Annual Report and Accounts 2020 Revenue £335.3m 2019: £401.7m Adjusted profit before tax £57.4m 2019: £104.6m Adjusted diluted earnings per share 42.7p 2019: 77.6p Dividend per share 11.4p 2019: 33.1p Statutory profit before tax £32.9m 2019: £82.9m Statutory diluted earnings per share 28.8p 2019: 56.6p A detailed reconciliation of the Group’s statutory and adjusted results is set out on pages 20 to 23. Adjusted measures exclude the impact of amortisation of acquired intangible assets, exceptional items and other adjusting items in accordance with the Group’s policy set out on page 20. Contents Strategic Report Who we are Group at a glance Chairman’s introduction Our business model Chief Executive’s review Strategy and strategy in action Chief Financial Officer’s review Key performance indicators Segment review Market overview Stakeholder value and engagement Sustainability and stakeholders S172 statement Risk management Viability statement 01 02 04 06 08 11 16 24 26 28 30 32 40 42 57 Find out about our Business Model page 06 See our Strategy in Action page 11 Read about Sustainability and Stakeholders page 32 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 58 60 68 74 76 98 101 112 167 174 175 Further information can be found online by visiting our website at euromoneyplc.com Strategic Report Who we are We look to serve markets where the information which organisations need in order to operate effectively is hard to find See Group at a glance on page 2 We deliver products and services that support our clients’ critical activities See Chief Executive’s review on page 8 Our capital allocation strategy supports our strategic objectives See Our business model on page 6 Our strategy delivers a strong balance sheet allowing investment which drives the strategy See Our business model on page 6 Our strategic pillars Our quadrant-based assessment leads to three pillars of strategic activity: Invest around big themes Transform the operating model Actively manage the portfolio S t r a t e g i c R e p o r t Euromoney is a global business-to-business information services business. We provide price discovery, essential market intelligence and events. Euromoney is listed on the London Stock Exchange and is 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 be embedded in clients’ critical workflow. We manage a portfolio of businesses in markets where information, data and convening market participants are valued. We serve markets which are semi-opaque, that is, where information which organisations need to operate effectively is hard to find. Our focus is on long-term value generation benefiting all stakeholders. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 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. During the year, we reported on three segments (Pricing; Data & Market Intelligence; and Asset Management) served by five divisions, which is reflected in the table across the page. Our reporting of financial performance by segment in this Annual Report reflects this structure. The Telecoms division merged into the Financial & Professional Services division on 1 October 2020 and those businesses remain in the Data & Market Intelligence segment for reporting purposes. Pricing Focus Provides pricing and other information and analysis critical for our clients’ business processes and workflows Divisions • Fastmarkets Revenue £83.7m Adjusted operating profit1 £32.3m Number of employees 450 Key brands • Fastmarkets 1 A detailed reconciliation of the Group’s statutory and adjusted results is set out on pages 20 to 23. January 2020 • Annual General Meeting • Tristan Hillgarth stepped down from the Board November 2019 • 2019 results demonstrate strong underlying profit growth and progress towards a 3.0 business model • Completion of Wealth-X acquisition, adding scale to our People Intelligence businesses December 2019 • Second meeting of the Group’s Employee Forum March 2020 • Completion of AgriCensus acquisition, strengthening our price reporting capabilities • Group issues statement on business impact of covid-19 • Cross-functional steering committees and working groups set up to manage Group’s response to covid-19 • All staff globally commence home- working in response to covid-19 February 2020 • Final dividend paid • Financial & Professional Services teach-in for investors and analysts • Inclusion & Diversity Council formed with members from a wide range of countries, divisions and functions 02 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Data & Market Intelligence Asset Management Focus Focus Provides market intelligence, thought leadership, conferences and events, training and news to the global finance and telecoms industries Provides investment research, networks and conferences which bring asset allocators and investors together, as well as critical industry news and data S t r a t e g i c R e p o r t Divisions • Financial & Professional Services Revenue £134.1m Adjusted operating profit1 £20.9m Number of employees 1,223 Key brands • Global Capital • Wealth-X • Board-Ex • SRP • The Insurance Insider • IMN • Euromoney • IFLR • Capacity Media 1 A detailed reconciliation of the Group’s statutory and adjusted results is set out on pages 20 to 23. Divisions • Institutional Investor • Investment Research Revenue £118.8m Adjusted operating profit1 £44.9m Number of employees 372 Key brands • BCA Research • Ned Davis Research • Institutional Investor June 2020 • Half-year results show a strong position in a challenging environment • International Telecoms Week runs virtually for the first time, welcoming almost 4,000 delegates April & May 2020 • Strategic review of Asset Management businesses concludes that the best outcome for shareholder value is for Euromoney to remain the long-term owner • Telecoms division holds the Virtual Wan Summit, the first of more than 130 virtual events run during the year • Group announces a range of cost saving measures in response to covid-19 • Board Committee changes effective • Group extends committed bank facilities through to December 2022 July 2020 • Board strategy review takes place confirming continued support for the 3.0 strategy • Global Inclusion Week at Euromoney providing opportunities for all staff to participate in virtual events and discussions across a wide range of issues August 2020 • Announcement that the Telecoms division will merge with the Financial & Professional Services division from 1 October 2020, creating a new FPS division-wide events pillar • Announcement of the creation of a Group-wide events operations centre of excellence from early 2021 September 2020 • Group announces restructuring and other cost saving measures Euromoney Institutional Investor PLC Annual Report and Accounts 2020 03 Strategic Report Chairman’s introduction I am confident that the Group will emerge from this crisis stronger as our businesses continue to demonstrate resilience and agility. Leslie Van de Walle Chairman Introduction My first full year as Chairman has not been the year I anticipated. I am sure that is also the case for my colleagues, our investors and other stakeholders. We have all had to make significant adjustments in our professional and home lives. Andrew talks about the extraordinary response of our staff to the crisis in his Chief Executive’s review and I must start my review of the year by thanking our employees across the globe. Their flexibility, hard work, resilience and focus during this very challenging period has been critical in delivering what is, in the circumstances, a positive set of results. Board strength and stability I should also extend the same thanks to my Board colleagues. We held our first remote Board meeting following the lockdown at the end of March. Since then we have met remotely on an almost monthly basis for scheduled Board and Committee meetings as well as more informally. Our Directors’ willingness to adapt both their preparation and interaction in our meetings means that the Board has continued to operate at least as effectively as we did pre-covid-19. This was reflected in the external Board evaluation we undertook this year, of which more is below. Tristan Hillgarth was kind enough to provide us with several months’ notice of his intention to step down at the 2020 AGM allowing us to plan for his departure. The Board thanks Tristan for his eight years of service on the Board. Other than Tristan’s departure, we made two small changes to the composition of our Board’s Committees, with Jan Babiak and Lorna Tilbian swapping seats on the Audit & Risk and Remuneration Committees. The stability on our Board and Committees has been welcome over the last 12 months. Cash and capital One of the Board’s priorities during the covid-19 crisis has been to maintain careful oversight of the Group’s cash position and use of capital. The Group has maintained positive net cash (as defined and reconciled on page 23) throughout the crisis, and in fact we had more cash at year-end than at the half-year, despite running no physical events during the period. One of the reasons for the strong cash position for the Group is the range of cost- saving measures we have taken which resulted in a net cost and cash saving of over £30m in the second half of the year. This required some difficult decisions. Staff pay was frozen during the usual pay- review period and a large number of our higher-earning staff volunteered to defer between a quarter and a fifth of their salary between June and September into shares, thereby strengthening the Group’s cash position. Andrew took a 40% pay cut for four months and the rest of the Board agreed a 25% reduction in salary or fees for that period. At the start of the crisis we participated in various government schemes, including the UK’s furlough scheme. Now that we have weathered the storm, we have fully reimbursed the UK furlough money we initially used. Our cash-saving measures also had an impact on shareholders when the Board decided not to pay an interim dividend payment this year. I would like to thank our shareholders for supporting this decision. I am pleased to report news that is more positive on our final dividend later in my report. As a result of these measures, combined with the positive performance of our subscriptions, we are able to head into our new financial year in a strong financial position and I look forward to the next 12 months with confidence despite, at the time of writing, there being no certainty yet as to when the covid-19 disruption will end. Notwithstanding the difficulties of the last few months, we are well placed to make the investments necessary to continue pursuing our strategy, which Andrew discusses in more detail in his Chief Executive’s review. Culture, values and people I noted in my review last year that although the Board now has an equal number of men and women, diversity is a wider issue than gender. That is even clearer now following some of the events we have witnessed in the US this year, which I know have had a particular impact on our Black, Asian and other minority ethnic staff. These events made what was already a difficult year, even more challenging for many of our colleagues. As Chair of the Nominations Committee, I can report that when we next have an opportunity to appoint a Director we will ensure we have a racially and ethnically diverse short-list. The Group held its second Global Inclusion Week during the year. All participants attended online and staff engagement was high. A wide range of meetings and workshops were organised across multiple time zones highlighting the fantastic work undertaken by our network groups during the year as 04 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 well as educating staff on the role and importance of allies. You can read a case study about the week on page 37. My predecessor as Chairman worked hard with Andrew to improve the gender diversity of our Board over a relatively short period. As the business focuses on inclusion and diversity, particularly for Black and other minority ethnic staff, the Board will show leadership on this issue. Governance I believe that good governance underpins successful business performance, and we began addressing the requirements of the 2018 version of the Corporate Governance Code this time last year. As a result, our Corporate Governance Report on page 60 has a good story to tell. I would like to thank Nigel Martin, the Group HR Director, for the work he has done in order to ensure that the Board has been able to address the Code’s requirements relating to corporate culture. This year, Lintstock undertook an external evaluation of our Board. This was well timed since I have now been in office for almost two years and the majority of the Board for three years. I am pleased that Lintstock’s evaluation concluded that we have a Board which functions effectively. The evaluation has helped the Board identify its priorities for the coming year: focusing on business recovery and growth, in particular in the Group’s Asset Management businesses; succession planning; organisational development and efficiency; and an increased focus on risk. I am grateful for the candour of my Board colleagues when providing their input for the evaluation. I look forward to using the Board’s inputs to enhance the already strong relationships we have developed as a Board and which I believe enable us to provide the right balance between support and constructive challenge to the management team. Becoming a 3.0 business: Strategy Andrew introduced what has become known as the 3.0 strategy – embedding our products and services in clients’ workflow – back in 2016. As he discusses in more detail in his Chief Executive’s review, covid-19 has been a proof point for the strategy. Notwithstanding the challenges of remote meetings, the Board held its annual strategy day in July where Andrew led a discussion of the strategy with the Board. The Board supported the strength of the strategy during this testing time while agreeing with Andrew’s proposals for ensuring a degree of evolution, being particularly prudent with respect to debt for the time being. 3.0 remains at the heart of our strategy and what we do. This is why we believe the Group will emerge strongly from the covid-19 crisis. A key strategic decision during the year was the Board’s decision to retain the Group’s Asset Management businesses. Andrew addresses this in more detail in his Chief Executive’s review on page 8. Dividend We recognise that dividends are important for shareholders. Although on balance we felt that cash retention in May should be the priority, not paying an interim dividend was not a decision we took lightly. I know that I speak on behalf of the entire Board when I say I am delighted that the Board is able to recommend a return to dividend payments. We are recommending a final dividend of 11.4 pence. This recommendation is a resumption of our dividend policy at 40% of adjusted fully diluted EPS, with a notional interim dividend deducted. Stakeholders S t r a t e g i c R e p o r t the challenge, but not only that, they have still found time to contribute to the communities in which we live and work as reported in more detail in our Sustainability and stakeholders section beginning on page 32. We have relied on existing business partners for service stability and engaged new ones as we pivot towards new services. Last, but not least, our customers continue to demonstrate their trust in our ability to provide the information and services they need to succeed in their own businesses while connecting them with each other, albeit virtually rather than physically at this time. Conclusion There are challenging times ahead for us all. However, I am confident that the Group will emerge from this crisis stronger as our businesses continue to demonstrate resilience and agility. In addition, our management team, which Andrew has led with calmness and authority during the year, has responded strongly to the crisis and mitigated its impact on the Group insofar as possible, and I am confident they will continue to do so. We are as well placed as we can be given the year just passed. I am sure we all hope for a return to something approaching normality during the next 12 months, but rest assured, Euromoney will continue to operate in the best interests of all stakeholders whatever happens, remaining prudent but also taking the opportunity to continue to invest in our strongest businesses and being open to bolt-on acquisitions should attractive ones become available. It has been a year that no one could have foreseen 12 months ago for us and all of our stakeholders. Our investors have shown patience and support. As I have reported, our colleagues have risen to Leslie Van de Walle Chairman 18 November 2020 B2B Information 1.0 B2B Information 2.0 B2B Information 3.0 Print Monologue Digital Dialogue Embedded in workflow Part of the industry structure Advertising-centric Subscriptions Revenues based on value to customer Product-centric Customer-centric Solution-centric Euromoney Institutional Investor PLC Annual Report and Accounts 2020 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 2,000 staff based out of more than 30 offices across more than 11 countries who contribute to our success • We have provided virtual events for our customers Customers • We have a global customer base with revenues split across UK (15%), North America (52%) and Rest of World (33%) • Our customers are financial institutions, investment banks, commodity traders, miners, asset managers, executive search firms, 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 technology that creates scale and flexibility • We have pivoted to provide virtual events for our customers 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 Our quadrants identify when and where to invest and where to withdraw capital 3 + B2B information 3.0 Prepare for the upturn 4 Invest • Protect and enhance competitive position • 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 • Accelerate transition operational deficit to 3.0 - Challenged market 1 + 2 Strong market tailwinds Disinvest Use the time wisely • Maximise short-term profit and cash • Divest • Prevent future build-up • 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 12 06 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 S t r a t e g i c R e p o r t The characteristics of our businesses mean that our products and services are scalable, cash generative and deliver strong, sustained earnings Creating value for our stakeholders: 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, which results in stability for our businesses. This includes some event revenues which are membership-based. The majority of our events are repeat events which can be a blend of physical and virtual. 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. Virtual events use less capital than physical events. This reduces working capital requirements and improves cash flow. Shareholders Customers Employees 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. Partners Event revenues are fees paid by customers to attend, sponsor or be associated with events (both physical and virtual), conferences, training courses or seminars. Other revenues are generated through selling more traditional brand and product advertising, as well as by meeting our customers’ thought-leadership marketing needs. Community Read about the value we create and how we engage with our stakeholders on pages 30 to 31. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 07 Strategic Report Chief Executive’s review Revenue decline (17%) Revenue £335.3m Adjusted profit before tax1 £57.4m Statutory profit before tax £32.9m Our teams have risen magnificently to the challenge of operating during the pandemic and the crisis has demonstrated the relevance of our 3.0 strategy. Andrew Rashbass Chief Executive Officer Introduction Covid-19 Covid-19 has dominated our professional and personal lives. It has presented significant challenges and substantially reduced revenue and profit, but despite its huge impact on our events businesses and the fact that nearly everyone has been working from home most of the time since March, it has shown the resilience and quality of our businesses. We have stayed cash-positive, and in fact have increased our net cash, since the start of the pandemic. Subscriptions in our Pricing segment have continued to grow, and subscriptions in Data & Market Intelligence have actually grown faster this year than they did last year. We also made two strategically important acquisitions in the year. Both are subscription businesses, adding further strength to the Group’s business model. Our staff These reviews normally end with thanking staff, but I want to record my thanks at the start, since their efforts have made it possible to report positive elements despite the covid-19 disruption. Our teams have risen magnificently to the challenge of operating during the pandemic. Within days of closing our offices all round the world, nearly everyone was working effectively from home, finding new ways to collaborate, and serve our customers. Our staff also helped in our drive to preserve cash during the first few months of the pandemic while we proved the Group’s resilience: we froze hiring and pay, and the majority of our higher-paid staff volunteered to defer a proportion of their salary into Company shares. In addition, we slowed or halted projects and, as our shareholders will be well aware, the Board decided not to pay an interim dividend. We used these measures to preserve cash at a time when we did not know the impact covid-19 disruption would have on our customers and our businesses, and when we had not yet proved the Group’s resilience during the pandemic. With major economies effectively frozen, we also protected all jobs during the initial six-month period of the pandemic. At the start of March, we defined and planned five phases through which we expected the crisis to pass: phase 1 was getting staff safe and productive working from home; phase 2 was about doing business during covid-19 – bringing in revenue by finding new ways to serve our customers alongside continuing to serve them effectively as we always have, though from home; phase 3 responded to gradual and partial reversals of lockdowns; at the time of writing we are currently in phase 4, which we think of as operating in a physically and economically constrained environment. At some future point, we expect to reach phase 5 when there will be a sustained economic recovery and a gradual return to normality. We expect to be in our current phase, phase 4, for some time (though we recognise some countries or regions may revert to an earlier phase for a period). Our approach now needs to fit the tough but functioning global economy we are operating in. That is why, on the plus side, we are recommending recommencing paying the dividend as the Chairman has discussed in his statement. We are also restarting or speeding up projects we had 1 A detailed reconciliation of the Group’s statutory and adjusted results is set out on pages 20 to 23. 08 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 S t r a t e g i c R e p o r t We acquired AgriCensus in March 2020. Our balance sheet and cash generation gave us the confidence to make this acquisition even though we knew the covid-19 crisis was imminent. A Price Reporting Agency for global agricultural commodity markets, AgriCensus is the start of Fastmarkets Agriculture alongside our two well-established areas, Fastmarkets Metals and Mining and Fastmarkets Forest Products. We will continue to look for bolt-on acquisitions which accelerate our progress towards becoming a fully 3.0 business. Asset Management Following the strategic review of our Asset Management businesses, the Board concluded in April 2020 that the best outcome for shareholders was for the Group to remain the long-term owner of BCA Research, Ned Davis Research and Institutional Investor. These are businesses with high levels of subscription revenue and attractive margins. The review strengthened our confidence in our turnaround plan for our Investment Research division and identified opportunities for our three Asset Management businesses to work more closely together. We announced at the half-year that we are targeting to return the non-vote subscription Book of Business for the Investment Research division to growth by the end of financial year 2022, which will mean revenue growth in financial year 2023. Despite the economic turmoil of covid-19, I am pleased to say that the plan remains on track. Financial performance The resilient subscriptions performance in Pricing and Data & Market Intelligence could not offset the economic challenge of covid-19, particularly on our events businesses, and its impact on Institutional Investor’s events-based subscriptions. Wendy discusses the financial performance in more detail in her Chief Financial Officer’s review on page 16. paused or slowed as we invest prudently in the future. On the downside, it also means we need to structure the business for the current situation, which has led to us removing more than 200 jobs from the Group, more than half of which are in our events businesses. It is always painful to lose valued colleagues. However, we believe this balance of investment with cost reduction and strict cost control will position us well for the future while preserving the strong balance sheet that has underpinned our resilience during this crisis. Our 3.0 strategy Covid-19 has demonstrated the relevance of our 3.0 strategy. We think about the evolution of information services in three generations. 1.0 businesses typically produced print products supported largely by advertising; 2.0 businesses are based on digital subscriptions; 3.0 services are usually subscription products too, but ones embedded in customers’ critical workflow. As our business becomes more 3.0, the proportion of our revenue derived from subscriptions grows. For the full year, 74% of our revenue was derived from subscriptions. Of course, the proportion is flattered by the lower events revenue due to covid-19. But in the first half, which was largely pre-covid-19, the subscription proportion was 68% compared with 62% for the same period last year. As our products become more embedded in customers’ workflow, their value increases, renewal rates typically improve and, as we deliver more value, we can usually increase the prices we charge as well. So, the 3.0 strategy tends to lead to higher subscription revenues and a higher proportion of our revenues from subscription channels, further strengthening the resilience of our business. Strategy 3.0 Our strategy delivers a strong balance sheet, allowing investment, driving strategy. 3.0 strategy Investment – organic and M&A Strong balance sheet We use our strong balance sheet to continue to invest, allocating capital to our best opportunities. Organic growth In our Pricing segment, we continue to invest in Fastmarkets, our Price Reporting Agency. We continue to enhance the Fastmarkets platform, improving the service for our customers. We have invested in new marketing systems as well, and in the number of price benchmarks going through the rigorous IOSCO assurance process. In our Data & Market Intelligence segment, we have invested in product management and product development as well as in the creation of new, proprietary content such as Inside P&C. Inside P&C is a new product for the US market relating to insurance for property and casualty lines. Even in our events businesses, we have invested where we can see a return in order to deliver virtual events to our customers. Our largest virtual events now attract thousands of attendees, many of whom have never attended one of our physical events. Sponsors increasingly use our digital events to reach, and interact with, potential customers. For example, International Telecoms Week, the leading international event for the wholesale telecoms market, ran in June 2020 and was virtual. It attracted almost 4,000 attendees, generating revenue through sponsorship and paid attendee passes. As part of the event, we facilitated over 1,900 meetings on the virtual platform between participants which lasted on average over 25 minutes each. Within our Asset Management segment, we continue to develop new 3.0 products. For example, our Investment Research division’s Investment Solutions deliver direct investment instructions to wealth managers, advisors, asset owners, institutional investor and fund issuers so they can implement investment strategies based on NDR’s models and approach. Growth through acquisition During the year, we made two bolt-on acquisitions: Wealth-X and AgriCensus. Wealth-X is a market-leading provider of data-driven intelligence on the world’s wealthiest individuals. It is complementary to BoardEx, which has just ended its first full financial year under our ownership. These are what we call People Intelligence businesses and they are embedded in customers’ critical workflow. They are significantly (c. 94%) subscriptions-based. Their revenues have grown by just over 10% this year. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 09 Best-of-both worlds: Our behaviours that will drive success Business-unit-focus What we do Creative Quick and action-oriented Close to customers Passionate about our brands Knowledgeable about the industries we serve Accountable for our results Corporate-focus What we do Strategic Economies of scale Sharing best practice Managing talent across the Group Portfolio management Strong governance Strategic Report Chief Executive’s review continued Inclusion and diversity The future Inclusion and diversity should not really be a separate section in this review, nor pigeonholed into any one section of this Annual Report. It needs to be, and we are working hard to ensure that it becomes, embedded in everything we do. As we state in our published commitment around this area: ‘our entrepreneurial heritage rests on a belief that people are different, that great ideas come from combining different perspectives and from freeing people to be themselves, which allows us to see the world in different ways. This enables us to solve issues for our customers around the world’. We encourage everyone to be themselves at work, sharing what is important, to create the best possible working environment where everyone can thrive professionally and personally. We also need to make sure we attract and retain the best talent from all demographic groups. We are a business whose success is dependent on our people, and we need to find, attract and retain the best staff whoever and wherever they are. We have vibrant employee groups who help us to achieve these goals and we have now added a more formal group, our Inclusion & Diversity Council, with employee members from across our business and from around the world. The Council and network groups worked together to organise Global Inclusion Week in July. I attended most of the sessions and they were informative, welcoming, challenging and fun – capturing very well the Group’s approach to this essential area. A particular focus for us over the coming months is around Black staff inclusion in the Group. We plan to shortly announce targets to improve the representation of Black staff in our senior management team, which broadly represents our top 100 most senior staff. Our Inclusion & Diversity Council will continue to work with me and the management team to build on last year’s efforts over the next 12 months and beyond – there is always more to do in the area of inclusion and diversity and I know that the Board and management team are as committed as I am to it. Doubtless, the immediate future will be dominated by covid-19. The past few months tested and have proved the strength of our 3.0 strategy. We will continue to pursue that strategy in the year ahead. We expect the proportion of our business that delivers strong 3.0 subscription revenue to continue to grow. I believe physical events will come back, but we will make sure the new skills we have quickly learnt in running virtual events will allow us to add new features to serve our customers even better and to extend our relationships with them so that our event businesses are no longer constrained by the time and place of a physical event. This will allow us to move our event businesses into memberships in the same way Institutional Investor has successfully pioneered over many years. We will continue to protect our financial position and continue to use it to invest in our businesses and to acquire new ones. I have known since I joined Euromoney that it is a great business. Despite, or maybe even because of, the challenges created by the crisis, I am confident about the Group’s future: we are now a two-thirds subscriptions business; our Pricing and Data & Market Intelligence segments are enjoying excellent 3.0 growth in their subscriptions area; our balance sheet is strong, providing security for our shareholders and headroom for further investment; and the Investment Research turnaround is on track. Finally, although we cannot predict when events will come back – it is largely out of our control – we are confident that they will come back in the long term, better. I therefore look forward with confidence to continuing to work with our Board, the management team and all our staff to deliver our 3.0 strategy. Andrew Rashbass Chief Executive Officer 18 November 2020 10 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 S t r a t e g i c R e p o r t Acquiring Wealth-X has given the Group the most comprehensive global source of data on ultra and very- high-net-worth individuals. James Lavell CEO People Intelligence Strategy in action Financial & Professional Services: Building scale in People Intelligence Acquisition of Wealth-X The integration of the businesses is now complete, with the focus on creating combined new and complementary data sets and products. For example, incorporating BoardEx compensation data into the Wealth-X platform and overlaying BoardEx’s relationship mapping algorithms to the Wealth-X platform. The combination allows users to identify the clients they should be targeting and highlight the relationships they already have to most successfully facilitate this. Scale and efficiency Combining businesses such as BoardEx and Wealth-X is a good example of how the Group is creating scale as well as standardising processes and platforms. The combination delivers greater operational leverage given the further scale in our data processing operations. The combined platform leaves our People Intelligence pillar well placed to create synergies and further scale from future acquisition opportunities. The latest acquisition building scale in the Financial & Professional Services division’s People Intelligence pillar is Wealth-X, a provider of data-driven intelligence on the world’s wealthiest individuals. Wealth-X has all the characteristics of a 3.0 subscription business. The Wealth-X database is embedded in its customer workflows and provides customers with access to information in the semi- opaque wealth intelligence market. The platform is a workflow tool used by banks, wealth managers, luxury brands and non-profit organisations primarily for business development and know-your- client activities. Wealth-X provides the most comprehensive source of data on ultra- high-net-worth and very-high-net-worth individuals globally, with coverage across 125 countries, profiles of 1.8m wealthy individuals and the database is updated more than 200,000 times each week. Integration with BoardEx The acquisition followed the February 2019 purchase of BoardEx, a leading executive profiling and relationship mapping business. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 11 Strategic Report Our strategy Our three strategic pillars Invest around the big 3.0 themes Transform the operating model Actively manage the portfolio Price discovery Proprietary, must-have market intelligence People intelligence Post-trade activities We deploy capital prudently to invest in the themes which best serve our customers’ critical needs. We invest in our existing businesses and also through acquisitions. 3 Prepare for the upturn 1 Disinvest 4 Invest 2 Use the time wisely Our target business model Make bolt-on acquisitions (page 06) A best-of-both worlds operating model encompassing three segments, four divisions1 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. consistent with our investment priorities Dispose of non-strategic assets to free up capital Manage debt prudently 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. 1 The Telecoms division merged into the Financial & Professional Services division on 1 October 2020, reducing the Group’s divisions from five to four. Strategic progress in 2020 Invest around the big 3.0 themes We serve markets which are semi-opaque, that is, where the information which organisations need to operate effectively is hard to find. This determines our big themes which include 3.0 areas such as price discovery, people intelligence, post-trade activities and must-have market intelligence. Progress made in 2020 How we measure progress Priorities for 2021 • The acquisition of Wealth-X, a people intelligence 3.0 business enabling customers to engage with wealthy individuals • Pricing underlying subscription revenue increased by 7% and underlying operating profit by 15% (see page 26) • The acquisition of AgriCensus, a • Data & Market Intelligence Price Reporting Agency focused on agri-price reporting which launches Fastmarkets Agriculture subscription underlying revenue increased by 4% and underlying operating profit by 6% (see page 26) • Further development in Fastmarkets • Integration of businesses within technology platform acquiring divisions We will continue to invest in our Pricing and Data & Market Intelligence segments, both organically and through bolt-on acquisitions should attractive ones become available. • Investment in marketing and events management platforms • Launch of Inside P&C • We have focused on 3.0 product development in our Asset Management businesses such as IRD Investment Solutions 12 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 S t r a t e g i c R e p o r t Actively manage the portfolio Recycling capital remains an important part of our strategy. We have a record of identifying good businesses where our ownership adds value. We 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 2020 • The acquisition of Wealth-X • The acquisition of AgriCensus • Completed strategic review of our Asset Management businesses concluding that the Group remains the best owner of these businesses • The combination of restructuring and reorganisation undertaken in the business provides a stronger platform for integrating acquisitions How we measure progress • We invested over £20m in the acquisitions of Wealth-X and AgriCensus • Integration of businesses within acquiring divisions Priorities for 2021 We will continue to monitor the M&A market during covid-19 and explore any attractive assets which become available and fit with our strategy. We will continue to manage debt prudently and protect the strength of our balance sheet. Transform the operating model 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 2020, we were structured as five divisions supported by central functions, which reduced to four divisions on 1 October 2020. Progress made in 2020 How we measure progress • More than 28 online training sessions or webinars rolled-out to support staff during covid-19 • Covid-19 area of corporate intranet developed to share key information as well as services and toolkits for staff • By measuring property cost savings • 11 Town Halls held since March 2020 chaired by the CEO or members of the Group Management Board • More than 25 I&D focused sessions provided by staff during the year either in person or online Priorities for 2021 We will use the Group’s size by focusing on scale, efficiency and, where possible, growth. To achieve scale, we will share capabilities across divisions and create a Group events operations centre of excellence to serve all divisions. We will improve efficiency through the merger of our Telecoms and Financial & Professional Services divisions. We will continue to standardise systems and processes across the Group. • The restructuring of our Financial & Professional Services division to include our ‘Euromoney’ branded businesses and our telecoms businesses, driving scale and efficiencies • Rapid deployment of technology and use of existing cloud-based services enabled fast and seamless transition to home-working during covid-19 • Creation of cross-divisional and functional steering committees and working groups to manage the Group’s response to covid-19 • Continued roll-out of NetSuite as a common finance system across the Group • Investment in event platform technology to streamline telecoms and other event operations • Investment in cross-brand content management system. Euromoney was the first brand to go live in September 2020 • Reduced office footprint in both large (Hong Kong) and small (including Montreal, Boston and Santa Monica) offices • Increased focus on inclusion and diversity through our Inclusion & Diversity Council and network groups, and on employee engagement through our Employee Forum • A Group Management Board who are invested in the best-of- both worlds operating model and incentivised on both Group and divisional performance • Merged functions in our Asset Management businesses and created new roles (Asset Management CFO, CTO and CCO) to enable consistency of approach, sharing of best practice and creation of synergies • Combined BCA Research and Ned Davis Research sales teams under single CRO leadership to facilitate cross-selling and sharing best practice Euromoney Institutional Investor PLC Annual Report and Accounts 2020 13 Strategic Report Strategy in action continued AgriCensus establishes an important strategic position for Fastmarkets in agriculture. Raju Daswani CEO Fastmarkets, Divisional Director Whether from trade wars, population changes, political shifts or even the current impact of covid-19, global supply chains are in flux and under pressure. Business leaders depend on objective, trusted pricing and intelligence to make decisions in times where price volatility and opacity can have significant impact on financial performance. Fastmarkets continues to deliver that value to customers across the metals and mining, forest products, and, now through AgriCensus, agriculture markets, facilitating trading and helping customers navigate and thrive in dynamic times. Fastmarkets: AgriCensus acquisition In March, Fastmarkets announced the acquisition of AgriCensus, a Price Reporting Agency (PRA) for the global agricultural commodity markets. This was a strategic bolt-on acquisition for Fastmarkets and its first acquisition of a PRA in the agriculture sector. Rising populations and the resulting increase in food demand is a trend that is expected to be in place for at least the next three decades and AgriCensus establishes an important strategic position for Fastmarkets in agriculture, which is an opaque market. The acquisition expands Fastmarkets’ price reporting business into the agriculture market, where globalisation of trade flows and commodity price volatility is increasingly dependent on pricing and market news. The acquisition complements the Global Grain business which operates a series of international events connecting the grain and oilseed community. Fastmarkets will develop the strong position established by AgriCensus by leveraging its reputation in pricing and providing access to Fastmarkets’ global PRA infrastructure. 14 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Events: International Telecoms Week In these unprecedented times for our events businesses, large scale, international meetings cannot operate. The Group’s event teams had to adapt to continue delivering value to our clients, who rely on our events as places to convene and do business. The teams rapidly adjusted our events to run on virtual platforms allowing customers from all over the world to join the events for valuable information and networking. International Telecoms Week (ITW) is Euromoney’s largest event, and since its launch in 2008, has taken place annually in Washington D.C, Chicago and Atlanta. This year, for the first time, the event ran as a virtual ITW, extended its days of operation, and its opening hours to accommodate meetings and networking from 118 global locations. Delegate engagement Virtual ITW 2020 was attended by almost 4,000 delegates, from 1,500 companies. Over 1,900 meetings were booked, demonstrating that strong brands, that deliver what their customers need, can generate positive engagement even when delivered virtually. Hosting the event virtually opened the door to a wider customer base with 400 new companies attending the event, which shows a real opportunity for growth moving forward. A blended future As we look forward to a time when the current restrictions on travel and gatherings begin to ease, the Group is planning to retain virtual elements as part of its live events, creating a blended offering to allow our customers to plan with certainty for events that will accommodate the right people, while allowing optionality as event operators and participants grapple with continuing volatility in global travel. S t r a t e g i c R e p o r t It’s been a pleasure to be present at Virtual ITW 2020. It’s certainly a new experience for all of us. I think it has been wonderful and we have had some great leads come to us through the platform. Event delegate telXira Our best-of-both worlds operating model will be critical in making this happen; combining the customer-focused, nimble approach of our individual businesses with the economies of scale and sharing of best practice that come from being a large organisation. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 15 Strategic Report Chief Financial Officer’s review We have had a resilient performance, though event revenue has been significantly reduced by covid-19. We have a robust balance sheet and are returning to paying dividends. Wendy Pallot Chief Financial Officer £m unless stated Revenue by segment Pricing Data & Market Intelligence Asset Management Sold/closed businesses Foreign exchange losses on forward contracts Revenue by type Subscriptions Events Other Total revenue Segmental adjusted operating profit1 Foreign exchange losses on forward contracts Sold/closed businesses Central costs Group adjusted operating profit1 Group adjusted operating margin %1 2020 2019 Change 83.7 134.1 118.8 – (1.3) 248.4 53.8 33.1 89.9 167.7 145.6 2.0 (3.5) 240.6 126.2 34.9 (7%) (20%) (18%) n/a (63%) 3% (57%) (5%) 335.3 401.7 (17%) 98.1 (1.3) – (35.3) 61.5 18% 145.2 (3.5) 0.4 (36.7) 105.4 26% (32%) (63%) n/a (4%) (42%) (8ppt) Underlying change1 2% 1% (12%) (4%) (2%) (8%) (4%) (7%) 1 Adjusted measures are as defined on page 20. A detailed reconciliation of the Group’s adjusted and underlying results is set out on pages 21 to 23. Summary The Group reacted quickly to the biggest global crisis in decades to protect the health and wellbeing of our employees, customers and business partners and to reduce costs and preserve cash. These market conditions have reinforced our view that our strategy to become a 3.0 business is the right one for generating long-term value for shareholders. The strategy is to actively manage a portfolio of businesses that provide information services embedded in clients’ critical workflow, in markets where information, data and convening market participants are highly valued. We serve markets which are semi-opaque, that is, where information which organisations need to operate effectively exists but is hard to find. These are characterised by resilient and robust recurring subscription revenue, and when applied to events, large deal-making events or subscription- membership models. The attractions of our business model are even more important in the current weaker business environment. Aligned with this strategy, organic investment across our 3.0 subscription business has continued. During the year Group subscription revenue grew by +3%, driven by Pricing +7% and Data & Market Intelligence +35%. Data & Market Intelligence subscription revenue growth was boosted by the full-year impact from two successful People Intelligence 16 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 acquisitions: BoardEx (February 2019) and Wealth-X (November 2019). Both Pricing and Data & Market Intelligence achieve high renewal rates averaging 90%. Within Asset Management the turnaround of the Investment Research Division (IRD) subscriptions continues but there is a material drag from events-based subscriptions at Institutional Investor. As a result of covid-19, much of the world experienced restrictions during the second half of the year and event revenue fell by £70m. The Group took swift and decisive action to mitigate some of this impact by reducing costs and successfully introducing virtual events. The Group hosted over 200 virtual events over six months, which generated gross profit, maintained customer relationships and reached new customers. Virtual event highlights include IMN’s CLOs Virtual Conference and ITW, the global event in the wholesale telecoms industry which nearly 4,000 delegates attended. The Group will return to running physical events quickly when government and company restrictions are eased. In April 2020, the Group announced it would remain the long-term owner of its Asset Management segment, which comprises Institutional Investor and IRD. The turnaround of IRD remains on track. This, together with opportunities from new products and the businesses working more closely together, means that the Asset Management segment will be a source of great value within the Group. Acquisitions remain a core part of the Group’s strategy. In November 2019 Euromoney acquired Wealth-X for $21.4m. Wealth-X is the market-leading provider of data and intelligence on the world’s wealthiest individuals and is a strong strategic fit with BoardEx, our executive profiling and relationship mapping business. In March 2020 we acquired AgriCensus, a Price Reporting Agency for global agricultural commodity markets. Segmental review Euromoney reports under three segments: Asset Management; Pricing; and Data & Market Intelligence. Further information on the performance of our segments is detailed on pages 26 and 27. S t r a t e g i c R e p o r t Profit and outlook Restatements The £70m reduction in event revenues, from the cancellation of physical events, significantly impacted adjusted operating profit which fell to £61.5m. On an underlying basis Group adjusted operating profit decreased 7%, with growth in Pricing and Data & Market Intelligence and lower central costs unable to offset the decline in Asset Management. During the second half of the year, in response to covid-19 the Group took swift action to cut over £15m of costs. These savings included a reduction in bonus payments and travel expenses. The majority of these savings are one-off and will return during 2021 which will impact like-for-like margin performance next year. In September, the Group announced a restructure and cost reduction programme, mainly impacting our events businesses. The reorganisation will drive efficiencies and will include the creation of a Group events operations centre of excellence. Gross savings, before investment in other areas, are estimated at £15m. During 2021, the Group will continue to invest in growth opportunities focused on the 3.0 subscription businesses. These investments include an additional £5m in people and an increased technology spend (2021 capex forecast £13m). New technology will drive a £2m increase in depreciation in 2021. Adjusted profit before tax declined 45%, reflecting lower operating profit and higher interest costs, the latter was mainly due to the adoption of IFRS 16. Adjusted diluted earnings per share declined 45% to 42.7p (2019: 77.6p). Statutory profit before tax was £32.9m (2019: £82.9m). Demand for price reporting and essential market intelligence remains strong with good visibility for Pricing and Data & Market Intelligence subscriptions. The turnaround of IRD is on track. Covid-19 remains a headwind and while there has been media speculation on potential vaccines in recent weeks, government intentions on social distancing measures and large events remain unclear. We are a nimble, agile event operator and will be ready and able to move fast to run physical events as and when restrictions are lifted. Following the conclusion of the strategic review of Asset Management, the segment no longer meets the classification criteria of discontinued operations and held for sale, so prior year income statement results have been restated accordingly. The segment continues to be classified as held for sale at 30 September 2019 in the Statement of Financial Position. Tax The adjusted effective tax rate for the period ended 30 September 2020 is 20% (2019: 20%). The tax rate in each year depends mainly on the geographic mix of profits and applicable tax rates. We expect that the adjusted effective tax rate for the next financial year will be in line with the current year rate. The Group’s statutory effective tax rate is 6% for the period ended 30 September 2020 compared to 26% in 2019. The decrease is driven by large current and deferred tax credits in respect of amendments to US corporate state income tax filings and the recognition of state tax losses respectively, which were partially offset by a tax charge arising on exceptional items. The basis for the calculation of the effective tax rate and further details relating to the US state income tax adjustment can be found in note 8. In addition to the two successful UK tax settlements noted above, the Group’s appeal against a previously disclosed, but not provided for, Canadian tax exposure has now been resolved, following the Canada Revenue Agency offer to consent to judgement, resulting in no liability for the Group. A tax refund (including interest) of C$10.5m (£6.1m) is expected by the end of the year. Exceptional items Exceptional items are disclosed in note 5 to the Consolidated Financial Statements. Following a notification from HMRC, the Group was able to release a provision of £10.6m, which was originally recognised in the 2019 Financial Statements, in respect of UK VAT for the four years ended 30 September 2018. The Group released £6.7m of the £8.2m provision, of which £6.1m is included in exceptional items, held in respect of payroll taxes with an additional £0.6m release for interest as an adjusted finance item (note 7), when a settlement was agreed with HMRC during the year. This provision was originally recognised in 2019, when prior year results were restated, and covered the six years ended 30 September 2019. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 17 Strategic Report Chief Financial Officer’s review continued In September 2020, the Group announced a major restructuring programme. The £9.0m cost of this programme is included within exceptional items. An impairment of £1.7m has been recognised relating to the customer relationships capitalised as part of the acquisition of Broadmedia and Layer123, due to the lower retention rates of customers than originally estimated. Other exceptional costs consist of expenditure associated with the acquisition of BoardEx and The Deal, Wealth-X and AgriCensus, which is treated as exceptional due to the magnitude of the costs. Also included are costs incurred to support the strategic review of Asset Management. The recognition of the earn- out payments in relation to the acquisition of Site Seven Media Ltd (TowerXchange) and AgriCensus are treated as compensation costs and included in exceptional items. Dividends In recognition of the strong balance sheet and confidence in the business, the Board has decided to resume dividend payments and recommend a final dividend for the financial year 2020 of 11.4 pence per share, (2019: 22.3 pence per share). Our dividend policy is to pay out approximately 40% of adjusted diluted earnings per share, subject to the capital needs of the business. This recommendation is subject to shareholder approval at our AGM on 11 February 2021 and, if approved, will be paid on 16 February 2021 to shareholders on the register at the close of business on 27 November 2020. The Board chose not to declare an interim dividend, so the total dividend for the year ended 30 September 2020 is 11.4 pence per share (2019: 33.1 pence per share). Other comprehensive income The Group recognised £1.3m of foreign exchange losses on revenue hedges in 2020, compared to a loss of £3.5m in 2019. This movement reflects a strengthening of the US dollar, which is the main currency that the Group hedges, since these hedges were placed. The movement in the net exchange differences on translation of net investments in overseas subsidiary undertakings is driven by the FX movement on net assets, mainly due to the weakening of the US dollar during the year from 1.23 to 1.29. The US dollar strengthened during the prior year from 1.30 to 1.23. Actuarial gains on defined benefit pension schemes were £3.0m in 2020, compared with a loss of £5.2m in 2019. Balance sheet The main movements in the balance sheet were as follows: Goodwill and other intangible assets Property, plant and equipment Right of use assets Investments in associates and other equity investments Acquisition commitments and deferred consideration Net deferred tax liabilities Contract liabilities Lease liabilities Other non-current assets and liabilities Other current assets Other current liabilities Net assets of businesses held for sale Net cash1 Net assets 1 2019 excluding held for sale cash of £0.3m. 2020 £m 658.1 14.5 53.4 2019 £m 405.4 15.3 – 8.8 5.3 – (24.1) (134.6) (70.1) (5.0) 84.3 (96.0) – 28.1 517.4 (2.8) (15.5) (88.4) – (5.4) 55.0 (113.5) 220.8 49.8 526.0 Change £m 252.7 (0.8) 53.4 3.5 2.8 (8.6) (46.2) (70.1) 0.4 29.3 17.5 (220.8) (21.7) (8.6) Balance sheet • Goodwill and other intangible assets – the movement reflects the reclassification of £266.0m from assets held for sale, additions of £29.6m following the acquisitions of Wealth-X and Census Commodity Data, additions to intangible assets under development of £9.1m offset by an amortisation charge of £25.9m, impairment of £1.7m for Broadmedia and Layer123 and an adverse exchange movement of £24.4m from the predominantly US dollar-denominated balance. • Right of use assets and lease liability – on 1 October 2019 the Group adopted IFRS 16, ‘Leases’, using the modified retrospective transition method. The impact of the transition to IFRS 16 is disclosed in note 1 to the Consolidated Financial Statements. • Investments in associates and other equity investments – the movement is driven by the increased shareholding in Zanbato following the conversion of the convertible loan notes into shares (£4.1m), and is offset by the recognition of £0.5m being the Group’s share of Zanbato’s losses. • Acquisition commitments and deferred consideration – the movement primarily reflects the exercise of the remaining interest in BroadGroup which was subject to put and call options under an earn-out agreement. • Net deferred tax liabilities – after adjusting for the reclassification of deferred tax from assets previously held for sale and the recognition of a deferred tax asset arising on transition to IFRS 16, the decrease in the net deferred tax liability primarily relates to the unwind of deferred tax liabilities on intangible assets and goodwill and recognition of deferred tax assets on losses in the US offset by a significant foreign exchange movement on the Group’s US deferred tax liabilities. • Contract liabilities – the movement reflects deferred income increasing by £4.6m and a reclassification of £44.9m from assets held for sale offset by an exchange difference of £3.3m. • Other current assets – the movement primarily reflects £7.0m of tax assets arising from the resubmission of New York and New York City state tax returns; and £25.4m being classified from held for sale in 2019. 