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Financial Announcements


REG-Euromoney Ins.InvPLC Final Results - Part 1

13/11/2008

    
http://pdf.reuters.com/Regnews/regnews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20081113:RnsM0620I
                                                                                                                       .
RNS Number : 0620I  
  
Euromoney Institutional InvestorPLC  
  
13 November 2008  
  
November 13, 2008 (embargoed for release until 7am 13/11/2008)  
  
EUROMONEY INSTITUTIONAL INVESTOR PLC  
  
PRELIMINARY ANNOUNCEMENT  
  
RESULTS FOR YEAR TO SEPTEMBER 30 2008  
  
Record 2008 Results  
  
 
  Highlights                             2008                    2007                    change     
                                                                                                    
  Revenue                                £332.1      m           £305.2      m           +9%        
  Underlying results*                                                                               
  * Adjusted operating profit            £81.3       m           £78.6       m           +3%        
  * Adjusted profit before tax                                                                      
  * Adjusted diluted earnings a share                                                               
                                         £67.3       m           £55.5       m           +21%       
                                         44.4        p           35.0        p           +27%       
  Statutory results                                                                                 
  * Operating profit                     £61.0       m           £54.1       m           +13%       
  * Profit before tax^                                                                              
  * Diluted earnings a share                                                                        
                                         £37.4       m           £41.1       m           -9%        
                                         40.4        p           29.9        p           +35%       
  Dividend                               19.25       p           19.00       p           +1%        
  * A detailed reconciliation of the group's underlying results is set out in the appendix to this  
  statement.                                                                                        
  ^ Statutory profit before tax includes a foreign exchange loss on tax equalisation contracts of   
  £12.0 million (2007: £1.8 million). This is matched by an equal and opposite tax credit and       
  therefore has no effect on earnings a share. The foreign exchange losses and the tax credit are   
  excluded from underlying profit and the underlying tax expense (appendix and notes 4 and 5).      
  
  
Results reflect the resilience and diversity of the group's activities:  
  
 
 * Revenues up 9% to £332.1 million 
 * Adjusted profit before tax up 21% to £67.3 million, ahead of previous 
guidance 
 * Subscription revenues up 18% to £123.1 million, now 37% of group revenues 
(2007: 34%)  
 * Strong performance from emerging markets and non-financial activities 
 * Adjusted operating margin 25% 
 * Cash generated from operations up 11% to £99.8 million 
 * Adjusted operating cash conversion 123% 
 * Net debt reduced to £172.0 million (March 31: £201.8 million) driven by 
strong cash generation 
 * Debt facility renewed to December 2013 
 * Final dividend unchanged at 13p, with scrip alternative  
  
Commenting on the results, chairman Padraic Fallon, said:  
  
"It was a year of achievement in worsening markets, when we broke all previous 
records. We kept a tight grip on costs throughout, convinced that the troubles 
in the western banking systems would hit us before long. Some revenue streams, 
particularly advertising and sponsorship from the money centre institutions, 
have begun to turn down as we anticipated, but the robust nature of our 
subscription revenues, the geographical spread of the company and the continued 
growth of Metal Bulletin and our legal and telecoms activities are very 
encouraging. Cash flows run at record levels. The proposed final dividend is the 
same, with a share alternative. New debt facilities are in place for the next 
five years. Costs are under continual review. We don't expect to be active in 
the acquisition market in the short term, but investment in new products 
continues as before. We're as ready for a tough period as we can be."   
  
Highlights  
  
Euromoney Institutional Investor PLC, the international publishing, events and 
electronic information group, increased adjusted profit before tax by 21% to 
£67.3 million in the year to September 30, 2008. Adjusted diluted earnings a 
share increased by 27% to 44.4p. The directors recommend an unchanged final 
dividend of 13p a share to be paid to shareholders on February 4, 2009.   
  
These results demonstrate the success of the group's strategy to build a high 
quality, more robust subscription-driven information business. Revenues and 
profits both reached record levels. Throughout 2008 the business has 
demonstrated its resilience in the face of problems in global credit markets, a 
gloomier economic outlook, and more recently the major impact of the credit 
crisis on the world's leading financial institutions.  
  
