Publication of Annual Report and Notice of AGM
Source: RNS
EUROMONEY INSTITUTIONAL INVESTOR PLC
PUBLICATION OF ANNUAL REPORT AND ACCOUNTS 2020 AND
NOTICE OF ANNUAL GENERAL MEETING 2021
16 December 2020
Euromoney Institutional Investor PLC ("Euromoney") the global B2B information services provider of price discovery, essential market intelligence and events, has today published the following documents on its website www.euromoneyplc.com:
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Document |
Location |
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Annual Report and Accounts 2020 |
www.euromoneyplc.com/investors/reports-and-presentations/year/2020 |
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Notice of Annual General Meeting 2021 |
The Annual Report and Accounts 2020, together with the Notice of Annual General Meeting 2021 and Form of Proxy have been posted or otherwise made available to shareholders. These documents have been uploaded to the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The Company's Annual General Meeting in 2021 is scheduled to be held at 9.30am on Thursday 11 February 2021. Considering the UK Government's restrictions and guidance on public gatherings, the Annual General Meeting will be held as a closed meeting as permitted by legislation and attended only by those necessary to constitute a quorum. This means that shareholders will not be permitted to attend the Annual General Meeting in person.
The information set out in the Appendix below, which is extracted from the Annual Report and Accounts 2020, is provided solely for the purpose of complying with Disclosure and Transparency Rule 6.3.5R. The information should be read in conjunction with the Preliminary Statement announcement made on 19 November 2020.
Ends
For further information, please contact:
Euromoney Institutional Investor PLC
Tim Bratton, General Counsel & Company Secretary: +44 (0)20 7779 8288; tim.bratton@euromoneyplc.com
About Euromoney Institutional Investor PLC
Euromoney is a global information business providing essential B2B information in price discovery, market intelligence and events across our segments. Euromoney is listed on the London Stock Exchange and is a member of the FTSE 250 share index. (www.euromoneyplc.com)
LEI number: 213800PZU2RGHMHE2S67
APPENDIX: ADDITIONAL INFORMATION REQUIRED BY DTR 6.3.5
Statement of Directors' responsibilities in respect of the financial statements
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group and Company for that period. In preparing the financial statements, the Directors are required to:
· Select suitable accounting policies and then apply them consistently;
· State whether applicable IFRSs as adopted by the European Union have been followed for the Group financial statements and United Kingdom Accounting Standards, comprising FRS 102, have been followed for the Company financial statements, subject to any material departures disclosed and explained in the financial statements;
· Make judgements and accounting estimates that are reasonable and prudent; and
· Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business.
The Directors are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.
The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Directors' confirmations
Each of the Directors, whose names and functions are listed on pages 58 and 59 in the Annual Report and Accounts confirm that, to the best of their knowledge:
· The Company's Financial Statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', and applicable law), give a true and fair view of the assets, liabilities, financial position and profit of the Company;
· The Group Financial Statements, which have been prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position, profit and cash flows of the Group; and
· The Strategic Report and the Directors' Report includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that it faces.
