Preliminary Results

Euromoney Institutional Investor PLC

Preliminary Statement

September 30 2014

Chairman's Statement

· Headline revenues ahead of last year at £406.6m

· Underlying revenues increased by 3%

· Delphi platform delivering growth and good pipeline of new products

· Adjusted profit before tax in line with last year at £116.2m

· Adjusted operating margin down 1% reflecting investment in digital strategy

· Net debt increased by £27.7m due to acquisitions and purchase of own shares

· Strong operating cash conversion and low gearing

· Final dividend increased by 2% to 16p

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

Commenting on the results, Chairman Richard Ensor said:

"We have continued to invest in the business despite the difficult trading conditions. The Delphi content platform was successfully launched and the focus in 2015 will include rolling out Delphi's functionality to Euromoney's other titles and investing in a strong pipeline of new information services and databases, while accelerating the move to a digital-only format for most of the group's titles by the end of 2016.

The pressures on the investment banking sector from increased regulation and compliance costs show no real sign of easing. However, other organic growth initiatives in events and data provide confidence in the company's longer term growth strategy, while its strong balance sheet and cash flows provide plenty of headroom for future investment and selective acquisitions." 

Highlights

Euromoney Institutional Investor PLC, the international online information and events group, achieved an adjusted profit before tax of £116.2m for the year to September 30 2014, against £116.5m in 2013. Adjusted diluted earnings a share were 70.6p (2013: 71.0p). The directors recommend a 2% increase in the dividend to 16.00p, giving a total for the year of 23.00p (22.75p) to be paid to shareholders on February 12 2015.

Total revenues for the year were marginally ahead of last year at £406.6m. Underlying revenues, after adjusting for acquisitions and disposals, increased by 3% at constant currency.  The underlying revenue trends reported for the first half for subscriptions and advertising largely continued into the second, while event revenue growth was driven by a combination of increased event volumes and favourable timing. The adjusted operating margin fell from 30% to 29%, reflecting the group's continued strategic investment in digital publishing.

The new Delphi content platform was launched successfully earlier in the year and is already starting to generate benefits for businesses such as BCA and the newly launched GlobalCapital news and data service for international capital markets. The digital focus in 2015 will include rolling out Delphi's functionality to the group's other titles and investing in a strong pipeline of new information services and databases, while accelerating the move to a digital-only format for most of the group's titles by the end of 2016.

Net debt at September 30 was £37.6m compared with £28.6m at March 31 and £9.9m at last year end. The increase reflects net acquisition spend of £55.7m, including £45.6m for the purchase of Mining Indaba and £12.5m for Infrastructure Journal, and £21.5m spent buying the company's own shares to satisfy expected future rewards under its new long-term incentive plan. Underlying cash flows remain strong and there is plenty of headroom for the group to pursue its selective acquisition strategy.

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; retaining and fostering an entrepreneurial culture; and using a healthy balance sheet and strong cash flows to fund selective acquisitions.

The main focus of 2014 has been the completion of Project Delphi including the launch of the group's new platform for authoring, storing and delivering its content. The Delphi content platform will improve the quality of existing subscription products and reduce the time to market for new digital information services. The first products launched on the platform included BCA Analytics, a standalone interactive charting tool which has already generated sales of nearly $1m, and the GlobalCapital news and data service for international capital markets which combines content from EuroWeek, Asiamoney and a number of smaller newsletters, as well as a new offshore renminbi service. For BCA, the real value of Delphi is still to come: first from BCA Edge, a fully integrated online research service including a content dashboard featuring live reports, personalised views and alerts, theme insights and recommendations for trades and asset allocation. Delphi will also help BCA accelerate its plans to launch a number of new research services over the next two years.

