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EUROMONEY INSTITUTIONAL INVESTOR PLC

(ERM)
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Euromoney Institutional Investor : sites/euromoney/files/reports and presentation/euromoney 2021 full year result…

11/26/2021 | 06:20am EST

Euromoney Institutional

Investor PLC

2021 Full Year Results

Transcript

Thursday, 18th November 2021

Euromoney 2021 Full Year Results

Thursday, 18th November 2021

Introduction

Andrew Rashbass

CEO, Euromoney Institutional Investor PLC

Welcome

Welcome everybody to Euromoney's Full Year Results. I hope you can either see the presentation on the screen or have a copy in front of you.

I am going to move on to and start with slide 3. I am going to introduce the results, then hand over to Wendy to take you through the results in detail, and then I will come back to take you through some thoughts on strategy, and then, of course, opportunity for you to ask any questions that you have.

Driven by data, powered by people

Let us move to slide 3. As you know, we exist to provide clarity in opaque markets to help our customers compete successfully. We do that because our customers find it incredibly valuable. Because they find it valuable, that is what results in us becoming a fast-growing,high-margin 3.0 information services subscription business.

Delivered through three divisions

I think you know very well, as you see on the next slide, that we deliver our services through three divisions:

  • Fastmarkets;
  • Financial & Professional Services; and
  • Asset Management.

Now, with the simplification of our company that we have been undergoing over the past few years, we are now in the position where our divisions and our segments now correspond one to one. We have simplified things by using from now on just the division names, not the previous segment names that we used. But the segments and the divisions map exactly onto each other, so all your models and analysis will remain the same.

High-quality subscriptions revenue is accelerating

If you look at the next slide, there are many positives I think and takeaways that Wendy will talk about in the results. But if I have to point a one thing, it would be the subscription growth that we are seeing in our business. You see the three divisions here. You have got bars for 2019, 2020, 2021. Then we have what we call the growth in our book of business at the year-end. That gives you a great snapshot of where we are entering the momentum, we have entering 2022.

What you can see is:

  • Fastmarkets was at 13% growth year-on-year, and that is an underlying adjusted for M&A, adjusted for exchange;
  • FPS growing at 7%; and
  • The Asset Management declined now narrowed to just minus 1% as we exited the year.

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Euromoney 2021 Full Year Results

Thursday, 18th November 2021

Delivering a step change in growth for Group subscriptions

On slide 6, what you can see is what happens when you put all of that together as a Group, and what is see, as a Group, we enter 2022 with underlying subscription growth of 7%. Apart from all the benefits of subscription that you know very well, that is incredibly significant for us, because as you can see on the right-hand chart, in 2021, 70% of our revenue came from those subscriptions.

We enter FY 2022 with strong momentum

So, as I say, looking at slide 7, we enter the New Year with great momentum. There is some strong growth in Fastmarkets, in FPS subscriptions. Asset Management turnaround is ahead of schedule. We are seeing a sharp recovery in Events. In fact, you see there that in the second half, our second half compares to a COVID period the year before, and then I guess the emergence from all the impacts of COVID. What you see is that those revenues in the second half grew by more than 100%.

Throughout COVID, we were able to continue to make great strategic complementary acquisitions, and continued with that amazing cash generation that Euromoney is so well known for, which creates the balance sheet that allows us to continue to invest organically in M&A and of course to pay dividends.

With that, let me hand over to Wendy to take you through the results in more detail.

Full Year Results

Wendy Pallot

CFO, Euromoney Institutional Investor PLC

FY 2021 financial highlights

Thank you, Andrew, and good morning, everyone. I am going to start with the financial highlights, which shows the reported revenue increased slightly year-on-year, driven by that accelerating growth in subscriptions and other revenues and the three strategic acquisitions we made during the year, offset by the continued impact of COVID-19 on physical events.

Underlying revenues declined by 2% during the year, but both the reported and the underlying increases are quite a jump up when I last presented to you our half year results when reported revenues were down 17%. In the second half, our reported revenues were up 21% year-on-year.

It is really the first period we reported where the comparative was duly COVID impacted. As we highlighted in our year-end trading update, we have adopted new guidance on IAS 38 regarding the treatment of Software-as-a-Service. These resulted in a net additional charge of £3.8 million in the year. I will explain more about that on the next slide.

Operating profit was up 8% on an underlying basis and up 12% on a reported basis, really reflecting a good cost control during the year, resulting in an operating profit margin of 19%, up 2 percentage points year-on-year. As you can see, our cash conversion and free cash flow during the year was strong and that resulted in a net cash position of £32.5 million. That is £4.4 million higher than last year after spending £24 million on three acquisitions and the payments of dividends.

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Euromoney 2021 Full Year Results

Thursday, 18th November 2021

Finally, the Broad has proposed a final dividend of 12.5p per share, bringing the total dividend to 18.2p.