Principal Risks and uncertainties
The Group's Principal Risks are outlined below
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Description |
Mitigation |
Risk appetite |
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Risk 1: Covid-19 continues to have a significant impact on the Group's business activities, particularly events |
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· Covid-19 has had a significant impact on the Group since March 2020. In particular, it has meant that the Group has not been able to run in-person events, which in the previous full financial year accounted for nearly a third of the Group's revenue. If no vaccine becomes widely available, therapies continue to be only partially successful in treating the disease, and governments and companies therefore continue to restrict travel and large gatherings, the impact on the Group's performance will continue. Although there has been only limited impact on our business performance outside of events, the covid-19-triggered recession in major markets could have a further negative impact repercussion on our business · In addition, lockdowns and homeworking could create risk for our staff's mental health, their productivity and their connection to, and commitment to, the Company |
· Following closure of most of our offices around the world, the Group is running effectively with nearly everyone working from home. The Company is making sure that staff are well supported with proactive wellbeing and support services available · The Group has started to reopen our larger offices for those who are unable to work effectively at home. There are strict processes and procedures in place to make sure all open offices are covid-19 secure · The Board regularly discusses the Company's approach to covid-19 and it is a major focus for the whole senior management team · The Group has reviewed all event-related costs and reduced them where possible in light of the fall in event-related revenue · We now run a range of digital events and training. The Group has put in place technology to run a variety of digital event formats and so can stage these events rapidly and flexibly. Although in most cases these can replace only a proportion of the revenue from in-person events, the revenue they are able to attract is increasing and, because there are no physical venues needed, the gross margin on the events is higher · We have reduced headcount and costs substantially in our events businesses · We continue to work closely with venues both to reduce any committed costs from cancelled or postponed events, and to be able to run events quickly as markets reopen · We are preparing best-practice safety procedures for live events when they run to ensure they are covid-secure · We stay closely in touch with our customers to make sure we understand their evolving needs and we sell alternative products to event sponsors, for example advertising and thought leadership, and content to delegates to meet their information needs · The Group has established cross-company working groups to determine and share best practice on commercial, management and well-being matters · We keep our investors informed about the status of our events and the possible financial impact
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Risk tolerant Prior years (relative position)
This is a new risk
Post-mitigation risk trend
Increasing
Description of risk change
The pandemic has created a large amount of uncertainty in terms of ability to host events, working patterns and economic volatility |
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Description |
Mitigation |
Risk appetite |
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Risk 2: Recession or poor business economic conditions in major markets hinder organic revenue growth |
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· At present, covid-19 is causing disruption to our event-related businesses, which is covered in a separate risk. Unrelated to covid-19 or triggered by it, there is an inherent risk of recession or poor market conditions in countries and regions where we operate · Ongoing economic pressures could cause a more structural shift away from travel and large functions, resulting in more structural pressure on events recovery · More than half our revenue comes from North America, and therefore a downturn in the US in particular could reduce our customers' profitability and therefore their willingness and ability to buy our services · If customers go out of business or reduce their headcount, this can reduce the number of customers we serve or the size of accounts · We have a particular exposure to financial services companies and any cyclical downturn that affects them will have an impact on us · Lower demand for commodities stemming from a slow-down in China in particular could have a knock-on effect on Fastmarkets · Failure of the UK and the EU to reach agreement about their future relationship could cause a downturn in those markets |
· The Group's 3.0 strategy is to provide services that are embedded in our customers' workflow, which makes them more likely to be non-discretionary purchases, and the resulting revenues are therefore more resilient · We have increased people and technology investment in sales and marketing in a number of businesses which helps improve our performance even in tough times · A high proportion of our revenue comes from subscriptions, which are typically more resilient than other revenues in a downturn · Investment in new technology to allow virtual or hybrid events will enable the business to adapt to structural changes in the events industry · The Group operates in many geographical markets, which provides some diversification; likewise, the Group serves customers in different industries. · The Group serves large numbers of customers in nearly every business and is not dependent on a small group of clients for a large proportion of its revenue · We can cut some costs in the face of lower revenues in order to mitigate some of the impact on profit from lower revenues · The Group is pooling more resources at Group level, for instance around event operations, in order to make them operate as efficiently as possible |