In 2015, Delphi's digital authoring tool and enhanced search functionality will be rolled out across the group's titles. Further investment will also be made in an exciting pipeline of new products for launch on the Delphi platform in 2015 and 2016, including new or enhanced services for HedgeFund Intelligence, Metal Bulletin and Euromoney, as well as several new financial databases. Restructurings took place in 2014 with a view to consolidating or reducing the number of print products, and several print titles were closed or sold. With the help of Delphi, the group expects most of its titles to be digital-only by the end of 2016.

The group's investment in new products is not limited to those on the Delphi platform. One of the most exciting opportunities is the Investor Intelligence Network launched by Institutional Investor. This private online network brings together some of the largest asset owners and managers around the world and allows them to connect, share knowledge and put capital to work. This disruptive technology connects buyers, sellers and intermediaries in the asset management industry. Revenues will come from capital introduction fees, data services, platform fees and, subject to regulatory approval being obtained, the ability to charge basis points on capital placed.

Acquisitions are a key part of the group's growth strategy. The group completed four small transactions in 2013, all of which have been integrated successfully and are performing well. In October 2013 the group acquired Infrastructure Journal, a leading information source for the international infrastructure markets. Its deal database and news coverage were combined with the deal analysis, awards and events of Euromoney's Project Finance to create the most comprehensive online source of news, analysis and data for the infrastructure market. The business was re-launched under the IJ Global brand in March 2014. In July the group acquired the Investing in African Mining Indaba ("Mining Indaba"), the largest mining event in emerging markets, as part of its strategy to build on its strength in the global commodities sector. The group will draw on its strong links to institutional investors and governments to enhance the investor content and networking opportunities which have been at the heart of Mining Indaba's success.

Since the year end, the group has announced plans to acquire a 15.5% equity stake in a company ("New Dealogic") incorporated by The Carlyle Group to acquire Dealogic Holdings plc (Dealogic) alongside Carlyle and Dealogic's founders. This investment fits Euromoney's strategy of expanding the scope of its activities in the global financial information and analytics sector. Dealogic, with its strong brand and global adoption levels among investment banks in the US, EMEA and Asia-Pacific, offers Euromoney attractive strategic and financial upside. Euromoney's investment will be funded through the sale to New Dealogic of its interests in two businesses, Capital DATA and Capital NET, which Dealogic and Euromoney have jointly operated since the 1980s. The transaction values Euromoney's participation in these two businesses at $85m, comprising equity in New Dealogic of $59m and cash and preference shares of $26m. The transaction is subject to regulatory approval and is expected to complete by the end of December. While the transaction has significant long-term financial upside, in the short-term the loss of earnings from the Capital DATA and Capital NET arrangements* will more than offset the group's share of profits from New Dealogic and lead to earnings dilution of approximately 2% in 2015.

As part of a regular portfolio review, at the beginning of the year the group reviewed the strategy for its training division and concluded that MIS Training Institute, the Boston-based provider of audit and information security training, offered limited synergies with the rest of Euromoney's financial training business and would require significant investment to drive future growth. Accordingly, the business was sold to a private equity buyer on April 1 for an initial consideration of £6.6m and deferred consideration of up to £2.2m.

Following the expiry of the lease for one of its London properties, the company has decided to consolidate its offices in refurbished premises a short distance away in Bouverie Street, off Fleet Street. The new space has significantly larger floor plates and will reflect a more modern working environment, encourage a digital-first culture and give the group more flexibility for expansion. It will, however, increase the group's operating costs by £2m a year. At the same time the company expects to release up to £10m of capital from the sale of its freehold and leasehold interests later in 2015.

Currency

As highlighted in previous statements, the group generates approximately two thirds of both its revenues, including approximately a third of its UK revenues, and profit before tax in US dollars. The exposure to US dollar revenues in its UK businesses is hedged using forward contracts to sell US dollars, which delays the impact of movements in exchange rates for at least a year. However, the group does not hedge the foreign exchange risk on the translation of overseas profits. While it endeavours to match foreign currency borrowings with investments, as debt levels have fallen the related foreign currency finance cost has been of only limited benefit as a hedge against the translation of overseas profits.

