TIDMDATA
RNS Number : 0634R
GlobalData PLC
27 February 2023
27 February 2023
GlobalData Plc
Full Year Results
31 December 2022
GlobalData Plc (AIM: DATA, GlobalData, the Group), a leading
provider of industry intelligence, today publishes its results for
the year ended 31 December 2022 (FY22).
-- Our strong performance in 2022 has accelerated our Adjusted
EBITDA earnings expectations for FY23
-- Delivered target of 10% underlying revenue growth and Adjusted EBITDA margin of 36%
-- Proposed final dividend increases total dividend by 35% to 26.0 pence per share
-- Strong momentum with >80% visibility on FY23 revenue and
accelerating towards 40% Adjusted EBITDA margin
-- Well positioned for sustainable organic growth, supported by earnings enhancing M&A
Mike Danson, Chief Executive Officer of GlobalData Plc,
commented:
"Today we are reporting an excellent set of results for FY22
with overall revenue growth of 28%, including underlying revenue
growth of 10% and Adjusted EBITDA margin of 36%, delivering our
near-term financial targets. As signalled in our trading update on
10 January 2023, our strong performance in 2022 has brought forward
our Adjusted EBITDA earnings expectations by a year.
We have delivered on our previously stated near-term financial
targets and continue to drive the business forward. The resilient
nature of our business model underpins confidence in our ability to
continue to achieve double-digit revenue growth, significant margin
progression and to pay a progressive dividend.
This year, we have continued to invest heavily in our people,
our platform and in our unique product which is yielding such
strong results. Our product continues to deliver mission-critical
intelligence and insights to our customers driving strong growth
across both new and existing customers. I would like to thank the
team for all their efforts to evolve our scalable One Platform,
which now covers 20 sectors, delivering must-have critical
information to a growing global customer base.
We enter 2023 in a position of strength with visibility on more
than 80% of our FY23 revenue guidance, giving us the confidence for
both growth and margin expansion into 2023 and beyond. I believe we
are at an inflection point in our journey and poised to leverage
the platform further. With a strong business model and
differentiated product, GlobalData is well placed to capitalise on
the multiple levers open to us to create long-term compounding
growth and shareholder returns in the year ahead and beyond."
Highlights
Financial results for the year ended 31 December 2022.
Underlying
Key performance metrics 2022 2021 Growth growth (1)
Revenue GBP243.2m GBP189.3m +28% +10%
Operating profit GBP56.0m GBP38.2m +47%
Adj. EBITDA (2) GBP86.4m GBP64.4m +34%
Adj. EBITDA margin
(2) 36% 34% +2p.p.
Statutory profit before
tax (PBT) GBP38.4m GBP32.6m +18%
Earnings per share
(EPS) 27.1p 21.9p +24%
Adj. EPS (3) 43.3p 36.2p +20%
Total dividends 26.0p 19.3p +35%
Invoiced Forward Revenue
(4) GBP133.5m GBP107.7m +24% +12%
Net bank debt (5) GBP249.6m GBP177.6m +41%
--------------------------- --------- --------- ------ -----------
Financial Highlights
-- Strong growth in both revenues and profit means we delivered our 'rule of 40' goal
o Underlying (1) revenue growth of 10%, underpinned by
subscriptions - 81% of total revenues.
o Demonstrates the significant opportunity for GlobalData to
grow revenue organically, aided by the benefit of acquisitions and
currency tailwinds for reported growth of 28%.
-- Adjusted EBITDA (2) up 34% to GBP86.4m (2021: GBP64.4m) and
Adjusted EBITDA margin (2) improvement of 2 percentage points to
36%.
-- Statutory PBT grew by GBP5.8m to GBP38.4m (2021: GBP32.6m)
reflecting an 18% increase on prior year.
-- Operating cash flow grew by 41% to GBP85.4m (2021: GBP60.5m)
which was 99% of Adjusted EBITDA (2021: 94%).
-- Continued improvement of Invoiced Forward Revenue (4) growth
of 24% up to GBP133.5m at 31 December 2022 (2021: GBP107.7m), which
includes underlying growth of 12%, the benefit of acquisitions and
currency tailwinds.
-- Final dividend of 18.3p, up 39% (2021: 13.2p); total dividend
of 26.0p, up 35% (2021: 19.3p).
Operational Highlights
-- Delivering on our Growth Optimisation Plan via four key pillars:
o Customer Obsession, World-Class Product, Sales Excellence and
Operational Agility.
-- Customer Obsession remains our number one priority
o Enhanced our client relationships with focused initiatives
contributing to improved renewal rates, increased average client
value and continued traction with multi-year deals.
-- Continued investment in our World-Class Product, embedding
artificial intelligence and machine learning
o Scalable 'One Platform' now covers 20 sectors, delivering
must-have critical information.
o Our unique platform is ideally positioned to integrate new
datasets and verticals.
-- Immediate value derived following completion of two further strategic acquisitions
o Media Business Insight - a new vertical with deep media sector
intelligence.
o TS Lombard - bringing global economic and political research
filling a gap in thematic intelligence.
o Integrations on track.
-- Focus on strong Sales Excellence driving results
o We start the year with 80% visibility of budgeted revenues for
2023.
-- Delivering Operational Agility with continued disciplined approach to cost
-- Completed refinancing to support future M&A strategy
Current Trading and Outlook
-- Entering the new financial year from a position of strength
and scope for further margin improvement.
-- Set to deliver resilient growth - uncertainty driving demand
for our 'gold standard' data, delivered through our One
Platform.
-- A focused approach to cost management and capital discipline,
including mitigating the impact of inflation through advancements
in technology and efficiency savings, whilst ensuring the business
remains appropriately invested for sustainable growth and
systematic M&A activity.
-- Clear financial targets for FY23 and beyond:
o In FY23, at least 10% underlying revenue growth, adjusted
EBITDA margin of 40%.
o Beyond FY23, platform in place to drive further margin
enhancement through organic and inorganic growth.
Note 1: Underlying growth: Defined as growth in business
excluding impact of movement in exchange rates and adjusts for the
proforma results of acquired business.
Note 2: Adjusted EBITDA: Earnings before interest, tax,
depreciation and amortisation, adjusted to exclude costs associated
with acquisitions, restructuring of the Group, share-based
payments, impairment, unrealised operating exchange rate movements
and the impact of foreign exchange contracts. Adjusted EBITDA
margin is defined as: Adjusted EBITDA as a percentage of revenue.
This is reconciled to the statutory operating profit on page 8.
Note 3: Adjusted EPS: Adjusted profit after tax per share
(reconciliation between statutory profit and adjusted profit shown
on page 8).
Note 4: Invoiced Forward Revenue: Invoiced Forward Revenue
relates to amounts that are invoiced to clients at the statement of
financial position date, which relate to future revenue to be
recognised. This is reconciled to deferred revenue on page 13.
Note 5: Net bank debt: Short and long-term borrowings (excluding
lease liabilities) less cash and cash equivalents.
ENQUIRIES
GlobalData Plc
Mike Danson, Chief Executive Officer 0207 936 6400
Graham Lilley, Chief Financial Officer
J.P. Morgan Cazenove (Nomad and
Joint Broker) 0207 742 4000
Bill Hutchings / Mose Adigun
Panmure Gordon (Joint Broker) 0207 886 2500
Rupert Dearden / Dougie McLeod
Numis Securities (Joint Broker)
Nick Westlake / Iqra Amin 0207 260 1000
FTI Consulting LLP (Financial PR) 0203 727 1000
Edward Bridges / Dwight Burden /
Emma Hall
Notes to Editors
About GlobalData Plc
GlobalData Plc (AIM: DATA) is a leading data, insights, and
analytics platform for the world's largest industries. Our mission
is to help our clients decode the future, make better decisions,
and reach more customers.
One Platform Model
GlobalData's One Platform model is the foundation of our
business and is the result of years of continuous investment,
targeted acquisitions, and organic development. This model governs
everything we do, from how we develop and manage our products, to
our approach to sales and customer success, and supporting business
operations. At its core, this approach integrates our unique data,
expert analysis, and innovative solutions into an integrated suite
of client solutions and digital community platforms, designed to
serve a broad range of industry markets and customer needs on a
global basis. The operational leverage this provides means we can
respond rapidly to changing customer needs and market
opportunities, and continuously manage and develop products
quickly, at scale, with limited capital investment as well as
providing unique integration opportunities for M&A.
Strategic Priorities
GlobalData's four strategic priorities are: Customer Obsession,
World-Class Product, Sales Excellence and Operational Agility.
Growth Optimisation Plan
GlobalData's Growth Optimisation Plan is a set of initiatives
designed to drive revenue growth and profitability. The Plan's
initiatives operate across all of GlobalData's operations but are
organised around the strategic priorities noted above.
CHIEF EXECUTIVE'S REVIEW
At GlobalData we are on a mission to help our c.4,700 clients to
decode the future, make better decisions, and reach more customers.
In the last 12 months, clear progress has been made to enhance our
position as a leading intelligence and insights platform through
sustained underlying momentum and further execution of our M&A
strategy.
Uncertainty drives demand for our business. Our mission critical
data is a 'must-have' rather than 'nice to have' for a wide range
of blue-chip corporates, and once embedded, provides all the
insight our clients need to navigate a challenging macro backdrop.
We create our intelligence from a deep pool of experts across the
globe, including 2,000 analysts and researchers, 250 data
scientists and 100 journalists.
Continued momentum in 2022 has been clearly demonstrated through
our strong financial and operational performance. Investing for
growth throughout 2022, in our people and in our scalable One
Platform, which now covers 20 sectors, has enabled the Group to
enhance its highly valued, must-have, critical information to a
growing global customer base.
We have now reached the next stage of our development; the
'leveraging the platform' phase is where we intend to capitalise on
the multiple levers open to us to create growth. As we enter the
new financial year, the management team and Board remain focused on
delivering long-term, compounding growth and shareholder
returns.
Underlying growth
With a continued strong performance throughout the year, I am
pleased to report that GlobalData successfully delivered its
near-term financial target of at least 10% revenue growth and
Adjusted EBITDA margin of 35-40%. In the last five years,
subscriptions have grown from approximately 70% of revenues to more
than 80%, with margin nearly doubling.
The Group reported revenue of GBP243.2m (2021: GBP189.3m),
including 10% underlying growth. Operating profit grew by 47% to
GBP56.0m (2021: GBP38.2m) and Adjusted EBITDA increased by 34% to
GBP86.4m (2021: GBP64.4m). The growth in Adjusted EBITDA was driven
by our strong revenue growth and our ability to control what is a
relatively fixed cost base, delivering an Adjusted EBITDA margin of
36%. The Group had a strong finish to the year with underlying
Invoiced Forward Revenue growth of 12% at 31 December 2022, with
overall growth of 24%.
Traction with our subscription model continued through the year,
with improving renewal rates evidenced in both volume and value at
84% (2021:83%) and 101% (2021: 97%) for our larger clients
(>GBP20k) respectively. We have demonstrated our ability to
optimise pricing in 2022 and there remains significant opportunity
to continue with price increases and deliver enhanced value for
customers, particularly in recently acquired businesses. As a
result, with inherently predictable and recurring revenue, the
Group enters the new financial year with c.80% revenue visibility
for FY2023.
A continued trend is the growth of multi-year deals. Over the
last three years, multi-year deals by value have grown from 20% to
39%, which highlights the strength of our product, the criticality
of our platform to our customers and the growing resilience of our
revenue growth.
Platform ideally positioned to integrate new datasets and
verticals
Our underlying growth is also supported by strategic M&A
opportunities. Our scalable platform is ideally positioned to
integrate new datasets and content into our existing vertical
offering or expand our breadth into new vertical markets. Our
M&A strategy is disciplined and systematic, with value creation
being a core competence of the Group.
Following completion of the Life Sciences acquisition in
November 2021 and LMC in December 2021, we completed two more
acquisitions during 2022. We acquired Media Business Insight (MBI)
in June 2022, bringing new and unique gold standard datasets across
the film, TV and media markets to GlobalData. This, combined with
our existing Technology content, provides the Group with a new
vertical with deep media sector intelligence and related services
while strengthening clients' access to a more comprehensive range
of industry expertise.
In September 2022, we announced the completion of the TS Lombard
acquisition, which provides global economic and political research
to businesses and financial markets to clients across the globe,
with a particular strength in China and emerging markets. This move
further enables us to sell our full product suite, not only to the
asset management industry, but increasingly to other corporates,
and it has been integrated onto the GlobalData platform. TS Lombard
brings to us a strong team of research analysts and economists who
have on-the-ground networks and insights from developed and
emerging markets. This addition has helped us to fill a gap in our
thematic intelligence offering, allowing us to arm clients with a
globally integrated macro story which in times of uncertainty is in
increasing demand as clients seek to navigate and make sensible,
proactive decisions quickly.
We welcome these new businesses into the GlobalData family. Both
represent strategic bolt-on acquisitions of data assets,
efficiently complementing our One Platform model and adding value
to our global and scalable product.
In August 2022, we agreed a new three-year GBP410m debt
financing facility which will be used to support our long-term
growth, including future M&A opportunities.
Delivering our Growth Optimisation Plan
The Growth Optimisation Plan, launched in 2020, is our framework
to invest for growth with the aim to be the leading data,
analytics, and insights platform for the world's largest
industries. As a responsible business, sustainability sits at the
heart of our plan and, as a team, GlobalData is a firm believer
that our Company can drive positive change and be a force for good
through our critical information and technology innovations.