18 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 S t r a t e g i c R e p o r t 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 transactional 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 2020, the Group’s revolving credit facility remained undrawn and consequently there were no interest rate hedges in place. • Other current liabilities – significant factors contributing to the movement were the liabilities for a VAT exposure on intra-group transactions (£11.3m) and payroll taxes (£8.2m) in 2019 which were released in 2020, as well as a release of accrued rent (£12.3m) on transition to IFRS 16 in 2020. Offsetting this was £14.5m of current liabilities reclassified from held for sale in 2019. • Net assets of businesses held for sale – as a result of the strategic review, Asset Management was classified as held for sale on the Statement of Financial Position at 30 September 2019. Net cash Net cash at 30 September 2020 was £28.1m, excluding lease liabilities, compared with £50.1m at last year end. This decrease in net cash largely reflects payments for acquisitions in the year totalling £24.8m and the payment of the 2019 final dividend of £24.0m. Lower year- on-year cash generated from operations, as a result of the impact of covid-19 on trading performance, was partly mitigated by cost savings. The Group’s adjusted cash conversion for the 12 months to September 2020 was 100% (2019: 89%). The calculation has been revised in both years, to include capital expenditure, which better reflects the Group’s cash generation. Refer to page 22 for the definition of cash conversion. Cash conversion is normally very strong reflecting the robustness of the Group’s subscription businesses. The 11ppt rise has been driven, in part, by the adoption of IFRS 16 classification of lease payments as a financing activity from 1 October 2019. In April 2020, the Group’s committed bank facility was extended to December 2022 and the limit was reduced to £188m. At 30 September 2020, the facility was undrawn with an additional £130m uncommitted accordion facility still available. On 11 May 2020, the Group was confirmed in principle as an eligible issuer for the Covid Corporate Financing Facility with an issuer limit of £125m. This facility remains undrawn. As a result of performance being more robust than originally anticipated in the covid-19 environment, the Group has repaid to HMRC all the money received under the UK Government furlough scheme. Currency The Group generates approximately 75% of its revenues in US dollars, including approximately 40% of its UK revenues in its UK-based businesses. Approximately two- thirds of its operating profits are US dollar- denominated. The exposure to US dollar revenues in the 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 average sterling-US dollar rate for the year to 30 September 2020 was $1.28 (2019: $1.28). This had no material impact to headline revenue for the year but increased adjusted profit before tax by 2% despite the average rate being unchanged because of movements during the year. Each one cent movement in the US dollar rate has an impact on translated profits, net of UK revenue hedging, of approximately £0.5m on an annualised basis. The Group also translates its non- sterling denominated balance sheet items resulting in a loss in 2020 of £1.1m (2019: £0.6m). Net cash The main movements in the cash flow were as follows: Cash generated from operations Capex Leases, interest and other Taxation Free cash flow Dividends paid Net M&A Opening net cash Currency translation Closing net cash1 1 2019 including held for sale cash of £0.3m. 2020 £m 57.4 (10.6) (9.6) (7.1) 30.1 (24.0) (24.8) (18.7) 50.1 (3.3) 28.1 2019 £m 92.4 (10.0) 0.4 (38.4) 44.4 (35.4) (39.1) (30.1) 78.3 1.9 50.1 Change £m (35.0) (0.6) (10.0) 31.3 (14.3) 11.4 14.3 11.4 (28.2) (5.2) (22.0) Euromoney Institutional Investor PLC Annual Report and Accounts 2020 19 Strategic Report Chief Financial Officer’s review continued Global Finance Transformation Programme (GFTP) During 2020 we have made good progress on Phase 1 of GFTP despite the challenges presented by covid-19. In the first half of the year, the UK roll-out of NetSuite from 2019 has bedded in and we went live in Bulgaria and most of our non-revenue UK legal entities. We took action to address the shortfalls of the NetSuite bank reconciliation module. From April, we scaled back the project to preserve cash and protect the benefits. We created a short, six-month sprint with very clear milestones to maintain momentum. The aim was to realise maximum benefits from decommissioning a third-party service for Order to Cash (O2C) and the UK’s largest legacy finance system. We have successfully gone live with the whole of the Telecoms division and O2C in Fastmarkets and Financial & Professional Services and are on track with our decommissioning. In the coming year we plan to roll-out NetSuite in our US operations and our recent acquisitions and develop the further phases of the programme. 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 2,167 to 2,420, mainly as a result of the acquisition of Wealth-X in November 2019. Our need to restructure will lead us to remove more than 200 roles from the Group. Adjusted measures The Directors believe that the adjusted measures provide additional useful information for shareholders to evaluate and compare the performance of the business from period to period. These measures are used by management for budgeting, planning and monthly reporting purposes and are the basis on which executive management is incentivised. The non-IFRS measures also enable the Group to track more easily and consistently the underlying operational performance by separating out the following types of exceptional income, charges and non-cash items. In the 2019 Annual Report and Accounts adjusted results included continuing operations and discontinued operations for Asset Management. As outlined in note 1 of the Consolidated Financial Statements, Asset Management no longer meets the discontinued operations classification and the income statement is presented as continuing operations in the 2020 Annual Report and Accounts. Adjusted figures are presented before the impact of amortisation of acquired intangible assets (comprising trademarks and brands, customer relationships and databases); exceptional items; share of associates’ and joint ventures’ acquired intangibles 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. 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 2019, the Group provided for a potential payroll taxes liability of £8.2m (including interest of £0.6m). In February 2020, a settlement was agreed with HMRC of £1.2m and the remaining £6.7m provision was released after netting off £0.3m of professional fees. The Group also provided for a VAT exposure of £11.3m (including interest) relating to the understatement of UK VAT on intra-group transactions in respect of the four years ended 30 September 2018. During the first half of 2020, the Group engaged with HMRC on the matter and on 11 May 2020, was notified by HMRC that no VAT was due on these transactions. The previously held provision for £11.3m has been released in full. The release of the provisions for the payroll taxes and VAT have been classified as exceptional items and the related interest has been treated as adjusted finance income because these items are not expected to recur. Adjusted finance costs exclude interest arising on any uncertain tax provisions, as these provisions are not in the ordinary course of business and relate to tax adjusting items. 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 are excluded as these items are adjusted in accordance with Group policy. Adjustments in respect of prior years are also removed 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, 11 and 14 to 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. 20 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 S t r a t e g i c R e p o r t The reconciliation below sets out the adjusted results of the Group and the related adjustments to the statutory Income Statement that the Directors consider necessary to provide useful and comparable information about the Group’s adjusted trading performance. Revenue Adjusted operating profit Acquired intangible amortisation Exceptional items Operating profit Operating profit margin Share of results in associates and joint ventures Finance income Finance expense Net finance costs Profit before tax Tax expense on profit Profit for the year Attributable to: Equity holders of the parent Equity non-controlling interests Notes 3 3 11 5 2020 Adjustments £000 – – 23,039 4,811 27,850 – Statutory £000 335,256 61,481 (23,039) (4,811) 33,631 10% Adjusted £000 335,256 61,481 – – 61,481 18% Restated1 Statutory £000 401,673 105,443 (25,143) 3,856 84,156 21% 14 (495) 154 (341) (88) 7 7 7 8 4,141 (4,368) (227) 32,909 (2,125) 30,784 30,978 (194) 30,784 (3,850) 307 (3,543) 24,461 (9,432) 15,029 14,968 61 15,029 291 (4,061) (3,770) 57,370 (11,557) 45,813 45,946 (133) 45,813 1,873 (3,082) (1,209) 82,859 (21,666) 61,193 60,929 264 61,193 Diluted earnings per share 10 28.8p 42.7p 56.6p 2019 Restated1 Adjustments £000 – – 25,143 (3,856) Adjusted £000 401,673 105,443 – – 21,287 105,443 – (38) (675) 1,214 539 21,788 820 22,608 22,586 22 22,608 26% (126) 1,198 (1,868) (670) 104,647 (20,846) 83,801 83,515 286 83,801 77.6p 1 In the 2019 Annual Report and Accounts the results for the year ended 30 September 2019 were split between continuing and discontinued operations. As outlined in note 1 to the Consolidated Financial Statements, Asset Management no longer meets the classification criteria of discontinued operations and all of the results are presented as continuing operations in the 2020 Annual Report and Accounts. 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. Underlying measures • Excluding events and publications 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 adjusted results and are stated: • At constant exchange rates, with the prior year comparatives being restated using current year exchange rates; • Including pro forma prior year comparatives for acquisitions and new business launches and excluding all results for disposals or business closures; which took place in the comparative period but did not take place in the current period, and events and publications which took place in the current period but did not take place in the comparative period are added into the comparative period at the same amount. 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, including cancellation costs. • Including pro forma prior year adjustments for the application of new accounting standards. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 21 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 Net M&A and closed businesses Timing differences and event cancellations Foreign exchange Underlying revenue Statutory operating profit Adjustments Adjusted operating profit Net M&A and closed businesses Timing differences and event cancellations Foreign exchange IFRS 16 Underlying operating profit Statutory profit before tax Adjustments Adjusted profit before tax Net M&A and closed businesses Timing differences and event cancellations Foreign exchange IFRS 16 Underlying profit before tax Cash conversion 2020 £000 335,256 – – – 2019 £000 401,673 15,872 (70,660) 1,951 Change % (17%) 335,256 348,836 (4%) (60%) (42%) 33,631 27,850 61,481 – – – – 84,156 21,287 105,443 633 (42,744) 1,672 1,321 61,481 66,325 (7%) 32,909 24,461 57,370 – – – – 57,370 82,859 21,788 104,647 300 (42,744) 1,674 (556) 63,321 (60%) (45%) (9%) Cash conversion measures the percentage by which adjusted cash generated from operations covers adjusted operating profit. Adjusted operating profit Cash generated from operations Exceptional items Capital expenditure Other working capital adjustments Adjusted cash generated from operations Adjusted cash conversion % 2020 £000 2019 £000 61,481 105,443 57,368 14,646 (10,570) – 61,444 92,407 10,519 (10,002) 627 93,551 100% 89% Adjusted cash generated from operations is after adjusting for the cash impact relating to exceptional items, capital expenditure and significant timing differences affecting the movement on working capital. For the year ended 30 September 2020, exceptional cash payments largely consist of cash paid to acquire new businesses and to support the strategic review of Asset Management. For the year ended 30 September 2019, exceptional cash payments largely consist of cash paid for acquisition and disposal costs and deferred compensation costs in relation to acquisitions. The other working capital adjustments in 2019 are largely the result of the landlord’s contribution to the fit-out of the New York office which were amortised over the period of the lease and the rent-free period of the London and New York offices; these adjustments are no longer applicable in 2020 as accounted for in accordance with IFRS 16. 22 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 The following table sets out the cash movements in the year and reconciliation to adjusted net cash: Net cash Total cash and cash equivalents at 1 October Net decrease in cash and cash equivalents Increase in borrowings Effect of foreign exchange rate movements Total cash and cash equivalents at 30 September Net cash comprises: Cash at bank and short-term deposits Classified as held for sale Total cash and cash equivalents Net cash Average exchange rate adjustment Adjusted net cash The following table sets out the reconciliation from adjusted operating profit to adjusted EBITDA: Adjusted EBITDA 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 Depreciation of right of use assets Share of associates’ interest, depreciation and amortisation IFRS 16 adjustments M&A annualised adjustment Adjusted EBITDA Adjusted net cash to EBITDA ratio S t r a t e g i c R e p o r t 2019 £000 78,273 (30,151) – 1,956 50,078 49,751 327 50,078 50,078 (1,452) 48,626 2019 £000 105,443 (126) 2,099 2,744 – – – 2,425 112,585 0.43 2020 £000 50,078 (19,601) 880 (3,264) 28,093 28,093 – 28,093 28,093 619 28,712 2020 £000 61,481 (341) 2,860 2,908 7,785 163 (7,711) (136) 67,009 0.43 The Group’s borrowing facilities contain certain covenants, including the ratio of adjusted net debt to EBITDA. The amounts and foreign exchange rates used in the covenant calculations are subject to adjustments as defined under the terms of the arrangement. The facility’s covenant requires the Group’s net debt to be no more than three times adjusted EBITDA and requires minimum levels of interest cover of three times on a rolling 12-month basis. The bank covenant ratio uses an average exchange rate in the calculation of net debt and includes discontinued operations 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 bank covenant ratio is adjusted to remove the impact of IFRS 16. This means that the adjusted EBITDA for covenant compliance calculations includes an entry for the rental expense which would have been recognised for the Group’s leases had the transition to IFRS 16 not taken place. To be consistent with the bank covenant calculations, net cash is defined to exclude lease liabilities. Wendy Pallot Chief Financial Officer 18 November 2020 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 23 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 20 to 23. This is the first financial measure for Directors’ remuneration in 2020 as set out on page 78. 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 21. This is the second financial measure for Directors’ remuneration in 2020 as set out on page 78. 102.5 106.5 99.9 104.6 Adjusted profit before tax decreased by 45% to £57.4m, reflecting the significant impact of covid-19 on our physical events business and events-based subscriptions in Institutional Investor. 57.4 2016 2017 2018 2019 2020 3% 0% (1%) (4%) (4%) 2016 2017 2018 2019 2020 Underlying revenues decreased by 4%. There was 2% growth in Pricing, where good underlying subscription revenue growth was held back by covid-19 headwinds and the weaker business environment. In Data & Market Intelligence there was 1% growth with underlying subscription growth and flat events revenues. Asset Management underperformed with covid-19 impacting Institutional Investor’s events-based subscriptions. In the Investment Research division, although revenues declined, renewal rates progressively improved during the year and the turnaround plan is on track. 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. Subscription share of total revenues Subscription-based products usually have the advantage of premium prices, high renewal rates and high margins. 1.4% 0.4% 0.9% 0.4% 2016 2017 2018 2019 2020 (4%) The subscription BoB decline was 4% with robust growth in Pricing (+4%) and Data & Market Intelligence (+5%) being more than offset by the challenges from Institutional Investor in Asset Management (-14%). 58% 61% 59% 60% 74% The Group’s proportion of revenues derived from subscription and content-related products has increased to 74% of its total revenues, in part due to the decline in events revenues. 24 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 2016 2017 2018 2019 2020 Key Invest around big themes Transform the operating model Actively manage the portfolio Relevance Performance Narrative S t r a t e g i c R e p o r t 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 21. 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 135. Adjusted 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 adjusted cash generated from operations, net of capital expenditure, covers adjusted operating profit. The definition of adjusted cash conversion rate is set out on page 22. 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 23. 25% 25% 26% 26% The adjusted operating margin declined by 8ppt to 18% principally due to the declines in Asset Management and Data & Market Intelligence partially offset by strong cost controls. 18% 2016 2017 2018 2019 2020 76.4p 73.6p 77.6p 66.5p The decrease from 77.6p to 42.7p reflects the decline in adjusted profit before tax. 42.7p 2016 2017 2018 2019 2020 106% 99% 98% 100% 89% 2016 2017 2018 2019 2020 The adjusted cash conversion rate was 100% (2019: 89%). The improvement has been driven, in part, by the adoption of IFRS 16 classification of lease payments as a financing activity from 1 October 2019. 1.26 The Group’s net debt remains comfortably below the covenant maximum of three times EBITDA. (0.75) (0.71) (0.43) (0.43) 2016 2017 2018 2019 2020 A detailed reconciliation of the Group’s adjusted and underlying results to the equivalent statutory measures is set out on pages 21 to 23. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 25 Strategic Report Segment review Pricing Data & Market Intelligence The Pricing segment consists of one business, Fastmarkets, Euromoney’s Price Reporting Agency. Fastmarkets provides commodity price benchmarks and analysis critical for our clients’ business processes and workflows as well as commodity-related events. Fastmarkets is active in the metals and mining, forest products and agriculture sectors. Pricing is a 3.0 business and its business model benefits from high barriers to entry. It has significant headroom for growth. Revenue in Pricing fell 7% with robust performance in subscriptions offset by the covid-19 impact on events. Subscription revenue, which accounts for nearly 90% of total segment revenue, grew a robust 7% on both a reported and underlying basis, from strong data-licensing sales during the first half. The weaker business environment impacted new sales and renewals, with second-half subscription growth of 5%. The subscription Book of Business (BoB), which is a lead growth indicator, grew by 4% year-on-year at 30 September 2020. Events revenue, which accounts for 8% of total segment revenue, declined 57% on a reported basis and 10% on an underlying basis, continuing the soft trend previously disclosed at the half-year. Adjusted operating profit improved 15% on an underlying basis reflecting significant cost savings, net of investments made to drive growth. £3m of these savings, such as staff bonuses, are one-off in nature and we expect these costs will return in the current financial year. The Pricing segment continues to invest in future growth through the roll-out of the new Fastmarkets platform which is delivering enhanced value to customers with a better customer interface. Following the acquisition of AgriCensus, agricultural commodities have become Fastmarkets’ third commodity vertical, in addition to its leading market position in forest products and metals and mining. £m unless stated Subscriptions Events Other Total Adjusted operating profit* Adjusted operating margin %* 2020* 73.9 6.6 3.1 83.7 32.3 2019* Change Underlying* change 68.9 15.4 5.6 89.9 33.0 7% (57%) (45%) (7%) 2% 7% (10%) (45%) 2% 15% 39% 37% (2ppt) The Data & Market Intelligence segment brings together complementary brands that deliver market intelligence, embedded workflow solutions, including deal-making events, and business development services. We continue to invest in growth including product management and sales and marketing to create efficiency and scale across the segment. On 1 October 2020 the Financial & Professional Services (FPS) division merged with the Telecoms division. This segment now has four pillars: People Intelligence, NextGen, Derivatives, and Events. Data & Market Intelligence revenues fell 20% on a reported basis because of the covid-19 impact on events revenues. On an underlying basis revenue grew 1%. Subscription revenue, which accounts for 54% of segment revenue, increased by 4% on an underlying basis, benefiting from strong growth in the People Intelligence and NextGen pillars, including brands such as Insurance Insider. Renewal rates for the segment remained high during the period at around 90%, demonstrating the importance to customers of the products and solutions we provide. The subscription BoB grew 5% year-on-year at 30 September 2020. Events revenue, which accounted for 31% of the segment, was flat on an underlying basis, although down 55% on a reported basis. Data & Market Intelligence ran 180 virtual events in the second half of the year. Other revenues, which consist of advertising, consultancy and thought leadership, grew 8% in the first half of the year. In the second half, business confidence affected these revenues, leading to a full-year revenue decline of 9%, on both a reported and underlying basis. The integration of Wealth-X, the market-leading provider of data-driven intelligence on the world’s wealthiest individuals, is on track. Wealth-X is highly complementary to BoardEx, a leader in executive profiling and relationship mapping which enables cross-sell opportunities. Data & Market Intelligence adjusted underlying operating profit increased 6%, mainly due to the growth in underlying revenue and strong cost management more than offsetting the continued investment in the business. £m unless stated Subscriptions Events Other Total 2020* 2019* Change Underlying* change 72.8 53.8 41.3 19.9 91.9 21.9 134.1 167.6 35% (55%) (9%) (20%) (58%) 4% 0% (9%) 1% 6% Adjusted operating profit* 20.9 50.1 Adjusted operating margin %* 16% 30% (14ppt) Fastmarkets: METALS & MINING FOREST PRODUCTS AGRICULTURE * Revenue and adjusted operating profit by segment excludes all sold/closed businesses. Refer to pages 20–21 for the definition of adjusted and underlying measures. 26 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 S t r a t e g i c R e p o r t Asset Management Segment revenue by type (%) The Asset Management segment includes our brands and businesses that serve the global asset management industry: BCA Research, Ned Davis Research and Institutional Investor. This segment provides independent research that enables our clients to make informed investment decisions; runs networks and conferences that bring asset allocators and asset managers together in an effective and efficient way; and provides news and data that are critical for the industry to stay informed and make deals. Asset Management revenue declined 18% on a reported basis, driven by the 14% reduction in subscriptions. There are two different trends in this segment: Institutional Investor (38% of segment revenue) saw a decline of 27% in subscriptions revenue, because it is an event-based subscription business which is impacted by government and company restrictions on travel and face-to- face events. The turnaround of IRD (62% of segment revenue) is on track, with subscription renewal rates improving during the year following sales and marketing investment. The 12 month moving average renewal rate as at the year-end was 86%. We maintain our target to return the non-vote subscription BoB to growth by the end of financial year 2022, which will result in revenue growth during 2023. Asset Management adjusted operating profit fell 20% on an underlying basis, driven by the reduction in divisional revenues. Pricing 4 8 2020 88 Data & Market Intelligence 15 6 17 2019 77 13 32 2019 2020 31 54 55 2020* 2019* Change Underlying* change Asset Management £m unless stated Subscriptions Events Other Total 101.6 5.9 11.3 117.9 16.9 10.8 118.8 145.6 (14%) (65%) 5% (18%) (28%) (14%) (10%) 14% (12%) (20%) Adjusted operating profit* 44.9 62.1 Adjusted operating margin %* 38% 43% (5ppt) 7 12 2019 81 9 5 2020 86 Subscriptions Events Other Institutional Investor: Investment Research: Euromoney Institutional Investor PLC Annual Report and Accounts 2020 27 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. Pricing Price Reporting Agencies (PRAs) publish market prices for commodities to bring transparency to what would otherwise be opaque markets. In many instances, the prices published become established industry benchmarks. These benchmarks are used by market participants, including buyers and sellers, to facilitate long-term supply contracts by providing pricing certainty. Methodologies for pricing vary by market. Assessments are published daily, weekly or monthly, and data is accessible via subscriptions or licensing arrangements. PRAs have become an established part of the global commodity market with their data embedded within transactions across the markets they serve. Key market drivers: • Benchmarks needed to facilitate trading across commodity supply chains • Utilisation of benchmarks to create derivative products for risk management • Demand for benchmarks in new and emerging markets will continue to increase How we are responding • We acquired AgriCensus establishing Fastmarkets’ position in agriculture and creating the opportunity for the development of benchmark indices in this new market • We continue to invest in the Fastmarkets platform to improve the ability for customers to integrate products into their workflow • We apply IOSCO principles to a wide range of price indices ensuring market confidence in our pricing methodologies Links to strategic pillars 28 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 S t r a t e g i c R e p o r t Data & Market Intelligence Asset Management Market participants are managing exponentially increasing levels of data and leveraging this to build value-added intelligence products, enhancing demand for product solutions. With these growing levels of data and complexity of products, new technologies are required to extract value and drive opportunities. Senior management at customers are increasingly involved with data and analytics, using these to improve operational efficiency and for business development, driving further adoption across organisations. The high cost and scarcity of in-house data experts, along with the increasing importance of information security and data privacy, is encouraging companies to outsource data management and analytics to specialist third-party providers with domain and technical expertise. Customers continue to require networking events where they can convene and transact. The Asset Management sector has been significantly impacted by the covid-19 pandemic, but the impact is largely isolated to events businesses. Although events businesses are pivoting their delivery models to adjust, the path forward for them is currently uncertain. The overall market challenges facing the sector, including MiFID II and the continued shift from active to passive investing have continued to shrink the market size for investment research and result in asset managers implementing cost reductions in order to maintain margins. In addition, Brexit continues to create uncertainty in the market. There is a degree of encouragement in that the overall pace of decline continues to slow, and in some instances, such as the market for independent macro research, we are seeing growth. Key market drivers: Key market drivers: • Covid-19 has severely disrupted events businesses • Increasing adoption of data as markets leverage ever- • Continued pressure on fees amid the shift from active to growing levels of data passive investment products • Development of value-add analytics products • MiFID II has affected the way research buyers in the EU • Complexity of regulation and a focus on risk management organise their budgets and commission work driving outsourcing • Macro uncertainty caused by Brexit uncertainty and other • Covid-19 has severely disrupted events businesses How we are responding • We are investing capital in data businesses such as Wealth-X and BoardEx • We have reorganised our people intelligence businesses into a People Intelligence Pillar enabling us to build scale and share best practice • We pivoted quickly towards and will continue to offer virtual events to our customers, enabling them to convene and transact while physical meetings remain challenging and in future as part of hybrid physical and virtual events geopolitical risks How we are responding • We continue to invest organically in our 3.0 products such as Investment Research Investment Solutions which has over $1bn in assets under advisement • We are merging functions across our Asset Management businesses resulting in synergies as well as efficiencies in our processes • We pivoted quickly towards and will continue to offer virtual events to our customers, enabling them to convene and transact while physical meetings remain challenging and in future as part of hybrid physical and virtual events Links to strategic pillars Links to strategic pillars Euromoney Institutional Investor PLC Annual Report and Accounts 2020 29 Strategic Report Stakeholder value and engagement 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 Customers The value we create 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 long-term value that benefits all stakeholders at relatively low risk. We adopted a prudent approach to shareholder distributions and did not declare an interim dividend payment for the financial year 2020. We have however recommended a final dividend payment of 11.4p which is in line with our dividend policy. How we engage and respond: • £24.0m paid in 2020 in dividends 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 fully 3.0 business to more effectively serve our customers. How we engage and respond: • Thousands of customers operating across a broad range of sectors • Products which many customers regard as non-discretionary • A strong emphasis on embedding our products in • Annual General Meeting held in January customer workflows • Financial & Professional Services teach-in held in February • A global customer base mirroring our global footprint • Over 87 shareholder meetings held during the year • Must-have products and must-attend events facilitate a • Retaining ownership of Asset Management following the conclusion of strategic review subscription model Our response to covid-19 Impact on our shareholders Impact on our customers As we suspended our operation of physical events from March onwards, our event revenues reduced to zero almost overnight. This had a significant impact on Group revenue, profit and the Company’s share price. The Company did not pay an interim dividend. Our customers faced their own business challenges as a result of the pandemic. While impacting our customers’ own discretionary spend, it also underlined their own need to access that information which is hard to find and which our customers need to operate effectively. Our response Our response • Providing an early and then subsequent regular market • Investing in product development, to enhance our service updates on Group performance and our ability to operate physical events delivery and experience • Acquiring Wealth-X and AgriCensus, improving our customer • Prioritising the preservation of cash and prudent management offering in those sectors of capital • Pivoting where possible to a virtual events model, enabling • Pivoting where possible to a virtual events model, generating our customers to convene and do business new event revenue streams • Focusing on our data subscriptions business, to drive subscription growth and protect our recurring revenue streams 30 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 S t r a t e g i c R e p o r t Employees Partners Read about the value we create and how we engage with our Community on page 36. The value we create The value we create The size and scale of our divisions, combined with the support of our strong central functions ensures that our employees can be expert, creative, action-oriented and customer-focused. They can take advantage of Euromoney’s scale, share best practice, operate strategically and create career paths for themselves and their colleagues across the Group. How we engage and respond: • Ensuring consistently high-quality experiences for our employees working in partnership with them and the Employee Forum • Thriving staff-led diversity and inclusion initiatives covering a wide range of issues, such as Global Inclusion Week • All divisions and functions represented globally on our Employee Forum • Continuation of mini-secondment programmes across different areas of our business We continue to 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 a wide range of technology partners • Increasing transition to cloud-based service providers resulting in greater flexibility as well as security benefits • Working with virtual event platforms to best utilise their product to provide a positive experience for our customers • 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 Our response to covid-19 Impact on our employees Impact on our partners We required our staff to work remotely, creating more than 2,000 offices rather than 30. Many faced challenges with their home-working environments. We froze pay and asked our higher paid staff to agree to salary deferrals, in return for shares. We undertook a restructuring exercise in September to reflect the covid-19 environment. Our response • We held numerous Town Halls hosted by the CEO and other Group Management Board members, providing staff with a forum to ask questions and share concerns • We protected all jobs for the first six months of the crisis • We encouraged staff to put ‘family first’ • Our Group HR teams created toolkits to facilitate home- working, as well as making other advisory and practical support available • We right-sized our business in September in order to provide certainty and clarity for staff remaining with the business • Commencing a ‘future of work’ programme and liaising with our Employee Forum, to create the framework for the ‘post- covid office’ Our business partners faced their own business challenges as a result of the pandemic. Technology vendors faced increased demands from all customers. Our events partners, such as venues and hotels, faced rafts of cancellations. We required pragmatic and often urgent advice from our professional advisors. We worked with our insurance brokers on obtaining insurance payments to mitigate some of the lost profit. Our response • By highlighting to staff the success and resilience of our key technology providers • By negotiating significant cost reductions and savings with our event suppliers, balancing our requirement to minimise costs and protect shareholder value with the requirements of long- term business partners • By working closely with our insurance brokers, enabling successful policy claims for certain lost revenues • By empathising with all suppliers, in particular in relation to the challenges their own staff were facing to continue qualitative service provision to the Group Euromoney Institutional Investor PLC Annual Report and Accounts 2020 31 Strategic Report Sustainability and stakeholders The Company’s Section 172 statement on page 40 explains how the Board assesses and monitors the Company’s culture. Inclusion Week created a workspace for difference to have its voice heard. As a member of the LGBTQ+ and Women@Euromoney employee resource groups it was both powerful and heartening to have so many allies engaging with the issues and supporting the aims of the initiative. Vicki Taylor FPS, UK Measures taken to drive positive cultural change • A collaborative ‘best-of-both’ worlds culture • Setting and communicating clear standards for acceptable behaviour and business practice • Core development offerings to improve capability, for example management, leadership, recruitment and sales programmes • An Inclusion & Diversity agenda • Improving transparency on pay and a focus on fairness • Introducing new leaders and talent with different experiences • A gender-diverse Board Culture Covid-19 has disrupted our business but it has proved we have a resilient culture and in some ways has had a positive impact on our culture. Facing a common challenge, people have worked together across different businesses, sometimes for the first time; our managers’ views about flexible working have changed for the better and their understanding of the importance of wellbeing has improved; and internal and external factors have reinforced the culture of inclusion we are working towards. As we look forward to 2021, we think about further evolving our culture in three ways. Firstly, continuing to develop an inclusive culture that works for diverse teams. Secondly, providing a more consistent and higher quality experience for our employees in partnership with the Employee Forum. Thirdly, developing a culture of growth delivering sustainable growth for the business and our employees. Our Board has spent time discussing, understanding and approving this approach. Our culture affects both how our employees feel about working for us as well as the experiences our stakeholders have when working with us. Themes The reporting in this section is focused on five stakeholder themes: Employees; Customers; Partners; Shareholders; and Community. These themes are closely aligned to and reflect the Group’s operations, stakeholders and strategy. They also enable 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. Many of the initiatives reported in this section are grass-roots initiatives. The Board and senior management aim to create an environment where staff can be themselves at work. We believe this then provides our staff with a platform which enables them to perform to the best of their ability. Employees Investing in talent Euromoney continued to offer its successful initiative for staff to attend our mini- secondment programmes in different areas of our business. These secondments have received excellent feedback and offered opportunities for our employees to work with our colleagues in global offices and gain international experience. Valuable skills and experience our secondees have gained include mentorship, sharing expertise between businesses, working in a new environment or culture, gaining a better understanding of Euromoney as a whole and making new connections. This year Danielle Ngwana-Joseph and Mounia Saydy were seconded to work with our CEO, Andrew Rashbass, for three months. As part of this, they organised a session of our Early Careers Academy which focused on developing successful 3.0 events, and carried out research into corporate codes of conduct. Sam Rogan joined the Legal, Risk & Secretariat team on a mini-secondment from the FPS division towards the end of the year where he project managed the process which produces this Annual Report. 32 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 The initial roll-out of our Sales Academy was completed during the year with workshops held for sales staff on conceptual selling. The Finance Academy continued its rolling programme of training and workshops to further develop the finance professionals working in the organisation. The pandemic means we need to place greater emphasis on remote learning and the Group has trialled LinkedIn Learning which will shortly be made available to all staff so they can continue pursuing their development needs from home. Welcoming new colleagues During the year we welcomed more than 168 new staff to Euromoney through the acquisitions we made. Wealth-X has 144 staff, and plans were underway for some of our new colleagues to join us in our main New York office shortly prior to the start of the pandemic. We look forward to welcoming them physically into our business as and when office normality resumes. AgriCensus, which joined Fastmarkets in March, has 24 staff based in London and the Ukraine. Again, once we can do so, we look forward to them joining us in our London HQ office. Inclusion and diversity The Board has continued to assess and monitor our culture during a year that has brought significant changes for our employees during the covid-19 crisis. Despite the many challenges the crisis has brought it has also positively developed elements of our culture, in particular the collaboration across the Group to tackle common issues. We have supported new ways for managers and teams to flexibly work together despite the physical distancing. We have started a new project to consider how else our ways of working can evolve over the next few years following a move to a more virtual environment. Our commitment to inclusion and diversity has remained an important focus with the launch of a Global Inclusion & Diversity Council and a successful Global Inclusion Week. You can read more about this important work on page 37. Our Board benefits from its gender diversity. Half of our Board Directors are women, including the key positions held by our CFO (Wendy Pallot), Senior Independent Director (Jan Babiak) and Chair of the Remuneration Committee (Imogen Joss). We have similarly positive representation at Group Management Board level, with 30% female representation through Wendy Pallot (CFO), Diane Alfano (Chairman and CEO, Institutional Investor) and Ros Irving (CEO, FPS Events). Volunteer days We actively encourage all our staff to make use of their two allocated volunteering days including through programmes co-ordinated by a consultancy, Benefacto. A wide variety of charities, community and environmental initiatives are supported, including gardening days, working at food banks and in charity shops, and providing companionship for the elderly at various events and workshops. We discuss our volunteering activities in more detail in the Community section on page 36. Board (%) Senior Management Group (%) 4 4 31 63 Group Management Board* (%) Total employees 3 8 1032 * On 1 October our GMB membership reduced from 11 to 10 members which changed female representation from 27% to 30%. 1315 Male Female S t r a t e g i c R e p o r t Shareholders FPS teach-in Following on from the success of last year’s Capital Markets Day, this year we continued to invest time helping our investors to better understand the Group’s businesses, growth drivers and talent. In light of investor focus over the last 12 months on our Asset Management and Pricing segments, we felt it would benefit investors to provide them with more colour on our Data & Market Intelligence segment. We therefore held a teach-in on the Financial & Professional Services division (FPS) which represents 35% of Group revenue. This division is characterised by many disparate brands operating across a common platform. Our objective was to highlight to investors the plans for bringing these brands together in an efficient way. Investors were provided with the opportunity to meet the divisional leadership team, led by Jeff Davis, the CEO of the FPS division. The teach-in was attended by 84 people, representing our shareholders, sell-side and bankers. Many more viewed the webcast available on our website. Jeff Davis outlined the divisional strategy and how it is built for growth and scale while the CEOs of each pillar in the division showcased their own areas. The teach-in provided investors with a deeper understanding of our businesses in this area, the strategy for the various brands, and the opportunity to meet the senior divisional leadership team. Feedback from the event was positive and we plan to run future divisional ‘deep dives’ for the benefit of the investor community. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 33 Contract Transformation Programme Our Legal team continues to develop and promote the Contract Transformation Programme, rolling-out new contract templates and guidance. The principle of ‘self-help’ underlines the programme, designing our customer-facing contracts to minimise negotiation points and enable our sales teams to manage ‘the basics’ of their own contracts. Our objective is a more streamlined approach with contract terms that balance protecting our business with a market approach, reducing reliance on the in-house Legal team, and speeding up the contracting process for the benefit of both Euromoney and our customers. IOSCO The IOSCO principles for Price Reporting Agencies (PRAs) are a set of best practices for all PRAs to ensure the pricing process is robust, reliable and transparent. Adherence to the principles is verified annually via independent external audits, providing assurance that Fastmarkets’ prices, which customers use as reference in physical and derivatives contracts, are produced through a high-quality methodology. The principles detail recommended procedures around governance and oversight; quality and integrity; conflict management and accountability. Fastmarkets completed its first IOSCO assurance review in 2017, with more prices audited each year, including key benchmarks and exchange-listed prices such as 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. Strategic Report Sustainability and stakeholders continued Our teams rapidly adjusted our events to run on virtual platforms allowing customers from all over the world to join the events for valuable information and networking. Event management solutions Consistent with our strategy of shifting to enterprise SaaS-based solutions, we evaluated the market for an event management system and selected Cvent. Cvent is a comprehensive platform to facilitate and automate event management from initial planning to post-event engagement. After a successful roll-out across our telecoms businesses, we are now in the process of rolling Cvent out across our other events businesses. Global Finance Transformation Programme While not a direct touch point for our customers, the continued improvements to our central business processes help us move towards a consistent, global approach to billing interactions with our customers. Global sanctions policy The Group refreshed its Sanctions Policy in 2020 with additional guidance and compliance tools available, as well as training for relevant staff. The Group’s trade sanctions policies and procedures are designed to raise awareness of sanctions for all staff and ensure that the business operates within required regulatory frameworks. 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. The Risk Committee receives regular briefings on sanctions-related developments globally, encompassing reminders about the implications of a breach of sanctions for the Group. This list celebrates 100 inspirational women ‘who are not yet senior leaders in an organisation, but are making a significant contribution to gender diversity at work’. The future leaders were nominated by peers and colleagues and reviewed by the HERoes judging panel. We are proud to see Denise on that list. It is a well- deserved accolade in her long list of accomplishments. Customers Our customers are central to everything we do at Euromoney, and understanding their needs and embedding our products within their workflow is integral to our strategy. Fastmarkets platform This year Fastmarkets has invested in improving the customer experience. The business introduced a new and sophisticated platform that gives customers access to its data while giving them the choice of how to access it. Customers now have the choice of using the secure Application Programming Interfaces (API), desktop dashboard, browser dashboard, Excel add-in and new mobile experience. The platform is built on the latest cloud technology, making it simpler for Fastmarkets to deliver new capabilities to customers in the future while maintaining a consistent customer experience regardless of delivery channel. Pivoting to virtual events In these unprecedented times for our events businesses, large scale, in-person, international meetings cannot operate. Our teams had to adapt to continue delivering value to our clients, who rely on our events as places to convene and do business. HERoes100 The Group would like to congratulate Denise Best on making the HERoes 100 Future Female Leaders List of 2020. She features alongside other inspirational role models aiming to inspire the next generation of women leaders. Denise co-chairs the Race, Faith, Diversity & Inclusion Group and has organised numerous events promoting inclusion and diversity. As a member of the Euromoney Charity Committee, she works with organisations to support women. 34 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 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 whistleblowing (which we call ‘Speak-up’) arrangements and our compliance approach. Supplier engagement We work with a wide range of suppliers and partners of different sizes across the globe. Ensuring we select the right suppliers for the right projects is an important aspect of our risk management. We use an online portal for our procurement teams to use when engaging with 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 pillar of our information security strategy is our business-wide ‘security champion’ programme, called the Business Information Security Officer (BISO) programme. It is a voluntary programme which provides 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. 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 specific criteria. Speak-up We discuss our Speak-up arrangements, provided by ISO 27001 accredited supplier Expolink on page 66 of this report. The Audit & Risk and Risk Committees both receive regular updates regarding any related Speak-up contacts and investigations which arise as a result. Partners 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 partners, 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, while our events businesses, at least in more normal times, 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. Our corporate advisers also help Euromoney meet our legal and regulatory obligations, and the Board to meet its individual and collective duties. 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 20 of this report. Contract Transformation Programme Our Contract Transformation Programme 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 seriously. The related Transparency Global Inclusion Week provided an invaluable opportunity for the entire organisation to reflect on our culture and envisage a future, more inclusive Euromoney. It was inspiring to see such high levels of engagement and to hear so many employees bravely sharing their personal experiences and frustrations. Izzy Griffin-Smith FPS, UK Inclusion Week was an opportunity to gather virtually with colleagues who share a passion for advancing Euromoney’s commitment to creating a diverse, equitable and inclusive workplace. I felt hopeful to be working toward those goals alongside such talented and dedicated people. Rebecca Burns Legal, US 35 Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2020 Outside of various fundraising efforts across Euromoney including bake sales, raffles and quizzes, there are also various teams who arrange for non-financial donations to charitable organisations from collecting travel-sized toiletries for a women’s shelter to collections for food banks and homeless shelters. A team organised a collection of food and non- perishable items for a food bank based near Waterloo, London. The team were able to fill a car with all of the donations which they transported from the Bouverie Street offices. Volunteering A lot of support that Euromoney offers to charities around the globe is focused on fundraising and financial donations but there is a large amount of volunteering that also takes place throughout the year. In the UK, the team works alongside Benefacto to find suitable opportunities and take advantage of the two days each year that Euromoney provides to every member of staff for volunteering activities. This year they have included a range from gardening days, working at food banks and in charity shops, and providing companionship for the elderly at various events and workshops. 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. Strategic Report Sustainability and stakeholders continued The I&D Council works alongside our network groups, to build on the foundations in place and set the direction for I&D at Euromoney. It promotes and aligns activities with our I&D framework, which outlines Euromoney’s commitment and approach to integrating I&D with our entrepreneurial culture. Charitable giving The Group co-ordinates its charitable activities through committees representing the UK, US and Asia businesses. Throughout the year the Group has raised approximately £80k through a combination of Group donations and staff fundraising. Each of our Charity Committees in the UK, US and Asia have been active during the year. In New York, colleagues volunteered their time at The Bowery Mission’s soup kitchen preparing meals and collecting donations. The team continued its work with Bottomless Closet, which guides disadvantaged New York City women to enter the workforce. It also hosted various fundraising events with proceeds going to Americares for hurricane victims. In addition, staff organised a toy drive and assembled safer sex kits for Iris House, a comprehensive support, prevention and education service for women and families affected by HIV/AIDS. Euromoney’s UK Charity Committee recommitted to supporting Haven House through the development of a new woodland wonderland, including the total renovation of the playground which is suitable for all their families, regardless of disability. The development was slowed due to covid-19, but we are pleased to say that they have broken ground as of the end of August and are making quick progress with the development, hoping to move onto their Garden of Reflection in early autumn. The effect of UK lockdown on a charity’s ability to fundraise has been vast and not only did it put a stop to events such as the London Marathon, it paused many volunteering efforts for our employees too. That didn’t stop some of our UK colleagues undertaking their own challenges in lieu of postponed and cancelled events, including Stefano Di Nardo from our Fastmarkets division, who ran the London Marathon in four stages over one week to raise money for charity. In Hong Kong, the team donated supplies such as instant meals, energy bars and sleeping bags to local charities, including Impact HK, a charity supporting the homeless in Hong Kong. Community 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 that 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 Headquartered in the UK, Euromoney has offices in 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. We believe having an inclusive environment that allows us to be ourselves at work and where we feel free to share what is important to us, can help us to create a satisfying working experience, enabling everyone to thrive personally and professionally. Over the past few years, our Inclusion and Diversity network groups have done valuable work in developing our culture for all employees. They have also helped us to promote and celebrate the rich and diverse backgrounds of our employees through bespoke educational and networking events and global initiatives. Recent events have highlighted that now, more than ever, more needs to be done to improve the diversity of our workforce and break down barriers to talented people having fulfilling careers at Euromoney. One of the ways in which we have improved our approach to inclusion and diversity (I&D) is by setting up our Inclusion & Diversity Council. 