The strength of sterling against the US dollar started to have a negative impact on the translation of overseas profits towards the end of the first half and had a more significant impact in the second half. The average sterling-US dollar rate for the year to September 30 was $1.66 (2013: $1.56). This reduced headline revenue growth rates for the year by approximately four percentage points and adjusted profit before tax by approximately £5m. Each one cent movement in the US dollar rate reduces profits on translation by approximately £0.6m on an annualised basis.

The revenue tables below show headline growth rates as well as those at constant currency. Underlying revenue growth rates exclude the impact of acquisitions, disposals and currency movements.

Trading Review

Total revenues were in line with last year at £406.6m. At constant currency total revenues increased by 4% and, once acquisitions and disposals are excluded, underlying revenues by 3%.

Trading conditions have remained difficult, particularly in the investment banking sector, where there has been no real sign of an easing of the pressures from increased compliance, a tougher regulatory regime, tighter capital adequacy tests and record fines for bank misdemeanours including most recently the global settlements for foreign exchange manipulation. The commodities sector has also suffered from price weakness and lower trading volumes. In contrast, the performance of the group's businesses serving the asset management industry has improved over the course of the year, although the natural lag effect of subscriptions means the full benefit will not be seen until 2015. The strength of sterling against the US dollar also had a negative impact on revenues in 2014, although more recent currency trends have been positive.

The main driver of underlying revenue growth was a 12% increase in event sponsorship and a 5% increase in delegate revenues largely from new financial market events in the second quarter and favourable timing of events. Underlying subscription revenues have been increasing at a steady rate of 2% for the past 18 months from a combination of new products and a gradual return to growth of the asset management sector. Underlying advertising revenues continued to decline in 2014 largely due to reduced bank spend.

The adjusted operating margin fell from 30% to 29% as a result of the group's continued strategic investment in digital publishing including the new Delphi content platform. Delphi was launched in March and has full year running costs of £4m including amortisation of the build costs. Permanent headcount has increased by 49 to 2,191 people since September 30 2013 reflecting acquisitions and the increased investment in technology and new products.

Business Review

Research & Data: underlying revenues, which are derived predominantly from subscriptions, fell by 1%. This has been a consistent trend throughout the year following a tough 2013 for both the banking and asset management sectors with the burden of additional compliance costs on information buying budgets. Sales and renewal rates for the group's research businesses, BCA and NDR, improved in the second half, the benefits from which should be seen in 2015, although revenue growth in 2014 was held back by the lag effect of the difficult 2013. The cost pressures facing investment banks have also affected the performances of the group's emerging market information and data products, EMIS and CEIC, although again there were signs of a recovery in the second half. The adjusted operating margin was down 2% at 40% mainly due to investments made by BCA in the Delphi content platform and NDR's repurposing of its content into new, more targeted products.

Financial Publishing: underlying revenues increased by 7% reflecting the group's newly combined infrastructure finance business, IJ Global, and a strong performance from LatinFinance, offset by weakness in other financial titles from their dependence on banks for advertising. The reduction in the adjusted operating margin reflects the continued investment in the transition to a digital publishing model including the launch of GlobalCapital using the Delphi content platform.

Business Publishing: the 2% increase in underlying revenues reflects a good performance from the wholesale telecoms information business, TelCap, offset by tough commodities and energy markets faced by Metal Bulletin and Gulf Publishing. As with Financial Publishing, the adjusted operating margin fell after investment in digital publishing including Metal Bulletin's steel information service and a new pricing database.

Conferences & Seminars:underlying event revenues increased by 9% from a combination of new financial market events in the US, the favourable timing of events, and the strength of Institutional Investor's subscription-based memberships for the asset management industry. In contrast, markets for commodities-related events including metals and coal have been more challenging.

