Preliminary Results

Euromoney

Institutional

Investor PLC

Preliminary Statement

September 30 2013

Chairman's Statement

· Revenues increased by 3% to £404.7m

· Subscriptions maintained at 51% of total revenues

· Adjusted profit before tax up 9% to £116.5m

· Adjusted operating margin maintained at 30% with continued investment in new products and technology

· Project Delphi content platform set to launch in 2014

· Four acquisitions completed in the year, and another post year-end

· Net debt of only £9.9m at year-end reflects strong cash flows

· New $160m debt facility in place

· Shareholder approval to be sought for new long-term incentive plan (CAP)

· Final dividend increased by 7% to 15.75p

· First quarter trading has started in line with board's expectations

Commenting on the results, chairman Richard Ensor said:

"We have continued, and will continue, to invest across the business to drive organic growth and through selective acquisitions. The five businesses acquired since the beginning of last year build on our existing strengths but also take us into exciting new sectors.

First quarter trading in the new financial year is in line with the board's expectations and sentiment in financial markets remains broadly positive. This encourages us to believe that we can continue to grow our revenues and gives us confidence that our investment programme for the digital transformation of our businesses, in particular via the Delphi content management system, is the right strategy to pursue."

Highlights

Euromoney Institutional Investor PLC, the international online information and events group, achieved a record adjusted profit before tax of £116.5m for the year to September 30 2013, against £106.8m in 2012. Adjusted diluted earnings a share were 71.0p (2012: 65.9p). The directors recommend a 7% increase in the final dividend to 15.75p, giving a total for the year of 22.75p (2012: 21.75p), to be paid to shareholders on February 13 2014.

Total revenues for the year increased by 3% to £404.7m. Underlying revenues, excluding acquisitions, increased by 1%. Headline subscription revenues increased by 3% to £206.3m, after a flat first half, and again accounted for just over half of group revenues.

The adjusted operating margin was unchanged at 30%. While the operating margins of some divisions have come under pressure, this has been offset by savings on central costs. Costs and margins remained tightly controlled throughout the year and, as highlighted in previous announcements, the group has continued to invest in technology and new products as part of its online growth strategy.

Net debt at September 30 was £9.9m compared with £38.1m at March 31 and £30.8m last year-end. The group's net debt is at its lowest level since the acquisition of Institutional Investor in 1997. The group spent £28.1m on four acquisitions during the year, and since the year-end has put in place a new $160m multi-credit facility providing headroom for a larger acquisition if and when the opportunity arises.

The board believes the Capital Appreciation Plan (CAP), the group's long-term incentive scheme designed to retain and reward those who drive profit growth, has been an important driver of the fivefold increase in the group's profits since it was first introduced in 2004. Accordingly, subject to shareholder approval at the AGM in January 2014, the board proposes to introduce a new CAP, CAP 2014, which will be structured along similar lines to CAP 2010.

As highlighted in previous trading updates, the profitability of banks and asset managers has improved during 2013, particularly in the US. However, continuing litigation against banks, often leading to significant financial settlements, combined with increasing regulation and demands for stronger capital bases, continues to put pressure on the profits of the banking industry. As a result, the broadly positive outlook for markets and economic growth is taking time to translate into a recovery in the spending of financial institutions on marketing, training and information buying.

Strategy

The group's strategy remains the building of a robust and tightly focused global online information business with an emphasis on emerging markets. This strategy is being executed through increasing the proportion of revenues derived from electronic subscription products; investing in technology to drive the online migration of the group's products as well as developing new electronic information services; building large, must-attend annual events; maintaining products of the highest quality; eliminating products with a low margin or too high a dependence on print advertising; maintaining tight cost control at all times; retaining and fostering an entrepreneurial culture; and using a healthy balance sheet and strong cash flows to fund selective acquisitions.

Acquisitions remain a key part of the group's strategy. Four were completed in the year and another post year-end. In December, the group acquired TTI/Vanguard, a private membership organisation for executives who lead technology innovation, providing an opportunity for Institutional Investor to apply its expertise in building global subscription membership organisations to a new sector. In April the group acquired CIE, Australia's leading provider of investment forums for senior executives of superannuation funds and asset management firms. Combining CIE with the expertise and relationships of Institutional Investor's forums and membership business has extended the group's coverage of the asset management events sector to a key geographic market.