With multiple levers for growth, supplemented with M&A
activity, we are delivering on the Plan via four key pillars:
Customer Obsession, World-Class Product, Sales Excellence and
Operational Agility.
1) Customer Obsession remains our number one priority
Customer Obsession remains our priority and is central to our
strategy. It runs through everything we do, and we continue to
focus on client needs and on providing unique and innovative
solutions. We strive to maintain strong customer relationships and
endeavour to build even deeper relationships.
Our ongoing initiatives are aimed at providing clients with
world-class solutions delivered with exceptional levels of service.
Our focus on top-tier clients is gaining traction, and we continued
to increase resources throughout the year, enhanced usability and
grew via our top-750 programme.
Usage of our product is aimed at multiple use cases and job
functions within an organisation, giving opportunity to expand
usage within our existing clients, resulting in more seats taken.
This focus meant that Average Client Value improved 13% in 2022 to
GBP47,900 (2021: GBP42,400).
The net result of our Customer Obsession is improving renewal
rates by volume and value, as well as greater levels of
profitability. Looking ahead, we remain laser focused on improving
in the different areas of Customer Obsession. This should enhance
some of our key operational metrics: for example, the volume
renewal rate in 2022 for clients paying more than GBP20k p.a. was
84%; a priority is to increase volume renewal rates to over 90% or
more over the medium term.
2) Continued investment in our World-Class Product provides a resilient model, geared for growth
We have developed a World-Class Product enabling us to offer our
clients 'gold standard' data. Our unique selling point is the
intelligence created by more than 800 analysts, 2,000 researchers
and 100 journalists in our business. Our One Platform empowers the
world's largest 20 industries and is highly scalable. Having
invested in our technology stack and enhanced our artificial
intelligence powered solutions through the year, we are now able to
offer a more personalised experience to our clients.
We continue to invest in our product, to keep it best-in-class
and scalable. This is particularly evident in our efforts to
optimise the production of our digital content with investments in
artificial intelligence and machine learning, which are now truly
embedded in our offering.
Our routes to market continue to expand with our multiple media
sites. Our media assets provide limited free-to-access insight
through to high value, paywalled custom products and continues to
prove a powerful go-to-market proposition, driving new customers up
the value curve over time.
We are focusing on usability and strong adoption across our
entire user base, ensuring that our newly acquired assets integrate
efficiently and provide immediate synergies for our business and
our clients.
Following the successful integration of the Life Sciences
business as well as the LMC integration, we are now on the final
stretch to fully integrate our most recent acquisitions of MBI and
TS Lombard. We are already seeing the immediate value of these new
assets.
TS Lombard has significantly expanded our Thematic Intelligence
capability, strengthening our "macro themes" product and making
GlobalData a market leader in tech, industry, macro and ESG themes.
Through this acquisition, we have also gained exposure to TS
Lombard's clients, who are predominantly institutional investors, a
market in which we have historically been underrepresented.
The depth of industry verticals we cover, combined with our One
Platform approach, provides c.4,700 businesses around the world
with mission-critical data to make informed business decisions. As
a result, we are seeing improving customer retention, pricing power
and an increasing shift to multi-year deals.
3) Acute focus on Sales Excellence is driving results
Our sales teams performed well during 2022, delivering 10%
underlying growth in the year and 12% underlying growth in Invoiced
Forward Revenue.
Looking ahead, our sales teams have a clear focus on the key
levers for growth. Linked to our Customer Obsession initiatives,
our ambitious target is to take our volume renewal rate in our
larger clients (>GBP20k) from 84% to over 90%, through
increasing client engagement and enhancing client and user
experience. We will also look to embed further AI-driven tools into
our renewals workflow, both in terms of helping our clients derive
more value from their partnership and also to alert internal teams
on the health of our client relationships. Reducing the churn of
our existing clients sets a greater platform for growth and
de-risks some of the upsell and new business growth levers.
We continue to see a significant opportunity to add greater
value to our existing clients, including via sales synergies in
acquired businesses. There is also a large white space in the
market, for example, where we believe there are 125,000 client
opportunities, with significant latent growth in the US and
professional services markets.
4) Demonstrating Operational Agility with disciplined approach to cost
With an ongoing disciplined approach to cost, we continue to
maintain a largely fixed cost base. During the year, as we have
invested heavily in advancing our product, we have been able to
achieve price increases for our renewing clients as we continue to
push more relevant content, in a timely manner and in an
increasingly personalised way - just as our clients want it.
In August 2022, GlobalData secured a new three-year GBP410.0m
debt financing facility, providing the Group with additional
firepower to execute its M&A growth strategy. This facility
matures on 5 August 2025, with an option to extend further by a
year. The debt facility comprises a GBP290.0m term loan, to be used
in part to repay existing indebtedness of GBP229.2m, as well as a
Revolving Credit Facility ("RCF") of GBP120.0m. The RCF is
currently undrawn, but will be used to support long-term growth of
the business, including M&A.
We thank our existing lenders, who have all extended their
support through participation in this issuance, plus our new
lenders as we seek to create shareholder value through further
strategic acquisitions.
We have a clear capital allocation policy to operate within 2-3x
net bank debt leverage, in relation to EBITDA. The Group reviews
leverage on a look forward basis and the high degree of visibility
it has on its revenue and earnings gives the Group comfort.
Furthermore, the free cash flow profile of the business sees the
Group de-lever reasonably quickly subject to any additional M&A
and share buy-backs.
Dividends
We are pleased to propose a final dividend of 18.3 pence per
share (2021: 13.2 pence), to be paid on 28 April 2023 to
shareholders on the register at the close of business on 31 March
2023. The ex-dividend date will be on 30 March 2023. The proposed
final dividend increases the total dividend for the year to 26.0
pence per share (2021: 19.3 pence), an increase of 35% in line with
growth in Adjusted EBITDA.
Our Colleagues
We have delivered another strong set of results and our success
is underpinned by the talent and dedication of our GlobalData team.
Investment in enhancing our One Platform and in our people
throughout the year has continued and I am confident that through
our acute focus on our Growth Optimisation Plan we will celebrate
further achievements in 2023 and beyond.
I would like to thank all my GlobalData team and welcome the new
colleagues who have joined us and bring a wealth of knowledge via
the MBI and TS Lombard acquisitions. Together, we are building a
responsible business that invests in its people and our clients'
success, delivering highly valued, must-have, critical information
to a growing audience.
Current Trading and Outlook
As stated in the recent year-end trading update, GlobalData
enters the new financial year from a position of strength with 80%
revenue visibility for FY2023 and scope for further margin
improvement. The business continues to deliver resilient growth.
Uncertainty is driving demand for our business, as customers
continue to rely on and embed our 'gold standard' data, delivered
through our One Platform.
As we enter the new financial year, we maintain a focused
approach to cost management and capital discipline, whilst ensuring
the business remains appropriately invested for sustainable growth
and opportunistic on M&A activity.
The management team at GlobalData have clear financial targets
for the year of at least 10% underlying revenue growth and Adjusted
EBITDA margins of 40%, which leaves us well positioned to deliver
on the 'rule of 50' in the longer term.
Mike Danson
Chief Executive Officer
27 February 2023
CHIEF FINANCIAL OFFICER'S REVIEW
GBPm Year ended Year ended
31 December 2022 31 December 2021
Revenue 243.2 189.3
Operating profit 56.0 38.2
Adjusting items
Depreciation 6.4 6.8
Amortisation of acquired intangible assets 9.1 5.6
Amortisation of software 1.0 0.9
Share-based payments charge 4.1 9.2
Costs relating to share-based payments scheme 0.9 -
Restructuring and refinancing costs 2.5 1.4
Unrealised operating foreign exchange loss/(gain) 2.5 (0.1)
M&A and contingent consideration costs 3.9 2.4
Adjusted EBITDA 86.4 64.4
--------------------
Adjusted EBITDA margin(1) 36% 34%
------------------------------------------------------ -------------------- --------------------
Statutory profit before tax 38.4 32.6
------------------------------------------------------ -------------------- --------------------
Amortisation of acquired intangible assets 9.1 5.6
Share-based payments charge 4.1 9.2
Costs relating to share-based payments scheme 0.9 -
Restructuring and refinancing costs 2.5 1.4
Unrealised operating foreign exchange loss/(gain) 2.5 (0.1)
M&A and contingent consideration costs 3.9 2.4
------------------------------------------------------ -------------------- --------------------
Adjusted profit before tax 61.4 51.1
------------------------------------------------------ -------------------- --------------------
Adjusted income tax expense(2) (12.6) (10.0)
------------------------------------------------------ -------------------- --------------------
Adjusted profit after tax 48.8 41.1
------------------------------------------------------ -------------------- --------------------
Cash flow generated from operations 85.4 60.5
Interest paid (14.0) (3.4)
--------------------
Income taxes paid (9.5) (5.1)
------------------------------------------------------ -------------------- --------------------
Principal elements of lease payments (5.9) (5.8)
------------------------------------------------------ -------------------- --------------------
Purchase of intangible and tangible assets (2.7) (1.3)
------------------------------------------------------ -------------------- --------------------
Free cash flow 53.3 44.9
------------------------------------------------------ -------------------- --------------------
Operating cash flow conversion %(3) 99% 94%
------------------------------------------------------ -------------------- --------------------
Free cash flow conversion %(4) 87% 88%
------------------------------------------------------ -------------------- --------------------
Earnings attributable to equity holders:
Basic earnings per share (pence) 27.1 21.9
Diluted earnings per share (pence) 26.2 20.2
Adjusted basic earnings per share (pence) 43.3 36.2
Adjusted diluted earnings per share (pence) 41.9 33.4
------------------------------------------------------ -------------------- ------------------
(1) Adjusted EBITDA margin is defined as: Adjusted EBITDA as a
percentage of revenue. Note 2 discloses the rationale for the
adjusting items in detail.
(2) Adjusted income tax expense represents the statutory income
tax expense adjusted for the tax effect on adjusting items. In
addition, the adjusted income tax expense includes the effect of
any tax rate changes. Adjusted income tax expense has been
reconciled on page 12.
(3) Operating cash flow conversion is defined as: Cash flow
generated from operations divided by Adjusted EBITDA.
(4) Free cash flow conversion is defined as: Free cash flow
generated from operations; being cash flow generated from
operations less interest paid, income taxes paid, principal
elements of lease payments and purchase of intangible and tangible
assets; divided by Adjusted profit before tax. We have updated the
definition to include principal elements of lease payments compared
with the Annual Report for the year ended 31 December 2021,
accordingly the comparative has been adjusted above.
The financial position and performance of the business are
reflective of the core financial elements of our business model:
visible and recurring revenues, high incremental margins, scalable
opportunity and strong cash flows.
The Directors believe that Adjusted EBITDA, Adjusted EBITDA
margin, Adjusted profit before tax, Adjusted profit after tax and
Adjusted earnings per share provide additional useful information
on the core operational performance of the Group to shareholders,
and internally we review the results of the Group using these
measures. The term 'adjusted' is not a defined term under IFRS and
may not therefore be comparable with similarly titled profit
measures reported by other companies. It is not intended to be a
substitute for, or superior to, IFRS measures of profit.
Financial Key Performance Indicators
The financial KPIs below are used, in addition to statutory
reporting measures, by the Executive Directors to monitor the
Group's performance and progress. These KPIs are used to measure
progress against strategy, the strength of the business and
long-term prospects for our stakeholders.
Revenue Invoiced Forward Revenue Adjusted EBITDA Adjusted EBITDA margin Net bank debt
2022 GBP243.2m GBP133.5m GBP86.4m 36% GBP249.6m
2021 GBP189.3m GBP107.7m GBP64.4m 34% GBP177.6m
-------------------- ---------- ------------------------ ---------------- ----------------------- --------------
% reported growth 28% 24% 34% 2p.p. 41%
% underlying growth 10% 12% 36% 2p.p. 41%
The Group delivered on its ambition to achieve at least 10%
underlying revenue growth and achieve margin of 35-40% and now sets
its target on exceeding 40% margin.
The platform economics of our business model meant that a
significant proportion of the underlying revenue growth filtered
through to EBITDA without material incremental cost of sale. This
therefore gave the Group a significantly improved margin from 34%
to 36%, achieving our previous margin range target.
In addition to the underlying performance of the business, the
deployed debt also brought in two further acquisitions to the
Group, MBI and TS Lombard. These additions also contributed to the
revenue growth and increased profitability in the year.
Operational Key Performance Indicators
The operational key performance indicators ("KPIs") below are
used by the Directors to monitor the quality of revenue growth and
understand underlying performance. Our operational KPIs are:
Value Renewal Rate - this is calculated by dividing the total
subscription sales value closed in the year compared with
subscription value available for renewal (based upon prior year
value).
Volume Renewal Rate - this is calculated by dividing the total
volume of subscription sales closed in the year compared with
subscription volume available for renewal.
Average Client Value - this is calculated using the total value
of sales across our clients and showing an average value.
Our operational KPIs reference sales orders rather than revenue
and therefore impact both revenue recognised in the year as well as
Invoiced Forward Revenue.
As at 31 December 2022, the total number of clients
(>GBP5,000 spend) was 4,735 (2021: 4,732).
