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GlobalData PLC (DATA)

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Monday 01 March, 2021

GlobalData PLC

Final Results For The Year Ended 31 December 2020

RNS Number : 6091Q
GlobalData PLC
01 March 2021
 

   

GlobalData Plc

Final Results For The Year Ended 31 December 2020 (unaudited)

"GlobalData's 'One Platform' model delivers significant margin improvement"

 

Key performance metrics

 2020

Unaudited

 

 

2019

Audited

 

 

Change

Revenue

£178.4m

£178.2m

0%

Adj. EBITDA 1

£56.7m

£49.8m

+14%

Adj. EBITDA margin

32%

28%

+4p.p.

Statutory PBT

£28.6m

£8.0m

+258%

Statutory PBT margin

16%

4%

+12p.p.

EPS

19.4p

3.3p

+488%

Adj. EPS 2

32.9p

30.2p

+9%

Net Debt 3

£58.1m

£55.3m

+5%

Deferred revenue

£74.7m

£68.6m

+9%

Invoiced forward revenue 4

£92.7m

£85.1m

+9%

 

Financial Highlights

· Subscription revenue up by 7% (2019: 7%), offset by a decline in event revenue due to COVID-19

· Adjusted EBITDA 1 up 14% to £56.7m (2019: £49.8m) 

· Adjusted EBITDA margin improvement of 4 percentage points to 32% 

· Statutory PBT grew by £20.6m to £28.6m (2019: £8.0m)

· Invoiced forward revenue 4 up 9% to £92.7m (2019: £85.1m), 8% organic growth in invoiced forward revenue

· Cash generated from continuing operations up 13% to 59.8m (2019: £52.8m), 105% of Adjusted EBITDA (2019: 106%)

· Final dividend of 11.6p, up 16% (2019: 10.0p); total dividend of 17.0p, up 13% (2019: 15.0p) 

 

Operational Highlights

· Business as usual maintained throughout 2020

· Significant advancement in product and platform; rapid response to customer demand for COVID-19 intelligence

· Continued investment in Growth Optimisation Plan and execution across strategic priorities

 

Mike Danson, CEO of GlobalData Plc, commented:   

"GlobalData made significant progress in 2020 despite the challenges of COVID-19. We continued to execute on our strategic priorities and delivered an impressive operational and financial performance. Excluding events, which account for less than 10% of our revenues, revenue grew at 7%, driving Adjusted EBITDA growth of 14% with margins improving by 4 percentage points to 32%."   

 

"We have invested considerably over several years to develop our business around a One Platform model. In 2020, this model proved its worth by enabling us to rapidly pivot our global workforce to remote working with little operational disruption, and to deliver the trusted, actionable intelligence our customers rely on us to provide when it matters most."   

 

"Our performance in 2020 and the attractiveness of the information services sector have given us a strong strategic, operating and financial position from which to grow in 2021. We can look forward to strong organic revenue growth and continued margin improvement in 2021 as we progress towards our medium term Adjusted EBITDA margin target of between 35% and 40% and have the ambition to accelerate our organic revenue growth to at least 10% annually." 

 

See Notes to Editors

 

Note 1: 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 7.

Note 2: Adjusted EPS: Adjusted profit after tax per share (reconciliation between statutory profit and adjusted profit shown on page 7).

Note 3: Net debt: Short and long-term borrowings (excluding lease liabilities) less cash and cash equivalents.

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 9.

ENQUIRIES

 

GlobalData Plc

 

 

0207 936 6400

Mike Danson (Chief Executive Officer), Graham Lilley (Chief Financial Officer)

 

 

 

Brokers

 

Bill Hutchings/ Mose Adigun - J.P. Morgan Cazenove (Nomad and Joint Broker)

0207 742 4000

Sam Barnett - HSBC (Joint Broker)

0207 991 8888

Erik Anderson/ Alina Vaskina - Panmure Gordon (Joint Broker)

0207 886 2500

 

 

Hudson Sandler

0207 796 4133

Nick Lyon

 

 

 

 

 

Notes to Editors  

 

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 capital 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.  

 

Strategic Priorities   
GlobalData's four strategic priorities are: World-Class Products, Sales Excellence, Client Centric, 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. In 2020, the core focus of the Growth Optimisation Plan was on Sales Excellence and the implementation of best-in-class technologies across our business to improve Client Centricity and Operational Agility.   

 

CHIEF EXECUTIVE'S REVIEW

 

GlobalData confronted tough commercial and operational challenges in 2020 as a result of COVID-19.  However, our Full Year 2020 results clearly demonstrate that we overcame those challenges and continued to progress GlobalData's strategic development through the year and we are well placed for a strong 2021.

 

Strategy Update

GlobalData was founded in 2016 with the mission to help our clients decode the future, make better decisions, and reach more customers. In 2020, we continued to consolidate and expand our strategic position as a leading data, insights, and analytics platform within the growing information services market. 

 

We benefit from long-term trends which are driving growing demand for our products from organisations of all sizes and types worldwide using data, insights and analytics to maintain their competitive advantage in an increasingly complex, dynamic and unpredictable world.

 

We have adopted a One Platform operating model which integrates our data assets, research capabilities and information technology to develop and deliver a portfolio of client solutions and digital community platforms to markets and customers worldwide. This platform also gives us the ability to respond rapidly to changing market conditions and customer needs by developing new solutions at speed and scale, with limited capital investment.

 

We have clear accessible paths to organic growth across our core markets and products, as well as the capability to enter new markets and develop new revenue streams. Given the diversified, scalable nature of our business we are confident in our ability to progress towards our medium term Adjusted EBITDA margin target of between 35% and 40% and have the ambition to accelerate our organic revenue growth to at least 10% annually.  

 

We aim to deliver against these targets by implementing a range of growth initiatives in four strategic priority areas:

World-Class Products, Sales Excellence, Client Centric and Operational Agility. 

 

Strategic Priorities - World-Class Products

During the year we continued to make significant advancements in strengthening our 'Gold Standard' capabilities within each individual vertical, including implementing a unified forecasting approach and common data lake across all industries.

 

We also continued to enhance our cross-vertical use of business fundamentals (e.g. Companies, Deals, News, Macroeconomics), proprietary Thematic Research, and expand our innovative horizontal "Alternative" data and analytics. These capabilities are integrated into our core vertical offering and help to differentiate our products in the marketplace by providing our customers with a richer and more complete intelligence offering.

 

As we see adoption of our product increase, we remain committed to creating a world-class user experience.  Not only does this help our users gain more value from their Intelligence Center and to work more effectively and efficiently, but it is key to driving subscription renewals. In 2020, we made significant investments in our platform, including introducing a range of new analytics and workflow tools such as our competitive intelligence tool, 'build your own report' tools and a new, more advanced content recommendation engine.

 

In 2020, we redesigned our largest free-to-access digital community platforms and invested in publishing repurposed proprietary data and insight content from our Intelligence Centers. This data-driven journalism and analyst reporting stimulated significant increases in traffic totalling 65 million unique visitors in 2020. This engagement with millions of professionals globally enhances our brand, drives leads and automated sales, as well as providing an innovative source of proprietary insight.

 

Strategic Priorities - Sales Excellence

In 2020, we focused on strengthening our existing sales capabilities by recruiting new commercial leadership talent across our Professional Services, Custom Solutions, and Communities Solutions sales teams.

 

We also invested significantly in creating a best practice sales enablement capability, including the introduction of a new structured salesperson on-boarding programme which resulted in an average time to first sale of between 4-10 weeks for the cohort of 20 salespeople that were enrolled in Q4 2020.

 

We also introduced:

· an enterprise learning management platform to support structured training pathways designed to improve sales skills, product knowledge, and use of in-role support technology. In particular, this platform supports our ability to train and coach our salesforce continuously and at scale on our evolving product portfolio.

 

· a conversation intelligence platform to analyse thousands of our client calls and meetings in real-time to better support coaching and identification of customer and competitor insights.

 

Strategic Priorities - Client Centric

In 2020, we made almost a 100% increase in headcount across our Customer Success teams and set best practice playbooks to scale operations efficiently by standardising our approach to Customer and User on-boarding, training, and on-going account management, focusing on the key touchpoints across our customer lifecycle. 

 

Complementing the above, we also adopted an in-product customer engagement tool which allows us to run targeted campaigns for our Intelligence Center users designed to encourage them to use specific product features. We ran four campaigns in the second half of 2020 each of which engaged an average of 35,000 users, leading to an average of 17% of users increasing their use of the features in the following 30 days.   This capability will play an important role in driving awareness and adoption of new product releases.

 

Strategic Priorities - Operational Agility

We continued to make progress in developing and executing our TechFirst programme and digital workplace strategy, which is designed to help all employees and teams work effectively and efficiently. Our focus in this area meant that during the first part of the year we successfully transitioned the entire organisation to working from home and ensured we continued to operate as "business as usual" with no colleagues being furloughed.  We equipped staff with laptops and secure remote access to our IT infrastructure and adapted our offices to meet recommended standards for working, enabling them to remain open throughout the pandemic to those employees who chose to use them.  We are fully prepared for a progressive return to a more normal working environment when conditions permit.  No material additional costs were incurred in adapting to COVID-19 working conditions.