The diversity of the group's revenues streams, geographic markets, product 
offerings and customers has helped sustain the group's trading through this 
difficult period. Total revenue increased by 9% to £332.1 million. Subscription 
revenues increased by 18% to £123.1 million and the proportion of group revenues 
derived from subscription products increased from 34% to 37%. Growth from 
emerging markets continued to compensate for weakness in the developed financial 
markets, and emerging markets now account for nearly 50% of the group's 
revenues. The group's strengths in sectors outside finance, particularly metals, 
commodities and energy, is demonstrated by the 16% increase in revenues from 
business publishing activities, which helped offset the weakness in some 
financial sectors, particularly structured finance and hedge funds.  
  
The increase in adjusted profit before tax was helped by a £4.5 million 
reduction in underlying net finance costs, reflecting the strong operating cash 
flows of the group, which increased by 11% to £99.8 million. Net debt fell to 
£172.0 million compared with £201.8 million at March 31 and new five-year debt 
facilities have been agreed.   
  
Strategy  
  
The company's strategy over the past five years has been to build a more 
resilient and better focused business. This strategy has been executed through 
increasing the proportion of revenues derived from subscription products; 
investing in products of the highest quality that customers will value in tough 
times as well as good; eliminating products with a low margin or too high a 
dependence on advertising; maintaining tight cost control at all times; 
retaining and fostering an entrepreneurial culture; and making selective 
acquisitions to accelerate that strategy.   
  
The success of this strategy is highlighted by the 2008 results. Since 2003, 
revenues have more than doubled. In the same period, subscription revenues have 
increased threefold and are now nearly double the level of advertising revenues. 
The group has also made a successful transition from a predominantly 
publishing-driven business to one with significant activities in events and 
training, and more recently in the provision of electronic information and 
database services, which in 2008 accounted for adjusted operating profits of 
£21.1 million compared to just £2.7 million in 2003.  
  
The company's strategy is equally applicable to tough trading conditions and 
will continue to drive the group's activities in 2009. Our strong cash 
generation means we can sustain our investment in high quality subscription 
products, new events and the quality of editorial. We will continue with this 
strategy, even if revenues come under pressure in the short-term as customers 
react to pressure on their own earnings, because we believe it will deliver 
excellent growth in the medium and longer-term. The focus on costs and 
maintaining margins will increase and while we are comfortable with our level of 
debt and associated covenants, we are unlikely to make any significant 
acquisitions over the coming 12 months.   
  
Trading Background  
  
The impact of the global credit crisis on the group's results was less severe 
than expected when problems first surfaced in 2007. Growth in advertising and 
sponsorship revenues slowed but delegate revenues for conferences and training 
courses remained strong and demand for subscription products, particularly 
databases and electronic information services, such as BCA's economic research 
and ISI's emerging market information, proved resilient.  
  
The group's investment in new products has been targeted at the electronic 
delivery of niche financial information services with real-time news, unique 
data and sophisticated search engine technology. More than £2.4 million was 
invested in these new products in the year with a view to driving future revenue 
growth. In addition, the continued investment in subscription marketing, new 
events and editorial was a key factor in the growth in subscription and delegate 
revenues.  
  
The more recent extreme events experienced by financial markets, and in 
particular the demise of so many leading financial institutions, had no 
significant effect on the results for the final quarter of 2008, but will 
obviously have a negative impact on financial activity in 2009. The priorities 
of many of the leading global financial institutions remain the raising of 
finance to secure their future and determining their strategies for growth once 
markets improve. In the short-term, this is likely to lead to further cuts in 
headcount and marketing spend, particularly once institutions start to focus on 
their budgets for 2009. However, the group's dependence on global financial 
institutions, particularly for advertising revenues, is less than it was and no 
customer accounts for more than 1% of group revenues.    
  
