ERM.L Regulatory News (ERM)

Euromoney

Institutional

Investor PLC

Preliminary Statement

30 September 2017

Euromoney Institutional Investor PLC

Preliminary Statement

22 November 2017

· Strategy on track in this year of transition. The recent DMGT sell down has given financial flexibility to accelerate the strategy.

· FX a significant factor after dollar strengthened 14 cents but no longer a tailwind.

· Benefits from upturn in banking and commodities cycles, our Price Reporting Agency (PRA) investment and self-help actions in training and event businesses helped to mitigate the headwinds in the asset management sector, particularly from MiFID II.

· Statutory and total revenues up 6%, underlying revenues down 1%.

· Adjusted profit before tax up 4% to £106.5m.

· Statutory profit before tax reflects exceptional items of £33.7m (primarily non-cash impairment charges) and acquired intangible amortisation of £20.8m.

· Net debt at September of £154.6m, from net cash position last year, following the £193.5m share buyback in January and $125m acquisition of RISI in April.

· Strong 12-month underlying cash conversion of 118% (2016: 105%) continues to strengthen the balance sheet.

· Active portfolio management continues:

o Secured three acquisitions in the year: RISI (100%), Layer123 (61%) and BroadGroup (49%),

o Completed six disposals: HedgeFund Intelligence, II Intelligence, LatinFinance, Euromoney Indices, Adhesion and World Bulk Wine Exhibition.

· New, progressive dividend policy announced at interim: final dividend increased by 33% to 21.8p.

· Post period-end, Board strengthened with appointments of Imogen Joss, Jan Babiak and Lorna Tilbian as independent Non-executive Directors.

1 Adjusted measures include the results of continuing and discontinued operations and exclude the impact of amortisation of acquired intangible assets, exceptional items, share of associates' and joint ventures' acquired intangibles amortisation, exceptional items and tax, and net movements in deferred consideration and acquisition commitments.

2 Underlying measures include the adjusted results of continuing and discontinued operations and are stated at constant exchange rates, including pro forma prior year comparatives for acquisitions and excluding disposals and significant event timing differences.

Commenting on the results, Andrew Rashbass, CEO, said:

"The full-year results demonstrate good progress with our strategy: investing in strategic themes; creating a best-of-both-worlds operating model which combines Euromoney's well-known entrepreneurial culture with the benefits of a more corporate approach; and active portfolio management. DMGT's sell down has given us the financial independence and flexibility to accelerate this strategy. During the year, we continued to invest for growth in particular around the big theme price discovery, with the acquisition of RISI following the successful integration of FastMarkets within Metal Bulletin. Improving market conditions for banking and commodities together with cutting low-margin training courses and events helped mitigate the cyclical headwinds that affected, and continue to affect, our asset management businesses particularly in the second half. While a near term challenge, we still believe asset management will be a long term driver for the business. As flagged at the half year, the Board has changed the Company's dividend policy to increase the pay-out to approximately 40% of adjusted after-tax earnings each year. 2017 has been a year of transition and as we enter a new financial year, it remains our view that, subject to the usual caveats, Euromoney remains on track to return to underlying growth in 2018."

Strategy

Our strategy is to manage a portfolio of businesses in markets where information, data and convening market participants are valued. We deliver products and services that support our clients' critical activities.

In particular, we look to serve markets which are semi-opaque; that is, where there is information which organisations need in order to operate effectively but the information is hard to find. Price discovery is a good example.

We characterise the business models of B2B information companies into three generations, which we call B2B Information 1.0, 2.0 and 3.0. Their characteristics are set out below.

As we manage our portfolio to achieve our strategy and to become a 3.0 business, we categorise our business into four quadrants.

We allocate capital to the top two quadrants and withdraw capital from the bottom two.

This quadrant-based assessment leads to three pillars of strategic activity:

Our strategy is designed to develop the businesses we own and deliver strategic, timely and well-executed acquisitions and disposals. We aim to allocate and recycle capital efficiently to good organic and inorganic opportunities via our 'best-of-both-worlds' operating model. Our ambition is to generate consistent and meaningful returns for our shareholders at relatively low risk.

The outlook for the commodities and banking markets has improved whereas the asset management sector is now facing headwinds with the uncertainty for our customers caused by MiFID II. However, we have seen good progress from the strategic actions we are taking and our asset management businesses are tackling sensibly the effects of MiFID II and are well positioned for the upturn. Currency is not expected to be such a significant factor in the year ahead. Therefore, subject to the normal caveats, we expect the strategy for the business to remain on track and for 2018 to be the year when the business returns to underlying growth.

