosed above
include insured annuities with an estimated value of £8.3m. The corresponding liability associated with these annuities means that their
net impact is considered to be nil.
The key financial assumptions adopted are as follows:
Discount rate
Price inflation
Salary increases
Pension increases
MBPS
2019
%
1.80
2.95
2.50
2.80
2018
%
2.80
3.15
2.50
3.00
HPS
2019
%
1.80
3.10
2.50
3.00
2018
%
2.80
3.25
2.50
3.10
The discount rate for both scheme liabilities and for 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 7.0 for MBPS and 7.5 for HPS. Allowance is made for the extent to which employees have chosen to
commute part of their pension for cash at retirement.
The average duration of the defined benefit obligation at the end of the year is approximately 19 years for MBPS (2018: 19 years) and 18
years for HPS (2018: 18 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
2019
25.8
27.8
27.2
29.3
2018
26.3
28.3
27.8
29.8
HPS
2019
26.7
28.3
27.1
29.0
2018
26.2
28.2
26.7
29.2
160 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
27 Retirement benefit schemes continued
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 2019.
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 were discontinued. The total outstanding amount claimed on the two remaining writs was
Malaysian ringgit 83.4m (£15.5m) at 30 September 2018. As the limitation period for enforcing these claims has passed, the case has
closed during the year.
European Commission (EC) Inspection
In January 2018, the EC 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. On 10 May 2019, the Group received confirmation that this case has been closed.
EC investigation into state aid
On 2 April 2019, the EC concluded their state aid investigation into the Group Financing Exemption (GFE) in the UK controlled foreign
company rules on the GFE and ruled that the GFE is only justified where there are no UK activities involved in generating the finance
profits. The UK government has decided to appeal against the EC decision but an aid recovery process has also commenced as this is
required under EU law. The maximum exposure is £8.0m.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
161
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
29 Related party transactions
Daily Mail & General Trust plc (DMGT) shareholders approved distribution of DMGT’s shares in Euromoney Institutional Investor PLC,
amounting to approximately 49% of the issued share capital of the Group, to its participating shareholders, following a review by the
DMGT Board. There is no direct accounting impact of the transaction for the Group. The relationship deed entered into between DMGT
and the Group in December 2016 has terminated and DMGT’s representative Directors on the Board have stepped down. This was
effective from 2 April 2019. The related party transactions with DMGT below are up to this effective date.
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)
During the year ended 30 September 2019, the Group expensed services recharged by DMGT and other fellow group companies of
£57k (2018: £64k).
(ii)
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 £1.5m (2018: £1.9m).
(iii) During the year, the Group provided services to Risk Management Solution Ltd, a DMGT subsidiary, for HKD713,337 (2018:
HKD1,336,936).
(iv) During the year the Group charged BroadGroup for services when it was accounted for as an associate of £48k (2018: 40k).
In addition, the Group received dividends of £197k (2018: nil).
(v)
The Directors who served during the year received dividends of £0.1m (2018: £0.2m) in respect of ordinary shares held in
the Company.
(vi) During the year ended 30 September 2018, the Group’s equity shareholding in NDR increased to 100%.
(vii) During the year ended 30 September 2018, the Group sold sponsorship revenue to Trepp LLC, a DMGT subsidiary, 2018: $60k.
(viii) 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
2019
£000
6,300
548
269
668
7,785
2,984
548
4,253
7,785
Restated
2018
£000
8,239
628
316
591
9,774
3,010
628
6,136
9,774
Details of the remuneration of Directors are given in the Directors’ Remuneration Report.
30 Events after the balance sheet date
The Directors propose a final dividend of 22.30p per share (2018: 22.30p) totalling £24.0m (2018: £24.0m) for the year ended
30 September 2019. The dividend will be submitted for approval by shareholders at the AGM to be held on 28 January 2020.
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 2020.
There were no other events after the balance sheet date.
162 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
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 2019 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
BCA Research, Inc.