36 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Global Inclusion Week: Breaking barriers, creating opportunities By the time we got to July, it had been a tough few months. Most of our more than 2,000 staff had been home- working since March. While we had mastered the art of Microsoft Teams or Zoom meetings for business purposes, they could feel transactional, without the nuanced exchanges that take place in face-to-face meetings and help us build those important networks and friendships in the workplace. This year’s theme – breaking barriers, creating opportunities – focused on ways we can create a workplace culture at Euromoney where everyone can contribute to their fullest and have the kind of experience that enables each of us to thrive personally and professionally. With so many of us working from home during this time, all sessions were online, enabling everyone to participate and contribute to the discussion. There were a variety of events including keynote speakers and panel discussions, as well as interactive learning resources, polls and surveys. Our entrepreneurial heritage rests on a belief that people are different, that great ideas come from combining different perspectives and from freeing people to be themselves, which allows us to see the world in different ways. This enables us to solve issues for our clients around the world. We work in markets where information is opaque. Understanding one another can be similarly unclear and we risk making incorrect assumptions about each other. Only by being open to listening, sharing and learning from one another can we discover what can help us thrive individually and collectively. Championing diversity creates value. It strengthens both our strategic decision-making and our execution. It allows us to understand our stakeholders better and to connect with our communities. Events in the US, and specifically the death of George Floyd, had a significant impact on many of our staff. And unlike in ‘normal times’, most staff were not able to have the daily ‘water cooler’ chats about things on their mind that is an aspect of office work we take for granted. Our Global Inclusion Week was, then, a welcome focal point for several days in July. It was the first time since the pandemic started that our staff could come together and participate in something with a shared purpose, which was not ‘just work’. Our Inclusion & Diversity Council and our employee network groups worked hard and collaborated effectively to host a wonderful, colourful, inclusive and informative range of online events for colleagues across the globe. Our network groups represent staff in a range of areas – LGBTQA@Euromoney, Women@Euromoney, Disability@ Euromoney, RFDI@Euromoney (Race, Faith, Diversity & Inclusion) and Wellbeing@Euromoney. This three-day interactive event promoted and celebrated the rich and diverse backgrounds of our employees through bespoke educational and networking events. S t r a t e g i c R e p o r t Inclusion Week enabled individuals around the world to come together to share their much varied and valuable experiences, their frustrations but also their ambition for a more inclusive and diverse work space. Education and empathy are necessary skills that need to be mastered to ensure progress. The future of Euromoney looks bright. Camela Cuison FPS, UK I really enjoyed this year’s Inclusion Week – not only was it educational it was also entertaining! Denise Best Institutional Investor, US It was heart-warming hearing employees share their personal stories and having fellow members announce their ally-ship. This demonstrated a shared experience and support network regardless of our identity, embodying the notion of inclusion. Zack Bensouda FPS, Hong Kong Euromoney Institutional Investor PLC Annual Report and Accounts 2020 37 Strategic Report Sustainability and stakeholders continued Energy and carbon disclosures For over a decade, the Group has been monitoring gross carbon emissions generated from its operations in the UK and globally, and has been consistently making efforts to reduce them. Emission reductions achieved across our operations are a result of our commitment to minimise our impact and prepare our business for the environmental risks and opportunities that lie ahead, as reflected in our mission statement. This section summarises the results of our 2020 carbon footprint, which covers the period from 1 October 2019 to 30 September 2020 and some of the actions implemented across our business in the past year to reduce emissions, specifically those due to use of energy. This report is in alignment with the requirements of the Streamlined Energy & Carbon Reporting (SECR) requirements for UK businesses. 2020 energy and carbon footprint The Group’s carbon footprint for the period from 1 October 2019 to 30 September 2020 totalised 4,100 t CO2e. Emissions from UK operations corresponded to 39% of this total and amounted to 1,600 t CO2e. Our 2020 direct and indirect emissions and total energy use are presented in detail below, alongside the results of our 2019 carbon footprint. Baseline year Consolidation approach Boundary summary Consistency with the Financial Statements 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 scopes 1 and 2. All scope 3 emissions are off-balance sheet emissions. Gross GHG emissions (in tCO2e) Scope 1 Scope 2 Scope 3 Scopes 1 + 2 + 3 Energy consumption (in MWh) Scope 1 Scope 2 Scopes 1 + 2 GHG emissions intensity (tCO2e/£m) Scope 1 + 2 Scope 1 + 2 + 3 2020 2019 Global, incl. UK UK only Global, incl. UK UK only 1,000 1,100 2,000 4,100 200 200 1,200 1,600 1,300 1,800 5,700 8,800 200 400 2,800 3,400 2020 2019 Global, incl. UK UK only Global, incl. UK UK only 3,600 3,500 7,100 1,000 1,100 2,100 4,500 5,100 9,600 1,000 1,400 2,400 2020 2019 Global, incl. UK UK only Global, incl. UK UK only 6.3 12.2 1.2 4.8 7.7 21.9 1.5 8.5 Our strategic pillars Invest around big themes Transform the operating model Actively manage the portfolio 38 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 S t r a t e g i c R e p o r t Methodology The Group’s carbon footprint has been developed based on the widely recognised GHG protocol methodology developed by the World Resource Institute (WRI) and the World Business Council for Sustainable Development. The methodology is also in line with HMG Environmental Reporting Guidelines. Emission factors used in our carbon footprint were predominantly sourced from BEIS conversion factors 2020. This data is collated and independently reviewed by environmental consultancy ICF, who calculate our carbon footprint. The results of the footprint have not been audited by a third-party assurance company. In line with the definitions of the GHG Protocol, for the purpose of this report Scope 1, 2 and 3 includes the following sources of GHG emissions: • Scope 1 (direct emissions): combustion of natural gas and oil for heating purposes, and leakage of refrigerant gases used in the cooling systems, use of diesel and gasoline in owned vehicles used for business purposes and other transportation under Euromoney’s operational responsibility • Scope 2 (indirect emissions): production of electricity imported from the grid and consumed by Euromoney offices • Scope 3 (other indirect emissions): Rail and air travel for business purposes. We have not attempted to measure indirect working at home emissions within this scope. Energy management practices We explore feasible ways to reduce the energy consumption across our offices and operations. The results presented above indicate a reduction of 53% of our gross carbon emissions and 44% of our GHG emissions intensity, in comparison to 2019. In addition to the impacts of covid-19 in our operations during most of the year, the observed reduction in Scope 3 is also attributed to our recent investment in video conferencing technology which has been rolled-out in all of our offices. Other initiatives which have helped us reduce our impact in the environment and our carbon footprint are: • Investment in more efficient systems: Installation of motion sensor light systems and energy-efficient lighting fittings, centrally controlled ventilation systems and replacement of hot water boilers • Cloud data hosting: Reducing the demand for air conditioning and power requirements, in comparison to dedicated server rooms • Green energy procurement: Our head office in Bouverie Street is one of the largest consumers of electricity in the Group. In this office, our policy is to select green suppliers only, which utilise renewable energy sources such as hydroelectricity, wind, solar, biomass and landfill gas-derived energy for the generation of electricity. Our current supplier operates under a green tariff scheme • Flexible working arrangements and co-working spaces: In some businesses, office space is supplied through flexible working arrangements with co-working spaces. This reduces the required rented office space and makes for efficient reductions in the cost of upkeeping, as well as the absolute carbon impact • Ride2work scheme: We encourage our employees to buy bicycles, by paying the costs upfront and deducting from their salary over a period of months 2021 Commitments During 2021, we will continue to work closely with our employees and suppliers to explore practical ways to reduce the energy consumption across our offices and operations. The switch to remote working provides us with an opportunity to review the amount of required rented office space which would reduce our carbon footprint as well as reducing the impact from employees commuting to work. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 39 Strategic Report Section 172 statement: promoting the success of Euromoney S172(1) reporting The 2018 UK Corporate Governance Code requires Euromoney to explain how the Directors have performed their duty under s172 of the Companies Act 2006 to promote the success of Euromoney for the benefit of its members as a whole. Our key stakeholders We identify how our business model benefits our five key stakeholders on page 30. The Company’s 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. The decisions the Board makes can impact different stakeholders in different ways and it is the role of the Board to balance stakeholder interests appropriately. Our case study on page 41 highlights how the Board addressed the sometimes competing interests of stakeholders when managing the Group’s response to the covid-19 pandemic. Strategic decisions As noted in the Chairman’s Corporate Governance Report, the Board addressed a range of complex issues during the year and, in doing so, took into account the interests of its stakeholders. The interests of our stakeholders are integral to the Board’s decision-making process and the non-exhaustive examples below of key decisions taken during the year illustrate how the Board considers stakeholder interests within its decision-making, while promoting the success of the Company. Acquisitions Strategic review • During the year we acquired AgriCensus and Wealth-X, two bolt-on • The Board concluded its strategic review of the acquisitions which strengthened our Pricing and Data & Market Intelligence segments thereby increasing the range of prices we could offer customers • Wealth-X strengthened our ability to serve new and existing customers in our People Intelligence pillar • AgriCensus provided our Pricing segment with a presence in the agri- pricing sector, again strengthening our customer offering • Combining businesses offers staff new opportunities and experience Group’s Asset Management businesses • It concluded that the best outcome for shareholder value was to remain the long-term owner of all three businesses • These businesses have high levels of recurring subscription revenue and attractive profit margins • The conclusion of the review without a change in ownership provided staff with stability and certainty following the review period • Management has set the target of returning the Investment Research division’s non-vote Book of Business to growth by 2022, which would improve shareholder returns • This will be partially achieved through product development enhancing the service available to customers Capital allocation Culture • Covid-19 has necessitated difficult decisions on capital allocation • The Board discussed and reviewed the evolvement • Pay freezes and salary deferrals impacted staff negatively, but enabled the short-term protection of jobs in the first six months of the covid-19 crisis • The Board took a prudent approach to shareholder distributions and did not declare an interim dividend. The Company’s move was widely supported by shareholders • These and other measures generated over £30m in cost and cash savings over the year, enabling the Company to maintain reasonable levels of cash during a difficult trading period, safeguarding the wellbeing of the Company for all stakeholders • The Board approved the repayment of UK furlough monies received of the Group’s culture since 2015, including the effectiveness of the Company’s best-of-both worlds operating model • Management kept the Board updated on the impact of covid-19 on Group culture. The pandemic has brought employees together, managers’ expectations are changing for the better, for example in respect of flexible working, and a culture of inclusion has been re-enforced, for example through the launch of the Group’s Inclusion & Diversity Council • Investment has continued in some areas to improve the services we provide to customers. For example, the new Fastmarkets platform, the Investment Research division’s investment solution businesses, and the delivery of virtual events • The Board also discussed the risks to culture brought through the pandemic, for example the employee response to restructuring and the loss of jobs • The Board approved management’s focus for • Recognising the importance of dividends for most shareholders, the Board is recommending resuming a final dividend, referred to on page 05 of this report • The Group undertook a significant restructuring exercise at the end of the year. Taking decisive action protects the wellbeing of the Company and means staff and other stakeholders have greater security and direction in the year ahead developing the Group’s culture which is: to further develop an inclusive culture, ideal for diverse teams; a more consistent and higher quality experience for our employees in partnership with the Employee Forum; and a culture of growth delivering sustainable growth for the business and our employees • The Board confirmed that the Group’s objectives in respect of culture are aligned with and will help drive the Company’s purpose and strategy (see page 65) 40 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 S t r a t e g i c R e p o r t Covid-19 Board case study Most of the Board’s decisions since March have been made through the lens of the covid-19 pandemic. This has required balancing the sometimes competing interests of the Group’s stakeholders. Generally, however, by continuing to focus on securing the long-term health and success of the Company during covid-19, the Board is confident it is acting in the interests of all stakeholders. At the start of the pandemic, the Company, with the Board’s support, prioritised employee safety and well-being. Communications with staff emphasised the need to put them and their families first. The Company supplied practical support to ensure effective home- working and looked to maintain as much as possible the mental health of all employees. For the first six months of the crisis, when economies around the world contracted severely, we sought to protect nearly all jobs in the Group. At the same time, we conserved cash while we proved the resilience of the Company in the face of market turmoil. We could see the effects on our events immediately, but we wanted to be sure we remained viable if there was a significant negative impact on our subscription businesses too (which in fact there was not). To conserve cash, we froze pay and suspended all but critical hiring; Executive and Non-Executive Directors took pay and fee cuts; and most higher-paid staff volunteered to defer a proportion of their salary into shares. We slowed or suspended projects. We also drew upon government furlough schemes. The Board decided to take a prudent approach to shareholder distributions and the Company did not pay an interim dividend. The Board, however, also recognised the need to continue to invest in the long-term in order to serve customers well. For example the Board decided near the start of the crisis to complete the acquisition of AgriCensus, a price reporting agency. The Board also supported continued investment including in the Fastmarkets platform, and the launch of new products such as Inside P&C. With the resilience of the Group’s business model proved and the crisis becoming to some extent normalised, the Board has adapted its approach. We have restructured the Group, removing more than 200 roles; we ended the salary deferral scheme; in the light of our wider societal responsibilities, we have repaid furlough money to HMRC now that we know we have demonstrated we do not need it; and the Board decided not to draw down on its approved Covid Corporate Financing Facility. In addition, the Board is recommending a return to repaying dividends. In these and other ways, the Board has sought to balance the needs of its different shareholders in line with the Company’s purpose, referred to on page 65. 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 Supporting policies Annual Report reference Page Environmental matters • Volunteering policy Employees Human rights Social matters • Code of Conduct • Diversity & Inclusion policy • Speak-up policy • Health & safety policy • Event Risk Framework • Sustainability and stakeholders • Stakeholder value and engagement • Energy and carbon disclosures • Our business model • Chief Executive’s review • Stakeholder value and engagement • Sustainability and stakeholders • Directors’ Remuneration Report • Directors’ Report • Code of Conduct • Modern Slavery Act Transparency Statement • Event Risk Framework • Sustainability and stakeholders • Risk management • Directors’ Report • Trade Sanctions policy • Modern Slavery Act Transparency Statement • Volunteering policy • Sustainability and stakeholders • Risk management 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 • Sustainability and stakeholders • Risk management • Directors’ Report • Risk management • Our business model Euromoney Institutional Investor PLC Annual Report and Accounts 2020 32 30 38 06 08 30 32 76 98 32 42 98 32 42 32 42 98 42 06 41 Strategic Report Risk management While nothing can negate the impact covid-19 has had on our business, I have seen lots of positive examples of excellent risk management in the response of our staff to the crisis. Wendy Pallot Chief Financial Officer Dear shareholders, Covid-19 impact While global pandemics on the scale we have seen with covid-19 are rare, they do happen. However, very few businesses, including our own, foresaw this one. There are many lessons we will take out of the pandemic. One we are already implementing is the need to spend more time thinking about so-called ‘black swan’ risks, including the extent to which they can be planned for and mitigated. The financial impact of covid-19 on the Group is well-documented in this report. Covid-19 has illustrated how, when risks crystallise, they can have a significant and adverse impact on the successful delivery of strategy. Managing covid-19 risk Like most businesses, the strength of our risk management has been tested by covid-19. The pandemic has meant we have been unable to deliver physical events for our clients since March, and that is reflected in this year’s results. You find out a lot about people and organisations by looking at how they respond to significant challenges. While nothing can negate the adverse impact covid-19 has had on our business, I find lots of positive examples of excellent risk management in the response of our people to the crisis. Our events businesses pivoted quickly to offer our clients virtual events which has, albeit to a small degree, mitigated the impact. Our events operations teams responded well to the potential financial exposure we faced through cancelled events, by working hard with our vendors, other events partners and insurers to significantly reduce that exposure. Much of this work was led by Ros Irving, CEO, FPS Events and a member of our Group Management Board, who quickly established an Events Steering Committee in response to the pandemic and brought together different divisions and functional experts to manage our events businesses responses. Their work undoubtedly helped to significantly mitigate our risk position in this area. The changes made to our technology infrastructure over the last two years, primarily a shift to cloud-based services, meant that the transition from office to home-working was as seamless as it could have been. This work almost completely mitigated the operational risk created by our staff not being able to access our offices. Our staff have responded well to the challenges of home-working and our HR and Risk teams have helped put the tools in place to facilitate that. We were quick to close our offices globally, managing the potential health risk. Where we have reopened a small number of offices in response to requests from colleagues who have found home- working more of a challenge, we have only done so after a substantive risk assessment process. Robust business model The Group’s business model does, to some degree, provide a buffer against the crystallisation of a ‘one-off’ and significant risk such as covid-19. Our data subscription businesses have performed consistently well during the pandemic period, demonstrating that clients continue to require access, perhaps more so than even in more normal times, to information which is hard to find and embedded in the workflow of their own businesses. The work of our sales teams to successfully manage these revenues is another 42 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 example of good risk management in action as they have worked hard to be a partner to our customers. The Group also has a large number of customers, in different industries, in many countries, which has also helped de-risk our exposure to covid-19. Of course, the loss of physical event revenues to the Group has been significant, but our diverse revenue streams, themselves a form of risk management, mean we are less impacted than many organisations in our peer group. Governance Over the last year, the Risk Committee has continued to monitor the Group’s approach to risk management and risk appetite in relation to the risks that impact the Group. As CFO, I work closely with the Chair and members of the Audit & Risk Committee to ensure that the Group’s approach to risk and controls is appropriate, and with adequate mitigation plans to reduce or minimise operational risks within the appetite of the Group. Deborah Thomas, our Director of Risk who joined us in December 2019, manages the enterprise risk programme and day-to-day risk management activities, which are overseen by the Risk Committee, which is also attended by Colin Day as Chair of the Audit & Risk Committee. During the past year, we have reviewed the end-to-end enterprise risk framework, implementing a new framework with an enhanced risk management policy and embedding new risk assessment processes across the Group. Wendy Pallot Chief Financial Officer Oversight of risk Group risk profile 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. Principal risks facing the Group are regularly reported to and assessed by the Board and Risk Committee. Business management present directly to the Risk Committee in relation to risk assessment and risk management in their divisions or functions. These activities are managed by our Director of Risk. 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 has been embedded into each division and function, who are accountable for maintaining an active risk register and up-to date response plans for their key risks. Monthly meetings are held between the Risk team and the divisions and functions to keep focus on key risk activities and provide an early alert system for any emerging risks that arise. Each division and function has a ‘risk lead’ who is the contact point for the Risk team and manages their business unit’s enterprise risk activities, as well as implement Group policies and procedures. As our divisions have increased in scale, they have appointed specialist risk and compliance managers, further strengthening our best-of-both worlds approach to risk management. 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. The framework was refreshed in early 2020 and plans are reviewed and updated over the course of each year. The most material risk to business operations in the current year has been the impact of covid-19 related travel and meeting restrictions on the events business. These restrictions are likely to have an impact over the coming year ahead, as the business adjusts to more virtual and ‘blended’ events, rather than a sole focus on large face-to-face physical events. In addition to the challenges presented by the ongoing pandemic, 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 strategy discussed in more detail on page 12. On a practical level, this means that the Group invests more capital in assets more likely to generate a return in line with the strategy. However, business acquisitions are likely to be smaller in the current environment to mitigate risk, with a focus on organic subscriptions growth. Risk priorities for 2021 The risk priorities for the 2021 financial year are to continue to make risk-based decisions and investment to meet our strategic objectives and manage the financial impacts that have been caused by the global pandemic, whilst creating platforms for future growth. The Risk team continues to embed the enterprise risk framework in the Group, ensuring that there is a holistic end-to-end risk programme in place. Risk register The Group’s risk register identifies the principal risks facing the business. The register is put together through the review of each of the divisions’ and functions’ risk matrices (bottom-up approach), which is then layered by the strategic risks (top-down approach) to create a holistic principal risk matrix. Risks are assessed using likelihood and impact scales set centrally by the Risk team and take in to account the potential consequences from risks around finance, system down-time, reputation and regulation. The Group’s risk appetite is discussed by the Risk Committee before presentation to the Board for final discussion and approval. The Board also considers outlying (low likelihood, high impact) risks which could affect the Group. They provide a benchmark for the divisions and functions to manage their own risks and set the risk parameters within which the Board will operate. S t r a t e g i c R e p o r t Our principal risks this year remain largely unchanged, although the phrasing of some of the risks has been fine-tuned to better reflect the challenges the Group faces. We have introduced two new principal risks (which we also call emerging risks), which are to recognise the ongoing challenges the business faces as a result of the covid-19 pandemic, and the risk of global systems implementations being challenged during the pandemic period, resulting in business process inefficiencies and higher costs. The tensions between the US and China, the US Presidential election, as well as the imminent departure of the UK from the EU, has resulted in greater geopolitical uncertainty, which reflects the territories in which we operate. We have also removed our business disruption risk and incorporated the mitigation activities into our economic recovery and geopolitical risks to avoid the duplication of risk management activities. The Risk Committee has completed a robust and detailed assessment of both the risk management processes and the risk register, and has considered the impact of significant risks on the Group including our principal risks. The Committee’s findings are taken into account prior to a final discussion with the Board. Further details of the risk management processes and the governance structure for risk can be found in the Governance section. The risk matrix on page 44 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. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 43 Strategic Report Risk management continued Risk matrix 1 Covid-19 continues to have a significant impact on the Group’s business activities, particularly events 2 Recession or poor business economic conditions in major markets hinder organic revenue growth 3 Compliance and Controls: complex global regulations and a litigious environment cause reputational, legal or financial damage 4 Inability to execute M&A strategy or integrate acquisitions successfully into the Group on a timely basis prevents the delivery of the strategy 5 Geopolitical upheaval has a major impact on the business environment 6 Cyber security and information security threats compromise data integrity or result in a loss of key data 7 Inadequate investment in technology creates competitor risk and slows execution of 3.0 strategy 8 Inadequate talent management process of hiring and/or retaining critical roles lead to inability to execute strategy 9 Uncertain tax liabilities lead to material cash outflows 10 Existing and emerging competitor activity creates product and pricing pressures, as well as potentially eroding margins 11 Support systems implementations and obsolescence do not meet business needs resulting in inefficiencies and increased cost 12 Exposure to USD exchange rate leads to unexpected swings in reported results 13 Changing customer needs, new technology or disruptive new entrants into the market cause structural changes in markets, reducing the value delivered by our products and services d o o h i l e k L i 1 2 6 13 3 10 9 12 4 5 7 11 8 Impact 44 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 The Group’s Principal Risks are outlined below Description Mitigation Risk appetite Link to strategic pillars Risk 1: Covid-19 continues to have a significant impact on the Group’s business activities, particularly events S t r a t e g i c R e p o r t • Covid-19 has had a significant impact on the Group since March 2020. In particular, it has meant that the Group has not been able to run in-person events, which in the previous full financial year accounted for nearly a third of the Group’s revenue. If no vaccine becomes widely available, therapies continue to be only partially successful in treating the disease, and governments and companies therefore continue to restrict travel and large gatherings, the impact on the Group’s performance will continue. Although there has been only limited impact on our business performance outside of events, the covid-19-triggered recession in major markets could have a further negative impact repercussion on our business • In addition, lockdowns and home- working could create risk for our staff’s mental health, their productivity and their connection to, and commitment to, the Company Risk tolerant Prior years (relative position) This is a new risk Post-mitigation risk trend Increasing Description of risk change The pandemic has created a large amount of uncertainty in terms of ability to host events, working patterns and economic volatility • Following closure of most of our offices around the world, the Group is running effectively with nearly everyone working from home. The Company is making sure that staff are well supported with proactive wellbeing and support services available • The Group has started to reopen our larger offices for those who are unable to work effectively at home. There are strict processes and procedures in place to make sure all open offices are covid-19 secure • The Board regularly discusses the Company’s approach to covid-19 and it is a major focus for the whole senior management team • The Group has reviewed all event-related costs and reduced them where possible in light of the fall in event-related revenue • We now run a range of digital events and training. The Group has put in place technology to run a variety of digital event formats and so can stage these events rapidly and flexibly. Although in most cases these can replace only a proportion of the revenue from in-person events, the revenue they are able to attract is increasing and, because there are no physical venues needed, the gross margin on the events is higher • We have reduced headcount and costs substantially in our events businesses • We continue to work closely with venues both to reduce any committed costs from cancelled or postponed events, and to be able to run events quickly as markets reopen • We are preparing best-practice safety procedures for live events when they run to ensure they are covid-secure • We stay closely in touch with our customers to make sure we understand their evolving needs and we sell alternative products to event sponsors, for example advertising and thought leadership, and content to delegates to meet their information needs • The Group has established cross- company working groups to determine and share best practice on commercial, management and well-being matters • We keep our investors informed about the status of our events and the possible financial impact Euromoney Institutional Investor PLC Annual Report and Accounts 2020 45 Strategic Report Risk management continued Description Mitigation Risk appetite Link to strategic pillars Risk 2: Recession or poor business economic conditions in major markets hinder organic revenue growth Risk tolerant Prior years (relative position) 2019: Risk tolerant 2018: Risk tolerant 2017: Risk tolerant Post-mitigation risk trend Increasing Description of risk change In addition to the long-term impact of the pandemic, cyclical and geopolitical economic uncertainty continues • At present, covid-19 is causing disruption to our event-related businesses, which is covered in a separate risk. Unrelated to covid-19 or triggered by it, there is an inherent risk of recession or poor market conditions in countries and regions where we operate • Ongoing economic pressures could cause a more structural shift away from travel and large functions, resulting in more structural pressure on events recovery • More than half our revenue comes from North America, and therefore a downturn in the US in particular could reduce our customers’ profitability and therefore their willingness and ability to buy our services • If customers go out of business or reduce their headcount, this can reduce the number of customers we serve or the size of accounts • We have a particular exposure to financial services companies and any cyclical downturn that affects them will have an impact on us • Lower demand for commodities stemming from a slow-down in China in particular could have a knock-on effect on Fastmarkets • Failure of the UK and the EU to reach agreement about their future relationship could cause a downturn in those markets • The Group’s 3.0 strategy is to provide services that are embedded in our customers’ workflow, which makes them more likely to be non-discretionary purchases, and the resulting revenues are therefore more resilient • We have increased people and technology investment in sales and marketing in a number of businesses which helps improve our performance even in tough times • A high proportion of our revenue comes from subscriptions, which are typically more resilient than other revenues in a downturn • Investment in new technology to allow virtual or hybrid events will enable the business to adapt to structural changes in the events industry • The Group operates in many geographical markets, which provides some diversification; likewise, the Group serves customers in different industries. • The Group serves large numbers of customers in nearly every business and is not dependent on a small group of clients for a large proportion of its revenue • We can cut some costs in the face of lower revenues in order to mitigate some of the impact on profit from lower revenues • The Group is pooling more resources at Group level, for instance around event operations, in order to make them operate as efficiently as possible 46 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Description Mitigation Risk appetite Link to strategic pillars Risk 3: Compliance and Controls – complex global regulations and a litigious environment cause reputational, legal or financial damage S t r a t e g i c R e p o r t • The Group operates in multiple jurisdictions 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 • Geopolitical risks have increased the scope and severity of sanctions, particularly from the US, UK, and EU, which the Group must comply with to ensure it is not unintentionally in technical breach of sanctions regulations • 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 frameworks would result in reputational damage, and potential regulatory censure • The Group has a central Legal, Risk & Secretariat function and employs specialists across a range of areas to help our businesses manage these risks • Our divisions employ compliance and/or risk specialists where required • There is an updated sanctions compliance programme, that uses in- house expertise, accredited software, and external specialist advice to minimise the risk of a sanctions breach • An updated Event Risk Framework in place to facilitate management of covid-19 and operational risks in respect of events • All key Company policies are updated at least annually and made available on the Intranet, as well as having compulsory online training for key risk areas such as anti-bribery and data privacy compliance • 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 • 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 • The Group holds a comprehensive set of insurance policies that help mitigate the financial impact of these risks, should they materialise Risk averse Prior years (relative position) 2019: Risk averse 2018: Risk averse 2017: Risk averse Post-mitigation risk trend Unchanged Description of risk change Large global organisations face multiple regulatory and compliance risks due to their global footprint. There are additional requirements for information and price reporting business, which customers may rely on their own business decisions. The Group continues to focus on managing these compliance and regulatory risks through enhanced internal policies and an ongoing programme of training Euromoney Institutional Investor PLC Annual Report and Accounts 2020 47 Strategic Report Risk management continued Description Mitigation Risk appetite Link to strategic pillars Risk 4: Inability to execute M&A strategy or integrate acquisitions successfully into the Group on a timely basis prevents the delivery of the strategy • The Group continues to make strategic acquisitions and disposals as part of its strategy. Active portfolio management remains important for accelerating the Group’s strategy of becoming a fully 3.0 company • The risks are that the Group fails to acquire at all, acquires a business that does not have expected 3.0 characteristics, or we fail to integrate the acquired business sufficiently to get expected benefits • Even during covid-19, the best 3.0 businesses attract valuations which are high multiples of profit. Competitive auction processes for high-quality assets can favour private equity companies and large corporations. Private equity firms can use more debt to fund an acquisition than is prudent for us. They are therefore sometimes able to justify a higher price. Furthermore, an acquisition which is large for Euromoney may be relatively small for a larger corporation who can therefore complete a transaction more quickly and offer a higher likelihood of completion to a seller given that we may require shareholder approval • Acquiring smaller companies rather than fewer large ones makes integration more complex, which increases risk • In either case, failure to integrate the acquisition may mean an acquired business does not generate expected returns, which can lead to an impairment of value • The risks around disposing of businesses arise from failing to identify the time at which businesses should be sold, failing to achieve the best available price, or the disruption to the business being sold or to the wider Group during the sales process • Covid-19 constraints could make funding acquisitions more difficult • M&A strategy and execution is a regular topic of Board discussions • We buy and sell businesses within a clear and agreed framework for identifying and evaluating acquisition and disposal candidates and for integrating businesses we buy Risk neutral Prior years (relative position) 2019: Risk neutral 2018: Risk neutral 2017: Risk neutral • The CEO and CFO are closely involved in Post-mitigation risk trend Unchanged Description of risk change Successful portfolio management remains a strategic pillar of the Group, and despite the challenges posed by the pandemic, the Group’s strong balance sheet and robust risk and controls framework means that the risk is unchanged all M&A • The Board regularly delegates authority to an Investment Committee to make sure there is detailed Board oversight of acquisitions and disposals and to enable quick decision-making, particularly where the schedule of Board meetings does not match a particular transaction timetable • We typically use external and independent firms to help with commercial due diligence to analyse the quality of a business and the market in which it operates • We retain professional advisors who know Euromoney well in order to execute transactions quickly and effectively • Acquisitions are subject to specific financial and other targets and these are monitored and reported to the Board regularly • The divisional structure facilitates effective integration and creation of synergies • The Company regularly discusses the role of M&A in the strategy with investors • Although we will be prudent in our funding of acquisitions, our strong balance sheet means we still have some acquisition firepower, despite covid-19 uncertainty 48 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Description Mitigation Risk appetite Link to strategic pillars Risk 5: Geopolitical upheaval has a major impact on the business environment S t r a t e g i c R e p o r t Risk neutral Prior years (relative position) 2019: Risk neutral (new risk) Post-mitigation risk trend Increasing Description of risk change Multiple geopolitical factors continue to create instability at a macro level, therefore the risk is increasing • Politics in and between major markets can have large and sometimes sudden impacts on our business. The nature of geopolitics is that even though we know there is a risk, we often do not know how the situation will play out • Covid-19 is disrupting the operation of many businesses. We have split this into its own risk • The outcome of the negotiations between the UK and the EU about the terms of their future relationship could lead to business disruption • The US-China trade war could reduce trade volumes or economic growth or increase restrictions on doing business internationally, which would affect our customers and us • Sanctions policies in the US and elsewhere increase the risk of carrying out business in certain countries or with certain companies and individuals • Unrest in Hong Kong creates uncertainty for the Group’s operations in Hong Kong • Mistreatment of journalists in certain countries may put some of our staff at risk, or make our journalists unwilling to travel • The results of the US election in November may lead to volatility in markets we serve. Likewise, an escalation of tension in the US around race and other issues may have an impact on business confidence Although the Group, its staff, customers, suppliers and other stakeholders are unable to plan with precision for the uncertainty resulting from the above and other factors, there are a number of mitigations: • The Group’s global footprint means we are not completely reliant on any single country or region for our revenue • We continue to monitor and consider potential impacts of the UK exit from the EU and put in place appropriate mitigations • Group management continues to delegate relevant decision-making to senior managers in Hong Kong in order to respond flexibly and rapidly to any disruption in Hong Kong • A trade sanctions framework is in place and used by all Group businesses, who also have access to internal and external experts • Hedging is in place to offset some of the impact of US dollar exchange rate movements against sterling • The Group uses country-risk tracking services to monitor current and emerging risks in different markets Euromoney Institutional Investor PLC Annual Report and Accounts 2020 49 Strategic Report Risk management continued Description Mitigation Risk appetite Link to strategic pillars Risk 6: Cyber security and information security threats compromise data integrity or result in a loss of key data Risk averse Prior years (relative position) 2019: Risk averse 2018: Risk averse 2017: Risk averse Post-mitigation risk trend Increasing Description of risk change Cyber security and information risks continue to increase across nearly all sectors as the frequency and sophistication of cyber- attacks increases • 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 are 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 remote and 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, and is increasing • Increased home and remote working creates additional security challenges • Chief Information Security Officer continues to manage these threats • Increased the size of the information security team two-fold over last 18 months • Information security strategy is demonstrating effectiveness and is on schedule • Investment continues 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 training programmes for all staff, on a regular basis • 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 • Increased assurance controls to ensure businesses are meeting required standards • Investment in improved cloud security controls that have been rolled out • The Group holds a high level of insurance cover for cyber risks including cyber- attack and data breach incidents • Information security is reviewed as part of our internal audit process • Incident response playbook and supporting policies and processes 50 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Description Mitigation Risk appetite Link to strategic pillars Risk 7: Inadequate investment in technology creates competitor risk and slows execution of the 3.0 strategy S t r a t e g i c R e p o r t • Under-investment in products and • Continue to adopt enterprise cloud technology will slow the Group’s transition to becoming a B2B 3.0 information services business and potentially exacerbate competitor risk • 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 • As we develop more successful cloud- based products (eg Fastmarkets platform) which increase our market share, it is important to factor service availability in these products, unreliability or service disruption could damage our standing in the market Software-as-a-Service (SaaS) solutions, reducing high development spend, in particular in areas that are commonly recognised as commodity. This in turn frees up cash to invest in more valuable and bespoke customer products • 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 based in Chennai, which includes product specialists • Hiring product specialists at both senior management and product owner level • Success of divisional investment such as the 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 • Increased scale of larger divisions reduces the impact of specific investments Risk averse Prior years (relative position) 2019: Risk averse (new risk) Post-mitigation risk trend Unchanged Description of risk change Transforming the Group to a 3.0 business remains a key strategic priority. The actions taken over the past year and ongoing transformation plans means that this risk is unchanged Euromoney Institutional Investor PLC Annual Report and Accounts 2020 51 Strategic Report Risk management continued Description Mitigation Risk appetite Link to strategic pillars Risk 8: Inadequate talent management process of hiring and/or retaining critical roles lead to inability to execute strategy Risk averse Prior years (relative position) 2019: Risk averse 2018: Risk averse 2017: Risk averse Post-mitigation risk trend Unchanged Description of risk change The Group remains committed to hiring and retaining key staff in order to implement its strategy. Over the past 12 months, the Group has invested in training, employee forums, diversity and inclusion initiatives, and town halls to improve skills and staff engagement • The covid-19 crisis has created significant uncertainty for employees, in particular in managing virtual working with home responsibilities. Supporting employees with this is important to reduce retention risk and to attract new employees • The importance of providing an inclusive culture to attract and retain diverse talent remains critical • The economic challenges of covid-19 led to the deferral of our 2020 pay review and although the jobs market is depressed it is important to continue to match compensation to the market to avoid retention issues in 2021 • As the Group continues to move towards becoming a B2B 3.0 information services business, the skills required within the Group will change • An inability to recruit, retain and train for critical roles will adversely impact our ability to deliver the strategy successfully • Competitors may poach key talent which would provide them with a competitive advantage and means that the Group loses institutional knowledge from its businesses • 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 • Potential loss of key personnel or institutional knowledge as a result of the restructuring • General business, societal and work environment along with changes in Group organisation and staff levels impact well- being and morale of staff, which adversely affects productivity and performance • To support virtual working we have developed much more flexible working arrangements for our employees. In addition to our formal flexible working policy we have encouraged managers to show day-to-day flexibility to allow employers to balance managing their home responsibilities, managing their wellness and managing their work • Training has been provided on a range of tactics to support virtual working including how to manage virtual teams and how to manage stress • Covid-19 has led to unprecedented collaboration across the business through formal structures and ad hoc opportunities • Careful analysis of role retention was conducted as part of the Group’s restructuring • Launched a global Inclusion & Diversity Council, together with running a global inclusion week. These actions have engaged employees more globally than in previous years, particularly in Asia • We continue to benchmark and review remuneration packages • Core training solutions are available, and we are investing in a common online training platform for 2021 to provide more consistently available development opportunities for all our employees • Programme to review future working practices given the fundamental shift we have seen with covid-19 • Maintaining the Group’s reputation for an entrepreneurial approach, making it an attractive place to work • The large number of staff and roles in each segment mitigates the impact of departures of critical staff • Contractual notice periods are designed to manage the risk of critical staff leaving on short notice • Implementing actions resulting from culture surveys and other sources of employee sentiment 52 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Description Mitigation Risk appetite Risk 9: Uncertain tax liabilities lead to material cash outflows Link to strategic pillars S t r a t e g i c R e p o r t • The Group is a multinational group with tax affairs in many complex geographical locations. Tax legislation is not always clear cut and often requires judgement and interpretation which may be challenged by tax authorities • Disputes with tax authorities could lead to unexpected tax costs and tax litigation which could take many years to resolve • Tax strategy is to take a low risk approach to the management of tax. This is signed off by the Board and communicated to all individuals who have a responsibility for tax • Increased engagement with tax authorities, including quarterly meetings with HMRC. Open and transparent communication with local tax authorities • Third-party advisors are engaged to resolve known issues or where there is sufficient tax technical uncertainty • New transfer pricing policy in place with supporting benchmarking study and documentation to reduce risk of challenge Risk averse Prior years (relative position) 2019: Risk averse 2018 Risk averse 2017: Risk averse Post-mitigation risk trend Unchanged Description of risk change The Group is experienced at managing the tax risks that are inherent in a multinational business. Nonetheless, the Group has a complex structure with an international footprint, subject to an ever-changing tax environment Euromoney Institutional Investor PLC Annual Report and Accounts 2020 53 Strategic Report Risk management continued Description Mitigation Risk appetite Link to strategic pillars Risk 10: Existing and emerging competitor activity creates product and pricing pressures, as well as potentially eroding margins Risk tolerant Prior years (relative position) 2019: Risk tolerant 2018: Risk tolerant 2017: Risk tolerant Post-mitigation risk trend Unchanged Description of risk change The Group ensures it invests in high-quality products for its customers, as well as implementing the 3.0 strategy to embed our products into our client’s workflows and create long-term business relationships • Although the Company has no single • Our 3.0 strategy seeks to embed our competitor competing in all the markets in which the Group operates, every business within the Group has at least one strong competitor • As well as taking market share or putting pressure on pricing, competitors can also seek to recruit key staff. There is also the additional risk of new entrants into the market offering the same or similar services to our Group’s businesses, but with aggressive pricing, impacting margins products and services in clients’ workflow. This creates greater value for the client. The more tightly the products are embedded, the less likely the client is to move to a competitor • Divisional senior teams regularly discuss competitor activity and it is also covered in regular reviews between the CEO and CFO and the divisional leadership, particularly in respect to its impact on financial performance • We have improved the sophistication of how we price our products and services in our most important sectors, and the analysis that has underpinned that has included scrutiny of perceived value of our products relative to competitors • In most of our subscription businesses, account cancellations are analysed including identifying where a competitor has won the account and these trends are monitored • Company-wide sales training includes handling competitive pitches; authority to discount is tightly controlled; and businesses have gross margin targets • Marketing materials and sales collateral highlight the benefits of our solutions over other providers • Where appropriate and available, we maintain a list of competitive products and services, and periodically review to understand where we have threats and opportunities and update product and sales and marketing plans accordingly • We develop and release new products and features to keep our products functionally competitive • All staff are regularly made aware of our policies to prevent illegal anti- competitive behaviour • Talent retention approaches are covered in the separate people risk 54 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Description Mitigation Risk appetite Link to strategic pillars Risk 11: Support systems implementations and obsolescence do not meet business needs, resulting in inefficiencies and increased cost S t r a t e g i c R e p o r t • Under-investment in, or inadequate • Implementation of Global Finance project management of new support or back-office systems could result in business process inefficiencies, increased cost, lower productivity and less cohesion in controls operations • Any systems obsolescence could result in a removal of updates or maintenance by the provider, creating additional operational or security risks transformation programme continues; rolling out NetSuite (SaaS solution) across the Euromoney Group • Rolling out a new SaaS-based Event Management system (Cvent) across all events businesses • Operations Committee formed to identify opportunities to consolidate and make more efficient business processes • Looking at ways to improve HR employee data management across the Group (eg People HR project for FPS) • Divisional technology programmes enabling more modern capabilities (eg Content Authoring for publishing) Risk averse Prior years (relative position) This is a new risk Post-mitigation risk trend Unchanged Description of risk change Ensuring that support systems are implemented in an efficient and timely basis is key to delivering a successful internal operating model and ensuring that internal controls operate effectively Risk 12: Exposure to USD exchange rate leads to unexpected swing in reported results • 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 • Sensitivity analysis is performed regularly to assess the impact of currency risk • 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 the following 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 • Exposures are well communicated in the Annual Report and in investor presentations meaning our shareholders are aware of the USD exposures when investing in Euromoney • Natural hedging where possible Risk tolerant Prior years (relative position) 2019: Risk tolerant 2018: Risk tolerant 2017: Risk tolerant Post-mitigation risk trend Unchanged Description of risk change The Group is experienced in managing risks related to its exposure to the US dollar, but recognises that domestic political volatility in the short term could increase the risk Euromoney Institutional Investor PLC Annual Report and Accounts 2020 55 Strategic Report Risk management continued Description Mitigation Risk appetite Link to strategic pillars Risk 13: Changing customer needs, new technology or disruptive new entrants into the market cause structural changes in markets reducing the value delivered by our products and services • Our 3.0 strategy is designed to evaluate structural risks and opportunities and respond to them • We hold regular CEO-led reviews across all divisions including discussion around structural change • We encourage product development based on market need rather than Euromoney capability, and aim to foster an entrepreneurial approach to stay aligned with customers’ emerging requirements • Effective management reporting with regular forecast reviews means the financial impact of disruptive change can be spotted early • The range of our business spreads the risk to some degree • Our commitment to active portfolio management allows the Group to sell structurally challenged businesses and to buy structurally strong ones • The Risk Committee regularly reviews each division, who present their key risks to the Committee for debate and challenge Risk tolerant Prior years (relative position) 2019: Risk tolerant 2018: Risk tolerant 2017: Risk tolerant Post-mitigation risk trend Unchanged Description of risk change As an entrepreneurial business, the Group is experienced at managing this risk, with the divisions investing in their products and technologies to mitigate the challenges • As well as the risk of the Group’s results being affected by the ups and downs of the business cycle, we also have the risk of structural changes to our markets. In these situations, revenue can decline and never rebound because of permanent changes to customer needs or demographics or the introduction of disruptive technology. In addition, new competitors sometimes give away, or sell at a low price, content or services similar to that which we sell • Some competitors have a capital structure and investors such that they never have to make a profit, or can sustain large losses for many years, allowing them to invest massively in technology or on marketing and promotion including giving away their product to build market share • Government policy or new regulations, particularly in financial services, but in other markets too, can permanently disrupt markets. For example, governments can mandate that information that we collect from a market and then sell is made public by market participants for free. Although this is often a source of opportunity, it can also undermine our business or business model • Typically, acquiring businesses who use disruptive techniques can be prohibitively expensive for us because they are attractive to many possible buyers and so sell for very high prices. Typically, they have low margins or are loss-making, so that they do not generate the financial returns we require from our acquisitions 56 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Viability statement In accordance with the 2018 UK Corporate Governance Code (the Code), the Directors have assessed the viability of the Group and have selected a period of three years to 30 September 2023 for the assessment. 