Operating and Financial Review

Following the Group's decision to review the strategic options for the Global Markets Intelligence Division (CEIC and EMIS), these businesses have met the recognition criteria of discontinued operations and therefore have been presented as such in this statement. As the division has been managed as part of the Group for the full year, its results have been included in the Group's review of performance. Hence, total, adjusted and underlying measures combine the results from the Group's continuing and discontinued operations. A detailed reconciliation of the Group's statutory, adjusted and underlying results is set out in the appendix to this statement.

Definitions

Total revenue - includes the revenues of continuing and discontinued operations.

Adjusted measures - include the results of continuing and discontinued operations and exclude the impact of amortisation of acquired intangible assets, exceptional items, share of associates' and joint ventures' acquired intangibles amortisation, exceptional items and tax, and net movements in deferred consideration and acquisition commitments.

Underlying measures - include the adjusted results of continuing and discontinued operations stated at constant exchange rates, including pro forma prior year comparatives for acquisitions and excluding disposals and significant event timing differences.

Trading and business review

Total revenue for the year increased by 6% to £428.4m, largely due to favourable exchange rates. The Group's businesses focussed on price discovery, data and market intelligence performed strongly, benefitting from the strategic actions taken this year. Despite modest growth in the asset management segment during the first half of the year, the increasing cyclical headwinds caused by the MiFID II regulations led to its large subscription revenues being a significant drag in the second half. The commodity events and banking & finance segments, which together accounted for 23% of revenues, declined largely reflecting the elimination of low-margin events and training courses in the first and fourth quarters and the decision not to repeat events in certain markets due to increased geopolitical instability in the fourth quarter.

* Figures are 2017 total revenues and percentages are underlying growth rates.

^ Calculates the growth rate for underlying revenues of £423.7m for 2017 (i.e. total revenue of £428.4m less sold/closed businesses revenue of £4.7m) against 2016.

Underlying revenue fell by 1% although this masks markedly varied performances between the quarters. After a 5% decline in the first quarter, underlying revenue grew in the second and third quarters primarily reflecting a strong recovery in the events businesses, particularly in banking and finance and commodities. The events performance remained robust in the fourth quarter, but was affected by the decision to cut certain events in markets affected by increased geopolitical instability (see table below). Statutory revenue increased by 6% to £386.9m in line with the increase in total revenue.

ῼ Includes other revenues but excludes revenues from sold/closed businesses. Foreign exchange hedging losses restated in prior year at current year level.

Underlying subscriptions and content revenues increased by 1%. Pricing, data & market intelligence subscription revenues increased by an underlying 5%, mainly due to an excellent performance from Metal Bulletin including the successfully integrated FastMarkets, together with strong growth from the RISI acquisition in the second half of the year. The increasing cost and fee pressures facing the asset management sector from the impact of MiFID II resulted in subscription revenues from this segment declining 2% on an underlying basis.

The rate of decline in underlying advertising revenues decreased during the year, reflecting some success in the strategic investment in thought-leadership products. However, its performance remains weak and declined by 8% year-on-year; but it now only represents 10% of total revenue.

Underlying event revenues decreased 3% (sponsorship fell by 1% and delegates by 5%), with the banking & finance and commodity events segments the most significant reductions. However, much of this revenue decline was a direct result of the 'self-help' strategic actions taken in 2016 to consolidate some of the Group's event activities and cut out a significant number of low margin events and unprofitable training courses. This has improved profitability for both segments and improving market conditions led to renewed growth in the second and third quarters, and further demonstrated the health of the large 'must-attend' annual events and the strategic focus to continue to build large, repeat, high-margin events.

Adjusted results

The adjusted operating margin fell from 25.2% to 25.0% largely due to the required investment in standalone company costs following the DMGT sell down and the need to operate as an independent group. This drag was partly offset by the favourable currency mix. Adjusted operating profit increased by 6% to £107.1m.

Adjusted profit before tax increased by 4% to £106.5m, with increased financing costs following the share buyback partly offset by an improvement in adjusted profits from the Group's equity interest in associates and joint ventures, principally Dealogic. Adjusted diluted earnings per share increased by 15% to 76.4p (2016: 66.5p), largely reflecting the benefit from the reduced number of shares in issue following the share buyback.

