17th May 2007 07:02
Euromoney Institutional InvestorPLC17 May 2007 17 May 2007 Euromoney Institutional Investor PLC Interim Results Results for the six months to March 31 2007 Highlights 2007 2006 change Revenue £144.2 m £103.1 m +40% Operating profit £22.4 m £15.8 m +42% Adjusted operating £34.2 m £17.6 m +95% profit* Profit before £18.8 m £13.5 m +40% tax Adjusted profit before £24.8 m £13.9 m +78%tax* Diluted earnings a 13.3 p 10.8 p +23% share Adjusted diluted earnings a 19.2 p 11.3 p +70% share * Dividend 6.0 p 5.4 p +11% * see glossary Results reflect strong organic growth and successful integration of acquisitions Revenues up 40% to £144 million, the highest ever • Adjusted profit before tax up 78% to record £24.8 million • Adjusted operating margin improves from 17% to 24% • Strong growth across all divisions and revenue streams • Metal Bulletin integration successfully completed and synergies ahead of expectations • Investment in new businesses stepped up • Interim dividend increased by 11% to 6p • Capital Appreciation Plan continues to drive record performance • Encouraging outlook for the full year Commenting on the results, chairman Padraic Fallon, said: "Above all, these results reflect very strong real growth across all ourbusinesses, as well as the success of our acquisitions. The integration of MetalBulletin has been completed ahead of plan, and is generating better thanexpected synergies." "The healthy economic and financial environment experienced in the first halflooks set to continue into the second. Current trading is encouraging andforward bookings for advertising, sponsorship and delegates are all ahead of thesame time last year. Comparatives for the second half will be more challengingbut the enlarged group is well positioned for further growth." Highlights Euromoney Institutional Investor PLC (Euromoney), the international publishing,events and electronic information group, achieved adjusted operating profit forthe six months to March 31 2007 of £34.2 million, nearly double that achieved in2006. Adjusted profit before tax increased by 78% to £24.8 million and adjusteddiluted earnings a share increased 70% to 19.2p. The board has approved aninterim dividend of 6p, against 5.4p, to be paid to shareholders on June 252007. These record interim results reflect the company's successful strategy to builda leading international business information group. The group operating marginimproved and all divisions achieved strong organic growth, based on: - advertising revenues increasing at the highest rate for some time; - subscription revenues for both print and electronic products continuing to show double digit growth; - the benefit of past investment in marketing and new products In addition, Metal Bulletin plc, which was acquired on October 5 2006, hastraded in line with expectations at the time of acquisition and has beensuccessfully integrated into the group ahead of plan. Better than expected costsynergies have been generated from the elimination of duplicate functions; allnon-core businesses have been sold; and the investment in new products andmarketing is already beginning to generate rewards. Trading Background The positive trading background experienced in 2006 has extended into the firsthalf of 2007 as global financial institutions continue to invest in newproducts, markets and headcount, driving increased demand for quality businessinformation through a variety of media. Capital markets worldwide continue tosee record activity levels, fuelled by a surplus of liquidity and low interestrates. Markets also remain strong across all geographies, particularly emergingmarkets such as the Middle East and Asia which are so important to the group'sproducts. Subscription revenues, which for this period include Metal Bulletin's BCAresearch business, nearly doubled to £50.3 million. The group's strategy ofinvesting in premium subscription products, particularly those deliveredelectronically, has driven strong organic growth over the past two years and theinvestment in subscription marketing and new products has been stepped up.Subscription revenues accounted for more than a third of total revenues in thefirst half and are now the largest revenue stream in the group. More than £1million was invested in new products during the period. Advertising revenues increased by 20% to £28.3 million, the highest increase forsome years. Titles such as Euromoney and the international edition ofInstitutional Investor have achieved increases in advertising in excess of 20%. Sponsorship and delegate revenues increased by 28% to £58.9 million, driven bystrong demand for the networking opportunities and training expertise thegroup's events and training courses offer. Acquisition of Metal Bulletin The acquisition of Metal Bulletin was completed at the start of the financialyear and the focus of management in the first half has been the integration ofMetal Bulletin's businesses within the Euromoney Institutional Investor group.This integration is now largely complete. The emphasis going forward will be toinvest in and grow the Metal Bulletin businesses to deliver the revenuesynergies set out at the time of acquisition. Metal Bulletin contributedrevenues from continuing operations of £27.2 million and adjusted operatingprofits from continuing operations of £9.1 million to the group in the periodbetween the date of acquisition and March 31. The programme to dispose of thoseMetal Bulletin businesses identified for sale at the time of acquisition hasbeen successfully completed. These businesses contributed operating profits ofsome £1 million in the first half. Following the restructuring of Metal Bulletin the board has identifiedannualised cost synergies of £5 million, of which £3.5 million will be realisedin the current financial year. For the six months to March 31, the synergiesamounted to £1 million, and exceptional costs of £4.7 million were incurred,including £2.5 million for the elimination of duplicate functions and systems,and £2.2 million for onerous property leases. In March, the Remuneration Committee approved an increase in the hurdle for thegroup's profit target under its long-term incentive scheme, the CapitalAppreciation Plan, from £50 million to £57 million to reflect the effect of theMetal Bulletin acquisition. Business Review Revenues from Financial Publishing increased by 20% to £35.4 million reflectingstrong