The acquisition of Insider Publishing in March enhanced the group's position in the insurance and reinsurance sector and provides a strong complementary fit with its other reinsurance title, Reactions. At the end of September the group completed the acquisition of HSBC's Quantitative Techniques operation, the benchmark and calculation agent business of HSBC Bank plc. The business has been rebranded Euromoney Indices and the group believes the acquisition creates an exciting opportunity to establish a significant footprint in the attractive index compilation market. Finally, at the end of October, the group completed the acquisition of Infrastructure Journal, a leading information source for the international infrastructure markets. By combining the deals database and news coverage of Infrastructure Journal with the deals analysis, awards and events of Euromoney's Project Finance, the group aims to create the market's most comprehensive online infrastructure information provider.

All of these transactions were consistent with the group's strategy of investing in online subscription and events businesses which will benefit from its global reach, marketing expertise and content platforms, and the group will continue to use its robust balance sheet and strong cash flows to pursue further acquisitions in 2014.

Driving revenue growth from new products is another key part of the group's strategy. The group has continued to invest heavily in technology and content delivery platforms, particularly for the mobile user, and in new digital products as part of its transition to an online information business. New products launched in the year included: SteelFirst, a specialised online news, pricing and analysis service for the steel markets; Institutional Investor's Sovereign Wealth Center, a premium digital research tool designed to provide a detailed understanding of sovereign wealth fund investment strategies; and Petroleum Economist's interactive digital maps covering global energy infrastructure.

In addition, the group has continued the development of its new platform for authoring, storing and delivering its content (Project Delphi), with a view to both improving the quality of its existing subscription products and increasing the speed to market of new digital information services. Initially the Delphi platform will be used to transform BCA's content into a fully integrated online research service, including personalised content and alerts, dynamic and interactive charts, semantic search and a research dashboard to track research themes, investment recommendations and trades. Delphi is also being used to upgrade the group's Global Capital Markets products, including EuroWeek, through improved search, more data feeds and new transaction and data products, starting with the launch of a new service covering the Renminbi debt market. The Delphi platform is expected to be ready for launch in the second quarter of financial year 2014. The total expected capital investment in Project Delphi is £9.4m, of which £6.1m was spent in 2013, with a further £2.7m expected to be incurred to completion. The cost of this project will be amortised over a four-year period.

Trading Review

Total revenues for the year increased by 3% to £404.7m. After a 1% decline in the first half, the headline rate of revenue growth improved to 6% in the second, due to a combination of gradually improving markets and the contribution from three acquisitions completed in the middle of the year. Underlying revenues, excluding acquisitions, increased by 1%.

The group derives nearly two thirds of its total revenue in US dollars and movements in the sterling-US dollar rate can have a significant impact on reported revenues. However, currency movements in 2013 were not significant and headline revenue growth rates are similar to those at constant currency (see table below).

Headline subscription revenues increased by 3% to £206.3m, after a flat first half, and again accounted for just over half of group revenues. Underlying subscription revenues, excluding acquisitions, increased by 2% with the strongest performances coming from CEIC Data, the emerging markets data business, and Institutional Investor's membership business. Revenues from independent research were unchanged.

After two years of decline, advertising revenues returned to growth in the final quarter. This was largely driven by factors specific to the quarter: new products and a tendency for advertising in the main financial titles, Euromoney, Institutional Investor, Latin Finance and Asiamoney, to be concentrated in their IMF issues published in September. This quarterly improvement is more indicative of product timing than a sustained improvement in advertising markets. Over the year, advertising fell across most of the group's titles with Latin Finance, which celebrated its 25th anniversary, and the energy titles the only significant exceptions.

Event sponsorship revenues have continued to grow from a combination of new events and strong demand for emerging market events, helped in the second half by the acquisitions of Insider Publishing and CIE. Paying delegate attendance improved across most of the event businesses, mostly due to new events. The first half decline in revenues was due to timing differences on biennial events not held this year.