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. While the Board has no reason to believe that the Group will not be viable over a longer period, it has determined that three years is an appropriate period. The assessment of viability considered the Group’s operating profit, revenue, cash flows, dividend cover and other key financial ratios over the three-year period. In making their assessment, the Board carried out a comprehensive exercise of financial modelling and stress-tested these metrics with various scenarios based on the principal risks identified in the Group’s annual risk assessment process as set out in the Strategic Report. The scenarios modelled took into account the Group’s current position, the Group’s experience of managing adverse conditions in the past and in recent months, as well as the potential impact of a number of severe yet plausible scenarios based on the principal risks. 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 viability statement, the Directors have applied the following key assumptions from the related principal risks in preparing the scenarios: Scenario 1. 2. 3. 4. No physical events occurring during 2021 and one-off event cancellation costs as a result of slow economic recovery or global recession following the ongoing impact of the covid-19 pandemic (Principal Risk: 1) The turnaround of the Asset Management segment is slower than expected, resulting in a reduction in clients’ research spend and customer behaviour (Principal Risk: 2) A one-off payment to a regulatory body (Principal Risks: 3, 6) Economic and geopolitical uncertainty could have a significant impact on foreign exchange movements, adversely impacting the financial results. Examples include Brexit; USA/China trade relations; changes in key political relationships; explicit trade protectionism; differing tax or regulatory regimes; potential for conflict or broader political issues; and heightened political tensions (Principal Risk: 5) 5. Existing and emerging competitor activity creates product and pricing pressures, as well as potentially eroding margin including reduced Book of Business (BoB) growth in Pricing and a worsening economic impact affecting subscription renewal rates (Principal Risk: 10) The Directors have also modelled an extreme scenario downside that combines scenarios 1, 2 and 3 (those deemed to have a higher probability of occurring, although unlikely to all occur) to assess the viability of the Group. This extreme scenario includes the following assumptions: no physical events in 2021, a fall of 10% in non-events revenue in 2021 versus the plan and a fall of 10% in all revenues in 2022 and 2023 versus the plan. The Group’s net cash position provides a strong foundation on which to model this extreme downside scenario. This scenario shows sufficient headroom against the Group’s banking covenants before management taking any mitigating actions to reduce the impact on the financial results. It demonstrates sufficient resilience to these adverse events mainly due to the Group’s robust capital position and strong cash-generative nature. S t r a t e g i c R e p o r t If this type of scenario were to arise, the Group would look to address this through a range of actions. The expense of reward and incentive schemes would decrease because performance thresholds would not be met. The Group could further restructure its cost base, reducing direct costs and indirect costs and reigning back investment to reflect a lower volume of work. The Group could choose to restrict dividends, if necessary. The Group could seek a temporary waiver or permanent renegotiation of the Group’s financial covenants, make selective disposals of businesses within the portfolio or raise additional debt or equity capital. 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 proven ability of the Group to cut costs quickly, that funding facilities will continue to be available and that the facility that expires in December 2022 will be renewed on similar terms, the ability to raise further funds if required, and the Group’s ability to restrict dividends, if necessary. 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 to 30 September 2023. The Strategic Report was approved by the Board of Directors on 18 November 2020 and signed on its behalf by Andrew Rashbass Chief Executive Officer 18 November 2020 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 57 Governance Board of Directors Leslie Van de Walle Chairman of the Board Appointed to the Board March 2019 N R Andrew Rashbass Chief Executive Officer Appointed to the Board October 2015 Wendy Pallot Chief Financial Officer Appointed to the Board August 2018 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 joined Euromoney in 2018. Wendy has 19 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 also a Governor of the Central School of Ballet. She qualified as a Chartered Accountant with Coopers & Lybrand. Leslie Van de Walle is a Non-Executive Director of HSBC UK Bank plc. He was previously Chairman of Robert Walters plc and SIG plc, as well as Deputy Chairman and a Non-Executive Director and Chair of the Nominations Committee at Crest Nicholson Holdings plc and senior independent Director and Chair of the Remuneration Committee of DCC 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. Key A Member of the Audit & Risk Committee N Member of the Nominations Committee R Member of the Remuneration Committee Committee Chair 58 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Jan Babiak Senior Independent Director Appointed to the Board December 2017 N R Colin Day Independent Non-Executive Director Appointed to the Board March 2018 A N Imogen Joss Independent Non-Executive Director Appointed to the Board November 2017 N R 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). Colin Day has significant experience in senior roles. Colin is Chairman of Premier Foods plc. He 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’s roles in his executive career included serving as 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 and DEFRA, where he chairs the Audit Committees and at Meggitt is a member of the Nominations and Remuneration Committees. 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. Imogen holds Non-Executive Director roles at the International Property Securities Exchange, Grant Thornton and Interswitch Limited, where she also chairs the Remuneration Committees. G o v e r n a n c e Tim Pennington Independent Non-Executive Director Appointed to the Board September 2019 A R Lorna Tilbian Independent Non-Executive Director Appointed to the Board January 2018 A 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 companies 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. Lorna Tilbian is an experienced media analyst and banker having served as Head of the Media Sector at Numis Corporation Plc and as a main Board Director for over 10 years. Lorna is the Chairman of Dowgate Capital and sits on the advisory board of Technation’s Future Fifty Programme, having previously served as a Cabinet Ambassador for Creative Britain for the Department for Culture, Media and Sport. She is a Non-Executive Director at Rightmove plc, ProVen VCT plc and Finsbury Growth & Income Trust plc and has previously served as a Non- Executive Director at M&C Saatchi plc and Jupiter UK Growth Trust plc. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 59 Governance Corporate Governance Report The role of the Board is one of both support and constructive challenge and that can only happen with meaningful engagement, as we are able to have at Euromoney. Our Board has recognised the pressure which executives and senior management face as a result of needing to balance the requirements of each of our stakeholders – including investors, employees, business partners and of course customers – all facing their own professional and personal challenges as the result of the crisis. I would like to thank our Directors for the support they have provided to me and to management during this time. Following a number of changes to the Board and Committee membership in recent years, the stability we have enjoyed this year has been important in the face of the macro instability we are facing. Tristan Hillgarth was kind enough to provide us with several months’ notice of his intention to step down at the 2020 AGM allowing us to plan for his departure. I speak on behalf of the whole Board in thanking Tristan for his eight years of service as a Non-Executive Director of the Company. Other than Tristan leaving us, the only change this year has been a swapping of Committee seats between Jan Babiak and Lorna Tilbian, with Lorna joining the Audit & Risk Committee while Jan moved to the Remuneration Committee. Notwithstanding the more challenged operating environment, the Board and its Committees have addressed a range of complex issues during the year: the decision to retain the Group’s Asset Management businesses; reviewing the Group’s response to the pandemic; challenging and testing the strategy at our annual away day (held remotely, of course); and managing the Group’s capital effectively. These and other issues have required difficult decisions and the strong governance framework we have in place has helped us reach the right conclusions despite the inability to meet physically for our discussions. Additionally, the Board has reviewed, approved or updated a considerable number of the Group’s policies to further strengthen its governance frameworks. My own positive perspective on the Board’s effectiveness during this challenging year was borne out by the external evaluation we undertook in accordance with the Code. The key findings from Lintstock’s review have helped to focus the Board’s priorities for the coming year as discussed on page 05. We look forward to implementing Lintstock’s recommendations and further improving the Board’s effectiveness and therefore the Group’s governance framework over the coming year. While I am pleased with the Board’s response to the pandemic and the strong governance oversight it has shown, the job is far from complete in this area. There are many more difficult months and difficult decisions ahead. At the time of writing, there are many unknowns at a macro level: for example, when a vaccine might be available; when the pandemic might be under control; and how the global economy will perform. These all lead to significant uncertainty for our business and all of its stakeholders. We are under no illusions that there is a challenging year ahead and I assure shareholders that the Board will continue to focus on providing effective stewardship and oversight, in order to support Andrew, Wendy and the senior management team as they continue to navigate the business through these very choppy waters. Dear shareholders As with most sections of this report, we must start with covid-19. Its impact on the Group is well-documented elsewhere – its impact on our results, our operations, our staff and our management of risk. It has also impacted the way in which our Board needed to operate. The pandemic has created an environment which, on the face of it, means that it is more important, but also more challenging, for boards to be able to exercise effective governance oversight. In some ways, the crisis provides a real life case study of how boards need to think about their ‘section 172 duties’, by providing stewardship of the Company which takes into account the needs of all stakeholders during a period when the business is under stress. Our Directors have risen to the challenge, and did so with urgency, pragmatism and the right balance of challenge of and support for management. This is not only my view, but it is also reflected in this year’s independent Board evaluation, discussed below. If, as Andrew discusses in his Chief Executive’s review, the pandemic has in some ways been a test for the Group’s strategy, it has also been a test for the effectiveness of its governance. This section of the Annual Report and Accounts provides an overview of our governance arrangements at Euromoney and reports on the key areas of focus for the Board and its Committees during the last 12 months. Notwithstanding the challenges of the last year, and because the Board began assessing its compliance road-map against the 2018 UK Corporate Governance Code (the Code) more than 12 months ago, I am pleased to report that we have a strong compliance story to tell. Our plan to manage the one instance of non-compliance is detailed later in this report. For a number of reasons – for example, the cloud-based technology used by the Group, the willingness of our Non- Executive Directors to adapt quickly and the support of our Company Secretariat team in running virtual meetings – our Board and Committee meetings have been no less effective than before the crisis. While we’d all prefer to be meeting in person and look forward to when that can resume, I am confident that the regular engagement our Board has had with management throughout this period means that our governance oversight has not suffered. 60 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Leslie Van de Walle Chairman 18 November 2020 Approach to 2018 UK Corporate Governance Code compliance This Corporate Governance Report explains the Board’s approach to governance in the context of the main principles of the Code. The Code’s key themes are: • Board Leadership and Company Purpose which are on pages 64 to 65. • Division of Responsibilities which are on pages 62 to 63. • Composition, Succession and Evaluation: the Nominations Committee Report is set out on pages 74 and 75. • Audit, Risk and Internal Control: the Audit & Risk Committee Report is set out on pages 68 to 73. • Remuneration is covered in the Directors’ Remuneration Report on pages 76 to 97. Leadership: Board composition and individual roles The Board comprises a Non-Executive Chairman, two Executive Directors, and six additional independent Non-Executive Directors. One independent Non-Executive Director is appointed as the Senior Independent Director. The Board has determined that all Non-Executive Directors are independent, with the Chairman considered independent on appointment. Analysis of the composition of the Board can be found on page 58 to 59. There are clear divisions of responsibility within the Board such that no one individual has unfettered powers of decision. The Board reviews and approves a statement on the division of responsibilities between the Chairman, Chief Executive Officer and Senior Independent Director on an annual basis. The Chairman, Leslie Van de Walle, and the Chief Executive Officer, Andrew Rashbass, have a strong working relationship and rapport. There are 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. A summary of the Board members’ key responsibilities is set out in the table below: G o v e r n a n c e Executive Directors Responsibilities Chief Executive Officer Andrew Rashbass Strategy and Group performance Chief Financial Officer Wendy Pallot Group financial performance and risk management Non-Executive Directors Chairman Leslie Van de Walle Board governance, performance and shareholder engagement Non-Executive Directors Senior Independent Director Jan Babiak Support the Chairman as a sounding board Act as intermediary for other Directors if required Chair meetings if the Chairman is absent Available to shareholders to resolve issues outside of the normal engagement process With the Non-Executive Directors, assess the performance of the Chairman If necessary, lead the appointment process for a new Chairman Other Independent Non- Executive Directors Colin Day Imogen Joss Tim Pennington Lorna Tilbian 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 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, either meet 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. The number of scheduled Board meetings and the attendance by each Director during the year is shown in the table opposite. Attendance table Board Leslie Van de Walle Andrew Rashbass Wendy Pallot Jan Babiak Colin Day Tristan Hillgarth* Imogen Joss Tim Pennington Lorna Tilbian 6/6 6/6 6/6 6/6 6/6 2/2 6/6 6/6 6/6 * Stepped down during the year. Outside of the scheduled meetings of the Board, certain ad hoc meetings took place to consider urgent matters including the evolving impact of covid-19. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 61 Governance Governance Corporate Governance Report continued Leadership and effectiveness Role of the Board and its Committees Board Committees Board Meets at least every two months and more frequently when required – chaired by Leslie Van de Walle Remit: • Approves and monitors strategy • Identifies, evaluates and manages material risks through an effective and improving controls environment • Reviews financial and commercial performance • Ensures adequate funding Audit & Risk Committee Meets at least three times a year – chaired by Colin Day Remit: • 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. • Reviews all material corporate transactions including See page 68 for more information potential acquisitions • Approves the Group’s purpose, culture and values Nominations Committee • Approves 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. Meets at least three times a year – chaired by Leslie Van de Walle Remit: • 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 inclusion and 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 See page 74 for more information Remuneration Committee Meets at least three times a year – chaired by Imogen Joss Remit: • 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 See page 76 for more information All Non-Executive Directors of the Company are invited to attend meetings of the Audit & Risk and Remuneration Committees. 62 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Management Committees Group Management Board Risk Committee Meets four times a year – chaired by Wendy Pallot Remit: This management committee is a sub-committee of and reports to the Audit & Risk Committee. It oversees the Group’s strategic and operational risk management processes and, in particular: • Reviews the Group’s principal risks, as well as wider risks from the business and monitors developments in relevant legislation and regulation, assessing the impact on the Group • 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, Head of Internal Audit, Director of Risk as well as Chief Financial Officers from each of the divisions. All Non-Executive Directors of the Company are invited to attend the meetings. The Chair of the Audit & Risk Committee regularly attends its meetings. G G o o v v e e r r n n a a n n c c e e Meets as needed and at least monthly – chaired by Andrew Rashbass Remit: The Group Management Board 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 • Monitors financial performance of our segments • Develops the Group’s approach to managing employees and to culture, inclusion and diversity • Takes shared responsibility for the Group’s approach to corporate governance • Ensures that the Group’s best-of-both worlds operating model works effectively The team has met weekly since late March during the covid-19 crisis in order to effectively co-ordinate the Group’s response. As a result, it has considered issues such as staff wellbeing, office closures, pay freezes, salary deferrals, restructuring measures and reorganisation planning. Members: Andrew Rashbass (CEO); Wendy Pallot (CFO); Diane Alfano (CEO & Chairman, Institutional Investor); Bashar Al-Rehany (CEO, Investment Research); Tim Bratton (General Counsel & Company Secretary); Raju Daswani (CEO, Fastmarkets); Jeff Davis (CEO, Financial & Professional Services); Ros Irving (CEO, FPS Events); Nigel Martin (Group HR Director); Andrew Pieri (Chief Information Officer) Tax & Treasury Committee Investment Committee Meets twice a year – chaired by Wendy Pallot Meets whenever required – chaired by Leslie Van de Walle Remit: This management committee is a sub-committee of and reports to the Audit & Risk Committee. It oversees the Group’s tax and treasury arrangements and, in particular: • Monitors control frameworks and ensuring effective planning is in place to reduce financing, treasury and tax risks across the Group • Approves financing, treasury and tax policy and changes Remit: The Committee’s primary purpose is to review requests for approval for investment of between £15m and £50m. 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 the meetings. • Monitors related processes to ensure they are operating effectively Its members are the CEO, CFO, Deputy CFO, General Counsel & Company Secretary and Global Head of Tax & Treasury. All Non-Executive Directors of the Company are invited to attend the meetings. Committee reporting 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. As noted above, the Risk Committee and the Tax & Treasury Committee, which are both management committees and also sub-committees of the Audit & Risk Committee, report to the Audit & Risk Committee. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 63 Governance Corporate Governance Report continued Leadership: Independence The Board has determined that each of the Non-Executive Directors appointed as at 30 September 2020, and all those Non-Executive Directors who will be proposed for re- election at the Annual General Meeting in February 2021, are independent within the meaning of the Code. They were each independent throughout the financial year or from the date of their appointment. Leadership: Effectiveness During the year, the Board engaged with Lintstock to perform an independent evaluation of the effectiveness of the Board and its Committees. The approach taken was for each Director to complete a survey which was followed up by an individual interview. The results were initially discussed with the Chairman and General Counsel & Company Secretary. The Chairman followed-up specific outputs with individual Directors as required. Lintstock presented a summary of their findings to the Board at its November 2020 Board meeting and facilitated a discussion. The majority of the themes scored strongly and the report provided the Board with a recommendation of areas for future focus based on the feedback from the Directors. An action plan was agreed by the Board at the November meeting in order to address the report’s findings. Board activities The key areas of Board focus in 2020 were: Significant strategic developments and transactions During the year the Board met and made a range of strategic decisions. These included approving acquisitions of 3.0 businesses in line with the Group’s strategy and consistent with all three of its strategic pillars. Decisions impacting staff, including protection of jobs during covid-19 and subsequent reorganisation and restructuring, were made through the lens of transforming the Group’s operating model, a strategic pillar. The Board considered and balanced different stakeholder interests. For example, extending the Group’s banking facilities to secure ongoing access to capital for future investment while deciding to take a prudent approach to shareholder distributions and not paying an interim dividend. For example: • Oversaw the Group’s response to the covid-19 pandemic, including relating to staff retention, cost-saving measures, capital allocation, dividend payments, restructuring and reorganisation • Oversaw the strategic review of the Group’s Asset Management businesses and concluded that the Company remains the best owner of all three businesses (Institutional Investor, BCA Research and Ned Davis Research) • Approved the acquisition of Wealth-X in November 2019 • Approved the acquisition of AgriCensus in March 2020 • Approved certain changes to Committee composition in April 2020 • In April 2020, approved the extension of the Group’s committed bank facilities through to December 2022 • In May 2020 approved decision to take a prudent approach to shareholder distributions and agreed not to pay an interim dividend • Reviewed and discussed the Company’s strategy at a virtual off-site in July 2020 • Approved the 2021 budget in September 2020 in the context of the ongoing covid-19 environment Board Timeline November 2019 • CEO Report • CFO Report (year-end matters and disclosures) • Committee reports (Nominations, Remuneration, Audit & Risk) • Company Secretary Report (year- end matters) March 2020 July 2020 • Covid-19 assessment on the Group • CEO Report • Covid-19 approval of crisis arrangements • CFO Report (including trading update) • Company Secretary Report • Covid-19 staff survey results (Disclosure Policy, Modern Slavery Act, Sharesave invitation) • Board Committee updates • Company Secretary Report (Share Dealing Code and UK Corporate Governance Code compliance update) June 2020 • CEO Report September 2020 • CEO Report • Information security strategy overview • CFO Report (including half-year results • CFO Report (results update, future • Corporate Development update and covid-19 related issues) dividend strategy analysis) January 2020 • CEO Report • CFO Report (Q1 trading update) • Corporate Development update (including M&A) • Company Secretary Report • Framework for strategy days • Covid-19 Strategy (including doing • 2021 budget approval business in covid-19 and post covid-19) • Corporate Development update • Salary deferral • Board training on ESG • Brexit planning • Company Secretary Report (division of responsibility, schedule of reserved matters) • Board Committee updates 64 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 G o v e r n a n c e 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 between 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. Internal control and risk management See pages 45 to 56 for the Group’s principal risks and mitigating actions. The Board as a whole is responsible for the oversight of risk and an 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 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. All of the material controls operated throughout the year and additional controls were introduced during the year. During the year, the Risk Committee approved an updated Enterprise Risk Framework, to help our businesses identify, assess, manage and report on risk in a consistent and accessible way. Following the appointment of a Director of Risk, a comprehensive review of our approach to enterprise risk management was undertaken. The updated framework is being rolled out across the Group to ensure consistency of approach and reporting of risk. 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 Risk Committee receives a quarterly report on emerging and existing information security threats and approves remedial actions. 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, continue to operate, and are detailed on page 70. Company purpose In line with the expectations of the 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 undertakes an annual review of the Purpose Statement with a view to evolving its approach to this important Code theme over time. Culture The Company addresses its obligation to assess and monitor culture under the 2018 Code in a number of ways which are linked to and help drive the Company’s strategy and purpose and are in line with the Group’s three strategic pillars. The Board is asked to review culture based on three themes: (1) the experience for the Group’s employees; (2) inclusion and diversity; and (3) a culture of growth. Employee experience is assessed through an annual staff survey (replaced this year with a staff survey on home-working and plans for reopening offices) as well as Town Halls held at both a Group, divisional, functional and local team level. Staff are encouraged to ask questions about what is on their mind and in some forums these are submitted anonymously so that people are not discouraged from asking direct or difficult questions. This year we launched a Global Inclusion & Diversity Council to support the work in this area already underway from employee network groups. The Council will focus on the Group’s strategy towards inclusion and diversity, including measuring progress and embedding inclusion and diversity principles into processes, employee recruitment, development and careers. We ran a half-day session with our senior management team to provide education, encourage difficult conversations and commit to actions with a view to improving the representation of Black and other ethnic minority employees at Euromoney. We also ran a Global Inclusion Week for all staff. We promote a growth culture by setting the goal of delivering the capabilities we need as a business in a way which matches how people learn (and in a way which they want to learn) and which is sustainable. We do this through using common platforms, programmes and approaches. The Board reviews and provides guidance on the approach suggested by management as well as reviewing specific initiatives throughout the year. Monitoring and oversight Fair, balanced and understandable The Board has responsibility for preparing and making certain confirmations concerning the 2020 Annual Report and Accounts and delegates aspects of this responsibility to the Audit & Risk Committee. In accordance with section 4 of the Code, the Board confirms, in line with the recommendation of the Audit & Risk Committee, that taken as a whole, the 2020 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. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 65 Governance Corporate Governance Report continued The Board of Directors Entity level controls 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 62. 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 • Approves proposals for investments and capital expenditure beyond specified limits Speak-up arrangements The Group operates a 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 a number of submissions made to the hotline which were duly investigated and reported to the Audit & Risk Committee and Executive Directors. Committee oversight Audit & Risk Committee The work of the Audit & Risk Committee is discussed in more detail on pages 68 to 73 of this Report. Risk Committee The Risk Committee is a sub-committee of the Audit & Risk Committee. 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 63. 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. 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 senior management team follows up these submissions as appropriate. The Director of Risk has established a cross-functional/ divisional risk working group which she chairs. Its members include functional and risk professionals from across the Group. The working group meets monthly to discuss Group and divisional initiatives, as well as to share best practice. The Group Management Board customarily meets monthly (which has been increased to weekly during the pandemic) to discuss strategic, operational and financial issues. The Tax & Treasury Committee oversees the Group’s tax, financing and foreign exchange positions. 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 continued to strengthen its Internal Audit function, and with the approval of the Audit & Risk Committee, the function has: (1) increased its headcount with the recruitment of two Internal Audit professionals; (2) developed a risk-based Internal Audit Plan for the 2021 financial year, and; (3) appointed an External Co-Source Assurance Partner who is tasked to review bespoke or specialist areas of risk. 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. 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. 66 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Relations with shareholders The Chairman continues to prioritise effective dialogue with significant shareholders and stakeholders during the year. Separately, the CEO and CFO, and on occasion the Chairman, meet with shareholders to discuss the annual and half-year results, to highlight significant developments, 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 February 2020 the Group co-ordinated a Financial & Professional Services teach-in. Jeff Davis, CEO of the division and the division’s senior team, provided an overview of the division’s areas of focus and key pillars of activity. The event was well attended by investors and analysts. All shareholders 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. At the date of this report, the Company is planning to hold its 2021 AGM remotely as permitted by legislation. Shareholders will be notified in the usual way. The Group’s CEO and CFO report to the Board on matters raised by shareholders and analysts to ensure members of the Board develop an understanding of investors’ and potential investors’ views of the Company. All Board members also regularly receive analyst reports about the Company to provide additional insight into how the market perceives the Company. Viability statement See page 57 for the viability statement and 99 for the going concern statement. Statement of compliance The composition of the Board and its Committees are fully compliant with the Code as at 30 September 2020. 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 around the world. Euromoney is recognised as an employer committed to inclusion and 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 65 and the Group’s inclusion and diversity commitments are published on its website. 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 Employee Forum, staff wellbeing through externally designed support programmes, staff safety in the context of geopolitical risks and covid-19, and supplier assessment and validation. These aspects are discussed in more detail in the Sustainability and stakeholders section on pages 32 to 39. Compliance with the 2018 UK Corporate Governance Code The Company was compliant with all provisions of the Code as at 30 September 2020, save as follows. Pursuant to section 1(4) of the Code, the Company had intended to consult with shareholders within six months of the 2020 AGM when more than 20% of votes (22.92%) were cast against the re-election of Lorna Tilbian to the Company’s Board. However, the onset of the covid-19 pandemic and the UK government’s implementation of various restrictions from that period until now, has made the Board’s ability to plan and implement a path for meaningful engagement with shareholders on this issue more challenging. It is understood from prior engagement that the dissent was caused by questions as to Lorna Tilbian’s independence given her past directorship with Numis, the Company’s broker. At the time of her appointment to the Board in January 2018, Numis was the corporate broker to the Company’s then significant shareholder, Daily Mail & General Trust plc. As noted in previous AGM notices, the Board considered Lorna Tilbian to meet the Code’s definition of independence when appointed, as upon her appointment to the Company’s Board she ceased to be employed by and has no financial interest in Numis. In addition, Lorna’s role at Numis required her to manage the relationship with at least 20 other clients in the media sector. Numis’ subsequent appointment by the Company as a corporate broker occurred in 2019. This issue was specifically considered by the Nominations Committee during the year. The Committee has also taken the shareholder vote into account when considering Committee composition during the course of the year, including Lorna stepping down from the Company’s Remuneration Committee. Nonetheless, the Company is committed to consulting with shareholders and plans to do so before 31 March 2021. The Company intends to post an update on the views received in that consultation on the Company’s website shortly following its completion. The Company is otherwise compliant with all other areas of the Code. G o v e r n a n c e Tim Bratton General Counsel & Company Secretary Euromoney Institutional Investor PLC 18 November 2020 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 67 Governance Audit & Risk Committee Report As well as its core responsibilities, the Committee also spent time this year monitoring the Group’s reporting requirements resulting from the covid-19 pandemic as well as continuing to oversee progress of the Global Finance Transformation Programme. Colin Day Chair of the Audit & Risk Committee Committee Membership 4/4 1/1 1/1 4/4 3/3 The Committee consists of three Non-Executive Directors. The experience of each member of the Committee is summarised on page 59 and the Committee meeting attendance is detailed on this page. I can confirm that I bring recent and relevant financial experience to the Committee as a Fellow of the Association of Chartered Certified Accountants, having previously held a number of FTSE 100 and 250 listed company roles as either Group CFO or CEO and I am Chair of the Audit Committee for two other organisations. During the year there were a number of changes to the Committee membership. The Committee would like to thank Tristan Hillgarth for his service over the past eight years. In addition, the Committee would also like to thank Jan Babiak, who has been an independent Non-Executive Director of Euromoney since December 2017 and who joined the Committee on an interim basis from 1 May 2019 until 30 November 2019. As of 30 April 2020 the Board welcomed Lorna Tilbian to the Committee, who has been an independent Non-Executive Director of Euromoney since January 2018. The Board considers each member of the Committee to be independent within the definition of the 2018 UK Corporate Governance Code. They bring a broad and diverse range of commercial 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’s requirements. By invitation, the Chair of the Board, CEO, CFO, Deputy CFO, Global Head of Tax & Treasury, General Counsel & Company Secretary, Director of Risk, Head of Internal Audit and representatives from the external auditor attend the Committee meetings. A separate session is scheduled at each meeting for the Committee to meet with the Head of Internal Audit and the external auditor without the Executive Directors present. Outside of the Audit & Risk Committee meetings I attend both the Tax & Treasury and Risk Committees, and also hold routine meetings with both Internal and External Audit. This enables me to deepen my understanding of the key issues and ensures that sufficient time is devoted to them at each meeting. Attendance table Audit & Risk Committee Colin Day Jan Babiak* Tristan Hillgarth* Tim Pennington Lorna Tilbian * Stepped down during the year. Chair’s Introduction As Chair of the Audit & Risk Committee, I present the Audit & Risk Committee Report for the year ended 30 September 2020, which provides details of the activities carried out by the Committee during the year. The Committee met four times during the year. In addition to its core responsibilities and its continued role of providing oversight to the Global Finance Transformation Programme it was also heavily engaged in monitoring the financial reporting requirements resulting from the strategic review of the Asset Management businesses, together with the impacts of the covid-19 pandemic. To ensure the Committee continued to be adequately appraised of relevant issues, the following enhancements were undertaken: i) the Head of Internal Audit was granted authority to increase the in-house audit resource; ii) the Committee oversaw the appointment of an Internal Audit Co-source Assurance Partner to ensure the function had the necessary capability to review complex or bespoke areas of risk; and iii) the Group appointed an experienced Director of Risk who has strengthened the Enterprise Risk Management Framework and the reporting to the Committee. The Committee’s principal 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 and the adequacy of the control environment. Throughout the year the Committee has received timely and relevant information from management and both internal and external audit 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. 68 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Committee Timeline November 2019 • Received reports from both internal and • Reviewed and approved a external auditors • Reviewed an update on IR35 compliance • Reviewed the 2019 Annual Report to • Received a Global Finance Transformation Programme update management paper on Group Statutory Audit exemptions • Received a report from Internal Audit and approved the Internal Audit Charter ensure it met the requirement to be fair, balanced and understandable • Considered a report on the principal risks together with a status report on the effectiveness of internal controls mitigating those risks that covered 2020 • Received an update on significant reporting issues and judgements from management • Considered a report on IR35 compliance • Received reports from both internal and external auditors • Discussed a Group-wide year-end controls assessment • Considered the results of the external auditor effectiveness review • Received a report on expenses of all Board members to ensure compliance with Company policy • Received the annual Committee Governance Compliance Report • Met the external and internal auditors without management present • Received an external auditor Effectiveness Feedback Assessment and discussed the results • Received a Speak-up update • Received a report from the Risk Committee • Discussed a Group-wide half-year • Met the external and internal auditors controls assessment without management present • Approved a revised Internal Audit Plan that considered a changed risk profile as a result of covid-19 and remote working • Approved the appointment of an Internal Co-Source Assurance Partner to provide subject matter expertise for more complex reviews • Reviewed and approved an update policy on Non-Audit Services & Joint Business Relationships in line with the new Ethical Standard • Received a Speak-up update • Received reports from both the Risk Committee and the Tax & Treasury Committee September 2020 • Received an update on significant reporting issues and judgements from management • Received a pre-year report from the external auditor on execution of the Statutory Audit Plan of activities for 2020 year-end • Received the Internal Audit Report and approved the 2021 Audit Plan • Received a Global Finance Transformation Programme update • Discussed management’s proposals to restructure the Group Finance function • Met the external and internal auditors • Received a Speak-up update G G o o v v e e r r n n a a n n c c e e without management present June 2020 July 2020 • Reviewed the half-year report and results announcement • Received an update on significant reporting issues and judgements from management • Received an update on significant reporting issues and judgements from management • Discussed the Statutory Audit Plan for forthcoming 2020 year-end • Received reports from both the Risk Committee and the Tax & Treasury Committee • Met the external and internal auditors without management present • Reviewing the adequacy and effectiveness of the Group’s risk management systems and mitigation programmes; • Reviewing the process undertaken and the stress-testing performed to support the Group’s Viability Statement and Going Concern Statement; and • Reviewing the adequacy of the Group’s Speak-up arrangements and procedures for detecting fraud. Colin Day Chair of the Audit & Risk Committee 18 November 2020 I would like to thank the members of the Committee, the management team and the external and internal audit teams for their commitment and contributions to the work of the Committee over the past year. Roles and responsibilities The Committee is appointed by the Board. The Committee’s detailed responsibilities are set out in its Terms of Reference. These are reviewed at least annually. The Committee is responsible for: • Monitoring the integrity of the Financial Statements and announcements and reviewing significant financial reporting requirements, issues and judgements; • Ensuring the Annual Report and Accounts are fair, balanced and understandable; • 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, quality of the audit, assessment of independence and monitoring of non-audit services; Euromoney Institutional Investor PLC Annual Report and Accounts 2020 69 Governance Audit & Risk Committee Report continued Key focus areas during 2020 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 Risk Management The Committee received regular updates from management on the areas considered to have significant financial judgement applied. These are set out on pages 125 and 126. 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 Risk Committee and the effectiveness of controls to mitigate such risks. During the year, with the appointment of a new Director of Risk, an enhanced Enterprise Risk Management Framework was reviewed and approved for implementation. Covid-19 Response From the start of 2020 the Committee has received regular updates from management and the internal and external auditors on the impacts of the covid-19 pandemic covering not only financial reporting but also on the execution of financial processes and controls to ensure their continued application. Both the internal and external auditors have additionally detailed to the Committee their approach to maintaining auditing standards whilst operating in a remote working environment, to ensure that the Committee continues to receive robust sources of assurance. Global Finance Transformation Programme Internal Audit The Committee received regular updates from management on the implementation of the Global Finance Transformation Programme, which includes deployment of a solution to improve quality and efficiency of financial reporting and to enhance the control environment. This year the Committee focused particularly on the shortfalls in the NetSuite bank reconciliation module, which lead to deficiencies in the bank reconciliation process, and the management actions taken during the year, which have mitigated these shortfalls and improved control strength. Following a review of the Internal Audit function structure in 2019, 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, further authority was granted to expand the in-house headcount. In addition, during 2020 the Committee provided oversight for a tender to appoint an Internal Audit Co-Source Assurance Partner. This was to ensure the Internal Audit function has the necessary subject matter expertise capability to perform reviews of complex areas of risk including cyber-security and IT assurance. 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. The General Counsel & Company Secretary investigates speak-up complaints and reports on their outcome to the Committee. There were no failures of material controls identified during the year. In addition, the Committee considers the implications of findings of the external auditor to the Group’s financial controls framework. As issues are reported and discussed, management are challenged as to what actions they are taking to improve the control framework and minimise the likelihood of their reoccurrence. 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. There was no interaction with the Financial Reporting Council’s (FRC) Corporate Reporting Team during the year. For 2021 the Committee will continue to oversee a programme to enhance the Group’s internal controls and risk management frameworks and monitor the continued implementation of the Global Finance Transformation Programme. In addition, the Committee has requested management to provide regular updates to the Committee on the ongoing programme to refine and optimise the Group entity structure. Main activities The Committee met three times in 2020 after publication of the 2019 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 the key Financial Statements and financial announcements of the Group. At the request of the Board, the Committee considered whether the 2020 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 2020 results were 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 Report on Corporate Governance on page 60. 70 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Internal Audit External Audit objectivity and independence 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 & Risk Committee and the Group CFO. The Committee discussed and approved the 2020 audit plan to be executed by the Internal Audit team at the start of the year ensuring its alignment with the Group’s strategic priorities, risk management outputs and routine compliance control and monitoring requirements. During the year, the Committee oversaw the tender of a new Internal Audit Co-Source Assurance Partner. Under supervision of the Head of Internal Audit, the Co- Source Assurance Partner is utilised to ensure complex or bespoke areas of risk are adequately appraised. During 2020 this included a review of the Enterprise Risk Management Framework together with a number of cyber and information security reviews. 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 management 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. The audit plan remains flexible and any changes to the agreed audit plan are presented to and agreed by the Committee. In March 2020, the Head of Internal Audit proposed a number of changes to the audit plan in response to the covid-19 pandemic to ensure adequate assurance was provided to cover both changes in key processes due to remote working and potential areas of external fraud risk; these were duly approved by the Committee. The effectiveness of the Internal Audit function is reviewed on an annual basis and 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. A new lead audit partner, Jason Burkitt, was appointed in 2020, after shadowing for the 2019 audit, due to his predecessor having been Euromoney’s audit partner for five years. This is in accordance with the FRC’s auditing and ethical standards. The external audit contract will be put out to tender at least every ten years and the Committee considers that it would be appropriate to conduct an external audit tender by no later than 2024 for the 2025 year end. 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. The Committee has undertaken 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 personnel across the Group. Taking into account the nature of the feedback received from the business and the Committee’s own experiences of working with PwC during the year, the Committee has satisfied itself that the external auditor is providing an effective service. G o v e r n a n c e 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 and approved a revised Non-Audit Services Policy to ensure compliance with the FRC’s Revised Ethical Standard (2019) that became effective from 15 March 2020. 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 identifies what services the external auditors can provide to the Company, its subsidiaries and any related entity services. These permitted services are in line with the FRC’s Revised Ethical Standard (2019). Certain non-audit permitted services (as defined by the Standard) cannot exceed 70% of the annual average of the audit fees for the preceding three-year period, calculated both on a Group and UK basis. In addition, any fee for non-audit services of less than £50,000 requires pre-approval by the CFO, and above that requires pre-approval by the Audit & Risk Committee or a sub-committee of any two Committee members. Once above 50% of the annual limit in any one year, any further services require full Committee pre-approval. The amounts paid to the external auditor were £2.3m (2019: £2.0m) during the year, comprising £1.3m (2019: £1.7m) for audit services and £0.8m (2019: £0.1m) for audit-related assurance services and £0.1m (2019: £0.1m) for other assurance services as set out in note 4 to the Consolidated Financial Statements. The majority of non-audit work undertaken by the Statutory Auditor during the year related to the Strategic Review announced in September 2019. This involved the audit of ‘carve-out’ Financial Statements and was permissible under both the prior and current Ethical Standards. Before approving the engagement the Committee performed a full assessment to ensure no independence concerns arose. In conclusion, and taking into account the appointment of a new external audit partner and 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 On the basis that the audit tender process was undertaken in 2015 and the Committee believes the independence and objectivity of the external auditor and the effectiveness of the audit process are safeguarded and remain strong, it has been recommended to the Board that PwC be reappointed at the 2021 Annual General Meeting. Committee effectiveness The Committee undertook a review of its own performance and effectiveness during 2020. This year the review was facilitated by an external third party in line with the Code, that recommends the annual review is externally facilitated at least once every three years. The Company’s Chairman reviewed the results with the Chair of the Committee, before a wider discussion with other Board and Committee members. The review concluded that the Committee is operating highly effectively with no major issues identified. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 71 Governance Audit & Risk Committee Report continued Financial Statements and significant accounting matters During the year and prior to the publication of the Group’s results for the half year ended 31 March 2020 and the year ended 30 September 2020, the Committee assessed whether suitable accounting policies had been adopted, that management had made appropriate estimates and judgements, and whether disclosures were balanced and fair. The Committee reviewed the main issues noted below and challenged management at various stages during the year and during the preparation and finalisation of the Financial Statements. After reviewing the reports from management challenging the key judgements and estimates and assessing the risks identified, the Committee is satisfied that the Financial Statements appropriately address the critical judgements and key estimates, both in respect of the amounts reported and the disclosures made. The Committee is also satisfied that the significant assumptions used for determining the value of assets and liabilities have been appropriately scrutinised, challenged and are sufficiently robust. The Committee has discussed these issues with the external auditor during the audit planning process and at the finalisation of the year-end audit and is satisfied that its conclusions are in line with those drawn by the external auditor in relation to these issues. Issue Review Fair, balanced and understandable At the request of the Board, the Committee has considered whether, in its opinion, the 2020 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 2020 Annual Report and Accounts is fair, balanced and understandable. Presentation of adjusted and underlying performance Presentation of adjusted and underlying performance, including identification and treatment of exceptional and adjusting items. Management considered the latest European Securities and Markets Authority (ESMA) and FRC guidelines on alternative performance measures to ensure that the Annual Report and Accounts had been prepared in line with best practice. The Committee reviewed the 2020 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 has clear labelling, transparent reconciliations and appropriate explanations. 