growth in both advertising and subscription revenues. Operating marginsimproved from 15% to 21% producing a rise in adjusted operating profits of 71%to £7.5 million. Growth was achieved by both the general capital markets titlessuch as Euromoney and the international edition of Institutional Investor, aswell as specialist titles such as Alpha, Project Finance and Global Investor.Within Metal Bulletin, the publishing activities of Managed Account Reports(MAR) were merged with the hedge fund publishing activities of Euromoney, whileFutures & Options World has been integrated within the Euromoney specialistfinance group and restructured with a view to restoring its profitability. The group's print products are increasingly migrating to an electronic platformwhich provides excellent opportunities to enhance growth through the launch ofnew products, widening the reach of the subscriber base, and more targetedmarketing efforts. The group's strategy of investing in subscription-basedelectronic information services led to the acquisition in October of TotalDerivatives, a leading provider of real-time news and analysis on the globalfixed income derivatives markets. Total Derivatives made a first halfcontribution of £0.6 million and provides an excellent platform for the launchof similar services in other niche financial verticals. In line with thisstrategy, Total Securitisation, an online news service dedicated to the globalsecuritisation markets was launched in March and further products are planned. The contribution from the Business Publishing division increased sharplyfollowing the acquisition of Metal Bulletin. Adjusted operating profitsincreased from £1.9 million to £4.8 million after revenues nearly doubled to £20million. Among the other businesses in this division, the energy publishingcompanies Petroleum Economist and Gulf Publishing were the best performers, withthe higher oil price driving increased investment in both downstream andupstream activities. The Metals, Minerals and Mining (MMM) division of Metal Bulletin, whichcomprises the eponymous UK-based title and the US-based American Metal Market,is now the largest component of Business Publishing. The Euromoney and MetalBulletin businesses in this sector have been brought together more closely withthe objective of increasing the cross-marketing of products, and building a moresubstantial events business using Euromoney's expertise in this area. Thisstrategy is unlikely to have a significant impact on revenues until 2008. In themeantime investments are being made in people, marketing and productdevelopment. The MMM publishing business contributed revenues of £8.5 millionand adjusted operating profits of £2.3 million, in line with forecasts at thetime of acquisition. The strong growth achieved in the Conferences and Seminars division over thepast few years continued with revenues up 20% to £45.9 million, and adjustedoperating profits improved 31% to £13.5 million. The growth in this divisioncontinues to reflect the group's strategy of building existing events as well aslaunching new ones. Areas such as hedge funds, real estate finance, air financeand Islamic finance have provided opportunities for new events, particularly inemerging markets. The Institutional Investor conference business, which has been a significantdriver of growth with its attractive subscription-based membership model,increased the number of members by 11%. It launched a new legal instituteearlier in the year and plans to launch another four institutes over the next 18months. The hedge fund events previously run by Metal Bulletin's MAR businesshave been absorbed by Institutional Investor. The MMM events business has beenrestructured and Euromoney events expertise added, with a view to significantlyexpanding the number of events run in 2008. In the first half the MMM eventsbusiness contributed revenues of £2.6 million and adjusted operating profits of£1 million to the Conferences and Seminars division. The performance of the Training division extended the excellent results achievedin the second half of 2006. Revenues increased by 23% to £16.5 million andadjusted operating profits by 63% to £4.6 million. This business is verysensitive to the number of courses run and the average number of delegates percourse. In the first half of 2006 the Training division invested heavily inrevenue growth at the expense of the margin. This problem was quickly identifiedby management and rectified in the second half. As a result, profit growth inthe second half of 2007 will be more challenging. However, the businesscontinues to invest in new products and is experiencing an increase in delegatenumbers across all its markets. Total revenues for the Database and Information Services division, includingBCA, the largest and fastest growing division of Metal Bulletin, increased from£9.3 million to £25.5 million, and adjusted operating profits increased nearlyfourfold to £8.8 million. BCA is one of the world's leading independentproviders of high quality global investment research for financial institutions,hedge funds and private wealth managers. In its first six months under Euromoneyownership, BCA's subscription revenues increased by 20% to $24.7 million,consistent with forecasts at the time of acquisition. The Euromoney strategy forBCA has been to accelerate the investment in new products, and help build itsglobal sales resource using the Euromoney infrastructure. Since acquisition, newsales teams have been installed in Euromoney's New York and Hong Kong offices,while a new Commodity and Energy Strategy product is being launched this monthand BCA is investing in a Global Equities product for launch in 2008. The other key driver of growth in the Database and Information Services divisionis ISI, the emerging markets information provider, which experienced its bestsix month performance for a long time with record sales, subscription revenuesup 17% to $14.3 million, and a customer retention rate over 90%. In addition,ISI's recently acquired subsidiary CEIC, which provides time-series economicdata covering Asian markets, has been integrated within ISI and increasedsubscription revenues by 26%. Financial Review The acquisition of Metal Bulletin was completed on October 5 2006 for a cashconsideration including costs of £240 million, plus assumed net debt of £15million, funded by the issue of 13.8 million new shares for £65 