 

As part of supporting the well-being of colleagues working remotely, we introduced a Group wide internal communications programme to keep employees connected to the business and their colleagues. The monthly on-line information sessions, presented by the Chief Executive, were well received and our employee feedback survey showed they substantially improved employee understanding of Company goals and strategy as we moved into 2021.

 

 

 

 

2020 Review

 

Impact of COVID-19

During the first part of the year we successfully transitioned the entire organisation to working from home and ensured we continued to operate as "business as usual".  We equipped staff with laptops and secure remote access to our IT infrastructure and adapted our offices to meet recommended standards for working, enabling them to remain open throughout the pandemic to those employees who chose to use them. 

 

As we reported in July, the initial impact constrained sales during the first half of the year, particularly in our events activities.  Over the full year revenues from events were approximately 53% lower than 2019.  However, this should be seen in the context of the small contribution events make, which was 10% of GlobalData's total revenues in 2019 compared to 5% in 2020. We accelerated development of our digital engagement capabilities and delivered 33 virtual events during the year, 26 of which had been run as live events in 2019.  In 2021 we will continue to expand our virtual events programme and we will resume some in person events when conditions allow.  Overall, we expect events - live and virtual - to continue to contribute revenues at a similar level to 2020.

 

The operational flexibility of the One Platform model allowed us to refocus resources from within our existing cost base to underpin our response to customer demand for insight and to do so without compromising the development roadmap of our core product and platform. We were able to quickly expand our dedicated team covering COVID-19 from 5 to over 200 analysts by April 2020 to provide our customers with the intelligence they needed to understand and analyse the economic, sectoral, market and company-level impacts. Our centralised product management and data science infrastructure - another facet of our 'Our Platform' capabilities - allowed us to rapidly develop a suite of new Intelligence Center product capabilities and other products, including over 2,000 analyst briefing reports, over 1,500 sector and company-specific reports, over 900 impact forecasts at market, brand, asset and company-level and more than 50 webinars.  We made these products available immediately at no additional cost to our subscription customers, driving Intelligence Center usage to peak in April 2020 at three times prior year usage.  

 

Trading Performance

Revenue - Renewal rates remained strong throughout 2020 and subscription sales gathered momentum through the second half contributing to subscription revenue growth of 7% for the full year. These positive trends resulted in 9% growth in invoiced forward revenue as at 31 December 2020 to £92.7m (2019: £85.1m).

 

Cost base - During the year we took steps to ensure our cost base remained in line with trading performance while also continuing to invest in Growth Optimisation Plan initiatives vital to driving the business's future development. As part of the management of costs, we slowed down the recruitment of additional sales heads as well as achieving more organic savings such as reduced travel and event hosting facilities' running costs. We only expect a marginal increment in costs going forward as a result of only some of these costs returning on a normalised basis.

 

Balance sheet - In 2020 we completed the re-financing of our debt facility, providing £145.5m of committed facility and a further £75m uncommitted accordion facility.  While our strategic focus is on exploiting GlobalData's organic growth opportunities, these new arrangements provide us with resources of more than £140m with which to take up acquisition opportunities as they arise. 

 

Key Performance Indicators

The key performance indicators below are used, in addition to statutory reporting measures, by the Executive Directors to monitor the Group's performance and progress.

 

 

 

Revenue

 

Invoiced Forward Revenue

Adjusted EBITDA

 

Adjusted EBITDA margin

 

Net Debt

 

 

 

 

 

 

 

2020 (Unaudited)

£178.4m

£92.7m

£56.7m

32%

£58.1m

2019 (Audited)

£178.2m

£85.1m

£49.8m

28%

£55.3m

% growth

0%

9%

14%

4p.p.

5%

 

We have continued to make progress against these KPIs.  As noted above, subscription revenue growth of 7% has been offset by a 53% decline in events revenue. The subscription growth has benefitted only very marginally from a small acquisition made in the year.

Due to the relatively stable cost base created by our 'One Platform' model, the business's profitability growth remains strong and in 2020 our margin improved towards our medium term Adjusted EBITDA margin target of between 35% and 40% as a result of year on year organic cost savings.

 

Dividend

Having regard to 2020's financial performance, cash generation and future prospects, the Board is pleased to announce a final dividend of 11.6 pence per share (2019: 10.0 pence). The proposed final dividend will be paid on 23 April 2021 to shareholders on the register at the close of business on 26 March 2021. The ex-dividend date will be on 25 March 2021.  The proposed final dividend increases the total dividend for the year to 17.0 pence per share (2019: 15.0 pence), an increase of 13%.

 

Outlook for 2021

A resilient performance in 2020, and the tailwinds which continue to drive information services sector growth, have given us a strong strategic, operating and financial position from which to grow in 2021. 

 

Underpinned by our strong invoiced forward revenue position of £92.7m at the start of the new financial year and sales growth, we look forward to strong organic revenue growth and continued margin improvement in 2021. We acknowledge the continuing economic impact of COVID-19, particularly in physical events, but we are confident in our model and now have a lesser exposure to event revenues as we move forward. We are confident that we will continue to fulfil the strategic ambitions set out in our Growth Optimisation Plan.

 

People 

I want to thank all my GlobalData colleagues for their impressive achievements in progressing the business while simultaneously responding and adapting to the effects of a global pandemic.  It is a measure of the commitment and capabilities of GlobalData's people that our entire organisation pivoted seamlessly to homeworking with no interruption to our normal business activity.  We look forward with great optimism that worldwide vaccination programmes will enable a gradual return to normal working patterns over the course of 2021.

 

Board

Earlier in the year we announced that Bernard Cragg would be stepping down as Chairman at the Annual General Meeting in April.  I would like to thank Bernard for his considerable years of service to GlobalData and wish him well for the future.

 

I am delighted that Murray Legg will take on the role of Non-Executive Chairman at the Annual General Meeting and we are also announcing the appointment of Catherine Birkett to the Board as independent non-executive. Following the Annual General Meeting on 20 April 2021, Catherine will succeed Murray Legg as chair of the Audit Committee.

 

We are planning to add further non-executive directors in the coming months.  Our intention is to continue to grow the Board's capabilities in order to enhance the support the Board provides to the business as it evolves.

 

 

 

 

Mike Danson

Chief Executive Officer

1 March 2021

 

   

 

 

 

Financial Review

£m

Year Ended

31 December 2020

Unaudited

 

Year Ended

31 December 2019

Audited

Restated 1

Revenue

178.4

178.2

Operating profit

33.0

12.7

Adjusting items

 

 

Depreciation

7.0

4.8

Amortisation of acquired intangible assets

10.7

16.3

Amortisation of software

1.1

0.9

Share based payments charge

4.2

10.9

Restructuring and refinancing costs

0.6

0.8

Costs of settlement of pension liabilities

-

2.2

Revaluation gain on short and long-term derivatives

(0.3)

(1.7)

Unrealised operating foreign exchange (gain)/ loss

(0.3)

1.4

M&A costs

0.7

1.5

Adjusted EBITDA

56.7

49.8

Adjusted EBITDA margin2

32%

28%

 

 

 

Statutory Profit Before Tax

28.6

8.0

Amortisation of acquired intangible assets

10.7

16.3

Share based payments charge

4.2

10.9

Restructuring and refinancing costs

0.6

0.8

Costs of settlement of pension liabilities

-

2.2

Revaluation gain on short and long-term derivatives

(0.3)

(1.7)

Unrealised operating foreign exchange (gain)/ loss

(0.3)

1.4

M&A costs

0.7

1.5

Adjusted Profit Before Tax

44.2

39.4

Income Tax Expense

(6.0)

(4.2)

Adjusted Profit After Tax

38.2

35.2

 

Cash flow analysis

 

 

 

Cash flow generated from continuing operations

59.8

52.8

Cash flow conversion %3

105%

106%

 

 

 

 

Earnings performance

 

 

 

Profit After Tax

22.6

3.8

 

Adjusted Profit After Tax

38.2

35.2

 

Basic Shares (millions)

116.2

116.5

 

Diluted Shares (millions)

124.8

125.7

 

Attributable to equity holders:

 

 

 

Basic earnings per share (pence)

19.4

3.3

 

Diluted earnings per share (pence)

18.1

3.0

 

Adjusted basic earnings per share (pence)

32.9

30.2

 

Adjusted diluted earnings per share (pence)

30.6

28.0

 

             

1 The restatement is in relation to the accounting treatment of the Pension buy-in, classification of other income and correction of understated prior year tax  expense as disclosed in note 1 to the Preliminary Results. 

2 Adjusted EBITDA margin is defined as: Adjusted EBITDA as a percentage of revenue. Note 2 discloses the rationale for the adjusting items in detail.

3 Cash flow conversion is defined as: Cash flow generated from continuing operations divided by Adjusted EBITDA

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 use statutory profit measures to assess business performance but also believe that Adjusted EBITDA 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 Group's performance this year

 

1.  Revenue

Overall revenue for the year was marginally ahead of the previous year at £178.4m (2019: £178.2m). Revenue performance included 7% growth in subscription revenue (which represents 83% of total revenue compared to 78% in 2019). The growth in subscriptions was driven by strong renewal rates, and together with strong new business momentum in the second half, also drove the invoiced forward revenue growth as at 31 December 2020.