All Clients
Clients >GBP20,000 (above GBP5,000)
Value renewal Volume renewal Average client Value renewal Volume renewal Average client
rate rate value rate rate value
--------- ----------------- -------------- ----------------- ------------------ -------------- -----------------
2022 101% 84% GBP75,100 99% 78% GBP47,900
2021 97% 83% GBP72,900 95% 75% GBP42,400
--------- ----------------- -------------- ----------------- ------------------ -------------- -----------------
Movement 4p.p. 1p.p. 3% 4p.p. 3p.p. 13%
Strong performance in underlying operational KPIs helped deliver
10% underlying growth. We improved our Group volume renewal rates
by 3 percentage points to 78% compared with 2021. The Group also
demonstrated strong pricing power, as well as a good performance in
selling more licences and product to its existing client base. The
additional value meant that the value renewal rate for the Group
was 99% compared with 95% in 2021, with a particularly strong
performance in our larger client base.
The Group's Performance This Year
1. Revenue
Revenue grew by 28% to GBP243.2m, driven largely from underlying
growth of 10% and aided by revenue from recent M&A and the
benefit of currency gains (2021: GBP189.3m). On an underlying
basis, subscriptions (representing 81% of revenue (2021: 81%)) grew
by 10% underpinned by improving renewal rates, strong pricing and
client contract growth as well as new business wins.
2. Profit before tax
Profit before tax for the year grew by GBP5.8m to GBP38.4m
(2021: GBP32.6m), which partly reflects the operating leverage
which has driven Adjusted EBITDA to grow by GBP22.0m to GBP86.4m
(2021: GBP64.4m), offset with increases in finance and other
operating costs.
Year ended Year ended
31 December 31 December Change
GBPm 2022 2021 %
------------------------------------- ------------- ------------- -------
Revenue 243.2 189.3 +28%
Operating costs (156.8) (124.9) +26%
------------------------------------- ------------- ------------- -------
Adjusted EBITDA 86.4 64.4 +34%
Depreciation (6.4) (6.8) -6%
Amortisation of acquired intangible
assets (9.1) (5.6) +63%
Amortisation of software (1.0) (0.9) +11%
Share-based payments charge (4.1) (9.2) -55%
Costs relating to share-based
payment schemes (0.9) - +100%
Refinancing costs (1.9) (0.2) +850%
Restructuring costs (0.6) (1.2) -50%
Revaluation loss on short and
long-term derivatives (0.6) (0.9) -33%
Unrealised operating foreign
exchange losses (1.9) 1.0 +290%
M&A costs (2.9) (2.4) +21%
Contingent consideration (1.0) - +100%
Finance costs (17.6) (5.6) +214%
------------------------------------- ------------- ------------- -------
Profit before tax 38.4 32.6 +18%
Adjusted EBITDA
Adjusted EBITDA increased by 34% to GBP86.4m (2021: GBP64.4m).
The growth in Adjusted EBITDA was driven by our strong revenue
growth and our ability to control what is a relatively fixed cost
base.
We have an established operating cost base and given the
economics of our platform business, which sees limited incremental
cost of sale, our overall margin increased by 2 percentage points
to 36% (2021: 34%).
Adjusting items
Adjusting items grew by GBP4.5m in total, with some significant
individual movements of note:
-- The amortisation charge for acquired intangibles has
increased by GBP3.5m to GBP9.1m (2021: GBP5.6m). This is reflective
of intangible assets acquired as part of the four business
combinations over the past 15 months and resulting increases in
amortisation.
-- The share-based payment charge has decreased from GBP9.2m to
GBP4.1m, largely due to the vesting of Scheme 1 in August 2022,
which carried no charge in 2022.
The charge for 2022 included IFRS2 costs for Schemes 2 and 4
including the modification disclosed within note 10. The
modification was effective from 30 November 2022 and therefore only
had an impact of GBP0.5m increase in charge in the year. It is
expected that the charge will increase in future years because of
the modification.
-- M&A costs grew year on year, reflecting continued M&A transactions in 2022.
Finance costs
Finance costs have increased by 214% to GBP17.6m (2021: GBP5.6m)
which is inclusive of a non-cash IFRS9 charge of GBP2.1m (2021:
GBP0.8m) and IFRS16 leases interest of GBP1.3m (2021: GBP1.5m). The
cash paid in interest in 2022 was GBP14.0m (2021: GBP3.4m).
This reflects the increase in average drawn debt in 2022
compared with 2021, which funded the M&A activity over the past
15 months and purchase of own shares, in addition to the increase
in interest rates.
Finance costs are calculated on drawn debt based upon on a
margin range of 275-375bps, dependent on Group net leverage, plus
SONIA (Sterling Overnight Index Average rate). The Group entered
into a swap arrangement on SONIA on 21 October 2022 amid the
backdrop of rising rates. The arrangement fixed SONIA at 4.9125%
over the remaining life of the term loan. Undrawn debt carries
interest at one third of the prevailing margin.
Leases
Within our operating costs, depreciation in relation to
right-of-use assets was GBP4.7m (2021: GBP5.0m). Other income, in
relation to sub-let income on right-of-use assets was GBP0.1m
(2021: GBP0.4m). Our net finance costs include interest of GBP1.3m
in relation to lease liabilities (2021: GBP1.5m).
3. Foreign exchange impact on results
The Group derives around 60% of revenues in currencies other
than Sterling, compared with around 40% of its cost base. The
impact of currency movements in the year increased revenue by
GBP7.9m, which mainly reflected Sterling weakness against US Dollar
(average rate: 2022: 1.25, 2021: 1.38), with GBP6.0m currency
benefit also reflected in Invoiced Forward Revenue. Cost inflation
as a result of currency movements fully offset the gain in the year
and impacted the results by GBP8.8m. The full impact of currency on
Adjusted EBITDA was a reduction of GBP0.9m.
GBPm Revenue Operating Adjusted Margin Invoiced
costs EBITDA Forward
(1) Revenue
As reported 243.2 (156.8) 86.4 36% 133.5
-------------------- -------- ---------- --------- ------- ---------
Add back currency
movements
US Dollar (8.1) 6.8 (1.3) (6.0)
Euro 0.3 - 0.3 -
Other (0.1) 2.0 1.9 -
Constant currency 235.3 (148.0) 87.3 37% 127.5
-------------------- -------- ---------- --------- ------- ---------
2021 - as reported 189.3 (124.9) 64.4 34% 107.7
Constant currency
growth 24% 18% 36% 3.p.p. 18%
(1) Operating costs excluding adjusting items.
4. Taxation
The Group's effective income tax rate (ETR) for the reporting
period is 20.6% which exceeds the statutory UK income tax rate of
19.0%. The major components impacting the income tax expense are
higher tax rates in certain overseas jurisdictions where the Group
operates, specifically the United States and India (increasing the
Group's ETR), expenses that are non-deductible for tax purposes
(increase to ETR) and the remeasurement of deferred tax assets to
25.0% to recognise the change in UK tax rate from 1 April 2023
(decrease to ETR).
Key factors that may impact the Group's future tax charge as a
percentage of underlying profits are the mix of profits and losses
between the jurisdictions in which the Group operates and the
corresponding tax rates in those territories, the impact of
non-deductible expenditure and non-taxable income and the
utilisation (with a corresponding reduction in cash tax payments)
of previously unrecognised deferred tax assets.
Reconciliation of statutory income tax charge to adjusted income
tax charge is presented below:
Year ended Year ended
31 December 31 December
GBPm 2022 2021
------------------------------------- ------------- -------------
Statutory income tax charge 7.9 7.7
------------------------------------- ------------- -------------
Amortisation of acquired intangible
assets 1.8 0.9
Share-based payments charge 0.8 1.5
Costs relating to share-based
payment schemes 0.2 -
Restructuring and refinancing
costs 0.4 0.1
Unrealised operating foreign
exchange loss/(gain) 0.5 (0.2)
Corporate tax rate change 1.3 (0.6)
Movement in unrecognised deferred
tax (0.3) 0.6
------------------------------------- ------------- -------------
Adjusted income tax charge 12.6 10.0
------------------------------------- ------------- -------------
5. Earnings per share
Basic EPS was 27.1 pence per share (2021: 21.9 pence per share).
Fully diluted profit per share was 26.2 pence per share (2021: 20.2
pence per share).
Adjusted earnings per share grew from 36.2 pence per share to
43.3 pence per share, representing 20% growth.
6. Dividends
We are pleased to propose a final dividend of 18.3 pence per
share (2021: 13.2 pence), to be paid on 28 April 2023 to
shareholders on the register at the close of business on 31 March
2023. The ex-dividend date will be on 30 March 2023. The proposed
final dividend increases the total dividend for the year to 26.0
pence per share (2021: 19.3 pence), an increase of 35%.
7. Cash generation
Cash generated from operations grew by 41% to GBP85.4m (2021:
GBP60.5m), representing 99% of Adjusted EBITDA (2021: 94%). We
would normally expect operating cash flow to be in excess of 100%
of Adjusted EBITDA and if we add back one-off cash costs in the
year (restructuring, refinancing and M&A), cash flow conversion
is 103%.
Capital expenditure was GBP2.7m in 2022 (2021: GBP1.3m),
including GBP1.7m on software (2021: GBP0.5m). Capital expenditure
represented 1.1% of revenue (2021: 0.7%).
Total cash flows from operating activities was GBP61.9m (growth
of GBP9.9m from 2021), which represented 111% of operating profit
(2021: 136%), with an increase in interest paid of GBP10.6m to
GBP14.0m being the main reason for the lower conversion rate.
During the year, the Group paid out GBP23.6m in dividends (2021:
GBP20.4m).
Short- and long-term borrowings increased by GBP83.4m to
GBP283.6m as at 31 December 2022 (2021: GBP200.2m). The debt drawn
was focused on two main areas of expenditure:
-- M&A - The Group purchased MBI and TS Lombard during 2022
for a combined cash consideration of GBP32.9m. In addition, GBP0.7m
was paid in relation to the target working capital adjustment for
LMC, which completed in 2021. The cash costs of acquisitions are
set out on page 39.
-- Purchase of shares through Employee Benefit Trust - The Group
purchased 5.3m shares for its employee LTIP for net consideration
of GBP66.6m. The Employee Benefit Trust held 5.6m shares as at 31
December 2022, to satisfy options in issue of 7.1m.
8. Net bank debt:
Net bank debt increased to GBP249.6m as at 31 December 2022
(2021: GBP177.6m). The increase principally reflects strong
operating cash flows, offset by M&A activity of GBP33.6m,
contributions to the Employee Benefit Trust to buy back shares of
GBP66.6m, dividends of GBP23.6m and capital expenditure of
GBP2.7m.
The Group defines Net bank debt as short- and long-term
borrowings (note 8) less cash and cash equivalents. The amount
excludes items related to leases.
GBPm 2022 2021
Short- and long-term borrowings (note 8) 283.6 200.2
Cash (34.0) (22.6)
------------------------------------------ ------- ------
Net bank debt 249.6 177.6
9. Invoiced Forward Revenue
Invoiced Forward Revenue grew by 24% to GBP133.5m from the 31
December 2021 balance of GBP107.7m, reflecting good momentum on
sales orders during 2022 (underlying growth of 12%) and the impact
of acquisitions. Invoiced Forward Revenue is a major component of
our significant revenue visibility for the forthcoming year.
GBPm 2022 2021
Deferred revenue 104.0 81.4
Amounts not due/subscription not started at 31 December 29.5 26.3
--------------------------------------------------------- ------ -----
Invoiced Forward Revenue 133.5 107.7
10. Intangible assets
Intangible assets have increased by GBP32.4m during the year,
from GBP347.7m as at 31 December 2021, to GBP380.1m as at 31
December 2022. The majority of the increase relates to the two
acquisitions made during the year of MBI and TS Lombard in which
the Group recognised goodwill and intangible assets on acquisition
of GBP24.9m and GBP15.1m respectively. Offsetting against these
increases was an amortisation charge for the year of GBP10.1m
(2021: GBP6.5m), which represented an increase of 55% reflecting
the acquisitions made over the past 15 months.
11. Trade receivables
Net trade receivables as at 31 December 2022 were GBP54.4m,
representing 29% growth compared with the 31 December 2021 balance
of GBP42.3m, the impact of the acquired companies and sales growth
mainly driving the increase.
Financial Risk Management
The Group's primary objective in managing foreign currency risk
is to protect against the risk that the eventual Sterling net cash
flows will be affected by changes in foreign currency exchange
rates. To do this, the Group enters into foreign exchange contracts
that limit the risk from movements in US Dollar and Euro exchange
rates with Sterling. Due to the Group's operations in India, the
Group also enters into foreign exchange contracts that limit the
risk from movements in US Dollars with the Indian Rupee exchange
rate. While commercially and from a cash flow perspective this
hedges the Group's currency exposures, the Group elects not to
apply hedge accounting and accordingly any movements in the fair
value of the foreign exchange contracts are recognised in the
income statement.
As a data and analytics company, we are not currently impacted
by cross-border tariffs and we do not currently expect the
renegotiation of tariffs to materially impact our business.