Statutory results

The statutory profit before tax of £40.7m is lower than the adjusted profit before tax due to exceptional items of £33.7m, acquired intangible amortisation of £20.8m and a £9.2m contribution from discontinued operations. The exceptional items consist primarily of a goodwill impairment charge taken in the first half for one of the Group's asset management businesses, following its disappointing financial performance in the face of tough market conditions and recent management changes. A detailed reconciliation of the Group's adjusted and statutory results is set out in the appendix to this statement.

Tax

The adjusted effective tax rate based on adjusted profit before tax and excluding deferred tax movements on intangible assets, prior year items and exceptional items is 19% (2016: 18%). The tax rate in each year depends mainly on the geographic mix of profits and applicable tax rates. The Group's statutory effective tax rate decreased to 8% compared to 33% in 2016. The Group continues to benefit from reductions in the UK corporate tax rate and the tax effect of acquisitions made prior to July 2015. The rate was further reduced by prior year items and a disposal of shares in a subsidiary. The Group continues to have a number of uncertain tax positions, highlighted in previous periods, for which the maximum exposures are explained in note 5 to this statement.

Net debt, cash flow and dividend

Net debt at 30 September 2017 was £154.6m compared with net debt of £83.6m at 31 March and net cash of £83.8m at last year end. The move to a net debt position reflects the share buyback completed in early January at a cost of £193.5m, funded by £75.3m of the Group's cash and new bank term-loans of £118.2m. It also reflects the acquisitions of RISI and Layer123 in April that increased net debt by a further £102.7m and dividend payments of £30.8m. This was partly offset by strong underlying operating cash flows of £126.0m.

Following the share buyback, the Group arranged new five-year external borrowing facilities comprising term-loans of US$100m and £40m (total £114.6m) and a £130m multi-currency revolving credit facility. There is a further accordion facility of £130m should the Group wish to request it. The term-loans and drawings under the revolving credit facility bear interest charged at LIBOR plus a margin, the applicable margin being based on the Group's ratio of adjusted net debt to EBITDA. At 30 September 2017, the Group's ratio of adjusted net debt to EBITDA was 1.24 times and the committed undrawn facility available to the Group was £74.8m.

The Group's underlying operating cash conversion for the 12 months to September was 118% (2016: 105%), reflecting better working capital management and the recovery in events performance.

Dividend

As announced at interim, following the DMGT sell down, the Board committed to reviewing the Company's dividend policy. As a result, the Board approved a new, progressive dividend pay-out ratio from approximately 33% to approximately 40% of adjusted after-tax earnings (a reduction in the dividend cover from 3.0 to 2.5 times earnings), subject to the capital needs of the business. The 15% reduction in the number of shares in issue following the share buyback, combined with the increase in the dividend pay-out ratio, has enabled the Board to approve a 33% increase in the final dividend to 21.8p per share (2016: 16.4p), to be paid to shareholders on 15 February 2018.

Currency

The Group generates approximately three quarters of both its revenues, including approximately a third of its UK revenues, and operating profits in US dollars. The exposure to US dollar revenues in its UK businesses is hedged using forward contracts to sell US dollars, which delays the impact of movements in exchange rates for at least a year. However, the Group does not hedge the foreign exchange risk on the translation of overseas profits.

The average sterling-US dollar rate for the year to 30 September was $1.27 (2016: $1.41). This improved headline revenue growth rates for the year by approximately seven percentage points and adjusted profit before tax by £9.4m. Each one cent movement in the US dollar rate has an impact on profits on translation of approximately £0.8m on an annualised basis. The Group also translates its non-sterling denominated balance sheet items resulting in a loss of £0.4m (2016: £1.9m gain).

Further trading updates

Further coverage of these full-year results will be provided to analysts at a presentation starting at 9:30am on 22 November at the offices of UBS. The Group intends to provide a brief 2018 first-quarter trading update on 25 January 2018.

END

For further information, please contact:

Euromoney Institutional Investor PLC

Colin Jones, Finance Director: +44 20 7779 8666; cjones@euromoneyplc.com

FTI Consulting

Charles Palmer / Emma Hall: +44 20 3727 1400; euromoney@fticonsulting.com 

CAUTIONARY STATEMENT

This Preliminary Statement ('Statement') is prepared for and addressed only to the Company's shareholders as a whole and to no other person. The Company, its Directors, employees, agents and advisers accept and assume no liability to any person in respect of this Statement save as would arise under English law. Statements contained in this Statement are based on the knowledge and information available to the Group's Directors at the date it was prepared and therefore facts stated and views expressed may change after that date.