Training: revenues for the training division, which relies heavily on customers in the banking sector, fell by 2%. The adjusted operating margin improved from 18% to 20% following a restructuring undertaken last year and the sale of the lower margin MIS business.

Financial Review

The adjusted profit before tax of £116.2m compares to a statutory profit before tax of £101.5m. The statutory profit before tax is usually lower than the adjusted profit before tax because of the impact of acquired intangible amortisation and non-cash movements in acquisition liabilities. A detailed reconciliation of the group's adjusted and statutory results is set out in the appendix to this statement.

A net exceptional credit of £2.6m (2013: £2.2m credit) has been recognised. This includes a £6.8m profit from the sale of MIS Training offset by exceptional acquisition, restructuring and property costs of £4.2m.

The long-term incentive expense of £2.4m (2013: £2.1m) reflects the cost of CAP 2014 awards which were granted in June 2014. The charge in 2013 reflected the final cost of CAP 2010.

Interest payable on the group's committed borrowing facility fell by £1.2m to £1.3m, reflecting lower funding costs. Headline net finance costs of £2.1m (2013: £10.4m) include a non-cash charge of £0.6m (2013: £7.6m) for increases in deferred acquisition liabilities.

The adjusted effective tax rate was 22%, the same as 2013. The tax rate in each period depends mainly on the geographic mix of profits and applicable tax rates. The group continues to benefit from reductions in the UK corporate tax rate, offset by higher US taxes. The adjusted effective tax rate is expected to fall to 20% in 2015, in line with the reduction in the UK corporate tax rate.

Net Debt, Cash Flow and Dividend

Net debt at September 30 was £37.6m compared with £28.6m at March 31 and £9.9m at last year end. The increase largely reflects £55.7m of net acquisition spend and £21.5m to purchase the company's own shares to satisfy future CAP 2014 rewards. A further £2.6m was invested in Project Delphi, bringing the total project cost to date to £10.0m, of which £9.3m has been capitalised and is being amortised over a four-year period.

The operating cash conversion rate was 92% (2013: 88%). The rate was less than 100% in 2014 and 2013 as the vesting of options under CAP 2010 triggered cash outflows of approximately £9m in both years for which the expense was accrued in previous years. The underlying operating cash conversion rate, adjusting for this timing difference, was 100% (2013: 103%).

The group's debt is provided through a dedicated multi-currency borrowing facility from Daily Mail and General Trust plc, the group's parent. In November 2013 the group replaced its US$300m (£185m) facility, which was due to expire in December 2013, with a new US$160m (£99m) facility which expires in April 2016.

The company's policy is to distribute a third of its after-tax earnings by way of dividends. Pursuant to this policy, the board recommends a final dividend of 16.00p a share (2013: 15.75p) giving a total dividend for the year of 23.00p a share (2013: 22.75p). As explained in previous announcements, the earlier than expected achievement of the CAP 2010 profit target triggered an accelerated CAP expense of £6.6m in 2011 which was not charged against earnings for dividend purposes that year, but spread over the period to which it originally related (i.e. mostly 2012 and 2013). This has enabled a small increase in the final dividend despite the decrease in adjusted diluted earnings a share.

Capital Appreciation Plan (CAP)

The CAP is the 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 strategy. The CAP was first introduced in 2004, since when it has been a key driver of the more than fivefold increase in the company's adjusted profit before tax.

Shareholders approved the introduction of CAP 2014 at the AGM in January 2014. It has a similar structure to CAP 2010. Initial awards under CAP 2014 were granted on June 20 to approximately 250 senior employees and executive directors. A maximum of 3.5m ordinary shares and £7.6m of cash will be used to satisfy CAP 2014 awards. The shares will be acquired in the market under the authority granted by shareholders at the AGM, and 1.7m shares were acquired during 2014 at a cost of £21.5m. CAP awards are expected to vest in three tranches in 2018, 2019 and 2020, subject to certain performance tests.