 

However, the impact of COVID-19 on our ability to deliver physical events meant that event revenue was a drag on our overall results. Event revenues declined by £9.6m year on year, representing a 53% reduction. Event revenue has typically accounted for around 10% of Group revenue but moving forwards we expect this number to be nearer 5% of Group revenue with more focus on digital delivery.

 

2.  Profit before tax

Profit before tax for the year grew by £20.6m to £28.6m (2019: £8.0m), which partly reflects the operating leverage which has driven Adjusted EBITDA to grow by £6.9m to £56.7m (2019: £49.8m) and reductions in other operating costs.

 

Adjusted EBITDA

Adjusted EBITDA increased by 14% to £56.7m (2019: £49.8m). The growth in Adjusted EBITDA was achieved despite our relatively modest overall revenue growth, meaning our margins were significantly expanded (4 percentage points to 32% (2019: 28%)). This is reflective of our ability to control our cost base. Savings made in 2020 related to lower events costs, salesperson commissions and travel expenses. We expect only some of these costs to return on a normalised basis.

 

 Other operating costs

Further to the improved Adjusted EBITDA performance, there was a decline in other operating costs which contributed to an overall increase in statutory profit (Adjusting Items are disclosed in note 5). Notable variances included:

 

· Restructuring, M&A and refinancing costs have declined by £1.0m to £1.3m reflecting reduced M&A activity over the past year (2019: £2.3m).

· The non-recurring nature of the pension settlement of £2.2m during 2019, meaning nil cost in 2020.

· The share based payment charge has dropped from £10.9m to £4.2m in 2020 (a decline of £6.7m). The expectation was that the target for the 2010 share option scheme would be fully satisfied during 2020, but due to the COVID-19 impact on events revenue, the target was not met. We now expect the target to be met in 2021, meaning that the charge in 2020 has reduced due to a "true up" exercise on the cost during 2020 and the fair value of each option to be spread over an additional year (in line with IFRS2). Further details on share based payments can be found in note 10.

· The amortisation charge for acquired intangibles has declined by £5.6m to £10.7m (2019: £16.3m). This is reflective of assets becoming fully amortised and no significant M&A activity adding further intangible assets to the Group.

 

Leases

Within our operating costs, depreciation in relation to right-of-use assets was £5.6m (2019: £4.0m). Other income, in relation to sub-let income on right-of-use assets was £1.3m (2019: £1.3m). Our net finance costs include interest of £1.7m in relation to lease liabilities (2019: £1.6m).

 

 

 

3.  Cash Generation

Cash generated from continuing operations grew by 13% to £59.8m (2019: £52.8m) representing 105% of Adjusted EBITDA (2019: 106%), reflecting the fact that COVID-19 has not had a significant impact on the Group's working capital cycles.

 

Capital expenditure was £5.0m in 2020 (2019: £2.7m), including £1.5m on software (2019: £1.1m). The uplift reflects significant investment into the Group's computer hardware and cyber security systems. We expect that normal capital expenditure levels will return in 2021.

 

Total cash flows from operating activities was £51.0m (growth of £9.0m from 2019), which represented 155% of operating profit (2019: 331%).

 

Short and long term borrowings increased by £9.3m (inclusive of a £5.3m repayment) to £75.8m as at 31 December 2020 (2019: £66.5m), however the average debt drawn position throughout 2020 was lower than in 2019, which is reflected in the lower interest payments in the year.

 

During the year, the Group paid out £18.0m in dividends. As part of its treasury policy to cover the requirement of its share options schemes from market purchases, the Group bought back £23.7m of shares through the Group's Employee Benefit Trust.

 

4.  Net Debt:

Net debt increased to £58.1m as at 31 December 2020 (2019: £55.3m). This increase principally reflects strong cash flows, offset by contributions to the Employee Benefit Trust to buy back shares of £23.7m, dividends of £18.0m and an increase in capital expenditure to £5.0m.

 

The Group defines Net Debt as short and long term borrowings (note 8) less cash and cash equivalents. The amount excludes items related to leases.

 

£m

2020

2019

 

 

 

Short and long term borrowings (note 8)

75.8

66.5

Cash

(17.7)

(11.2)

Net Debt

58.1

55.3

 

5.  Invoiced forward revenue

Invoiced forward revenues grew by 9% from the 31 December 2019 balance of £85.1m to £92.7m, reflecting good momentum on sales orders in the latter quarter of 2020.

 

Invoiced forward revenue is a major component of our significant revenue visibility for the forthcoming year and when combined with other contracted (but not invoiced) revenue, and our expected return from renewals during 2021, we have visibility on £156m of revenue for 2021 as at 1 January 2020 (1 January 2019: £144m), a 9% increase.

 

£m

2020

2019

 

 

 

Deferred Revenue

74.7

68.6

Amounts not due/ subscription not started at 31 December

18.0

16.5

Invoiced forward revenue

92.7

85.1

 

Invoiced forward revenue includes £1.0m as at 31 December 2020, which is in relation to Progressive Content Limited, a company acquired in the year. Excluding this, the organic invoiced forward revenue was £91.7m, growth of 8%.

 

6.  Foreign exchange impact on results

The Group derives around 60% of revenues in currencies other than Sterling. The impact of currency movements in the year had a slightly positive impact on revenues of £0.3m (2019: positive £3.0m), which was offset in the consolidated income statement by approximately £0.6m adverse impact on costs (2019: adverse £2.4m), meaning that currency adversely affected the Group's profitability by £0.3m (2019: benefit £0.6m). The main driver for the movement was the fluctuation throughout the year of pound sterling in comparison to US dollar. In 2019 the average rate throughout the year was 1.27 compared to an average rate of 1.28 in 2020.

 

7.  Earnings per share

Basic EPS was 19.4 pence per share (2019: 3.3 pence per share). Fully diluted profit per share was 18.1 pence per share (2019: 3.0 pence per share).

 

On an adjusted basis, the adjusted earnings per share grew from 30.2 pence per share to 32.9 pence, representing 9% growth.

 

8.  Dividends

Having regard to 2020's financial performance, cash generation and future prospects, the Board is pleased to announce a final dividend of 11.6 pence per share (2019: 10.0 pence). The proposed final dividend will be paid on 23 April 2021 to shareholders on the register at the close of business on 26 March 2021. The ex-dividend date will be on 25 March 2021.  The proposed final dividend increases the total dividend for the year to 17.0 pence per share (2019: 15.0 pence), an increase of 13%.

 

The Company had, at all times, sufficient distributable profits to fund its distributions during 2020. However, following the year end, the Directors became aware that a proportion of a contribution made to the Employee Benefit Trust, in order to buy back shares to satisfy the employee share options plan, was technically an unlawful distribution in accordance with section 838 of the Companies Act 2006.  Despite having sufficient distributable profits, interim accounts had not been filed at Companies House, to demonstrate its reserves position, prior to the distribution. Furthermore, the Directors noted that again, whilst always maintaining distributable reserves in the company accounts, unlawful distributions by way of dividends and contributions to the Employee Benefit Trust were also made in 2019. There are no issues noted in this respect prior to 2019.

 

In order to correct the position, the Company will file interim accounts with Companies House in advance of the Annual General Meeting to demonstrate sufficient reserves. At the Company's Annual General Meeting, on 20 April 2021, the Company shall propose a resolution to remove any right the Company may have to claim from Directors and Shareholders in respect of the relevant contributions and distributions. The Company reserves as at 31 December 2020 are £33m, which are inclusive of the distributions made of £8.7m in 2019, £6.4m in 2020 and £0.3m in 2021 which were technically in breach of section 838 of the Companies Act 2006. No accounting entries need to be made to correct the position and the resolutions, if passed, will remedy the matter.

 

9.  Taxation

The Group's effective tax rate for the year was 21%. This is higher than the current UK rate of 19% which is broadly due to overseas tax suffered, mainly in the United States and India. There are a number of factors that will affect the Group's future total tax charge as a percentage of underlying profits, including the mix of profits and losses between the jurisdictions in which the Group operates.  A normalised effective tax rate is expected to be between 20% and 25%.

 

 

 

 

 

Consolidated Income Statement

 

 

Notes

Year ended 31 December 2020

Unaudited

 

Year ended 31 December 2019

Audited

Restated 1

Continuing operations

 

£m

£m

Revenue

3

178.4

178.2

Operating expenses

4

(146.7)

(166.8)

Other income

 

1.3

1.3

Operating profit

 

33.0

12.7

Net finance costs

 

(4.4)

(4.7)

Profit before tax

 

28.6

8.0

Income tax expense

 

(6.0)

(4.2)

Profit for the year

 

22.6

3.8

 

 

 

 

Attributable to:

 

 

 

Equity holders of the parent

 

22.6

3.8

 

 

 

 

Earnings per share attributable to equity holders:

 

 

 

Basic earnings per share (pence)

6

19.4

3.3

Diluted earnings per share (pence)

6

18.1

3.0

 

 

 

 

 

Reconciliation to Adjusted EBITDA2:

 

 

 

Operating profit

 

33.0

12.7

Depreciation

 

7.0

4.8

Amortisation of software

 

1.1

0.9

Adjusting items

5

15.6

31.4

Adjusted EBITDA2

 

56.7

49.8

 

 

1 Restatement

The comparative year's results have been restated:

· to include other income above operating profit, reflecting that the income is in relation to operations. This change has had no effect on profit before tax and Adjusted EBITDA for the comparative year.