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. The Group retired significant tax risks in the year relating to open matters, including resolving its litigation with the Canadian Revenue Agency following their offer to consent to judgement resulting in no liability for the Group and reached two successful settlements with HMRC relating to VAT and payroll taxes. In addition, the Group continues to provide for open tax matters in the UK and discloses a contingent liability in respect of the European Commission’s decision against the UK Government relating to the UK Controlled Foreign Company partial exemption being illegal State Aid. 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 assessed the position taken with regards to tax judgements and estimates around the carrying value of tax provisions and uncertainties, in particular the potential impact on the Group of the State Aid matter, as well as other direct and indirect tax liabilities and provision releases in the year. The Committee concluded that management’s accounting treatment and disclosures of the tax-related matters in the Annual Report and Accounts, including uncertain tax positions in note 2 and elsewhere in the Financial Statements, were appropriate. The Chairman also attends Tax & Treasury Committee meetings which provides valuable insight into the Group’s tax matters. Equity investment in Zanbato, Inc (Zanbato) The Group holds 12.34% of the shares in Zanbato and judges that it has significant influence on the basis that it has a voting representative on the Board of Directors. The Group has therefore used the equity method to account for the investment as an associate in accordance with IAS 28 ‘Investments in associates and joint ventures’. The Committee has reviewed and challenged management’s assessment to judge whether the investment should be accounted for as an investment or as an associate and has concurred with the accounting treatment and disclosures. 72 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Issue Review Impairment considerations The Group has goodwill and other intangible assets. As part of the normal impairment testing the Group recognised a small impairment charge on its acquired customer relationships. No impairments arose on goodwill or other intangible assets. The Company has an investment in its subsidiary. The Company recognised a partial impairment charge on this investment largely triggered by the reduced cash flow forecasts. Accounting for acquisitions The Group made two new acquisitions during the year and some minor increase in equity holding. There were a number of consequential accounting considerations, including the fair value of goodwill and identification and fair values of other intangible assets. Trade receivables The Group has assessed the carrying value of trade receivables in light of the covid-19 pandemic and the impact on the judgements and assumptions used to determine the expected credit losses. Going concern and future viability The Group has assessed the principal risks, made certain judgements and estimates in relation to the going concern status of the Group and any impact on future viability due to covid-19. Retirement benefit obligations The valuation of the assets and liabilities of the Group’s two defined benefit schemes are based on estimates and assumptions including salary increases, inflation rates, discount rates, the mortality rates and long-term expected returns on the assets of the schemes. Adoption of new accounting standards The Group adopted IFRS 16 ‘Leases’ from 1 October 2019 using the modified retrospective transition method. The Committee has considered the assessments made in relation to the impairment of goodwill, other intangible assets and the Company’s investment in its subsidiary. The Committee discussed the methodology and assumptions used in the model supporting the carrying value and reviewed those businesses and its investment where headroom has decreased. The Committee has focused on, monitoring regularly and constructively challenging, the reasonableness of the assumptions used in impairment calculations by management, particularly in light of the impact of covid-19. The Committee has also understood the sensitivity analysis used by management in its review and disclosure of impairment in both the Group and the Company disclosures. The Committee supports the impairment required. The Committee reviewed the work undertaken for the acquisition of Wealth-X and AgriCensus. The Committee considered the risk that acquisitions are not accounted for correctly in line with IFRS 3 ‘Business combinations’ including the recording of fair value adjustments and the identification and valuation of acquired intangible assets. The Committee reviewed management’s work on the identified intangible assets acquired and assessed the methodology used to calculate 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. Having rigorously challenged management’s assumptions and methodologies, the Committee concluded that the accounting for acquisitions was appropriate. G o v e r n a n c e The Committee has understood and challenged management’s assumptions and assessment of risks used in the determining the recoverability of trade receivables in light of the impact of covid-19. The Committee considered the make-up of the Group’s receivables, reviewed and challenged the assumptions behind the calculation of the expected credit losses, and assessed the adequacy of the bad debt provision and prudence applied in relation to the risks in each division and across the Group. The Committee satisfied itself that the carrying value of trade receivables was appropriate. The Committee has considered the evidence supporting the going concern basis of accounts preparation, the Viability Statement and the risk management (particularly in light of covid-19) and internal control disclosure requirements. The Committee has approved the viability and going concern statements as on pages 57 and 99. The Committee has assessed the assumptions used in determining the pension obligations, particularly given market volatility and concluded that the key assumptions are reasonable. The Committee has reviewed the impact of adopting IFRS 16 ‘Leases’ for the first time and the adequacy of the disclosures. Reviewing the conclusion of the transition process for the adoption of IFRS 16, to confirm that the outcome on the Group’s results and KPIs was in line with that expected, see note 1 of the Consolidated Financial Statements. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 73 Governance Nominations Committee Report The Committee and Board have spent significant time this year considering Executive Director and senior management succession planning. Leslie Van de Walle Chairman Attendance table Nominations Committee Leslie Van de Walle Jan Babiak Colin Day Tristan Hillgarth* Imogen Joss * Stepped down during the year. Chair’s Introduction 3/3 3/3 3/3 2/2 3/3 The Committee has met three times during the year and in addition the Board spent time discussing succession planning in detail. Tristan Hillgarth stepped down from the Board at the 2020 AGM and the Committee is grateful for his service. There were no other changes to the Committee’s composition during the year, following the appointment of Jan Babiak (Senior Independent Director), Colin Day (Chair of the Audit & Risk Committee) and Imogen Joss (Chair of the Remuneration Committee) to the Committee last November. 2020 focus The Committee has spent time this year both considering Board Committee composition and focusing on areas identified in the course of last year’s Board evaluation as requiring an enhanced focus. Succession planning has formed a key part of the Committee’s work. In July, the Board spent time reviewing the current succession planning in place for the CFO and each member of the Group Management Board. This was a worthwhile exercise which identified a mixture of internal candidates and their development needs, as well as external avenues which could be explored, as and when senior managers move on. The Committee has also spent time since the year-end discussing CEO succession planning in detail. I am confident that the range of options we identified would quickly lead us to an effective interim solution, should one be required. The meeting also created a framework within which longer-term succession planning can take place. Last year’s evaluation highlighted a request from the Board to receive formalised training. As a result, the Committee arranged for PwC to facilitate a briefing session in September focused on Environmental, Social and Corporate Governance (ESG), in particular considering the issue from an investor perspective. It was an informative session which triggered a useful discussion about where the Company should further focus in this area. Inclusion and diversity My Chairman’s introduction makes the point that diversity is a wider issue than gender. Andrew and the senior management team have, rightly, started a series of work-streams designed to ensure that not only is there a focus on improved Black, Asian and other ethnic minority representation in the Group, particularly at senior management level, but that steps are being taken which will lead to this being embedded as an approach. Jeff Davis has taken a lead role in this area at Group Management Board level and is the Chair of the Group’s Inclusion & Diversity Council and the executive sponsor of the LGBTQA network group. The Committee will show leadership on this issue and while the formal remit of the Committee encompasses the appointment of Directors, as a Committee we are very much aligned with Andrew, and support the various initiatives which he and the senior management team are working on to improve minority representation in the Group. 74 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 The Company’s primary executive search consultant is Russell Reynolds Associates, which does not have any connection with the Company. I can report to shareholders that the Nominations Committee is working effectively and meeting the requirements of the 2018 Code. External evaluation This year, as required by the Code every three years, Lintstock undertook an external evaluation of the effectiveness of the Board and its Committees. I look forward to continuing to work with the Committee in these areas. Leslie Van de Walle Chairman 18 November 2020 G o v e r n a n c e Committee Timeline November 2019 • Re-election of Directors • Board evaluation feedback January 2020 • Committee composition review • Succession planning April 2020 • Appointment to the Audit & Risk Committee As Chair of the Nominations Committee, I can report that when we next have an opportunity to appoint a Director we will ensure we have a racially and ethnically diverse short-list. Staff engagement The pandemic has disrupted the Board’s usual programme of informal lunches or dinners with a wide range of staff. These usually take place after Board meetings and enable the Directors to meet and engage with staff at different levels of the organisation. This has been a frustration since these events are hugely beneficial for the Board in gaining an understanding of the day-to-day business of the Group and the issues important to staff. While we have continued to engage with senior management through Board and other Committee meetings, I look forward to being able to resume more regular touch-points at all levels of the organisation. I was fortunate prior to the onset of the pandemic to visit our Asian operations where I spent time in our offices in Hong Kong and Singapore. It was helpful for me to hear their local perspectives on the operation of our businesses and I have spent time discussing them with Andrew and other members of the Board and Group Management Board. Governance The Committee has delegated authority from the Board under the Terms of Reference which were reviewed and approved in November 2020. The composition and structure of the Committee meets the requirements of the 2018 Code. Committee composition is currently Leslie Van de Walle (Chairman), Jan Babiak (Senior Independent Director), Colin Day (Chair of the Audit & Risk Committee) and Imogen Joss (Chair of the Remuneration Committee). 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; (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. This includes oversight of each Director’s other commitments and their ability to devote sufficient time to their responsibilities. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 75 Governance Directors’ Remuneration Report We will ensure our remuneration arrangements remain appropriate to support the delivery of the strategy. Imogen Joss Chair of the Remuneration Committee Attendance tables Remuneration Committee Imogen Joss Tim Pennington Lorna Tilbian** Leslie Van de Walle*** Jan Babiak* * Appointed during the year. ** Stepped down during the year. *** The Chairman was independent on appointment. Letter to shareholders from the Remuneration Committee Chair Dear shareholders 5/5 5/5 3/3 5/5 3/3 I am pleased to present the Directors’ Remuneration Report for 2020 which has been prepared by the Remuneration Committee on behalf of the Board. The key remuneration outcomes for the year and plans for the coming year are below. Further details are provided in the Annual Remuneration Report, commencing on page 87. Our Remuneration Policy and the link to long-term performance As in previous years, the Remuneration Policy continues to maintain a strong link to the long-term performance of the business, and we remain assured that the policy has operated as intended. A clear remuneration package aligned to the Euromoney culture consists of basic salary, benefits and pension arrangements. This package continues to be market competitive for Executive Directors and for the wider employee population. 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 and reviewed to ensure there is predictability in the outcomes and management of risk. 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 alignment with shareholders. 76 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Our Performance Share Plan takes the form of awards of 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 also rewards the creation of long-term shareholder value. In addition, to further ensure alignment with shareholders, Non-Executive Directors, Executive Directors and all members of our Group Management Board have personal Euromoney shareholding requirements. For Non-Executive Directors, they are encouraged to build a shareholding 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. 2020 performance and reward outcomes The Group’s financial performance has been severely impacted by covid-19. Consequently, neither of the financial targets, which each have a 37.5% weighing to determine the bonuses for the CEO and CFO, were met. Our adjusted profit before tax for 2020 was £57.4m, representing a 9.4% decline on an underlying basis. This was significantly below our target level of £104.6m for 2020. Underlying revenues decreased by 4%. This was below the target level of 2% for 2020. The remaining 25% of the 2020 annual bonus performance measures relate to individual objectives. Information on how our CEO and CFO performed against their individual objectives is provided on pages 88 and 89. However, in recognition of the impact of covid-19, Andrew Rashbass waived any bonus payment for the year. The Remuneration Committee agreed to the waiver, while acknowledging that Andrew has shown great leadership of the business and our people, particularly during the extraordinary times that we have faced this year. The performance against individual objectives resulted in an annual bonus pay-out of 16.25% of maximum for Wendy Pallot resulting in an aggregate payment of £73,912. The Remuneration Committee was satisfied that the outcome for Wendy was appropriate and that no exercise of discretion to adjust the outcome was appropriate. Remuneration for 2021 The Remuneration Committee has reviewed the Remuneration Policy (see pages 80 to 86). There are minor changes proposed to the Policy though we continue to be satisfied that the remuneration structures support our delivery of the strategy and that these changes are consistent with good governance. The Remuneration Committee considered again the proposed performance measures approved by the shareholders in 2019, for the PSP grant due in December 2020. In 2019, the grant had been delayed to June 2020, and in recognition of the challenges covid-19 presented, was approved with the single measure of TSR. In the light of pandemic developments, it was considered prudent to retain this single measure for the December 2020 grant in the absence of economic clarity. The Committee continues to monitor the current situation and is minded to approach any further remuneration changes in a pragmatic manner for 2021. Remuneration Policy shareholder approval at the 2021 AGM As this is a policy change year, our Remuneration Policy will be put forward for a shareholder vote at our 2021 AGM which will take place on 11 February 2021. The policy changes are in relation to pension, malus and clawback, and 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 on any future major policy changes. G o v e r n a n c e Imogen Joss Chair of the Remuneration Committee 18 November 2020 Our Performance Share Plan (PSP) awards granted in 2017 are due to vest in December 2020, based on performance of the 2018, 2019 and 2020 financial years. The performance measures attached to these awards were EPS growth over the three- year performance period and operating margin at the end of the three-year performance period. Adjusted diluted EPS has decreased over the period due to the impact of covid-19, so these awards are not expected to vest. Board and Remuneration Committee member changes Jan Babiak joined the Remuneration Committee in December 2019 and Lorna Tilbian stepped down from the Remuneration Committee after the March 2020 meeting. Tristan Hillgarth stepped down on 28 January 2020. Remuneration changes during 2020 Due to the challenging economic circumstances as a result of the covid-19 outbreak in March 2020, a cost and cash-saving programme was introduced to support the business financially. As part of the programme, Andrew Rashbass and Wendy Pallot took salary reductions for a period of four months across the summer, as did all Non-Executive Directors. In addition, a voluntary temporary reduction in base salary was implemented across the business for higher paid staff over the summer through a salary deferral scheme into shares. Neither Andrew Rashbass nor Wendy Pallot have received salary increases for the 2020 period. As referenced below, the annual salary review for all employees was due in April 2020. As the pandemic progressed, it was considered prudent to defer this for a period of time, until the situation became clearer. The next annual salary review is now expected to take place in April 2021. All employee remuneration at Euromoney During the year we continued to embed structure and consistency with a focus on the use of benchmark data and increased standardisation of bonus plans. Given covid-19 we deferred our April 2020 pay review and intend to continue to drive robustness to our approach in this area over the coming year. Engaging with employees Throughout the year management have increased formal and informal communications with our teams, particularly since March 2020. Town Halls have been held regularly at global, divisional/functional and team levels, both to ensure consistent communication through the crisis but also to provide opportunities for employees to directly raise questions and receive answers at a time of increased uncertainty. The Employee Forum which was launched in 2019 has continued in operation and has recently started a new project looking at future ways of working for the business. I am the Board representative on the forum and attended my first meeting in October. The focus on inclusion and diversity has continued throughout the year as highlighted on page 37. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 77 Governance Directors’ Remuneration Report summary This summary section provides shareholders with the key information from our 2020 Directors’ Remuneration Report at a glance 2020 key performance measures for remuneration Adjusted profit before tax (annual bonus financial performance measure, 37.5% weighting) Adjusted diluted earnings per share (EPS – award performance measure for PSP scheme ending in 2021 – 75% weighting) 102.5 106.5 99.9 104.6 76.4p 73.6p 77.6p 66.5p 57.4 42.7p Scenario charts for the 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 four 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 86. 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 CEO (£000) Underlying revenue growth (annual bonus financial performance measure, 37.5% weighting) Adjusted operating profit margin (PSP award performance measure, 25% weighting) 3% 25% 25% 26% 26% 0% (1%) 18% 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 47% 37% 27% 28% 32% 27% 100% 45% 31% 26% Minimum In line with expectations Maximum Maximum +50% ● Fixed pay ● Annual bonus ● PSP (4%) (4%) 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 CFO (£000) TSR (award performance measure for PSP scheme ending in 2022 – 100% weighting) 550 500 450 400 350 300 250 200 150 100 50 0 1,750 1,500 1,250 1,000 750 500 250 0 49% 39% 30% 25% 45% 32% 27% 29% 24% 100% Minimum In line with expectations Maximum Maximum +50% ● Fixed pay ● Annual bonus ● PSP 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 30 Sep 2020 ● Company ● FTSE 250 See page 24 for definitions of Key Performance Indicators. 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 20 to 21. 78 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Single figure of remuneration summary table (audited) A Rashbass W Pallot Total Salary, Benefits and Pension1 £ Annual bonus £ Total before buy-out award £ 2020 2019 2020 2019 2020 2019 979,481 997,810 368,677 397,012 1,348,158 1,394,822 0 675,000 73,912 257,677 73,912 932,677 979,481 1,672,810 442,589 654,689 1,422,070 2,327,499 1 For the CEO this reflects the current view of the costs of the commuter assignment including tax liabilities. Andrew Rashbass and Wendy Pallot took salary reductions for a period of four months across the summer. 2020 CEO bonus outcome (audited) For 2020 the CEO bonus amount is 15.5% of the maximum bonus opportunity, equating to an overall bonus of £174,375 (23% of base salary). In the light of covid-19, Andrew Rashbass has waived his annual bonus. Bonus Plan A Rashbass Bonus payable in cash Bonus deferred into shares Total G G o o v v e e r r n n a a n n c c e e £ 0 0 0 Performance measures Weighting Threshold On target Maximum Actual Financial: Group adjusted profit before tax1 Financial: Group underlying revenue growth Individual objectives Total pay-out (% of maximum) 37.5% 37.5% 25% 100% 1 A reconciliation of adjusted profit before tax is set out on page 21. £94,106 1.0% – £104,562 2.0% – £115,018 3.0% – £57,369 (4.0%) – Maximum opportunity (% of salary) Pay-out (% of maximum) 56.25% 56.25% 37.5% 150% 0 0 62% 15.5% The individual objectives for Andrew Rashbass in 2020 focused on the delivery of strategy and the Group structure and design. For 2020, the financial objectives were not met. The individual objectives were evaluated as laid out in full in the Annual Remuneration Report on page 88. The achievement against these objectives resulted in an award of bonus at 15.5% of the maximum bonus opportunity, equating to an overall bonus of £174,375 (23% of base salary). In the light of covid 19, Andrew Rashbass has chosen to waive his annual bonus. The Committee appreciated the gesture and has accepted Andrew’s position. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 79 Governance Directors’ Remuneration Report summary continued Salary Deferral and Share Scheme In response to the pressures on the business from the pandemic, management implemented a range of cost and cash-saving measures to help protect jobs which included pay/fee cuts and a salary deferral into shares programme. The programme was implemented over the summer months, with temporary salary cuts of 20% implemented for certain higher paid roles for June, July and August 2020 replaced with a compensating share grant. This included the Group Management Board who took a 25% salary cut for the period May, June, July and August 2020. The Non-Executive Directors took a 25% fee cut for the period May, June, July and August 2020 with no share award. The CEO and the CFO took a 40% and 25% salary cut respectively for May, June, July and August 2020 with no share award. These salary reductions reduced pension contributions over the period, for which no compensation was made. The measures all ended on 1 September 2020 with salaries/fees being returned to their previous levels and with shares vesting for those in the deferral programme. Remuneration Policy To be approved by shareholders at our 2021 AGM Remuneration Policy The Board believes in aligning the interests of management with those of shareholders. The proposed Remuneration Policy is designed to continue to support the growth of the business and the creation of sustainable long-term shareholder value. The Policy states under the sections, Basic salary, Benefits and Pensions (page 81), how pay and employment conditions have been taken into account across the business. During the review of the Policy, the Remuneration Committee in the context of a covid-19 year was mindful not to widely change the direction of the Policy, but continue to maintain alignment between employees and Directors. As such it did not directly consult with employees on setting policy for the Directors, but the Employee Forum is an open communication forum between employees and the Board where all topics can be discussed. For 2021, the original policy from 2018 has been largely retained, but in order to continue to align the policy with best market practice, minor adjustments have been made. They include an alignment to executive pension contributions, malus and clawback, and enhanced post-employment shareholding conditions (pages 82 and 83). Information not subject to audit. The proposed Remuneration Policy for the Executive Directors in 2020 is set out in the Annual Remuneration Report, from page 80 to 86. 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 compliance with the requirements of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008. The Remuneration Committee discussed the detail of the Remuneration Policy over a series of meetings which considered the strategic priorities of the business and evolving market and regulatory practice. Input was sought from the management team, while ensuring that conflicts of interest were suitably mitigated. An external perspective was provided by our independent advisers Deloitte. 80 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Directors’ Remuneration Report continued Pay Element Key Features of Policy Maximum Opportunity Basic salary Purpose and link to strategy • Part of an overall market competitive pay package with • No absolute maximum has 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 • Normally reviewed by the Remuneration Committee in March each year Benchmarking • The Remuneration Committee examines salary levels at FTSE 250 companies and other listed peer group companies to help determine Executive Director pay increases • 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 • Benefits are available to all Directors and employees subject to a minimum length of service or passing a probationary period Relationship to employee benefits Benefit levels • All Executive Directors participate in the healthcare scheme offered in the country where they reside Pensions Purpose and link to strategy • Retirement benefits are provided as part of a market competitive pay package Operation • Directors may participate in the pension arrangements applicable to the country where they work • A Director who elects to cease contributing to a Company pension scheme due to changes in tax or pension legislation may choose to receive a pension allowance in lieu of the Company’s pension contributions Relationship to employee pension arrangements • All Directors and employees are entitled to participate in the same pension scheme arrangements with the same maximum contribution rate for the wider employee population applicable to the country where they are based. 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 • The maximum employer’s contribution to a pension scheme is the lower of the maximum rate for the wider employee population under the pension scheme available to all employees in the country in which the Director is based and 10% of pensionable salary Euromoney Institutional Investor PLC Annual Report and Accounts 2020 81 Governance Directors’ Remuneration Report continued Pay Element Key Features of Policy Maximum Opportunity 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’ • The maximum award that can be made under the Annual Bonus Plan is 150% of salary interests through the operation of bonus deferral • The maximum level of bonus payment at threshold achievement performance levels is 0% of maximum • Each year the Remuneration Committee will determine the maximum annual bonus opportunity for individual Executive Directors within these parameters 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 pay-out is ultimately at the discretion of the Remuneration Committee who may override any formulaic outcome • 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 of results/error in performance calculation, material reputational damage, material failure of risk management and control, misconduct (serious/material), corporate failure comes to light which resulted in an overpayment under the Annual Bonus Plan Relationship to all employee short-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 82 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 G o v e r n a n c e Pay Element Key Features of Policy Maximum Opportunity Long-term incentive plans – PSP 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 and/or share price-related 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 of results/error in performance calculation, material reputational damage, material failure of risk management and control, misconduct (serious/material), corporate failure, comes to light which resulted in an over-vesting of PSP awards • Any PSP pay-out is ultimately at the discretion of the Remuneration Committee who may override any formulaic outcome • 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 – SAYE Purpose and link to strategy • All-employee share schemes align staff with the Group’s financial performance and promote a sense of ownership Operation • Euromoney SAYE scheme • The Group operates an all-employee save as you earn scheme in which those Directors employed in the UK are eligible to participate. No performance conditions attach to options granted under this plan. It is designed to incentivise all employees. Participants are able to buy shares in the Company at a price set at a discount of up to 20% to the market value at the start of the savings period • Participants save a fixed monthly amount of up to £500 (or such other limit as may be approved from time to time by HMRC) for three years Euromoney Institutional Investor PLC Annual Report and Accounts 2020 83 Governance Directors’ Remuneration Report continued Notes to table: • The Remuneration Committee has reviewed the current Policy (the Policy) approved in 2018 and agreed only to update the Policy sections on executive pension contributions, malus and clawback, and enhanced post-employment shareholding conditions, to better align with the Investment Association guidelines and the market. • 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. • 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 and 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 84 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 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. • Upon termination any deferred awards will lapse unless the Director is considered a good leaver. The Remuneration Committee will be required to formally approve the request. • 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 & Risk 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 that 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 (eg cash or shares). The overriding principle will be that any replacement buy-out award should, in aggregate, not exceed the commercial value of the earnings which have been forfeited. The Remuneration Committee may, in a recruitment scenario, rely upon the Listing Rules exemption from shareholder approval to grant a one-off buy-out award to facilitate the recruitment of a Director. New Executive Directors are entitled to participate in the Euromoney SAYE scheme. 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. G o v e r n a n c e Policy on payment for loss of office The Company’s approach to payments in the event of termination is to take account of the individual circumstances including the reason for termination, individual performance, contractual obligations, the terms of bonus incentives and long-term incentive plans in which the Executive Director participates. The Company’s general practice for all Executive Directors is to provide for 12 months’ salary and pension up to the date of termination. The Company may lawfully terminate an Executive Director’s employment without compensation in circumstances where the Company is entitled to terminate for cause (this is defined in the service agreements). The Remuneration Committee may determine that any Executive Director is eligible to receive an annual bonus in respect of the financial year in which they cease employment. This bonus would usually be time apportioned. In determining the level of bonus to be paid, the Remuneration Committee may, at its discretion, take into account performance up to the date of cessation or over the financial year as a whole. The treatment of outstanding share awards in the event of termination is governed by the relevant share plan rules as summarised below. If an Executive Director participates in the PSP and ceases to be an officer or employee of the Group during the performance period in any circumstances other than those set out below, an unvested award will lapse on the date on which their employment ceases. If a participant dies, an unvested PSP award will vest at the time of the participant’s death, taking into account the satisfaction of the performance condition and, unless the Remuneration Committee determines otherwise, on a time 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. 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. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 85 Governance Directors’ Remuneration Report continued 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 2020 • Benefits: estimated value (CEO: £264,000**; CFO: £2,000) • Pension allowance: 10% of salary Minimum (less than threshold) performance • No pay-out under the annual bonus • No vesting under the PSP (Variable pay) Performance in line with expectations (Variable pay)* • CEO 60% of the maximum pay-out under the annual bonus • CFO 50% of the maximum pay-out under the annual bonus • 50% vesting under the PSP Maximum performance (Variable pay)* • 100% of the maximum pay-out under the annual bonus • 100% vesting under the PSP Maximum – assuming 50% share price growth • 100% of the maximum pay-out under the annual bonus • 100% vesting under the PSP assuming 50% share price growth * PSP awards have been shown at face value, with no share price growth or discount rate assumptions. All-employee share plans have been excluded. ** For the CEO this reflects the current view of the costs of the US commuter assignment including tax liabilities. 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 Executive Directors are expected to build and maintain a shareholding equal to at least 200% of base salary. A newly appointed Executive Director will usually have a period of five years from their date of appointment to meet the minimum shareholding requirement. The Remuneration Committee will review progress towards the requirement on an annual basis and has the discretion to adjust the requirement in what it feels are appropriate circumstances. A shareholding requirement will continue for a total period of 24 months after the end of employment. For the first 12 months after the end of employment the shareholding requirement will be equal to 200% of base salary (or, if lower, the shareholding level at the end of employment). This will reduce to 100% of base salary (or, if lower, the shareholding level at the end of employment) 12 months after the end of employment. This requirement will apply to shares from incentive awards due to be released from the date of adoption of the Policy at the 2021 AGM. The Committee would retain discretion to waive this requirement if it is not considered appropriate in the specific circumstances. Non-Executive Directors are encouraged to build a shareholding of 100% of their base fee over the six years from the date of appointment to the Board (unless for some reason they are unable to retain their fees). 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 four 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. CEO (£000) CFO (£000) 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 27% 28% 45% 100% 47% 37% 32% 27% 31% 26% 1,750 1,500 1,250 1,000 750 500 250 0 Minimum ● Fixed pay In line with expectations ● Annual bonus Maximum Maximum +50% ● PSP 86 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 49% 39% 30% 25% 45% 32% 27% 29% 24% In line with expectations ● Annual bonus Maximum Maximum +50% ● PSP 100% Minimum ● Fixed pay Annual Remuneration Report Executive Directors (audited) In 2020, the key elements of remuneration for the CEO and CFO, in line with the Directors’ Remuneration Policy in force, were as follows: Salary1 Annual incentive Bonus deferral LTIP Pension Benefits A Rashbass (CEO) £750,000 Annual Bonus Plan • 150% of salary maximum • 100%/90%2 of salary target The performance measures were: • 37.5% Group adjusted profit before tax • 37.5% Group underlying revenue growth • 25% individual objectives WM Pallot (CFO) £363,875 Annual Bonus Plan • 125% of salary maximum • 62.5% of salary target The performance measures were: • 37.5% Group adjusted profit before tax • 37.5% Group underlying revenue growth • 25% individual objectives Any amount above 100% of salary deferred into nil-cost options for two years PSP annual award of 170%2 of salary vesting after five years3 10% of salary per annum, payable in cash4 Private healthcare Life insurance US assignment support Health Cash Plan Any amount above 100% of salary deferred into nil-cost options for two years PSP annual award of 150% of salary vesting after five years3 10% of salary per annum, payable in cash4 Private healthcare Life insurance Health Cash Plan G o v e r n a n c e 1 Both the CEO and the CFO took a reduction in salary over the period May, June, July and August 2020. Andrew Rashbass took a 40% reduction over four months and Wendy Pallot took a 25% reduction over four months. Notwithstanding the salary reduction in 2020, the CEO salary has remained unchanged since 2015, and the CFO salary since April 2019. 2 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 2020 is 90% of salary. 3 The five-year vesting period is a three-year performance period plus a two-year holding period, after which awards vest. 4 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 2020 and 2019. A Rashbass WM Pallot Total Salary1 650,000 750,000 333,552 359,438 983,552 1,109,438 2020 2019 2020 2019 2020 2019 Benefits2 £ 264,481 172,810 1,770 1,630 266,251 174,440 Pension £ Total Fixed £ 65,000 75,000 33,355 35,944 979,481 997,810 368,677 397,012 98,355 1,348,158 Annual bonus3 £ 0 Buy-out award4 £ – 675,000 656,149 73,912 257,677 73,912 – – – 110,944 1,394,822 932,677 656,149 LTIP £ – – – – – – Total Variable £ Total £ 0 979,481 1,331,149 2,328,959 73,912 442,589 257,677 654,689 73,912 1,422,070 1,588,826 2,983,648 1 Both Andrew Rashbass and Wendy Pallot took salary reductions for a period of four months across the summer. 2 For the CEO this reflects the current view of the costs of the US commuter assignment including tax liabilities. 3 The temporary salary reductions have not affected the salary used to calculate the annual bonus. 4 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. The proportion of the buy-out award (over 44,203 shares) for the CEO, which vested on 30 September 2019 was exercised on 4 June 2020. A portion of the shares (20,775) were sold to cover tax, with the balance of 23,428 shares retained. The share price at exercise was £8.44. The buy-out scheme is now closed. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 87 Governance Directors’ Remuneration Report continued Annual Bonus Plan (audited) A Rashbass Bonus payable in cash Bonus deferred into shares Total Performance measures Weighting Minimum On target Maximum Actual Maximum opportunity (% of salary) Financial: Group adjusted profit before tax1 Financial: Group underlying revenue growth Individual objectives Total pay-out (% of maximum) 37.5% £94.1m £104.6m £115.0m £57.4m 56.25% 37.5% 25% 100% 1.0% – 2.0% – 3.0% – (4%) – 56.25% 37.5% 150% 1 A reconciliation of adjusted profit before tax is set out on page 21. The individual objectives for Andrew Rashbass in 2020 were: (i) Delivery of strategy (15% weighting) Measure Outcome Progress on delivering strategy including actively managing the portfolio. The thorough and well-run review of the Asset Management segment resulted in the Board’s decision to retain the businesses. It confirmed the viability of the Investment Research division’s turnaround plan (which is on track) and identified ways the three Asset Management businesses should work more closely together, which are already being implemented. The Company successfully completed the acquisitions of Wealth-X and AgriCensus, two relatively small but strategically important 3.0 businesses. Despite the impact of covid-19 the business enters the new financial year in a strong position, particularly in respect to its strong balance sheet and with regard to subscriptions in the Pricing and Data & Market Intelligence segments. (ii) Group structure/design of centre/margin (10% weighting) Measure Outcome Telecoms and Financial and Professional Services divisions combined, reducing the number of total divisions to four from 1 October 2020. Costs were substantially reduced across the Company, including a material reduction in central costs. Design of a cost-effective and fit-for- purpose Group structure (including centre) following completion of the strategic review and adaptive to future M&A activity. Delivery against a PBT margin target in 2020 of 25% leading to a margin forecast for 2021 of at least 27% (subject to being revisited following the outcome of the Strategic Review). £ 0 0 0 Pay-out 0 0 62% 15.5% Percentage of max 50% Percentage of max 80% In addition, the Committee considered whether the bonus outcome was appropriate based on the Company’s overall performance. The Committee noted the financial strength of the Company as a direct result of decisions and actions taken in the year to combat the covid-19 crisis and the quality of the plan for, and the robust start to, the new financial year as evidence that the pay-out would have been appropriate. Based on the above, the annual bonus pay-out would have been 15.5% of the maximum opportunity equating to an overall bonus of £174,375 (23% of salary). However, as noted above, Andrew has waived his bonus in the light of covid-19. The Committee appreciated the gesture and has accepted Andrew’s position. 88 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 WM Pallot Bonus payable in cash Bonus deferred into shares Total Performance measures Weighting Minimum On target Maximum Actual Maximum opportunity (% of salary) Financial: Group adjusted profit before tax1 Financial: Group underlying revenue growth Individual objectives Total pay-out (% of maximum) 37.5% £94.1m £104.6m £115.0m £57.4m 46.875% 37.5% 25% 100% 1.0% – 2.0% – 3% – (4%) – 46.875% 31.25% 125% 1 A reconciliation of adjusted profit before tax is set out on page 21. The individual objectives for Wendy Pallot in 2020 were: Objective Measures Outcome Delivery of strategy (10%) Progress on delivering strategy including actively managing the portfolio Group structure/design of centre/margin (10%) Finance Transformation Project (5%) Design of a cost-effective and fit-for-purpose Group structure (including centre) following completion of the Strategic Review Delivery against a PBT margin target in 2020 of 25% leading to a margin forecast for 2021 of at least 27% (subject to being revisited following the outcome of the Strategic Review) Further progression in transforming the finance function, based on measures including: Completion of the roll-out of NetSuite in the UK in line with the project scope and timelines agreed with the Audit Committee Development and launch of the Internal Controls Framework The thorough and well-run review of the Asset Management Segment resulted in the Board’s decision to retain the businesses. It confirmed the viability of the Investment Research division’s turnaround plan (which is on track) and identified ways the three Asset Management businesses should work more closely together, which are already being implemented. The Company successfully completed the acquisitions of Wealth-X and AgriCensus, two relatively small but strategically important 3.0 businesses. Despite the impact of covid-19 the business enters the new financial year in a strong position, particularly in respect to its strong balance sheet and with regard to subscriptions in the Pricing and Data & Market Intelligence segments. Telecoms and Financial & Professional Services divisions combined, reducing the total number of divisions to four from 1 October 2020. Costs were substantially reduced across the Company, including a material reduction in central costs. Continued strong progress in developing the finance function. Successful UK roll-out of NetSuite in line with timelines agreed by the Audit & Risk Committee. All scheduled implementations done, with no roll-backs required. Progress on ICF with plans prepared for next stage which flows from updated, detailed Risk and Control Matrices. £ 73,912 – 73,912 Pay-out 0 0 65% 16.25% G o v e r n a n c e Outcomes/ Rating Target Above target Above target Euromoney Institutional Investor PLC Annual Report and Accounts 2020 89 Governance Directors’ Remuneration Report continued In arriving at this recommendation, the Remuneration Committee was mindful of the factors that would mitigate against any executive bonus award but would highlight the following: • The Company has repaid to HMRC all the money received from the UK government for the UK furlough scheme • The Company has not drawn from the UK Government’s Covid Corporate Financing Facility • The Company is recommending that dividend payments are resumed from the final dividend onwards • The Company has not sought capital from shareholders in relation to the pandemic • Throughout the pandemic, the Company has remained profitable and cash-generative, with a positive net cash position In the light of the above and based on the performance above, the CFO’s proposed bonus level is 16.25% of maximum (£454,844), 20.31% of salary, i.e. £73,9121. 1 Under our Remuneration Policy, any bonus amount up to 100% of salary is paid in cash, with any amount in excess of 100% of salary awarded in the form of deferred shares. Therefore, the bonus amount proposed of £73,912 will be payable in cash, with nothing awarded in the form of deferred shares. Pensions (audited) 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 Pension Saver 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) The last tranche of shares was exercised by Andrew Rashbass in June 2020. The buy-out scheme is now closed. Long-term incentives (audited) Andrew Rashbass held a 2018 PSP award over 110,103 shares (originally granted on 19 February 2018 and due to vest on 19 February 2023). The performance measures were determined by 75% EPS growth over the three-year performance period and 25% operating margin at the end of the three-year performance period. The PSP award lapsed during the year as the EPS threshold level of 3% and the operating margin threshold level of 25.5% required for any vesting was not met. In December 2015 an award was made to the CEO under the PSP being a maximum 159,269 shares in the Company with a value at grant of £1.5m (i.e. 200% of his salary). The award stated that it would be subject to performance conditions to be satisfied over a five-year period ending in September 2020. A Rashbass Type of option awarded Basis of award Nil-cost option 200% of salary Face value of award made1 £1,500,000 Number of shares1 End of performance period 159,269 Sept 2020 1 Calculated as the 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 the average of the middle market quotations of an Ordinary Share as derived from the Daily Official List for the preceding five dealing days of 18 December 2015, Performance measures for the award are detailed below: Maximum opportunity Performance measure Weighting Performance target A Rashbass 200% of salary EPS2 growth between financial years 2015 and 2020 50% 5% or more Between 1 and 5% 1% Less than 1% Vesting level Full vesting Between 12.5% and 50% on a sliding scale 12.5% Nil 2 Adjusted diluted EPS in 2015 amended to reflect the impact of the DMGT share buy-back. Strategic objectives 50% No formal vesting schedule 90 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 The strategic objectives agreed are laid out below: Invest around the big 3.0 themes Transform the operating model Actively manage the portfolio Investing around big themes such as the information and services to support the asset management industry, price discovery and others. Introducing an effective operating model that marries the best of the Group entrepreneurial culture (closeness to customers, passion for brands, knowledge of products and accountability for revenue and profit) with a new emphasis on modern marketing techniques, Group- wide talent management, seeking economies of, and opportunities from, scale and adopting a more strategic approach to developing each business. Actively managing the portfolio, disinvesting in businesses where the market is weak and the business model structurally challenged and investing where the businesses are structurally strong and there are market tailwinds. 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. We will take a prudent approach to debt. G o v e r n a n c e At the time of the award it was proposed that when assessing the success of these strategic measures, the Committee would pay particular attention to the quality and sustainability of underlying revenue growth, as well as the absolute levels of revenue, for the performance period. It was also recognised that the proposed EPS targets assumed a level of revenue growth in order to allow this portion of the award to vest. The Remuneration Committee also agreed that the assessment of the strategic measures would be subjective, with no formal vesting schedule. The extent of the vesting of this portion of the PSP award would ultimately be at the Committee’s discretion. It was proposed that at the end of the five-year period, the Committee would assess the quality of delivery of the three pillars of strategy outlined at the investor day. As noted in the table below, the financial objectives against the EPS have not been met. Against the strategic objectives, the view of the Committee is that broadly all have been met satisfactorily. In the last five years investments have been made to strengthen the Fastmarkets business and what is now our Financial & Professional Services division, whilst Asset Management has suffered from market dynamics. A strategic review of Asset Management was undertaken that resulted in the determination that the Group remains the best owner. Group structure during this period has been reviewed fundamentally, and the structure of the business has been simplified and has leveraged scale at Group level. These changes have resulted in major measurable improvements in the operation of the business. Finally, the portfolio has been actively managed through a structured M&A programme. Overall, the strategic objectives have been satisfactorily implemented. However, lack of progress on the EPS element of the award has been taken into consideration by the Remuneration Committee. It was noted that Andrew showed strong and effective leadership through this most challenging of years and his strategic actions have had a positive impact and have positioned the business well as we emerge from the effects of the covid-19 pandemic. Taking these elements into consideration the Remuneration Committee has capped the overall award to 25% of maximum. On the basis that the financial measures have not been met and the commentary above, the Committee has awarded 39,817 shares equal to 25% of the total.2 Vesting period ending 2020 Performance measures Adjusted EPS growth (2015–2020)1 Strategic objectives 1 EPS growth for the five-year period was (10.97%). 2 The share price will be determined at the point of exercise. Weighting 50% Min/award 1% 12.5% Max/award Vesting period Vesting Award 5% 50% 5 years 0 0 50% – 50% 50% 25% Euromoney Institutional Investor PLC Annual Report and Accounts 2020 91 Governance Directors’ Remuneration Report continued 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 2020. 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 16 June 2020. Vesting will be determined according to the achievement of performance measures that will be tested in 2022. 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 2020. As explained above, the Chief Executive Officer’s PSP award level was reduced to 170% of salary (at grant) for the award granted in June 2020 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 the Group’s 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 £545,813 Number of shares1 End of performance period 156,480 66,987 Sep 2022 Sep 2022 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 £8.148, 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 16 June 2020. Details of performance measures for the June 2020 PSP awards are as follows: Maximum opportunity Performance measure Weighting Performance target against the comparator group A Rashbass: 170% of salary W Pallot: 150% of salary The Company’s Total Shareholder Return relative to the comparator group of the FTSE 250 (excluding investment trusts) between financial years 2020 and 2022. 100% Upper quartile or higher Vesting level Full vesting Between median and upper quartile Between 25% and 100% on a sliding scale Median Below median 25% Nil The table below sets out the details of PSP awards (nil-cost options) held by Executive Directors as at 30 September 2020. Date of grant Relating to Performance period ends Exercisable from Expiry date Award price (pence) Status Granted during the year Lapsed during the year Exercised during the year Outstanding awards A Rashbass 18 Dec 2015 19 Feb 2018 17 Dec 2018 16 June 2020 Total W Pallot PSP PSP PSP PSP 30 Sep 2020 18 Dec 2020 18 Dec 2025 Outstanding 30 Sep 2020 19 Feb 2023 19 Feb 2028 Outstanding 30 Sep 2021 17 Dec 2023 17 Dec 2028 Outstanding 941.8 1,158.0 1,169.2 – – – 30 Sep 2022 16 June 2025 16 June 2030 Outstanding 818.4 156,480 17 Dec 2018 16 June 2020 PSP PSP Total 30 Sep 2021 17 Dec 2023 17 Dec 2028 Outstanding 30 Sep 2022 16 June 2025 16 June 2030 Outstanding 1,169.2 818.4 – 66,987 – – – – – – – – – – – – 159,269 110,103 109,048 156,480 534,900 45,543 66,987 112,530 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. Date of grant A Rashbass Relating to Award type Exercisable from Expiry date Status Award price (pence) Exercised during the year Outstanding awards 1 Oct 2015 Buy-out award Nil-cost option 30 Sep 2019 1 Oct 2025 Outstanding 19 Feb 2017 Deferred bonus Nil-cost option 19 Feb 2020 19 Feb 2026 Outstanding 15 June 2018 SAYE Discounted option 1 Aug 2021 1 Feb 2022 Outstanding 1,018.5 1,158.0 1,420.0 Total W Pallot 14 June 2019 SAYE Discounted option 1 Aug 2022 1 Feb 2023 Outstanding 1,246.0 44,203 4,339 – – – – 1,691 1,691 1,651 The proportion of the buy-out award (over 44,203 shares) for the CEO, which vested on 30 September 2019 was exercised on 4 June 2020. A portion of the shares (20,775) were sold to cover tax, with the balance of 23,428 shares retained. The share price at exercise was £8.44. The deferred bonus award (over 4,339 shares) for the CEO, which vested on 19 February 2020, was exercised on 4 June 2020. A portion of the shares (2,039) were sold to cover tax, with the balance of 2,300 shares retained. The share price at exercise was £8.44. 92 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Scheme interests summary (audited) The table below summarises all interests in shares. Executive Director A Rashbass W Pallot Awards held subject to performance conditions 534,900 112,530 Awards held not subject to performance conditions (unvested) Awards held not subject to performance conditions (vested but unexercised) Shares required to be held % of salary Number of shares required to be held1 Number of beneficially owned shares Shareholding requirement met 1,691 1,651 – – 200% 200% 186,800 90,629 150,374 833 No2 No3 1 The number of shares is calculated using the closing mid-market price on 30 September 2020 of £8.03. 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 Andrew Rashbass has increased his beneficial shareholding for 2020, but due to the impact of covid-19 and the related fall in the share price, he is currently below the 200% required. 