Although the group is exposed to the uncertainty of the economic outlook in 
general, and to the problems in financial markets in particular, the increasing 
diversity of its revenue streams, product offerings and geographic markets 
provide better protection against market trends. The demand for quality, 
hard-to-get information products, particularly those delivered electronically, 
should remain robust during difficult times. And while all revenue streams are 
subject to the impact of volatility in financial markets, the increased 
proportion of revenues now derived from high margin subscription products and 
the reduced exposure to traditionally more volatile advertising revenues should 
provide some protection against the widely expected economic downturn in 2009.   
  
Business Review  
  
Financial Publishing: Revenues, which comprise a mix of advertising and 
subscriptions, were unchanged at £84 million while the adjusted operating margin 
improved slightly to give adjusted operating profits of £24.5 million. The 
performance of the second half mirrored that of the first. Revenues fell for 
those titles more reliant on revenues from global financial institutions, or on 
sectors particularly exposed to the credit crisis such as structured finance and 
hedge funds. In contrast, those titles with a strong emerging markets exposure 
held up well: Euromoney, for example, had its best September issue ever and 
increased its advertising revenues for the year by 7%.  
  
Meanwhile, investment in new electronic products targeted at niche financial 
sectors continued, and many of the group's financial titles have now moved 
successfully from a print-first to a web-first publishing model.  
  
Business Publishing: The sectors covered by this division - metals and 
commodities, energy, legal and telecoms - all continued to perform well, helped 
by strong commodity markets and high levels of investment in infrastructure, 
particularly in emerging markets. Revenues increased by 16% to £53.1 million 
with growth from both advertising and subscription products, and adjusted 
operating profits improved by 29% to £19.4 million. Metal Bulletin's revenues 
continued to benefit from the increased investment in marketing and technology 
since its acquisition, while TelCap, which publishes Capacity magazine for the 
wholesale telecoms market, achieved strong growth through the launch of new 
products.  
  
Conferences and Seminars: Revenues, which are generated from a mix of sponsored 
and paid delegate events, continued to hold up well in the second half. Total 
revenues increased by 8% to £87.9 million while adjusted operating profits for 
the year were unchanged at £23.1 million. The decline in margin largely reflects 
the impact of the credit crisis on events in the structured finance sector, 
particularly securitisation, and cuts by global financial institutions in their 
spend on capital markets conferences. In contrast, events in areas outside 
finance performed well, particularly those covering the coal and alternative 
energy markets under the Coaltrans brand, and the metals and commodities markets 
under Metal Bulletin.  
  
Training: The revenue growth of the first half continued, while the steps taken 
earlier in the year to improve the margin were successful. As a result, total 
training revenues increased by 10% to £40.8 million and adjusted operating 
profits by 2% to £10.4 million. Training revenues are heavily dependent on the 
headcount and training and travel budgets of financial institutions, and to date 
have held up well despite the cost pressures triggered by the problems in the 
credit markets. This has been achieved through a mix of investment in new course 
content, effective marketing and an ability to roll out successful courses 
quickly to emerging markets.  
  
Databases and Information Services: This division largely comprises businesses 
which deliver high quality data and information services in electronic-only 
format, and available on a subscription-only basis. Revenues increased by 28% to 
£66.1 million and adjusted operating profits from £18.7 million to £21.1 
million. BCA, the independent research business acquired as part of Metal 
Bulletin, continued to achieve strong revenue growth on the back of its 
expansion into new geographic markets and increases in sales resource. ISI, the 
emerging markets information business, maintained its strong sales performance 
of the first half and its local currency subscription revenues increased by 21%. 
The decline in adjusted operating margin was the result of ISI's continued 
investment in new products, most notably the expansion of the CEIC emerging 
market economic data business into new regions.   
  
Financial Review   
  
Cash generated from operations increased by 11% to £99.8 million, and the strong 
growth in subscription revenues helped generate an adjusted operating profit to 
cash conversion rate of 123% (2007: 115%). These strong cash flows helped reduce 
year end net debt to £172.0 million, compared to £201.8 million at the half year 
and £204.6 million a year ago. Net debt to EBITDA at September 30 was a 
comfortable 2.2 times against 2.8 times at March 31.  
  