Furthermore, the company is continuing to monitor the Inclusive
Framework Project established by the OECD, including Pillar One
(determining where tax should be paid and on what basis) and Pillar
Two (the design of a system that ensures multinational enterprises
pay a minimum level of tax), which is expected to move into an
implementation phase during 2023. However, the application
thresholds will be aimed at the very largest companies, and
therefore the rules are unlikely to impact the Group.
Interest Rate Risk
Interest rate risk is the impact that fluctuations in market
interest rates can have on the value of the Group's
interest-bearing assets and liabilities and on the interest charge
recognised in the income statement. On 21 October 2022, GlobalData
Plc (the parent company) entered into an interest rate swap
arrangement, to fix the floating element of the interest rate
(based upon SONIA) to a fixed rate of 4.9125%. The Group has
applied hedge accounting in accordance with IFRS9 (Financial
Instruments); as such any gains or losses on the interest rate
swap, to the extent that they are effective, are recognised
directly within other comprehensive income of both the Group and
the parent company.
Liquidity Risk and Going Concern
The Group's approach to managing liquidity risk is to ensure, as
far as possible, that it has sufficient liquidity to meet its
liabilities as they fall due, with surplus facilities to cope with
any unexpected variances in timing of cash flows. The Group meets
its day-to-day working capital requirements through free cash flow,
being operations generated cash (with no external financing
required). Although the statement of financial position shows net
current liabilities (current assets less current liabilities),
included in current liabilities is GBP104.0m of deferred revenue
that represents future income earnings. Excluding deferred revenue,
the Group has net current assets of GBP56.4m (2021: GBP27.8m).
Based on cash flow projections, the Group considers the existing
financing facilities to be adequate to meet short-term commitments.
The Directors have a reasonable expectation that there are no
material uncertainties that cast significant doubt about the
Group's ability to continue in operation and meet its liabilities
as they fall due for the foreseeable future, being a period of at
least 12 months from the date of approval of the financial
statements. Accordingly, the Group has prepared the Annual Report
and Accounts on a going concern basis. The Directors have prepared
a Going Concern and Long-Term Viability statement within the
Group's Annual Report and Accounts for the year ended 31 December
2022 (page 32).
Consolidated Income Statement
Year ended Year ended
31 December 31 December
Notes 2022 2021
Continuing operations GBPm GBPm
Revenue 3 243.2 189.3
Operating expenses 4 (186.6) (150.8)
Losses on trade receivables (0.7) (1.2)
Other income 0.1 0.9
-------------------------------------- ------ ------------- -------------
Operating profit 56.0 38.2
Net finance costs (17.6) (5.6)
Profit before tax 38.4 32.6
Income tax expense (7.9) (7.7)
-------------------------------------- ------ ------------- -------------
Profit for the year 30.5 24.9
-------------------------------------- ------ ------------- -------------
Attributable to:
Equity holders of the parent 30.5 24.9
Earnings per share attributable to
equity holders:
Basic earnings per share (pence) 6 27.1 21.9
Diluted earnings per share (pence) 6 26.2 20.2
-------------------------------------- ------ ------------- -------------
Reconciliation to Adjusted EBITDA(1)
:
Operating profit 56.0 38.2
Depreciation 6.4 6.8
Amortisation of software 1.0 0.9
Adjusting items 5 23.0 18.5
-------------------------------------- ------ ------------- -------------
Adjusted EBITDA(1) 86.4 64.4
-------------------------------------- ------ ------------- -------------
(1) We define Adjusted EBITDA as EBITDA adjusted to exclude
costs associated with acquisitions, restructuring of the Group,
share-based payments, impairment, unrealised operating exchange
rate movements and the impact of foreign exchange contracts. We
present Adjusted EBITDA as additional information because it is
used internally as a key indicator to assess financial performance.
However, other companies may present Adjusted EBITDA differently.
EBITDA and Adjusted EBITDA are not measures of financial
performance under IFRS and should not be considered as an
alternative to operating profit or as a measure of liquidity or an
alternative to net income as indicators of our operating
performance or any other measure of performance derived in
accordance with IFRS. Adjusted EBITDA margin is defined as:
Adjusted EBITDA as a percentage of revenue.
Consolidated Statement of Comprehensive Income
Year ended 31 December 2022 Year ended 31 December 2021
GBPm GBPm
Profit for the year 30.5 24.9
Other comprehensive income
Items that will be classified subsequently to profit or
loss when specific conditions are
met:
Cash flow hedge - effective portion of changes in fair
value (3.9) -
Net exchange loss on translation of foreign entities (0.4) (0.5)
Other comprehensive loss, net of tax (4.3) (0.5)
---------------------------------------------------------- ---------------------------- ----------------------------
Total comprehensive income for the year 26.2 24.4
---------------------------------------------------------- ---------------------------- ----------------------------
Attributable to:
Equity holders of the parent 26.2 24.4
------------------------------ ----- -----
Consolidated Statement of Financial Position
31 December 31 December
2022 2021
Notes GBPm GBPm
Non-current assets
Property, plant and equipment 31.0 35.3
Intangible assets 7 380.1 347.7
Net investment in sub lease - 0.1
Deferred tax assets 2.3 2.1
----------------------------------- ------ ------------ ------------
413.4 385.2
----------------------------------- ------ ------------ ------------
Current assets
Trade and other receivables 62.7 51.2
Current tax receivable 0.6 -
Short-term derivative assets 0.9 0.6
Cash and cash equivalents 34.0 22.6
----------------------------------- ------ ------------ ------------
98.2 74.4
----------------------------------- ------ ------------ ------------
Total assets 511.6 459.6
----------------------------------- ------ ------------ ------------
Current liabilities
Trade and other payables (137.3) (114.3)
Short-term borrowings 8 - (5.0)
Short-term lease liabilities 8 (5.4) (4.1)
Current tax payable (1.7) (4.2)
Short-term derivative liabilities (1.3) (0.3)
Short-term provisions (0.1) (0.1)
----------------------------------- ------ ------------ ------------
(145.8) (128.0)
----------------------------------- ------ ------------ ------------
Net current liabilities (47.6) (53.6)
----------------------------------- ------ ------------ ------------
Non-current liabilities
Long-term provisions (1.3) (0.7)
Deferred tax liabilities (4.1) -
Long-term derivative liabilities (3.9) (0.1)
Long-term lease liabilities 8 (24.6) (29.3)
Long-term borrowings 8 (283.6) (195.2)
----------------------------------- ------ ------------ ------------
(317.5) (225.3)
----------------------------------- ------ ------------ ------------
Total liabilities (463.3) (353.3)
----------------------------------- ------ ------------ ------------
Net assets 48.3 106.3
----------------------------------- ------ ------------ ------------
Equity
Share capital 9 0.2 0.2
Treasury reserve 9 (70.8) (66.6)
Other reserve 9 (44.3) (44.3)
Cash flow hedge reserve 9 (3.9) -
Foreign currency translation
reserve 9 (0.7) (0.3)
Retained profit 167.8 217.3
----------------------------------- ------ ------------ ------------
Equity attributable to equity
holders of the parent 48.3 106.3
----------------------------------- ------ ------------ ------------
Consolidated Statement of Changes in Equity
Equity
attributable
Foreign Cash to equity
Share currency flow holders
Share premium Treasury Other Merger translation hedge Retained of the
Notes capital account reserve reserve reserve reserve reserve profit parent
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ------ -------- -------- --------- -------- -------- ------------ -------- --------- -------------
Balance at 1
January 2021 0.2 0.7 (21.4) (37.1) 163.8 0.2 - 31.3 137.7
----------------- ------ -------- -------- --------- -------- -------- ------------ -------- --------- -------------
Profit for the
year - - - - - - - 24.9 24.9
Other
comprehensive
income:
Net exchange
loss on
translation
of foreign
entities - - - - - (0.5) - - (0.5)
----------------- ------ -------- -------- --------- -------- -------- ------------ -------- --------- -------------
Total
comprehensive
income for
the year - - - - - (0.5) - 24.9 24.4
----------------- ------ -------- -------- --------- -------- -------- ------------ -------- --------- -------------
Transactions
with owners:
Share
buy-back 9 - - (46.5) - - - - - (46.5)
Dividends 9 - - - - - - - (20.4) (20.4)
Vesting of
share
options 10 - - 1.3 - - - - (1.3) -
Bonus issue
of shares 171.0 - - (7.2) (163.8) - - - -
Capital
reduction (171.0) (0.7) - - - - - 171.7 -
Share-based
payments
charge 10 - - - - - - - 9.2 9.2
Tax on
share-based
payments - - - - - - - 1.9 1.9
Balance at 31
December 2021 0.2 - (66.6) (44.3) - (0.3) - 217.3 106.3
Profit for the
year - - - - - - - 30.5 30.5
Other
comprehensive
income:
Cash flow hedge
- effective
portion
of changes in
fair value - - - - - - (3.9) - (3.9)
Net exchange
loss on
translation
of foreign
entities - - - - - (0.4) - - (0.4)
----------------- ------ -------- -------- --------- -------- -------- ------------ -------- --------- -------------
Total
comprehensive
income for
the year - - - - - (0.4) (3.9) 30.5 26.2
----------------- ------ -------- -------- --------- -------- -------- ------------ -------- --------- -------------
Transactions
with owners:
Share
buy-back 9 - - (66.6) - - - - - (66.6)
Dividends 9 - - - - - - - (23.6) (23.6)
Vesting of
share
options 10 - - 62.4 - - - - (62.4) -
Share-based
payments
charge 10 - - - - - - - 4.1 4.1
Tax on
share-based
payments - - - - - - - 1.9 1.9
Balance at 31
December 2022 0.2 - (70.8) (44.3) - (0.7) (3.9) 167.8 48.3
----------------- ------ -------- -------- --------- -------- -------- ------------ -------- --------- -------------
Consolidated Statement of Cash Flows
Year ended Year ended
31 December 31 December
Continuing operations 2022 2021
Cash flows from operating activities GBPm GBPm
Profit for the year 30.5 24.9
Adjustments for:
Depreciation 6.4 6.8
Amortisation 10.1 6.5
Gain on disposal of property, plant
and equipment - (0.2)
Impairment of goodwill - 0.4
Net finance costs 17.6 5.6
Taxation recognised in profit or
loss 7.9 7.7
Share-based payments charge 4.1 9.2
Increase in trade and other receivables (9.2) (3.2)
Increase in trade and other payables 17.2 2.2
Revaluation of short- and long-term
derivatives 0.6 0.9
Increase/(decrease) in provisions 0.2 (0.3)
-------------------------------------------- ------------- -------------
Cash generated from operations 85.4 60.5
Interest paid (14.0) (3.4)
Income taxes paid (9.5) (5.1)
-------------------------------------------- ------------- -------------
Total cash flows from operating
activities 61.9 52.0
-------------------------------------------- ------------- -------------
Cash flows from investing activities
Acquisitions (33.6) (97.7)
Cash received from repayment of
loans 0.9 0.9
Proceeds from disposal of property,
plant and equipment - 0.6
Purchase of property, plant and
equipment (1.0) (0.8)
Purchase of intangible assets (1.7) (0.5)
-------------------------------------------- ------------- -------------
Total cash flows used in investing
activities (35.4) (97.5)
-------------------------------------------- ------------- -------------
Cash flows from financing activities
Repayment of borrowings (2.5) (5.0)
Settlement of loan (229.2) -
Proceeds from borrowings 321.0 129.0
Loan refinancing fee (8.0) (0.4)
Acquisition of own shares (66.6) (46.5)
Principal elements of lease payments (5.9) (5.8)
Dividends paid (23.6) (20.4)
-------------------------------------------- ------------- -------------
Total cash flows (used in)/from
financing activities (14.8) 50.9
-------------------------------------------- ------------- -------------
Net increase in cash and cash equivalents 11.7 5.4
Cash and cash equivalents at beginning
of year 22.6 17.7
Effects of currency translation
on cash and cash equivalents (0.3) (0.5)
-------------------------------------------- ------------- -------------
Cash and cash equivalents at end
of year 34.0 22.6
-------------------------------------------- ------------- -------------
Notes to the Preliminary Results
1. General information
Nature of operations
The principal activity of GlobalData Plc and its subsidiaries
(together 'the Group') is to provide business information in the
form of high quality proprietary data, analytics and insights to
clients in multiple sectors.
GlobalData Plc ('the Company') is a company incorporated in the
United Kingdom (England & Wales) and listed on the Alternative
Investment Market (AIM), therefore is publicly owned and limited by
shares. The registered office of the Company is John Carpenter
House, John Carpenter Street, London, EC4Y 0AN. The registered
number of the Company is 03925319.
Basis of preparation
The condensed financial statements have been prepared on the
historical cost basis, except for derivative financial instruments,
which are measured at fair value. While the information included in
the condensed financial statements has been prepared in accordance
with United Kingdom adopted international accounting standards and
in conformity with the requirements of the Companies Act 2006 and
International Financial Reporting Standards as issued by the IASB,
this announcement does not itself contain sufficient information to
comply with United Kingdom adopted International Accounting
Standards. The condensed financial statements for the year ended 31
December 2022 have been prepared on a consistent basis with the
financial accounting policies set out in the Accounting Policies
section of GlobalData Plc's Annual Report and Accounts for the year
ended 31 December 2022. These condensed financial statements are
presented in Pounds Sterling (GBP).