3 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. The PSP award for the period 2017 to 2020 is unlikely to vest. The CEO 5 year PSP is due to vest at 25% of the total share award granted in 2015. These changes will be captured in the 2021 DRR. 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 £72,836 for 2020). The total costs incurred are therefore £122,836. G o v e r n a n c e Payments for loss of office (audited) There were no payments for loss of office made in the year. Non-Executive Directors Leslie Van de Walle was appointed as Chairman from 1 March 2019, the fee level is set at £220,000. The fees for the other Non-Executive Director roles were not reviewed during 2020 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 & Risk Committee Chair: additional £10,000 • Remuneration Committee Chair: additional £10,000 • Senior Independent Director: additional £10,000 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 2020, along with comparable figures from 2019. L Van de Walle (appointed Chairman from 1 March 2019) I Joss (Remuneration Committee Chair from 1 February 2018) J Babiak (appointed 1 December 2017, Senior Independent Director from 18 September 2019)2 LM Tilbian (appointed 1 January 2018) C Day (appointed 5 March 2018, Audit Committee Chair from 16 May 2018) T Pennington (appointed 1 September 2019) TP Hillgarth (stepped down on 28 January 2020) Total 2020 fees1 £ 201,667 55,000 55,357 45,833 55,000 45,833 16,667 475,357 Taxable benefits £ 0 0 0 0 0 0 0 0 2020 Total £ 201,667 55,000 55,357 45,833 55,000 45,833 16,667 475,357 2019 fees3 £ 128,333 60,000 50,357 50,000 60,000 4,167 50,000 402,857 1 The fees reported for all Non-Executive Directors are actual for 2020 less the 25% fee cut taken from May to August 2020. 2 There was an increase in September 2019 which was backdated in the October 2019 payroll. 3 Total fees for 2019 were £548,215. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 93 Governance Directors’ Remuneration Report continued 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 2020 (or date of stepping down from the Board, if earlier) were as follows: TP Hillgarth (stepped down on 28 January 2020) I Joss J Babiak LM Tilbian C Day L Van de Walle T Pennington Number of ordinary shares 4,000 – 5,404 – – 3,500 – There have been no changes in the shareholdings of the Non-Executive Directors between 30 September 2020 and the date of this Annual Report and Accounts. The Non-Executive Directors are encouraged to build a shareholding over their term of service (six years), and have not yet built up shares equal to their fee levels. 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 ten 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 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 30 Sep 2020 ● Company ● FTSE 250 The table below sets out the remuneration data for Directors undertaking the role of CEO during each of the last ten years. The single figure of remuneration for the CEO set out below includes salary, benefits, Company pension contributions and, where applicable, long-term incentives. CEO 2011 2012 Single figure of remuneration (£000) Annual incentive payment (% of maximum) Long-term incentive vesting (% of maximum) A Rashbass CHC Fordham PR Ensor A Rashbass1 CHC Fordham2 PR Ensor2 A Rashbass CHC Fordham PR Ensor – – – – 4,397 4,857 – – – – 82% 82% 2013 – 1,647 – – 2014 – 895 – – 2015 – 576 – – 20163 2,761 – – 20173 2,145 – – 20183 2,188 – – 20193 2,329 – – 85% 71% 60% 60% 58% 52% 17% – – – – – 100% 100% – – – – – – – – – – – – – – – – – – – – – – – – – – – – 0% – – 2020 979 – – 0% – – 0% – – 1 Andrew Rashbass has waived his annual bonus under the Group’s Annual Bonus Plan for 2020. As part of the Salary Deferral and Share Scheme, Andrew Rashbass took a salary reduction for a period of four months across the summer. Please note that this reflects the current view of the costs of the US commuter assignment including tax liabilities. 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. 3 This includes Andrew Rashbass buy-out. 94 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Percentage change in remuneration of the CEO The table below illustrates the change in remuneration for the CEO, CFO and NEDs compared with the average percentage remuneration change for employees across the Group at constant currency. This is a regulatory requirement, however as there are no employees in the listed company, this is a voluntary disclosure. 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, CFO and under the same economic circumstances. The Directors believe this demonstrates the best link between the changes in average remuneration compared to the CEO, CFO and NEDs. CEO remuneration CFO remuneration L Van de Walle (appointed Chairman from 1 March 2019) I Joss (Remuneration Committee Chair from 1 February 2018) 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) T Pennington (appointed 1 September 2019) TP Hillgarth (stepped down on 28 January 2020) Employee average % change 2019 to 2020 Salary1 (13.3)% (7.2)% 57.1% (8.3)% 9.9% (8.3)% (8.3)% 1000% (66.7)% (9.7)% Benefits2 53% 8.6% Incentives3 (100)% (71.3)% – – – – – – – – – – – – – – (4.4)% (35)% G o v e r n a n c e 1 The negative change in the average employee salary from 2019 to 2020 is partly due to the salary deferral and employees moving to part-time during the deferral period. Senior employees were part of the Salary Deferral and Share Scheme for a period of three months across the summer. The CEO, CFO and NEDs took a salary reduction for a period of four months with no deferral. 2 For the CEO this reflects the current view of the costs of the US commuter assignment including tax liabilities. 3 For 2020, in the light of covid-19, Andrew Rashbass has waived his annual bonus. The incentive change for average employee is based on accrued bonuses as at 30 September taking all relevant information into account to have an adequate provision. Remuneration in the above table excludes long-term incentive payments and pension benefits. CEO Pay Ratio Quoted companies incorporated in the UK (with more than 250 UK employees) are now required to publish the ratio of their CEO’s single figure total remuneration to the median, 25th and 75th percentile total remuneration of their full-time equivalent UK employees. In the following table, total compensation has been calculated for UK employees individually for financial year 2020, adjusted to provide a consistent comparison of employee data on a full-time equivalent basis. Year 2020 – Pay Ratio (Salary) 2020 – Pay Ratio (Total Compensation) 2020 – Representative employee salary 2020 – Representative employee total compensation Method Lower Quartile Median Upper Quartile Option A Option A Option A Option A 22:1 28:1 30,000 35,556 14:1 17:1 45,400 58,360 9:1 9:1 76,342 110,259 1 Andrew Rashbass took a salary reduction for a period of four months. As part of the Salary Deferral and Share Scheme, senior employees took a salary reduction for a period of three months. 2 For the CEO, this reflects the current view of the costs of the US commuter assignment including tax liabilities. For 2020, in the light of covid-19, Andrew Rashbass has waived his annual bonus. Incentives for average employees is based on actual bonuses paid in November 2019. Notes on the calculation Our ratios are calculated using Option A in the disclosure regulations and it was selected because it provides the strongest level of consistency in comparison. The employees identified were those in place as of 30 September 2020. The valuation methodology used to determine the lower quartile, median and upper quartile is consistent with that used for the CEO in the single figure table on page 87. New joiners and leavers in the year were excluded and part-time employees were included and calculated on an FTE basis. Those on sick or maternity/paternity leave have been excluded. In managing remuneration for CEO and all other employees, the Remuneration Committee is informed by market data to guide us on median pay levels. Over time these ratios will provide increasingly useful information. 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 2020 £m 156.9 24.0 57.4 2019 £m Year-on-year change 153.6 35.6 104.6 2.1% (32.6)% (45.1)% 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. The change in the Total employee pay is affected by the salary deferral and employees moving to part-time during the deferral period. Bonus used for 2020 is the total accrued bonus amounts. 2 A reconciliation of adjusted profit before tax is set out on page 21. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 95 Governance Directors’ Remuneration Report continued Committee Timeline October 2019 • Market update • 2019 PSP Awards – Performance July 2020 Measures and Targets • 2019 PSP Awards – Individual Awards • 2019 Directors’ Remuneration Report • 2019 Bonus – Update on Performance • 2019 Bonus – CFO Outcome • Market update • 2020 year-end planner • 2021 Business Planning scenario • 2020 Directors’ Remuneration Report against Financial Measure • December 2019 PSP Awards – Performance Measures • 2019 Directors’ Remuneration Report November 2019 • Market update • 2019 Bonus – GMB Outcomes • 2020 Bonus – Financial Performance Targets and GMB individual objectives • 2016–19 PSP Awards – Performance Measure Outcome Remuneration Committee • 2020 Bonus – CFO Personal Objectives • 2019 Bonus – CEO Outcome • 2020 Bonus – CEO Personal Objectives September 2020 • Market update March 2020 • 2020 Bonus – Update on Performance against Financial Measure • PSP awards, performance measures and • 2021 Bonus – Performance Measures current market conditions update • Salary Review 2020 • December 2020 PSP Awards – Performance Measures • Reward at Euromoney update • 2020 Directors’ Remuneration Report • 2020 Directors’ Remuneration Report • UK Pension Schemes The Committee meets five 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. During 2020, the Committee met five times and informal discussions were held at other times during the year. Information on meeting attendance is provided on page 76. Committee members Imogen Joss (appointed to the Committee on 10 November 2017, became Committee Chair on 1 February 2018) Leslie Van de Walle (appointed to the Committee on 2 April 2019) Lorna Tilbian (appointed to the Committee on 2 April 2019, stepped down from the Committee on 30 April 2020) Tim Pennington (appointed to the Committee on 1 October 2019) Jan Babiak (appointed to the Committee on 30 November 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 £8,685 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. 96 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Implementation of the Remuneration Policy in 2021 Basic salary Directors’ salaries from 1 October 2020 are: Andrew Rashbass: £750,000 Wendy Pallot: £363,875 Salaries will be reviewed in April 2021. 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 2021. However, the financial measures are evenly split between underlying revenue growth with a 37.5% weighting and adjusted PBT with a 37.5% weighting. The maximum bonus for Andrew Rashbass is 150% and for Wendy Pallot 125%. 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 2020 will be equivalent to 170% of salary for Andrew Rashbass and 150% of salary for Wendy Pallot. The current performance measure attached to the PSP award is relative Total Shareholder Return which the Policy supports. The maximum vesting at median performance against the comparator group is 25%, with a sliding scale between the median and upper quartile of between 25% and 100%. Performance higher than the upper quartile will result in full vesting. If performance is below the median, there will be no vesting. The comparator group is the FTSE 250 (excluding investment trusts), due to the economic complexity of covid-19. Shareholders will be fully informed in the market announcement of the PSP grants (expected to be in December 2020), as well as in our 2021 Directors’ Remuneration Report. Directors employed in the UK are eligible to participate in the SAYE. G o v e r n a n c e Non-Executive Directors’ fees There is no current intention to review Non-Executive Directors’ fees during Financial Year 2021. Shareholding requirement Guidelines recommended by the Committee and as indicated in the proposed 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 2019 Directors’ Remuneration Report at the February 2020 AGM: Directors’ Remuneration Report Votes for 88,394,936 % Votes against 98.85% 1,031,967 % 1.15% Abstentions 5,630,973 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 18 November 2020 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 97 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. At 30 September 2020, the two trusts’ combined shareholdings totalled 1,238,638 shares representing 1% of the Company’s called up ordinary share capital. There have been no awards transferred between 30 September 2020 and the date of this Annual Report and Accounts. The Directors’ Report comprises pages 98 to 100 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 01 to 57) 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. 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. Forward-looking statements Change of control 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 £31.0m (2019: £60.9m). Our dividend policy is to pay out approximately 40% of adjusted diluted earnings per share, subject to the capital needs of the business. The Board is able to recommend a final dividend of 11.4p per ordinary share (2019: 22.30p), payable on 16 February 2021 to shareholders on the register on 27 November 2020. As confirmed on 4 June 2020, the Board adopted a prudent approach to shareholder distribution and did not declare an interim dividend for the financial year 2020 which resulted in a cash saving of approximately £12m. The total dividend for the year will therefore be 11.4p per ordinary share (2019: 33.1p). Distributable reserves (unaudited) The reserves which are potentially distributable to the Company’s equity shareholders are determined by company law and require judgement. At 30 September 2020, the Company had reserves of at least £209.1m (2019: £231.2m) available for distribution to its equity shareholders, comprising the share-based payment reserve of £38.7m (2019: £40.1m) and £185.0m (2019: £210.8m) of the profit and loss account less £14.6m (2019: £19.7m) in relation to own shares by virtue of s381 Companies Act 2006. Share capital The Company’s share capital is divided into ordinary shares of 0.25p each. At 30 September 2020, there were 109,289,406 ordinary shares in issue and fully paid. During the year, 40,054 ordinary shares of 0.25p each (2019: 68,623 ordinary shares) with an aggregate nominal value of £100 (2019: £172) were issued following the exercise of share options granted under the Company’s share incentive schemes for a cash consideration of £0.3m (2019: £0.5m). Details of the Company’s share capital are given in note 24 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. 98 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 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 2020 AGM, shareholders authorised the Company to make market purchase of its own shares. The Company has not yet exercised this authority to date. The Directors were authorised by shareholders to allot shares up to an aggregate nominal amount of £182,082 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 the date of this report. This information is disclosed pursuant to the Disclosure Guidance and Transparency Rules and in response to disclosures requested by the Company. Save for the two disclosures below, no notifications have been disclosed to the Company in accordance with DTR 5 during the period 1 October 2020 to 18 November 2020. Shareholder Lindsell Train Limited Lindsell Train Limited Standard Life Aberdeen plc Standard Life Aberdeen plc Standard Life Aberdeen plc Majedie Asset Management Limited Standard Life Aberdeen plc Aviva plc Nature of holding Direct and Indirect Direct and Indirect Shareholding Interest 15,245,022 13.95% Date of disclosure 23 January 2020 14,204,750 12.99% 16 November 2020 10.75% 18 November 2020 Indirect 11,746,103 Indirect 8,886,552 8.13% 10 July 2020 Indirect 5,498,809 5.03% 13 May 2020 Indirect 5,290,991 4.84% 19 June 2020 Indirect 3,873,935 3.60% Direct 3,415,969 3.13% 2 October 2019 20 August 2020 Employee engagement Going concern 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 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, using our grievance process. Alternatively, it may be via a third party, using 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 Expolink 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. Covid-19 has posed challenges for the Group’s employees, both professionally and personally. We froze hiring and pay, and the majority of our higher-paid people volunteered to defer a proportion of their salary into Company shares for three months. Our need to restructure the business for the current situation has led to us removing more than 200 roles from the Company, more than half of which are in our event businesses. These measures, combined with the personal strain caused by the pandemic, mean that the Company will need to work hard on continued employee engagement over the next 12 months in order to incentivise our staff to perform and help the Company achieve its objectives. During the year the Employee Forum met and discussed issues including: parental leave policies; inclusion and diversity; Group results; the strategic review of Asset Management businesses; and Employee Forum representation, communications and areas of focus. Political donations No political donations were made during the year (2019: £nil). Post balance sheet events Events arising after 30 September 2020 are set out in note 30 to the Group’s Financial Statements. G o v e r n a n c e 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 as set out in note 1 to the Consolidated Financial Statements. 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 60 to 67) • Related party transactions (note 29) • Waivers of dividends (page 116) • Greenhouse Gas (GHG) reporting (page 38) 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 2021 AGM. Annual General Meeting At the date of this report, taking into account the constantly evolving covid-19 situation and the UK Government’s restrictions and guidance on, amongst other things, public gatherings and social distancing, we hope that shareholders will understand that the Company is planning to hold its 2021 AGM remotely as a closed meeting as currently permitted by legislation. This means that unfortunately shareholders will not be permitted to attend the AGM in person. The Company intends to include a proposal in its 2021 AGM circular to update its Articles in order to permit future combined physical and electronic meetings, allowing shareholders to attend meetings physically or electronically if the Directors decide to hold a so-called ‘hybrid’ meeting. A separate circular comprising the Notice of Meeting together with explanatory notes, accompanies this Annual Report and Accounts. Directors Directors and Directors’ interests The membership of the Board and biographical details of the Directors are given on pages 58 and 59 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) 28 January 2020 Director Jan Babiak Colin Day Tristan Hillgarth Imogen Joss Wendy Pallot Tim Pennington Andrew Rashbass Lorna Tilbian Leslie Van de Walle Euromoney Institutional Investor PLC Annual Report and Accounts 2020 99 Governance Directors’ Report continued 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 76 to 97. 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: Stakeholder engagement The Company’s S172 statement on page 40 refers to how the Board complies with its S172 obligations to balance the interests of all shareholders. 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 will 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 18 November 2020 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 (IFRS) 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 100 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 • Select suitable accounting policies and then apply them consistently; • State whether applicable IFRSs as adopted by the European Union have been followed for the Group financial statements and United Kingdom Accounting Standards, comprising FRS 102, have been followed for the Company financial statements, subject to any material departures disclosed and explained in the financial statements; • Make judgements and accounting estimates that are reasonable and prudent; and • Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business. The Directors are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements and the Directors’ Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Directors’ confirmations Each of the Directors, whose names and functions are listed on pages 58 and 59 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 18 November 2020 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 as at 30 September 2020 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 Company Balance Sheet as at 30 September 2020; the Consolidated Income Statement; the Consolidated Statement of Comprehensive Income; the Consolidated and Company Statements of Changes in Equity; and the Consolidated Statement of Cash Flows 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 2019 to 30 September 2020. Our audit approach Overview Materiality Audit scope Key audit matters • Overall Group materiality: £3.2 million (2019: £4.0 million), based on 5% of a three year average of statutory profit before tax, adjusted for exceptional items. • Overall Company materiality: £12.4 million (2019: £14.2 million), based on 1% of total assets. • We conducted work in three key territories being the UK, US and Canada. This included full scope audits at five components with centralised procedures performed over balances in a further three components. • Taken together, the components at which audit work had been performed accounted for approximately 74% of Group’s revenue and 66% of the Group’s statutory profit before tax, adjusted for exceptional items. • Carrying values of goodwill and acquired intangible assets (Group) • Carrying value of investment in subsidiary (Company) • Uncertain tax positions (Group) • Presentation of exceptional items (Group) • Acquisitions (Group) • Covid-19 (Group and Company) Euromoney Institutional Investor PLC Annual Report and Accounts 2020 101 i F n a n c i a 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 industry, we identified that the principal risks of non-compliance with laws and regulations related to non-compliance with the Companies Act 2006 (CA06), the Listing Rules of the Financial Conduct Authority (FCA), the UK Bribery Act 2010, General Data Protection Regulation (GDPR) and applicable tax laws in relevant jurisdictions, 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, 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 internal 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 to impairment of goodwill and intangible assets, acquisition accounting and uncertain tax positions; and • Identifying and testing unusual journal entries, in particular journal entries posted with an unusual account combination. 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. 102 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Key audit matter How our audit addressed the key audit matter Carrying values of goodwill and acquired intangible assets (Group) Refer to the Audit & Risk Committee report on page 73 and to note 11 to the Consolidated Financial Statements. At 30 September 2020, the Group had £658.1m (2019: £405.4m) of intangible assets, which includes £183.4m (2019: £149.5m) of acquired intangible assets and £456.3m (2019: £246.3m) 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. 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. For goodwill impairment testing CGU’s are grouped at a divisional level, which represents the lowest level at which goodwill is monitored for internal management purposes. The cash flow forecasts and related recoverable value calculations include a number of significant judgements and estimates including revenue and profit growth rates, terminal growth rates and discount rates. Changes in the key assumptions underpinning these calculations have a significant impact on the headroom available in the impairment calculations. Covid-19 has had a significant impact on the Group, causing a significant decline in events revenue and profits in the year. There is uncertainty over the shape and speed of recovery of events activity and to what extent physical events will be permanently lower than 2019 levels. Covid-19 has also impacted the subscription revenues. Management has reflected the estimation uncertainty caused by covid-19 by using probability weighted cash flow forecasts, incorporating different potential scenarios for those CGUs most dependent on events revenue. Management identified the impact of covid-19 as a potential indicator of impairment for certain intangible assets. Following the impairment review management has recorded a £1.7m impairment charge in the year. We obtained management’s goodwill impairment model and tested the reasonableness of key assumptions, including revenue and profit growth rates, terminal growth rates and the selection of discount rates. We agreed the underlying profit projections to management approved budgets and forecasts and assessed how these projections are compiled, checking the mathematical accuracy. For those CGUs most dependent on event revenue, management utilised probability weighted cash flows to reflect the range of potential outcomes. We assessed the reasonableness of the different scenarios, which included no return to physical events in the discrete cash flow period and the probability associated with each. 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 underpinned by previous transactions. 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 underperforming businesses. As a result of our work, we determined that the impairment charge recognised in 2020 for intangible assets 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 2020 103 i F n a n c i a 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 We evaluated management’s assessment whether any indicators of impairment existed by comparing the net assets of the Company’s subsidiary at 30 September 2020 with the Company’s investment carrying value and to the market capitalisation of the Group. 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 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 value by reference to the Group’s market capitalisation at 30 September 2020. 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 value was consistent with the recoverable values of the 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 £206.7m impairment charge to be appropriate and that the remaining carrying value of the investment held by the Company is supportable in the context of the Company Accounts taken as a whole. Carrying value of investment in subsidiary (Company) Refer to the Audit & Risk Committee report on page 73 and to notes 2 and 6 in the Company Financial Statements. The investment in subsidiary of £1,019.0m (2019: £1,225.6m) is accounted for at cost less impairment in the Company Balance Sheet at 30 September 2020. Investments are tested for impairment if impairment indicators exist. If such indicators exist, the recoverable value of the investment is 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. The decline in the Group’s near-term forecast cash flows as a result of covid-19 and fall in the Group’s market capitalisation was identified by management as potential indicators of impairment in the investment in subsidiary. Additionally, the Group has also reorganised its corporate structure with initial stages being completed by 30 September 2020. Accordingly, management calculated the recoverable value of the investment in subsidiary, which indicated an impairment charge of £206.7m, largely triggered by the reduced cash flows forecasts. 104 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Key audit matter How our audit addressed the key audit matter Uncertain tax positions (Group) Refer to the Audit & Risk Committee report on page 72 and to note 8 to the Consolidated Financial Statements. The Group operates in a complex multinational tax environment in relation to direct taxes. 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. There are a number of open tax matters with tax authorities, especially in the UK relating to an HMRC enquiry from 2015 which has a maximum potential exposure of £10.7m and was fully provided in 2018. The case was heard by the First-tier Tribunal and judgment is expected to be received imminently. During the year, the Canadian Revenue Agency offered to consent to judgement on a previously unprovided but disclosed matter resulting in no liability to the Group. In addition, the Group reached settlements with HMRC relating to payroll taxes of off-payroll employees and to VAT recharges between UK subsidiaries. This resulted in releases of the amounts previously provided of £6.7m and £11.3m, respectively. Presentation of exceptional items (Group) Refer to the Audit & Risk Committee report on page 72 and to note 5 to the Consolidated Financial Statements. The Group continues to present adjusted earnings by making adjustments for charges and credits which management believes to be exceptional by virtue of their size and incidence. During the year, the Group presented £4.8m of net charges (2019: £3.9m net credit) as exceptional items primarily comprising: severance and other costs associated with the announced restructuring, intangible asset impairments and professional fees associated with the acquisitions in the year; offset by releases of provisions for exposures relating to payroll taxes on off-payroll employees and VAT. 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. 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. In the case of the settled matter with the Canadian Revenue Agency, we inspected correspondence with the Canadian Revenue Agency and the court’s consent to settlement. Deploying our tax specialists, we reviewed external expert advice received by the Group in relation to the challenges by HMRC. We inspected correspondence with HMRC in relation to the off-payroll employees and VAT settlements and validated the quantum of the provision required to be released. We considered and concurred with management’s view that the release was as a result of positive engagement with HMRC and therefore it was appropriate to be adjusted in the current period. 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. 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 2020. Overall, we found that management was even handed and consistent in its treatment of exceptional credits and debits. We were satisfied that the restructuring costs were sufficiently large and related to a major restructuring programme to be classified as exceptional. We also concurred with management’s judgement that excluding the one-off credits arising from provision releases from adjusted profit measures was appropriate given their size and that they were not related to trading activity in the year. Where other 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 charges and credits. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 105 i F n a n c i a 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 Acquisitions Refer to the Audit & Risk Committee report on page 73 and to note 15 to the Consolidated Financial Statements. On 25 November 2019, the Group acquired 100% of the equity share capital of Wealth-X for £16.6m. A provisional purchase price allocation exercise has been performed by management, assisted by an external expert. The purchase price allocations exercise determined that the fair value primarily related to identifiable intangible assets in the form of an acquired database, customer relationships and the Wealth-X brand. 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. On 9 March 2020, the Group acquired 100% of the share capital of Census Commodity Data Limited for £9.0m. An intangible asset representing the value of the acquired brand (£0.8m) was recognised along with goodwill of £8.6m. How our audit addressed the key audit matter In respect of the Wealth-X acquisition, 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. We deployed our valuations experts and 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 acquired entity’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. In respect of the Census Commodity Data acquisition, we reviewed the SPA and audited management’s purchase price allocation including assessing the reasonableness of forecast cash flows against historical growth rates. We believe management’s purchase price allocation to be materially correct. 106 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Key audit matter How our audit addressed the key audit matter Our procedures in response to covid-19 in relation to the carrying value of goodwill and acquired intangible assets and investment in subsidiary key audit matters are set out in the relevant areas of focus above. We obtained management’s cash flow forecasts used to support the Directors’ going concern and viability assessment, reconciling the forecast cash flow analysis to those in the goodwill impairment reviews. We considered the reasonableness of severe but plausible downside scenarios applied to these forecasts, which included scenarios where there was no return to physical events until October 2021. We reviewed the terms of the Group’s RCF including the covenants that are required to be met for the facility to be available for drawdown. Under management’s severe but plausible downside scenario, we noted significant liquidity headroom and no breaches of covenants were forecast. We have assessed the provision for expected credit loss on trade receivables, including analysing the value of debtors held with individual customers, how concentrated these are and the customer type and size. We also considered the adjustments management has made to capture the increased risk of default in the current period, which we believe to be materially appropriate. We have reviewed the disclosures in the Consolidated Financial Statements explaining the impact of covid-19 on the results for the period and disclosures management has given to explain and quantify the estimation uncertainty and believe these to be appropriate. Covid-19 (Group and Company) Refer to the Audit & Risk Committee report on page 73 and to note 1, 2, 11, 16 and 20 to the Consolidated Financial Statements. The covid-19 pandemic has had a significant impact on the trading performance of the Group during the year. The pandemic has also brought increased estimation uncertainty to certain areas of the financial statements. We identified the following key impacts: • Heightened uncertainty over the shape and speed of the recovery from covid-19 and in particular in relation to the events business activity. Management has reflected this uncertainty in their budgets and models supporting the goodwill impairment assessments by using probability weighted cash flow forecasts, incorporating different potential scenarios for those CGUs most dependant on events revenue. In addition, the useful economic life of certain intangible assets have been reassessed. Consideration of the impact on the carrying value of goodwill and acquired intangible assets and the carrying value of the Company’s investment in subsidiary is described in the related key audit matters above; • Increased uncertainty over the forecasts used by the Directors’ assessing the ability of the Group to continue as a going concern and its assessment of the Group’s viability. This includes the cash flow forecasts used to assess the liquidity available to the Group and the impact of severe but plausible downsides on covenants of its Revolving Credit Facility (RCF); and • Increased probability of customers defaulting on their debts, such that the historical debtor write-off rate is no longer an appropriate indicator of the future credit loss which needs to be provided for at 30 September 2020. In addition, management’s way of working, including the operation of controls, has been impacted by covid-19 as a result of a large number of staff working remotely. There is inevitably an increase in risk due to the remote accessing of IT systems and potentially heightened cyber risk. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 107 i F n a n c i a 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 accounting processes and controls, and the industry in which they operate. We identified five components in the UK, US and Canada that required a full scope audit due to their size. Centralised audit procedures over specific financial statement line items were performed at a further three components in the UK 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 centralised audit procedures over cash and cash equivalent balances held at Euromoney Canada and Fantfoot (both UK) and over right of use assets and property, plant and equipment and related dilapidation provisions at Tipall (UK). 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, treasury, post-retirement benefits and tax. Taken together, the components and corporate functions where we conducted audit procedures accounted for approximately 74% of the Group’s total revenue and 66% of the Group’s statutory profit before tax, 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 Overall materiality £3.2m (2019: £4.0m). How we determined it Rationale for benchmark applied 5% of the three year average of statutory profit before tax, adjusted for exceptional items. 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. We have used a three year average of this metric to determine materiality given the volatility in the Group’s 2020 results from covid-19, which is not necessarily reflective of the size of the Group’s continuing operations or balances. Company Accounts £12.4m (2019: £14.2m). 1% of total assets. Based on our professional judgement, total assets is an appropriate measure to assess the performance of the Company and is a generally accepted auditing benchmark. 108 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 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 £2.0m and £2.9m. Certain components were audited to a local statutory audit materiality that was also less than our overall Group materiality. We agreed with the Audit & Risk Committee that we would report to them misstatements identified during our audit above £0.2m (Group audit) (2019: £0.2m) and £0.2m (Company audit) (2019: £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. 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 2020 109 i F n a n c i a 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 2020 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 100 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. • The Directors’ explanation on page 57 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 65, that they consider the Annual Report taken as a whole to be fair, balanced and understandable, and provides the information necessary for the members to assess the Group’s and Company’s position and performance, business model and strategy is materially inconsistent with our knowledge of the Group and Company obtained in the course of performing our audit. • The section of the Annual Report on pages 68 to 73 describing the work of the Audit & Risk Committee does not appropriately address matters communicated by us to the Audit & Risk Committee. • 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) 110 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Responsibilities for the financial statements and the audit Responsibilities of the Directors for the financial statements As explained more fully in the Statement of Directors’ responsibilities set out on page 100, 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/ auditorsresponsibilities. This description forms part of our auditors’ report. Use of this report This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Other required reporting Companies Act 2006 exception reporting Under the Companies Act 2006 we are required to report to you if, in our opinion: • we have not received all the information and explanations we require for our audit; or • adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or • certain disclosures of Directors’ remuneration specified by law are not made; or • the Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility. Appointment Following the recommendation of the Audit & Risk 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 six years, covering the years ended 30 September 2015 to 30 September 2020. Jason Burkitt (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 18 November 2020 111 Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2020 Financial Statements Consolidated Income Statement for the year ended 30 September 2020 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 Attributable to: Equity holders of the parent Equity non-controlling interests Earnings per share Basic Diluted Dividend per share (including proposed dividends) 2020 £000 335,256 61,481 (23,039) (4,811) 33,631 (495) 4,141 (4,368) (227) 32,909 (2,125) 30,784 30,978 (194) 30,784 28.8p 28.8p Restated1 2019 £000 401,673 105,443 (25,143) 3,856 84,156 (88) 1,873 (3,082) (1,209) 82,859 (21,666) 61,193 60,929 264 61,193 56.6p 56.6p 11.4p 33.1p Notes 3 3 11 5 3, 4 14 7 7 7 3 8 3 10 10 9 1 In the 2019 Annual Report and Accounts the results for the year ended 30 September 2019 were split between continuing and discontinued operations. As outlined in note 1, Asset Management no longer meets the classification criteria of discontinued operations and all of the results are presented as continuing operations in the 2020 Annual Report and Accounts. A detailed reconciliation of the Group’s statutory results to the adjusted and underlying results is set out on pages 20 to 23. 112 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Consolidated Statement of Comprehensive Income for the year ended 30 September 2020 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 on cash flow hedges from fair value reserves to Income Statement: Foreign exchange losses in revenue Foreign exchange losses in administrative expenses Net exchange differences on translation of net investments in overseas subsidiary undertakings Net exchange differences on foreign currency loans Fair value remeasurements Items that will not be reclassified to profit or loss: Actuarial gains/(losses) on defined benefit pension schemes Tax (loss)/credit on actuarial gains/losses on defined benefit pension schemes Other comprehensive (expense)/income for the year Total comprehensive income for the year Attributable to: Equity holders of the parent Equity non-controlling interests 2020 £000 30,784 2019 £000 61,193 1,838 (5,061) 1,300 523 (17,437) (3,781) – 3,483 361 22,644 1,524 2,131 3,005 (468) (5,175) 880 (15,020) 20,787 15,764 81,980 15,958 (194) 15,764 81,716 264 81,980 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 113 i F n a n c i a l S t a t e m e n t s Financial Statements Consolidated Statement of Financial Position as at 30 September 2020 Non-current assets Intangible assets Goodwill Other intangible assets Property, plant and equipment Right of use assets Investment in associates and joint ventures Convertible loan note Deferred tax assets Retirement benefit asset Other non-current assets Derivative financial instruments Current assets Trade and other receivables Contract assets 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 Lease liabilities Current income tax liabilities Accruals Contract liabilities Derivative financial instruments Provisions Total liabilities of businesses held for sale Net current (liabilities)/assets Total assets less current liabilities Non-current liabilities Acquisition commitments Lease liabilities Other non-current liabilities Contract liabilities Deferred tax liabilities Retirement benefit obligation Derivative financial instruments Provisions Net assets 114 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Notes 2020 £000 2019 £000 11 11 12 13 14 20 23 27 20 16 20 20 26 26 17 19 18 20 22 26 19 18 23 27 20 22 456,343 201,713 14,454 53,404 8,836 – 4,018 566 422 307 246,281 159,140 15,294 – 5,271 3,759 2,232 1,511 317 93 740,063 433,898 71,428 1,454 10,602 28,093 782 – 112,359 (15) – (27,885) (9,142) (15,824) (44,013) (132,615) (914) (7,272) – (237,680) (125,321) 614,742 – (60,999) (216) (1,936) (28,104) (3,130) (134) (2,848) (97,367) 517,375 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 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 24 2020 £000 2019 £000 273 104,636 64,981 56 (14,592) 38,686 (23,528) 122,427 224,436 517,375 – 273 104,306 64,981 56 (19,682) 40,120 (27,087) 143,243 218,795 525,005 1,043 517,375 526,048 The Financial Statements on pages 112 to 166 were approved by the Board of Directors on 18 November 2020 and signed on its behalf by: Andrew Rashbass Wendy Pallot Directors 18 November 2020 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 115 i F n a n c i a 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 2020 Called up share capital £000 Share premium account £000 Other reserve £000 Capital redemption reserve £000 Own shares £000 Reserve for share- based payments £000 Fair value reserve £000 Translation reserve £000 Retained earnings £000 Non- controlling interests £000 Total £000 Total equity £000 273 103,790 64,981 56 (20,462) 39,687 (28,001) 119,075 199,630 479,029 – 479,029 – – – – – – – – – – – – – – – – 516 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 883 – 780 (450) – – – – 60,929 60,929 264 61,193 914 24,168 (4,295) 20,787 – 20,787 914 24,168 56,634 81,716 264 81,980 – – – – – – – – – (1,429) (1,429) – (1,429) – – – 883 779 – 779 883 – (35,586) (35,586) – (35,586) – – (330) 516 (124) (124) – – 516 (124) At 1 October 2018 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 Share-based payments Cash dividend paid Exercise of share options Tax relating to items taken directly to equity At 30 September 2019 273 104,306 64,981 56 (19,682) 40,120 (27,087) 143,243 218,795 525,005 1,043 526,048 Impact of adopting IFRS 16 – – – – – – – – (1,989) (1,989) – (1,989) At 1 October 2019 273 104,306 64,981 56 (19,682) 40,120 (27,087) 143,243 216,806 523,016 1,043 524,059 Profit/(loss) for the year Other comprehensive income/(expense) for the year Total comprehensive income/(expense) for the year Share-based payments Cash dividend paid Exercise of acquisition option commitments Exercise of share options Reclassification of reserves Tax relating to items taken directly to equity – – – – – – – – – – – – – – – 330 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 30,978 30,978 (194) 30,784 – 3,661 (21,218) 2,537 (15,020) – (15,020) – 3,661 (21,218) 33,515 15,958 (194) 15,764 – 2,992 2,263 – (23,994) (23,994) – 2,263 – (23,994) – – 849 (4,385) 849 330 – (849) – – – 330 – (102) 402 (300) (729) – – – – – – 5,090 (705) – – – – At 30 September 2020 273 104,636 64,981 56 (14,592) 38,686 (23,528) 122,427 224,436 517,375 – – (1,047) (1,047) – (1,047) – 517,375 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 Employees’ Share Ownership Trust Euromoney Employee Share Trust Total Nominal cost per share (p) Historical cost per share (£) Market value (£000) 2020 Number 58,976 1,179,662 1,238,638 0.25 11.78 9,946 2019 Number 58,976 1,593,198 1,652,174 0.25 11.91 24,452 116 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Consolidated Statement of Cash Flows for the year ended 30 September 2020 Cash flow from operating activities Operating profit Long-term incentive (credit)/expense and salary deferral Acquired intangible amortisation Licences and software amortisation Depreciation of property, plant and equipment Depreciation and impairment of right of use assets Loss on disposal of property, plant and equipment Impairment charge Amendment to defined benefit pension plan Profit on disposal of businesses Increase/ (decrease) in provisions Profit on deemed disposal of associate Operating cash flows before movements in working capital Decrease in receivables Decrease in payables Cash generated from operations Income taxes 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 associates Receipt of deferred consideration Payment of deferred consideration Net cash used in investing activities Financing activities Dividends paid Interest paid Capital element of lease repayments Interest element of lease repayments Issue of new share capital Proceeds from borrowings Decrease in borrowings Purchase of additional interest in subsidiary undertakings Net cash used in from financing activities Net decrease 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 Notes 2020 £000 2019 £000 25 11 11 12 13 5 5 5 22 11 15 15 26 26 33,631 2,261 23,039 2,860 2,908 7,785 115 1,727 – – 6,389 – 80,715 1,752 (25,099) 57,368 (7,139) 50,229 310 (9,110) (1,967) 507 (23,999) – – 176 (134) 84,156 883 25,143 2,099 2,744 – 19 2,410 (1,224) (16,998) (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) (34,217) (47,686) 9 (23,994) 24 15 (2,130) (6,071) (1,985) 330 67,857 (68,737) (883) (35,613) (19,601) 50,078 (2,384) 28,093 – 28,093 (35,586) (1,287) – – 516 – – (97) (36,454) (30,151) 78,273 1,956 50,078 (327) 49,751 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 117 i F n a n c i a 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 2020. The adoption and impact of these new pronouncements from 1 October 2019 has been disclosed within this note. Additional disclosure has been given where relevant: • IFRS 16 ‘Leases’ – mandatory for reporting periods starting on or after 1 January 2019 • IFRIC 23 ‘Uncertainty over Income Tax Treatments’ – mandatory for reporting periods starting on or after 1 January 2019 • Amendment to IFRS 16 ‘Leases’ covid-19 rent concessions – the mandatory effective date of implementation is 1 June 2020 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, which have 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 phase 1 – ‘Financial Instruments’ – IFRS 9, IAS 39 and IFRS 7 – the mandatory effective date of implementation is 1 January 2020 • Amendments to IAS 1 ‘Presentation of Financial Statements’ – 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 As at 30 September 2020, the following standards have not been endorsed by the European Union: • Amendments to Interest Rate Benchmark Reform phase 2 – ‘Financial Instruments’ – IFRS 9, IAS 39, IFRS 7 and IFRS 16 – the mandatory effective date of implementation is 1 January 2021 118 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 • Amendments to classification of liabilities in IAS 1 ‘Presentation of Financial Statements’ – the mandatory effective date of implementation is 1 January 2022. IFRS 16 ‘Leases’ On 1 October 2019 the Group adopted IFRS 16, ‘Leases’, using the modified retrospective transition method. As permitted under the specific transitional provisions in the Standard, comparatives for 2019 have not been restated and the cumulative impact on the Group’s Financial Statements has been applied by adjusting the relevant opening balances on 1 October 2019. On adoption of IFRS 16, the Group recognised liabilities for a number of leases for office premises, which had previously been classified as operating leases, in accordance with IAS 17, ‘Leases’. These have been measured at the present value of the remaining lease payments, discounted using the incremental borrowing rate (IBR) determined for each lease. The weighted average IBR applied to the leases on transition at 1 October 2019 was 2.77%. The Group did not have any leases which would have been classified as finance leases, under IAS 17. The right of use (ROU) assets were recognised using a mixture of the ‘simplified’ and ‘asset’ transition 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 calculated as if IFRS 16 had always been applied. A reconciliation of the operating lease commitments disclosed in the 2019 Annual Report and Accounts to the lease liabilities on transition to IFRS 16 is as follows: Operating lease commitments at 30 September 2019 Short-term exemption Leases not within scope of IFRS 161 Leases with terms starting after transition Gross lease liabilities at 1 October 2019 Discounting Additional lease liabilities as a result of the initial application of IFRS 16 as at 1 October 2019 Current liabilities Non-current liabilities £000 87,708 (40) (71) (3,303) 84,294 (12,690) 71,604 8,162 63,442 1 Commitments for access to shared workspaces where it has been determined that ‘right of use’ criteria specified in IFRS 16 have not been met. The change in accounting policy affected the following items in the balance sheet on 1 October 2019: Increase in right of use assets2 Increase in lease liabilities Increase in deferred tax assets Decrease in deferred tax liabilities Decrease in accruals Decrease in retained earnings 2 All of the right of use assets relate to property. £000 56,732 71,604 254 352 12,277 1,989 The carrying value of ROU assets at 30 September 2020 was £53.4m, this is disclosed on the face of the balance sheet. The carrying value of the lease liabilities at 30 September 2020 was £9.1m in current liabilities and £61.0m in non-current liabilities. 1 Accounting policies continued Under the previous accounting treatment, lease expenses were charged to the Income Statement on a straight-line basis as an operating expense. Under IFRS 16, a depreciation charge is recognised on the right of use assets and a finance expense recognised arising from the lease liability. While the total expense over the life of the lease will be consistent, the charge in any one year could be different. The change in accounting policy for the leases on transition reduced the Group’s earnings per share by 0.4p in 2020. The Group has taken advantage of the following practical expedients when implementing IFRS 16, as allowed by the standard: • On initial application, IFRS 16 only applies 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 over the right of use assets upon adoption; and • Initial direct costs are excluded from the measurement of the right of use asset at the date of initial application. Following transition, the Group has also applied 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. The leases accounting policy is set out on page 121. 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 2020, the accounting policies set out below have been applied consistently to all periods presented in these Consolidated Financial Statements. Having assessed the principal risks and the other matters discussed in connection with the viability statement, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing this Annual Report. Going concern, debt covenants and liquidity At 30 September 2020, the Group’s net cash position, excluding lease liabilities, was £28.1m and comprised entirely of cash and cash equivalents. During the year the Group’s committed revolving credit facility was extended to December 2022 and the limit of the facility reduced to £188m. At 30 September 2020 the facility was undrawn. The facility’s covenants requires the Group’s net debt to be no more than three times adjusted 12-month EBITDA and requires minimum levels of interest cover of three times on a 12-month basis. The values and foreign exchange rates used in the covenant calculations are subject to adjustments from the statutory numbers as defined under the terms of the facility agreement. At 30 September 2020, the Group was in a net cash position and unlevered. The uncertainty as to the future impact on the Group of the covid-19 outbreak has been considered as part of the Group’s adoption of the going concern basis. The Group has not identified any material uncertainties in its going concern assessment. As previously announced, it is unlikely the Group will run physical events until December 2020 and the effect of covid-19 on broader economic activity could impact the ability to generate new sales. The Group has taken swift and decisive action to reduce costs and preserve cash, while supporting employees, serving customers and protecting the long-term health of the business. The Group had taken steps to minimise non-contractual spend, postpone capital expenditure, freeze pay, limit new hires, utilise government support schemes, swapping an element of salaries for shares, run virtual events and not declaring an interim dividend. Taking into account reasonably possible changes in trading performance, the Group’s forecasts and projections, out to the going concern assessment period of 12 months from the date of signing the Financial Statements, show that the Group should be able to operate within the level and covenants of its current and available borrowing facilities. In making the going concern assessment, the Directors have also modelled a severe but plausible downside that assumes no physical events in the year ending 30 September 2021 and a fall of 10% in non-events businesses versus the plan. Under this scenario, the Group maintains sufficient liquidity and is projected to satisfy covenants required by the RCF after taking measures to preserve cash. The viability statement is disclosed on page 57. Based on the results of the assessment, 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. Restatements Following the conclusion of the strategic review of Asset Management, whereby it was announced that the Group is to remain the long-term owner of Asset Management, the segment no longer meets the classification criteria of discontinued operations and held for sale. As a result, the Income Statement is no longer split into continuing and discontinued operations, for either 2019 or 2020. The assets and liabilities on the Statement of Financial Position remain classified as held for sale at 30 September 2019 as the business was held for sale at that point. The balances disclosed as held for sale at 30 September 2019 were as follows: Asset Management Goodwill Acquired intangible assets Licences 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 business held for sale Trade and other payables Accruals Contract liabilities Derivative financial instruments Deferred tax liabilities Total liabilities of the business held for sale 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) Euromoney Institutional Investor PLC Annual Report and Accounts 2020 119 i F n a n c i a l S t a t e m e n t s Financial Statements Notes to the Consolidated Financial Statements continued 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. 