In May the group spent £0.6 million on the acquisition of a 51% interest in the 
assets of Benchmark Financials Limited, one of the leading providers of company 
financial data and analysis for Colombian companies, which is being integrated 
with ISI's Emerging Markets Information Service. Further investments totalling 
£6.0 million were made in a number of the group's subsidiaries, all in the first 
half, while in the second half disposals of investments and property assets 
acquired as part of the Metal Bulletin acquisition generated proceeds of £4.7 
million.  
  
The group generates more than 60% of its revenues in US dollars. The average US 
dollar exchange rate for the year was 1.97 against 1.96 in 2007. The group uses 
forward exchange contracts to hedge its US dollar exposures. As a result, the 
profit benefit from the recent strengthening of the US dollar against sterling 
will largely be delayed until 2010 and beyond. In contrast, year end net debt 
was calculated at a US dollar rate of 1.78, and the recent strengthening of the 
US dollar to rates below 1.60 will have increased the level of net debt by 
approximately £15 million.   
  
Net finance costs of £23.6 million shown in the statutory results include a 
charge of £8.6 million (2007: £0.2 million) relating to tax equalisation 
contracts under a foreign currency financing derivative. This charge is made up 
of gains on tax equalisation contracts of £3.4 million (2007: £1.6 million) and 
a foreign exchange loss of £12.0 million (2007: £1.8 million) which is offset by 
a matching tax credit. Underlying net finance costs were £8.9 million compared 
to £13.4 million in 2007, and the average cost of funding the group's net debt 
was 5.9% compared to 6.1% for 2007.   
  
Statutory profit before tax fell by 9% to £37.4 million as a result of the 
inclusion of the £12.0 million foreign exchange loss on tax equalisation 
contracts in net finance costs. This foreign exchange loss is matched with a 
corresponding tax credit so that there is no financial impact on earnings a 
share.  
  
The tax credit of £7.3 million shown in the statutory results is stated after 
recognising the credit of £12.0 million relating to tax on foreign exchange 
losses hedged by the tax equalisation contracts referred to above. At the half 
year, the group changed its presentation of the underlying tax rate by removing 
all deferred tax effects of goodwill and intangibles. This, combined with a 
reduction in tax rates in the UK and Canada, and a change in the profit mix, 
means that the underlying rate of tax rate for 2008 has fallen from 31% to 27%.  
  
A detailed reconciliation of the group's underlying and statutory results is set 
out in the appendix to this statement.  
  
Debt Facilities  
  
The group's debt is provided through a dedicated £300 million three-year 
multi-currency facility with a subsidiary of its majority shareholder, Daily 
Mail and General Trust plc (DMGT). This facility is due to expire in August 
2009. DMGT refinanced its bank facilities, of which the Euromoney dedicated 
facility was part, in August 2008.    
  
The board is pleased to announce it has approved a renewal of its facility with 
DMGT, which is expected to be signed shortly, securing the group's funding until 
December 2013. The terms of the new facility are broadly similar to those of the 
existing facility, except that the margin over LIBOR is expected to increase by 
approximately 120 basis points, reflecting the increased cost of credit in these 
difficult markets. This will increase the group's net finance costs for 2009 by 
approximately £2 million. The size of the facility has been reduced to £250 
million to reflect the strong cash flows and reduced funding requirements of the 
group.   
  
Dividend  
  
The board has recommended an unchanged final dividend of 13p, making a total for 
the year of 19.25p (2007: 19p). The board has also recommended the introduction 
of a scrip dividend alternative for shareholders. The payment of a scrip 
dividend will be subject to shareholder approval at the Annual General Meeting 
on January 28, 2009, and the detailed terms of the scrip dividend will be set 
out in a circular to shareholders to be sent out in December 2008. The group's 
majority shareholder, Daily Mail and General Trust plc, has indicated its 
intention to accept the scrip dividend alternative when the final dividend is 
paid in February 2009. This will help DMGT to maintain its equity interest in 
Euromoney in the face of a further dilution to come from the issue of new shares 
under the company's Capital Appreciation Plans.  
  