The financial information for the year ended 31 December 2022
does not constitute statutory accounts as defined in section 434 of
the Companies Act 2006. A copy of the statutory accounts for the
year ended 31 December 2022 will be delivered to the Registrar of
Companies in due course. The independent auditors' report on the
full financial statements for the year ended 31 December 2022 was
unqualified and did not contain an emphasis of matter paragraph or
any statement under section 498 of the Companies Act 2006.
Critical accounting estimates and judgements
The Group makes estimates and assumptions regarding the future.
Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances.
In the future, actual experience may deviate from these
estimates and assumptions. The estimates and assumptions that have
a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are discussed in detail below. Climate-related risks did not have a
material impact on the financial statements.
Key sources of estimation uncertainty
Carrying value of goodwill and other intangibles
The carrying value of goodwill and other intangibles is assessed
annually to ensure that there is no impairment of these assets.
Performing this assessment requires management to estimate future
cash flows to be generated by the related cash-generating unit
(CGU), which entails making judgements including the expected rate
of growth of sales, margins expected to be achieved, the level of
future capital expenditure required to support these outcomes and
the appropriate discount rate to apply when valuing future cash
flows.
Management has undertaken sensitivity analysis, taking into
consideration the impact of key impairment test assumptions arising
from a range of possible future trading and economic scenarios on
each CGU. The following individual scenarios would need to occur
before impairment is triggered within the Group:
Cash-generating unit Revenue growth Discount rate
falls by* rises by*
-------------------------------- -------------- -------------
Data, Analytics and Insights (17.0%) 36.8%
LMC (2.9%) 2.0%
Media Business Insights ("MBI") (2.4%) 3.7%
TS Lombard (1.8%) 2.1%
-------------------------------- -------------- -------------
*percentage points
No indication of impairment was noted from Management's review;
there is headroom in each CGU. Management acknowledge the
sensitivity of the revenue growth and discount rate assumptions
applied to the LMC, MBI and TS Lombard CGUs; however, Management is
comfortable with these assumptions and will continue to monitor
performance regularly for any indicators of future impairment
loss.
Management recognises that the 2% cost growth assumption is
lower than the current rate of inflation, however the Group
operates a focused approach to cost management, including
mitigating the impact of inflation through advancements in
technology and efficiency savings and has a strong track record of
achieving this. Therefore, Management consider the assumption to be
reasonable.
Critical accounting judgements
Identification of Cash-Generating Units
IAS36 'Impairment of Assets' requires that assets be carried on
the statement of financial position at no more than their
recoverable amount. An asset or cash-generating unit (CGU) is the
smallest identifiable group of assets that generates cash inflows
and is impaired when its carrying amount exceeds its recoverable
amount. As at the date of the impairment review (30 September
2022), Management made the judgement that the Group had four CGUs,
being Data, Analytics and Insights, LMC, MBI and TS Lombard. In
previous years, the Group had identified MEED (a subsidiary based
in the United Arab Emirates) as an individual CGU; however, during
the course of 2022 and prior to the date of the impairment review,
the MEED cash inflows were fully integrated into the Data,
Analytics and Insights CGU. In making this judgement Management has
determined that the assets acquired as part of the original
acquisition of MEED are no longer generating cash flows that are
separately identifiable. The cash flows, in addition to being
generated by the acquired assets of MEED, are also now being
generated from the assets acquired across many of the Group's
historic acquisitions. Likewise, the Data, Analytics and Insights
cash inflows are also now being generated in part by the MEED
assets. Management therefore concluded that this level of
consolidation and integration does not make it possible for MEED to
meet the definition of a separately identifiable CGU as required by
IAS36.
Going concern
The Group meets its day-to-day working capital requirements
through free cash flow. The Group has closing cash of GBP34.0m as
at 31 December 2022 and net bank debt of GBP249.6m (31 December
2021: net bank debt of GBP177.6m), being cash and cash equivalents
less short- and long-term borrowings, excluding lease liabilities.
The Group has an outstanding term loan of GBP290.0m which is
syndicated with 12 lenders. As at 31 December 2022, the Group had
undrawn RCF of GBP120.0m which is syndicated with 13 lenders. The
Group's banking facilities are in place until August 2025, at which
point the Group will be required to renew or extend its financing
arrangements. The Group has generated GBP85.4m in cash from
operations during 2022. Based on cash flow projections the Group
considers the existing financing facilities to be adequate to meet
short-term commitments.
The finance facilities were issued with debt covenants which are
measured on a quarterly basis. There have been no breaches of
covenants in the year ended 31 December 2022. Management has
reviewed forecast cash flows and there is no indication that there
will be any breach in the next 12 months.
The Directors have a reasonable expectation that there are no
material uncertainties that cast significant doubt about the
Group's ability to continue in operation and meet its liabilities
as they fall due for the foreseeable future, being a period of at
least 12 months from the date of approval of the financial
statements. The Directors have modelled a number of worst-case
scenarios to consider their potential impact on the Group's
results, cash flow and loan covenant forecast. Key assumptions
built into the scenarios focus on revenue and cost growth. In
addition to performing scenario planning, the Directors have also
conducted stress testing of the Group's forecasts and, taking into
account reasonable downside sensitivities (acknowledging that such
risks and uncertainties exist), the Directors are satisfied that
the business is expected to operate within its facilities. The
plausible downside scenarios modelled were as follows: (i) revenue
growth in 2023 being 10% lower than expectation (ii) cost growth in
line with the current UK rate of inflation and (iii) both scenarios
combined. There remains headroom on the covenants under each
scenario and cash remained in excess of the 31 December 2022
balance of GBP34.0m in all months.
Through our normal business practices, we are in regular
communication with our lenders and are satisfied they will be in a
position to continue supporting us for the foreseeable future.
The Directors therefore consider the strong balance sheet, with
good cash reserves and working capital along with financing
arrangements, provide ample liquidity. Accordingly, the Directors
have prepared the financial statements on a going concern
basis.
2. Accounting policies
These condensed financial statements have been prepared based on
the accounting policies detailed in the Group's financial
statements for the year ended 31 December 2022 and is consistent
with the policies applied in the previous year, except for the
following new standards The new standards which are effective
during the year (and have had a minimal impact on the financial
statements) are:
-- Amendments to IAS16: Property, Plant and Equipment (effective
for periods beginning on or after 1 January 2022);
-- Amendments to IAS37: Provisions, Contingent Liabilities and
Contingent Assets (effective for periods beginning on or after 1
January 2022); and
-- Amendments to IFRS3: Business Combinations (effective for
periods beginning on or after 1 January 2022).
Pre sentation of non-statutory alternative performance
measures
The Directors believe that Adjusted EBITDA, Adjusted EBITDA
margin, Adjusted profit before tax, Adjusted profit after tax and
Adjusted earnings per share provide additional useful information
on the core operational performance of the Group to shareholders,
and we review the results of the Group using these measures
internally. The term 'adjusted' is not a defined term under IFRS
and may not therefore be comparable with similarly titled profit
measures reported by other companies. It is not intended to be a
substitute for, or superior to, IFRS measures of profit.
Adjustments are made in respect of:
Share-based payments Share-based payment expenses are excluded
and associated costs from Adjusted EBITDA as they are a non-cash
charge, the awards are equity-settled and
the Directors believe they result in a level
of charge that would distort the user's view
of the core trading performance of the Group.
Restructuring, M&A The Group excludes these costs from Adjusted
(including contingent EBITDA where the nature of the item, or its
consideration) and size, is not related to the core underlying
refinancing costs trading of the Group. This is to assist the
user of the financial statements to better
understand the results of the core operations
of the Group and allow comparability of underlying
results.
-----------------------------------------------------
Amortisation and The amortisation charge for those intangible
impairment of acquired assets recognised on business combinations
intangible assets is excluded from Adjusted EBITDA since they
are non-cash charges arising from historical
investment activities. Any impairment charges
recognised in relation to these intangible
assets are also excluded from Adjusted EBITDA.
This is a common adjustment made by acquisitive
information service businesses and is therefore
consistent with peers.
-----------------------------------------------------
Revaluation of short- Gains and losses are recognised within Adjusted
and long-term derivatives EBITDA when they are realised in cash terms
and therefore we exclude non-cash movements
arising from fluctuations in exchange rate
as these may not reflect the underlying performance
of the Group, which better aligns Adjusted
EBITDA with the cash performance of the business.
-----------------------------------------------------
Unrealised operating
foreign exchange
gain/loss
-----------------------------------------------------
3. Segmental analysis
The principal activity of GlobalData Plc and its subsidiaries
(together 'the Group') is to provide business information in the
form of high quality proprietary data, analytics and insights to
clients in multiple sectors.
IFRS8 "Operating Segments" requires the segment information
presented in the financial statements to be that which is used
internally by the chief operating decision maker to evaluate the
performance of the business and to decide how to allocate
resources. The Group has identified the Chief Executive as its
chief operating decision maker.
The Group maintains a centralised operating model and single
product platform (One Platform), which is underpinned by a common
taxonomy, shared development resource, and new data science
technologies. The fundamental principle of the GlobalData business
model is to provide our clients with subscription access to our
proprietary data, analytics, and insights platform, with the
offering of ancillary services such as consulting, single copy
reports and events. The vast majority of data sold by the Group is
produced by a central research team which produces data for the
Group as a whole. The central research team reports to one central
individual, the Managing Director of the India operation, who
reports to the Group Chief Executive. 'Data, Analytics and
Insights' is therefore considered to be the operating segment of
the Group.
The Group profit or loss is reported to the Chief Executive on a
monthly basis and consists of earnings before interest, tax,
depreciation, amortisation, central overheads and other adjusting
items. The Chief Executive also monitors revenue within the
operating segment.
The Group considers the use of a single operating segment to be
appropriate due to:
-- The Chief Executive reviewing profit or loss at the Group level;
-- Utilising a centralised operating model;
-- Being an integrated solutions based business, rather than a portfolio business; and
-- The M&A strategy of the Group being to fully integrate within the One Platform.
A reconciliation of Adjusted EBITDA to profit before tax from
continuing operations is set out below:
Year ended Year ended
31 December 31 December
2022 2021
GBPm GBPm
Adjusted EBITDA 86.4 64.4
Restructuring costs (0.6) (1.2)
M&A costs (2.9) (2.4)
Contingent consideration (1.0) -
Refinancing costs (1.9) (0.2)
Share-based payment charge (4.1) (9.2)
Costs relating to share-based payment
schemes (0.9) -
Revaluation loss on short and long-term
derivatives (0.6) (0.9)
Unrealised operating foreign exchange
(losses)/gains (1.9) 1.0
Amortisation of acquired intangibles (9.1) (5.6)
Depreciation (6.4) (6.8)
Amortisation (excluding amortisation
of acquired intangible assets) (1.0) (0.9)
Finance costs (17.6) (5.6)
Profit before tax 38.4 32.6
----------------------------------------- ------------- -------------
The Group generates revenue from services provided over a period
of time such as recurring subscriptions and other services which
are deliverable at a point in time such as reports, events and
custom research.
Subscription income for online services, data and analytics
(typically 12 months) is normally invoiced at the beginning of the
services and is therefore recognised as a contract liability,
"deferred revenue", in the statement of financial position. Revenue
is recognised evenly over the period of the contractual term as the
performance obligations are satisfied evenly over the term of
subscription.
The revenue on services delivered at a point in time is
recognised when our contractual obligation is satisfied, such as
delivery of a static report or delivery of an event. The obligation
on these types of contracts is a discrete obligation, which once
met satisfies the Group performance obligation under the terms of
the contract.
Any invoiced contracted amounts which are still subject to
performance obligations and where the payment has been received or
is contractually due are recognised within deferred revenue at the
statement of financial position date. Typically, the Group receives
settlement of cash at the start of each contract and standard terms
are zero days. Similarly, if the Group satisfies a performance
obligation before it receives the consideration or is contractually
due the Group recognises a contract asset within accrued income in
the statement of financial position.
Revenue recognised in the Consolidated Income Deferred Revenue recognised within the
Statement Consolidated Statement of Financial Position
Year ended 31 Year ended 31 As at 31 December As at 31 December
December 2022 December 2021 2022 2021
GBPm GBPm GBPm GBPm
Services transferred:
Over a period of
time 196.5 156.9 91.6 73.1
At a point in time 46.7 32.4 12.4 8.3
----------------------- ---------------------- ---------------------- --------------------- ----------------------
Total 243.2 189.3 104.0 81.4
As subscriptions are typically for periods of 12 months the
majority of deferred revenue held at 31 December will be recognised
in the income statement in the following year. As at 31 December
2022, GBP1.1m (2021: GBP0.4m) of the deferred revenue balance will
be recognised beyond the next 12 months. In the year ended 31
December 2022 the Group recognised revenue of GBP81.0m (2021:
GBP74.1m) that was included in the deferred revenue balance at the
beginning of the period.
As at 31 December 2022, the total non-cancellable obligations
within deferred revenue to fulfil revenue amounted to GBP104.0m
(2021: GBP81.4m). As at the same date, the total non-cancellable
obligations within Invoiced Forward Revenue to fulfil revenue
amounted to GBP133.5m (2021: GBP107.7m).
In instances where the Group enters into transactions involving
a range of the Group's services, for example a subscription and
custom research, the total transaction price for a contract is
allocated amongst the various performance obligations based on
their relative stand-alone selling prices.