120 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 (b) Transactions with non-controlling interests Transactions with non-controlling interests in the net assets of consolidated subsidiaries are identified separately and included in the Group’s equity. Non-controlling interests consist of the amount of those interests at the date of the original business combination and its share of changes in equity since the date of the combination. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance. (c) Interests in joint ventures and associates A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control, that is, when the strategic financial and operating policy decisions relating to the activities require the unanimous consent of the parties sharing control. An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies. The post-tax results of joint ventures and associates are incorporated in the Group’s results using the equity method of accounting. Under the equity method, investments in joint ventures and associates are carried in the Consolidated Statement of Financial Position at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the joint venture and associates, less any impairment in the value of the investment. Losses of joint ventures and associates in excess of the Group’s interest in that joint venture or associate are not recognised. Additional losses are provided for, and a liability is recognised, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the joint venture or associate. Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the joint venture or associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment. Non-current assets classified as held for sale Where the carrying value of a non-current asset is expected to be principally recovered through its sale, the asset is classified as held for sale if it also meets the following: • The asset is available for sale in its current condition; • The sale is highly probable; and • The sale is expected to occur within one year. Once classified as held for sale, the asset is held at the lower of its carrying value and the fair value less cost to sell and is no longer depreciated. Discontinued operations A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which: • Represents a separate major line of business or geographic area of operations; • Is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations; or • Is a subsidiary acquired exclusively with a view to re-sale. Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held for sale. 1 Accounting policies continued 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 Euromoney Group Limited (formerly named 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. Government grants Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received. Government grants are recognised in the Income Statement so as to match with the related costs they are intended to compensate for. Grant income is deducted against the related expense. Leases The Group recognises all leases on the Statement of Financial Position, apart from in cases where the lease is for a period of less than 12 months or is for an asset with a low value. Lease liabilities are recognised at the present value of future lease payments, determined using the implicit interest rate in the lease where available, or using an incremental borrowing rate appropriate to the subsidiary and lease term where an implicit interest rate is not available or appropriate. A corresponding right of use asset is recognised, equivalent to the value of the lease liability which is depreciated in a straight line over the shorter of the useful economic life of the asset and the lease term. The depreciation is recognised as an administrative expense within overheads. The unwinding of the discount on the present value of the lease liability is recognised as a finance charge over the lease term. Rent payments are used to reduce the lease liability and are disclosed as debt repayments in the Statement of Cash Flows. Lease terms include any options to extend when it is reasonably certain that the extension will be taken. Low-value and short-term leases continue to be charged to the Income Statement on a straight-line basis. The Group’s leases relate to property, mainly offices. 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: Leasehold improvements over term of lease Office equipment 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. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 121 i F n a n c i a l S t a t e m e n t s Financial Statements Notes to the Consolidated Financial Statements continued 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. The Group’s financial assets and liabilities are listed in note 20. 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. 1 Accounting policies continued 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. 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. 122 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 1 Accounting policies continued 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. 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. 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. 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 risk, 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. 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. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 123 i F n a n c i a l S t a t e m e n t s Financial Statements Notes to the Consolidated Financial Statements continued 1 Accounting policies continued 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 the Statement of Comprehensive Income and equity, in which case the deferred tax is also dealt with in the 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, and there is a wide range of possible outcomes, IFRIC 23 requires the Group to adopt a probability weighted average approach in calculating a provision to be made. These provisions are made for each uncertainty individually on the basis of the most appropriate method considering all relevant information. The Group reviews the adequacy of these provisions at the end of each reporting period and adjusts them based on changing facts and circumstances. 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. 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. Defined contribution plans Payments to the defined contribution pension plan are charged to the Income Statement as they fall due. • Events revenues, for both physical and virtual events, 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. 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. 124 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 1 Accounting policies continued 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. 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 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 20 to 23. 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 and ruled that the GFE is only justified where there are no UK activities involved in generating the finance profits. The UK Government has appealed to the General Court of the European Union against the decision. However, the UK Government is required to commence collection proceedings and therefore it is expected that the Group will have to make a payment in the year ending 30 September 2021. In response to HMRC’s requests in this matter, the Group provided further details to HMRC in July 2020. It is uncertain at this stage the amount the UK Government will seek to collect. If the decision of the European Commission is upheld, the Group’s estimated maximum liability is approximately £8.9m, including estimated interest of £0.6m. Based on our current assessment and professional advice taken on the matter, management concludes no provision is required in relation to this amount. New York and New York City state income tax filing US corporations are required to file state income tax returns for New York and New York City (NY and NYC) on a combined basis if they conduct a unitary business and have common ownership or control. All US entities within the Group are under common control, however, whether the entities conduct a unitary business is a matter of judgement for the Group. The Group concludes that the US Group entities have conducted a unitary business since financial year 2016 due to centralised management, functional integration and economies of scale achieved through a new Group strategy. The Group therefore determined that the NY and NYC state income tax returns should be filed on a combined basis. The impact of this is that NY and NYC tax losses carried forward (previously unrecognised due to the utilisation of these losses being not probable) can be offset against future profits generated by the combined group, resulting in additional deferred tax asset being recognised in the current period. Further details are disclosed in note 8. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 125 i F n a n c i a l S t a t e m e n t s Financial Statements Notes to the Consolidated Financial Statements continued 2 Key judgemental areas adopted in preparing these Financial Statements continued Equity investment in Zanbato, Inc. (Zanbato) The Group holds 12.34% of the shares in Zanbato with a carrying value of £8.8m at 30 September 2020. The Group’s investment in Zanbato was classified as an associate in July 2019 as a result of a voting Board seat and the maturity of the Group’s convertible loan notes in Zanbato. The loan notes converted on 24 January 2020. 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. The Group has therefore used the equity method to account for the investment in associate. Acquisitions The Group is required to identify and allocate the purchase consideration of acquisitions in the year to the assets and liabilities acquired. Judgement is required in determining the identifiable intangible assets. For the two acquisitions in the year, the Group identified intangible assets arising from the acquired database, brands and customer relationships. This was from review of the purchase agreements, due diligence reports and the Group’s understanding of the nature of the businesses. The total value of acquired intangible assets recognised in the year was £16.0m. 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 and therefore conducts impairment tests for goodwill at the divisional level. Estimates Goodwill and other intangibles impairment The Group has £639.7m of goodwill and acquired intangible assets (30 September 2019: £405.4m excluding Asset Management). The Group assesses, at each reporting period, whether there is an indication that an asset might be impaired, and if such indication exists, an estimate of the asset’s recoverable amount is determined. The recoverable amount is the higher of an asset’s value in use or fair value less costs of disposal. 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 groups of cash generating units and the discount rate applied to those cash flows. The methodologies applied, key assumptions and sensitivity analysis are disclosed in note 11. The goodwill impairment assessments indicated that the assets of each group of cash generating units are recoverable and no goodwill impairment at 30 September 2020 has been recognised. The intangible asset impairment review assessment indicated an impairment of £1.7m relating to the customer relationships of Broadmedia and Layer123 due to the low retention rates of customers; this impairment has been recognised in exceptional items. Taxation Direct taxes The Group is a multinational with tax affairs in many geographical locations. This inherently leads to complexity in the Group’s tax structure and involves a number of judgements. The degree of estimation is especially challenging where there has been a change in tax law in the year or uncertain tax matters, since 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. The final resolution of some of these items may give rise to material profit and loss and/or cash flow variances. As a result, there can be substantial differences between the tax expense in the Income Statement and tax payments. The Group has a small number of 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 assessment. 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. As set out in note 1, the Group has adopted IFRIC 23 during the year, but no material differences arose from the adoption. This approach is applied to both current and deferred taxes. The Group has fully provided for an exposure relating to an HMRC enquiry, which has a maximum exposure of £10.7m, plus estimated interest of £1.5m. A first-tier tax tribunal hearing was held in May 2020 but the Group has yet to receive a judgement. No adjustment to the provision is being made at this time. Employment taxes In April 2020 the Group agreed a settlement of £1.2m with HMRC for the potential payroll taxes exposure identified during the year ended 30 September 2019. After incurring professional fees of £0.3m, the Group has released £6.1m from the £8.2m provision made at 30 September 2019 (note 5) and an additional release for interest of £0.6m has been made as an adjusted finance item (note 7). Indirect tax In May 2020, the Group concluded with HMRC no VAT will be due on the potential liability for UK VAT on intra-group transactions. The provision made in the year ended 30 September 2019 of £11.3m has been released in full, including interest of £0.6m. 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. 126 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 3 Segmental analysis Segmental information is presented in respect of the Group’s segments and reflects the Group’s management and internal reporting structure. From 1 October 2019, the Pricing, Data & Market Intelligence segment split into two separate segments: Pricing and Data & Market Intelligence. The Banking & Finance segment was incorporated into the Data & Market Intelligence segment. The Group is now organised into three segments: Pricing; Data & Market Intelligence; and Asset Management. Revenues generated in the Pricing and Asset Management segments are primarily from subscriptions. Data & Market Intelligence revenues consist mainly of subscriptions, sponsorship and delegates revenue. A breakdown of the Group’s revenue by type is set out below. Events revenue consists of sponsorship and delegates revenue. Advertising revenue is included in other revenue. 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 the Pricing, Data & Market Intelligence segment splitting into two separate segments and the Banking & Finance segment being incorporated into the Data & Market Intelligence segment. The Asset Management segment which was classified as discontinued operations in the 2019 Annual Report and Accounts no longer meets the classification criteria of discontinued operations and all of the results are presented as continuing operations in the 2020 Annual Report and Accounts. Analysis of the Group’s three main geographical areas is also set out to provide additional information on the trading performance of the businesses. 2020 Revenue by segment and type: Pricing Data & Market Intelligence Asset Management Foreign exchange losses on forward contracts Revenue 2019 Revenue by segment and type: Pricing Data & Market Intelligence Asset Management Sold/closed businesses Foreign exchange losses on forward contracts Revenue Subscriptions and content £000 73,927 72,820 101,589 248,336 – Events £000 6,620 41,343 5,857 53,820 – 248,336 53,820 Other £000 3,120 19,948 11,332 34,400 (1,300) 33,100 Subscriptions and content £000 Events £000 Other £000 68,926 53,771 117,891 240,588 – – 15,377 91,930 16,942 124,249 1,997 – 240,588 126,246 5,622 21,911 10,789 38,322 – (3,483) 34,839 Total revenue £000 83,667 134,111 118,778 336,556 (1,300) 335,256 Total revenue £000 89,925 167,612 145,622 403,159 1,997 (3,483) 401,673 Events revenue of £53.8m (2019: £126.2m) and print advertising of £7.9m (2019: £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 2020 127 i F n a n c i a 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 2020 £000 2019 £000 2020 £000 2019 £000 2020 £000 2019 £000 2020 £000 2019 £000 Total 2020 £000 2019 £000 Revenue by segment and source: Pricing 36,314 42,800 44,207 43,339 Data & Market Intelligence 102,585 129,123 31,834 35,302 Asset Management Sold/closed businesses Foreign exchange losses on forward contracts – – – – (1,300) (3,483) 118,834 145,696 – – – – 3,277 9,499 – – – 3,928 6,433 – 1,997 – (131) (142) 83,667 89,925 (9,807) (3,246) 134,111 167,612 (56) (74) 118,778 145,622 – – – – – 1,997 (1,300) (3,483) Revenue 137,599 168,440 194,875 224,337 12,776 12,358 (9,994) (3,462) 335,256 401,673 Revenue by destination 48,784 56,523 173,458 200,826 113,014 144,324 – – 335,256 401,673 Adjusted operating profit1 by segment and source: Pricing Data & Market Intelligence Asset Management Sold/closed businesses Unallocated corporate costs Adjusted operating profit1 Acquired intangible amortisation2 (note 11) 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 United Kingdom North America Rest of World 2020 £000 2019 £000 2020 £000 2019 £000 2020 £000 2019 £000 Total 2020 £000 2019 £000 14,089 18,417 22,532 18,026 (4,336) (3,449) 32,285 32,994 19,112 40,755 4,642 10,051 (2,892) (724) 20,862 50,082 – – 3 44,913 62,148 (134) – (7) – – – 44,913 62,151 590 – 449 (34,828) (35,898) (1,481) (2,808) (270) (1,527) (36,579) (40,233) (1,627) 23,143 70,606 87,410 (7,498) (5,110) 61,481 105,443 (5,420) (7,128) (17,581) (17,977) 15,861 (10,732) (9,233) (38) (112) (38) (23,039) (25,143) (2,772) (4,811) 3,856 6,033 (1,014) 31,876 42,293 60,200 (7,648) (7,920) 33,631 84,156 (495) 4,141 (88) 1,873 (4,368) (3,082) 32,909 82,859 (2,125) (21,666) 30,784 61,193 1 A detailed reconciliation of the Group’s statutory results to the adjusted and underlying results is set out on pages 20 to 23. 2 Acquired intangible amortisation represents amortisation of acquisition-related non-goodwill assets such as trademarks and brands, customer relationships, databases and software (note 11). 128 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 3 Segmental analysis continued Other segmental information by segment: Pricing Data & Market Intelligence Asset Management Sold/closed businesses (excluding GMID) Unallocated corporate costs Total Acquired intangible amortisation Exceptional items Depreciation and amortisation 2020 £000 2019 £000 2020 £000 2019 £000 2020 £000 (6,783) (6,440) (9,638) – (178) (6,884) (4,701) (10,928) (2,432) (198) (23,039) (25,143) (1,689) (6,874) (8,748) (2,081) (5,835) (2,494) 173 14,226 (1,722) (1,303) (2,374) – 12,327 (4,811) 40 (8,154) 3,856 (13,553) (3,576) (4,843) 2019 £000 (713) (193) (352) (9) The closing net book value of goodwill, other intangible assets, property, plant and equipment, right of use assets and investments is analysed by geographic area as follows: Goodwill Other intangible assets Property, plant and equipment Right of use assets Investments Non-current assets United Kingdom North America Rest of World 2020 £000 2019 £000 2020 £000 2019 £000 2020 £000 2019 £000 Total 2020 £000 2019 £000 112,822 102,367 338,751 139,246 4,770 4,668 456,343 246,281 57,289 42,763 143,976 115,898 4,109 21,906 8,836 4,617 10,225 10,310 – 30,344 5,271 – – – 448 120 1,154 – 479 367 – – 201,713 159,140 14,454 53,404 8,836 15,294 – 5,271 204,962 155,018 523,296 265,454 6,492 5,514 734,750 425,986 Additions to property, plant and equipment Additions to right of use assets (251) (1,914) (112) – (2,302) (1,858) (1,409) – (29) (792) (117) – (2,582) (4,564) (1,637) – 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 2020 £000 335,256 (60,089) 275,167 (1,227) 2019 £000 401,673 (85,306) 316,367 (1,538) (240,309) (230,673) 33,631 84,156 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 129 i F n a n c i a l S t a t e m e n t s 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 Depreciation of right of use assets Property operating lease rentals1 Loss on disposal of property, plant and equipment Exceptional items (note 5): VAT provision release Payroll taxes provision release Restructuring Impairment charges Other exceptional costs Profit on disposal of businesses Amendment to defined benefit pension scheme Foreign exchange loss 1 The property operating lease rentals relate to leases with terms of 12 months or less. 2020 £000 2019 £000 174,368 173,863 23,039 2,860 2,908 6,467 1,392 115 (10,633) (6,143) 8,954 1,727 10,906 – – 1,094 25,143 2,099 2,744 – 7,749 11 – – – 2,410 11,956 (16,998) (1,224) 168 Government grants In light of covid-19, the Group has taken advantage of government support schemes to further protect jobs and prioritise liquidity. The job retention and wage support schemes in the United States, Singapore and Hong Kong have been used, whereby the Group has received support of £0.3m. The Group had received £0.7m from the UK Government as part of the Coronavirus Job Retention Scheme, however this was repaid on 30 October 2020. Audit and non-audit services relate to: Group audit: Fees payable for the audit of the Group’s annual accounts Audit of subsidiaries pursuant to local legislation Assurance services: Audit related assurance services Non-audit services: Other assurance services Taxation compliance services Other services Total Group auditors’ remuneration 2020 £000 20191 £000 700 641 1,341 810 93 5 2 100 2,251 1,065 634 1,699 121 132 – 2 134 1,954 1 After the completion of the audit of the 2019 Consolidated Financial Statements, additional audit fees for subsidiaries amounting to £0.2m were incurred. These additional fees are included in the 2019 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. VAT provision release Payroll taxes provision release Restructuring Impairment charges Other exceptional costs Profit on disposal of businesses Amendment to defined benefit pension scheme 130 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 2020 £000 10,633 6,143 (8,954) (1,727) (10,906) – – (4,811) 2019 £000 – – – (2,410) (11,956) 16,998 1,224 3,856 5 Exceptional items continued For the year ended 30 September 2020, the Group recognised exceptional costs of £4.8m. The Group released a provision of £10.6m originally recognised in the 2019 Financial Statements in respect of UK VAT on supplies between UK Group companies for the four years ended 30 September 2018. The potential exposure was identified during the second half of the prior year and after discussing the matter with HMRC during the first half of 2020, the Group was notified on 11 May 2020 by HMRC that no VAT was due on these supplies. The Group released £6.1m of the £8.2m provision held in respect of payroll taxes with an additional £0.6m release for interest as an adjusted finance item (note 7). This provision was originally recognised in the 2019 Annual Report and Accounts with a restatement for previously unidentified liabilities for payroll taxes covering the six years to 30 September 2019. Following a meeting with HMRC in February 2020, a settlement amount of £1.2m was agreed in April 2020 and the Group incurred £0.3m of professional fees. Costs of £9.0m as a result of the major restructuring across the Group are included in exceptional items. A provision of £7.0m (note 22) was recognised during the year for exceptional severance costs associated with the restructuring programme announced in September 2020. Normal restructuring costs of £0.6m are not treated as exceptional items. Following the impairment review assessment, an impairment of £1.7m has been recognised relating to the customer relationships of Broadmedia and Layer123 due to the low retention rates of customers. Other exceptional costs consist of expenditure associated with the acquisition of BoardEx and The Deal, Wealth-X and AgriCensus, and have been treated as exceptional due to the magnitude of the costs. Also included are costs incurred to support the strategic review of Asset Management as well as significant costs associated with an acquisition that did not complete. The recognition of the earn-out payments for the acquisition of Site Seven Media Ltd (TowerXchange) and AgriCensus are treated as compensation costs and included in exceptional items. Management has consistently applied its definition of exceptional items in 2020 and has made no adjustments to capture incremental costs associated with covid-19. The Group’s tax charge includes a related tax credit on exceptional items of £0.1m (note 8). For the year ended 30 September 2019, the Group recognised an exceptional credit of £3.9m. The Group sold Mining Indaba for a profit of £17.0m. The impairment charge related 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 include earn-out payments for the acquisitions of TowerXchange and Random Lengths which were treated as compensation costs. The acquisition related costs for Random Lengths, BoardEx and The Deal were 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 were treated as an exceptional item. The remaining costs are as a result of a strategic review of Asset Management undertaken and for the major restructuring of CIE, which were treated as exceptional items. Normal restructuring costs are not treated as exceptional items. The Group’s tax charge includes a related tax charge on exceptional items of £2.6m (note 8). 6 Staff costs From 1 October 2019, the Pricing, Data & Market Intelligence segment split into two separate segments: Pricing and Data & Market Intelligence. The Banking & Finance segment was incorporated into the Data & Market Intelligence segment. The comparative split of staff costs has been restated to reflect these changes. The 2019 numbers in this note have been restated to include Asset Management, which had previously been accounted for as discontinued operations. (i) Number of staff (including Directors and temporary staff) By business segment: Pricing Data & Market Intelligence Asset Management Central Total 2020 Monthly average number Restated 2019 Monthly average number 447 1,170 388 347 2,352 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 380 899 394 283 1,956 131 i F n a n c i a l S t a t e m e n t s Financial Statements Notes to the Consolidated Financial Statements continued 6 Staff costs continued By geographical location: United Kingdom North America Rest of World Total (ii) Staff costs (including Directors and temporary staff) Wages and salaries Social security costs Other pension costs (note 27) Long-term incentive (credit)/expense (note 25) 2020 Monthly average number 2019 Monthly average number 960 669 723 2,352 2020 £000 157,284 13,124 4,689 (729) 174,368 826 644 486 1,956 Restated1 2019 £000 154,691 13,558 4,731 883 173,863 1 Restated to include Asset Management, which had been reported as a discontinued operation in 2019 (note 1). Staff costs exclude restructuring costs that are included in exceptional items (note 5). Details of Directors’ remuneration have been disclosed in the Directors’ Remuneration Report on pages 76 to 97. 7 Finance income and expense Finance income Interest receivable from short-term investments Movements in acquisition commitments (note 26) Fair value remeasurements Interest on tax Movements in deferred consideration (note 26) Finance expense Interest payable on borrowings Interest on lease liabilities Net interest expense on defined benefit liability (note 27) Movements in acquisition commitments (note 26) Movements in deferred consideration (note 26) Interest on tax Net finance costs 1 Restated to include Asset Management, which had been reported as a discontinued operation in 2019 (note 1). Reconciliation of net finance costs in Income Statement to adjusted net finance costs Net finance costs in Income Statement Add back: Movements in acquisition commitments Movements in deferred consideration Fair value remeasurements Interest on tax Adjusted net finance costs 1 Restated to include Asset Management, which had been reported as a discontinued operation in 2019 (note 1). 132 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 2020 £000 291 1,728 130 1,988 4 4,141 (1,813) (1,985) (136) – – (434) (4,368) (227) Restated1 2019 £000 1,198 – 675 – – 1,873 (1,362) – (100) (1,022) (36) (562) (3,082) (1,209) 2020 £000 Restated1 2019 £000 (227) (1,209) (1,728) (4) (130) (1,681) (3,543) (3,770) 1,022 36 (675) 156 539 (670) 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 21). 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 was measured at fair value through profit or loss (FVTPL). The fair value remeasurement for the respective year-end periods 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 and up to its conversion on 24 January 2020. Interest on tax excluded from the adjusted net finance expense consist of finance income of £0.5m (2019: £0.2m income) for movements in respect of uncertain tax positions and finance income of £1.2m from the release of a provision for interest on payroll taxes amounting to £0.6m and interest on VAT liabilities of £0.6m (note 5). Finance costs of £0.3m in 2019 arising as a result of the provision for the potential VAT underpayment are excluded as the related charges were not expected to recur. 8 Tax expense on profit Current tax expense UK corporation tax expense Foreign tax expense Adjustments in respect of prior years Deferred tax credit Current year Adjustments in respect of prior years Change in rate of deferred tax Tax expense in Income Statement Effective tax rate Reconciliation of tax expense in Income Statement to adjusted tax expense The adjusted effective tax rate for the year is set out below: Reconciliation of tax expense in Income Statement to adjusted tax expense Total tax expense in Income Statement Add back: Tax on acquired intangible amortisation Tax on exceptional items 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 2020 £000 2,121 8,254 (6,859) 3,516 (2,594) 1,233 (30) (1,391) 2,125 2019 £000 9,438 14,392 (1,718) 22,112 (1,218) 772 – (446) 21,666 6% 26% 2020 £000 2019 £000 2,125 21,666 4,011 76 1,408 (1,624) (65) 5,626 9,432 11,557 2,258 (2,664) (479) (843) (38) 946 (820) 20,846 57,370 20% 104,647 20% The Group presents the above adjusted effective tax rate reconciliation to help users of this report better understand its tax charge. Tax on exceptional items is excluded as these items are adjusted in accordance with Group policy. For the year ended 30 September 2020, tax on exceptional items relates largely to the tax charge arising on Group restructuring and redundancy costs, legal and professional fees in relation to investment acquisitions, and disposals offset by the tax credits arising on the release of provisions for payroll taxes and VAT. Please refer to note 5 for further details. Adjustments in respect of prior years are also removed from the adjusted tax expense as they do not relate to current year underlying trading. Refer to page 134 for details. 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 approach and policy. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 133 i F n a n c i a 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 The Group excludes the deferred tax impact of amortisation of intangibles and goodwill as any deferred tax on these items would only crystallise in the event of a disposal and that is not the current intention. Other tax adjusting items are primarily the removal of the deferred tax impact of the US state tax adjustment. The actual tax expense for the year is different from the UK rate of 19% of profit before tax for the reasons set out in the following reconciliation: Profit before tax Tax at 19.0% (2019: 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 Recognition of deferred tax Derecognition of deferred tax Disallowable expenditure Other timing differences Impact of change in rate Adjustments in respect of prior years Total tax expense for the year 2020 £000 2019 £000 32,909 82,859 6,253 15,744 2,047 25 (193) (63) (1,897) 516 1,476 (383) (30) (5,626) 2,125 4,662 38 (9) – – – 2,017 83 77 (946) 21,666 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 £2.0m (2019: £4.7.m) reflects higher profits earned in jurisdictions which have a higher tax rate than the UK. The tax charge on disallowable expenditure of £1.5m (2019: £2.0m) relates largely to expenses that are capital in nature such as legal and professional fees incurred in relation to acquisitions and therefore not deductible for tax purposes. Of the £5.6m credit for adjustments in respect of prior years (2019: £0.9m), a credit of £7.0m relates to the NY and NYC combined filing adjustments. Following a change in management’s intention to file the Group’s NY and NYC state income tax returns on a combined rather than a separate basis during the period, the NY and NYC state income tax returns for the year ended 30 September 2018 were filed on a combined basis in January 2020. As the Group is within the time limit to amend the NY and NYC state income tax returns for the years ended 30 September 2016 and 30 September 2017, management has concluded that the change should apply to these periods as well. As the change in intention to file on a combined basis was made in the year, the current and deferred tax credits are adjusted for prospectively in the current period. The current tax credit of £7.0m represents an adjustment to a current tax charge recognised in prior periods and is therefore recognised as an adjustment in respect of prior years. The deferred tax credit of £1.9m has been recognised as a current year movement as it represents the initial recognition during the year of a deferred tax asset relating to US state tax losses that were previously unrecognised on the basis that it was not probable that the losses would be utilised. In addition to the amount charged to the Income Statement, the following amounts relating to tax on pensions, share options and financial instruments have been directly recognised in other comprehensive income and equity: Deferred tax (note 23) Other comprehensive income Equity 2020 £000 468 2019 £000 (880) 2020 £000 1,047 2019 £000 124 134 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 9 Dividends Amounts recognisable as distributable to equity holders in the year Final dividend for the year ended 30 September 2019 of 22.30p (2018: 22.30p) No interim dividend for year ended 30 September 2020 (2019: 10.80p) Employee share trusts dividend Proposed final dividend for the year ended 30 September Employee share trusts dividend An interim dividend was not paid in 2020 (2019: 10.80p per share). 2020 £000 2019 £000 24,362 – 24,362 (368) 23,994 12,459 (141) 12,318 24,348 11,799 36,147 (561) 35,586 24,363 (368) 23,995 The proposed final dividend of 11.40p (2019: 22.30p) is subject to approval at the AGM on 11 February 2021 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 Non-controlling interests 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 Total earnings per share Basic Diluted Total adjusted earnings per share Basic Diluted 2020 £000 30,784 194 30,978 14,968 45,946 2020 Number 000 109,275 (1,605) 107,670 – 2019 £000 61,193 (264) 60,929 22,586 83,515 2019 Number 000 109,226 (1,667) 107,559 95 107,670 107,654 Pence Pence 28.8 28.8 42.7 42.7 56.6 56.6 77.6 77.6 The adjusted earnings per share figures have been disclosed since the Directors consider it necessary in order to give an indication of the Group’s adjusted trading performance. A detailed reconciliation of the Group’s statutory results to the adjusted and underlying results is set out on pages 20 to 23. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 135 i F n a n c i a l S t a t e m e n t s Financial Statements Notes to the Consolidated Financial Statements continued 11 Goodwill and other intangible assets 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 93,599 121,165 125,531 70,181 – – – – 1,975 (7,776) 1,068 (7,433) 12,663 231,793 20,576 287,595 539,964 7,368 198,714 8,638 240,775 448,127 – – – – 9,110 (4,048) – – 12,949 15,992 – 13,613 9,110 (4,048) 29,605 (745) (15,954) (921) (18,966) (35,841) 208,963 189,347 32,235 430,545 33,355 523,017 986,917 38,910 77,188 8,536 – – (4,320) 120,314 37,856 63,993 11,613 1,727 – (3,625) 111,564 5,481 7,368 82,247 148,549 10,982 5,817 41,314 134,543 27,745 182,111 2,890 23,039 2,860 – – 1,727 – – (3,946) – – – (441) (8,386) 15,298 247,176 (702) 15,011 (2,385) 66,674 25,899 1,727 (3,946) (11,473) 328,861 88,649 77,783 16,937 183,369 18,344 456,343 658,056 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 £000 206,935 150,478 13,931 371,344 – (5,864) 4,379 9,314 (121,165) 93,599 105,253 11,703 – (5,864) 5,006 – (1,388) 38,231 8,391 (70,181) 125,531 87,561 11,758 – (1,388) 3,918 – – 5,346 754 (7,368) 12,663 – (7,252) 47,956 18,459 (198,714) 231,793 10,686 203,500 1,682 25,143 14,059 2,099 – – 481 – (7,252) 9,405 19,718 8,379 (67) 268 916 484,303 875,365 – (5,739) 27,639 22,167 8,379 (13,058) 75,863 41,542 (8,638) (240,775) (448,127) 20,576 287,595 539,964 69,581 287,140 – 2,410 (5,739) 2,807 (27,745) 27,242 2,410 (13,058) 12,920 (182,111) 41,314 134,543 – (67) 708 (5,817) 10,982 (77,188) (63,993) (7,368) (148,549) 38,910 37,856 5,481 82,247 2020 Cost/carrying amount At 1 October 20191 Reclassified from held for sale Additions Disposals Balance at acquisition of business Exchange differences At 30 September 2020 Amortisation and impairment At 1 October 20191 Reclassified from held for sale Amortisation charge Impairment Disposals Exchange differences At 30 September 2020 Net book value/carrying amount at 30 September 2020 2019 Cost/carrying amount At 1 October 20181 Additions Disposals Balance at acquisition of company Exchange differences Classified as held for sale At 30 September 20191 Amortisation and impairment At 1 October 20181 Amortisation charge Impairment Disposals Exchange differences Classified as held for sale At 30 September 20191 Net book value/carrying amount at 30 September 20191 54,689 87,675 7,182 149,546 9,594 246,281 405,421 1 Following a review of balances, the comparatives and opening balances have been represented to correct an overstatement between goodwill cost and amortisation of £21.7m which arose from the classification of Global Markets Intelligence Division (GMID) assets as held for sale in 2017 and to correct the classification of £1.2m of costs in acquired intangible assets between Trademarks & brands and Customer relationships. This representation has no impact on the goodwill and acquired intangible assets net book values of the comparatives or opening balances. 136 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 11 Goodwill and other intangible assets continued The individually material acquired intangible assets are as follows: Trademarks & brands Customer relationships Databases 2020 BCA Research Metal Bulletin Ned Davis Research RISI The Deal BoardEx Wealth-X 2019 BCA Research Metal Bulletin Ned Davis Research RISI The Deal BoardEx 2020 £000 30,002 7,868 5,016 17,872 60,758 2020 years1 2020 £000 2020 years1 2020 £000 2020 years1 16 16 11 12 17 18 20 32,532 11,704 22,169 66,405 11,810 11,810 9 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 Total 2020 £000 30,002 7,868 5,016 50,404 11,704 22,169 11,810 138,973 Total 2019 £000 35,426 8,851 10,326 56,605 12,953 24,410 148,571 1 The remaining useful economic life. Intangible assets, other than goodwill, have a finite life and are amortised over their expected useful lives at the rates set out in the accounting policies in note 1 of this report. Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (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. 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 derived from approved 2020 budgets with a compound annual growth rate (CAGR) of -10.7% to 1.13% using 2019 as the benchmark on cash flows to 2023. These budgets are based on management’s view of expected performance. Management believes these budgets to be achievable. • The pre-tax nominal 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 rates applied are weighted on the same basis. • For groups of CGUs most dependent on events revenue (Telecoms and FPS), given the estimation uncertainty in the budgets around the speed and quantum of the recovery of physical events, probability weighted scenarios have been used. These include a 50% weighting assuming that only virtual events will be run until 2023, 30% weighting to a hybrid scenario and 20% weighting to a scenario that physical events will resume in the second half of 2021. These probabilities do not represent the expectation of the Group, rather a severe downside to test for potential impairment. No group of CGUs was impaired under this scenario. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 137 i F n a n c i a l S t a t e m e n t s Financial Statements Notes to the Consolidated Financial Statements continued 11 Goodwill and other intangible assets continued 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 flow budgets derived from approved 2020 budgets with a CAGR of -10.2% using 2019 as the benchmark on cash flows to 2023. These budgets are based on management’s view of expected performance. Management believes these budgets to be achievable. • The period of specific projected cash flows is three years. • Post-tax nominal discount rate of 9.3%, derived from the Group’s benchmarked WACC of 7.6% adjusted for risks specific to the nature of CGU groups and risks included within the cash flows themselves. • Long-term nominal growth rate of 2.3%. • Uses significant inputs which are not based on observable market data. Therefore, this valuation technique is classified as level 3 in the fair value hierarchy. The discount rates and long-term growth rates used in the calculation are as per the below table. Group of CGUs Fastmarkets Financial & Professional Services (FPS) Telecoms Institutional Investor Investment Research Valuation method VIU VIU VIU VIU FVLCOD 2020 Long-term growth rate % Discount rate % 2.2 2.3 2.2 2.3 2.3 10.9 11.0 10.8 11.1 9.3 Goodwill £000 140,827 98,051 14,411 5,438 197,616 For the year ended 30 September 2020, no goodwill impairment has been recognised. For the year ended 30 September 2019, following the closure of Centre for Investor Education (CIE), an impairment of £2.4m for goodwill was recognised in exceptional items (note 5). CIE was included in the sold/closed businesses segment. 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, with a headroom of £38.5m, for the recoverable amount to fall to the carrying value, the discount rate would need to be increased by one percentage point, the long-term growth rate reduced by two percentage points or the CAGR on cash flows reduced by three percentage points. See the VIU section on page 137 for key assumptions and methodologies applied. For FPS, with a headroom of £20.9m, for the recoverable amount to fall to the carrying value, the discount rate would need to be increased by one percentage point, the long-term growth rate reduced by one percentage point or the CAGR on cash flows reduced by two percentage points. See the VIU section on page 137 for key assumptions and methodologies applied. For Investment Research, with a headroom of £37.9m, for the recoverable amount to fall to the carrying value, the discount rate would need to be increased by one percentage point, the long-term growth rate reduced by one percentage point or the CAGR on cash flows reduced by four percentage points. See the FVLCOD section above for key assumptions and methodologies applied. For the year ended 30 September 2020, an impairment of £1.7m for acquired intangible assets relating to the customer relationships of Broadmedia and Layer123 due to the low retention rate of customers was recognised in exceptional items (note 5). 138 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 12 Property, plant and equipment 2020 Cost At 1 October 2019 Reclassified from held for sale Additions Disposals Balance at acquisition of business Exchange differences At 30 September 2020 Depreciation At 1 October 2019 Reclassified from held for sale Charge for the year Disposals Exchange differences At 30 September 2020 Net book value at 30 September 2020 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 Disposals Exchange differences Classified as held for sale At 30 September 2019 Net book value at 30 September 2019 Leasehold improvements £000 Office equipment £000 16,119 1,505 1,827 (545) 21 (549) 18,378 4,033 1,111 1,631 (40) (144) 6,591 11,787 8,723 2,208 755 (1,942) 15 (347) 9,412 5,515 1,998 1,277 (1,825) (220) 6,745 2,667 Leasehold improvements £000 Office equipment £000 15,790 1,069 (113) 242 636 (1,505) 16,119 3,859 1,238 (113) 160 (1,111) 4,033 12,086 12,850 568 (3,053) 43 523 (2,208) 8,723 8,669 1,506 (3,020) 358 (1,998) 5,515 3,208 Total £000 24,842 3,713 2,582 (2,487) 36 (896) 27,790 9,548 3,109 2,908 (1,865) (364) 13,336 14,454 Total £000 28,640 1,637 (3,166) 285 1,159 (3,713) 24,842 12,528 2,744 (3,133) 518 (3,109) 9,548 15,294 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 2020 139 i F n a n c i a l S t a t e m e n t s Financial Statements Notes to the Consolidated Financial Statements continued 13 Right of use assets The Group adopted IFRS 16 ‘Leases’ on 1 October 2019, using the modified retrospective method. The accounting policy for leases and right of use assets is disclosed in note 1. The right of use assets recognised by the Group are for leasehold premises, predominately used as office space. The table below shows the movements in right of use assets during the year. As IFRS 16 has been prospectively adopted, comparative figures are not disclosed. 2020 Cost 1 October 2019 transition to IFRS 16 Additions Balance at acquisition of company Reassessments Exchange differences At 30 September 2020 Depreciation and impairments At 1 October 2019 Depreciation Impairments Exchange differences At 30 September 2020 Net book value at 30 September 2020 Leasehold office space £000 56,732 3,277 1,622 1,287 (1,744) 61,174 – 6,467 1,318 (15) 7,770 53,404 The rent expense recognised in the Consolidated Income Statement in respect of short-term leases was £1.4m. Reassessments The majority of the movement attributable to reassessments resulted from the completion of a rent review for the Group’s main London office. Also included within reassessments are changes to several leases which involved either moving rent-free periods or temporarily reducing rent, in response to the covid-19 pandemic. These changes have been treated as reassessments rather than modifications in line with the temporary IFRS 16 amendment issued by the IASB (note 1). Impairments Where right of use assets are no longer used in the day-to-day operations of the Group they are tested for impairment. In practice this means when a property is completely vacated by the Group’s staff. The impairment review is performed by comparing the carrying value of the asset with its recoverable value. The recoverable value was established using value in use methodology, calculated using discounted cash flows which could reasonably be achieved by subletting the property for the remainder of the lease, as advised by property experts. The pre-tax discount rates used in the impairment calculations are based on the Group’s WACC, adjusted for the lessor’s size and location. The discount rates used range from 9.50% to 12.75%. Key assumptions in the impairment calculations are the length of time it will take to find a sublease tenant and the value of the likely rent income when agreed. The recoverable value of the impaired assets was £2.1m. 14 Investments At 1 October 2018 Fair value remeasurements Transfer from other equity to associate investment Share of losses after tax Dividends Transfer to subsidiary At 30 September 2019 Additions Share of losses after tax At 30 September 2020 Investment in associates £000 Other equity investments £000 715 – 5,292 (88) (197) (451) 5,271 4,060 (495) 8,836 3,161 2,131 (5,292) – – – – – – – Total £000 3,876 2,131 – (88) (197) (451) 5,271 4,060 (495) 8,836 All of the above investments in associates are accounted for using the equity method in these Consolidated Financial Statements. Other equity investments are classified as financial assets measured at fair value through other comprehensive income. 140 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 14 Investments continued Reconciliation of share of results in associates and joint ventures in Income Statement to adjusted share of results in associates and joint ventures Total share of results in associates and joint ventures in Income Statement Add back: Share of tax on losses Share of acquired intangible amortisation Adjusted share of results in associates and joint ventures 2020 £000 (495) (212) 366 154 (341) 2019 £000 (88) (38) – (38) (126) 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 20 to 23. The share of profit after tax includes a finance expense of £0.2m (2019: nil). 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 12.3% 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’s investment holding in Zanbato increased from 9.9% to 12.5% upon the Group’s conversion of a convertible loan note on 24 January 2020. This results in the £4.1m additions to investments in associates in the period. The investment in Zanbato is one of the Group’s strategic investments. As at 30 September 2020, the Group has a 12.34% shareholding due to changes to Zanbato’s total diluted shareholding. IAS 28 ‘Investments in associates and joint ventures’ requires that the fair value of assets and liabilities of associates is identified and that the Group’s share of profit from Zanbato is adjusted for the amortisation of the acquired intangible assets. The Group has recognised its share of acquired intangible amortisation of £0.4m relating to the database intangible asset. 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 Aggregate carrying amount of the Group’s interests in these associates 2020 £000 (495) 8,836 2019 £000 (88) 5,271 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 141 i F n a n c i a l S t a t e m e n t s Financial Statements Notes to the Consolidated Financial Statements continued 15 Acquisitions and disposals Increase in equity holdings Reinsurance Security (Consultancy).CO.UK Limited (ReSec) On 16 March 2020, 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 88% to 93%. Site Seven Media Limited (TowerXchange) On 24 July 2020, the Group made a final payment of £1.3m to the original shareholders. The payment consisted of £1.2m relating to deferred compensation and £0.1m for deferred consideration. The deferred compensation has been expensed since acquisition and treated as an exceptional item. The Group has held a 100% shareholding in TowerXchange since acquisition in December 2017. Broadmedia Communications Limited (BroadGroup) On 21 May 2020, the Group made a payment of £0.8m to acquire an additional 17% of the equity shareholding of BroadGroup. This increased the Group’s shareholding to 83%. On 18 September 2020, the Group acquired the remaining BroadGroup shares for nil consideration, bringing the Group’s shareholding to 100%. Purchase of business Wealth-X On 25 November 2019, the Group acquired 100% of the equity share capital of Wealth-X Pte Ltd and its subsidiaries (Wealth-X) for $21.4m (£16.6m). Wealth-X is the market leading provider of data-driven intelligence on high net worth individuals. Its proprietary platform is embedded in the workflow of banks, wealth managers, luxury brands and non-profit customers. Wealth-X is included in the 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: Intangible assets Right of use assets Property, plant and equipment Trade and other receivables Trade and other payables Lease liabilities Deferred tax liabilities Contract liabilities Cash and cash equivalents Net assets acquired (100%) Goodwill Total consideration Consideration satisfied by: Cash Working capital adjustments Net cash outflow arising on acquisition: Cash consideration Less: cash and cash equivalent balances acquired Book value £000 – 1,622 36 1,809 (1,705) (1,748) – (5,334) 1,399 (3,921) Fair value adjustments £000 15,198 – – – – – (88) 426 – 15,536 Provisional fair value £000 15,198 1,622 36 1,809 (1,705) (1,748) (88) (4,908) 1,399 11,615 11,615 5,007 16,622 15,847 775 16,622 16,622 (1,399) 15,223 Intangible assets represent customer relationships of $1.4m (£1.1m), brands of $1.5m (£1.2m) and databases of $16.7m (£12.9m) for which amortisation of $1.6m (£1.2m) has been charged for the year ended 30 September 2020. The intangible assets will be amortised over their respective expected useful economic lives; customer relationships of 12 years, database of 10 years and brand of 10 years. The deferred tax impact of $0.1m (£0.1m) has been recognised as a fair value adjustment to the deferred tax liability. Goodwill arises from the anticipated future operating synergies from integrating the acquired operations within the Group and the acquired workforce. The $0.5m (£0.4m) fair value adjustment to contract liabilities relates to an adjustment to reduce the deferred revenue balance. Wealth-X contributed £8.0m to the Group’s revenue, £0.4m to the Group’s operating profit and £0.3m to the Group’s profit before tax between the date of acquisition and 30 September 2020. If the acquisition had been completed on the first day of the financial year, Wealth-X would have contributed £9.9m to the Group’s revenue and £0.5m to the Group’s operating profit. 142 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 15 Acquisitions and disposals continued Census Commodity Data (AgriCensus) On 9 March 2020, the Group acquired 100% of the equity share capital of Census Commodity Data Limited and its subsidiary (collectively, AgriCensus) for £9.0m. AgriCensus is a Price Reporting Agency for the global agricultural commodity markets. It is included in the Pricing segment. The acquisition accounting is set out below and is provisional pending final determination of the fair value of the assets and liabilities acquired: Intangible assets Trade and other receivables Trade and other payables Deferred tax liabilities Contract liabilities Cash and cash equivalents Net assets acquired (100%) Goodwill Total consideration Consideration satisfied by: Cash Working capital adjustments Net cash outflow arising on acquisition: Cash consideration Less: cash and cash equivalent balances acquired Book value £000 – 82 (79) – (476) 202 (271) Fair value adjustments £000 Provisional fair value £000 794 – – (151) – – 643 794 82 (79) (151) (476) 202 372 372 8,606 8,978 9,000 (22) 8,978 8,978 (202) 8,776 Intangible assets represent a brand with a value of £0.8m for which £40k of amortisation has been charged for the year ended 30 September 2020. The intangible asset will be amortised over its expected useful economic life of five years. A deferred tax liability of £0.2m has been recognised in respect of this intangible asset. Goodwill arises from the anticipated future operating synergies from integrating the acquired operations within the Group and the acquired workforce. AgriCensus contributed £0.6m to the Group’s revenue, a loss of £0.2m to the Group’s operating profit and a loss of £0.2m to the Group’s profit before tax between the date of acquisition and 30 September 2020. If the acquisition had been completed on the first day of the financial year, AgriCensus would have contributed £0.9m to the Group’s revenue and a loss of £0.3m to the Group’s operating profit. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 143 i F n a n c i a l S t a t e m e n t s Financial Statements Notes to the Consolidated Financial Statements continued 16 Trade and other receivables Amounts falling due within one year Trade receivables Less: loss allowance for impairment of trade receivables Trade receivables – net of loss allowance Other debtors Prepayments 2020 £000 2019 £000 60,576 (5,760) 54,816 5,543 11,069 71,428 38,180 (1,588) 36,592 2,262 10,101 48,955 2019 % Expected loss rate 1% 0% 1% 25% 4% 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 2020 £000 Trade receivables 37,303 8,110 4,307 10,856 60,576 2020 £000 Loss allowance 2020 % Expected loss rate (625) (178) (313) (4,644) (5,760) 2% 2% 7% 43% 10% 2019 £000 Trade receivables 27,966 2019 £000 Loss allowance (417) 1,341 – 4,435 4,438 38,180 (62) (1,109) (1,588) Trade receivables at 30 September 2019 excludes £17.1m which had been classified as held for sale. 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. The expected credit loss model incorporates forward-looking factors at the customer level in addition to the geographical level. The loss allowance for 2020 also incorporates the expectation of increased losses resulting from the impact of covid-19. Trade receivables are written off when there is no reasonable expectation of recovery. Movements on the Group loss allowance: At 1 October Reclassified from held for sale IFRS 9 adjustment Balance at acquisition of company 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 17 Trade and other payables Trade creditors Other creditors 2020 £000 (1,588) (348) – (412) (5,795) 1,419 805 159 – 2019 £000 (3,153) – 828 – (1,659) 1,243 859 (54) 348 (5,760) (1,588) 2020 £000 2,789 25,096 27,885 2019 £000 2,783 41,146 43,929 The Directors consider the carrying amounts of trade and other payables approximate their fair values. The other creditors balance at the end of 2019 includes £11.3m relating to the VAT liability and £8.2m relating to payroll taxes. During the first half of 2020, the Group engaged with HMRC on the VAT liability and on 11 May 2020, was notified by HMRC that no VAT was due on these transactions. The Group released £6.1m of the £8.2m provision held in respect of payroll taxes during the year with an additional £0.6m release for interest as an adjusted finance item (note 7). The other creditors balance as at 30 September 2020 includes amounts due to customers of £13.1m as well as VAT and payroll taxes totalling £10.0m. 144 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 18 Contract liabilities Contract liabilities – subscriptions Contract liabilities – other Within one year In more than one year 1 October 2019 £000 66,541 21,887 88,428 87,150 1,278 88,428 Reclassified from held for sale £000 40,452 4,401 44,853 Balance at acquisition of company £000 5,384 – 5,384 Additions £000 111,138 18,425 129,563 Releases £000 (104,072) (26,288) (130,360) Foreign exchange £000 30 September 2020 £000 (2,995) (322) (3,317) 116,448 18,103 134,551 132,615 1,936 134,551 All movements in contract liabilities in the period are due to the timing difference between the right to consideration and the satisfaction of performance obligations. At 30 September 2020, contracts include £18.2m (2019: £31.9m) relating to performance obligations that are yet to be satisfied which will be recognised over time, of which £17.5m (2019: £30.6m) will be recognised within one year and the remaining balance thereafter. 