FY17 results presentation. Andrew Rashbass and Colin Jones 22 November 2017

Transcription

1 FY17 results presentation Andrew Rashbass and Colin Jones 22 November 2017

2 Strategic journey Message from our Investor Day in March no outward change 2017 year of transition 2018 year of growth Message from today We re on track Page 2

3 Strategy recap Page 3

4 Euromoney s capital allocation decisions can be understood along two dimensions We characterise the business models of B2B information companies into three generations, which we call B2B Information 1.0, 2.0 and 3.0. Structure We service fundamentally cyclical markets. Understanding which point in the cycle they are in is fundamental to our capital allocation decisions. Cycle Quadrants Plotting the businesses along the axes supports our investment decisions, capital allocation and defines strategic priorities. Page 4

5 Successful B2B information companies will be 3.0 businesses Structure - + B2B Information 1.0 B2B Information 2.0 B2B Information 3.0 Print Digital Embedded in workflow Monologue Dialogue Part of the industry structure Advertising-centric Subscriptions Licensing revenues based on customer outcomes Product-centric Customer-centric Solution-centric We aim to anticipate our markets development to become 3.0 Page 5

6 Market cycles impact the sectors that we serve Cycle Equities Commodities Banking and financial institutions Equity index Commodity index Bank shares index 2, ,400 2, , , ,600 1, , , Source: S&P 500 index Source: Bloomberg Commodity index Source: S&P Bank index Page 6

7 Structure Based on the cycle and structure we categorise the businesses in the portfolio - 3 Prepare for the upturn Protect and enhance competitive position Selective investments for when cycle turns Opportunistic revenue initiatives Tight cost control Fix any operational deficit B2B Information 3.0 Cycle + 4 Invest New product development Sales and marketing Acquisition Fix any operational deficit Accelerate transition to Quadrants Challenged market 1 Disinvest Maximise short-term profit and cash Divest Prevent future build-up 2 Use the time wisely Modest investment to move to top-right quadrant Maximise short-term profit and cash Fix any operational deficit Consider divestment Strong tailwinds B2B Information The quadrants guide investment decisions, capital allocation and also define strategic priorities Page 7

8 The actions dictated in the quadrant can be collected into our three key pillars of strategic activity 3 Prepare for the 4 upturn Invest 3 Prepare for the 4 upturn Invest 3 Prepare for the 4 upturn Invest 1 2 Disinvest Use the time wisely 1 2 Disinvest Use the time wisely 1 2 Disinvest Use the time wisely Invest around big themes Transform the operating model Actively manage the portfolio Semi-opaque market Inefficiency Challenged business models Disruption Barriers to entry Must have, not nice to have Create once, sell many 3.0 Business model Best of both worlds Acquisition Disposal Actions depend on market characteristics Product development and creating our future operating model Recycling capital Page 8

9 Finance TelCap Our portfolio of businesses are split into four segments composed of seven divisions with support from central functions Euromoney Institutional Investor PLC Central functions Institutional Investor Asset Management Investment Research Banking & Finance Banking & Finance Commodity Events Events Global Market Intelligence Pricing, Data & Market Intelligence Price Reporting Specialist Information Corporate Development Commodity Legal Finance HR Project and Asset Financing IT Insurance Legal, Risk and Programmes Marketing Derivatives Segment Division Page 9

10 Active portfolio management Acquisitions Boeing Fleet Database (January 2016) Reinsurance Security (August 2016) FastMarkets (September 2016) Broadgroup (March 2017) RISI (April 2017) Layer123 (April 2017) Disposals Gulf & PE (April 2016) HedgeFund Intelligence (December 2016) II Intelligence (December 2016) Euromoney Indices (March 2017) LatinFinance (March 2017) Adhesion & WBWE (October 2017) CEIC & EMIS held for sale Rationale: Recycling of capital towards big investment themes Status: process on track. Any announcement unlikely before January 2018 Impact on FY17 numbers (slide 55) Page 10

11 Governance Appointment of three independent Non-executive Directors in November: Imogen Joss Jan Babiak (from Dec 1) Lorna Tilbian (from Jan 1) Other Board changes: Chairman/SID DMGT representatives Page 11