Risk tolerant Prior years (relative position)
2019: Risk tolerant
2018: Risk tolerant
2017: Risk tolerant
Post-mitigation risk trend
Increasing
Description of risk change
In addition to the long-term impact of the pandemic, cyclical and geopolitical economic uncertainty continues |
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Description |
Mitigation |
Risk appetite |
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Risk 3: Compliance and Controls - complex global regulations and a litigious environment cause reputational, legal or financial damage |
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· The Group operates in multiple jurisdictions and must be compliant with all applicable laws and regulations · The Group's businesses publish, market and license increasingly complex content and data which in some cases its customers may choose to rely on when executing transactions · Risk or reputational damage can arise from inappropriate reliance on third-party data, errors in underlying data or content, failures of data integrity and failure to educate customers on appropriate usage of data · A number of our businesses operate in an environment where privacy regulations are increasingly stringent · The Group relies on third parties, usually in non-core markets, to represent the Group and the Group may be legally responsible for their failure to comply with law or regulation · Geopolitical risks have increased the scope and severity of sanctions, particularly from the US, UK, and EU, which the Group must comply with to ensure it is not unintentionally in technical breach of sanctions regulations · Claimants can forum shop when determining where to litigate or threaten legal proceedings · Compliance risk is increasing for information providers as price, benchmark and index reporting activities are coming under the scrutiny and remit of different regulators · A failure to comply with regulatory frameworks would result in reputational damage, and potential regulatory censure |
· The Group has a central Legal, Risk & Secretariat function and employs specialists across a range of areas to help our businesses manage these risks · Our divisions employ compliance and/or risk specialists where required · There is an updated sanctions compliance programme, that uses inhouse expertise, accredited software, and external specialist advice to minimise the risk of a sanctions breach · An updated Event Risk framework in place to facilitate management of covid-19 and operational risks in respect of events · All key Company policies are updated at least annually and made available on the Intranet, as well as having compulsory online training for key risk areas such as anti-bribery and data privacy compliance · Processes and methodologies for assessing commodity prices and calculating benchmarks and indices are clearly defined and documented · Compliance with International Organization of Securities Commissions (IOSCO) standards achieved for relevant pricing products · Code of Conduct and other key policies in place for price assessment, benchmark and index reporting activities · Specialist training in media law issues provided to relevant staff · Company-wide Speak-up policy in place and awareness initiative undertaken · Comprehensive legal disclaimers in place in contracts/within products · The Group holds a comprehensive set of insurance policies that help mitigate the financial impact of these risks, should they materialise |
Risk averse Prior years (relative position)
2019: Risk averse
2018: Risk averse
2017: Risk averse
Post-mitigation risk trend
Unchanged
Description of risk change
Large global organisations face multiple regulatory and compliance risks due to their global footprint. There are additional requirements for information and price reporting business, which customers may rely on their own business decisions. The Group continues to focus on managing these compliance and regulatory risks through enhanced internal policies and an ongoing programme of training |
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Description |
Mitigation |
Risk appetite |
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Risk 4: Inability to execute M&A strategy or integrate acquisitions successfully into the Group on a timely basis prevents the delivery of the strategy |
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· The Group continues to make strategic acquisitions and disposals as part of its strategy. Active portfolio management remains important for accelerating the Group's strategy of becoming a fully 3.0 company · The risks are that the Group fails to acquire at all, acquires a business that does not have expected 3.0 characteristics, or we fail to integrate the acquired business sufficiently to get expected benefits · Even during covid-19, the best 3.0 businesses attract valuations which are high multiples of profit. Competitive auction processes for high-quality assets can favour private equity companies and large corporations. Private equity firms can use more debt to fund an acquisition than is prudent for us. They are therefore sometimes able to justify a higher price. Furthermore, an acquisition which is large for Euromoney may be relatively small for a larger corporation who can therefore complete a transaction more quickly and offer a higher likelihood of completion to a seller given that we may require shareholder approval · Acquiring smaller companies rather than fewer large ones makes integration more complex, which increases risk · In either case, failure to integrate the acquisition may mean an acquired business does not generate expected returns, which can lead to an impairment of value · The risks around disposing of businesses arise from failing to identify the time at which businesses should be sold, failing to achieve the best available price, or the disruption to the business being sold or to the wider Group during the sales process · Covid-19 constraints could make funding acquisitions more difficult |
