Annual Report & Accounts 2012 - Euromoney Institutional Investor ...

Euromoney Institutional Investor PLC Annual Report and Accounts 2012
www.euromoneyplc.com
The group primarily generates revenues from
four revenue streams: advertising; subscriptions;
sponsorship; and delegates.
Advertising revenues represent the fees that
customers pay to place an advert in one or
more of the group’s publications, either in
print or online. Advertising revenue is primarily
generated from the Financial Publishing and
Business Publishing divisions.
Subscription revenues are the fees that customers
pay to receive access to the group’s information,
either through online access to various databases,
through regular delivery of soft copy research,
publications and newsletters or hard copy
magazines. Subscriptions are also received from
customers who belong to Institutional Investor’s
exclusive specialised membership groups.
Subscription revenue is primarily generated from
the Financial Publishing, Business Publishing and
Research and Data divisions.
Sponsorship revenues represent fees paid by
customers to sponsor an event. A payment of
sponsorship entitles the sponsor to high-profile
speaking opportunities at the conference, unique
branding before, during and after the event
and an unparalleled networking opportunity to
meet the sponsor’s clients and representatives.
Sponsorship revenue is generated from the
Conferences and Seminars division and the
publishing businesses which run smaller events.
Delegate revenues represent fees paid by
customers to attend a conference, training
course or seminar. Delegate revenues are derived
from the Conferences and Seminars and Training
divisions and from smaller events run by the
publishing businesses.
Details of the group’s revenues by revenue
stream and by division are set out in note 3.
The group has a global customer base with
revenue derived from almost 200 countries,
with approximately 60% from the US, Canada,
UK and the rest of Europe and more than a
third of its revenue from emerging markets.
Its customer base predominantly consists of
financial institutions, governments, financial
advisory firms, hedge fund organisations, law
firms, commodity traders, other corporate
organisations and for the group’s niche focused
products relevant niche corporate entities across
the length of the respective supply chain.
The group’s main offices are located in London,
New York, Montreal and Hong Kong.
The group’s costs are tightly managed with a
constant focus on margin control. The group
benefits from having a flexible cost base,
outsourcing the printing of publications, hiring
external venues for events, and choosing to
engage freelancers, contributors, external trainers
and speakers to help deliver its products. Other
than its main offices, the group avoids the fixed
costs of offices in most of the markets in which it
operates. This allows the group to scale up resource
or reduce overhead as the economic environment
in which it operates demand.
The group has strong covenants and takes
advantage of its ability to borrow money cheaply
using these funds to invest in new products
and fund acquisitions. The group’s subscription
revenues are normally received in advance, at
the beginning of the subscription service, and
a typical subscription contract would be for a
12 month period. This helps provide the group
with strong cash flows and normally leads to
cash generated from operations being in excess
of adjusted operating profit – a cash conversion
percentage in excess of 100%.
The board does not micro-manage each business,
instead devolving operating decisions to the local
management of each business, while taking
advantage of a strong central control environment
for monitoring performance and underlying
risk. This encourages an entrepreneurial culture
where businesses have the right kind of support
and managers are motivated and rewarded for
growth and initiative.
The group invests for the long-term in businesses
and products that meet certain financial and
strategic criteria. Equally, where businesses
no longer fit, the group divests. The group is
investing heavily in its program to migrate its
print products online, develop new electronic
information services, and to take advantage of
mobile and cloud technology.
3. Strategy
The key elements of the group’s strategy are:
● driving top-line revenue growth from both
new and existing products;
● building robust subscription and repeat
revenues and reducing the dependence on
advertising;
● improving operating margins through tight
cost control;
● investing in new businesses, technology
and the online migration of its publishing
activities;
● leveraging technology to launch specialised
new electronic information services;
● making acquisitions that supplement the
group’s existing businesses;
● strengthening the company’s market
position in key areas which have the
capacity for organic growth using the
existing knowledge base of the group;
● managing its cash flows to keep its debt
within a net debt to EBITDA limit of three
times; and
● providing incentives to foster an
entrepreneurial culture and retain key people
(see section 4.4.6 of the Directors’ Report).
4. Business review
4.1 Group results and dividends
The group profit for the year attributable to
shareholders amounted to £69.7 million (2011:
£45.6 million). The directors recommend a final
dividend of 14.75 pence per ordinary share
(2011: 12.50 pence), payable on Thursday
February 14 2013 to shareholders on the register
on Friday November 23 2012. This, together with
the interim dividend of 7.00 pence per ordinary
share (2011: 6.25 pence) which was declared on
May 17 2012 and paid on July 19 2012, brings
the total dividend for the year to 21.75 pence per
ordinary share (2011: 18.75 pence).
Directors’ Report
Company Accounts Group Accounts
Our Governance
Our Performance
09