12 From March 2016 Investor Day Strategy: achievable revenue growth (not guidance) New 2015 Existing FY14/FY15 growth (underlying) 1 Disinvest Batten down the hatches Use the time wisely Invest, Organic Achievable organic growth Invest, Acquisitions Achievable growth Margin: Lower margin Margin-enhancing Higher margin Quality: Lower quality Improving quality High quality 1. Underlying revenue growth from FY14 to FY15, excluding the impact of acquisitions, disposals, currency movements and significant event timing differences. 2. Note: Chart for illustrative purposes only. Not drawn to scale

13 Full-year results Page 13

14 Full-year snapshot FY16 FY17 Change Total revenue 1 ( m) % Adjusted PBT 1 ( m) % Statutory PBT ( m) % Adjusted EPS 1 (p) 66.5p 76.4p 15% Dividend per share (p) 23.4p 30.6p 31% Net cash/(debt) ( m) 83.8 (154.6) 1. Includes the results of continuing and discontinued operations and reconciled in the appendix to the Preliminary Statement. Page 14

15 Statutory profit ( m) (20.8) (33.7) (9.2) (5.2) Adjusted PBT Acquired intangible amortisation Exceptional items (slide 42) Discontinued operations PBT Associates/ JVs Acquisition commitment movements Statutory PBT Page 15

16 Adjusted 1 results m FY16 FY17 Change Total revenue % Adjusted operating profit % Adjusted operating margin 25.2% 25.0% (0.2%) Adjusted PBT % 1. Includes the results of continuing and discontinued operations and reconciled in the appendix to the Preliminary Statement. Page 16

17 FY16 to FY17 total revenue 1 bridge ( m) 34.5 (3.0) (1.2) (5.0) m Global Markets Intelligence Division 37.1m Global Markets Intelligence Division FY16 FX Timing Net M&A FY16 underlying revenue (restated on FY17 basis for continuing businesses) 1. Includes the results of continuing and discontinued operations. Business revenue FY17 Page 17

18 FY16 to FY17 total revenue 1 bridge (by segment) ( m) (3.0) 5.1 (4.7) (2.4) Headwinds Strategy & tailwinds Self help FY16 underlying revenue (restated on FY17 basis for continuing businesses) Asset Management Pricing, Data & Market Intelligence Banking & Finance Commodity Events FY17 1. Includes the results of continuing and discontinued operations. Page 18

19 FY16 to FY17 Adjusted PBT 1 bridge ( m) 10.9 (2.1) (6.4) m Global Markets Intelligence Division 11.5m Global Markets Intelligence Division FY16 FX Timing Net M&A FY16 Underlying Adjusted PBT (restated on FY17 basis for continuing businesses) Central costs (incl interest) Business profit (incl Associates and JVs) FY17 1. Includes the results of continuing and discontinued operations. Page 19

20 FY16 to FY17 underlying 1 segmental performance ( m) Asset Management Pricing, Data & Market Intelligence Banking & Finance Commodity Events Total Revenue (5.0) Associates/JVs Profit 0.7 Battening down the hatches Top-right investment Shifting quadrants Self-help, plus H1 headwinds 1. At constant exchange rates, including pro forma prior year comparatives for acquisitions and excluding disposals and significant event timing differences. Page 20

21 Revenue turnaround since Q1 Revenue change by quarter 1 Y-o-Y % change Subscriptions and content FY17 Actuals Q1 Q2 Q3 Q4 Q4 Like-for-like 3 1% 2% 1% 1% 1% Advertising (16%) (10%) (5%) (3%) (3%) Events (14%) 2% 4% (8%) (2%) Total 2 (5%) 1% 2% (2%) 0% 1. At constant exchange rates, including pro forma prior year comparatives for acquisitions and excluding disposals and significant event timing differences. 2. Includes other revenues but excludes revenues from sold/closed businesses. FX hedging losses restated in prior year at current year level. 3. Q4 adjusted for self-help actions and decision not to repeat events in certain markets due to increased geopolitical instability. Page 21

22 Adjusted operating margin: year-on-year movement FY16 adjusted operating margin 25.2% FX 0.5% Timing (0.3%) Net M&A 0.3% Standalone company (0.8%) Underlying business: - Asset Management 0.7% - Pricing, Data & Market Intelligence (1.0%) - Banking & Finance 0.5% - Commodity Events (0.1%) 0.1% FY17 adjusted operating margin 25.0% Page 22