Capital Appreciation Plan  
  
Following the achievement in 2007 of the profit target under the group's Capital 
Appreciation Plan (CAP), the first tranche of 2.5 million CAP options vested in 
February 2008, representing 2.4% of the company's share capital. The 2008 CAP 
profit target was also achieved, and will give rise to the vesting of up to 2.5 
million CAP options in February 2009. The third and final tranche of up to 2.5 
million CAP options will vest in February 2010 subject to further performance 
tests, the most important of which requires the group's adjusted profit before 
tax before CAP option expense to exceed £57 million in 2009. The share option 
expense was £5.4 million (2007: £10.2 million), the reduction in expense 
reflecting the accelerated CAP charge incurred in 2007 as a result of the CAP 
profit target being achieved a year earlier than expected.   
  
The board, with the support of the Remuneration Committee, has approved the 
introduction of a second Capital Appreciation Plan (CAP 2). The structure, terms 
and cost of CAP 2 will be broadly similar to those of the first CAP, except that 
CAP 2 will comprise an equal mix of cash and new equity, thereby reducing the 
dilution effect for existing shareholders compared to the first CAP which was 
funded entirely by new equity. CAP 2 will commence in the year following the 
satisfaction of the performance tests for the final tranche of the first CAP. 
The performance tests for CAP 2 will be set once the profits for the final year 
of the first CAP are known, and will require above average profit growth over 
the CAP 2 vesting period.  
  
The introduction of CAP 2 will be subject to shareholder approval at the Annual 
General Meeting on January 28, 2009, and the detailed terms and conditions of 
CAP 2 will be set out in a circular to shareholders to be sent out in December 
2008.  
  
Management  
  
Two of the company's non-executive directors, Charles Sinclair and Peter 
Williams of DMGT, stood down from their roles with effect from September 30, 
2008. Both have played a considerable part in the growth of the company over the 
past 20 years. Martin Morgan, who replaced Charles Sinclair as chief executive 
of DMGT, joined the board with effect from October 1. In future, Peter Williams 
will serve as an alternate non-executive director to The Viscount Rothermere. 
This reduces the number of DMGT representatives on the Euromoney board from 
three to two and it is the company's intention to appoint a new independent 
non-executive director at the Annual General Meeting.    
  
After nine years of valuable service as an executive director, Tom Lamont, 
editor of Institutional Investor's newsletter division, will step down from the 
board in January 2009, on reaching the normal retirement age for an executive 
director. He will continue to serve as a member of the company's Executive 
Committee.  
  
Outlook  
  
The record results for 2008 highlight the success of the group's strategy for 
building a high quality portfolio of leading information brands across a broad, 
global customer base.    
  
The current levels of uncertainty and volatility in global financial markets, 
and the negative economic outlook, will present greater challenges to this 
strategy in 2009. However, the strategy is robust and will not change. Our 
strong cash flows will allow us to continue to invest in new subscription-based 
information products, in specialist events, and in marketing and editorial. We 
will place even more emphasis on managing costs tightly and maintaining our 
margins. We are unlikely to make any significant acquisitions in the next 12 
months and our excess cash flows will be applied to reducing debt levels and 
maximising returns for shareholders.  
  
The trading performance in the second half was similar to that of the first but, 
unsurprisingly, the outlook is more uncertain than six months ago. Current 
trading is in line with the board's expectations, but in such volatile markets 
it is difficult to predict how well sales will hold up beyond the first quarter. 
Deferred revenues at September 30 were £89.5 million, an increase of 22% since a 
year ago. October's revenues were ahead of last year and forward revenues for 
the first quarter are ahead of the same time last year. However, sales for the 
past six weeks have shown some signs of weakening in the face of the extreme 
credit market conditions and continued uncertainty over the economic outlook. 
Visibility beyond the first quarter is very limited, as usual at this time of 
year, and the recent sales weakness means revenues will come under increasing 
pressure from the second quarter.   
  