· M&A strategy and execution is a regular topic of Board discussions · We buy and sell businesses within a clear and agreed framework for identifying and evaluating acquisition and disposal candidates and for integrating businesses we buy · The CEO and CFO are closely involved in all M&A · The Board regularly delegates authority to an Investment Committee to make sure there is detailed Board oversight of acquisitions and disposals and to enable quick decision-making, particularly where the schedule of Board meetings does not match a particular transaction timetable · We typically use external and independent firms to help with commercial due diligence to analyse the quality of a business and the market in which it operates · We retain professional advisors who know Euromoney well in order to execute transactions quickly and effectively · Acquisitions are subject to specific financial and other targets and these are monitored and reported to the Board regularly · The divisional structure facilitates effective integration and creation of synergies · The Company regularly discusses the role of M&A in the strategy with investors · Although we will be prudent in our funding of acquisitions, our strong balance sheet means we still have some acquisition firepower, despite covid-19 uncertainty |
Risk neutral Prior years (relative position)
2019: Risk neutral
2018: Risk neutral
2017: Risk neutral
Post-mitigation risk trend
Unchanged
Description of risk change
Successful portfolio management remains a strategic pillar of the Group, and despite the challenges posed by the pandemic, the Group's strong balance sheet and robust risk and controls framework means that the risk is unchanged |
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Description |
Mitigation |
Risk appetite |
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Risk 5: Geopolitical upheaval has a major impact on the business environment |
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· Politics in and between major markets can have large and sometimes sudden impacts on our business. The nature of geopolitics is that even though we know there is a risk, we often do not know how the situation will play out · Covid-19 is disrupting the operation of many businesses. We have split this into its own risk · The outcome of the negotiations between the UK and the EU about the terms of their future relationship could lead to business disruption · The US-China trade war could reduce trade volumes or economic growth or increase restrictions on doing business internationally, which would affect our customers and us · Sanctions policies in the US and elsewhere increase the risk of carrying out business in certain countries or with certain companies and individuals · Unrest in Hong Kong creates uncertainty for the Group's operations in Hong Kong · Mistreatment of journalists in certain countries may put some of our staff at risk, or make our journalists unwilling to travel · The results of the US election in November may lead to volatility in markets we serve. Likewise, an escalation of tension in the US around race and other issues may have an impact on business confidence |
Although the Group, its staff, customers, suppliers and other stakeholders are unable to plan with precision for the uncertainty resulting from the above and other factors, there are a number of mitigations: · The Group's global footprint means we are not completely reliant on any single country or region for our revenue · We continue to monitor and consider potential impacts of the UK exit from the EU and put in place appropriate mitigations · Group management continues to delegate relevant decision-making to senior managers in Hong Kong in order to respond flexibly and rapidly to any disruption in Hong Kong · A trade sanctions framework is in place and used by all Group businesses, who also have access to internal and external experts · Hedging is in place to offset some of the impact of US dollar exchange rate movements against sterling · The Group uses country-risk tracking services to monitor current and emerging risks in different markets |
Risk neutral Prior years (relative position)
2019: Risk neutral (new risk)
Post-mitigation risk trend
Increasing
Description of risk change
Multiple geopolitical factors continue to create instability at a macro level, therefore the risk is increasing |
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Description |
Mitigation |
Risk appetite |
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Risk 6: Cyber security and information security threats compromise data integrity or result in a loss of key data |
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· As an information services business, the integrity of the data embedded in our products is critical in terms of trust and reputation · The Group is a data business and creates high volumes of proprietary, commercial data, while also processing B2B customer personal data and employee personal data · Increasing number of cyber-attacks are affecting organisations globally · The Group has many websites and is reliant on distributed technology, increasing exposure to threats · A successful cyber-attack could cause considerable disruption to business operations, lost revenue, regulatory fines and reputational damage · Privacy regulations (eg GDPR in Europe, Californian Consumer Privacy Act in the US) are increasingly stringent and regulators vigilant in relation to data breaches, increasing the risk of a breach and associated fine, civil proceedings or reputational damage · Technological innovations in remote and mobile working, cloud-based technologies and social media introduce new information security risks · Threats such as ransomware and crypto mining require the Group to adapt to a continually shifting landscape · Phishing remains one of the most serious threats to network security, and is increasing · Increased home and remote working creates additional security challenges |