23 FY17 revenue and profit matrix by segment/type 1 ( m) Subscriptions/ Content Advertising Sponsorship Revenue ( m) Delegates Other Total Profit ( m) Asset management (2%) 14.2 (9%) % 3.2 4% % (2%) % Pricing, data & market intelligence % 16.7 (13%) % % 1.5 (9%) % 51.3 (6%) Banking & finance 8.9 (5%) 9.8 8% 28.1 (7%) 21.7 (10%) 1.4 (11%) 69.8 (6%) % Commodity events N/A N/A 6.0 (4%) 20.8 (7%) 0.6 (2%) 27.4 (8%) 6.9 (10%) Total segment revenue/profit % 40.7 (8%) 64.6 (1%) 64.7 (5%) 3.5 (8%) (1%) (1%) Divergence in subscriptions performance between Asset Management and Pricing, Data & Market Intelligence Decline in overall sponsorship and delegate revenues reflects self-help strategic actions taken in FY16 to remove low-margin activities Repeat events achieved underlying growth of 4%, reflecting strategic focus on large mustattend annual events Total 1. See slide 48 and 49 for notes, colour key and reconciliation to Adjusted PBT Page 23

24 Impact of favourable FX GBP/USD rate 10.9m year-on-year FX benefit to adjusted PBT: GBP/USD rate fell 14 cents 9.4m FX benefit on translation of overseas profits UK embedded FX benefit 9.4m partly offset by movement in hedging losses of 5.6m 0.4m FX loss on balance sheet revaluation (FY16: 1.9m gain) FX hedging losses do not repeat in FY18 at current exchange rates Page 24

25 FY17 cash flow ( m) 83.8 (193.5) (30.8) Underlying 12-month cash conversion 118% (12.9) (102.2) (21.8) (4.8) 9.4 (7.8) (154.6) Net cash at Sept Share buyback (incl fees) Underlying cash generated from operations Dividends Capex Net M&A Net tax Interest Other (incl FX) Non trading items Net debt at Sept As reconciled in appendix to Preliminary Statement. Page 25

26 Outlook & summary Page 26

27 Asset Management and MiFID II impact MiFID II: How asset managers will pay for research? Pass costs on to clients, 5% Undecided, 7% Absorb costs, 85% Source: Financial Times Countdown to MiFID II (November 2017) Page 27

28 Asset Management: Asset class, AUM and fees GLOBAL AuM SPLIT BY PRODUCT (% / $TRILLIONS) GLOBAL REVENUES SPLIT BY PRODUCT (% / $BILLIONS) Total ($trillions) Total ($billions) / $ / $6 8 14/ $9 9 15/ $ / $14 20/ $6 4 19/ $7 8 20/ $ / $ / $18 28/ $ / $ / $ / $ / $130 6/ $2 13 9/ $ / $9 7 13/ $9 9 15/ $14 26/ $ / $ / $ / $23 35/ $ / $26 4 4/ $ / $ / $ / $ / $63 5/ $8 14 8/ $21 1 8/ $ / $31 39/ $ / $ / $ / $ / $57 9/ $3 9 11/ $ / $ / $ / $19 3/ $3 12 3/ $6 13 6/ $14 0 6/ $14 8 7/ $ Passive Active core Solutions/LDI/balanced Active Specialties Alternatives CAGR (%) Source: BCG 2017 Page 28

29 Metals prices turned in late 2015 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Source: LME Price Index Page 29

30 (USD Billion) Banking & Finance: Global investment bank revenues have stabilised Figure 1. Revenues by Business 0% (3%) 2% (15%) % YoY Change 1H17 vs. 1H % (3%) % 1H12 1H13 1H14 1H15 1H16 1H17 FICC Equities IBD Source: Coalition IB Index 1H17 - September 2017 Page 30

31 Book of business reported (c60% of total revenue) X Total book of business at reported GBP/US$ rate 18.1% 19.2% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Page 31

32 Book of business underlying Total book of business at constant GBP/US$ rate adjusted for net M&A X 0.8% 0.4% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Page 32

33 Effect of Acquisitions on BOB 19.2% 15.8% 11.2% 9.4% 4.7% 4.2% Page 33

34 Book of business Asset Management vs Pricing, Data & Market Intelligence Book of business growth at constant GBP/US$ rate adjusted for net M&A (%) 10.0% 8.0% 8.5% 6.0% 4.0% 2.0% - (2.0%) Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct 0.8% (4.0%) (6.0%) (5.9%) (8.0%) Group Pricing, Data & Market Intelligence Asset Management Page 34