100% Dormant
100% Dormant
100% Research and data services
Boardex LLC
100% Information services
Bright Milestone Limited
100% Investment holding company
8 Bouverie Street, London, EC4Y 8AX, United Kingdom
8 Bouverie Street, London, EC4Y 8AX, United Kingdom
1002 Sherbrook Street West, Montreal, Quebec,
H3A 3L6, Canada
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
38/F Hopewell Centre, 183 Queen’s Road East,
Wanchai, Hong Kong
Broadmedia Communications Limited
66% Events and publishing business 8 Bouverie Street, London, EC4Y 8AX, United Kingdom
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,
Wilmington, DE 19808, United States
EII Holdings II, Inc.
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
Euromoney Guarantee Limited
Euromoney Holdings 2 Limited
Euromoney Holdings Limited
Euromoney Holdings US, Inc
Euromoney Institutional Investor (Jersey)
Limited
Euromoney Institutional Investor
(Shanghai) Limited
100% Publishing and events
8 Bouverie Street, London, EC4Y 8AX, United Kingdom
100% Dormant
8 Bouverie Street, London, EC4Y 8AX, United Kingdom
100% Investment holding company 8 Bouverie Street, London, EC4Y 8AX, United Kingdom
100% Investment holding company 8 Bouverie Street, London, EC4Y 8AX, United Kingdom
100% Investment holding company Corporation Service Company, 251 Little Falls Drive,
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 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 SPRL
100% Investment holding company Avenue Louise 523, 1050 Brussels, Belgium
Euromoney Trading Limited
100% Publishing, training and events 8 Bouverie Street, London, EC4Y 8AX, United Kingdom
Fantfoot Limited
FOEX Indexes Oy
Fastmarkets Limited
Fastmarkets Pte Limited
100% Investment holding company 8 Bouverie Street, London, EC4Y 8AX, United Kingdom
100% Research and data services Mannerheimintie 40 D 85, 00100, Helsinki, Finland
100% Publishing
100% Publishing
8 Bouverie Street, London, EC4Y 8AX, United Kingdom
600 North Bridge Road, #23-01 Parkview Square,
188778, Singapore
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
163
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Financial Statements
Notes to the Consolidated Financial Statements continued
31 List of Subsidiaries continued
Company
Fastmarkets Inc
Proportion
held
Principal activity
and operation
100% Publishing
Glenprint Limited
Global Commodities Group Sarl
100% Publishing
100% Events
Registered Office
310 Alder Road PO Box 841, Dover, Kent, DE 19904, United
States
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
Management Diagnostics Limited
100% Information services
8 Bouverie Street, London, EC4Y 8AX, United Kingdom
MDL ESOP Limited
100% Investment holding
8 Bouverie Street, London, EC4Y 8AX, United Kingdom
company
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% Publishing
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
The Deal India Private Limited
100% Research and data
services
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
B Block, Ground Floor, Central Block, Sunny Side No 8-17,
Shafee Mohammed Road, Nungambakkam, Chennai, Tamil
Nadu, India
The Deal LLC
Tipall Limited
100% Information services
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
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.
164 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
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 2019, 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
Redquince 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
Euromoney Holdings 2 Ltd
MDL ESOP Limited
Company
registration
number
04082590
05885797
05994621
04121650
04082769
03803220
03879279
02703517
10975335
10925251
01951332
07162466
11823364
03318615
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
165
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Company Accounts
Company Balance Sheet
as at 30 September 2019
Fixed assets
Tangible assets
Investments
Debtors
Current assets
Debtors
Cash at bank and in hand
Creditors: Amounts falling due within one year
Net current assets/ (liabilities)
Total assets less current liabilities
Creditors: Amounts falling due after more than one year
Net assets
Capital and reserves
Called up share capital
Share premium account
Other reserve
Capital redemption reserve
Capital reserve
Own shares
Reserve for share-based payments
Profit and loss account
Total shareholders’ funds
Notes
5
6
7
7
8
8
10
2019
£000
263
1,225,648
150,614
2018
£000
333
1,231,729
151,680
1,376,525
1,383,742
44,712
46
44,758
67,109
529
67,638
(34,303)
10,455
(145,150)
(77,512)
1,386,980
1,306,230
(534)
(978)
1,386,446
1,305,252
273
104,306
64,981
56
1,842
(19,682)
40,120
273
103,790
64,981
56
1,842
(20,462)
39,687
1,194,550
1,386,446
1,115,085
1,305,252
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 £115.4m (2018: £208.2m).