· to charge the re-measurement of the pension liabilities arising on the pension buy-in as a cost through the Income Statement of £2.2m, previously the net re-measurement of assets and liabilities was reported through the Statement of Comprehensive Income. The restatement has had no impact on the Adjusted EBITDA of the prior year.

· to increase the income tax expense by £1.0m, reflecting that the tax deduction in relation to the exercise of share options during 2019 was inappropriately recognised within the Income Statement but should have been recognised directly in equity.  

 

Full disclosure included within note 1 to the Preliminary Results.

 

 

 

 

 

2 Adjusted EBITDA is defined 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 2020

Unaudited

 

Year ended 31 December 2019

Audited

Restated 1

 

£m

£m

Profit for the year

22.6

3.8

Other comprehensive income

 

 

Items that will be classified subsequently to profit or loss:

 

 

Net exchange losses on translation of foreign entities

(0.6)

-

Items that will not be classified subsequently to profit or loss:

 

 

Re-measurement of pension assets

-

0.9

Other comprehensive (loss)/ gain, net of tax

(0.6)

0.9

Total comprehensive income for the year

22.0

4.7

 

Attributable to:

 

 

Equity holders of the parent

22.0

4.7

 

 

1 The comparative year has been restated for the treatment of the pension buy-in and tax expense in relation to the exercise of share options during 2019, full disclosure included within note 1 of the Preliminary Results.

 

 

 

 

 

 

Consolidated Statement of Financial Position

 

Notes

31 December 2020

Unaudited

 

£m

31 December 2019

Audited

Restated 1

£m

Non-current assets

 

 

 

Property, plant and equipment

 

43.5

47.4

Intangible assets

7

242.0

250.1

Trade and other receivables

 

0.9

1.9

Deferred tax assets

 

5.4

8.7

 

 

291.8

308.1

Current assets

 

 

 

Trade and other receivables

 

44.9

45.8

Current tax receivable

 

1.6

-

Short-term derivative assets

 

1.2

0.9

Cash and cash equivalents

 

17.7

11.2

 

 

65.4

57.9

Total assets

 

357.2

366.0

Current liabilities

 

 

 

Trade and other payables

 

(100.2)

(96.1)

Short-term borrowings

8

(5.0)

(6.0)

Short-term lease liabilities

8

(4.1)

(3.9)

Current tax payable

 

(1.6)

(1.7)

Short-term derivative liabilities

 

(0.1)

(0.1)

Short-term provisions

 

(0.2)

(0.1)

 

 

(111.2)

(107.9)

Net current liabilities

 

(45.8)

(50.0)

Non-current liabilities

 

 

Long-term provisions

 

(0.5)

(0.5)

Deferred tax liabilities

 

(1.2)

(4.8)

Long-term lease liabilities

8

(35.8)

(40.7)

Long-term borrowings

8

(70.8)

(60.5)

 

 

(108.3)

(106.5)

Total liabilities

 

(219.5)

(214.4)

Net assets

 

137.7

151.6

Equity

 

 

 

Share capital

9

0.2

0.2

Share premium account

 

0.7

0.7

Treasury reserve

 

(21.4)

(11.0)

Other reserve

 

(37.1)

(37.1)

Merger reserve

 

163.8

163.8

Foreign currency translation reserve

 

0.2

0.8

Retained profit

 

31.3

34.2

Equity attributable to equity holders of the parent

 

137.7

151.6

 

 

 

1 The comparative year has been restated for the treatment of the pension buy-in and tax expense in relation to the exercise of share options during 2019, full disclosure included within note 1 of the Preliminary Results.

 

Consolidated Statement of Changes in Equity

 

 

 

 

Share capital

 

Share premium account

 

 

Treasury reserve

 

 

Other reserve

 

 

Merger reserve

 

Foreign currency translation reserve

 

Retained profit

Restated 1

Equity attributable to equity holders of the parent

 

£m

£m

£m

£m

£m

£m

£m

£m

Balance at 1 January 2019

0.2

0.2

(19.2)

(37.1)

163.8

0.8

41.7

150.4

Profit for the year (Restated) 1

-

-

-

-

-

-

3.8

3.8

Other comprehensive income:

 

 

 

 

 

 

 

 

Re-measurement of pension assets

-

-

-

-

-

-

0.9

0.9

Net exchange gain on translation of foreign entities

-

-

-

-

-

-

-

-

Total comprehensive profit for the year

-

-

-

-

-

-

4.7

4.7

Transactions with owners:

 

 

 

 

 

 

 

 

Share buy back

-

-

(3.5)

-

-

-

-

(3.5)

Dividends

-

-

-

-

-

-

(14.6)

(14.6)

Vesting of share options

-

0.5

11.7

-

-

-

(12.2)

-

Share based payments charge

-

-

-

-

-

-

10.9

10.9

Deferred tax on share based payments

-

-

-

-

-

-

3.7

3.7

Balance at 31 December 2019 (Audited)

0.2

0.7

(11.0)

(37.1)

163.8

0.8

34.2

151.6

Profit for the year

-

-

-

-

-

-

22.6

22.6

Other comprehensive income:

 

 

 

 

 

 

 

 

Net exchange loss on translation of foreign entities

-

-

-

-

-

(0.6)

-

(0.6)

Total comprehensive profit for the year

-

-

-

-

-

(0.6)

22.6

22.0

Transactions with owners:

 

 

 

 

 

 

 

 

Share buy back

-

-

(23.7)

-

-

-

-

(23.7)

Dividends

-

-

-

-

-

-

(18.0)

(18.0)

Vesting of share options

-

-

13.3

-

-

-

(13.3)

-

Share based payments charge

-

-

-

-

-

-

4.2

4.2

Deferred tax on share based payments

-

-

-

-

-

-

1.6

1.6

Balance at 31 December 2020 (Unaudited)

0.2

0.7

(21.4)

(37.1)

163.8

0.2

31.3

137.7

                   

 

 

1 The comparative year has been restated for the treatment of the pension buy-in and tax expense in relation to the exercise of share options during 2019, full disclosure included within note 1 of the Preliminary Results.

 

 

 

 

 

Consolidated Statement of Cash Flows

 

 

Continuing operations

 

Year ended

31 December 2020

Unaudited

 

Year ended

31 December 2019

Audited

Restated 1

Cash flows from operating activities

 

£m

£m

Profit for the year

 

22.6

3.8

Adjustments for:

 

 

 

Depreciation

 

7.0

4.8

Amortisation

 

11.8

17.2

Finance costs

 

4.4

4.7

Taxation recognised in profit or loss

 

6.0

4.2

Share based payments charge

 

4.2

10.9

Re-measurement of pension assets

 

-

0.9

Decrease in trade and other receivables

 

1.5

5.7

Increase in trade and other payables

 

2.5

2.9

Revaluation of short and long-term derivatives

 

(0.3)

(1.7)

Movement in provisions

 

0.1

(0.6)

Cash generated from continuing operations

 

59.8

52.8

Interest paid (continuing operations)

 

(2.4)

(3.0)

Income taxes paid (continuing operations)

 

(6.4)

(7.8)

Total cash flows from operating activities

 

51.0

42.0

Cash flows from investing activities (continuing operations)

 

 

 

Acquisitions

 

(1.0)

(8.2)

Cash received from repayment of loans

 

0.9

0.9

Purchase of property, plant and equipment

 

(3.5)

(1.6)

Purchase of intangible assets

 

(1.5)

(1.1)

Total cash flows used in investing activities

 

(5.1)

(10.0)

Cash flows from financing activities (continuing operations)

 

 

 

Repayment of borrowings

 

(5.3)

(10.5)

Proceeds from borrowings

 

15.0

6.4

Loan refinancing fee

 

(0.7)

-

Acquisition of own shares

 

(23.7)

(3.5)

Principal elements of lease payments

 

(6.1)

(5.0)

Dividend paid

 

(18.0)

(14.6)

Total cash flows used in financing activities

 

(38.8)

(27.2)

Net increase in cash and cash equivalents

 

7.1

4.8

Cash and cash equivalents at beginning of year

 

11.2

6.3

Effects of currency translation on cash and cash equivalents

 

(0.6)

0.1

Cash and cash equivalents at end of year

 

17.7

11.2

 

1 Restatement

The comparative year's statement of cash flows has been restated:

· to reduce operating profit by £2.2m for the year ended 31 December 2019 and increase the re-measurement of pension assets by the same amount reflecting a change to the accounting treatment of the pension buy-in (Adjusted EBITDA remains unaffected).

· to reduce operating profit by a further £1.0m and increase taxation expense by the same amount reflecting incorrect treatment of taxation on exercise of share options in 2019.

· to recognise principal elements of lease payments gross, not net of sub-lease income.

· to reclassify cash received from the repayment of loans into cash flows from investing activities.

 

Full disclosure included within note 1 to the Preliminary Results.

