Faced with regulatory fines and rising compliance costs, financiers aren't spending as much on magazine subscriptions, advertising, training and events. Combine that with the effects on aggregate demand from depressed energy and commodity markets, and it's easy to see why underlying half-year sales contracted 6 per cent at Euromoney Institutional Investor (ERM). The fall-away fed through into a 7 per cent decline in adjusted operating profits to £46.8m from the comparable period in 2015.
The financial information and events group hopes to revive growth by launching new products, adjusting its prices, pruning its portfolio and targeting buoyant markets. For instance, BCA - its investment research business - has started offering fresh analysis on US equities and the technology sector. The group also disposed of energy publishing businesses Gulf Publishing and Petroleum Economist.
Underlying subscription revenues crept up 1 per cent as Institutional Investor membership sales rose by more than a tenth. But advertising, sponsorship and delegate turnover all fell, as weak resources markets weighed on demand in Nigeria, Saudi Arabia and other energy-dependent economies. Moreover, currency devaluation and a weaker growth outlook in South Africa meant the group stomached £12.9m in impairment costs for Mining Indaba, on top of a previous £10.7m charge.
Broker Numis trimmed its forecasts and now expects pre-tax profits of £103m for the September 2016 year-end, giving EPS of 64.7p (down from £108m and 70.1p in FY2015).
| EUROMONEY INSTITUTIONAL INVESTOR (ERM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 989p | MARKET VALUE: | £1.3bn | |
| TOUCH: | 984-989p | 12-MONTH HIGH: | 1,241p | LOW: 851p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 30 | |
| NET ASSET VALUE: | 347p* | NET CASH: | £55.9m† | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 198 | 93.3 | 63.5 | 7.0 |
| 2016 | 194 | 23.4 | 13.5 | 7.0 |
| % change | -2 | -75 | -79 | - |
Ex-div: 26 May Payment: 23 Jun *Includes intangible assets of £523m, or 408p a share †Includes £43.7m in cash deposited with parent company | ||||