The Company Accounts on pages 166 to 172 were approved by the Board of Directors on 21 November 2019 and signed on its behalf by:
Andrew Rashbass
Wendy Pallot
Directors
166 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Company Statement of Changes in Equity
for the year ended 30 September 2019
At 1 October 2017
Profit for the year
Change in fair value of
cash flow hedges
Credit for share-based
payments
Cash dividends paid1
Exercise of share options
Share
capital
£000
Share
premium
account
£000
273
103,147
Other
reserve
£000
64,981
–
–
–
–
–
–
–
–
–
643
–
–
–
–
–
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
56
–
–
–
–
–
1,842
(21,005)
38,395
1,358
941,309
1,130,356
–
–
–
–
–
–
–
–
–
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
Profit for the year
Credit for share-based
payments
Cash dividends paid1
Exercise of share options
–
–
–
–
–
–
–
516
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
780
–
–
115,381
115,381
883
–
(450)
–
–
–
–
883
(35,586)
(35,586)
(330)
516
At 30 September 2019
273
104,306
64,981
56
1,842
(19,682)
40,120
– 1,194,550
1,386,446
1 Refer to the Consolidated Financial Statements note 9.
The investment in own shares is held by the Euromoney Employee 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 Employee Share Ownership Trust
Euromoney Employee Share Trust
Total
Nominal cost per share (p)
Historical cost per share (£)
Market value (£000)
2019
Number
58,976
1,593,198
1,652,174
0.25
11.91
24,452
2018
Number
58,976
1,656,575
1,715,551
0.25
11.93
23,091
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 £231.2m (2018: £144.1m) is distributable to equity shareholders of the Company, comprising the share-
based payments reserve of £40.1m (2018: £39.7m) and £210.8m (2018: £124.9m) of the profit and loss account less £19.7m (2018: £20.5m)
in relation to own shares by virtue of s381 Companies Act 2006. The remaining balance of the profit and loss account of £983.7m
(2018: £990.2m) is not distributable.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
167
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Company Accounts
Notes to the Company 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.
168 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
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 continued
Own shares held by Employee Share Ownership Trust and Employee Share Trust
Transactions of the Group-sponsored trusts are included in the Consolidated 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
of the Company’s investments has been determined taking into account the future budgeted cash flows attributable to the relevant
businesses, discounted using the weighted average costs of capital specific to the region in which the businesses operate. These discount
rates range between 11.4% and 13.4%. An impairment charge of £6.1m was recognised in the year which has arisen due to an increase
the UK weighted average cost of capital from 11.0% in 2018 to 11.5% in 2019. A 0.5% increase in the UK cost of capital reduces the value
of the relevant investments by £61.4m. Investments held in the Statement of Financial Position at 30 September 2019 were £1,225.6m
(2018: £1,231.7m).
3 Staff costs
The monthly average number of persons employed by the Company during the year amounted to:
Executive Directors
2019
No.
2
2018
No.
2
Details of Directors’ remuneration are set out in the Directors’ Remuneration Report on pages 72 to 91 and in note 6 to the Consolidated
Financial Statements.
4 Remuneration of auditor
Fees payable for the audit of the Company’s annual accounts
5 Tangible assets
Cost
At 1 October 2018 and at 30 September 2019
Depreciation
At 1 October 2018
Charge for the year
At 30 September 2019
Net book value at 30 September 2019
Net book value at 30 September 2018
2019
£000
16
2018
£000
16
Short-term
leasehold
improvements
£000
701
368
70
438
263
333
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
169
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Company Accounts
Notes to the Company Accounts continued
6 Investments
At 1 October
Additions
Impairment
At 30 September
2019
Subsidiaries
£000
2018
Total
£000
Subsidiaries
£000
Total
£000
1,231,729
1,231,729
1,086,904
1,086,904
–
–
(6,081)
(6,081)
193,452
(48,627)
193,452
(48,627)
1,225,648
1,225,648
1,231,729
1,231,729
The Company recognised an impairment of £6.1m in its investments in EII (Ventures) Limited and Euromoney Canada Limited.