 

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 and listed on the Alternative Investment Market (AIM). 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 under the historical cost convention as modified by the revaluation of derivative financial instruments. Whilst the information included in the condensed financial statements has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRSs") as adopted by the European Union and as issued by the International Accounting Standards Board, this announcement does not itself contain sufficient information to comply with IFRSs. The condensed financial statements for the year ended 31 December 2020 have been prepared on a consistent basis with the financial accounting policies set out in the Accounting Policies section of the GlobalData Plc's Annual Report and Accounts for the year ended 31 December 2019 except as described below. These condensed financial statements are presented in Pounds Sterling (£).

 

The financial information for the year ended 31 December 2020 is unaudited and 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 2019 has been delivered to the Registrar of Companies. The independent auditors' report on the full financial statements for the year ended 31 December 2019 was unqualified and did not contain an emphasis of matter paragraph or any statement under section 498 of the Companies Act 2006.

 

This preliminary announcement does not constitute the Group's full financial statements for the year ended 31 December

2020. The Group's full financial statements will be approved by the Board of Directors and reported on by the auditors in March 2021. Accordingly, the financial information for 2020 is presented unaudited in the preliminary announcement.

 

Restatements

On 16 December 2019 the Group entered into an irrevocable agreement to sell the defined benefit pension scheme of World Market Intelligence Limited, a subsidiary of the Group, to Just Retirement Limited ("Just") through a two-step buy-out transaction under which all risks in relation to the scheme are transferred to Just.  The first step of the transaction involved the acquisition of a qualifying insurance policy that will cover the future pension obligations of the scheme (the "buy-in" step), at a cash cost to the Group of £1.3m subject to an adjusting payment on completion. The buy-out step, which resulted in the transfer of the scheme liabilities to the insurer, was completed on 22 February 2021. This transaction has been accounted for as a settlement. A charge of £2.2m has been recognised as a settlement cost, being the difference between the amount paid and the liability at the settlement date.  The prior year income statement has been restated to reflect this loss of £2.2m in the income statement. 

 

Previously, the loss of £2.2m was recognised in other comprehensive income offset by the reversal of an asset ceiling, recorded to limit the pension surplus able to be recognised under IFRSs, in the amount of £0.9m. As such, an overall entry of £1.3m was recognised in other comprehensive income in the prior year.  The reversal of the asset ceiling of £0.9m through other comprehensive income is not impacted by the restatement as this may not offset any loss recorded in the income statement in respect of this transaction. This adjustment has increased operating expenses by £2.2m and reduced operating profit and profit before tax by the same amount. Basic earnings per share reduced from 6.0 pence to 4.1 pence and diluted earnings per share from 5.6 pence to 3.8 pence (excludes the impact of the tax restatement detailed on page 17). The adjustment had no impact on the Group's net assets as at 31 December 2019 and no impact on the Group's Adjusted EBITDA.

 

The comparative period results have been restated to reclassify other income from below operating profit to above operating profit. Other income is comprised of sub-lease rental income related to the operations of the business and, as such, has been reclassified above operating profit. The restatement has increased operating profit for the year ended 31 December 2019 by £1.3m. Profit before tax, net assets and earnings per share is unaffected for the comparative period.

 

In the comparative period a tax deduction in relation to the exercise of share options in 2019 was fully recognised in the Income Statement and the prior period results have been restated to correctly recognise this directly in Equity because the amount of the accrued tax deduction exceeded the amount of the related cumulative remuneration expense and this excess should therefore be recognised directly in equity in accordance with IAS 12. At the same time, the comparative period tax expense has been updated for other prior year errors, predominantly errors identified in the Group's US tax returns which have subsequently been refiled. These changes have had no effect on profit before tax and Adjusted EBITDA for the comparative year but the income tax expense has increased by £1.0m, the taxation credit on share based payments within Equity has increased by £1.2m and current tax payable has reduced by £0.2m. These changes have reduced both basic and diluted earnings per share by 0.8 pence for the year ended 31 December 2019.  

 

The cash flow statement for the prior year has also been restated to recognise principal elements of lease payments gross of sub-lease rental income. Sub-lease rental income was incorrectly netted off against principal elements of lease payments and has been reclassified to total cash flows from operating activities. The restatement has increased the principal elements of lease payments by £1.3m for the year ended 31 December 2019. Total cash flows from operating activities has increased by the same amount.

 

The cash flow statement for the prior year has additionally been restated to reclassify £0.9m cash received from the repayment of loans from operating cash flows to investing cash flows.

 

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.

 

Key sources of estimation uncertainty

Management have performed an assessment and have concluded that there are no key sources of estimation uncertainty.

 

Critical accounting judgements

Segmental reporting

IFRS 8 "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 Officer (CEO) 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 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 team reports to one central individual, the Managing Director of the India operation who reports to the Group CEO. Data, analytics and insights is therefore considered to be the operating segment of the Group. Segmental reporting disclosures are provided in note 3.

 

The Group profit or loss is reported to the CEO monthly and consists of earnings before interest, tax, depreciation, amortisation, central overheads and other adjusting items (as detailed in note 5). The CEO also monitors revenue within the operating segment.

 

The Group considers the use of a single operating segment to be appropriate due to:

-  The CEO reviewing profit or loss at the Group level

-  Utilising a centralised operating model

-  Being an integrated solutions based business, rather than a portfolio business

 

Identification of Cash-Generating-Units

IAS 36 '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. Management have previously identified 8 CGUs, being Healthcare, Technology, Consumer, Construction, Energy, Financial Services, MEED and Communities which can all be traced back to acquisitions over recent years. Through being integrated and further developed within the Group, these assets all contribute to generating cash inflows for the wider business, covering all subject matter areas. All subject matters are accessible through the single operating platform ('One Platform'), and all products include access to a thin layer of information spanning across all markets and subjects. The exception to this is MEED (an indirect subsidiary of the Group based in the United Arab Emirates) which continues to be classified as an individual CGU due to having separately identifiable cash flows and financial results. Management have therefore identified 2 CGUs, being 'Data, Analytics and Insights' and MEED. Management recognise that this approach is different to the conclusion reached regarding the segmental reporting rationale of the Group, however this is appropriate because the IFRS criteria for identifying segments and CGUs differ. There are no historical or current impairment charges as a result of this change, and no impairment loss would have arisen in the current year under the previous CGU approach. Management have considered whether events should be classified as a separate CGU however have concluded that this is a route to market with the same underlying Data, Analytics and Insights product. If management had concluded that events was a separate CGU, no impairment loss would have arisen in the current year.

 

Going concern

The Group has closing cash of £17.7m as at 31 December 2020 and net debt of £58.1m (31 December 2019: net debt of £55.3m), being cash and cash equivalents less short and long-term borrowings, excluding lease liabilities. The Group has outstanding loans of £75.8m which are syndicated with The Royal Bank of Scotland, HSBC and Bank of Ireland. The Group has a further facility to draw upon of £65m RCF, plus a further uncommitted accordion facility of £75m. The Group's current banking facilities are in place until April 2023. The Group has generated £59.8m in cash from continuing operations during 2020.

 

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 2020. Management have 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 announcement of approval of the financial statements. The Directors recognise that the COVID-19 pandemic does create risks and uncertainties, and in response to this have modelled a number of scenarios to consider the potential impact of COVID-19 on the Group's results, cash flow and loan covenant forecast. Key assumptions built into the scenarios focus on new business growth rates, event revenue and directly attributable cost savings. There remains headroom on the covenants under each scenario. In addition to performing scenario planning, the Directors have also conducted stress testing of the business' 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

 

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 group financing arrangements, provide ample liquidity. Accordingly, the Directors have prepared the financial statements on a going concern basis.

 

2.  Accounting policies

 

These unaudited condensed financial statements have been prepared on a basis 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 IFRS 3: Definition of Business (issued on 22 October 2018 and effective for periods on or after 1 January 2020)

· Amendments to References to the Conceptual Framework in IFRS Standards (issued on 29 March 2018 and effective for periods on or after 1 January 2020)

· Amendments to IAS1 and IAS8: Definition of Material (issued in October 2018 and effective for periods on or after 1 January 2020)

· Amendments to IFRS9, IAS39 and IFRS7: Interest Rate Benchmark Reform (issued in September 2019 and effective for periods on or after 1 January 2020)

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 from Adjusted EBITDA as they are a non-cash charge, the awards are equity-settled and their effect on shareholders' returns is already reflected in diluted earnings per share measures.

Restructuring, M&A and refinancing costs

The Group considers these items of expense as exceptional and excludes them from Adjusted EBITDA where the nature of the item, or its size, is not related to the core underlying trading of the Group so as 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 of acquired intangible assets

The amortisation charge for those intangible assets recognised on business combinations is excluded from Adjusted EBITDA since they are non-cash charges arising from investment activities. These acquisitions were investment decisions that took place at different times over several years, and so the associated amortisation does not reflect the current trading performance of the Group. This is a common adjustment made by acquisitive information service businesses and therefore consistent with peers. 

Revaluation of short and long-term derivatives

Gains and losses are recognised within Adjusted EBITDA when they are realised in cash terms and therefore we exclude such non-cash movements, arising from fluctuations in exchange rate which may not reflect the underlying performance of the Group,  and which better aligns Adjusted EBITDA to 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.