million andborrowings of £175 million. In October 2006 the group also acquired a 67%interest in Total Derivatives for a cash consideration of £7.4 million. Furtherinvestments totalling £7.5 million were made in a number of the group'sassociates and subsidiaries during the period. The first half contribution toadjusted operating profits from these acquisitions and increases in equityinterests was £11.2 million. At the end of 2006 the group identified a number of businesses which no longersatisfied its strategic requirements. The programme to dispose of businessesidentified for sale at the time of the acquisition of Metal Bulletin has alreadybeen completed: Atalink, the specialist and direct response marketing publisherwas sold in March for £3.1 million, of which £1.3 million is expected to bereceived over the next 12 months; Energy Information Centre, the provider ofintegrated energy information data and services, was sold for £4.7 million inApril; and the sale of Systematics to its management was completed in May. Noprofit or loss was made on the disposal of any of these businesses. In addition,in March the group sold Raven Fox, a leading duty-free and luxury goodspublisher, for cash proceeds of £1.9 million giving rise to an exceptional gainon sale of £2 million. Further disposals of a number of small publishing titleswere also completed in the period. Net debt at March 31 was £239.6 million compared to £73.4 million at year end,reflecting the increased debt taken on to finance the acquisition of MetalBulletin. The strong operating cash flows of Metal Bulletin helped increasegroup operating cash flows for the six months to £37.0 million and generated anadjusted operating profit to cash conversion rate of 127%. The net cost offunding the group's debt increased from £1.8 million to £7.2 million, withinterest cover based on adjusted operating profit at March 31 a comfortable 4.7times. Net finance costs of £3.6 million also include a charge of £0.9 millionfor the imputed interest on acquisition option commitments and a credit of £4.5million for the net movement in the value of acquisition option commitments. Outlook The healthy economic and financial environment experienced in the first halflooks set to continue into the second. Current trading is encouraging andforward bookings for advertising, sponsorship and delegates are all ahead of thesame time last year. The investment in marketing and new products will leave thegroup well positioned for further growth. Meanwhile the success in integratingMetal Bulletin during the first half leaves the group well placed to concentrateon delivering the revenue synergies and growth identified at the time ofacquisition. The second half traditionally accounts for more than half of group profits,although Metal Bulletin, whose profits are weighted towards the first half, willhelp redress the balance. In addition, after an exceptionally strong second halfin 2006, growth comparisons for the second half of 2007 will be morechallenging, and the impact of the recent fall in the US currency through thetwo dollar threshold will also have a negative impact. After a first half of strong organic growth and the successful integration ofMetal Bulletin, the board of Euromoney remains confident in its clear long-termstrategy to deliver consistent top-line growth from new and existing products;invest in increasing revenues from high quality subscription products,particularly electronic data and information services; continue to improve theoperating margin; and to make selective acquisitions to strengthen the group'smarket positions. Overall, the enlarged group is well positioned for furthergrowth. Padraic Fallon Chairman May 16 2007 Glossary Adjusted operating profit = Operating profit before acquired intangibleamortisation, share option expense, exceptional items and share of results inassociates and joint ventures as set out in the income statement. Adjusted profit before tax = Profit before tax from continuing operations,acquired intangible amortisation, exceptional items, net movements inacquisition option commitment values, and imputed interest on acquisition optioncommitments as set out in the income statement and note 4. Adjusted earnings a share = Diluted earnings a share before acquired intangibleamortisation, exceptional items, net movements in acquisition optioncommitments, imputed interest on acquisition option commitments and deferred taxassets recognised as set out in note 7. END NOTE TO EDITORS About Euromoney Institutional Investor PLC Euromoney Institutional Investor PLC is listed on the London Stock Exchange anda member of the FTSE-250 share index. It is a leading internationalbusiness-to-business media group focused primarily on the international finance,metals and commodities sectors. It publishes more than 70 magazines, newslettersand journals, including Euromoney, Institutional Investor, and Metal Bulletin.It also runs an extensive portfolio of conferences, seminars and trainingcourses and is a leading provider of electronic information and data coveringinternational finance, metals and emerging markets. Its main offices are inLondon, New York and Hong Kong and approximately half its revenues and profitsare managed from the United States. For further information please contact: Euromoney Institutional Investor PLC Padraic Fallon Chairman 020 7779 8556 [email protected] Richard Ensor Managing Director 020 7779 8845 [email protected] Colin Jones Finance Director 020 7779 8666 [email protected] Financial Dynamics 020 7831 3113 Charles Palmer [email protected] Tim Spratt [email protected] Or visit our website at www.euromoneyplc.com Group Income Statement for the six months ended March 31 2007 Unaudited Unaudited Audited six months six months year ended ended ended September 30 March 31 March 31 2007 2006 2006 Note £000's £000's £000's Continuing operations 2 144,658 104,973 222,276Less: share of revenue of (441) (1,848) (1,800)joint ventures Total revenue 144,217 103,125 220,476 Operating profit before 2 34,187 17,559 43,812acquired intangible amortisation, share option expense and exceptional items Acquired intangible (6,882) - (144)amortisation Share option expense (2,611) (2,542) (4,428)Exceptional items 3 (2,683) - (716)Operating profit before 22,011 15,017 38,524associates and joint ventures Share of results in 414 733 1,208associates and joint ventures Operating profit 22,425 