The board of Euromoney remains committed to its strategy of investing to deliver 
long-term revenue growth from high quality products and high margin revenue 
streams, while using its strong cash flows to further reduce its debt levels. 
The outlook for trading is inevitably uncertain in these markets, but the group 
is better positioned than ever to meet the challenges of this difficult 
environment.   
  
Padraic Fallon  
  
Chairman  
  
November 12, 2008  
  
END  
  
For further information, please contact:  
  
Euromoney Institutional Investor PLC  
  
Padraic Fallon, Chairman: +44 20 7779 8556; pfallon@euromoneyplc.com  
  
Colin Jones, Finance Director: +44 20 7779 8845; cjones@euromoneyplc.com  
  
Richard Ensor, Managing Director: + 44 20 7779 8845; rensor@euromoneyplc.com  
  
Financial Dynamics  
  
Charles Palmer: +44 20 7269 7180; Charles.Palmer@FD.com 
  
  
NOTE TO EDITORS  
  
About Euromoney Institutional Investor PLC (www.euromoneyplc.com)  
  
Euromoney Institutional Investor PLC is listed on the London Stock Exchange and 
a member of the FTSE-250 share index. It is a leading international 
business-to-business media group focused primarily on the international finance, 
metals and commodities sectors. It publishes more than 70 magazines, newsletters 
and journals, including Euromoney, Institutional Investor, and Metal Bulletin. 
It also runs an extensive portfolio of conferences, seminars and training 
courses and is a leading provider of electronic information and data covering 
international finance, metals and emerging markets. Its main offices are in 
London, New York, Montreal and Hong Kong and nearly half its revenues are 
derived from emerging markets.  
  
Appendix to Preliminary announcement  
  
Reconciliation of Group Income Statement to underlying results for the year 
ended September 30 2008  
  
The reconciliation below sets out the underlying results of the group and the 
related adjustments to the statutory income statement that the directors 
consider necessary in order to provide a more meaningful indication of the 
underlying trading performance.  
  
 
                                                                                                2008                                  2007      
                                                                     Underlying   Adjustments   Total      Underlying   Adjustments   Total     
                                                                                                                                                
                                                              Note   £000's       £000's        £000's     £000's       £000's        £000's    
                                                                                                                                                
  Continuing operations                                       2      332,064                    332,064    305,594      -             305,594   
                                                                                                           (441)        -             (441)     
                                                                                                                                                
  Less: share of revenue of joint ventures                                                                                                      
  Total revenue                                                      332,064                    332,064    305,153      -             305,153   
                                                                                                                                                
  Operating profit before acquired intangible amortisation,   2      81,308                     81,308     78,606       -             78,606    
  share option expense and exceptional items                                                                                                    
                                                                                  (12,749)      (12,749)   -            (15,716)      (15,716)  
                                                                                                                                                
  Acquired intangible amortisation                                                                                                              
                                                                     (5,361)                    (5,361)    (6,993)      -             (6,993)   
                                                                                                                                                
  Share option expense                                                                                                                          
  Accelerated share option expense                                                              -          (3,183)      -             (3,183)   
                                                              3                   (2,477)       (2,477)    -            855           855       
                                                                                                                                                
  Exceptional items                                                                                                                             
  Operating profit before associates and joint ventures              75,947       (15,226)      60,721     68,430       (14,861)      53,569    
                                                                                                                                                
  Share of results in associates and joint ventures                  308                        308        490          -             490       
                                                                     76,255       (15,226)      61,029     68,920       (14,861)      54,059    
                                                                                                                                                
  Operating profit                                                                                                                              
                                                                                                                                                
                                                              4,a    5,594                      5,594      1,611        3,885         5,496     
                                                                                                                                                
  Finance income                                                                                                                                
  Finance expense                                             4,b    (14,506)     (14,691)      (29,197)   (14,998)     (3,429)       (18,427)  
                                                                     (8,912)      (14,691)      (23,603)   (13,387)     456           (12,931)  
                                                                                                                                                