35 Advertising underlying (c10% of total revenue) Advertising 52 week rolling sales at constant GBP/US$ rate (5.3%) (6.1%) Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Page 35

36 Events underlying (c30% of total revenue) Events 52 week rolling sales at constant GBP/US$ rate 5.9% 6.4% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Page 36

37 Outlook & summary Strategy on track. FY18 year of growth Capital being rigorously allocated and quadrants managed. Continuing strong cash flow DMGT sell down accelerates strategy. But there are standalone company costs Invested FX benefit to accelerate strategy. FX no longer favourable Asset management markets more challenged with MiFID II headwinds Banking & finance and commodities markets improving Summary: we re where we expected to be perhaps a bit ahead. Page 37

38 Q&A Page 38

39 FY17 results presentation Andrew Rashbass and Colin Jones 22 November 2017

40 Appendix: Supplementary information

41 FY17 adjusted and statutory results Adjusted Statutory Revenue ( m) Operating profit ( m) Operating margin (%) 25.0% 11.2% Profit before tax ( m) EPS (p) 76.4p 37.9p Page 41

42 Exceptional items 1 m FY17 Impairment (29.7) Profit on disposal of businesses 2.9 Tax settlement 3.9 Restructuring and other (8.4) Continuing operations (31.3) Discontinued operations (2.4) Total (33.7) 1. See note 3 of the Preliminary Statement for fuller description. Page 42

43 Net finance costs 1 m FY16 FY17 Interest on DMGT debt facility (1.3) (0.2) Interest on cash deposit with DMGT Interest on external borrowings - (3.7) Interest on tax (0.4) (0.1) Other 0.2 (0.1) Adjusted net finance costs (1.1) (4.0) Acquisition deferred consideration Acquisition commitments (0.6) 3.0 Total net finance costs (1.7) (0.8) 1. See note 4 of the Preliminary Statement. Page 43

44 Tax 1 m FY16 FY17 Adjusted PBT Total tax charge (12.9) (6.7) Other tax adjustments (5.2) (13.1) Adjusted tax charge (18.1) (19.8) Adjusted effective tax rate 18% 19% 1. See note 5 of the Preliminary Statement. Page 44

45 Cash conversion m FY16 FY17 Adjusted operating profit Cash generated from operations Exceptional items Timing differences (1.4) (4.6) Underlying cash generated from operations Cash conversion % 102% 110% Underlying 12-month cash conversion % 105% 118% Page 45

46 Deferred revenue Sep-16 to Sep-17 m Subscriptions Events Advertising Opening balance Net M&A (0.1) FX (2.7) (0.4) - Adjusted opening balance Underlying movement Closing balance Underlying growth % 4% 8% 0% 1. Excludes FY16 deferred revenue classified within total liabilities of businesses held for sale. 2. Includes FY17 deferred revenue classified within total liabilities of business held for sale. Page 46

47 Banking facilities m Purpose Term-loan 120 Share buyback Revolving credit facility 130 Acquisitions & working capital 250 Accordion 130 Additional acquisitions 380 Funding costs Net Debt: EBITDA Margin above LIBOR < % < % < % Rate hedging 32m of term-loan swapped to fixed rate of 0.76% p.a $80m of term-loan swapped to fixed rate of 1.97% p.a < % > % Page 47

48 FY17 revenue and profit matrix by segment/type ( m) Subscriptions/ Content Advertising Sponsorship Revenue ( m) Delegates Other Total Profit ( m) Asset management (2%) 14.2 (9%) % 3.2 4% % (2%) % Pricing, data & market intelligence % 16.7 (13%) % % 1.5 (9%) % 51.3 (6%) Banking & finance 8.9 (5%) 9.8 8% 28.1 (7%) 21.7 (10%) 1.4 (11%) 69.8 (6%) % Commodity events N/A N/A 6.0 (4%) 20.8 (7%) 0.6 (2%) 27.4 (8%) 6.9 (10%) Total segment revenue/profit % 40.7 (8%) 64.6 (1%) 64.7 (5%) 3.5 (8%) (1%) (1%) Central costs (incl FX/interest/associates & JVs) (29.8) - Adjusted PBT (5%) Total Notes The absolute figures represent total segment revenue/profit, central costs and Adjusted PBT. The percentages represent underlying growth rates, including pro forma prior year comparatives for acquisitions and excluding disposals and significant event timing differences at constant exchange rates. Total segment revenue of 434.5m excludes FX on forward contracts (- 10.8m) and sold/closed businesses (+ 4.7m). For a reconciliation of segment profit to Adjusted PBT, refer to slide 49. Key Dark green growth more than 2% Light green growth of 0% to 2% Amber decline of 0% to -1% Pink decline of -1% to -5% Dark red decline more than -5% The white cells have not been colour-coded due to their size Page 48