15,750 39,732 Finance income 4 6,691 444 772Finance costs 4 (10,293) (2,711) (5,270)Net finance costs (3,602) (2,267) (4,498) Profit before tax 18,823 13,483 35,234Tax on profit (4,030) (3,257) (10,137)Deferred tax asset - - 13,649recognition Tax (charge)/credit on 5 (4,030) (3,257) 3,512profit on ordinary activities Profit after tax from 2 14,793 10,226 38,746continuing operations Discontinued operations Profit for the period from 10 419 - -discontinued operations Profit for the period 15,212 10,226 38,746 Attributable to: Equity holders of the 13,918 9,620 37,430parent Equity minority interests 1,294 606 1,316 15,212 10,226 38,746 Basic earnings per share - 7 13.32 10.83 42.11continuing operations Basic earnings per share - 7 13.73 10.83 42.11continuing and discontinued operations Diluted earnings per share 7 13.28 10.81 41.90- continuing operations Diluted earnings per share 7 13.69 10.81 41.90- continuing and discontinued operations Adjusted diluted earnings 7 19.18 11.31 28.61per share Dividend per share 6 6.00p 5.40p 17.00p(including proposed dividends) Group Balance Sheet as at March 31 2007 Unaudited Unaudited Audited as at as at as at March 31 March 31 September 30 2007 2006 2006 £000's £000's £000'sNon-current assets Intangible assets Goodwill 260,184 68,536 68,452 Other intangible 144,405 486 3,146 assets Property, plant and 17,333 12,697 14,643equipment Investments 84 10,511 25,846Deferred tax assets 26,298 11,030 22,917 448,304 103,260 135,004 Current assets Trade and other 64,391 48,734 73,512receivables Cash and cash 27,562 18,083 27,503equivalents Derivative 5,720 2,424 3,069financial instruments 97,673 69,241 104,084 Total assets of 10 6,582 - -subsidiaries held for sale 6,582 - - Current liabilities Trade and other (44,958) (72,156) (95,515)payables Accruals (30,507) (18,100) (29,478)Deferred income (72,784) (46,678) (45,324)Bank overdrafts (7,073) (185) (1,235) (155,322) (137,119) (171,552) Net current (51,067) (67,878) (67,468)liabilities Total assets less 397,237 35,382 67,536current liabilities Non-current liabilities Acquisition option (34,396) (20,537) (24,332)commitments Other non-current (625) - (597)liabilities Committed (247,340) (67,927) (65,530)borrowings Deferred tax (48,285) (1,802) (3,074)liabilities Derivative (166) - -financial instruments Provisions (2,628) (1,552) (777)Loan notes (12,711) - -Post retirement (2,980) - -benefits (349,131) (91,818) (94,310) Total liabilities 10 (1,557) - -of subsidiaries held for sale (1,557) - - Net assets/ 46,549 (56,436) (26,774)(liabilities) Shareholders' equity Called up share 258 223 223capital Share premium 103,398 38,028 38,081account Capital redemption 8 8 8reserve Own shares (74) (74) (74)Liability for share 8,518 3,592 5,907based payments Fair value reserve 7,585 1,119 6,618Translation reserve 9,591 (3,160) (244)Retained earnings (86,879) (96,715) (78,642)Equity 42,405 (56,979) (28,123)shareholders' surplus/(deficit) Equity minority 4,144 543 1,349interests Total equity 46,549 (56,436) (26,774) Group Cash Flow Statement for the six months ended March 31 2007 Unaudited Unaudited Audited six months six months year ended ended ended March 31 March 31 September 30 2007 2006 2006 £000's £000's £000'sCash flow from operating activities Operating profit 22,425 15,750 39,732Share of results in (414) (733) (1,208)associates and joint ventures Operating profit from 801 - -discontinued operations Profit on sale of (1,972) - 1,483business Intangible amortisation 6,882 - 381Goodwill impairment - - 519Share option expense 2,611 2,542 4,428Depreciation of property, 1,479 1,336 2,925plant and equipment Movement in property 1,851 (170) (348)rental provision Gain on disposal of - - (1,286)property, plant and equipment Operating cash flows 33,663 18,725 46,626before movements in working capital Increase in receivables (4,394) (133) (9,822)Increase in payables 7,741 6,387 22,753Cash generated by 37,010 24,979 59,557operations Income taxes paid (7,275) (3,629) (6,884)Net cash from operating 29,735 21,350 52,673activities Investing activities Dividends paid to (1,432) (1,724) (1,724)minorities Dividends received from 348 354 756associates Dividends received from 111 - -assets held for resale Interest received 1,034 442 662Purchases of property, (1,591) (3,253) (7,694)plant and equipment Proceeds on disposal of 2 - 1,975property, plant and equipment Purchase of available for - - (19,740)sale investments Purchase of additional (7,546) - (14,507)interest in subsidiary undertakings Acquisition of associate - (3,048) (3,424)and joint ventures Acquisition of subsidiary (152,587) (9,263) -undertakings Disposal of business 1,865 - 150Net cash used in (159,796) (16,492) (43,546)investing activities Financing activities Dividends paid (11,933) (9,760) (14,563)Interest paid (5,450) (1,698) (696)Issue of new share 400 677 730capital (Repayment)/increase in (78,136) 2,727 3,336borrowings Loan repaid to DMGT group (34,109) (21,472) (71,991)company Loan received from DMGT 253,894 17,393 76,399group company Net cash used in 124,666 (12,133) (6,785)financing activities Net (decrease)/increase (5,395) (7,275) 2,342in cash and cash equivalents Cash and cash equivalents 26,268 24,932 24,932at beginning of period Effect of foreign (384) 241 (1,006)exchange rate movements Cash and cash equivalents 20,489 17,898 26,268at end of period Group Statement of Recognised Income and Expense for the six months ended March 31 2007 Unaudited Unaudited Audited six months six months year ended ended ended March 31 March 31 September 30 2007 2006 2006 £000's £000's £000's Gains on sale of - - 405available-for-sale investments taken to equity Gains on cash flow hedges 2,530 - 3,629Net exchange differences 9,835 (1,730) 1,056on translation of foreign operations Net exchange difference (607) 1,718 3,183on foreign currency loans Actuarial gains on 882 - -defined benefit pension schemes Tax on items taken 3,678 (130) (265)directly to equity Other movements - - (23) Net income recognised 16,318 (142) 7,985directly in equity Transfers Transfer of gain on cash (956) - -flow hedges from fair value reserves to the income statement Profit for the period 15,212 10,226 38,746 Total recognised income 30,574 10,084 46,731and expense for the period Attributable to: Equity holders of the 29,280 9,478 45,415parent Minority interests 1,294 606 1,316 30,574 10,084 46,731 Notes to the Unaudited Interim Report 1. Basis of