The impairment is the result of an increase in the weighted average cost of capital used to discount the cash flows attributable to the
Company’s UK investments. The weighted average cost of capital increased from 11.0% last year to 11.5% this year.
For the year ended 30 September 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.
Details of the principal subsidiary and associated undertakings of the Company at 30 September 2019 can be found in note 31 to the
Consolidated Financial Statements.
7 Debtors
Amounts falling due within one year
Amounts owed by Group undertakings
Other debtors
2019
£000
44,446
266
44,712
2018
£000
66,843
266
67,109
Amounts owed by Group undertakings of £44.4m (2018: £38.6m) are interest free and repayable on demand. In 2018, amounts owed by
Group undertakings included a loan of £28.2m with an interest rate of 3.0% and was repaid in September 2019.
Amounts falling due after more than one year
Amounts owed by Group undertakings
Other debtors
2019
£000
2018
£000
150,297
317
150,614
151,097
583
151,680
Amounts owed by Group undertakings include a loan of £150.3m (2018: £151.1m) with interest rate of 2.8% (2018: 2.8%) which is
repayable on demand and expires in September 2022.
170 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
8 Creditors
Amounts falling due within one year
Amounts owed to Group undertakings
Provisions (note 9)
Corporate tax creditor
Accruals
2019
£000
2018
£000
(30,154)
(137,919)
(62)
(2,878)
(1,209)
(149)
(6,210)
(872)
(34,303)
(145,150)
Amounts owed to Group undertakings of £30.2m (2018: £5.0m) are interest free and repayable on demand. In 2018, amounts owed to
Group undertakings included a loan of £133.0m with an interest rate of 2.1% and was repaid in May 2019.
Amounts falling due after more than one year
Provisions (note 9)
Other creditors
9 Provisions
At 1 October 2018
Provision in the year
Used in the year
At 30 September 2019
Maturity profile of provisions:
Within one year
Between one and five years
2019
£000
(534)
–
(534)
Dilapidation
provisions
£000
Other
provisions
£000
274
–
–
274
367
52
(97)
322
2019
£000
62
534
596
2018
£000
(492)
(486)
(978)
Total
£000
641
52
(97)
596
2018
£000
149
492
641
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.
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
171
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Company Accounts
Notes to the Company Accounts continued
10 Called up share capital
Allotted, called up and fully paid
109,249,352 ordinary shares of 0.25p each (2018: 109,180,729 ordinary shares of 0.25p each)
2019
£000
273
2018
£000
273
During the year, 68,623 ordinary shares of 0.25p each (2018: 79,121 ordinary shares) with an aggregate nominal value of £172
(2018: £198) were issued following the exercise of share options granted under the Company’s share option schemes for a cash
consideration of £516,126 (2018: £642,612).
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
2019
£000
756
2,096
2,852
2018
£000
889
3,243
4,132
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) Other than the transactions disclosed in note 29 of the Consolidated Financial Statements and notes 3 and 11 of the Company’s
Financial Statements, the Company’s other related party transactions were with wholly owned subsidiaries and so have not
been disclosed.
(ii) 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 Consolidated Financial Statements.
13 Post balance sheet event
The Directors propose a final dividend of 22.30p per share (2018: 22.30p) totalling £24.0m (2018: £24.0m) for the year ended
30 September 2019 subject to approval at the AGM to be held on 28 January 2020. These Company Accounts 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 2020.
There were no other events after the balance sheet date.