49 FY17 segment profit to adjusted PBT reconciliation ( m) Segment profit Non-segment items: - Central costs (18.0) - FX on hedging/balance sheet items (11.2) - Associates/JVs Interest (4.0) (29.8) Adjusted PBT Includes the results of continuing and discontinued operations. Page 49

50 Total revenue change Y-o-Y % change FY16 FY17 FY17 Subscriptions and content H1 H2 H1 H2 Full Year % revenue 2 5% 11% 19% 17% 18% 61% Advertising (3%) (6%) 3% 6% 5% 9% Sponsorship (3%) 10% 13% 10% 11% 15% Delegates (5%) (5%) (2%) 4% 1% 15% Total 1 (2%) 2% 5% 8% 6% 1. After sold/closed businesses, FX and other revenues. 2. Percentage of total FY17 revenue excluding closed businesses, FX and other revenues. Page 50

51 Underlying 1 revenue change by quarter Y-o-Y % change FY16 FY17 Subscriptions and content Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2% 0% 1% 2% 1% 2% 1% 1% Advertising (2%) (16%) (14%) (12%) (16%) (10%) (5%) (3%) Sponsorship (7%) (8%) 9% (7%) (14%) 5% 5% (6%) Delegates (18%) (17%) (9%) (12%) (14%) 1% 2% (11%) Total 2 (6%) (6%) (1%) (4%) (5%) 1% 2% (2%) 1. At constant exchange rates, including pro forma prior year comparatives for acquisitions and excluding disposals and significant event timing differences. 2. Includes other revenues but excludes revenues from sold/closed businesses. FX hedging losses restated in prior year at current year level. Page 51

52 Total revenue by segment m FY16 FY17 Total Underlying 1 Asset management % (2%) Pricing, data & market intelligence % 3% Banking & finance % (6%) Commodity events (6%) (8%) Sold/closed businesses FX hedges (5.2) (10.8) % (1%) 1. At constant exchange rates, including pro forma prior year comparatives for acquisitions and excluding disposals and significant event timing differences. Page 52

53 Total revenue by type m FY16 FY17 Total Underlying 1 Subscriptions and content % 1% Advertising % (8%) Sponsorship % (1%) Delegates % (5%) Other (3%) (8%) Sold/closed businesses FX hedges (5.2) (10.8) - - Total % (1%) 1. At constant exchange rates, including pro forma prior year comparatives for acquisitions and excluding disposals and significant event timing differences. Page 53

54 Adjusted operating profit by segment m FY16 FY17 Adjusted Underlying 1 Asset management % 3% Pricing, data & market Intelligence % (6%) Banking & finance % 7% Commodity events (14%) (10%) Sold/closed businesses Central costs (14.5) (18.0) - - FX hedges/balance sheet (3.3) (11.2) - - Total % (4%) 1. At constant exchange rates, including pro forma prior year comparatives for acquisitions and excluding disposals and significant event timing differences. Page 54

55 Discontinued operations 1 ( m) m FY16 FY17 Change Revenue % Adjusted operating profit % Adjusted operating margin 27.2% 28.6% 1.4% Adjusted PBT % Statutory PBT (12%) 1. Discontinued operations represents the Global Markets Intelligence Division (CEIC and EMIS). All figures disclosed above are reconciled in the appendix to the Preliminary Statement. Page 55

56 Disposal of Adhesion and WBWE Sale of Adhesion and WBWE in October for 13.6m ( 12.0m) m FY16 FY17 Revenue - Adhesion WBWE (held as a subsidiary) Operating profit - Adhesion (0.1) - WBWE (held as an associate) WBWE (held as a subsidiary) Adhesion s FY16 results include its biennial wine exhibition, Vinisud. Its FY17 results include the first edition of an annualised Vinisud. Page 56

57 Impact of FX REVENUE, 3% OPERATING PROFIT Other, 5%, 8% Other, 9%, 11%, 12% US$, 70% US$, 81% GBP/USD FY17 FY16 Average rate Closing rate GBP/USD Revenue Operating profit 1 movement +/- 1.9m +/- 0.8m Page 57