IAS 38

Now to slide 10. Before I talk you through this new accounting treatment, just to be clear, this has no impact on cash at all. Earlier in the year, IFRIC, the International Financial Reporting Interpretations Committee determined that the configuration and the customisation costs of SaaS solutions should not be capitalised, and must be expensed against profit. That was because they deemed they do not create a separate intangible asset, mainly because the underlying code is controlled by the software vendor rather than the user.

This new treatment is applicable immediately and retrospectively. What it is doing basically is taking cash that was in CapEx and putting it in the P&L, this is why it doesn't change cash. At a Group level, in FY21, this results in a net charge of £3.8 million to the income statement, and therefore, a reduction in adjusted operating profit and PBT of that size.

The net charges are made up of two elements. It is the CapEx spend of £5.6 million in FY21, which previously would have been capitalised, of course, partly offset by a £1.8 million credit for what would have been the amortisation in the year of historic plus CapEx. As a similar adjustment for FY20, you can see the adjustments in both years in the table at the bottom there.

In FY22, we expect this accounting adjustment to lead to an approximate incremental net charge in the P&L of £2 million, reflecting our slightly increased investments in SaaS-related solutions. Just to repeat, obviously this has no impact on free cash flow.

Euromoney is a majority-subscriptions business operating through three divisions

Moving to slide 11. Here, we see a quick snapshot of Euromoney today. As Andrew highlighted earlier, we are a majority subscriptions business. Subscriptions is 70% of Group revenues during the year and split across three sort of roughly in the divisions.

Subscriptions growth has accelerated across the year

On slide 12, let us look at those subscription revenues and their momentum in some more detail. Looking at the chart on the left, total subscription revenue grew by 5% on an underlying basis, driven by double-digit growth in Fastmarkets and further good progress in FPS.

The turnaround of our research businesses and in asset management is progressing well and we remain ahead of our plan with underlying revenues improving from minus 8% last year to minus 3% here in FY21.

The right-hand chart shows the growth in our book of business, or BoB, which measures the annual contracted value of subscriptions on a like-for-like basis, and as you will know, the key leading indicator for our future revenue growth.

The chart shows the progress made over the course of the year. You can see the strengthening trends in all divisions. The overall Group falls in the middle there and takes to 6.6% at the end of September, an improvement of 5.9 percentage points from September last year.

4

Euromoney 2021 Full Year Results

Thursday, 18th November 2021

A pick out for you in particular, is the continued acceleration in the Fastmarkets BoB, which is up at 12.7% at the end of September getting back to good double-digit growth. FPS improved to 6.8% growth compared to division in September last year at 2.4%. These numbers both include the impact of our recent acquisitions of WealthEngine and RelSci. If you exclude those acquisitions, the FPS BoB at the end of September was at 7.9% year-on- year growth.

The Asset Management BoB was at minus 0.6% in September. That is an improvement of 4.4 percentage points over the last 12 months.

Finally, the non-vote BoB, BCA and NDR, shown here as the grey dotted line, that is about 95% of the total asset management BoB and that is slightly positive in September. It is a key driver of the improvement trend in asset management and the basis of the target we set in this area.

Events returning to growth in H2 2021

Now, let us look on slide 13 at events and the performance of our businesses with events revenues where the total revenue was down by £20 million year-on-year. That is 75% of what we achieved in FY20 due to the COVID. What you can see from the chart, is very much the tale of two halves.

So, on the first half of 2021 compared to period in FY20, which was largely pre-COVID, the second half is against the COVID impacted period, so is more like-for-like. You can see there the growth we have had in the second half.

The Group event revenues were at 75% of FY20, as I said, but Asset Management achieved 88% on the same basis. That really highlights the strength of our membership model at Institutional Investor. There is a page in the appendix which will give you more information on the split between Institutional Investor, membership events and other events.

In total, we hosted 382 virtual events during the year and 50 blended events from May onwards. Total events revenue in the second half was £35.1 million, that was about £5 million lower than we expected in H1 results, just reflecting the challenges of COVID-related travel restrictions.

However, it was more than double the revenues for the same period in the previous year because of that return of in-person events.

Fastmarkets

Now moving to slide 14 and on to our divisions. Let us start with Fastmarkets, which as Andrew said, aligns to our previous reporting segment pricing.

Fastmarkets delivered excellent growth in subscription revenue, up 13% on an underlying basis, driven by the strong growth in Metals and Mining, Forest Products and Agriculture, really reflecting the continuing high demand for our price reporting.

Adjusted operating profit was up 3% underlying year-on-year with a strong subscriptions growth, partially offset by lower event revenues, although as you can see there and you may cut 3% of Fastmarkets revenues. Our investment in technology and new products to further accelerate the growth in Fastmarkets.

5

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Euromoney Institutional Investor plc published this content on 26 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 November 2021 11:19:09 UTC.


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Number of Analysts 6
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Managers and Directors
Andrew Rashbass Chief Executive Officer & Executive Director
Wendy Pallot Chief Financial Officer & Executive Director
Philippe Leslie van de Walle Non-Executive Chairman
Andrew Pieri Chief Information Officer
Janice May Babiak Senior Independent Non-Executive Director
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