 

IFRS 8 "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 Officer (CEO) 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 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 team reports to one central individual, the Managing Director of the India operation who reports to the Group CEO. 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 Officer on a monthly basis and consists of earnings before interest, tax, depreciation, amortisation, central overheads and other adjusting items. The Chief Executive Officer also monitors revenue within the operating segment.

 

The Group considers the use of a single operating segment to be appropriate due to:

-  The CEO reviewing profit or loss at the Group level

-  Utilising a centralised operating model

-  Being an integrated solutions based business, rather than a portfolio business

 

 

 

 

A reconciliation of Adjusted EBITDA to profit before tax from continuing operations is set out below:

 

 

Year ended

31 December 2020

Unaudited

 

£m

Year ended

31 December 2019

Audited

Restated

£m

Adjusted EBITDA

56.7

49.8

Adjusting items (see note 5)

(15.6)

(31.4)

Depreciation

(7.0)

(4.8)

Amortisation (excluding amortisation of acquired intangible assets 1 )

(1.1)

(0.9)

Finance costs

(4.4)

(4.7)

Profit before tax

28.6

8.0

1 Amortisation of acquired intangible assets included in Adjusting items above

 

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 received at the beginning of the services and is therefore recognised as a contract liability, "deferred revenue", on 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, is 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 Statement

Deferred Revenue recognised within the Consolidated Statement of Financial Position

 

Year ended 31 December 2020

Unaudited

Year ended 31 December 2019

Audited

As at 31

December 2020

Unaudited

As at 31

December 2019

Audited

 

£m

£m

£m

£m

Services transferred:

 

 

 

 

  Over a period of time

149.1

138.9

64.2

57.5

  Immediately on delivery

29.3

39.3

10.5

11.1

Total

178.4

178.2

74.7

68.6

 

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 2020 £1.1m (2019: £0.8m) of the deferred revenue balance will be recognised beyond the next 12 months. 

 

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 2020 (Unaudited)

UK

Europe

Americas 1

Asia Pacific

MENA 2

Rest of World

Total

 

£m

£m

£m

£m

£m

£m

£m

Revenue from external customers

26.3

49.7

62.8

19.2

13.1

7.3

178.4

 

Year ended 31 December 2019 (Audited)

UK

Europe

Americas 1

Asia Pacific

MENA 2

Rest of World

Total

 

£m

£m

£m

£m

£m

£m

£m

Revenue from external customers

27.7

49.4

62.0

17.7

15.0

6.4

178.2

 

1.  Americas includes revenue to the United States of America of £59.7m (2019: £58.5m)

2.  Middle East & North Africa

 

Intangible assets held in the US and Canada were £21.1m (2019: £21.5m), of which £19.7m related to Goodwill (2019: £19.7m). Intangible assets held in the UAE were £14.3m (2019: £15.9m) of which £11.4m related to Goodwill (2019: £11.4m). 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

31 December 2020

Unaudited

 

 

Year ended

31 December 2019

Audited

Restated

 

 

£m

£m

Cost of sales

 

101.0

106.8

Administrative costs - losses on trade receivables

 

1.3

2.3

Administrative costs - other

 

44.4

57.7

Operating expenses

 

146.7

166.8

 

 

5.  Adjusting items

 

 

 

  Year ended

31 December 2020

Unaudited

 

 

 

Year ended

31 December 2019

Audited

Restated

 

 

£m

£m

Restructuring costs

 

0.4

0.8

M&A costs

 

0.7

1.5

Refinancing costs

 

0.2

-

Costs of settlement of pension liabilities (note 1)

 

-

2.2

Share based payment charge

 

4.2

10.9

Revaluation gain on short and long-term derivatives

 

(0.3)

(1.7)

Unrealised operating foreign exchange (gain)/ loss

 

(0.3)

1.4

Amortisation of acquired intangibles

 

10.7

16.3

Total adjusting items

 

15.6

31.4

The adjustments made are as follows:

 

· Restructuring relates to a £0.1m charge incurred in relation to the pension buy-in transaction, a £0.2m charge incurred in relation to restructuring and £0.1m of fees incurred in relation to the Employee Benefit Trust.

· The M&A costs relate to deferred consideration payments in respect to an acquisition made in 2018, CHM Research Limited.

· Refinancing costs were £0.2m and are in relation to the refinancing activity completed in May 2020.

· Costs of settlement of pension liabilities reflects a charge of £2.2m in relation to the buy-in of the World Market Intelligence Limited defined benefit pension scheme. The scheme came into the Group as part of the acquisition of Research Views Limited and subsidiaries (World Market Intelligence Limited being a subsidiary of Research Views Limited) in 2018, the charge is therefore reflected as an adjusting item given it has arisen as part of M&A activity and relates to a corporate transaction to transfer the defined benefit obligations to a third party.

· The share based payments charge is in relation to the two 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 (fair value at the date of grant determined using the Black-Scholes model for scheme 1 and the Monte Carlo method for scheme 2), excluding the impact of any non-market service and performance vesting conditions (for example, profitability, sales growth targets and remaining an employee of the entity over a specified time period).

· The revaluation of short and long-term derivatives relates to movement in the fair value of the short and long-term derivatives.

· Unrealised operating foreign exchange (gains)/ losses relate to non-cash exchange gains and losses made on operating items.

 

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

31 December 2020

Unaudited

 

 

 

Year ended

31 December 2019

Audited

Restated

 

 
 

Earnings per share attributable to equity holders from continuing operations:

 

 

 

Basic

 

 

 

Profit for the period attributable to ordinary shareholders of the parent company (£m)

22.6

3.8

 

Weighted average number of shares (no' m)

116.2

116.5

 

Basic earnings per share (pence)

19.4

3.3

 

Diluted

 

 

 

Profit for the period attributable to ordinary shareholders of the parent company (£m)

22.6

3.8

 

Weighted average number of shares (no' m)

124.8

125.7

 

Diluted earnings per share (pence)

18.1

3.0

 

 

 

 

 

 

 

 

 

 

Reconciliation of basic weighted average number of shares to the diluted weighted average number of shares:

 

 

 

  Year ended

31 December 2020

Unaudited

No' m

 

Year ended

31 December 2019

Audited

No' m

 

 

Basic weighted average number of shares, net of shares held in Treasury reserve

 

116.2

116.5

Share options in issue at end of period, net of shares not paid up

 

8.6

9.2

Diluted weighted average number of shares

 

124.8

125.7

 

 

7.  Intangible assets

 

Software

Customer relationships

Brands

IP rights and Database

Goodwill

Total

 

£000s

£000s

£000s

£000s

£000s

£000s

Cost

 

 

 

 

 

 

As at 1 January 2019 (Audited)

9.7

42.6

15.7

47.1

222.8

337.9

Additions: Business Combinations

-

1.0

0.3

1.8

4.4

7.5

Additions: Separately Acquired

1.1

-

-

-

-

1.1

Fair value adjustment

-

-

-

-

0.1

0.1

Foreign currency retranslation

(0.1)

-

-

-

-

(0.1)

As at 31 December 2019 (Audited)

10.7

43.6

16.0

48.9

227.3

346.5

Additions: Business Combinations

-

0.4

-

1.3

0.4

2.1

Additions: Separately Acquired

1.5

-

-

-

-

1.5

Foreign currency retranslation

-

-

0.1

-

-

0.1

As at 31 December 2020 (Unaudited)

12.2

44.0

16.1

50.2

227.7

350.2

 

 

 

 

 

 

 

Amortisation

 

 

 

 

 

 

As at 1 January 2019 (Audited)

(8.1)

(20.9)

(8.2)

(31.6)

(10.5)

(79.3)

Charge for the year

(0.8)

(4.2)

(1.4)

(10.8)

-

(17.2)

Foreign currency retranslation

0.1

-

-

-

-

0.1

As at 31 December 2019 (Audited)

(8.8)

(25.1)

(9.6)

(42.4)

(10.5)

(96.4)

Charge for the year

(1.1)

(3.7)

(1.1)

(5.9)

-

(11.8)

As at 31 December 2020 (Unaudited)

(9.9)

(28.8)

(10.7)

(48.3)

(10.5)

(108.2)

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

As at 31 December 2020 (Unaudited)

2.3

15.2

5.4

1.9

217.2

242.0

1.9

18.5

6.4

6.5

216.8

250.1

               

 

Additions as a result of business combinations in the year have been disclosed in further detail in note 11.