Other revenues largely comprise content redistribution royalties and one-off content sales. Although only accounting for 3% of total revenues, these revenues increased sharply as the group continues to explore the possibilities for alternative distribution channels for its content.

The group's adjusted operating margin was 30%, the same as 2012. Over the past four years the group has consistently delivered steady operating margins around the 30% level. Increased spend on technology and digital products has reduced margins in the publishing businesses, but has been largely offset by changes in the divisional mix towards higher margin research and data products, as well as rigorous cost control and a constant refreshing of the portfolio with new products replacing those with lower margins. The permanent headcount at September 30 was 2,142 people, including 38 from businesses acquired in the year, against 2,133 a year ago.

Business Review

Research and Data: this division accounts for a third of group revenues and, with its higher margins, nearly 40% of group operating profits before central costs. Revenues are derived predominantly from subscriptions and increased by 1% to £131.3m while adjusted operating profits fell by 1% to £54.8m. The trends seen in the first half continued, with financial institutions exercising tight control over their information buying and new business difficult to generate. In addition, US sequestration had a negative impact in the second half as customers including government agencies and libraries were forced to cut costs. That apart, renewal rates for most products remained robust, and more recently have shown signs of improving.

Financial Publishing: revenues increased by 2% to £75.6m while adjusted operating profits fell by 1% to £23.8m. An advertising-led rebound in the final quarter, and a contribution from Insider Publishing, helped offset first half weakness. The 1% point decline in the adjusted operating margin reflects the continued investment in the transition to a digital first publishing model.

Business Publishing: the group's activities in the non-financial sectors of the market, particularly energy and telecoms, have proved more robust, partly because they are less dependent on advertising. The growth achieved in the first half continued into the second, with revenues up 7% to £68.9m and adjusted operating profits 5% ahead at £25.8m. For the first time, profits from business publishing exceeded those from financial publishing.

Conferences and Seminars: revenues comprise both sponsorship and paying delegates and increased by 5% to £99.4m, despite the timing differences on biennial events in the first half, and helped in the second by a contribution from CIE. Growth was achieved across most sectors and reflects both new events and more robust US financial markets. However, adjusted operating profits fell by 4% to £28.9m and the decline in adjusted operating margin is largely due to the event timing differences.

Training: the group's training division predominantly serves the global financial sector and banks have continued to control tightly headcount and training budgets. Revenues fell by 3% to £30.1m, although performance in the second half showed an improvement on the first. The decline in operating margin from 22% to 18% reflects the high operational gearing in this business and adjusted operating profits fell by 23% to £5.4m.

Financial Review

The adjusted profit before tax of £116.5m compares to a statutory profit before tax of £95.3m. A detailed reconciliation of the group's adjusted and statutory results is set out in the appendix to this statement. The statutory profit is generally lower than the adjusted profit before tax because of the impact of acquired intangible amortisation and non-cash movements in acquisition liabilities.

A net exceptional credit of £2.2m (2012: £1.6m charge) was recognised. This includes a credit of £4.4m for negative goodwill arising from the valuation of intangibles as part of the acquisition of Quantitative Techniques, offset by acquisition, restructuring and other exceptional costs of £2.2m.

The reduction in long-term incentive expense to £2.1m (2012: £6.3m) reflects the final cost of CAP 2010, which has now been fully amortised after the performance test was satisfied in 2011 and again in 2012.

Adjusted net finance costs for the group's committed borrowing facility fell by £2.8m to £2.7m, reflecting lower debt levels during the year. The average cost of funds for the year was 4.7% (2012: 4.8%). Statutory net finance costs of £10.4m (2012: £3.6m) include a charge of £4.7m for the increase in deferred consideration payable on two of the acquisitions completed in the year which have performed better than expected since acquisition, and a charge of £2.7m largely due to the extension of the put option agreement to acquire the outstanding minority interest in Ned Davis Research.