The primary performance test for CAP 2014 requires the group to achieve growth in adjusted profit before tax (and CAP expense) of at least 10% a year over a four-year period, i.e. £173.6m by 2017 from a base of £118.6m in 2013. If the primary performance test is not satisfied in 2017 the awards will lapse, subject to the secondary performance test. The secondary performance test requires the group to achieve an adjusted profit before tax (and CAP expense) of at least 84.9% of the primary performance target, i.e. £147.4m, equivalent to growth of 6% a year, at which point only one third of the awards will vest. If the adjusted profit before tax (and CAP expense) in 2017 is between the secondary and primary targets, then between 33% and 100% of the CAP awards will vest according to a sliding scale.

The rules of the CAP require these performance targets to be adjusted for significant acquisitions or disposals during the performance period. The only significant transaction in the period was the acquisition of Mining Indaba, as a result of which the primary and secondary performance targets have been increased to £178.4m and £151.5m, respectively. These performance targets will also require adjustment for the Dealogic transaction once it completes.

The maximum cost of CAP 2014 is £41m if the primary performance test is satisfied in 2017 and all subsequent performance tests are satisfied in full. The CAP cost will be amortised over the expected six-year life of CAP 2014. Given the uncertainty of both financial markets and the timing of future acquisitions and disposals, the significant digital investment requirements, and the volatility of exchange rates, it is difficult to estimate the level of profit the group will achieve in 2017. For the purpose of provisioning, the group has decided to amortise the CAP cost on the assumption that only the secondary performance test will be satisfied by 2017. This means that initially the CAP amortisation charge assumes a total CAP cost of £30m. The charge in future years will be adjusted once there is more visibility over future profits. On this basis the CAP charge for 2014 is £2.4m and the expected charge for 2015 is £6.1m.

Outlook

The pressures on the investment banking sector from increased regulation and compliance costs show no real sign of easing. It is the investment banks' fixed income activities which are most important to Euromoney and which have been hardest hit over the past couple of years from low trading volumes and volatility, as well as weak commodity prices. In contrast, the group's businesses serving the asset management sector have seen conditions improve during 2014 and recent trends in subscription sales and renewal rates suggest these businesses are positioned for further growth in 2015.

Looking ahead, the acquisition of Mining Indaba should contribute approximately £5m to operating profits in 2015. However, it is anticipated that adjusted operating profits will be reduced by approximately £3m from unfavourable event timing differences, property costs will increase by £2m following the London office relocation, and the group's adjusted operating margin will also be reduced by the impact of a full year's Delphi costs and investment in other new products including the Investor Intelligence Network. In addition, the full year impact of the cost of CAP 2014 will reduce adjusted profit before tax by nearly £4m. Further, as previously reported, the proposed Dealogic transaction will lead to earnings dilution in 2015 of approximately 2% assuming it completes at the end of December as expected.

First quarter trading has started in line with the board's expectations. As usual at this time, there is little visibility into the start of the next calendar year when new budgets are set by most customers. While the trading environment remains challenging, the initial reaction to the Delphi content platform has been very positive and the pipeline for new Delphi-based products is strong which, with other organic growth initiatives in events and data, provides confidence in the company's longer term growth strategy. At the same time, the company's low balance sheet gearing and strong cash flows provide plenty of headroom for future investment and acquisitions.

*For the year to September 30 2014, Euromoney's subscription revenues and adjusted operating profits included licence fees of £5.7 million from Capital DATA, while its adjusted profit before tax included an amount of £0.3m from equity accounting for its 48.4% interest in Capital NET.