 

 

 

 

 

8.  Borrowings

 

 

31 December 2020

Unaudited

£m

31 December

2019

Audited

£m

Short-term lease liabilities

 

4.1

3.9

Short-term borrowings

 

5.0

6.0

Current liabilities

 

9.1

9.9

 

Long-term lease liabilities

 

35.8

40.7

Long-term borrowings

 

70.8

60.5

Non-current liabilities

 

106.6

101.2

 

The changes in the Group's borrowings can be classified as follows:

 

 

 

 

Short-term borrowings

 

 

 

Long-term borrowings

 

Short-term lease liabilities 1

 

Long-term lease liabilities 1

 

Total

 

 

 

 

 

 

 

£m

£m

£m

£m

£m

 

1 January 2019 (Audited)

 

 

6.0

64.3

2.0

33.7

106.0

 

Cash-flows:

 

 

 

 

 

 

 

 

Repayment

 

 

(6.0)

(4.5)

(4.8)

-

(15.3)

 

Proceeds

 

 

-

6.4

-

-

6.4

 

Non-cash:

 

 

 

 

 

 

 

 

Loan fee amortisation

 

 

-

0.3

-

-

0.3

 

Lease additions

 

 

-

-

3.4

9.3

12.7

 

Lease liabilities 2

 

 

-

-

1.4

(0.4)

1.0

 

Reclassification

 

 

6.0

(6.0)

1.9

(1.9)

-

 

31 December 2019 (Audited)

 

 

6.0

60.5

3.9

40.7

111.1

 

Cash-flows:

 

 

 

 

 

 

 

 

-  Repayment

 

 

(5.3)

-

(6.1)

-

(11.4)

 

-  Proceeds

 

 

-

15.0

-

-

15.0

 

-  Loan fees paid

 

 

-

(0.7)

-

-

(0.7)

 

Non-cash:

 

 

 

 

 

 

 

 

-  Loan fee amortisation until modification date

 

 

-

0.1

-

-

0.1

 

-  Fair value adjustments since modification

 

 

-

0.2

-

-

0.2

 

-  Lease additions

 

 

-

-

0.3

-

0.3

 

-  Lease liabilities 2

 

 

-

-

1.6

(0.5)

1.1

 

-  Reclassification

 

 

4.3

(4.3)

4.4

(4.4)

-

 

As at 31 December 2020 (Unaudited)

 

 

5.0

70.8

4.1

35.8

115.7

 

1 Amounts are net of rental prepayments and accruals

2 Represents lease interest, dilapidations and movement on lease liability accruals and prepayments

                   

 

Term loan and RCF

In May 2020, the Group announced that it had agreed to increase its current banking facilities with NatWest, HSBC and Bank of Ireland, extending the current maturity to April 2023 (previously April 2022). The new arrangements increase the total committed facility to £145.5m (previously £100m), plus a further uncommitted accordion facility of £75m. The committed facility comprises a term loan of £50m and a revolving credit facility (RCF) of £95.5m.

 

The term loan is repayable in quarterly instalments, with total repayments due in the next 12 months of £5.0m. The outstanding term loan balance as at 31 December 2020 is £46.2m. A capitalised loan fee credit of £1.1m is included in the long term borrowing balance. As at 31 December 2020, the Group had drawn down £30.5m of the RCF. Interest is charged on the term loan and drawn down RCF at a rate of 2.5% over the London Interbank Offered Rate.

 

In accordance with IFRS 9 we have performed a comparison of the fair value of the new debt with the old to determine whether there has been a substantial modification requiring de-recognition. The assessment concluded that there has not been a substantial modification, the difference between the fair value of the new debt with the old is £0.2m and is included within the long term borrowings of £70.8m.

 

9.  Equity

 

Share capital

 

Allotted, called up and fully paid:

 

 

  31 December 2020

  Unaudited

  31 December 2019

  Audited

 

No'000

£000s

No'000

£000s

 

 

 

 

 

Ordinary shares (1/14th pence)

118,303

84

118,303

84

Deferred shares of £1.00 each

100

100

100

100

Total allotted, called up and fully paid

118,403

184

118,403

184

 

Share Purchases

As detailed in note 10, during the period the Group's Employee Benefit Trust purchased an aggregate amount of 2,102,250 shares at a total market value of £23.7m. The purchased shares will be held for the purpose of satisfying the exercise of share options under the Company's Employee Share Option Plan.

 

In May 2020, 1.8m outstanding share options held by GlobalData employees vested in accordance with the EBITDA target being satisfied under Tranche 2b and approved by the Remuneration Committee. The Group satisfied all of the share options exercised using the shares held by the Trust. Movements to the treasury reserve and retained earnings have arisen on the accounting for the vesting of the options as detailed in the Statement of Changes in Equity. This recognises the fact that no current year expense is incurred, as the vesting of options is a transaction with shareholders only.

 

Capital management

The Group's capital management objectives are:

· To ensure the Group's ability to continue as a going concern

· 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 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 2019 was 10.0p per share and was paid in June 2020. The total dividend for the current year is 17.0 pence per share, with an interim dividend of 5.4 pence per share paid on 2 October 2020 to shareholders on the register at the close of business on 28 August 2020 and a final dividend of 11.6 pence per share will be paid on 23 April 2021 to shareholders on the register at the close of business on 26 March 2021. The ex-dividend date will be on 25 March 2021.

 

The Company had, at all times, sufficient distributable profits to fund its distributions during 2020. However, following the year end, the Directors became aware that a proportion of a contribution made to the Employee Benefit Trust, in order to buy back shares to satisfy the employee share options plan, was technically an unlawful distribution in accordance with section 838 of the Companies Act 2006.  Despite having sufficient distributable profits, interim accounts had not been filed at Companies House, to demonstrate its reserves position, prior to the distribution. Furthermore, the Directors noted that again, whilst always maintaining distributable reserves in the company accounts, unlawful distributions by way of dividends and contributions to the Employee Benefit Trust were also made in 2019. There are no issues noted in this respect prior to 2019.

 

In order to correct the position, the Company will file interim accounts with Companies House in advance of the Annual General Meeting to demonstrate sufficient reserves. At the Company's Annual General Meeting, on 20 April 2021, the Company shall propose a resolution to remove any right the Company may have to claim from Directors and Shareholders in respect of the relevant contributions and distributions. The Company reserves as at 31 December 2020 are £33m, which are inclusive of the distributions made of £8.7m in 2019, £6.4m in 2020 and £0.3m in 2021 which were technically in breach of section 838 of the Companies Act 2006. No accounting entries need to be made to correct the position and the resolutions, if passed, will remedy the matter.

 

Share Premium

Proceeds received in addition to the nominal value of shares issued have been included in the Share premium account.

 

Merger reserve

The merger reserve contains the premium on the shares issued in consideration for the purchase of GlobalData Holding Limited in 2016 and the premium on the shares issued in consideration for the purchase of Research Views Limited and its subsidiaries in 2018.

 

Treasury reserve

The treasury reserve contains 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.

 

Other reserve

Other reserves consist of a reserve created upon the reverse acquisition of the TMN Group Plc in 2009. The parent company reserve differs from this due to the restatement of consolidated reserves at the time of the reverse acquisition. The parent company other reserve was generated in 2008 upon the issue of shares to fund acquisitions.

 

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.

 

 

 

 

 

10.  Share based payments

 

Scheme 1

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 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

 

The following assumptions were used in the valuation:

 

Award Tranche

Grant Date

Fair Value of Share Price at Grant Date

 

Exercise Price

(Pence)

Estimated Forfeiture rate p.a.

Weighted Average of Remaining Contractual Life (Years)

 

 

 

 

 

 

Award 1

1 January 2011

£1.089

0.0714p

0%

1.0

Award 3

1 May 2012

£1.866

0.0714p

0%

1.0

Award 4

7 March 2014

£2.550

0.0714p

0%

1.0

Award 6

22 September 2014

£2.525

0.0714p

0%

1.0

Award 7

9 December 2014

£2.075

0.0714p

0%

1.0

Award 8

31 December 2014

£2.025

0.0714p

0%

1.0

Award 9

21 April 2015

£1.980

0.0714p

0%

1.0

Award 10

28 September 2015

£2.420

0.0714p

0%

1.0

Award 11

17 March 2016

£2.380

0.0714p

0%

0.0

Award 12

17 March 2016

£2.380

0.0714p

0%

1.0

Award 13

21 October 2016

£4.300

0.0714p

0%

1.0

Award 14

21 March 2017

£5.240

0.0714p

0%

1.0

Award 15

21 March 2017

£5.240

0.0714p

0%

1.0

Award 16

21 March 2017

£5.240

0.0714p

0%

1.0

Award 17

21 September 2017

£5.540

0.0714p

0%

1.0

Award 18

20 March 2018

£5.910

0.0714p

0%

1.0

Award 19

20 March 2018

£5.910

0.0714p

0%

1.0

Award 20

23 October 2018

£5.270

0.0714p

0%

1.0

Award 21

23 October 2018

£5.270

0.0714p

0%

1.0

Award 22

23 October 2018

£5.270

0.0714p

0%

1.0

Award 23

19 March 2019

£5.860

0.0714p

0%

1.0

Award 24

22 October 2019

£8.189

0.0714p

0%

1.0

Award 25

14 February 2020

£12.500

0.0714p

0%

1.0

Award 26

23 March 2020

£9.080

0.0714p

0%

1.0

Award 27

23 June 2020

£13.910

0.0714p

0%

1.0

Award 28

22 September 2020

£14.260

0.0714p

0%

1.0

 

Awards 2 and 5 have been fully forfeited.

 

The estimated forfeiture rate assumption is based upon management's expectation of the number of options that will lapse over the vesting period. The assumptions were determined when the scheme was set up in 2011 and are reviewed annually. Management believe the current assumptions to be reasonable based upon the rate of lapsed options and proximity to the vesting targets.