This document and any materials distributed in connection with it may include forward-looking statements, beliefs, opinions or statements concerning risks and uncertainties, including statements with respect to the Group's business, financial condition and results of operations. Those statements and statements which contain the words "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning, reflect the Group's Directors' beliefs and expectations and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future and which may cause results and developments to differ materially from those expressed or implied by those statements and forecasts. No representation is made that any of those statements or forecasts will come to pass or that any forecast results will be achieved. You are cautioned not to place any reliance on such statements or forecasts. Those forward-looking and other statements speak only as at the date of this Statement. The Group undertakes no obligation to release any update of, or revisions to, any forward-looking statements, opinions (which are subject to change without notice) or any other information or statement contained in this Statement. Furthermore, past performance of the Group cannot be relied on as a guide to future performance.

No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Euromoney Institutional Investor PLC share for the current or future financial years would necessarily match or exceed the historical published earnings per Euromoney Institutional Investor PLC share.

Nothing in this document is intended to constitute an invitation or inducement to engage in investment activity. This document does not constitute or form part of any offer for sale or subscription of, or any solicitation of any offer to purchase or subscribe for, any securities nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract, commitment or investment decision in relation thereto. This document does not constitute a recommendation regarding any securities.

NOTE TO EDITORS

Euromoney Institutional Investor PLC (www.euromoneyplc.com) is listed on the London Stock Exchange and is a member of the FTSE 250 share index. It is an international business-information group covering asset management, price discovery, data & market intelligence, and banking & finance under brands including Euromoney, Institutional Investor, BCA Research, Ned Davis Research and Metal Bulletin. The Group also runs an extensive portfolio of events for the telecoms, financial and commodities markets.

Appendix to Preliminary Statement

Reconciliation of Consolidated Income Statement to adjusted results for the year ended 30 September 2017

The Directors believe that the adjusted measures provide additional useful information for shareholders to evaluate and compare the performance of the business from period to period. These measures are used by management for budgeting, planning and monthly reporting purposes and are the basis on which executive management is incentivised. The non-IFRS measures also enable the Group to track more easily and consistently the underlying operational performance by separating out the following types of exceptional income, charges and non-cash items.

Adjusted earnings include the results of continuing and discontinued operations. The discontinued operations for the Global Markets Intelligence division have been included in the adjusted results as it was owned and managed as part of the Group for the entire period and to aid year-on-year comparability of the Group's results.

Adjusted figures are presented before the impact of amortisation of acquired intangible assets (comprising trademarks and brands, databases and customer relationships), exceptional items, share of associates' and joint ventures' acquired intangibles amortisation, exceptional items and tax, and net movements in deferred consideration and acquisition commitments.

The amortisation of acquired intangible assets is adjusted as the premium paid relative to the net assets on the balance sheet of the acquired business and is classified as either goodwill or as an intangible asset arising on a business combination and is recognised on the Group's balance sheet. This differs to organically developed businesses where assets such as employee talent and customer relationships are not recognised on the balance sheet. Impairment and amortisation of intangible assets and goodwill arising on acquisitions are excluded from adjusted results as they are balance sheet items that relate to historical M&A activity rather than the trading performance of the business.

Exceptional items are items of income or expense considered by the Directors, either individually or if of a similar type in aggregate, as being significant and which require additional disclosure in order to provide an indication of the adjusted trading performance of the Group.

Adjusted share of results in associates and joint ventures excludes the share of exceptional items that relates to restructuring and earn-out costs in Dealogic. IFRS requires that earn-out payments to selling shareholders retained in the acquired business for a contractual time period are treated as a compensation cost. Given that these payments are in substance part of the cost of an investment and will not recur once the earn-out payments have been made, they have been excluded from the share of adjusted profit.

In respect of earnings, adjusted amounts reflect a tax rate that includes the current tax effect of the goodwill and intangible assets. Many of the Group's acquisitions, particularly in the US, give rise to significant tax savings as the amortisation of goodwill and intangible assets on acquisition is deductible for tax purposes. The Group considers that the resulting adjusted effective tax rate is therefore more representative of its tax payable position.

Further analysis of the adjusting items is presented in notes 3, 4, 5, 7, 9 and 10 to the Group's financial statements.

The Group has consistently applied this definition of adjusted measures as it has reported on its financial performance in the past and it is the Group's intention to continue to consistently apply this definition in the future.

The reconciliation below sets out the adjusted results of the Group and the related adjustments to the statutory Income Statement that the Directors consider necessary to provide useful and comparable information about the Group's trading performance.