preparation This interim report was approved by the board of directors on May 16 2007. The financial information contained in this interim report does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985 andshould be read in conjunction with the 2006 annual report. The comparativefinancial information is based on the interim results for the six months endedMarch 31 2006. The figures for the year to September 30 2006 are an abridged statement from thegroup's accounts, which have been delivered to the Registrar of Companies. Theauditors' report on those accounts was unqualified and did not contain astatement under section 237(2) or 237(3) of the Companies Act 1985. Accounting policies The condensed set of financial statements has been prepared using accountingpolicies consistent with International Financial Reporting Standards (IFRS). Thegroup has not yet adopted IAS 34 'Interim Financial Reporting' but intends to doso from October 1 2007. The same accounting policies, presentation and methods of computation arefollowed in the condensed set of financial statements as applied in the Group'slatest annual audited financial statements. In addition, for defined benefitschemes, the cost of providing benefits is determined using the Projected UnitCredit Method, with actuarial valuations being carried out at each balance sheetdate. Actuarial gains and losses are recognised in full in the period in whichthey occur. The retirement benefit obligation recognised in the balance sheetrepresents the present value of the defined benefit obligation as adjusted forunrecognised past service cost, and as reduced by the fair value of schemeassets. 2. Segmental analysis Primary reporting format Segmental information is presented in respect of the group's business divisionsand represent the group's management and internal reporting structure. The groupis currently organised into five business divisions: Financial publishing;Business publishing; Training; Conferences and seminars; and Databases andinformation services. This is considered to be the primary reporting format.Financial publishing and Business publishing consist primarily of advertisingand subscription revenue. The Training division consists primarily of delegaterevenue. Conferences and seminars consists of both sponsorship income anddelegate revenue. Databases and information services consists of subscriptionrevenue. A breakdown of the group's revenue by type is set out below. Secondary reporting format The group divides the operation of its businesses across three main geographicalareas: United Kingdom; North America; and Rest of World (which primarilyincludes Asia). These geographical areas are considered as the secondaryreporting format. Inter segment sales are charged at prevailing market rates. Unaudited six months ended March 31 United Kingdom North America Rest of World Elimination Total 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 £000's £000's £000's £000's £000's £000's £000's £000's £000's £000'sRevenue By division and source: Financial 18,571 14,047 16,670 15,358 694 477 (520) (419) 35,415 29,463publishing Business 13,655 5,969 5,961 3,764 586 634 (167) (149) 20,035 10,218publishing Training 11,968 9,198 3,530 3,365 1,395 1,188 (348) (263) 16,545 13,488Conferences and 18,121 14,251 23,045 18,805 6,691 6,790 (1,971) (1,710) 45,886 38,136seminars Databases and 3,497 2,595 15,398 2,387 6,708 4,353 (73) (19) 25,530 9,316information services Sold/closed 836 2,135 5 248 - 146 (35) (25) 806 2,504businesses Total revenue 66,648 48,195 64,609 43,927 16,074 13,588 (3,114) (2,585 144,217 103,125Joint ventures - 963 - - 441 885 - - 441 1,848 66,648 49,158 64,609 43,927 16,515 14,473 (3,114) (2,585) 144,658 104,973 The joint venture revenues of £441,000 (2006: £1,848,000) can be allocated asfollows; Business publishing £nil (2006: £963,000); Databases and informationservices £nil (2006: £885,000); Conferences and seminars £353,000 (2006: £nil);Training £88,000 (2006: £nil). Revenue of £27,190,000 from Metal Bulletin is included within the figures above.This has been allocated as follows: Financial publishing £905,000; Businesspublishing £8,453,000; Conferences and seminars £4,585,000; Databases andinformation services £13,247,000. Notes to the Unaudited Interim Report 2. Segmental analysis continued 2007 2006 £000's £000'sRevenue by type: Subscriptions 50,344 26,622Advertising 28,290 23,480Sponsorship 21,168 17,788Delegates 37,685 28,061Other 5,924 4,670Sold/closed businesses 806 2,504Total revenue 144,217 103,125Investment income (note 4) 1,773 444Total revenue and investment 145,990 103,569income Unaudited six months ended March 31 United Kingdom North America Rest of World Elimination Total 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 £000's £000's £000's £000's £000's £000's £000's £000's £000's £000'sRevenue By destination: Continuing 26,074 18,568 72,609 48,146 47,842 36,467 (3,114) (2,560) 143,411 100,621businesses Sold/closed 181 590 123 601 502 1,338 - (25) 806 2,504businesses Total revenue 26,255 19,158 72,732 48,747 48,344 37,805 (3,114) (2,585) 144,217 103,125Joint ventures - 59 - 152 441 1,637 - - 441 1,848Total revenue 26,255 19,217 72,732 48,899 48,785 39,442 (3,114) (2,585) 144,658 104,973(including share of joint ventures revenue) Investment 1,540 444 191 - 42 - - - 1,773 444income Total revenue 27,795 19,661 72,923 48,899 48,827 39,442 (3114) (2,585) 146,431 105,417(including share of joint ventures revenue) and investment income Unaudited six months ended March 31 United Kingdom North America Rest of World Total 2007 2006 2007 2006 2007 2006 2007 2006 £000's £000's £000's £000's £000's £000's £000's £000'sOperating profit 1 By activity and source:: Financial 5,045 3,012 2,476 1,535 (21) (169) 7,500 4,378publishing Business 3,873 1,622 1,077 413 (133) (98) 4,817 1,937publishing Training 3,411 1,974 772 557 390 281 4,573 2,812Conferences and 5,813 4,184 6,585 4,465 1,066 1,613 13,464 10,262seminars Databases and 2,149 2,021 5,488 183 1,152 130 8,789 2,334information services Sold/closed 210 (11) (1) - (1) 37 208 26businesses Unallocated (4,723) (3,814) (435) (376) (6) - (5,164) (4,190)corporate costs Operating profit 15,778 8,988 15,962 6,777 2,447 1,794 34,187 17,559before Acquired (2,484) - (4,217) - (181) - (6,882) -intangible amortisation 2 Share option (1,321) (1,519) 1,146) (898) (144) (125) (2,611) (2,542)expense Exceptional (953) - (1,730) - - - (2,683) -items (note 3) Operating profit 11,020 7,469 8,869 5,879 2,122 1,669 22,011 15,017before associates and joint ventures Share of results in associates and joint 414 733 ventures Net financing (3,602)(2,267)costs Profit 18,823 13,483 before tax Tax (4,030) (3,257) Profit after 14,793 10,226 tax The exceptional items of £2,683,000 (2006: £nil) can be allocated as follows:Sold/closed businesses £1,972,000 income; Unallocated corporate costs £4,655,000(expense). Share option expense of £2,611,000 (2006: £2,542,000) can be allocated asfollows: Financial publishing £650,000 (2006: £688,000); Business publishing£265,000 (2006: £266,000); Training £327,000 (2006: £331,000); Conferences andseminars £570,000 (2006: £719,000); Databases and information services £234,000(2006: £173,000); Sold/closed business £132,000 (2006: £nil); Unallocatedcorporate costs £433,000 (2006: £365,000). Acquired intangible amortisation of £6,882,000 (2006: £nil) can be allocated asfollows: Financial publishing £682,000; Business publishing £1,968,000;Conferences & seminars £37,000; Databases & information systems £4,195,000. Operating profit of £9,116,000 from Metal Bulletin is included within thefigures above. This has been allocated as follows: Financial publishing £54,000;Business publishing £2,349,000; Conferences and seminars £1,858,000; Databasesand information services £5,701,000; Unallocated corporate costs £846,000(expense). 1. Operating profit before acquired intangible amortisation, share optionexpense and exceptional items. 2. Acquired intangible amortisation represents amortisation of acquisitionrelated non-goodwill assets such as trade marks, subscriber relationships,advertiser relationships, and databases. Notes to the Unaudited Interim Report continued 3. Exceptional items Exceptional items are items of income or expense considered by the directors,either individually or if of a similar type in aggregate, as being eithermaterial of significant and which require disclosure in order to provide a viewof the group's results excluding these items. Unaudited Unaudited Audited six months six months year ended ended ended March 31 March 31 Sept 30 2007 2006 2006 £000's £000's £000's Profit on sale of - - 1,286property Profit / (loss) on 1,972 - (1,483)disposal of business Goodwill impairment - - (519)Reorganisation and (4,655) - -restructuring costs (2,683) - (716) In March 2007 the group sold Raven Fox, a leading duty-free and luxury goodspublishing and events business (note 11). Subsequent to the acquisition of Metal Bulletin in October 2006 (note 9) thegroup has begun the restructuring and reorganisation of the acquired group'soperations and incurred associated costs of £4.7 million. This primarilyincludes restructuring costs and provisions for onerous property leases. Thisresults in a tax credit for the group of £1.1 million. 4. Finance income and expense Unaudited Unaudited Audited six months six months year ended ended ended March 31 March 31 Sept 30 2007 2006 2006 £000's £000's £000's Finance income Interest receivable from 1,773 444 623 short-term investments Dividends receivable from - - 110 assets held for sale Ineffectiveness of - - 39 interest rate swaps Net movements in 4,455 - - acquisition option commitment values Expected return on 463 - - pension scheme assets 6,691 444 772 Finance expense Committed borrowings (8,414) (2,036) (4,020) Imputed interest on (886) (448) (916) acquisition option commitments Notional interest on (96) (227) (334) deferred consideration Ineffectiveness of (76) - - interest rate swaps Interest payable on loan (267) - - stock Interest on pension (554) - - scheme liabilities (10,293) (2,711) (5,270) Net finance costs (3,602) (2,267) (4,498) 5. Tax on profit on ordinary shares Unaudited Unaudited Audited six months six months year ended ended ended March 31 March 31 Sept 30 2007 2006 2006 £000's £000's £000's Current tax expense UK corporation tax 3,297 2,715 6,119 Foreign tax 2,734 673 1,533 Adjustments in respect of 18 - 107 prior years 6,049 3,388 7,759 Deferred tax (credit)/ expense Current year (1,983) (131) (11,361)Adjustments in respect of (36) - 90 prior years Total tax (credit)/expense 4,030 3,257 (3,512) in income statement The effective tax rate for the interim period is 21%. The underlying tax rate,after adjusting profit before tax for exceptional items (note 3) and the netmovements in acquisition option commitment values (note 4), and their tax effectis 29%. This is lower than the full year forecast underlying tax rate of 32% dueto a different regional mix of profits over the full year. 6. Dividends Unaudited Unaudited Audited six months six months year ended ended ended March 31 March 31 Sept 30 2007 2006 2006 £000's £000's £000'sAmounts recognisable as distributable to equity holders in period Final dividend for the 11,943 9,767 9,767year ended September 30 2006 of 11.6p (2005: 11.0p) Interim dividend for year - - 4,806ended September 30 2006 of 5.4p 11,943 9,767 14,573Employees' Share Ownership (10) (7) (10)Trust dividend 11,933 9,760 14,563 Interim dividend for the 6,177 4,806 period ended March 31 2007 of 6.0p (2006: 5.4p) Employees' Share Ownership (4) (3) Trust dividend 6,174 4,803 The final dividend was approved by shareholders at the Annual General Meetingheld on February 1 2007 and paid on February 6 2007. The interim dividend of 6.0p (2006: 5.4p) is anticipated to be paid on June 252007 to shareholders on the register on May 25 2007. It is expected that theshares will be marked ex-dividend on May 23 2007. Holders of InternationalDepositary Receipts can receive their dividend on May 25 2007 by presentation ofcoupon number 40 to Dexia Banque Internationale a Luxembourg or to one of theiragents. The interim dividend has not been included as a liability in thesefinancial statements in accordance with IAS 10 "Events after the balance sheetdate". 