Euromoney benefits from weak pound during quiet first quarter

Euromoney Institutional Investor, an international business information and events group, has gained from the fall in the pound against the dollar during a quiet period in the first quarter.

The FTSE 250 company’s reported revenues for the three months to 31 December 2016 increased by 6%, largely as a result of a favourable sterling to US dollar rate.

Approximately two thirds of its revenues and profit before tax is in US dollars. Each 1% movement in the exchange rate would translate in an approximate £0.6m impact on 2017 full year profits, according to the group.

Underlying revenues on the other hand, which exclude the impact of currency movements and acquisitions and disposals, fell by 5% mostly due to the group’s decision to restructure some of its event and training activities in the second half.

Reported revenue from subscriptions and content rose 20% to £63.5m in the first quarter of 2017. After taking away the effects of fx movements, it only rose by 1% as some of the group’s asset management activities felt the impact of the cost and fee pressures facing the sector.

On a reported basis advertising revenue rose by 2% while sponsorship and delegates revenue both increased 5%.

However, on an underlying basis, advertising revenue - which accounts for less than 10% of overall revenue - fell 16%, due to the long-term structural headwinds of print advertising, according to the group.

Underlying sponsorship and delegates revenue both dropped 14% as the first quarter has the least activity for the group’s events businesses. This was largely expected and reflects the strategic actions taken in 2016 to consolidate some of the group’s event activities and cut out a number of low margin events and unprofitable training courses.

The group continues to invest in strategic initiatives, particularly in BCA Research and Metal Bulletin, to drive new product development in the asset management and pricing, data and market research segments.

The company disposed of two businesses during the first quarter, including hedge fund publishing business Hedgefund Intelligence and its remaining Institutional Investor print newsletters and related data products.

Net cash at 31 December 2016 was £95.3m, an increase of £11.5m since the year end. The quarter to December is traditionally the lowest operating cash flow period for the company due to annual incentives.

The company has completed the purchase for cancellation of 19.2m ordinary shares from its then majority shareholder, Daily Mail and General Trust Group (DMGT) at £9.75 per share. Following the transaction the company had 109m ordinary shares in issue and DMGT’s stake was reduced to 49.1%.

The share buyback cost of £187.7m was funded using £70m of the group’s net cash and new bank term loans of £117.7m. In addition to long term loans the group has put in place a £80m five-year revolving credit facility to fund its acquisition strategy. The expected cost of these facilities for the rest of 2017 is around £3m.

The share price fell 0.27% to 1,122p at 0938 GMT on Thursday.