The adjusted effective tax rate for the year was 22%, the same as 2012. The tax rate depends on the geographic mix of profits and applicable tax rates. The group has benefited this year from the reduction in the UK corporate tax rate from 24% to 23%, although this was offset by the expiry of the US tax deduction for goodwill amortisation from the acquisition of Institutional Investor 15 years ago. The UK tax rate will fall further to 21% in April 2014 and 20% in April 2015.

The group continues to generate two thirds of its revenues, including approximately 30% of the revenues from its UK businesses, and more than half its operating profits in US dollars. The group hedges its exposure to the US dollar revenues in its UK businesses by using forward contracts to sell surplus US dollars. This delays the impact of movements in exchange rates for at least a year. The group does not hedge the foreign exchange risk on the translation of overseas profits, although it does endeavour to match foreign currency borrowings with investments and the related foreign currency finance costs provide a partial hedge against the translation of overseas profits. The translation impact on overseas profits of a one cent movement in the average US dollar exchange rate is approximately £0.6m on an annualised basis. The average sterling-US dollar rate for the year was $1.56 (2012: $1.58).

Net Debt, Cash Flow and Dividend

Net debt at September 30 was £9.9m compared with £38.1m at March 31 and £30.8m last year-end. The group's debt is provided through a dedicated multi-currency committed facility from its parent company, Daily Mail and General Trust plc (DMGT). The group has exercised its option to replace its existing $300m (£190m) facility with DMGT, which expires in December 2013, with a new $160m (£100m) facility which expires at the end of April 2016. This new facility will continue to provide funding for the group's acquisition strategy.

Significant non-operating cash outflows in the year included four acquisitions with a net cash cost of £28.1m, dividends of £27.2m against £7.5m in 2012 when a scrip dividend was offered, and capital investment in Project Delphi of £6.1m. Cash generated from operations fell by £16.0m to £106.2m and the operating cash conversion rate* was 88% (2012: 103%). The reduction in operating cash flow and operating cash conversion was due to cash payments in 2013 in respect of long-term incentive costs and profit shares which were expensed in 2012 or earlier. The underlying operating cash conversion rate, after adjusting for these timing differences, was unchanged at 103%.

The company's policy is to distribute a third of its after-tax earnings by way of dividends each year. Pursuant to this policy, the board recommends a final dividend of 15.75p a share (2012: 14.75p) giving a total dividend for the year of 22.75p a share (2012: 21.75p). As explained in previous announcements, following the earlier than expected achievement of the CAP 2010 profit target an additional accelerated CAP expense of £6.6m was not charged against earnings for dividend purposes in 2011, but is being spread over the period to which it originally related. Accordingly, earnings for dividend purposes were reduced by £1.1m in 2012 and by £3.9m in 2013, and will be similarly reduced by £1.6m in 2014.

It is expected that the final dividend will be paid on February 13, 2014 to shareholders on the register at November 22, 2013.

Capital Appreciation Plan

The CAP is the group's long-term incentive scheme designed to retain and reward those who drive profit growth and is an integral part of the group's successful growth and investment strategy.

After satisfying the profit target under CAP 2010, the first 50% of CAP 2010 awards vested in February 2013, satisfied by the issue of approximately 1.75 million new ordinary shares and a cash payment of £7.5m. The second 50% of CAP 2010 awards, to the extent the additional performance test has been satisfied, will vest in February 2014 and lead to the issue of a similar number of new shares and cash distribution.

The board, supported by its Remuneration Committee, believes the CAP has been an important driver of the fivefold increase in the group's profits since it was first introduced in 2004. Accordingly, subject to shareholder approval at the AGM in January 2014, the board proposes to introduce a new CAP, CAP 2014, which will have a similar structure and cost to CAP 2010. The primary performance test under CAP 2014 will require the group to achieve an adjusted profit before tax (and before CAP expense) of £173.6m by financial year 2017, equivalent to an average profit growth rate of at least 10% a year from a base of £118.6m** in 2013. This profit target would be adjusted in the event of any significant acquisitions or disposals during the CAP performance period. CAP 2014 awards would vest in three roughly equal tranches in financial years 2018, 2019 and 2020, subject to additional performance tests.