Geographical analysis
Our primary geographical markets are serviced by our global
sales teams which are organised as Europe, US and Asia Pacific by
virtue of the team location. The below disaggregated revenue is
derived from the geographical location of our customers rather than
the team structure the Group is organised by.
From continuing operations
Year ended 31 December 2022 UK Europe Americas(1) Asia Pacific MENA (2) Rest of World Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue from external customers 36.0 64.7 91.4 27.2 16.6 7.3 243.2
--------------------------------- ----- ------- ------------ ------------- --------- -------------- ------
Year ended 31 December 2021 UK Europe Americas (1) Asia Pacific MENA (2) Rest of World Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue from external customers 27.8 51.8 67.8 21.0 13.9 7.0 189.3
--------------------------------- ----- ------- ------------- ------------- --------- -------------- ------
1. Americas includes revenue from the United States of America of GBP86.7m (2021: GBP65.7m)
2. Middle East & North Africa
Intangible assets held in the US and Canada were GBP33.4m (2021:
GBP34.3m), of which GBP29.1m related to goodwill (2021: GBP29.1m).
Intangible assets held in the UAE were GBP12.8m (2021: GBP13.6m) of
which GBP11.4m related to goodwill (2021: GBP11.4m). All other
non-current assets are held in the UK. The largest customer
represented less than 2% of the Group's consolidated revenue.
4. Operating profit
Operating profit is stated after the following expenses relating
to continuing operations:
Year ended Year ended
31 December 31 December
2022 2021
GBPm GBPm
Cost of sales 125.7 101.8
Administrative costs 60.9 49.0
186.6 150.8
Losses on trade receivables 0.7 1.2
------------------------------ -------------- --------------
Total operating expenses 187.3 152.0
------------------------------ -------------- --------------
5. Adjusting items
Year ended Year ended
31 December 31 December
2022 2021
GBPm GBPm
Amortisation of acquired intangibles 9.1 5.6
Share-based payment charge 4.1 9.2
M&A costs 2.9 2.4
Refinancing costs 1.9 0.2
Unrealised operating foreign
exchange loss/(gain) 1.9 (1.0)
Contingent consideration 1.0 -
Costs relating to share-based
payments scheme 0.9 -
Restructuring costs 0.6 1.2
Revaluation loss on short- and
long-term derivatives 0.6 0.9
Total adjusting items 23.0 18.5
--------------------------------------- -------------- --------------
The adjustments made are as follows:
-- The share-based payments charge is in relation to the s
hare-based compensation plans (detailed in note 10) under which the
entity receives services from employees as consideration for equity
instruments (options) of the Group. The fair value of the employee
services received in exchange for the grant of the options and
awards is recognised as an expense in the income statement. The
total amount to be expensed is determined by reference to the fair
value of the options granted. The original fair value on grant date
is charged to the income statement based upon the Monte-Carlo
method. Following modification on 30 November 2022, an additional
charge for the beneficial modification was determined by the
Black-Scholes method (more detail is contained within note 10).
-- The M&A costs consist of professional fees incurred in
both performing due diligence relating to potential acquisition
targets and performing completion activities in relation to
acquisitions made during the year, in addition to redundancy costs
in relation to group integration projects.
-- Refinancing costs consist of legal fees incurred in relation
to (i) the extension of the previously held term loan and RCF by
one year (completed during June 2022) and (ii) the arrangement of
the new loan facility which was drawn down upon during August
2022.
-- Unrealised operating foreign exchange losses and gains relate
to non-cash exchange losses and gains made on operating items.
-- The contingent consideration amounts relate to payments due
to the previous owners of MBI and TS Lombard between 2023 and 2025.
These have been treated as remuneration costs due to their being
contingent upon the former owners remaining as employees of the
Group at the time of payment.
-- Costs relating to share-based payments scheme consist of
employer taxes borne as a result of the vesting of the final
tranche of Scheme 1 during the year, and professional fees incurred
in advice obtained relating to the restructure of existing
schemes.
-- Restructuring relates to professional fees incurred in
relation to group reorganisation projects.
-- The revaluation of short- and long-term derivatives relates
to movement in the fair value of the short- and long-term
derivatives.
6. Earnings per share
The calculation of the basic earnings per share is based on the
earnings attributable to ordinary shareholders of the parent
company divided by the weighted average number of shares in issue
during the period. The Group also has a share options scheme in
place and therefore the Group has calculated the dilutive effect of
these options.
Year ended Year ended
31 December 2022 31 December 2021
Earnings per share attributable to equity holders from continuing
operations:
Basic
Profit for the period attributable to ordinary shareholders of the parent
company (GBPm) 30.5 24.9
Weighted average number of shares (no' m) 112.7 113.5
Basic earnings per share (pence) 27.1 21.9
Diluted
Profit for the period attributable to ordinary shareholders of the parent
company (GBPm) 30.5 24.9
Weighted average number of shares (no' m) 116.6 123.0
Diluted earnings per share (pence) 26.2 20.2
---------------------------------------------------------------------------- ------------------ ------------------
Reconciliation of basic weighted average number of shares to the
diluted weighted average number of shares:
Year ended
31 December 2022
No' m
Year ended
31 December 2021
No' m
Basic weighted average number of shares, net of shares held in treasury
reserve 112.7 113.5
Share options in issue at end of period, net of shares not paid up 3.9 9.5
--------------------------------------------------------------------------- ------------------- ------------------
Diluted weighted average number of shares 116.6 123.0
--------------------------------------------------------------------------- ------------------- ------------------
7. Intangible assets
Software Customer relationships Brands IP rights and database Goodwill Total
GBPm GBPm GBPm GBPm GBPm GBPm
Cost
As at 1 January 2021 12.2 44.0 16.1 50.2 227.7 350.2
Additions: Business
combinations 0.7 11.8 0.1 25.2 75.4 113.2
Additions: Separately
acquired 0.4 - - 0.1 - 0.5
Reclassification to PPE (0.5) - - - - (0.5)
Fair value adjustment - - - - (0.4) (0.4)
As at 31 December 2021 12.8 55.8 16.2 75.5 302.7 463.0
Additions: Business
combinations 0.9 9.5 10.0 2.4 19.2 42.0
Additions: Separately
acquired 1.7 - - - - 1.7
Fair value adjustment - - - - 0.1 0.1
As at 31 December 2022 15.4 65.3 26.2 77.9 322.0 506.8
--------------------------- --------- ----------------------- ------- ----------------------- --------- --------
Amortisation
As at 1 January 2021 (9.9) (28.8) (10.7) (48.3) (10.5) (108.2)
Additions: Business
combinations (0.5) - - - - (0.5)
Impairment - - - - (0.4) (0.4)
Charge for the year (0.9) (3.8) (0.6) (1.2) - (6.5)
Reclassification to PPE 0.3 - - - - 0.3
As at 31 December 2021 (11.0) (32.6) (11.3) (49.5) (10.9) (115.3)
Additions: Business
combinations (0.8) - - (0.5) - (1.3)
Charge for the year (1.1) (5.2) (0.9) (2.9) - (10.1)
As at 31 December 2022 (12.9) (37.8) (12.2) (52.9) (10.9) (126.7)
--------------------------- --------- ----------------------- ------- ----------------------- --------- --------
Net book value
As at 31 December 2022 2.5 27.5 14.0 25.0 311.1 380.1
As at 31 December 2021 1.8 23.2 4.9 26.0 291.8 347.7
--------------------------- --------- ----------------------- ------- ----------------------- --------- --------
Additions as a result of business combinations in the year have
been disclosed in further detail in note 11.
8. Borrowings
31 December 31 December
2022 2021
GBPm GBPm
Short-term lease liabilities 5.4 4.1
Short-term borrowings - 5.0
Current liabilities 5.4 9.1
------------------------------- ------------ ------------
Long-term lease liabilities 24.6 29.3
Long-term borrowings 283.6 195.2
Non-current liabilities 308.2 224.5
------------------------------ ------ ------
The changes in the Group's borrowings can be classified as
follows:
Short-term
lease
Short-term Long-term liabilities Long-term lease
borrowings borrowings (1) liabilities (1) Total
GBPm GBPm GBPm GBPm GBPm
---------------------------------- ---------------- ---------------- --------------- ---------------- --------
As at 1 January 2021 5.0 70.8 4.1 35.8 115.7
----------------------------------- ---------------- ---------------- --------------- ---------------- --------
Cash flows:
* Repayment (5.0) - (5.8) - (10.8)
* Proceeds - 129.0 - - 129.0
* Loan fees paid - (0.4) - - (0.4)
Non-cash:
* Interest expense - 0.8 - - 0.8
* Lease additions - - 2.4 - 2.4
* Lease liabilities (2) - - 0.6 (3.7) (3.1)
* Reclassification 5.0 (5.0) 2.8 (2.8) -
----------------------------------- ---------------- ---------------- --------------- ---------------- --------
As at 31 December 2021 5.0 195.2 4.1 29.3 233.6
----------------------------------- ---------------- ---------------- --------------- ---------------- --------
Cash flows:
* Repayment (2.5) - (5.9) - (8.4)
* Proceeds - 321.0 - - 321.0
* Loan fees paid - (8.0) - - (8.0)
* Settlement of loan - (229.2) - - (229.2)
Non-cash:
* Interest expense - 2.1 - - 2.1
* Lease additions - - 0.6 - 0.6
* Lease liabilities (2) - - 1.5 0.4 1.9
* Reclassification (2.5) 2.5 5.1 (5.1) -
As at 31 December 2022 - 283.6 5.4 24.6 313.6
----------------------------------- ---------------- ---------------- --------------- ---------------- --------
Term loan and RCF
On 5 August 2022, the Group successfully completed a refinancing
of external debt facilities. This resulted in settlement of the
previously drawn-down position of GBP229.2m and draw down on the
new term loan facility of GBP290.0m on 9 August 2022, increasing
cash reserves of the Group. The settlement of the previously held
loan qualified as a substantial modification and therefore, in
accordance with IFRS9, the previous loan was derecognised from the
statement of financial position resulting in a credit to the income
statement of GBP2.8m.
The new facilities have been arranged to cover a period of three
years. There are no fixed periodic capital repayments, with the
full balance being due for settlement when the facilities expire in
August 2025. If the Group needs further debt funding in order to
support M&A activity, the new facility includes a GBP120.0m
revolving credit facility (RCF). The term loan is syndicated
between 12 lenders and the RCF is syndicated between 13
lenders.
As at 31 December 2022, the Group had fully drawn down the term
loan of GBP290.0m. The Group is yet to draw down the available RCF
facility of GBP120.0m. Due to offsetting of loan fees paid as part
of the refinancing process, the term loan is held on the statement
of financial position with a value of GBP283.6m.
Interest is currently charged on the term loan at a rate of
3.25% over the Sterling Overnight Index Average rate (SONIA) and is
payable at the end of each calendar quarter. The Group entered into
an interest rate swap during October 2022, with an effective date
of 30 September 2022 based on a notional amount of GBP290.0m, which
aligns to the current term loan draw down. The agreement is to
swap, on a calendar quarter basis, SONIA for a fixed rate of
4.9125%.
9. Equity
Share capital
Authorised, allotted, called up and fully paid:
31 December 2022 31 December 2021
No'000 GBP000s No'000 GBP000s
Ordinary shares (1/14(th) pence) 118,303 84 118,303 84
Deferred shares of GBP1.00 each 100 100 100 100
----------------------------------------------------- -------- -------- -------- --------
Total authorised, allotted, called up and fully paid 118,403 184 118,403 184
----------------------------------------------------- -------- -------- -------- --------
Share Purchases
During the year the Group's Employee Benefit Trust purchased an
aggregate amount of 5,274,462 shares (representing 4.5% of the
total share capital), each with a nominal value of 1/14(th) pence,
at a total market value of GBP66.6m. The purchased shares will be
held for the purpose of satisfying the exercise of share options
under the Company's Employee Share Option Plan.
During the year, a total of 4,503,327 shares (representing 3.8%
of the total share capital), each with a nominal value of 1/14(th)
pence, which were held by the Group's Employee Benefit Trust were
utilised as a result of the vesting of the final tranche of Scheme
1 share options (at a total market value of GBP57.0m), as disclosed
in note 10.
The maximum number of shares (each with a nominal value of
1/14(th) pence) held by the Employee Benefit Trust (at any time
during the year ended 31 December 2022) was 6,068,381 (representing
5.1% of the total share capital).
The purchase of shares by the trust is to limit the eventual
dilution to existing shareholders. As at 31 December 2022, based
upon the restructured vesting schedules (see note 10), no dilution
is forecast until 2027.
2023 2024 2025 2026 2027 Total
Vesting Schedule No. No. No. No. No. No.
Scheme 1* 997,227 997,226 - - - 1,994,453
Scheme 2 - 840,000 840,000 840,000 840,000 3,360,000
Scheme 4 - - 171,600 343,200 1,201,200 1,716,000
------------------ ---------- ------------ ------------ ------------ ---------- ------------
Total 997,227 1,837,226 1,011,600 1,183,200 2,041,200 7,070,453
Shares held in
trust (997,227) (1,837,226) (1,011,600) (1,183,200) (543,772) (5,573,025)
------------------ ---------- ------------ ------------ ------------ ---------- ------------
Net dilution - - - - 1,497,428 1,497,428
------------------ ---------- ------------ ------------ ------------ ---------- ------------
Capital management
The Group's capital management objectives are:
-- To ensure the Group's ability to continue as a going concern; and
-- To fund future growth and provide an adequate return to
shareholders and, when appropriate, distribute dividends.
