Euromoney Institutional Investor |
Result of strategic review and COVID-19 update |
Trading update |
Media |
1 May 2020 |
Share price performance
Business description
Next events
Analysts
Euromoney Institutional Investor is a research client of Edison Investment Research Limited |
Euromoney has concluded that shareholder value is best served by continuing to own its Asset Management segment, following a strategic review instigated in September 2019. The focus is on bringing it back into growth, with opportunities to develop new products and leverage data already captured. It is now very unlikely that events scheduled for the group’s Q4 will take place. These are now excised from our forecasts, with a £34m top-line impact. Further cost actions are being taken and the group remains on a strong financial footing. Interims are now set for 4 June.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
09/18 |
390.3 |
99.9 |
73.6 |
32.5 |
11.5 |
3.8 |
09/19 |
401.7 |
104.6 |
77.7 |
33.1 |
10.9 |
3.9 |
09/20e |
335.5 |
50.0 |
37.0 |
18.8 |
23.0 |
2.2 |
09/21e |
400.0 |
84.0 |
62.2 |
26.7 |
13.7 |
3.1 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Further adjustments to forecasts
Asset Management now stays within the group and there will be a greater focus on collaboration between Institutional Investor and the research businesses, NDR and BCA, as well as on organic product development. There are further opportunities to develop the brands in Asia and in packaging data gleaned by Institutional Investor, such as that on asset allocation decisions. The COVID-19 impact is still mainly being felt in the Events segment and, in line with management guidance, we have again adjusted our forecasts, taking £34m off FY20e revenue. The associated gross profit is £18m, but there is a further £7m of irrecoverable costs, resulting in our FY20 PBT forecast coming back to £50.0m from £75.0m after the March COVID-19 update. We have also taken a more cautious stand on the following year until there is greater clarity regarding how businesses will adapt operationally, particularly in respect of travel and face-to-face meetings. Our FY21e PBT moves to £84.0m from £104.0m. The experience to date on subscriptions (over 70% of FY20 forecast revenue) is that renewals have held up well, but that the sales cycle for new conversions is longer.
Resilient balance sheet
The group had £8.0m net cash at end March (from £12.2m at end February), with funding in place of £188m through to December 2022. We expect the group to have around £44m of net debt at the September year-end (was £40m), given reduced capital spend and the intended absence of an interim dividend payment, and be broadly cash neutral the following year. Payment of a final dividend in respect of FY20 will be decided on in November, dependent on the outlook at that point.
Valuation: Remains deeply discounted
Euromoney’s share price remains c 40% below highs of around £15 prior to the strategic review announced in September. The stock now stands at a discount of around c 36% to peers across EV/EBITDA and P/E metrics (although not all forecasts are yet adjusted for the full COVID-19 impact), despite the intrinsically strong business model with a high level of recurring revenue in the mix.
Exhibit 1: Financial summary
£m |
2018 |
2019 |
2020e |
2021e |
||
30-September |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
390.3 |
401.7 |
335.5 |
400.0 |
Cost of Sales |
(63.5) |
(60.0) |
(50.3) |
(60.0) |
||
Gross Profit |
326.8 |
341.7 |
285.1 |
340.0 |
||
EBITDA |
|
|
105.0 |
108.2 |
58.5 |
94.6 |
Operating Profit (before amort. and except.) |
|
|
101.6 |
105.4 |
52.6 |
87.0 |
Intangible Amortisation |
(22.7) |
(25.1) |
(25.6) |
(25.6) |
||
Exceptionals |
81.4 |
0.0 |
0.0 |
0.0 |
||
Capital Appreciation Plan |
0.0 |
0.0 |
0.0 |
0.0 |
||
Operating Profit before ass's & fin. except'ls |
160.3 |
80.3 |
27.0 |
61.4 |
||
Associates |
0.1 |
(0.1) |
0.0 |
0.0 |
||
Net Interest |
(1.8) |
(0.7) |
(2.5) |
(2.9) |
||
Exceptional financials |
(6.6) |
0.0 |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
99.9 |
104.6 |
50.0 |
84.0 |
Profit Before Tax (FRS 3) |
|
|
152.0 |
79.5 |
24.4 |
58.4 |
Tax |
(20.6) |
(20.8) |
(10.0) |
(16.8) |
||
Profit After Tax (norm) |
79.3 |
83.8 |
40.0 |
67.2 |
||
Profit After Tax (FRS 3) |
102.5 |
58.7 |
14.4 |
41.6 |
||
Average Number of Shares Outstanding (m) |
107.4 |
107.6 |
107.6 |
107.6 |
||
EPS - normalised (p) |
|
|
73.6 |
77.7 |
37.0 |
62.2 |
EPS - (IFRS) (p) |
|
|
122.2 |
54.4 |
13.3 |
38.6 |
Dividend per share (p) |
32.5 |
33.1 |
18.8 |
26.7 |
||
EBITDA Margin (%) |
26.9 |
26.9 |
17.4 |
23.7 |
||
Operating Margin (before GW and except.) (%) |
26.0 |
26.2 |
15.7 |
21.7 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
616.5 |
433.9 |
426.8 |
401.0 |
Intangible Assets |
588.2 |
405.4 |
397.3 |
376.4 |
||
Tangible Assets |
24.0 |
23.2 |
24.2 |
19.4 |
||
Investments |
4.3 |
5.3 |
5.3 |
5.3 |
||
Current Assets |
|
|
165.7 |
397.4 |
374.2 |
428.3 |
Stocks |
0.0 |
0.0 |
0.0 |
0.0 |
||
Debtors |
68.3 |
49.0 |
50.3 |
60.0 |
||
Cash |
78.3 |
50.1 |
26.9 |
71.4 |
||
Other |
19.1 |
298.4 |
296.9 |
296.9 |
||
Current Liabilities |
|
|
(262.2) |
(273.2) |
(197.3) |
(218.0) |
Creditors |
(262.2) |
(273.2) |
(197.3) |
(218.0) |
||
Short term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
||
Long Term Liabilities |
|
|
(41.4) |
(31.7) |
(191.6) |
(120.4) |
Long term borrowings |
0.0 |
0.0 |
(71.2) |
(71.2) |
||
Other long term liabilities |
(41.4) |
(31.7) |
(120.4) |
(49.2) |
||
Net Assets |
|
|
478.6 |
526.4 |
412.0 |
490.9 |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
108.6 |
92.4 |
47.3 |
99.9 |
Net Interest |
(2.8) |
(0.2) |
0.1 |
(0.4) |
||
Tax |
(38.9) |
(38.4) |
(27.8) |
(14.8) |
||
Capex |
(4.9) |
(10.0) |
(6.2) |
(10.9) |
||
Acquisitions/disposals |
195.8 |
(48.4) |
(15.8) |
0.0 |
||
Equity Financing / Other |
2.7 |
11.9 |
0.0 |
0.0 |
||
Dividends |
(34.2) |
(35.8) |
(20.7) |
(29.4) |
||
Net Cash Flow |
226.2 |
(28.5) |
(23.2) |
44.5 |
||
Opening net debt/(cash) |
|
|
154.6 |
(78.3) |
(50.1) |
44.3 |
Redemption of pref |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
0.0 |
0.3 |
(71.2) |
0.0 |
||
Closing net debt/(cash) |
|
|
(78.3) |
(50.1) |
44.3 |
(0.2) |
Source: Company accounts, Edison Investment Research
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