· Chief Information Security Officer continues to manage these threats · Increased the size of the information security team two-fold over last 18 months · Information security strategy is demonstrating effectiveness and is on schedule · Investment continues in 'BISO programme' (Business Information Security Officers) for non-security specialists who will attain accreditation and know-how, leading to increased awareness and expertise in businesses · Security governance provided by Risk Committee and Information Security Steering Group · Approved information security standards and policies which are reviewed on a regular basis · Continuing education and training programmes for all staff, on a regular basis · Active information security programme (including access management and cyber-resilience planning) to align all parts of the Group with its information security standards · Crisis management and business continuity frameworks cover all businesses including disaster recovery planning for IT systems · Multi-layered defence strategy · Robust IT security due diligence framework for acquisitions · Access to key systems and data is restricted, monitored and logged with auditable data trails in place and project underway for bolstered identity access management · Comprehensive backups for IT infrastructure, systems and business data · Increased assurance controls to ensure businesses are meeting required standards · Investment in improved cloud security controls that have been rolled out · The Group holds a high level of insurance cover for cyber risks including cyberattack and data breach incidents · Information security is reviewed as part of our internal audit process · Incident response playbook and supporting policies and processes |
Risk averse Prior years (relative position)
2019: Risk averse
2018: Risk averse
2017: Risk averse
Post-mitigation risk trend
Increasing
Description of risk change
Cyber security and information risks continue to increase across nearly all sectors as the frequency and sophistication of cyberattacks increases
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Description |
Mitigation |
Risk appetite |
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Risk 7: Inadequate investment in technology creates competitor risk and slows execution of the 3.0 strategy |
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· Under-investment in products and technology will slow the Group's transition to becoming a B2B 3.0 information services business and potentially exacerbate competitor risk · The relative size of the Company means that significant investment can have a material impact on the Group's financial performance · The Group may be a less attractive employer to technologists and product specialists than other brands · As we develop more successful cloudbased products (eg Fastmarkets platform) which increase our market share, it is important to factor service availability in these products, unreliability or service disruption could damage our standing in the market |
· Continue to adopt enterprise cloud Software-as-a-Service (SaaS) solutions, reducing high development spend, in particular in areas that are commonly recognised as commodity. This in turn frees up cash to invest in more valuable and bespoke customer products · Division of responsibilities between Central Technology (back-end infrastructure) and divisions (client-facing UI etc) provides clarity for technology and product teams on their remit · Product capability and, in particular, workflow technology are an important focus when considering acquisitions · Leveraging expertise of our staff based in Chennai, which includes product specialists · Hiring product specialists at both senior management and product owner level · Success of divisional investment such as the Fastmarkets platform demonstrates ROI to other divisions and businesses · Management will allocate capital for product/technology investment where there is a clear business case for doing so · Increased scale of larger divisions reduces the impact of specific investments |
Risk averse Prior years (relative position)
2019: Risk averse (new risk)
Post-mitigation risk trend
Unchanged
Description of risk change
Transforming the Group to a 3.0 business remains a key strategic priority. The actions taken over the past year and ongoing transformation plans means that this risk is unchanged
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Description |
Mitigation |
Risk appetite |
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Risk 8: Inadequate talent management process of hiring and/or retaining critical roles lead to inability to execute strategy |
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· The covid-19 crisis has created significant uncertainty for employees, in particular in managing virtual working with home responsibilities. Supporting employees with this is important to reduce retention risk and to attract new employees · The importance of providing an inclusive culture to attract and retain diverse talent remains critical · The economic challenges of covid-19 led to the deferral of our 2020 pay review and although the jobs market is depressed it is important to continue to match compensation to the market to avoid retention issues in 2021 · As the Group continues to move towards becoming a B2B 3.0 information services business, the skills required within the Group will change · An inability to recruit, retain and train for critical roles will adversely impact our ability to deliver the strategy successfully · Competitors may poach key talent which would provide them with a competitive advantage and means that the Group loses institutional knowledge from its businesses · Failure to address specific feedback from staff, including via staff survey and other forums, may lead to a lack of engagement · The Group needs to provide an employment environment which appeals to emerging talent as a place they want to work · Potential loss of key personnel or institutional knowledge as a result of the restructuring · General business, societal and work environment along with changes in Group organisation and staff levels impact wellbeing and morale of staff, which adversely affects productivity and performance |