  Net finance costs                                                                                                                             
                                                                                                                                                
                                                                     67,343       (29,917)      37,426     55,533       (14,405)      41,128    
                                                                                                                                                
  Profit before tax                                                                                                                             
                                                                                                                                                
  Tax credit/(expense) on profit on ordinary activities       5      (18,346)     25,625        7,279      (17,190)     8,967         (8,223)   
  Profit after tax from continuing operations                        48,997       (4,292)       44,705     38,343       (5,438)       32,905    
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
  Discontinued operations                                                                                                                       
  Profit for the year from discontinued operations            c      -            245           245        -            500           500       
                                                                     48,997       (4,047)       44,950     38,343       (4,938)       33,405    
                                                                                                                                                
  Profit for the year                                                                                                                           
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
  Attributable to:                                                                                                                              
                                                                     47,766       (4,047)       43,719     36,760       (4,938)       31,822    
                                                                                                                                                
  Equity holders of the parent                                                                                                                  
                                                                     1,231                      1,231      1,583        -             1,583     
                                                                                                                                                
  Equity minority interests                                                                                                                     
                                                                     48,997       (4,047)       44,950     38,343       (4,938)       33,405    
                                                                                                                                                
  Diluted earnings per share - continuing operations          7      44.36p       (3.99p)       40.37p     35.04p       (5.18p)       29.86p    
  
  
a) Finance income  
  
The adjustment of £nil (2007: £3,885,000) relates to the non-cash net movements 
in acquisition option commitment values as set out in note 4.  
  
                        b) Finance expense  
  
The adjustment of £14,691,000 (2007: £3,429,000) relates to the non-cash net 
movements in acquisition option commitment values of £1,730,000 (2007: £nil), 
imputed interest charge on acquisition option commitment values of £995,000 
(2007: £1,603,000) and tax equalisation swap expense of £11,966,000 (2007: 
£1,826,000) as set out in note 4. The tax equalisation swap expense relates to 
foreign exchange losses on hedges on intra-group financing. These foreign 
exchange losses are matched by an equal and opposite tax credit.  
  
c) Profit from discontinued operations  
  
In December 2007 following agreement of the Energy Information Centre Limited 
completion accounts, the group received a final payment of £220,000 from the 
purchasers. Energy Information Centre Limited was sold in April 2007 and was 
treated as a discontinued operation up to that date. This results in a tax 
charge of £nil.  
  
In May 2008 following agreement of the Systematics International Limited 
completion accounts, the group received a final payment of £25,000 from the 
purchasers. Systematics International Limited was sold in May 2007 and was 
treated as a discontinued operation up to that date. This results in a tax 
charge of £nil.  
  
                       Group Income Statement for the year ended September 30 
2008  
  
 
                                                                                           
                                                                      2008       2007      
                                                              Notes   £000's     £000's    
                                                                                           
  Revenue                                                                                  
  Continuing operations                                       2       332,064    305,594   
  Less: share of revenue of joint ventures                            -          (441)     
  Total revenue                                               2       332,064    305,153   
                                                                                           
  Operating profit before acquired intangible amortisation,   2       81,308     78,606    
  share option expense and exceptional items                                               
  Acquired intangible amortisation                                    (12,749)   (15,716)  
  Share option expense                                                (5,361)    (6,993)   
  Accelerated share option expense                                    -          (3,183)   
  Exceptional items                                           3       (2,477)    855       
  Operating profit before associates and joint ventures       2       60,721     53,569    
                                                                                           
  Share of results in associates and joint ventures                   308        490       
  Operating profit                                                    61,029     54,059    
                                                                                           
  Finance income                                              4       5,594      5,496     
  Finance expense                                             4       (29,197)   (18,427)  
  Net finance costs                                           4       (23,603)   (12,931)  
                                                                                           
  Profit before tax                                           2       37,426     41,128    
  Tax credit/(expense) on profit                                      1,921      (11,401)  
  Deferred tax asset recognition                                      5,358      3,178     
  Tax credit/(expense) on profit on ordinary activities       5       7,279      (8,223)   
                                                                                           