Underlying measures

When assessing the performance of our businesses, the Board considers the adjusted results. The year-on-year change in adjusted results may not, however, be a fair like-for-like comparison as there are a number of factors which can influence growth rates but which do not reflect underlying performance.

When calculating underlying growth, adjustments are made to give a like-for-like comparison. For example, the adjusted results in 2017 benefitted from the strengthening of the US dollar relative to sterling. To calculate underlying growth, the prior year comparatives are restated using 2017 exchange rates. Similarly, adjustments are made to exclude disposals from both years. When businesses are acquired, the prior year comparatives are adjusted to include the acquisition. The timing of events can also be a distortion. To give a fair like-for-like comparison when calculating underlying growth, significant timing event differences are excluded from the year in which they were held.

The Group's adjusted and underlying measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with IFRS. The adjusted and underlying measures used by the Group are not necessarily comparable with those used by other companies.

The following table sets out the reconciliation from statutory to underlying for revenues and profit before tax:

Cash conversion

Cash conversion measures the percentage by which cash generated from operations covers adjusted operating profit.

The underlying basis is after adjusting for significant timing differences affecting the movement on working capital and exceptional items. For the year ended 30 September 2017, exceptional items largely consist of cash payments for the 2016 restructuring costs, legal and professional fees and share buyback costs. The other working capital movements are largely the result of the landlord's contribution to the fit-out of the New York office which will be amortised over the period of the lease and the rent-free period of the London and New York offices. For the year ended 30 September 2016, exceptional payments related to the strategic review in 2016 and the development of the Group's new strategy. The other working capital movements in prior year related to the rent-free period of the London offices.

As cash generated from operations in the Consolidated Statement of Cash Flows includes those of discontinued operations we have not provided the statutory cash conversion rate as it would not give a fair indication of the Group's cash conversion performance.

Consolidated Income Statement

for the year ended 30 September 2017 

A detailed reconciliation of the Group's statutory results to the adjusted and underlying results is set out in the appendix to the Preliminary Statement on page 9.

Following the Group's decision to review the strategic options for the Global Markets Intelligence Division (CEIC and EMIS), these businesses have met the recognition criteria of discontinued operations under IFRS 5 'Non-current assets held for sale and discontinued operations' and are therefore presented as such throughout this report. In order to comply with this presentation, the 2016 Income Statement disclosures have been re-presented separating continuing and discontinued operations (note 8). 

Consolidated Statement of Comprehensive Income

for the year ended 30 September 2017

Movements in cash flow hedges have been reclassified between categories in 2016 in order to ensure consistent presentation with the current year. This reclassification has been explained in note 1.

Consolidated Statement of Financial Position

as at 30 September 2017

Approved by the Board on 22 November 2017. 

Consolidated Statement of Changes in Equity

for the year ended 30 September 2017

The investment in own shares is held by the Euromoney Employees' Share Ownership Trust and Euromoney Employee Share Trust. The trusts waived the rights to receive dividends. Interest and administrative costs are charged to the profit and loss account of the trusts as incurred.

The other reserve represents the share premium arising on the shares issued for the purchase of Metal Bulletin plc in October 2006.

Consolidated Statement of Cash Flows

for the year ended 30 September 2017

Cash and cash equivalents include bank overdrafts. This statement includes discontinued operations (refer note 8).

Note to the Consolidated Statement of Cash Flows

The Group's principal source of borrowings is provided through committed bank facilities available until December 2021. These syndicated facilities include two five-year term-loans of US$100m and £40m (total £114.6m) and a £130m multi-currency revolving credit facility which was drawn down by £55.2m at 30 September 2017. There is a further accordion facility of £130m should the Group wish to request it. The term-loans and drawings under the revolving credit facility bear interest charged at LIBOR plus a margin, the applicable margin being based on the Group's ratio of adjusted net debt to EBITDA. These facilities contain covenants based on a maximum 3.0 times adjusted net debt to EBITDA and a minimum interest cover ratio of 3.0 times. The amounts and foreign exchange rates used in the covenant calculations are subject to adjustments as defined under the terms of the arrangement. On this basis, at 30 September 2017, the Group's adjusted net debt to EBITDA was 1.24 times. Management regularly monitors the covenants and prepares detailed cash flow forecasts to ensure that sufficient headroom is available and that the covenants are not close or potentially close to breach.

In 2016, the Group had access to a committed multi-currency credit facility from DMGT. This facility was terminated in December 2016 as part of the share buyback transaction.

