Annual Report & Accounts 2008 - Euromoney Institutional Investor ...

Chairman's StatementHighlights2008 2007 changeRevenue £332.1m £305.2m +9%Underlying results*• Adjusted operating profit £81.3m £78.6m +3%• Adjusted profit before tax £67.3m £55.5m +21%• Adjusted diluted earnings a share 44.4p 35.0p +27%Statutory results• Operating profit £61.0m £54.1m +13%• Profit before tax^ £37.4m £41.1m -9%• Diluted earnings a share 40.4p 29.9p +35%Dividend 19.25p 19.0p +1%* A detailed reconciliation of the group's underlying results is set out in the appendix to the Chairman's statement.^ Statutory profit before tax includes a foreign exchange loss on tax equalisation contracts of £12.0 million (2007: £1.8 million). This is matchedby an equal and opposite tax credit and therefore has no effect on earnings a share. The foreign exchange losses and the tax credit are excludedfrom underlying profit and the underlying tax expense (note 7, 8 and appendix to the Chairman's statement).It was a year when our strategy paid off, in spite of shocksin the financial and commodities markets. The increasedreliance on high quality subscription products, a greaterpush into the emerging economies, continued developmentof the Metal Bulletin acquisition that we completed morethan two years ago, stronger legal and telecoms publishingand events, and a continued grip on costs combined todeliver a record year for revenues and profits. We believethat strategy will serve us well in whatever is to come inworld markets.New debt facilities are in place for the next five years. Cashgeneration ran at record levels during the year and continue todo so into the first quarter. The proposed final dividend is thesame, subject to your approval, and we also propose to offershareholders a choice to take the final dividend in sharesor cash.The new year has begun relatively well. Some revenue streamssuch as advertising and sponsorship, as we expected, havebegun to turn down, but many of the businesses, includingthose in financial events and publishing outside the mainmoney centres, as well as those outside finance, continue todeliver strong revenues and profits. The proportion ofsubscription revenues as a percentage of the total increasedfrom 34% to 37%, contributing strongly to the robustness ofour trading, and we expect the proportion to increase.Adjusted profit before tax rose by 21% to £67.3 million inthe year to September 30. Adjusted diluted earnings a shareincreased by 27% to 44.4p, and the directors recommendan unchanged final dividend of 13p a share to be paid toshareholders on February 4 2009.Throughout 2008 the business has demonstrated its resiliencein the face of problems in global credit markets, a gloomiereconomic outlook, and more recently the major impact of thecredit crisis on the world’s leading financial institutions.Total revenue increased by 9% to £332.1 million. Subscriptionrevenues increased by 18% to £123.1 million. Growth fromemerging markets continued to compensate for weakness inthe developed financial markets, and emerging markets nowaccount for nearly 50% of the group’s revenues. Our strengthsin sectors outside finance, particularly metals, commoditiesand energy, is demonstrated by the 16% increase in revenuesfrom business publishing activities, which helped offset theweakness in some financial sectors, particularly structuredfinance and hedge funds.The increase in adjusted profit before tax was helped bya £4.5 million reduction in underlying net finance costs,reflecting the strong operating cash flows of the groupwhich increased by 11% to £99.8 million. Net debt fell to£172.0 million compared with £201.8 million at March 31 andnew five-year debt facilities have been agreed.StrategyThe company’s strategy over the past five years has been tobuild a more resilient and better focused business. Thisstrategy has been executed through increasing the proportionof revenues derived from subscription products; investing inproducts of the highest quality that customers will value intough times as well as good; eliminating products with a lowmargin or too high a dependence on advertising; maintaining02 Euromoney Institutional Investor PLC