7. Earnings per share Unaudited Unaudited Audited six six year months months ended ended ended 2007 2006 2006 £000's £000's £000's Earnings attributable to 13,918 9,620 37,430equity holders of the parent Less earnings from (419) - -discontinued operations Basic earnings - continuing 13,499 9,620 37,430operations Intangible amortisation 6,882 - 144Exceptional items 2,683 - 716Deferred tax assets - - (13,649)recognition Imputed interest on 886 448 916acquisition option commitments Net movements in acquisition (4,455) - -option commitment values Adjusted earnings 19,495 10,068 25,557 Basic earnings - continuing 13,918 9,620 37,430and discontinued operations Number Number Number 000's 000's 000's Weighted average number of 101,424 88,862 88,943shares Shares held by the (59) (59) (59)Employees' Share Ownership Trust 101,365 88,803 88,884Effect of dilutive share 303 197 456options Diluted weighted average 101,668 89,000 89,340number of shares Pence per Pence per Pence per share share shareBasic earnings per share - 13.32 10.83 42.11continuing operations Effect of dilutive share (0.04) (0.02) (0.21)options Diluted earnings per share - 13.28 10.81 41.90continuing operations Effect of intangible 6.77 - 0.16amortisation Effect of exceptional items 2.64 - 0.80Effect of deferred tax - - (15.28)assets recognition Effect of imputed interest 0.87 0.50 1.03on acquisition option commitments Effect of net movements in (4.38) - -acquisition option commitment values Adjusted diluted earnings 19.18 11.31 28.61per share Basic earnings per share - 13.73 10.83 42.11continuing and discontinued operations Effect of dilutive share (0.04) (0.02) (0.21)options Diluted earnings per share - 13.69 10.81 41.90continuing and discontinued operations The adjusted diluted earnings per share figure has been disclosed since thedirectors consider it to give a more meaningful indication of the underlyingtrading performance. 8. Net debt Unaudited Unaudited Audited six months six months year ended ended ended March 31 March 31 September 30 2007 2006 2006 £000's £000's £000's Net debt at beginning of (73,438) (66,430) (66,430)period (Decrease)/increase in (5,395) (7,275) 2,342cash and cash equivalents Increase/(decrease) in 112,245 8,346 (15,716)loans (Increase)/decrease in (253,894) (6,994) 7,972amounts owed to DMGT group company Debt acquired on (12,606) - -acquisition of Metal Bulletin Other non cash changes (12,711) (1,729) (4,973)Effect of foreign exchange 6,237 (1,430) 3,367rate movements Net debt at end of period (239,562) (75,512) (73,438) Net debt comprises cash at bank and in hand, bank overdrafts, committedborrowings and loan notes. Debt acquired on acquisition of Metal Bulletinexcludes cash at bank and bank overdrafts acquired which are presented in thecash flow statement as part of the acquisition of subsidiary undertakings. Cash and cash equivalents in the cash flow statement includes banks overdrafts. The group has a dedicated £300 million three year multi-currency facility with asubsidiary of DMGT. Interest is payable on this facility at a variable rate ofbetween 0.4% and 1.6% above LIBOR. At September 30 2006, the group had not drawndown on this facility but remained a borrower under its existing five yearcommitted facility. During October 2006 the group, funded by the newmulti-currency facility, repaid all monies owing on its existing committedfacility and drew down further amounts to fund the purchase of Metal BulletinPlc and to settle related acquired debt. 9. Acquisitions Metal Bulletin On October 6 2006, the group acquired 100% of the issued share capital of MetalBulletin plc for cash consideration of £239.6 million. Metal Bulletin plc is theparent company of a group of companies operating as a leading global informationprovider of "must have" market sensitive data in niche, business-to-businessmarkets. Its revenues are derived from a range of publications, electronicproducts and services, conferences and research. This transaction has beenaccounted for using the purchase method of accounting. The directors have adjusted the consolidated balance sheet of Metal Bulletin plcat October 6 2006 for the following adjustments that they believe moreaccurately represent the fair value of the assets at acquisition. At March 312007 these adjustments are provisional and will be finalised during the secondhalf of the year. Book Accounting Fair value Provisional value policy adjustments fair value alignment £000's £000's £000's £000'sNet assets acquired: Goodwill 38,618 (38,618) - -Intangible assets 5,456 - 133,043 138,499Software 1,092 - - 1,092Other non-current 3,226 180 5,189 8,595assets Current assets 10,704 (47) (277) 10,380Trade creditors and (29,930) (398) (4,080) (34,408)other payables Other current (6,033) - (81) (6,114)liabilities Non-current (15,364) (1,593) (43,502) (60,459)liabilities 7,769 (40,476) 90,292 57,585 Goodwill 182,006 Total consideration 239,591 Consideration satisfied by: Cash 156,410Shares 65,016Loan notes 12,711Directly 5,454attributable costs 239,591 Intangible assets represent trade marks, subscriber relationships, advertiserrelationships, and databases for which amortisation of £6.2 million has beencharged in the period. Goodwill is attributable to the deemed value of theworkforce and anticipated future operating synergies. Non-current liabilitiesincludes primarily a deferred tax liability arising on the intangible assets. Metal Bulletin plc contributed £27.2 million to the group's revenue, £9.1million to the group's operating profit and £2.5 million to the group's profitbefore tax for the period between the date of acquisition and March 31 2007. Total Derivatives In October 2006, the group signed an agreement to acquire 67% of TotalDerivatives, a leading provider of real-time news and analysis about the globalfixed income derivatives markets. The price was £7.4 million includingacquisition costs and a working capital adjustment resulting in provisionalgoodwill and intangible assets of £4.5 million and £6.9 million respectively. Inaddition, the management team will stay with the business and have options tosell their remaining shares to Euromoney at prices linked to profits for thefinancial years 2007, 2008 and 2009. The transaction is subject to a maximumconsideration of 24.9% of Euromoney's market capitalisation at the date ofcompletion. Payments of deferred consideration In March 2007, in accordance with the purchase agreement, the group paid thefinal instalment of $12.3 million (£6.2 million) for Information ManagementNetwork, the 80% owned financial conference organiser purchased in February2004. Increase in equity holdings In January 2007, the group exercised its option to purchase the second trancheof Asia Business Forum increasing its equity holding from 47.5% to 90%. Thepayment is dependant on audited results to December 31 2006 and is anticipatedto be £3.1 million, payable after the period end and resulting in a provisionaladditional goodwill of £3.8 million bringing total goodwill to £4.6 million. In February 2007, the group purchased a further 1.2% of the equity share capitalof Internet Securities, Inc for a cash consideration of $2.6 million (£1.3million) resulting in additional goodwill of £1.0 million bringing totalgoodwill to £4.2 million. In February 2007, the group purchased a further 15% of the equity share capitalof Telcap Limited for a cash consideration of £1.7 million payable in April 2007and resulting in additional goodwill of £1.6 million bringing total goodwill to£3.3 million. 