· To support virtual working we have developed much more flexible working arrangements for our employees. In addition to our formal flexible working policy we have encouraged managers to show day-to-day flexibility to allow employers to balance managing their home responsibilities, managing their wellness and managing their work · Training has been provided on a range of tactics to support virtual working including how to manage virtual teams and how to manage stress · Covid-19 has led to unprecedented collaboration across the business through formal structures and ad hoc opportunities · Careful analysis of role retention was conducted as part of the Group's restructuring · Launched a global Inclusion & Diversity Council, together with running a global inclusion week. These actions have engaged employees more globally than in previous years, particularly in Asia · We continue to benchmark and review remuneration packages · Core training solutions are available, and we are investing in a common online training platform for 2021 to provide more consistently available development opportunities for all our employees · Programme to review future working practices given the fundamental shift we have seen with covid-19 · Maintaining the Group's reputation for an entrepreneurial approach, making it an attractive place to work · The large number of staff and roles in each segment mitigates the impact of departures of critical staff · Contractual notice periods are designed to manage the risk of critical staff leaving on short notice · Implementing actions resulting from culture surveys and other sources of employee sentiment |
Risk averse Prior years (relative position)
2019: Risk averse
2018: Risk averse
2017: Risk averse
Post-mitigation risk trend
Unchanged
Description of risk change
The Group remains committed to hiring and retaining key staff in order to implement its strategy. Over the past 12 months, the Group has invested in training, employee forums, diversity and inclusion initiatives, and town halls to improve skills and staff engagement |
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Description |
Mitigation |
Risk appetite |
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Risk 9: Uncertain tax liabilities lead to material cash outflows |
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· The Group is a multinational group with tax affairs in many complex geographical locations. Tax legislation is not always clear cut and often requires judgement and interpretation which may be challenged by tax authorities · Disputes with tax authorities could lead to unexpected tax costs and tax litigation which could take many years to resolve |
· Tax strategy is to take a low risk approach to the management of tax. This is signed off by the Board and communicated to all individuals who have a responsibility for tax · Increased engagement with tax authorities, including quarterly meetings with HMRC. Open and transparent communication with local tax authorities · Third-party advisors are engaged to resolve known issues or where there is sufficient tax technical uncertainty · New transfer pricing policy in place with supporting benchmarking study and documentation to reduce risk of challenge |
Risk averse Prior years (relative position)
2019: Risk averse
2018: Risk averse
2017: Risk averse
Post-mitigation risk trend
Unchanged
Description of risk change
The Group is experienced at managing the tax risks that are inherent in a multinational business. Nonetheless, the Group has a complex structure with an international footprint, subject to an ever-changing tax environment |
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Description |
Mitigation |
Risk appetite |
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Risk 10: Existing and emerging competitor activity creates product and pricing pressures, as well as potentially eroding margins |
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· Although the Company has no single competitor competing in all the markets in which the Group operates, every business within the Group has at least one strong competitor · As well as taking market share or putting pressure on pricing, competitors can also seek to recruit key staff. There is also the additional risk of new entrants into the market offering the same or similar services to our Group's businesses, but with aggressive pricing, impacting margins |
· Our 3.0 strategy seeks to embed our products and services in clients' workflow. This creates greater value for the client. The more tightly the products are embedded, the less likely the client is to move to a competitor · Divisional senior teams regularly discuss competitor activity and it is also covered in regular reviews between the CEO and CFO and the divisional leadership, particularly in respect to its impact on financial performance · We have improved the sophistication of how we price our products and services in our most important sectors, and the analysis that has underpinned that has included scrutiny of perceived value of our products relative to competitors · In most of our subscription businesses, account cancellations are analysed including identifying where a competitor has won the account and these trends are monitored · Company-wide sales training includes handling competitive pitches; authority to discount is tightly controlled; and businesses have gross margin targets · Marketing materials and sales collateral highlight the benefits of our solutions over other providers · Where appropriate and available, we maintain a list of competitive products and services, and periodically review to understand where we have threats and opportunities and update product and sales and marketing plans accordingly · We develop and release new products and features to keep our products functionally competitive · All staff are regularly made aware of our policies to prevent illegal anticompetitive behaviour · Talent retention approaches are covered in the separate people risk |
Risk tolerant Prior years (relative position)
2019: Risk tolerant
2018: Risk tolerant
2017: Risk tolerant
Post-mitigation risk trend
Unchanged
Description of risk change
The Group ensures it invests in high-quality products for its customers, as well as implementing the 3.0 strategy to embed our products into our client's workflows and create long-term business relationships |