In accounting terms, CAP 2014 is expected to cost the group up to £41m which will be amortised over its six-year life, against a cost of £30m for CAP 2010 over its four-year life. A maximum of 3.5m ordinary shares will be used to satisfy CAP 2014 rewards, with the balance settled in cash. The company intends to acquire these shares in the market over the course of the CAP performance period, rather than through the issue of new shares.

Further details of the proposed terms of CAP 2014 will be included in the circular to shareholders to be issued in December in connection with the AGM to be held on January 30, 2014.

Outlook

First quarter trading has started in line with the board's expectations. As part of its strategy, the group has increased significantly the proportion of revenues derived from less volatile subscriptions, and from events. Subscription revenues, supported by deferred revenues at the balance sheet date, should continue to grow, while the outlook for events and training is reasonably robust. However, for reasons highlighted above, the sharp improvement in fourth quarter financial advertising has not continued into the first quarter of the new financial year. As usual at this time, forward revenue visibility beyond the first quarter is limited for revenues other than subscriptions.

While sentiment in financial markets remains reasonably positive, there is usually a lag between their improved profitability and the appetite for financial institutions to increase their spending on marketing, training and information buying. Most customer budgets are calendar year driven so it is too early to determine whether this lag will translate into increased spend in 2014.

In 2014, the board plans to continue its programme of investing in the digital transformation of its publishing businesses, in particular using the Delphi platform to improve the quality of its content and launch new products. The board is confident its strategy for investing in new products and technology and using its strong balance sheet to fund further acquisitions will continue to drive further growth.

Richard Ensor

Chairman

November 13 2013

\* The operating cash conversion rate is the percentage by which cash generated from operations covers adjusted operating profit.

** The base profit for 2013 is £118.6m, being the adjusted profit before tax of £116.5m before CAP expense of £2.1m.

END

For further information, please contact:

Euromoney Institutional Investor PLC

Richard Ensor, Chairman: +44 20 7779 8845; [email protected]

Christopher Fordham, Managing Director: +44 20 7779 8998; [email protected]

Colin Jones, Finance Director: +44 20 7779 8666; [email protected]

FTI Consulting

Charles Palmer: +44 20 7269 7180; [email protected]

NOTE TO EDITORS

Euromoney Institutional Investor PLC (www.euromoneyplc.com) is listed on the London Stock Exchange and is a member of the FTSE-250 share index. It is a leading international business-to-business media group focused primarily on the international finance, metals and commodities sectors. It owns more than 70 brands including Euromoney, Institutional Investor and Metal Bulletin, and is a leading provider of economic and investment research and data under the BCA Research, Ned Davis Research and ISI Emerging Markets brands. It also runs an extensive portfolio of conferences, seminars and training courses for financial markets. The group's main offices are in London, New York, Montreal and Hong Kong and more than a third of its revenues are derived from emerging markets.

Appendix to Chairman's Statement

Reconciliation of Consolidated Income Statement to adjusted results for the year ended September 30 2013

The reconciliation below sets out the adjusted results of the group and the related adjustments to the statutory Income Statement that the directors consider necessary in order to provide an indication of the adjusted trading performance.

Adjusted figures are presented before the impact of amortisation of acquired intangible assets (comprising trademarks and brands, databases and customer relationships), exceptional items, movements in acquisition deferred consideration, and net movements in acquisition commitment values. In respect of earnings, adjusted amounts reflect a tax rate that includes the current tax effect of the goodwill and intangible assets.

Further analysis of the adjusting items is presented in notes 3, 4, 5, 7 and 9 to the Preliminary Statement.

Consolidated Income Statement

for the year ended September 30 2013 

A detailed reconciliation of the group's statutory results to the adjusted results is set out in appendix to the Chairman's Statement on page 8.

Consolidated Statement of Comprehensive Income

for the year ended September 30 2013

Consolidated Statement of Financial Position

as at September 30 2013

Consolidated Statement of Changes in Equity

for the year ended September 30 2013

The investment in own shares is held by the Euromoney Employees' Share Ownership Trust (ESOT). At September 30 2013 the ESOT held 58,976 shares (2012: 58,976 shares) carried at a historic cost of £1.25 per share with a market value of £684,000 (2012: £454,000). The trust waived the rights to receive dividends. Interest and administrative costs are charged to the profit and loss account of the ESOT as incurred.