  Profit after tax from continuing operations                 2       44,705     32,905    
                                                                                           
  Profit for the year from discontinued operations                    245        500       
  Profit for the year                                                 44,950     33,405    
                                                                                           
  Attributable to:                                                                         
  Equity holders of the parent                                        43,719     31,822    
  Equity minority interests                                           1,231      1,583     
                                                                      44,950     33,405    
                                                                                           
  Basic earnings per share - continuing operations            7       41.69p     30.66p    
  Basic earnings per share - continuing and discontinued      7       41.92p     31.16p    
  operations                                                                               
  Diluted earnings per share - continuing operations          7       40.37p     29.86p    
  Diluted earnings per share - continuing and discontinued    7       40.60p     30.34p    
  operations                                                                               
  Adjusted diluted earnings per share                         7       44.36p     35.04p    
  Dividend per share (including proposed dividends)           6       19.25p     19.00p    
  
  
A detailed reconciliation of the group's underlying results is set out on page 
7.  
  
                       Group Balance Sheet as at September 30 2008  
  
 
                                                                                       
                                                                2008        2007       
                                                        Notes   £000's      £000's     
  Non-current assets                                                                   
  Intangible assets                                                                    
                             Goodwill                           272,096     248,137    
                             Other intangible assets            135,482     131,885    
  Property, plant and equipment                                 21,661      20,917     
  Investments                                                   303         252        
  Deferred tax assets                                           16,459      11,508     
  Net pension surplus                                           2,527       364        
  Derivative financial instruments                              368         5,088      
                                                                448,896     418,151    
  Current assets                                                                       
  Trade and other receivables                                   69,141      67,458     
  Amounts on loans owed by DMGT group undertakings              155,772     -          
  Current income tax assets                                     1,928       -          
  Cash and cash equivalents                                     21,211      26,711     
  Derivative financial instruments                              1,451       4,387      
                                                                249,503     98,556     
  Current liabilities                                                                  
  Acquisition option commitments                                (22,276)    (14,899)   
  Trade and other payables                                      (30,619)    (28,991)   
  Amounts on loans owed to DMGT group undertakings              (155,772)   -          
  Current income tax liabilities                                (2,558)     (9,681)    
  Accruals                                                      (50,016)    (43,424)   
  Deferred income                                               (89,488)    (73,382)   
  Derivative financial instruments                              (15,165)    (605)      
  Provisions                                                    (1,198)     (2,684)    
  Committed loan facility                                       (184,594)   -          
  Loan notes                                                    (7,579)     (11,796)   
  Bank overdrafts                                               (1,032)     (5,935)    
                                                                (560,297)   (191,397)  
                                                                                       
  Net current liabilities                                       (310,794)   (92,841)   
                                                                                       
  Total assets less current liabilities                         138,102     325,310    
                                                                                       
  Non-current liabilities                                                              
  Acquisition option commitments                                (7,572)     (18,436)   
  Other non-current liabilities                                 (1,301)     (1,189)    
  Committed loan facility                                       -           (213,559)  
  Deferred tax liabilities                                      (27,887)    (31,650)   
  Derivative financial instruments                              (9,773)     (1,373)    
  Provisions                                                    (3,505)     (3,323)    
                                                                (50,038)    (269,530)  
                                                                            -          
  Net assets                                                    88,064      55,780     
                                                                                       
  Shareholders' equity                                                                 
  Called up share capital                               9       263         258        
  Share premium account                                 10      38,575      38,509     
  Other reserve                                         10      64,981      64,981     
  Capital redemption reserve                            10      8           8          
  Own shares                                            10      (74)        (74)       
  Liability for share based payments                    10      20,676      15,737     
  Fair value reserve                                    10      (19,579)    8,176      
  Translation reserve                                   10      17,113      (15,335)   
  Retained earnings                                     10      (36,916)    (69,975)   
  Equity shareholders' surplus                                  85,047      52,285     
  Equity minority interests                                     3,017       3,495       
  
  
More to follow, for following part double-click [nRn2M0620I]