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Description |
Mitigation |
Risk appetite |
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Risk 11: Support systems implementations and obsolescence do not meet business needs, resulting in inefficiencies and increased cost |
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· Under-investment in, or inadequate project management of new support or back-office systems could result in business process inefficiencies, increased cost, lower productivity and less cohesion in controls operations · Any systems obsolescence could result in a removal of updates or maintenance by the provider, creating additional operational or security risks |
· Implementation of Global Finance transformation programme continues; rolling out NetSuite (SaaS solution) across the Euromoney Group · Rolling out a new SaaS-based Event Management system (Cvent) across all events businesses · Operations Committee formed to identify opportunities to consolidate and make more efficient business processes · Looking at ways to improve HR employee data management across the Group (eg People HR project for FPS) · Divisional technology programmes enabling more modern capabilities (eg Content Authoring for publishing) |
Risk averse Prior years (relative position)
This is a new risk
Post-mitigation risk trend
Unchanged
Description of risk change
Ensuring that support systems are implemented in an efficient and timely basis is key to delivering a successful internal operating model and ensuring that internal controls operate effectively |
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Description |
Mitigation |
Risk appetite |
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Risk 12: Exposure to USD exchange rate leads to unexpected swing in reported results |
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· Approximately three-quarters of revenues and profits are generated in US dollars, including approximately 40% of the revenues in the UK-based businesses. This gives significant exposure to movements in the US dollar for both UK revenues and the translation of results of foreign subsidiaries |
· Sensitivity analysis is performed regularly to assess the impact of currency risk · US dollar forward contracts are used to hedge up to 80% of UK-based US dollar revenues for the coming 12 months and 50% of the following six months · Exposure from the translation of US dollar-denominated earnings is not directly hedged but is partially offset by US dollar costs and the use of US dollar-denominated debt when debt is required · Exposures are well communicated in the Annual Report and in investor presentations meaning our shareholders are aware of the USD exposures when investing in Euromoney · Natural hedging where possible |
Risk tolerant Prior years (relative position)
2019: Risk tolerant
2018: Risk tolerant
2017: Risk tolerant
Post-mitigation risk trend
Unchanged
Description of risk change
The Group is experienced in managing risks related to its exposure to the US dollar, but recognises that domestic political volatility in the short term could increase the risk |
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Description |
Mitigation |
Risk appetite |
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Risk 13: Changing customer needs, new technology or disruptive new entrants into the market cause structural changes in markets reducing the value delivered by our products and services |
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· As well as the risk of the Group's results being affected by the ups and downs of the business cycle, we also have the risk of structural changes to our markets. In these situations, revenue can decline and never rebound because of permanent changes to customer needs or demographics or the introduction of disruptive technology. In addition, new competitors sometimes give away, or sell at a low price, content or services similar to that which we sell · Some competitors have a capital structure and investors such that they never have to make a profit, or can sustain large losses for many years, allowing them to invest massively in technology or on marketing and promotion including giving away their product to build market share · Government policy or new regulations, particularly in financial services, but in other markets too, can permanently disrupt markets. For example, governments can mandate that information that we collect from a market and then sell is made public by market participants for free. Although this is often a source of opportunity, it can also undermine our business or business model · Typically, acquiring businesses who use disruptive techniques can be prohibitively expensive for us because they are attractive to many possible buyers and so sell for very high prices. Typically, they have low margins or are loss-making, so that they do not generate the financial returns we require from our acquisitions |
· Our 3.0 strategy is designed to evaluate structural risks and opportunities and respond to them · We hold regular CEO-led reviews across all divisions including discussion around structural change · We encourage product development based on market need rather than Euromoney capability, and aim to foster an entrepreneurial approach to stay aligned with customers' emerging requirements · Effective management reporting with regular forecast reviews means the financial impact of disruptive change can be spotted early · The range of our business spreads the risk to some degree · Our commitment to active portfolio management allows the Group to sell structurally challenged businesses and to buy structurally strong ones · The Risk Committee regularly reviews each division, who present their key risks to the Committee for debate and challenge |
Risk tolerant Prior years (relative position)
2019: Risk tolerant
2018: Risk tolerant
2017: Risk tolerant
Post-mitigation risk trend
Unchanged
Description of risk change
As an entrepreneurial business, the Group is experienced at managing this risk, with the divisions investing in their products and technologies to mitigate the challenges |
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