Richard Ensor

Chairman

November 19 2014

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 8057; [email protected]

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

FTI Consulting

Charles Palmer: +44 20 3727 1021; [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 brands including BCA Research, Ned Davis Research, and the emerging market information providers, EMIS and CEIC. It also runs an extensive portfolio of conferences, seminars and training courses for the financial and commodities 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 2014

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, net movements in acquisition deferred consideration and acquisition commitments. 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 2014 

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

Consolidated Statement of Comprehensive Income

for the year ended September 30 2014

Consolidated Statement of Financial Position

as at September 30 2014

Consolidated Statement of Changes in Equity

for the year ended September 30 2014

The investment in own shares is held by the Euromoney Employees' Share Ownership Trust (ESOT) and Euromoney Employee Share Trust (EEST). The EEST was incorporated in February 2014 to facilitate the purchase of shares for the Capital Appreciation Plan 2014. 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.

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 Cash Flows

for the year ended September 30 2014

Note to the Consolidated Statement of Cash Flows

The group's debt is provided through a dedicated US$160 million multi-currency borrowing facility from Daily Mail and General Trust plc (DMGT). In November 2013 the group replaced its US$300 million (£185 million) facility with the new US$160 million (£99 million) facility which expires at the end of April 2016. Interest is payable on this facility at a variable rate of between 1.35% and 2.35% above LIBOR dependent on the ratio of adjusted net debt to EBITDA. Exceeding the covenant would result in the group being in breach of the facility, potentially resulting in the facility being withdrawn or impediment of management decision making by the lender. Management regularly monitor the covenant and prepare detailed debt forecasts to ensure that sufficient headroom is available and that the covenants are not close or potentially close to breach. At September 30 2014, the group's net debt to adjusted EBITDA was 0.30 times and the committed undrawn facility available to the group was £53.0 million.

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 from operations covers operating profit before acquired intangible amortisation, long-term incentive expense and exceptional items) of 100% or more due to much of its subscription, sponsorship and delegate revenue being paid in advance. However, the group's cash conversion rate was 92% (2013: 88%) due to cash payments during the year in respect of the vesting of options under the CAP which were accrued in previous years.

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 2014 or 2013 but is derived from those accounts. Statutory accounts for 2013 have been delivered to the Registrar of Companies, and those for 2014 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 2013 annual audited financial statements, except as described below.

· IFRS 7 (amendments), 'Offsetting Financial Assets and Financial Liabilities' - disclosures (effective for accounting periods beginning on or after January 1 2013). The amendments to IFRS 7 require entities to disclose information about rights of offset and related arrangements for financial instruments under an enforceable master netting agreement or similar arrangement. The adoption of IFRS 7 (amendments) has no material impact on the financial statements of the group except for additional disclosures.

· IFRS 13, 'Fair Value Measurement' (effective for accounting periods beginning on or after January 1 2013). This standard aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements, which are largely aligned with IFRSs and US GAAP, do not extend to the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRS or US GAAP. The adoption of IFRS 13 has no material impact on the financial statements of the group except for additional disclosures.

· IAS 19 (revised), 'Employee Benefit', issued in June 2011 (effective for accounting periods beginning on or after January 1 2013). The interest cost on pension plan liabilities and expected return on plan assets reported in previous years have been replaced with a net interest amount. The group have amended the presentation of prior year comparative amounts to reflect these requirements. There is no material impact of adopting IAS 19 (amended) on the profit for the years 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.

The financial position of the group, its cash flows and liquidity position are set out in this report. The group meets its day-to-day working requirements through a dedicated US$160 million multi-currency borrowing facility from Daily Mail and General Trust plc (DMGT) which expires at the end of April 2016 (see note 19 to the group financial statements). The facility's covenant requires the group's net debt to be no more than three times adjusted EBITDA on a rolling 12 month basis. At September 30 2014, the group's net debt to adjusted EBITDA was 0.30 times and the committed undrawn facility available to the group was £53.0 million.

The group's forecasts and projections, after 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

1. Operating profit before acquired intangible amortisation, long-term incentive expense and exceptional items (refer to the appendix to the Chairman's Statement).

2. Acquired intangible amortisation represents amortisation of acquisition related non-goodwill assets such as trademarks and brands, customer relationships and databases (note 9).