The economist

(34.72% of issued capital, 20% of voting rights)


The key consolidated figures of The Economist Group reported for the first half of the financial year 2015/2016 (corresponding to the period March 1 – September 30, 2015), based on the most recent data available, are as follows:

 Half I 
£ million 2015/2016 2014/2015 Change
Net revenues 160.0 148.7 11.3
Operating costs (132.4) (122.9) (9.5)
Operating profit 27.6 25.8 1.8
Profit for the net period 19.4 17.7 1.7
£ million 09.30.2015 09.30.2014 Change
Equity attributable to owners of the parent (22.1) (21.4) (0.7)
Net debt (47.7) (37.9) (9.8)

For a correct interpretation of the data it should be noted that the financial year of The Economist Group does not coincide with the calendar year but covers the period April 1 – March 31. 

The Economist Group’s net revenues in the first half 2015 are up 8% (£11.3 million) from the same period last year. The dollar was stronger against the pound which boosted revenues by £8.1 million, and the results were also helped by the timing of EuroFinance’s flagship conference. This year the conference was in September, last year in October, so the swing in revenues for the half-year comparison was more than £4 million. Excluding both these favorable factors, revenues fell slightly. 

Operating profit increased by 7% (£1.8 million) in the first half but would have been lower if not for the benefit of the stronger dollar and the earlier timing of the EuroFinance event. Profit for the period was up 9% (£1.7 million) boosted by a lower effective tax rate.

Net debt increased in the period by £9.8 million as there were higher investments in new acquisitions and digital developments, a lower operating cash inflow and higher dividend payments.

Net revenues by sector are as follows:

 Half I 
£ million 2015/2016 2014/2015 Change
The Economist Businesses 109.7 102.6 7.1
The Economist Intelligence Unit 24.5 22.9 1.6
CQ Roll Call 23.8 21.3 2.5
Other businesses 2.0 1.9 0.1
Net revenues 160.0 148.7 11.3

On the plus side, and starting with The Economist Businesses, revenues from circulation grew by 4%, from digital advertising by 10% and from content solutions by 17%. There was a decline in print advertising, by an underlying 18%. The only unexpected negative came from TVC, the integrated communications agency, down 29% in the first half after large clients cut spending.

The other two divisions of the Group also did well: The Economist Intelligence Unit’s constant-currency revenues were up by 2% and CQ Roll Call’s by 2%.

Operating profit by division is as follows:

 Half I 
£ million 2015/2016 2014/2015 Change
The Economist Businesses 12.1 12.9 (0.8)
The Economist Intelligence Unit 6.7 5.6 1.1
CQ Roll Call 6.4 5.2 1.2
Other businesses 2.4 2.1 0.3
Operating profit 27.6 25.8 1.8

Operating profit by business was also helped by the stronger dollar and in the case of The Economist Businesses, the timing of the EuroFinance event.

The ongoing decline in high margin print advertising revenues has continued to affect profitability and while partly offset by strong growth in digital advertising this comes with a cost because of complex delivery and support.  There has also been increased investment in digital capabilities and editorial teams.


Significant events in the first half of 2015

There has been a lot of activity in the first half: some of it is innovation, but The Economist Group is also spending to improve the efficiency of its day-to-day operations. Visits to were almost 15% up from the same period as last year; Global Business Review (the foreign-language app) has been downloaded 328,000 times since its launch in April; Espresso has been downloaded almost 1 million times. The circulation of The Economist was steady at 1.6 million; four out of ten subscribers now take the bundle of print and digital, which is sold at a premium price. The Economist continued to increase the number of full-price subscriptions and also to reduce the number of discounted copies, so revenue per copy rose by 8% in absolute terms. Just as significant, the cost of acquiring new subscribers was reduced by 11%. The Economist Intelligence Unit completed the acquisition of Canback & Co in July 2015, a predictive analytics and consultancy business helping firms that seek to target consumers.


Events subsequent to the first half of 2015

The transaction for the buyback of the remaining 2,550,000 treasury shares of The Economist Group was concluded on March 23, 2016; the preceding 2,490,000 treasury shares were bought back in October 2015. The company financed the transaction in part with new 5-year term loan agreements entered into on October 16, 2015 and in part with cash raised from the sale of The Economist Complex in central London under the agreement signed on February 12, 2016.

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