The capital structure of the Group consists of net bank debt,
which includes borrowings (note 8) and cash and cash equivalents,
and equity.
The Company has two classes of shares. The ordinary shares carry
no right to fixed income and each share carries the right to one
vote at general meetings of the Company.
The deferred shares do not confer upon the holders the right to
receive any dividend, distribution or other participation in the
profits of the Company. The deferred shares do not entitle the
holders to receive notice of or to attend and speak or vote at any
general meeting of the Company. On distribution of assets on
liquidation or otherwise, the surplus assets of the Company
remaining after payments of its liabilities shall be applied first
in repaying to holders of the deferred shares the nominal amounts
and any premiums paid up or credited as paid up on such shares, and
second the balance of such assets shall belong to and be
distributed among the holders of the ordinary shares in proportion
to the nominal amounts paid up on the ordinary shares held by them
respectively.
There are no specific restrictions on the size of a holding nor
on the transfer of shares, which are both governed by the general
provisions of the Articles of Association and prevailing
legislation. The Directors are not aware of any agreements between
holders of the Company's shares that may result in restrictions on
the transfer of securities or on voting rights.
No person has any special rights of control over the Company's
share capital and all its issued shares are fully paid.
With regard to the appointment and replacement of Directors, the
Company is governed by its Articles of Association, the Companies
Act and related legislation. The Articles themselves may be amended
by special resolution of the shareholders. The powers of Directors
are described in the Board Terms of Reference, copies of which are
available on request.
Dividends
The final dividend for 2021 was 13.2 pence per share and was
paid in April 2022. The total dividend for the current year is 26.0
pence per share, with an interim dividend of 7.7 pence per share
paid on 7 October 2022 to shareholders on the register at the close
of business on 9 September 2022, and a final dividend of 18.3 pence
per share which will be paid on 28 April 2023 to shareholders on
the register at the close of business on 31 March 2023. The
ex-dividend date will be 30 March 2023.
Treasury reserve
The treasury reserve represents the cost of shares held in the
Group's Employee Benefit Trust for the purpose of satisfying the
exercise of share options under the Company's Employee Share Option
Plan.
The disclosures above are for both the Group and the
Company.
Foreign currency translation reserve
The foreign currency translation reserve contains the
translation differences that arise upon translating the results of
subsidiaries with a functional currency other than Sterling. Such
exchange differences are recognised in the income statement in the
period in which a foreign operation is disposed of.
Cash flow hedge reserve
The cash flow hedge reserve contains the fair valuation
movements arising from revaluation of interest rate swaps. Changes
in fair value of derivative financial instruments that are
designated, and effective, cash flow hedges of forecast
transactions are recognised in other comprehensive income and
accumulated under the heading of cash flow hedge reserve, limited
to the cumulative change in fair value of the hedged item from
inception of the hedge. The gain or loss relating to the
ineffective portion is recognised immediately in profit or loss.
The cumulative amount recognised in other comprehensive income and
accumulated in equity is reclassified into the consolidated income
statement out of other comprehensive income in the same period when
the hedged item is recognised in profit or loss.
10. Share based payments
Scheme 1 - fully vested and closed to new participants
The Group created a share option scheme during the year ended 31
December 2010 and granted the first options under the scheme on 1
January 2011 to certain senior employees. Each option granted
converts to one ordinary share on exercise. A participant may
exercise their options subject to employment conditions and
Adjusted EBITDA targets being met. For these options to be
exercised the Group's earnings before interest, taxation,
depreciation and amortisation, as adjusted by the Remuneration
Committee for significant or one-off occurrences, must exceed
certain targets. The fair values of options granted were determined
using the Black-Scholes model. The inputs used in the model
were:
-- share price at date of grant;
-- exercise price;
-- time to maturity;
-- annual risk-free interest rate; and
-- annualised volatility.
Each of the awards were subject to vesting criteria set by the
Remuneration Committee. As disclosed in the 2021 annual report and
accounts, the final vesting target of GBP52m Adjusted EBITDA
(excluding the impact of IFRS16) was met in the financial year
ending 31 December 2021 and therefore the final tranche of Scheme 1
options vested during 2022. Scheme 1 is now therefore closed.
The total charge recognised for the scheme during the 12 months
to 31 December 2022 was GBPnil (2021: GBP6.3m).
The Remuneration Committee approved the vesting of the final
tranche of Scheme 1 on 11 August 2022. The awards of the scheme
were settled with ordinary shares of the Company. Whilst the
majority of participants chose to exercise their options (4.5m
options), holders of the remaining 2.0m options chose to defer
their exercise, as allowable under the scheme rules. As a result of
the final tranche of options vesting during the year, GBP62.4m was
transferred from the Group's treasury reserve to retained earnings
of which GBP58.6m is distributable. The weighted average price of
the exercised options at the date of exercise was GBP13.85 per
share.
Reconciliation of movement in the number of options is provided
below. No new grants were awarded during 2022.
Remaining life
Option exercise price Number of
(pence) (years) options
31 December 2021 1/14th 0.0 6,547,557
Exercised 1/14th N/A (4,503,327)
Forfeited 1/14th N/A (49,777)
------------------ ----------------------- --------------- ------------
31 December 2022 1/14th 0.0 1,994,453
------------------ ----------------------- --------------- ------------
The options carried forward as at 31 December 2022 are both
outstanding and exercisable. The maximum term of the remaining
options outstanding is 10 years, ending in August 2033.
Schemes 2 and 4
During the year, the Remuneration Committee reviewed the
structure of the targets for Schemes 2 and 4 against the original
objectives of the scheme. As set out in detail within the
Remuneration report on page 53 of the Group's Annual Report and
Accounts for the year ended 31 December 2022, the Committee
determined it appropriate to change the methodology of targets from
a Total Shareholder Return (TSR) basis to an EBITDA basis.
In order to account for the restructure, management firstly
calculated the fair value of each scheme based upon both the
existing TSR targets and the proposed new EBITDA targets. The
valuation date was determined as 30 November 2022, being the date
the change was verbally communicated to option holders.
-- TSR basis - The fair value of Schemes 2 and 4 were calculated
as at 30 November 2022, based upon the remaining performance period
and existing TSR targets. The fair values of each individual
tranche were determined using the Monte Carlo method, using the
inputs; valuation date and share price, vesting dates, expected
term, risk free rate, dividend yield and volatility.
-- EBITDA basis - The fair value of Schemes 2 and 4 were
calculated as at 30 November 2022, based upon the remaining
performance period and proposed EBITDA targets. The fair values of
each individual tranche were determined using the Black-Scholes
model, using the inputs; valuation date and share price, exercise
price, vesting dates, risk free rate, and volatility.
Management then determined whether or not it considered the
modification to be a beneficial modification. Whilst it concluded
that the targets were calculated based upon a comparable compounded
growth rate when compared to the original vesting targets, for
accounting purposes it was deemed a beneficial modification based
upon:
-- The significant increase in the fair value of per share
moving from market vesting to non-market vesting target criteria,
as at 30 November 2022 when the changes were communicated to
employees;
-- The extension of the vesting period for Scheme 2 was partly
offset by splitting the target into four vesting targets, one of
which was brought forward from the original vesting period; and
-- Scheme 2 option holders now have four opportunities to
participate, compared with a single "hit or miss" target under the
old basis for target.
As Management determined a beneficial modification, the delta of
the fair values as at 30 November (being the difference in the fair
values of each tranche using the two target models) has been
charged to the income statement, spread over the remaining vesting
period for each tranche, from valuation date of 30 November 2022,
in accordance with IFRS2. In calculating this spreading of charge,
management also applied a churn assumption, based upon historical
employee churn data.
Fair value 30
Fair value 30 November November - EBITDA
- TSR target basis target basis
Scheme/ Tranche (GBP per grant) (GBP per grant)
---------------------- ----------------------- -------------------
Scheme 2
Tranche 1 3.80 11.79
Tranche 2 3.80 11.43
Tranche 3 3.80 11.09
Tranche 4 3.80 10.76
Scheme 4
Tranche 1 4.44 11.43
Tranche 2 1.84 11.09
Tranche 3 1.71 10.76
The below table summarises the detail of the targets under the
old and new structures.
Scheme 2 (2019) Scheme 4 (2021)
Old The award will vest if the The award will vest if the
basis compounded annual growth compounded annual growth
for (CAGR) in the Group's TSR (CAGR) in the Group's TSR
target performance over the five-year performance over the five-year
performance period (ending performance period (measured
March 2025) is equal to or in the February following
exceeds 16% per annum (100% year end) meets the below
vest). vesting criteria:
* If TSR achieves 6% compounded over 2022-2024 (10%
vest)
* If TSR achieves 16% compounded over 2022-2025 (20%
vest)
* If TSR achieves 16% compounded over 2022-2026 (70%
vest)
---------------------------------------------- --------------------------------------------------------------
New The awards will vest based The awards will vest based
basis upon the following proportions upon the following proportions
for if Adjusted EBITDA targets if Adjusted EBITDA targets
target are met, as measured in the are met, as measured in the
year end results for the year end results for the
below years: below years:
* 2023 GBP100m Adj EBITDA (25% Vest) * 2023 - Not Applicable
* 2024 GBP110m Adj EBITDA (25% Vest) * 2024 GBP110m Adj EBITDA (10% Vest)
* 2025 GBP125m Adj EBITDA (25% Vest) * 2025 GBP125m Adj EBITDA (20% Vest)
* 2026 GBP145m Adj EBITDA (25% Vest) * 2026 GBP145m Adj EBITDA (70% Vest)
---------------------------------------------- --------------------------------------------------------------
The change to Scheme 2 rules has resulted in the remaining life
of the scheme being extended from March 2025 to March 2027.
Within both Schemes 2 and 4, each option granted converts to one
ordinary share on exercise.
Scheme 2 - 2019 scheme
The following assumptions were used in the valuation under the
old performance criteria:
Weighted
Fair value average
of share Exercise Estimated of remaining
price at price forfeiture contractual
Award tranche Grant date grant date (pence) rate p.a. life (years)
--------------- --------------- ------------- ----------- ------------ --------------
31 October
Award 1 2019 GBP2.02 0.0714p 0% 2.0
Award 2 7 May 2020 GBP4.62 0.0714p 0% 2.0
Award 3 25 May 2020 GBP5.50 0.0714p 0% 2.0
Award 4 23 June 2020 GBP6.12 0.0714p 0% 2.0
22 September
Award 5 2020 GBP6.35 0.0714p 0% 2.0
17 November
Award 6 2020 GBP7.12 0.0714p 0% 2.0
Award 7 23 March 2021 GBP5.15 0.0714p 0% 2.0
The following assumptions were used in the valuation under the
new performance criteria and vesting periods:
Award Award Award Award Award
Award tranche 1 2 3 5 7
--------- --------- --------- --------- ---------
Grant date 31/10/19 07/05/20 25/05/20 22/09/20 23/03/21
Group achieves GBP100m EBITDA
by 31 March 2024 25% vest 25% vest 25% vest 25% vest 25% vest
Fair value at modification
date GBP11.79 GBP11.79 GBP11.79 GBP11.79 GBP11.79
Risk-free interest rate 3.169% 3.169% 3.169% 3.169% 3.169%
Estimated forfeiture rate 9% 9% 9% 9% 9%
Remaining contractual life 1.25 1.25 1.25 1.25 1.25
Group achieves GBP110m EBITDA
by 31 March 2025 25% vest 25% vest 25% vest 25% vest 25% vest
Fair value at modification
date GBP11.43 GBP11.43 GBP11.43 GBP11.43 GBP11.43
Risk-free interest rate 3.240% 3.240% 3.240% 3.240% 3.240%
Estimated forfeiture rate 15% 15% 15% 15% 15%
Remaining contractual life 2.25 2.25 2.25 2.25 2.25
Group achieves GBP125m EBITDA
by 31 March 2026 25% vest 25% vest 25% vest 25% vest 25% vest
Fair value at modification
date GBP11.09 GBP11.09 GBP11.09 GBP11.09 GBP11.09
Risk-free interest rate 3.201% 3.201% 3.201% 3.201% 3.201%
Estimated forfeiture rate 20% 20% 20% 20% 20%
Remaining contractual life 3.25 3.25 3.25 3.25 3.25
Group achieves GBP145m EBITDA
by 31 March 2027 25% vest 25% vest 25% vest 25% vest 25% vest
Fair value at modification
date GBP10.76 GBP10.76 GBP10.76 GBP10.76 GBP10.76
Risk-free interest rate 3.241% 3.241% 3.241% 3.241% 3.241%
Estimated forfeiture rate 25% 25% 25% 25% 25%
Remaining contractual life 4.25 4.25 4.25 4.25 4.25
Awards 4 and 6 had been forfeited at the time of modification.
For all options noted within the table above, the exercise price
per option is 0.0714p (equivalent to 1/14(th) pence) and the
expected dividend yield is 3.06%, which has been assumed to be paid
throughout the performance period. The volatility used within the
calculations was 26.87% which was determined by calculating the
Group's observed historical volatility over a period equal to the
time until the end of the assumed maturity date. The initial share
price used in the calculations was GBP12.25.