19 Lease liabilities The Group adopted IFRS 16 ‘Leases’ on 1 October 2019, using the modified retrospective method. The accounting policy for leases and right of use assets is disclosed in note 1. The table below shows the movements in lease liabilities during the year. As IFRS 16 has been prospectively adopted, comparative figures are not disclosed. 2020 1 October 2019 transition to IFRS 16 Additions Balance at acquisition of company Reassessments Finance charge in year Lease repayments in year Exchange differences At 30 September 2020 The maturity profile of the Group’s lease payments is shown below. Timing of committed lease payments Within 12 months 1 – 3 years 4 – 5 years Over 5 years Total Lease liabilities £000 71,604 3,745 1,748 1,287 1,985 (8,056) (2,172) 70,141 Lease payments £000 9,142 23,301 14,934 32,952 80,329 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 145 i F n a n c i a l S t a t e m e n t s Financial Statements Notes to the Consolidated Financial Statements continued 20 Financial instruments and risk management Derivative financial instruments The derivative financial assets/(liabilities) at 30 September comprised: Current Forward foreign exchange contracts – cash flow hedge Classified as held for sale forward foreign exchange contracts – cash flow hedge Non-current Forward foreign exchange contracts – cash flow hedge 2020 2019 Assets £000 Liabilities £000 Assets £000 Liabilities £000 782 – 782 (914) – (914) 307 1,089 (134) (1,048) 219 23 242 93 335 (3,578) (106) (3,684) (293) (3,977) 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 123 of the accounting policies. The Group’s Tax & 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 can be used to manage the Group’s exposure to fluctuations in interest rates on its floating rate borrowings. Further details are set out in the interest rate risk section (page 150). 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 148 and 149). 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 to balance investment and cost control underpins the capital risk management objective to preserve a strong balance sheet. 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 & Treasury Committee reviews the Group’s capital structure at least twice a year. Committed bank facilities available to the Group until December 2022 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. 146 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 20 Financial instruments and risk management continued Categories of financial instruments The Group’s financial assets/(liabilities) at 30 September are as follows: Financial assets Fair value through profit or loss (FVTPL) assets Derivative instruments Convertible loan note Cash and cash equivalents – money market funds Classified as held for sale derivatives Amortised cost Trade receivables and other debtors Cash and cash equivalents – amortised cost Classified as held for sale receivables (including cash at bank and short-term deposits) Financial liabilities Fair value through profit or loss liabilities Derivative instruments Deferred consideration Classified as held for sale derivatives Amortised cost Acquisition commitments Borrowings and payables Classified as held for sale borrowings and payables 2020 £000 2019 £000 1,089 – 20,217 – 61,813 7,876 – 90,995 (1,048) – – (15) (52,390) – (53,453) 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) In accordance with IFRS 9 ‘Financial Instruments’, other equity investments are classified as financial assets measured at fair value through other comprehensive income. The classification of each of the Group’s financial instruments as per the fair value hierarchy is disclosed on page 153. The Group has derivative assets of £1.1m (2019: £0.3m) and derivative liabilities of £1.0m (2019: £3.9m) 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 2020 or 2019 that are offset under the cash pooling arrangements. This agreement meets the offsetting criteria of IAS 32. During the year, a fair value gain of £0.1m (2019: £0.7m) on the FVTPL convertible loan note was recognised in finance income (note 7). The convertible loan note was converted to additional shares in Zanbato on 24 January 2020. In 2019, 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 was recognised at 1 October 2018 against opening reserves. In 2019, a fair value gain of £2.1m on the Zanbato FVTOCI equity investment was recognised in other comprehensive income. It was determined that the Group had significant influence over Zanbato from 26 July 2019, hence the equity method was to account for its 9.9% equity investment in Zanbato as an associate. The Group’s FVTOCI investment in Estimize has a fair value of nil at 30 September 2020 (2019: nil). 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 2020. The Group has no other material market price risks. Market risk exposures are measured using sensitivity analysis. There has been no change to the Group’s exposure to market risks or the manner in which it manages and measures the risks during the year. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 147 i F n a n c i a l S t a t e m e n t s Financial Statements Notes to the Consolidated Financial Statements continued 20 Financial instruments and risk management continued 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 at the reporting date, including assets held for sale within comparatives, are as follows: US dollar Assets 2020 £000 2019 £000 Liabilities 2020 £000 2019 £000 69,437 122,731 (66,843) (26,811) 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 within comparatives. A 10% sensitivity has been determined by the Board as the sensitivity rate appropriate when reporting an estimated foreign currency risk internally and represents management’s assessment of a reasonably possible change in foreign exchange rates at the reporting date. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign operations within the Group where the denomination of the loan is not in the functional currency of the lender/borrower. Where sterling strengthens 10% against the relevant currency, a negative number below indicates a decrease in profit and equity. For a 10% weakening of sterling against the relevant currency, there would be an equal and opposite impact on the profit and other comprehensive income and the balances below would be positive. Change in profit for the year in Income Statement ($ net assets in UK companies) Change in other comprehensive income (derivative financial instruments) Change in other comprehensive income (loans to/from foreign operations) 2020 £000 (380) 4,601 (327) 2019 £000 (919) 6,550 (5,824) The decrease in the loss from the sensitivity analysis is due to a decrease in the working capital assets. The decrease in the other comprehensive income in relation to derivative financial instruments from £6.6m to £4.6m from the sensitivity analysis is due to the decrease in the notional value of the derivative financial instruments. The change in other comprehensive income from a 10% change in sterling against US dollars in relation to the translation of loans to/ from foreign operations within the Group where the denomination of the loan is not in the functional currency of the lender/borrower would result in a change of £0.3m (2019: £5.8m). The decrease in other comprehensive income from the sensitivity analysis is due to Group restructuring undertaken. 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. 148 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 20 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. The hedging ratio remains 1:1 in line with risk management objectives, as the quantity of receipts or payments designated in hedges matches the notional amount of the hedging instrument. The source of ineffectiveness includes a variation of actual receipts or payments from management forecasts or a significant change in the credit risk of either party of the hedging instrument. Average exchange rate Foreign currency Contract value Fair value 2020 2019 2020 $000 2019 $000 2020 £000 2019 £000 2020 £000 2019 £000 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 1.284 1.280 1.319 1.269 47,140 18,200 69,930 36,709 53,035 18,700 14,220 14,734 237 175 (3,399) (288) 1.339 1.343 1.310 1.322 9,745 3,350 10,567 2,448 7,590 2,618 8,497 1,986 35 23 (81) (2) €000 €000 £000 £000 £000 £000 1.131 1.098 1.119 14,885 1.099 5,180 21,515 5,890 13,160 4,716 19,227 5,359 79,013 102,838 (404) (25) 41 40 88 (3,642) 1 Rate used for conversion from CAD to GBP is 1.7188 (2019: 1.6289). At 30 September 2020, the aggregate amount of unrealised gains under forward foreign exchange contracts deferred in the fair value reserve relating to future revenue transactions is £41k (2019: £3.6m losses). 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 a basis for recognising hedge ineffectiveness for the year is £2.1m loss (2019: £5.1m gain). The change in value of the hedged instrument used as a basis for recognising hedge ineffectiveness for the year is £1.8m gain (2019: £5.1m loss). There was £0.3m of hedge ineffectiveness losses recognised in administrative expenses during the current year (2019: nil) arising from UK based dollar receipts being lower than expected in the second half of the year due to the impact of covid-19. The following table represents the corresponding carrying values and nominal amounts of derivatives in a continued hedge relationship as at 30 September 2020: Derivatives Fair value reserves Nominal amounts £000 Carrying value of assets £000 1 October 2019 £000 Fair value gains deferred to OCI £000 FX losses recycled to the income statement £000 Exchange differences on translation of derivatives £000 30 September 2020 £000 Cash flow hedges – foreign exchange risk Forward foreign exchange contracts 79,013 41 (3,642) 1,838 1,823 22 41 During the year, the following amounts were recognised in profit or loss in relation to forward foreign exchange contracts: Net foreign exchange loss included in revenue Net foreign exchange loss included in administrative expenses Total net foreign exchange losses recognised in profit before income tax for the period 2020 £000 (1,300) (523) (1,823) 2019 £000 (3,483) (361) (3,844) Included in the fair value reserve are losses of £24.2m (2019: losses of £31.2m) in relation to net investment relationships for which hedge accounting is no longer applied and nil (2019: nil) in relation to continuing net investment hedge relationships. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 149 i F n a n c i a l S t a t e m e n t s Financial Statements Notes to the Consolidated Financial Statements continued 20 Financial instruments and risk management continued 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. At 30 September 2020, the Group had no long-term debt, and as such, no interest rate swaps were outstanding. The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk section on pages 150 to 152. 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 2020 would increase or decrease by £0.3m (2019: £0.5m). 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 £28.1m (2019: £49.8m) is £20.2m (2019: £36.3m) 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 is provided through committed bank facilities available to the Group until December 2022. These syndicated facilities include a £188m (2019: £240m) multi-currency revolving credit facility which was undrawn at 30 September 2020 (undrawn at 30 September 2019). 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 adjusted cash conversion rate (the percentage by which adjusted cash generated from operations covers adjusted operating profit before acquired intangible amortisation and exceptional items) of 90% or more due to much of its subscription, sponsorship and delegate revenue being paid in advance. The Group’s forecasts and projections, looking out to September 2023 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. 150 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 20 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 2020. This table excludes contractual cash flows arising from lease liabilities, which are disclosed in note 19. The contractual maturity is based on the earliest date on which the Group may be required to settle. 2020 Acquisition commitments Non-interest bearing liabilities (trade and other payables, and accruals) 2019 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 15 52,390 52,405 Less than 1 year £000 138 986 72,983 74,107 1–3 years £000 – – – 1–3 years £000 – 1,640 – 1,640 Total £000 15 52,390 52,405 Total £000 138 2,626 72,983 75,747 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. 2020 Variable interest rate instruments (cash at bank and short-term deposits) Non-interest bearing assets (trade and other receivables excluding prepayments) 2019 Variable interest rate instruments (cash at bank and short-term deposits) Non-interest bearing assets (trade and other receivables excluding prepayments) Weighted average effective interest rate % Less than 1 year £000 Total £000 0.59 28,093 28,093 – 61,391 61,391 89,484 89,484 Weighted average effective interest rate % 2.04 – Less than 1 year £000 49,751 40,628 90,379 Total £000 49,751 40,628 90,379 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 151 i F n a n c i a l S t a t e m e n t s Financial Statements Notes to the Consolidated Financial Statements continued 20 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 within comparatives. 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. 2020 Gross settled Foreign exchange forward contracts inflows Foreign exchange forward contracts outflows 2019 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 14,129 43,330 21,554 79,013 (14,316) (43,252) (21,392) (78,960) (187) 78 162 53 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) 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. • Money market funds are valued at the closing price reported by the fund sponsor Level 3 • If one or more significant inputs are not based on observable market data, the instrument is included in level 3. 152 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 20 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 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 Classified as held for sale receivables (including cash at bank and short-term deposits) Deferred consideration liability Deferred consideration liability Acquisition commitments Borrowings and payables Classified as held for sale borrowings and payables IFRS 9 Measurement category Fair value measurement hierarchy FVTPL1 FVTPL Amortised cost Amortised cost Amortised cost FVTPL Amortised cost Amortised cost FVTPL Amortised cost Amortised cost Amortised cost 2 3 N/A N/A N/A 2 N/A N/A 3 N/A N/A N/A 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 Borrowings Net cash 49,751 – 49,751 327 – 327 Analysis of changes in liabilities from financing activities Other financing items–prepaid bank fees Interest payable Lease liabilities Acquisition commitments Total (liabilities)/assets from financing activities 582 (1,702) – (2,626) (3,746) 1 October 2019 £000 Held for sale reclassified £000 IFRS 16 adoption on 1 October 2019 £000 Cash flow £000 (19,841) 1,365 (18,476) 611 1,519 8,056 883 Interest and other non-cash movements £000 Foreign exchange £000 30 September 2020 £000 240 (485) (245) (2,384) (880) (3,264) 28,093 – 28,093 (417) (2,121) (8,766) 1,728 (9,576) – – 2,173 – 776 (2,304) (70,141) (15) 2,173 (71,684) i F n a n c i a l S t a t e m e n t s – – – – – (71,604) – – – – – – (71,604) 11,069 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 153 Financial Statements Notes to the Consolidated Financial Statements continued 21 Borrowings Undrawn available committed facilities 2020 £000 2019 £000 188,000 240,000 Committed borrowing facilities The Group’s principal source of borrowings is provided through a committed bank facility. The maturity of the facility was extended by one year in April 2020 and is available to the Group until December 2022. 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. 22 Provisions At 1 October 2019 Balance at acquisition of company Provision in the year Used in the year Exchange differences At 30 September 2020 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 contract provision £000 Redundancy provision £000 411 – 766 (427) 3 753 – – 7,547 (1,179) 48 6,416 Other provisions £000 3,219 30 76 (377) 3 2,951 2020 £000 7,272 317 2,531 10,120 Total £000 3,630 30 8,389 (1,983) 54 10,120 2019 £000 785 533 2,312 3,630 Onerous contract provision The onerous contract provision brought forward related to an office in Hong Kong that was vacated following the disposal of GMID. The lease expired in August 2020. Onerous contract provisions were recognised for additional offices which were vacated during the year. The provision recognised by Ned Davis Research (£0.3m) covers the remaining term of a lease ending in December 2021. The leases for which provisions were recognised in UK central costs (£0.2m) and BCA Research (£0.2m) end in August 2023 and October 2028 respectively. The provision represents the costs that the Group does not expect to recover until it sublets the space, based on expert advice. Redundancy provision The majority of the provision is the result of the major restructuring across the Group as part of the cost reduction programme. The provision is expected to be utilised by December 2020. The restructuring provision estimates the severance payments to employees based on salary, length of service and notice periods but may change during the consultation period. Other provisions The provision consists of social security costs arising on share option liabilities and dilapidations on leasehold properties. A dilapidation provision of £2.8m (2019: £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. 154 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 23 Deferred taxation The net deferred tax liability at 30 September 2020 comprised: Deferred tax asset Deferred tax liability At 1 October 2019 Impact of adopting IFRS 16 Reclassified from held for sale Credit/(charge) to income statement Charge to other comprehensive income Charge to equity Acquisitions and disposals Exchange differences At 30 September 2020 Deferred tax asset Deferred tax liability Capitalised goodwill and intangibles £000 Tax losses £000 Financial instruments £000 (5,881) (22,879) (28,760) – (13,682) 1,923 – (183) (2,735) 3,731 (39,706) – (39,706) 2,248 1,998 4,246 – 10 1,525 – – 2,600 (144) 8,237 3,891 4,346 618 – 618 – – – – (768) – – (150) – (150) Pension deficit £000 1,056 – 1,056 – – (101) (468) – – – Property, plant and equipment £000 467 57 524 Other £000 3,724 3,106 6,830 Total £000 2,232 (17,718) (15,486) (14,170) 14,776 606 14 1,513 (12,145) 2,329 (4,285) – – – (3) – (96) (105) (281) 1,391 (468) (1,047) (240) 3,303 487 (11,306) 18,352 (24,086) – (218) 345 4,018 487 (11,088) 18,007 (28,104) After adjusting for the reclassification of deferred tax from assets previously held for sale and the recognition of a £0.6m net deferred tax asset on transition to IFRS 16, the decrease in the net deferred tax liability primarily relates to the unwind of deferred tax liabilities on intangible assets and goodwill and recognition of deferred tax assets on losses in the US, offset by a significant foreign exchange movement on the Group’s US deferred tax liabilities. Other deferred tax assets include provisions, accruals, deferred revenue and lease liabilities. The closing deferred tax asset balance is comprised of tax losses, right of use assets and lease liabilities. 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 recognised assets to be recovered. On 11 March 2020, the UK Government announced that a previously enacted reduction in the Corporation Tax rate from 19% to 17% on 1 April 2020 would no longer go ahead and the rate would remain at 19%. The legislation to implement the revised rates was substantively enacted on 17 March 2020 and therefore all UK deferred tax assets and liabilities, which were recognised at 17%, have been recalculated at 19% as at 30 September 2020, resulting in a £0.6m deferred tax charge in relation to deferred tax liabilities and a £0.6m deferred tax credit in relation to deferred tax assets. No deferred tax liability is recognised on temporary differences of £90m (2019: £nil) relating to the unremitted earnings of overseas subsidiaries as the Group is able to control the timing of the reversal of these temporary differences and it is not probable that they will reverse in the foreseeable future. The temporary differences at 30 September 2020 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. No temporary differences were recognised at 30 September 2019 as the relevant overseas subsidiaries were held for sale and no tax liability was expected to arise on any potential disposal of the assets. At 30 September 2020, on the basis that management believes it is probable there will be sufficient taxable profits generated in the relevant jurisdictions in future accounting periods to recover these assets, the Group has recognised tax losses as follows: UK US Rest of world 2020 £000 1,539 3,750 2,948 8,237 2019 £000 1,800 1,998 448 4,246 The combined NY and NYC tax filing mentioned above allows the NY and NYC tax losses carried forward to be offset against future profits generated by the combined US group; previously these were unrecognised as it was not considered probable that sufficient future taxable profits would be available to utilise these losses before they expire. As a result, the deferred tax asset recognised in respect of the state tax losses carried forward was increased by £1.9m as at 30 September 2020, bringing total deferred tax assets recognised on state tax losses carried forward to £3.5m. In calculating the amount of deferred tax asset recoverable in respect of US state tax losses carried forward, management has used estimated future taxable income based on the approved budgets for the Group and the expected long-term growth rates through to 30 September 2025, when the losses expire. The budgets used are in line with those used for the testing of goodwill and other intangible assets, as detailed in note 11. An increase or decrease of 10% in the cumulative taxable income through 30 September 2025 would change the recognised deferred tax assets with respect to the US state tax losses carried forward at 30 September 2020 by £0.5m. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 155 i F n a n c i a l S t a t e m e n t s Financial Statements Notes to the Consolidated Financial Statements continued 23 Deferred taxation continued As at 30 September 2020, after the resubmission of the NY and NYC combined returns, the Group had state tax losses carried forward in the US of £174m (2019: £340m) of which £169m expires in 2025 and £5m expires in 2037. The amount of losses on which a deferred tax asset is recognised is £56m (2019: £30m) and on which a deferred tax asset is not recognised is £118m (2019: £310m). Taking into account state apportionment factors and state tax rates, the amount of net unrecognised deferred tax in respect of state tax losses carried forward at 30 September 2020 is £6.9m (2019: £18.6m). The Group also has unrecognised deferred tax assets arising from UK non-trading and capital losses of £5.4m (2019: £5.4m) and Singapore trading losses of £14.6m (2019: £nil). These assets are not recognised because it is not probable, based on the current forecasts, that appropriate taxable profits will be generated in the relevant jurisdictions to enable the Group to utilise these losses for the foreseeable future. Taking into account enacted tax rates, the UK and Singapore tax losses represent unrecognised deferred tax assets of £3.5m (2019: £0.9m). 24 Called up share capital Allotted, called up and fully paid 2020 £000 2019 £000 109,289,406 ordinary shares of 0.25p each (2019: 109,249,352 ordinary shares of 0.25p each) 273 273 During the year, 40,054 ordinary shares of 0.25p each (2019: 68,623 ordinary shares) with an aggregate nominal value of £100 (2019: £172) were issued following the exercise of share options granted under the Company’s share option schemes for a cash consideration of £330,446 (2019: £516,126). 25 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 2020 (2019: nil). Further details of the Group’s share plans are provided in the Directors’ Remuneration Report. 2020 Incentive scheme SAYE/Sharesave Buy-out award PSP Deferred bonus – equity-settled CAP Total 2019 Incentive scheme SAYE/Sharesave Buy-out award PSP Deferred bonus – equity-settled CAP Total Income statement charge/ (credit) in year £000 Options outstanding at 30 September 2019 Number Granted in year Number Exercised during year Number Lapsed/ forfeited during year Number Options outstanding at 30 September 2020 Number 82 – (811) – – 258,488 44,203 716,654 4,339 5,124 – – (40,054) (44,203) (69,971) 148,463 – – 626,887 – (25,582) 1,317,959 – – (4,339) – – (5,124) – – (729) 1,028,808 626,887 (88,596) (100,677) 1,466,422 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 88,405 123,379 – (68,623) (44,202) – 676,860 349,668 – (309,874) 23,514 5,124 – – (19,175) – – – 44,203 716,654 4,339 5,124 883 1,038,574 473,047 (132,000) (350,813) 1,028,808 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 £4.2m (2019: £4.5m). The weighted average exercise price of options exercised during the year was £3.73 (2019: £3.91). The options outstanding at 30 September 2020 had a weighted average remaining contractual life of 7.79 years (2019: 6.70 years). 156 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 25 Share-based payments continued 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. Salary deferral A number of employees took a voluntary, temporary reduction in salaries of up to 20%. This applied to staff earning more than £50,000, or local currency equivalent and covered the period from June to August 2020. In compensation for the reduction in salary, the affected staff received shares with an equivalent value of the lost salary in September 2020. This share distribution of 354,283 shares was made from the Group’s Euromoney Employee Share Trust. 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 lapsed on 30 September 2020. 26 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 Reclassified from held for sale Additions from acquisitions during the year (note 15) Additions from disposals during the year Payment/(receipt) during the year Exercise of commitments 2020 £000 (2,626) – – – – 883 2019 £000 (272) – (1,429) – – 97 Net movements in finance income and expense during the year (note 7) 1,728 (1,022) Exchange differences to reserves Classified as held for sale At 30 September Within one year In more than one year – – (15) (15) – (15) – – (2,626) (986) (1,640) (2,626) 2020 £000 (138) – – – 134 – 4 – – – – – – 2019 £000 (334) – – – 232 – (36) – – (138) (138) – (138) 2020 £000 – 185 – – (176) – – (9) – – – – – Euromoney Institutional Investor PLC Annual Report and Accounts 2020 2019 £000 1,120 – – 8,719 (9,671) – – 17 (185) – – – – 157 i F n a n c i a l S t a t e m e n t s Financial Statements Notes to the Consolidated Financial Statements continued 26 Acquisition commitments and deferred consideration continued For the year ended 30 September 2020, payments for acquisition commitments comprised of an earn-out payment of £0.1m on 16 March 2020 to increase the Group’s equity shareholding in ReSec from 88% to 93%. In May 2020 the Group paid £0.8m to acquire an additional 17% of the equity shareholding of BroadGroup. On 18 September 2020, the Group acquired the remaining shareholding in BroadGroup for nil consideration, bringing the Group’s shareholding to 100%. The deferred consideration receipts were the settlement of the final amounts due from the disposal of II Journals in January 2018. For the year ended 30 September 2019, the addition to acquisition commitments of £1.4m relates to BroadGroup. 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 27 Retirement benefit schemes Acquisition commitments Deferred consideration payments Deferred consideration receipts 2020 £000 1,728 – 2019 £000 (1,022) – 1,728 (1,022) 2020 £000 4 – 4 2019 £000 (36) – (36) 2020 £000 2019 £000 – – – – – – Defined contribution schemes The Group operates the following defined contribution schemes: Euromoney PensionSaver and the Metal Bulletin Group Personal Pension Plan in the UK and a 401(k) savings and investment plan in the US. In compliance with the Pension Act 2008, the Group operated a defined contribution plan, DMGT PensionSaver, up to 30 June 2017 and thereafter the Euromoney PensionSaver, into which relevant employees are automatically enrolled. The pension charge in respect of defined contribution schemes for the year ended 30 September comprised: Euromoney PensionSaver Metal Bulletin Group Personal Pension Plan Private schemes 2020 £000 2,430 16 2,180 4,626 2019 £000 2,356 16 2,359 4,731 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. 158 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 27 Retirement benefit schemes continued 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 2019. The valuation identified that the Scheme had a Technical Provisions deficit of £5.9m at that date. It was agreed that, from 31 August 2020, the Group would make annual contributions of 31.0% per annum of pensionable salaries, plus monthly payments as set out below in order to fully reduce this deficit by 30 April 2025: Period 1 June 2019 to 30 September 2021 1 October 2021 to 30 September 2022 1 October 2022 to 30 September 2023 1 October 2023 to 30 April 2025 Monthly contribution (£000) 55.9 100.0 108.3 116.7 The Group contributed £0.7m to the MBPS during the year to 30 September 2020. 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). In 2019 the Trustees of the MBPS 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). 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 2019, DMGT agreed a recovery plan involving a funding payment of £14.4m on 5 October 2020 and a series of annual funding payments of £11.0m from 5 October 2021 to 5 October 2024. Following DMGT’s disposal of Euromoney in 2019, DMGT also agreed to make five annual payments of £7.0m from October 2020 to October 2024 and intends to make available £113.6m from its cash resources to the defined benefit pension schemes. In addition, DMGT has agreed with the Trustees that, should it make any permanent reductions in its share capital, including share buy- backs, it will make additional contributions to the scheme amounting to 20% of the capital reduction. No contributions relating to this agreement were made in the years to 30 September 2019 and 2020. DMGT considers that these contributions are sufficient to eliminate any deficit over the agreed period. The recovery plan will be reviewed at the next triennial funding valuation, due to be completed with an effective date of 31 March 2022. The Euromoney Group made cash contributions amounting to £0.1m during the year to 30 September 2020. HPS owns a beneficial interest in a Limited Partnership investment vehicle (LP). The LP was designed to facilitate annual payments of £10.8m as deficit funding payments over the period to 2026. In addition, the LP was 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 was less. This recovery plan, agreed following the 2016 actuarial valuation, assumed £60.0m of the £149.9m final payment would be required. As part of the 31 March 2019 actuarial discussions it has been agreed that the LP will be dissolved and replaced with a long-term insolvency guarantee, capped at £150.0m with a termination date of 2035 (or the date on which the scheme reaches full funding on a self-sufficiency basis). For funding purposes, the interest of HPS in the LP was treated as an asset of the scheme and reduced the actuarial deficit within the scheme. However, under IAS 19 ‘Employee Benefits’, the LP is not included as an asset of the scheme and therefore is not included in the disclosures below. 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). Euromoney Institutional Investor PLC Annual Report and Accounts 2020 159 i F n a n c i a 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 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 (55,749) (27,147) (82,896) (59,862) Fair value of plan assets 52,619 27,713 80,332 52,139 2020 MBPS £000 HPS £000 Total £000 MBPS £000 2019 HPS £000 (27,724) 29,235 Total £000 (87,586) 81,374 (Deficit)/surplus reported in the Statement of Financial Position (3,130) 566 (2,564) (7,723) 1,511 (6,212) The deficit for the year excludes a related deferred tax asset of £0.5m (2019: £1.1m). The movements in the defined benefit liability over the year is as follows: Present value of obligation £000 Fair value of plan assets £000 Net defined benefit liability £000 (87,586) 81,374 (6,212) (63) (1,064) (1,127) – (2,634) 1,190 4,451 3,007 – (7) 2,817 (82,896) – 928 928 (2) – – – (2) 842 7 (2,817) 80,332 (63) (136) (199) (2) (2,634) 1,190 4,451 3,005 842 – – (2,564) 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 (2,933) 1,158 (100) 1,058 16,332 (22,748) 1,206 35 (5,175) 838 – – (6,212) 2020 At 1 October 2019 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 gain/(loss) recognised in Statement of Comprehensive Income Contributions – employers Contributions – plan participants Payments from the plans – benefit payments At 30 September 2020 2019 At 1 October 2018 Current service income Interest (expense)/income Total (charge)/credit recognised in Income Statement Remeasurements: Return on plan assets, excluding amounts in interest (expense)/income – 16,332 Loss due to change in financial assumptions Gain due to change in demographic assumptions Experience gain Total (losses)/gains recognised in Statement of Comprehensive Income Contributions – employers Contributions – plan participants Payments from the plans – benefit payments At 30 September 2019 (22,748) 1,206 35 (21,507) – (8) 2,932 (87,586) – – – 16,332 838 8 (2,932) 81,374 160 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 27 Retirement benefit schemes continued The major categories and fair values of plan assets are as follows: Equities Diversified growth fund Bonds Liability driven investments Property Infrastructure Cash and cash equivalents Insured annuities 2020 £000 5,465 25,357 14,008 20,940 3,921 1,939 1,203 7,499 80,332 2019 £000 5,916 25,075 13,456 21,067 4,636 2,052 872 8,300 81,374 Equities include hedge funds and infrastructure funds. All the assets listed above, excluding property, cash and cash equivalents, diversified growth funds and insured annuities have a quoted market price in an active market. The assets do not include any of the Group’s own financial instruments nor any property occupied by, or other assets used by, the Group. The actual return on plan assets was £1.6m (2019: £8.2m). The key financial assumptions adopted are as follows: Discount rate Price inflation Salary increases Pension increases MBPS 2020 % 1.55 2.85 2.50 2.80 2019 % 1.80 2.95 2.50 2.80 HPS 2020 % 1.55 2.95 2.50 2.85 2019 % 1.80 3.10 2.50 3.00 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 16 years for MBPS (2019: 19 years) and 17 years for HPS (2019: 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 2020 26.6 27.1 28.0 28.6 2019 25.8 27.8 27.2 29.3 HPS 2020 26.9 28.5 27.2 29.2 2019 26.7 28.3 27.1 29.0 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 161 i F n a n c i a 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 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 Life expectancy Change in assumption (Increase)/decrease in liabilities £000s Decreases by 0.1% Increases by 0.1% Increases by one year (806) 12 (3,575) 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 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 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 (CFC) 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 appealed to the General Court of the European Union against the decision. However, the UK Government is required to commence collection proceedings and therefore it is expected that the Group will have to make a payment in the year ending 30 September 2021. In common with other UK-based international companies whose arrangements are in line with current UK CFC legislation, the Group is in the process of complying with HMRC’s review of all historical CFC financing arrangements and a response to HMRC’s current queries into the facts and circumstances of the Group’s arrangements has been sent to HMRC. If the decision of the European Commission is upheld, the Group’s estimated maximum liability is approximately £8.9m, including estimated interest of £0.6m. Based on our current assessment and professional advice taken on the matter, management concludes no provision is required in relation to this amount. 162 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 29 Related party transactions Daily Mail and General Trust plc (DMGT), and other fellow group companies are no longer related parties. However, they were during the year ended 30 September 2019. The Group has taken advantage of the exemption allowed under IAS 24 ‘Related Party Disclosures’ not to disclose transactions and balances between group companies that have been eliminated on consolidation. Other related party transactions and balances are detailed below: (i) The Group participates in the Harmsworth Pension Scheme (HPS), a defined benefit scheme operated by DMGT. The Group’s share of the HPS surplus is £0.6m (2019: £1.5m). (ii) During the year, the Group provided services to Zanbato of $nil (2019: $41k). (iii) The Directors who served during the year received dividends of £0.1m (2019: £0.1m) in respect of ordinary shares held in the Company. (iv) The Group has an outstanding intercompany balance receivable from Sanostro Institutional AG, a joint venture investment, of $51k (2019: $51k). (v) During the year ended 30 September 2019, the Group expensed services recharged by DMGT and other fellow group companies of £57k. (vi) During the year ended 30 September 2019, the Group provided services to Risk Management Solution Ltd, a DMGT subsidiary, for HKD713,337. (vii) During the year ended 30 September 2019, the Group charged BroadGroup for services when it was accounted for as an associate of £48k. In addition, the Group received dividends of £197k. (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 Post-employment benefits Other long-term benefits (all share-based) Of which: Executive Directors Non-Executive Directors Divisional Directors 2020 £000 3,950 548 229 293 5,020 1,422 548 3,050 5,020 Restated 2019 £000 6,300 548 269 668 7,785 2,984 548 4,253 7,785 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 11.40p per share (2019: 22.30p) totalling £12.3m (2019: £24.0m) for the year ended 30 September 2020. The dividend will be submitted for approval by shareholders at the AGM to be held on 11 February 2021. 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 2021. On 1 October 2020, the intellectual property (intangible assets) acquired with Wealth-X (note 15) were transferred from Wealth-X Pte Limited to its direct subsidiary, Wealth-X LLC. On acquisition, a deferred tax liability of £2.6m had been recognised on the acquired intangible assets, however, as there are tax losses carried forward in Wealth-X Pte Limited a deferred tax asset of £2.6m had also been recognised in related to these losses which fully offset the deferred tax liability. No deferred tax assets on the tax losses carried forward in Wealth-X Pte Limited would have been recognised otherwise as it was not probable that the tax losses would be utilised in the future and the deferred tax asset will therefore be derecognised in the year ending 30 September 2021. In addition, the deferred tax liability recognised on the acquired intangible assets will be increased by £1.5m due to the higher corporation tax rate in the US. There were no other events after the balance sheet date. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 163 i F n a n c i a l S t a t e m e n t s Financial Statements Notes to the Consolidated Financial Statements continued 31 List of subsidiaries In accordance with section 409 of the Companies Act 2006, a full list of related undertakings, the registered office and the effective percentage of share ownership included in these Consolidated Financial Statements at 30 September 2020 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, Québec, H3A 3L6, Canada Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States 12/F, V-Point 18 Tang Lung Street, Causeway Bay, Hong Kong Broadmedia Communications Limited 100% Events and publishing business 8 Bouverie Street, London, EC4Y 8AX, United Kingdom Census Commodity Data Limited 100% Research and data services 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 19, 181 William Street, Melbourne, VIC 3000 Census Commodity Data Ukraine 100% Research and data services 52 Bohdan Khmelnytskyi Street, 01030, Kyiv, Ukraine Datasift Private Limited 100% Dormant B-105, International Convention Centre, Senapati Bapat Road, Pune, Maharashtra – 411016, India EII (Ventures) Limited EII Holdings II, 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 US, Inc. 100% Investment holding company Corporation Service Company, 251 Little Falls Drive, Euromoney BML Limited Euromoney Bulgaria EOOD Wilmington, DE 19808, United States 100% Investment holding company 8 Bouverie Street, London, EC4Y 8AX, United Kingdom 100% Shared service centre Polygraphia Office Centre, 5th Floor, 47A Tsarigradsko Shosse Boulevard, Sofia 1124, 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 Dormant Limited (formerly Euromoney Group Limited) 100% Dormant 8 Bouverie Street, London, EC4Y 8AX, United Kingdom Euromoney ESOP Trustee Limited 100% Dormant 8 Bouverie Street, London, EC4Y 8AX, United Kingdom Euromoney Global Limited 100% Publishing and events 8 Bouverie Street, London, EC4Y 8AX, United Kingdom Euromoney Group Limited (formerly Fantfoot 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% Investment holding company 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, 100% † Publishing, training and events 15 Esplanade, St Helier, JE1 1RB, Jersey Wilmington, DE 19808, United States 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 164 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 31 List of subsidiaries continued Company Proportion held Principal activity and operation Registered Office Euromoney USA LLC (formerly EIMN LLC) 100% Events Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States FOEX Indexes Oy 100% Research and data Mannerheimintie 40 D 85, 00100, Helsinki, Finland Fastmarkets Limited Glenprint Limited Global Commodities Group Sarl services 100% Publishing 100% Publishing 100% Events 8 Bouverie Street, London, EC4Y 8AX, United Kingdom 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 Egypt Ltd Internet Securities, Inc. 100% Dormant 3 El Badia Street, Off Al Thawra Street, Heliopolis, Cairo, Egypt 100% Information services 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 MB Pension Trustee Limited 100% Pension Trustee 8 Bouverie Street, London, EC4Y 8AX, United Kingdom MDL ESOP Limited 100% Dormant 8 Bouverie Street, London, EC4Y 8AX, United Kingdom Metal Bulletin Holdings LLC 100% Investment holding company Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, United States Ned Davis Research, Inc. 100% Research and data 600 Bird Bay Drive West, Venice FL 34285, United States services Redquince Limited 100% * Investment holding 8 Bouverie Street, London, EC4Y 8AX, United Kingdom Reinsurance Security (Consultancy.CO.UK Limited company 93% 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 Avenida Paulista, 2573, 10th floor, Sao Paulo/SP, 01311- 300, Brazil RISI, Inc. RISI Sprl 100% Research and data services National Registered Agents, Inc. 160 Greentree Drive, Ste 101 Dover, DE 19904, United States 100% Research and data Avenue Louise 523, 1050 Brussels, Belgium Shanghai Leadway E-commerce Co Ltd 100% ^ Research and data services Site Seven Media Ltd Storas Holdings Pte Ltd services 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 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 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 165 i F n a n c i a 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 Wealth-X (UK) Ltd Wealth-X LLC Wealth-X Pte. Ltd Proportion held Principal activity and operation Registered Office 100% Research and data 8 Bouverie Street, London, EC4Y 8AX, United Kingdom services 100% Research and data 142 West 36th Street, NY, United States services 100% Research and data services 8 Marina Boulevard #05–02 Marina Bay Financial Centre, Singapore 018981 Wealth-X Services Kft 100% Research and data Wesselenyi utca 16/a, H–1007 Budapest, Hungary services Wealth-X Services Sdn Bhd 100% Research and data 3rd Floor, Prima 1, Prima Avenue, Block 3507, Malaysia * Name changed to Euromoney Limited on 28 October 2020. † Euromoney Institutional Investor (Jersey) Limited’s principal country of operation is Hong Kong. ^ Shares held by a nominee on behalf of RISI Consulting Beijing Co Ltd. services 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 the Companies Act 2006 respectively. A list of associates, joint ventures and other equity investments is disclosed in note 14. For the year ended 30 September 2020, 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 registration number 04894635 10921687 01951332 05885797 10975335 04082590 03803220 04082769 12340017 11823364 10925251 03879279 02703517 07162466 03714017 03318615 05994621 04121650 08293930 04701899 Company Broadmedia Communications Limited Census Commodity Data Limited Centre for Investor Education (UK) Limited EII (Ventures) Limited Euromoney BML Limited Euromoney Charles Limited Euromoney Consortium 2 Limited Euromoney Consortium Limited Euromoney Dormant Limited (effective 24 July 2020, formerly Euromoney Group Limited) Euromoney Holdings 2 Limited Euromoney Holdings Limited Fastmarkets Limited Glenprint Limited Layer123 Events & Training Limited Management Diagnostics Ltd MDL ESOP Limited Redquince Limited (name changed to Euromoney Limited on 28 October 2020) Reinsurance Security (Consultancy).CO.UK Limited Site Seven Media Limited Wealth-X (UK) Limited 166 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Company Accounts Company Balance Sheet as at 30 September 2020 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 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 Reserve for own shares Reserve for share-based payments Retained earnings: At 1 October (Loss)/profit for the year Other changes in retained earnings Total shareholders’ funds Notes 2020 £000 5 6 7 7 8 8 10 2020 £000 194 1,018,973 150,719 1,169,886 74,348 72 74,420 (61,336) 13,084 1,182,970 (317) 1,182,653 273 104,636 64,981 56 1,842 (14,592) 38,686 2019 £000 2019 £000 263 1,225,648 150,614 1,376,525 44,712 46 44,758 (34,303) 10,455 1,386,980 (534) 1,386,446 273 104,306 64,981 56 1,842 (19,682) 40,120 1,194,550 (182,392) (25,387) 1,115,085 115,381 (35,916) 986,771 1,182,653 1,194,550 1,386,446 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 Company Accounts on pages 167 to 163 were approved by the Board of Directors on 18 November 2020 and signed on its behalf by: Andrew Rashbass Wendy Pallot Directors 18 November 2020 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 167 i F n a n c i a l S t a t e m e n t s Company Accounts Company Statement of Changes in Equity for the year ended 30 September 2020 At 1 October 2018 Profit for the year Charge for share-based payments Cash dividends paid1 Exercise of share options At 30 September 2019 Loss for the year (Credit)/charge for share-based payments Cash dividends paid1 Exercise of share options Called up share capital £000 Share premium account £000 Other reserve £000 Capital redemption reserve £000 Capital reserve £000 Reserve for own shares £000 Reserve for share-based payments £000 Profit and loss account £000 Total shareholders’ funds £000 273 103,790 64,981 56 1,842 (20,462) 39,687 1,115,085 1,305,252 – – – – – – – 516 – – – – – – – – – – – – – – – – 115,381 115,381 883 – 883 – (35,586) (35,586) 780 (450) (330) 516 273 104,306 64,981 56 1,842 (19,682) 40,120 1,194,550 1,386,446 – – – – – – – 330 – – – – – – – – – – – – – – – – (182,392) (182,392) (729) 2,992 2,263 – (23,994) (23,994) 5,090 (705) (4,385) 330 At 30 September 2020 273 104,636 64,981 56 1,842 (14,592) 38,686 986,771 1,182,653 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) 2020 Number 58,976 1,179,662 1,238,638 0.25 11.78 9,946 2019 Number 58,976 1,593,198 1,652,174 0.25 11.91 24,452 The other reserve represents the share premium arising on the shares issued for the purchase of Metal Bulletin plc in October 2006. 168 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 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. 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 25 to the Group accounts. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 169 i F n a n c i a l S t a t e m e n t s Company Accounts Notes to the Company Accounts continued 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. This pre-tax nominal discount rate was 9.5%. An impairment charge of £206.7m was recognised in the year. The impairment review also modelled the potential impact of further downside being faced by the Group’s events businesses, in excess of current expectations, between 2021 and 2023. This was evaluated using weighted average probabilities of different scenarios, including a 50% weighting of no physical events running in 2021, 30% weighting of a hybrid of physical and virtual events and a 20% weighting of a return to physical events. The weightings become more favourable between 2021 and 2023 but still include a 10% probability weighting of no physical events in 2023. This additional downside would increase the investments impairment by £11.4m. The probabilities used do not represent the expectation of the Group, rather a severe downside to test the sensitivity of the impairment model. For the year ended 30 September 2019, an impairment charge of £6.1m was recognised which arose due to an increase in the UK weighted average cost of capital from 11.0% in 2018 to 11.5% in 2019. An additional 0.5% increase in the UK cost of capital would increase the impairment by a further £26.4m. Investments held in the Statement of Financial Position at 30 September 2020 were £1,019.0m (2019: £1,225.6m). 3 Staff costs The monthly average number of persons employed by the Company during the year amounted to: Executive Directors 2020 No. 2 2019 No. 2 Details of Directors’ remuneration are set out in the Directors’ Remuneration Report on pages 76 to 97 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 2019 and at 30 September 2020 Accumulated depreciation At 1 October 2019 Charge for the year At 30 September 2020 Net book value at 30 September 2020 Net book value at 30 September 2019 170 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 2020 £000 16 2019 £000 16 Short-term leasehold improvements £000 701 438 69 507 194 263 6 Investments At 1 October Additions Disposals Impairment At 30 September 2020 Subsidiaries £000 2019 Subsidiaries £000 1,225,648 1,231,729 647,421 (647,420) (206,676) – – (6,081) 1,018,973 1,225,648 On 30 September 2020, as part of a group corporate structure simplification, the Company disposed of its investments in Euromoney Group Limited (formerly Fantfoot Limited), Euromoney Institutional Investor (Jersey) Limited and EII (Ventures) Limited in exchange for additional shares in Euromoney Canada Limited. For the year ended 30 September 2020, the Company recognised an impairment of £206.7m in its investment in Euromoney Canada Limited. The impairment was attributed to a reduction in forecast cash flows. For the year ended 30 September 2019, the Company recognised an impairment of £6.1m in its investments in EII (Ventures) Limited and Euromoney Canada Limited. The impairment was 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% in 2018 to 11.5% in 2019. Details of the principal subsidiary and associated undertakings of the Company at 30 September 2020 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 Amounts owed by Group undertakings of £74.0m (2019: £44.4m) are interest free and repayable on demand. Amounts falling due after more than one year Amounts owed by Group undertakings Other debtors 2020 £000 73,993 355 74,348 2020 £000 150,297 422 150,719 2019 £000 44,446 266 44,712 2019 £000 150,297 317 150,614 Amounts owed by Group undertakings include a loan of £150.3m (2019: £150.3m) with an interest rate of 2.9% (2019: 2.8%) which is repayable on demand and expires in September 2022. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 171 i F n a n c i a l S t a t e m e n t s Company Accounts Notes to the Company Accounts continued 8 Creditors Amounts falling due within one year Amounts owed to Group undertakings Provisions (note 9) Corporate tax creditor Accruals Amounts owed to Group undertakings of £50.5m (2019: £30.2m) are interest free and repayable on demand. Amounts falling due in more than one year Provisions (note 9) 9 Provisions At 1 October 2019 Provision in the year Used in the year At 30 September 2020 Maturity profile of provisions: Within one year Between one and five years 2020 £000 (50,481) (105) (9,241) (1,509) (61,336) 2020 £000 (317) (317) Dilapidation provisions £000 Other provisions £000 274 – – 274 322 (112) (62) 148 2020 £000 105 317 422 2019 £000 (30,154) (62) (2,878) (1,209) (34,303) 2019 £000 (534) (534) Total £000 596 (112) (62) 422 2019 £000 62 534 596 The dilapidation provision represents the Directors’ best estimate of the amount likely to be payable on expiry of the Company’s property leases. The other provision consists of social security costs arising on share option liabilities. 172 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 10 Called up share capital Allotted, called up and fully paid 109,289,406 ordinary shares of 0.25p each (2019: 109,249,352 ordinary shares of 0.25p each) 2020 £000 273 2019 £000 273 During the year, 40,054 ordinary shares of 0.25p each (2019: 68,623 ordinary shares) with an aggregate nominal value of £100 (2019: £172) were issued following the exercise of share options granted under the Company’s share option schemes for a cash consideration of £330,446 (2019: £516,126). 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 2020 £000 842 1,333 2,175 2019 £000 756 2,096 2,852 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 11.40p per share (2019: 22.30p) totalling £12.3m (2019: £24.0m) for the year ended 30 September 2020 subject to approval at the AGM to be held on 11 February 2021. 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 2021. There were no other events after the balance sheet date. Euromoney Institutional Investor PLC Annual Report and Accounts 2020 173 i F n a n c i a l S t a t e m e n t s Additional Information Five year record Consolidated Income Statement Extracts 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 Net finance income/(costs) Profit before tax Tax expense on profit Profit for the year from continuing operations DISCONTINUED OPERATIONS Restated 2016 £000 Restated 2017 £000 Restated 2018 £000 Restated 2019 £000 2020 £000 366,062 386,923 390,279 401,673 335,256 89,044 (16,817) (37,265) 34,962 (1,823) (2,136) 31,003 (10,715) 20,288 90,993 (20,566) (31,253) 39,174 (1,890) (1,098) 36,186 (2,650) 33,536 101,605 (22,739) 76,060 154,926 157 (1,124) 153,959 (50,160) 103,799 105,443 (25,143) 3,856 84,156 (88) (1,209) 82,859 (21,666) 61,193 61,481 (23,039) (4,811) 33,631 (495) (227) 32,909 (2,125) 30,784 Profit for the year from discontinued operations 8,688 5,889 91,344 – – PROFIT FOR THE YEAR 28,976 39,425 195,143 61,193 30,784 Attributable to: Equity holders of the parent Equity non-controlling interests Basic earnings per share Diluted earnings per share 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 30,978 (194) 30,784 28.8p 28.8p Diluted weighted average number of ordinary shares 126,584,778 112,704,904 107,545,653 107,654,086 107,670,171 Dividend per share 23.40p 30.60p 32.50p 33.10p 11.40p Consolidated Statement of Financial Position Extracts Intangible assets Other non-current assets Accruals Contract liabilities Other net current assets Other non-current liabilities Net assets 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) 526,048 658,056 82,007 (44,013) (134,551) 51,307 (95,431) 517,375 The five year record does not form part of the audited Financial Statements. The five year record has been restated for VAT and payroll taxes as disclosed in note 1 of the 2019 Annual Report and Accounts. Results attributable to GMID have been reported in discontinued operations. Results attributable to Asset Management have been included in continuing operations. 174 Euromoney Institutional Investor PLC Annual Report and Accounts 2020 Shareholder information Financial calendar 2020 final results announcement Final dividend ex-dividend date Final dividend record date Trading update 2021 AGM (approval of final dividend) Payment of final dividend 2021 interim results announcement Interim dividend ex-dividend date Interim dividend record date Payment of 2021 interim dividend 2021 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 19 November 2020 Thursday 26 November 2020 Friday 27 November 2020 Thursday 11 February 2021 Thursday 11 February 2021 Tuesday 16 February 2021 Thursday 20 May 2021* Thursday 27 May 2021* Friday 28 May 2021* Friday 25 June 2021* Thursday 18 November 2021* Administrative enquiries about a holding of Euromoney Institutional Investor PLC shares should be directed in the first instance to the Company’s registrars, EQ (Equiniti): Telephone: 0371 384 2951 Lines are open 9.00 a.m. to 5.00 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 175 Euromoney Institutional Investor PLC Annual Report and Accounts 2020Additional Information 176 Euromoney Institutional Investor PLC Annual Report and Accounts 2020Additional Information Designed and produced by Radley Yeldar www.ry.com Euromoney Institutional Investor PLC 8 Bouverie Street London EC4Y 8AX www.euromoneyplc.com