The Group's strategy is to use excess operating cash to pay down its drawings under the revolving credit facility. The Group generally has an annual cash conversion rate (the percentage by which cash generated from operations covers adjusted operating profit before acquired intangible amortisation and exceptional items) of 100% or more due to much of its subscription, sponsorship and delegate revenue being paid in advance. The Group's operating cash conversion rate based on adjusted operating profit was 110%.

Notes to the Preliminary Statement

1 Basis of preparation

While the financial information contained in this Preliminary Statement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as adopted by the European Union and interpretations issued by the IFRS Interpretations Committee (IFRS IC), this statement does not itself contain sufficient information to comply with IFRS.

The information for the year ended 30 September 2017 does not constitute statutory accounts for the purposes of section 435 of the Companies Act 2006. A copy of the accounts for the year ended 30 September 2016 has been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified and did not contain statements under section 498(2) or 498(3) of the Companies Act 2006. These accounts will be finalised on the basis of the financial information presented by the Directors in this Preliminary Statement and will be delivered to the Registrar of Companies following the company's annual general meeting (AGM).

Following the Group's decision to explore the strategic options for the Global Markets Intelligence Division (CEIC and EMIS), these businesses have met the recognition criteria of discontinued operations under IFRS 5 'Non-current assets held for sale and discontinued operations' and are therefore presented as such throughout this report. In order to comply with this presentation, the 2016 Income Statement disclosures have been re-presented separating continuing and discontinued operations.

Following a review of the Consolidated Statement of Comprehensive Income, the Group has revised 2016 comparatives to ensure consistent and appropriate classification. This reclassification has no impact on the total comprehensive income for 2016 but increases the change in fair value of cash flow hedges by £4.1m from a loss of £5.2m to a loss of £9.3m with a corresponding adjustment to the transfer of gains/losses on cash flow hedges from fair value reserves to the Income Statement from a transfer of gains of £2.1m to a transfer of losses of £2.0m.

Accounting policies

The consolidated financial statements have been prepared under the historical cost convention, except for the revaluation of certain financial instruments.

The same accounting policies, presentation and methods of computation are followed in these financial statements as were applied in the Group's 2016 annual audited financial statements, except as described below.

· IFRS 9 'Financial Instruments' - the mandatory effective date of implementation is 1 January 2018

· IFRS 15 'Revenue from Contracts with Customers' - the mandatory effective date of implementation is 1 January 2018

· IFRS 16 'Leases - subject to EU endorsement, the mandatory effective date of implementation is 1 January 2019

· Amendments to IAS 12 'Income Taxes' - the mandatory effective date of implementation is 1 January 2017

· Amendments to IAS 7 'Statement of Cash Flows' - the mandatory effective date of implementation is 1 January 2017

Other than IFRS 16, the adoption of these standards, amendments and interpretations is not expected to have a material impact on the Group's financial statements. The Directors are in the process of evaluating the impact of these standards. The Group will adopt IFRS 9 and IFRS 15 with effect from 1 October 2018 and IFRS 16 with effect from 1 October 2019.

Going concern 

Having assessed the principal risks and the other matters discussed in connection with the viability statement, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing this Preliminary Statement.

2 Segmental analysis

Segmental information is presented in respect of the Group's segments and reflects the Group's management and internal reporting structure. The Group is organised into four segments: Asset management; Pricing, data & market intelligence; Banking & finance; and Commodity events.

Asset management and pricing, data & market intelligence consist primarily of subscription revenue. Banking & finance consists mainly of both sponsorship income and delegates revenue. Commodity events consists primarily of delegates revenue. A breakdown of the Group's revenue by type is set out below.

During the year, the Group sold HedgeFund Intelligence, II Intelligence, Euromoney Indices and LatinFinance (note 11). As a result segment information for these businesses has been reclassified as sold businesses and the comparative split of segmental revenues, revenue by type, operating profits, acquired intangible amortisation, exceptional items and depreciation and amortisation has been restated.

In addition, advertising revenues for 2016 have been restated by £1.3m to include consulting income which was previously reported as part of delegates revenue.

The Global Markets Intelligence Division (CEIC and EMIS) has been classified as discontinued operations (note 8) and therefore presented as such throughout this report. The 2016 Income Statement disclosures have been re-presented separating continuing and discontinued operations. These businesses are reported within the Pricing, data & market intelligence segment.

Analysis of the Group's three main geographical areas is also set out to provide additional information on the trading performance of the businesses.

Inter-segment sales are charged at prevailing market rates and shown in the eliminations columns.