The estimated forfeiture rate assumption is based upon
management's expectation of the number of options that will lapse
over the vesting period and are reviewed annually. Management
believes the current assumptions to be reasonable.
The total charge recognised for the scheme during the 12 months
to 31 December 2022 was GBP3.3m (2021: GBP2.9m). The awards of the
scheme will be settled with ordinary shares of the Company.
Reconciliation of movement in the number of options in Scheme 2
is provided below.
Remaining life
Option exercise price Number of
(pence) (years) options
31 December 2021 1/14th 3.0 3,660,000
Forfeited 1/14th N/A (300,000)
31 December 2022 1/14th 2.8 3,360,000
------------------ ----------------------- --------------- ----------
The options carried forward as at 31 December 2022 are both
outstanding and exercisable.
Scheme 4 - 2021 scheme
The following assumptions were used in the valuation under the
old performance criteria:
Award tranche Award 1
---------
Grant date 07/03/22
TSR achieves 6% compounded over 2022-2024 10% vest
Fair value at modification date GBP4.44
Estimated forfeiture rate 20%
Remaining contractual life 2.25
TSR achieves 16% compounded over 2022-2025 20% vest
Fair value at modification date GBP1.84
Estimated forfeiture rate 26%
Remaining contractual life 3.25
TSR achieves 16% compounded over 2022-2026 70% vest
Fair value at modification date GBP1.71
Estimated forfeiture rate 31%
Remaining contractual life 4.25
The following assumptions were used in the valuation under the
new performance criteria:
Award tranche Award 1
---------
Grant date 07/03/22
Group achieves GBP110m EBITDA by 31 March 2025 10% vest
Fair value at modification date GBP11.43
Risk-free interest rate 3.240%
Estimated forfeiture rate 20%
Remaining contractual life 2.25
Group achieves GBP125m EBITDA by 31 March 2026 20% vest
Fair value at modification date GBP11.09
Risk-free interest rate 3.201%
Estimated forfeiture rate 26%
Remaining contractual life 3.25
Group achieves GBP145m EBITDA by 31 March 2027 70% vest
Fair value at modification date GBP10.76
Risk-free interest rate 3.241%
Estimated forfeiture rate 31%
Remaining contractual life 4.25
For all options noted within the table above, the exercise price
per option is 0.0714p (equivalent to 1/14(th) pence) and the
expected dividend yield is 3.06%, which has been assumed to be paid
throughout the performance period. The volatility used within the
calculations was 26.87% which was determined by calculating the
Group's observed historical volatility over a period equal to the
time until the end of the assumed maturity date. The initial share
price used in the calculations was GBP12.25.
The estimated forfeiture rate assumption is based upon
management's expectation of the number of options that will lapse
over the vesting period and are reviewed annually. Management
believes the current assumptions to be reasonable.
The total charge recognised for the scheme during the 12 months
to 31 December 2022 was GBP0.8m (2021: GBPnil). The awards of the
scheme will be settled with ordinary shares of the Company.
Reconciliation of movement in the number of options in Scheme 4
is provided below.
Remaining life
Option exercise price Number of
(pence) (years) options
31 December 2021 1/14th N/A -
Granted 1/14th N/A 1,772,000
Forfeited 1/14th N/A (56,000)
31 December 2022 1/14th 3.9 1,716,000
------------------ ----------------------- --------------- ----------
The options carried forward as at 31 December 2022 are both
outstanding and exercisable.
11. Acquisitions
Media Business Insight Holdings Limited
On 9 June 2022 the Group acquired 100% of the share capital of
Media Business Insight Holdings Limited ("MBI") for cash
consideration of GBP22.9m. In August 2022, the Group paid a working
capital adjustment of GBP0.3m following finalisation of the
completion accounts. MBI and its subsidiaries had a bank balance of
GBP3.5m on the acquisition balance sheet, therefore the net cash
cost of the acquisition to the Group was GBP19.7m. The companies
within this group specialise in providing content, insight and
events for the creative media industry. In addition, there are a
number of contingent consideration payments due for settlement
between 2023-2025 up to a maximum amount of GBP1.6m, which are
being recognised as remuneration expenses within the income
statement and are disclosed as an adjusting item in note 5.
The amounts recognised for each class of assets and liabilities
at the acquisition date were as follows:
Carrying value Fair value adjustments Fair value
GBPm GBPm GBPm
Intangible assets consisting of:
Trade names - 9.4 9.4
Customer relationships - 5.5 5.5
Database - 0.4 0.4
Net assets acquired consisting of:
Property, plant and equipment 0.1 - 0.1
Intangible assets 0.9 (0.8) 0.1
Cash and cash equivalents 3.5 - 3.5
Trade and other receivables 2.8 (0.1) 2.7
Trade and other payables (4.1) 0.6 (3.5)
Corporation tax - (0.5) (0.5)
Deferred tax - (4.0) (4.0)
Fair value of net assets acquired 3.2 10.5 13.7
------------------------------------------- ----------------- ------------------------- -------------
The goodwill recognised in relation to the acquisition is as
follows:
Fair value
GBPm
Consideration 22.9
Working capital adjustment 0.3
Less net assets acquired (13.7)
------------------------------- -------
Goodwill 9.5
------------------------------- -------
In line with the provision of IFRS3, fair value adjustments may
be made within the 12-month period from the date of acquisition
which would result in an adjustment to the goodwill balance
reported above. The goodwill that arose on the combination can be
attributed to the assembled workforce, know-how and research
methodology. The fair values of the identified intangible assets
were calculated in line with the policies detailed on page 83 of
the Group's Annual Report and Accounts for the year ended 31
December 2022. The amount of goodwill which is expected to be
deductible for tax purposes is GBPnil.
The Group incurred legal and professional expenses of GBP0.8m in
relation to the acquisition. In the period from the date of
acquisition to 31 December 2022, the trade of MBI generated
revenues of GBP7.4m and EBITDA of GBP1.0m. If the acquisition had
occurred on 1 January 2022, Group revenue would have been GBP251.5m
and Group Adjusted EBITDA would have been GBP88.8m.
TSL Research Group Limited
On 31 August 2022 the Group acquired 100% of the share capital
of TSL Research Group Limited ("TS Lombard") for cash consideration
of GBP13.3m. The group of companies acquired provide economic and
political research, with a particular strength in emerging markets.
The acquisition provides the Group with further access to the asset
management sales channel to sell its full product suite to. In
addition, there are a number of contingent consideration payments
due for settlement during 2024 to a maximum amount of GBP3.0m,
which are being recognised as remuneration expenses within the
income statement and are disclosed as an adjusting item in note
5.
The amounts recognised for each class of assets and liabilities
at the acquisition date were as follows:
Carrying value Fair value adjustments Fair value
GBPm GBPm GBPm
Intangible assets consisting of:
Customer relationships - 4.0 4.0
Database - 1.5 1.5
Trade names - 0.6 0.6
Net assets acquired consisting of:
Cash and cash equivalents 0.1 - 0.1
Trade and other receivables 0.7 - 0.7
Trade and other payables (2.3) - (2.3)
Deferred tax - (0.3) (0.3)
Fair value of net (liabilities)/ assets acquired (1.5) 5.8 4.3
--------------------------------------------------- ----------------- ------------------------- -------------
The goodwill recognised in relation to the acquisition is as
follows:
Fair value
GBPm
Consideration 13.3
Less net assets acquired (4.3)
----------------------------- ------
Goodwill 9.0
----------------------------- ------
In line with the provision of IFRS3, fair value adjustments may
be made within the 12-month period from the date of acquisition
which would result in an adjustment to the goodwill balance
reported above. The goodwill that arose on the combination can be
attributed to the assembled workforce, know-how and research
methodology. The fair values of the identified intangible assets
were calculated in line with the policies detailed on page 83 of
the Group's Annual Report and Accounts for the year ended 31
December 2022. The amount of goodwill which is expected to be
deductible for tax purposes is GBPnil.
The Group incurred legal and professional expenses of GBP1.1m in
relation to the acquisition. In the period from the date of
acquisition to 31 December 2022, the trade of TS Lombard generated
revenues of GBP1.7m and EBITDA of GBP0.1m. If the acquisition had
occurred on 1 January 2022, Group revenue would have been GBP247.1m
and Group Adjusted EBITDA would have remained at GBP86.4m.
Cash Cost of Acquisitions
The cash cost of acquisitions in 2022 comprises:
31 December 2022
GBPm
Acquisition of LMC: Working capital adjustment 0.7
Acquisition of MBI:
Cash consideration 22.9
Cash acquired (3.5)
Working capital adjustment 0.3
Acquisition of TS Lombard:
Cash consideration 13.3
Cash acquired (0.1)
33.6
------------------------------------------------ -----------------
12. Related party transactions
Mike Danson, GlobalData's Chief Executive Officer, owned 62.5%
of the Company's ordinary shares as at 31 December 2022 and 60.1%
as at 27 February 2023 and is therefore the Company's ultimate
controlling party. Mike Danson owns a number of businesses that
interact with GlobalData Plc, largely in part as a result of past
M&A transactions (GlobalData Holdings in 2016 and Research
Views Limited in 2018).
The Board has put in place an additional control framework to
ensure related party transactions are well controlled and managed.
Related party transactions are overseen by a subcommittee of the
Board. The Related Party Transactions Committee, consisting of 4
Non-Executive Directors and chaired by Murray Legg meets to:
o Oversee all related party transactions;
o Ensure transactions are in the best interests of GlobalData
and its wider stakeholders; and
o Ensure all transactions are recorded and disclosed on an arm's
length basis.
As noted in the 2021 Annual Report, it is the intention of the
Board and management to reduce and eventually eliminate related
party transactions and wind down the service agreements that are
currently in place. During 2022 we have continued the progress made
in 2021 and now expect to have eliminated all legacy relationships
with related parties by 31 December 2023.
During the year, the following related party transactions were
entered into by the Group:
Accommodation
During 2021, we eliminated all related party landlord
arrangements, following the sale of the John Carpenter and Essex
Street properties by the Estel Properties Group to third party
landlords, and secondly, the surrender of the Hatton Garden lease
by GlobalData. These transactions completed in the first half of
2021 and therefore charges during 2022 were GBPnil
(2021:GBP0.8m).
In addition, GlobalData Plc sub-let office space to other
companies owned by Mike Danson, but this also materially ceased
during 2021 with the exception of one property (the related party
tenant exited as at 31 December 2022 and therefore no related party
property transactions are expected in 2023). The total sub-lease
income for the year ended 31 December 2022 was GBP0.1m (2021:
GBP0.4m).
Corporate Support Services
In 2022 net corporate support charges of GBP0.6m were charged to
the Group from NS Media Group Limited ("NSMGL"), a related party by
virtue of common ownership (2021: GBP0.2m charge to NSMGL). The
corporate support charges principally consist of shared IT support
and software development. The IT contracts have been recharged on a
consistent basis to the previous year and are determined by
headcount. The shared software support is clearly segregated into
separate GlobalData and NSMGL teams and the charges are based upon
this segregation with a benchmarked mark-up. The Group expects the
related contracts to end during 2023, which will result in the
elimination of corporate support services transactions. The Group
expects that shared software development and support will also
cease in 2023.
Loan to Progressive Trade Media Limited
The previous outstanding loan was fully repaid on 31 January
2022 and generated interest income in 2022 of GBP5,000 (2021:
GBP0.05m). Interest was charged throughout the term of the loan at
a rate of 2.25% above LIBOR. The balance at 31 December 2022 is
GBPnil (2021: GBP0.9m). The loan was specifically entered into in
relation to the divestment of non-core print and advertising
businesses in 2016 and no further loan relationships are
expected.
Revenue contract containing IP sharing clause
The Group entered into a five-year data services agreement with
NSMGL in June 2020. The agreed suite of data services provided to
NSMGL have been contracted on terms equivalent to those that
prevail in arm's length transactions. The Group mutually agreed
with NSMGL to terminate this agreement on 1 July 2022 in order to
reduce the amount of related party transactions as well as a
different strategic direction in NSMGL. The total revenue generated
from this contract was GBP0.4m (2021: GBP1.4m) and the net
contribution generated was GBP0.2m (2021: GBP0.8m). The
cancellation was in accordance with the contracted terms.
NSMGL also acted as a sales distributor for some GlobalData
products. On these transactions they charged agent fees of GBP0.2m
(2021: GBP0.1m).
Charity Donations
During the year the Group paid donations of GBP0.1m (2021:
GBPnil) to charities in India which were funded by a related party
entity, The Danson Foundation (charity reference 1121928). This was
a pass-through transaction, with the Group facilitating payment to
our charity partners in India.
Balances Outstanding
As at 31 December 2022, the total balance receivable from NSMGL
was GBPnil. There is no specific credit loss provision in place in
relation to this receivable and the total expense recognised during
the period in respect of bad or doubtful debts was GBPnil.
The Group has taken advantage of the exemptions contained within
IAS24: Related Party Disclosures from the requirement to disclose
transactions between Group companies as these have been eliminated
on consolidation. The amounts outstanding for other related parties
were GBPnil (2021: GBP0.9m). There were no other balances owing to
or from related parties.
Directors and Key Management Personnel
The remuneration of Directors is disclosed within the Directors'
Remuneration Report on page 60 of the Group's Annual Report and
Accounts for the year ended 31 December 2022.
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