The other reserve represents the share premium arising on the shares issued for the purchase of Metal Bulletin plc in October 2006.

Consolidated Statement of Changes in Equity

for the year ended September 30 2012

Consolidated Statement of Cash Flows

for the year ended September 30 2013

Note to the Consolidated Statement of Cash Flows

The group's debt is provided through a dedicated US$300 million multi-currency borrowing facility from Daily Mail and General Trust plc group (DMGT).The total maximum borrowing capacity is U$250 million (£154 million) and £33 million and was due to mature in December 2013. The facility's covenant requires the group's net debt to be no more than four times adjusted EBITDA on a rolling 12 month basis. At September 30 2013, the group's net debt to adjusted EBITDA covenant was 0.09 times and the committed undrawn facility available to the group was £165.9 million.

Subsequent to the year end, the group has signed a US$160 million multi-currency replacement funding facility with DMGT that provides access to funds during the period to April 2016. The new facility's covenant requires the group's net debt to be no more than three times adjusted EBITDA on a rolling 12 month basis.

The group's strategy is to use excess operating cash to pay down its debt. The group generally has an annual cash conversion rate (the percentage by which cash generated by operations covers operating profit before acquired intangible amortisation, long-term incentive expense and exceptional items) of over 100%, due to much of its subscription, conference and training revenue being paid in advance. However, this year the group's cash conversion rate was 88% compared to 103% last year, due to cash payments in 2013 in respect of the vesting of the first tranche of options under the CAP (£9.5 million) and profit shares for the company's former chairman who died in October 2012, both of which were expensed in financial year 2012 or earlier.

Notes to the Preliminary Statement

1 Basis of preparation

The financial information set out in this statement is based on the group's financial statements which are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the EU. This financial information does not constitute the group's statutory accounts for the year ended September 30 2013 or 2012 but is derived from those accounts. Statutory accounts for 2012 have been delivered to the Registrar of Companies, and those for 2013 will be delivered following the company's Annual General Meeting. The auditors have reported on those accounts; their report was unqualified and did not draw attention to any matters by way of emphasis without qualifying their report and did not contain a statement under s498 (2) or (3) Companies Act 2006.

Accounting policies

The consolidated financial statements have been prepared under the historical cost convention, except for the revaluation of certain financial instruments.

The same accounting policies, presentation and methods of computation are followed in these financial statements as were applied in the group's 2012 annual audited financial statements, except as described below.

· Presentation of Items of Other Comprehensive Income (Amendments to IAS 1), effective for accounting periods beginning on or after July 31 2012. This amends IAS 1, 'Presentation of Financial Statements' to revise the way other comprehensive income is presented.

Going concern, debt covenants and liquidity 

The results of the group's business activities, together with the factors likely to affect its future development, performance and financial position are set out in the Chairman's Statement on pages 2 to 7.

The financial position of the group, its cash flows and liquidity position are set out in detail in this report. The group meets its day-to-day working capital requirements through its US$300 million dedicated multi-currency borrowing facility with Daily Mail and General Trust plc group (DMGT). The total maximum borrowing capacity is US$250 million (£154 million) and £33 million and was due to mature in December 2013. The facility's covenant requires the group's net debt to be no more than four times adjusted EBITDA on a rolling 12 month basis. At September 30 2013, the group's net debt to adjusted EBITDA covenant was 0.09 times and the committed undrawn facility available to the group was £165.9 million.

Subsequent to the year end, the group has signed a US$160 million multi-currency replacement funding facility with DMGT that provides access to funds during the period to April 2016. The new facility's covenant requires the group's net debt to be no more than three times adjusted EBITDA on a rolling 12 month basis.

The group's forecasts and projections, looking out to September 2016 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 borrowing facility.

After making enquiries, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the directors continue to adopt the going concern basis in preparing this annual report.

2 Segmental analysis