10. Discontinued operations Part of the Metal Bulletin reorganisation and integration plan involved thedisposal of three of the non-core Metal Bulletin businesses. In accordance withIFRS 5 'Non-current Assets Held for Sale and Discontinued Operations' these areclassified as discontinued operations. For the two businesses disposed of afterthe period end their assets and liabilities are separately identified on thebalance sheet. Revenue and profit after tax arising from the three operations toMarch 31 2007 is £4,911,000 and £419,000 respectively. These discontinuedoperations relate to the Business publishing and Database and informationservices segments. 11. Disposals The first of the non-core Metal Bulletin operations above, Atalink Limited, aspecialist and direct response publication company, was sold on March 30 2007for £1.8 million. A further payment, anticipated to be £0.8 million, will bereceived for the net current assets of the company on agreement of thecompletion accounts. An additional final payment of £0.5 million is payable onMarch 30 2008. No profit or loss was made on disposal. The remaining entities have been sold subsequent to the period end and have beenclassified as subsidiaries held for sale and presented separately in the balancesheet. On March 12 2007, the group disposed of Raven Fox, a leading duty-free andluxury goods publishing and events business for cash consideration of £1.9million. Raven Fox's liabilities on disposal were £0.2m resulting in a profit onsale, after related sale costs, of £2.0 million. This results in a tax charge of£0.6 million. The results of Raven Fox are included in the consolidated accountsup to the date of their disposal as part of closed businesses. Post balance sheet date disposal On April 12 2007 the group sold Energy Information Centre Limited, a leadingcompany in the provision of wholesale and retail market intelligence, outsourcedprocurement and energy risk management strategy. The group received £4.7 millionon completion with a further payment, anticipated to be £0.3 million, to bereceived for the net current assets of the company on agreement of thecompletion accounts. On May 15 2007 the group sold certain assets of Systematics InternationalLimited, a database business principally in the farm machinery and constructionsector, for a nominal sum. Independent Review Report to Euromoney Institutional Investor PLC Introduction We have been instructed by the company to review the financial information forthe six months ended March 31 2007 which comprise the group income statement,the group balance sheet, the group cash flow statement, the group statement ofrecognised income and expense and related notes 1 to 11. We have read the otherinformation contained in the interim report and considered whether it containsany apparent misstatements or material inconsistencies with the financialinformation. This report is made solely to the company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures are consistent withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended March 31 2007. Deloitte & Touche LLP Chartered Accountants London May 16 2007 Directors and Advisors Chairman PM Fallon ++ Managing Director PR Ensor ++ Finance Director CR Jones Executive Directors NF Osborn DC Cohen CR Brown SM Brady RT Lamont D Alfano G Mueller MJ Carroll CHC Fordham JLE Wilkinson Non-executive Directors The Viscount Rothermere + Sir Patrick Sergeant ++(S) CJF Sinclair +++ JP Williams (S) JC Botts +++(S) JC Gonzalez (S) + member of the remuneration committee ++ member of the nominations committee (S) member of the audit committee President Sir Patrick Sergeant Company Secretary CR Jones Registered Office Nestor House, Playhouse Yard, London EC4V 5EX Registered Number 954730 Auditors Deloitte & Touche LLP, London Solicitors Nabarro Nathanson, Lacon House, Theobald's Road, London WC1X 8RW Joint brokers UBS, 1 Finsbury Avenue, London EC2M 2PP and Dresdner Kleinwort, 30 Gresham Street, London EC2V 7PG Depositary Banque Internationale a Luxembourg SA, 69 route d'Esch, 2953 Luxembourg Agents of the Depositary Citicorp Investment Bank (Switzerland), Bahnhofstrasse 63, PO Box 224, CH 8021 Zurich Citibank NA, Citibank House, 336 Strand, London WC2R 1HB Registrars Capita IRG plc, Northern House, Woodsome Park, Fenay Bridge, West Yorkshire, HD8 0LA Internet Sites Euromoney Institutional Investor Internet Sites (all www.) abf-asia.com iimemberships.com abf.com.sg iinews.com absolutereturn.net iiresearchgroup.com adhes.com iisearches.com airfinancejournal.com imn.org airtrafficmanagement.net indmin.com amm.com institutionalinvestor.com asialaw.com internationaltaxreview.com asiamoney.com isfmagazine.com ceicdata.com latinfinance.com chinalawandpractice.com legalmediagroup.com coaltrans.com managingip.com dcgtraining.com medadnews.com dealogic.com metalbulletin.com emergingmarkets.org metalbulletin.plc.uk euromoney.com misti.com euromoneybooks.com mistieurope.com euromoneyconferences.com petroleum-economist.com euromoneyleasetraining.com pharmalive.com euromoneyplc.com projectfinancemagazine.com euromoneyseminars.com reactionsnet.com euromoneytraining.com securities.com euromoney-yearbooks.com sfinews.net euroweek.com telcap.co.uk expertguides.com totalderivatives.com financialdirectories.com tradefinancemagazine.com fow.com worldoil.com fowevents.com fowtradedata.com globalinvestormagazine.com globaltelecomsbusiness.com For further information on all Euromoney gulfpub.com Institutional Investor products, call the Hotline on: hedgefundintelligence.com hydrocarbonprocessing.com (UK) 44 (0) 207 779 8999 iflr.com (US) +1 800 437 9997 or +1 212 224 3570 iflr1000.com iiconferences.com iievents.com or e-mail: iijournals.com [email protected] This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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