172 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Five year record
Consolidated Income Statement Extracts
CONTINUING OPERATIONS
Revenue
Operating profit before acquired intangible amortisation,
long-term incentive credit and exceptional items
Acquired intangible amortisation
Long-term incentive credit
Exceptional items
Operating profit
Share of results in associates and joint ventures
Net finance income/(costs)
Profit before tax
Tax expense on profit
Profit for the year from continuing operations
DISCONTINUED OPERATIONS
Restated
2015
£000
Restated
2016
£000
Restated
2017
£000
Restated
2018
£000
2019
£000
236,251
218,429
224,926
244,825
256,051
39,571
(7,491)
2,490
34,712
69,282
(381)
328
69,229
(11,607)
57,622
28,823
(7,516)
–
18,708
(10,012)
–
39,945
(11,990)
–
38,514
(14,215)
–
(35,370)
(3,658)
79,910
6,350
(14,063)
(1,823)
(2,221)
(18,107)
(4,596)
(22,703)
5,038
(1,890)
(1,026)
2,122
7,030
9,152
107,865
157
(1,206)
106,816
(41,358)
65,458
30,649
(88)
(1,110)
29,451
(9,317)
20,134
Profit for the year from discontinued operations
45,703
51,679
30,273
129,685
41,059
PROFIT FOR THE YEAR
103,325
28,976
39,425
195,143
61,193
Attributable to:
Equity holders of the parent
Equity non-controlling interests
Basic earnings per share
Diluted earnings per share
103,083
242
103,325
81.6p
81.5p
28,707
269
28,976
22.7p
22.7p
38,956
469
39,425
34.6p
34.6p
195,004
139
195,143
181.5p
181.3p
60,929
264
61,193
56.6p
56.6p
Diluted weighted average number of ordinary shares
126,460,787
126,584,778
112,704,904
107,545,653
107,654,086
Dividend per share
23.40p
23.40p
30.60p
32.50p
33.10p
Consolidated Statement of Financial Position Extracts
Intangible assets
Non-current assets
Accruals
Deferred income
Other net current assets
Non-current liabilities
Net assets
531,379
47,760
(55,743)
(112,129)
63,418
(33,225)
441,460
551,139
50,753
(73,375)
(118,786)
101,854
(40,009)
471,576
593,962
56,230
(67,819)
(116,978)
31,251
(208,815)
287,831
588,225
28,273
(64,143)
(120,404)
84,744
(38,109)
478,586
405,421
28,477
(48,562)
(88,428)
259,586
(30,446)
526,048
The five year record does not form part of the audited Financial Statements. The five year record has been restated to take into account the
restatements relating to discontinued operations, payroll taxes and VAT as disclosed on page 114.
A
d
d
i
t
i
o
n
a
l
I
n
f
o
r
m
a
t
i
o
n
Euromoney Institutional Investor PLC Annual Report and Accounts 2019
173
Additional Information
Shareholder information
Financial calendar
2019 final results announcement
Final dividend ex-dividend date
Final dividend record date
Trading update
2020 AGM (approval of final dividend)
Payment of final dividend
2020 interim results announcement
Interim dividend ex-dividend date
Interim dividend record date
Payment of 2020 interim dividend
2020 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
Thursday 21 November 2019
Thursday 28 November 2019
Friday 29 November 2019
Tuesday 28 January 2020*
Tuesday 28 January 2020
Thursday 13 February 2020
Thursday 21 May 2020*
Thursday 28 May 2020*
Friday 29 May 2020*
Thursday 25 June 2020*
Thursday 19 November 2020*
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
CMS Cameron McKenna
Nabarro Olswang LLP
78 Cannon Street
London EC4N 6AF
Registrars
Equiniti
Aspect House
Spencer Road, Lancing
West Sussex BN99 6DA
Numis Securities Limited
The London Stock
Exchange Building
10 Paternoster Square
London EC4M 7LT
Freshfields Bruckhaus Deringer LLP
65 Fleet Street
London EC4Y 1HT
174 Euromoney Institutional Investor PLC Annual Report and Accounts 2019
Designed and produced by Radley Yeldar www.ry.com
Euromoney Institutional Investor PLC
8 Bouverie Street
London EC4Y 8AX
www.euromoneyplc.com