 

Each of the awards are subject to the vesting criteria set by the Remuneration Committee. In order for the remaining 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 the remaining target of £52m in any one year before the end of the period in which the options are exercisable, which is generally 10 years from the date of the grant (£52m target excludes the impact of IFRS16).

 

The Remuneration Committee noted that due to the impact of COVID-19, the Group failed to meet the final target of £52m Adjusted EBITDA (pre IFRS16) during 2020. Under normal circumstances 892,000 shares would have expired as at 1 January 2021, being 10 years from date of grant. However, due to the impact that COVID-19 has had on the events business, the Remuneration Committee believes it is fair to replace those 892,000 shares and extend the target period by an additional year. The Group has accounted for this under the modification principles of IFRS 2, Share Based Payments.

 

The replacement share options were clearly documented as replacement options, the option holders received the same quantity of options, and at the same exercise price, and the vesting target of £52m is equal to the previous target. Therefore, because of these considerations the Directors believe a modification treatment to be appropriate.

 

Group

Achieves

£10m EBITDA

Group

Achieves

£32m EBITDA

 

 

Group

Achieves

£41m EBITDA 1

 

Group

Achieves

£52m EBITDA 1

Award 1-4

20% Vest

20% Vest

 

20% Vest

40% Vest

Award 6

N/a

25% Vest

 

25% Vest

50% Vest

Award 7

N/a

20% Vest

 

20% Vest

60% Vest

Award 8

N/a

25% Vest

 

25% Vest

50% Vest

Award 9

N/a

20% Vest

 

20% Vest

60% Vest

Award 10

N/a

N/a

 

N/a

100% Vest

Award 12

N/a

17.5% Vest

 

17.5% Vest

65% Vest

Award 13

N/a

17.5% Vest

 

17.5% Vest

65% Vest

Award 14

N/a

17.5% Vest

 

17.5% Vest

65% Vest

Award 15

N/a

12.5% Vest

 

12.5% Vest

75% Vest

Award 16

N/a

25% Vest

 

25% Vest

50% Vest

Award 17

N/a

10% Vest

 

10% Vest

80% Vest

Award 18

N/a

10% Vest

 

10% Vest

80% Vest

Award 19

N/a

N/a

 

N/a

100% Vest

Award 20

N/a

N/a

 

N/a

100% Vest

Award 21

N/a

N/a

 

14% Vest

86% Vest

Award 22

N/a

N/a

 

33% Vest

67% Vest

Award 23

N/a

N/a

 

10% Vest

90% Vest

Award 24

N/a

N/a

 

N/a

100% Vest

Award 25

N/a

N/a

 

N/a

100% Vest

Award 26

N/a

N/a

 

N/a

100% Vest

Award 27

N/a

N/a

 

N/a

100% Vest

Award 28

N/a

N/a

 

N/a

100% Vest

 

Note 1: Excluding the impact of IFRS16

 

Award 11 relates to options awarded to Chairman, Bernard Cragg during 2016. These do not carry any performance obligations and vest at a point in time. 125,000 options vested on 31 January 2019 and the remaining 125,000 will vest within the first quarter of 2021.

 

The total charge recognised for the scheme during the twelve months to 31 December 2020 was £2.8m (2019: £10.8m). The awards of the scheme are settled with ordinary shares of the Company.

 

During the period the Group purchased an aggregate amount of 2,102,250 shares at a total market value of £23.7m. The purchased shares will be held in treasury and 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.

 

 

 

 

Reconciliation of movement in the number of options is provided below.

 

Option price

(pence)

Number of

options

 

 

 

31 December 2019

1/14th

8,853,882

Granted

1/14th

253,750

Exercised

1/14th

(1,847,712)

Forfeited

1/14th

(319,083)

31 December 2020

1/14th

6,940,837

 

 

The following table summarises the Group's share options outstanding at each year end:

 

 

Reporting date

Options

outstanding

Option price

(pence)

Remaining

life (years)

 

 

 

 

31 December 2011

5,004,300

1/14th

3.7

31 December 2012

4,931,150

1/14th

4.3

31 December 2013

4,775,050

1/14th

3.3

31 December 2014

8,358,880

1/14th

2.5

31 December 2015

7,557,840

1/14th

2.5

31 December 2016

9,450,183

1/14th

3.2

31 December 2017

10,621,857

1/14th

2.2

31 December 2018

10,808,861

1/14th

1.4

31 December 2019

8,853,882

1/14th

1.0

31 December 2020

6,940,837

1/14th

1.0

 

In May 2020, 1.8m outstanding share options held by GlobalData employees vested in accordance with the EBITDA target being satisfied under Tranche 2b and approved by the Remuneration Committee. The Group satisfied all of the share options exercised using the shares held by the Trust. Movements to the treasury reserve and retained earnings have arisen on the accounting for the vesting of the options as detailed in the Statement of Changes in Equity. This recognises the fact that no current year expense is incurred, as the vesting of options is a transaction with shareholders only.

 

Scheme 2 - 2019 scheme

In October 2019 the Group created and announced a new share option scheme and granted the first options under the scheme on 31 October 2019 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 performance targets being met. For these options to be exercised the Group's share price must reach certain targets. The fair values of options granted were determined using the Monte Carlo method. The inputs used in the model were:

· grant date

· vesting date

· performance start and end date

· expected term

· risk free rate

· dividend yield

· volatility and;

· share price at date of grant

 

The awards shall vest based upon the following performance conditions being satisfied:

· 100% of the shares subject to the award will vest provided the compounded annual growth in the Group's TSR performance over the 5-year performance period is equal to or exceeds 16% per annum compounded (the "5-Year TSR Target").

· The 5-Year TSR Target will be measured by taking a base-line price per share of 830p and comparing it to the sum of the average closing price of a share derived from the 'official list' over the period 20 trading days commencing on the business day on which the Group announces its annual results for the period ending 31 December 2024 and all dividends paid during the performance period.

 

To the extent that the 5-year TSR Target has not been met, the awards will not vest. If any of the events pursuant to the rules covering 'takeovers and other corporate events' occur during the performance period or prior to the vesting date, awards shall vest as follows:

· Where the 5-year TSR Target has been met at the date of the relevant event, 100% of the awards shall vest.

· Where the 5-year TSR Target has not been achieved, but a 16% compound annual TSR has been met over the period from the commencement of the performance period, awards shall vest on a pro-rata basis to reflect the proportion of the performance period which has elapsed, although the Company shall have discretion to waive such time pro-rating if they consider it appropriate.

 

The following assumptions were used in the valuation:

 

Award Tranche

  Grant Date

Fair Value of Share Price at Grant Date

 

Exercise Price

(Pence)

Estimated Forfeiture rate p.a.

Weighted Average of Remaining Contractual Life (Years)

 

 

 

 

 

 

Award 1

31 October 2019

£1.58

0.0714p

0%

4.0

Award 2

7 May 2020

£4.62

0.0714p

0%

4.0

Award 3

25 May 2020

£5.50

0.0714p

0%

4.0

Award 4

23 June 2020

£6.12

0.0714p

0%

4.0

Award 5

22 September 2020

£6.35

0.0714p

0%

4.0

Award 6

17 November 2020

£7.12

0.0714p

0%

4.0

 

 

 

 

 

 

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 believe the current assumptions to be reasonable.

 

The total charge recognised for the scheme during the twelve months to 31 December 2020 was £1.4m (2019: 0.1m). The awards of the scheme are settled with ordinary shares of the Company.

 

Reconciliation of movement in the number of options is provided below.

 

Option price

(pence)

Number of

options

 

 

 

31 December 2019

1/14th

1,400,000

Granted

1/14th

1,625,000

31 December 2020

1/14th

3,025,000

 

The following table summarises the Group's share options outstanding at each year end:

 

 

Reporting date

Options

outstanding

Option price

(pence)

Remaining

life (years)

 

 

 

 

31 December 2019

1,400,000

1/14th

5.00

31 December 2020

3,025,000

1/14th

4.00

 

11.    Acquisitions

 

Progressive Content Limited

On 7 May 2020, the Group acquired 100% of the share capital of Progressive Content Limited for cash consideration of £1. The acquisition was made in order to act as a catalyst for new business opportunities and to strengthen and support the existing Group.

 

The amounts recognised for each class of assets and liabilities at the acquisition date were as follows:

 

 

 

Carrying Value

 

Fair Value Adjustments

 

Fair Value

 

 

£m

£m

£m

Intangible assets consisting of:

 

 

 

 

Customer relationships

 

-

0.4

0.4

Intellectual property and content

 

-

1.3

1.3

Net assets acquired consisting of:

 

 

 

 

Cash and cash equivalents

 

0.1

-

0.1

Trade and other receivables

 

1.1

(0.2)

0.9

Trade and other payables

 

(2.9)

-

(2.9)

Deferred tax

 

-

(0.2)

(0.2)

Fair value of net (liabilities)/ assets acquired

 

(1.7)

1.3

(0.4)

 

The goodwill recognised in relation to the acquisition is as follows:

Fair Value

£m

Consideration

 

 

 

-

Plus net liabilities acquired

 

 

 

0.4

Goodwill

 

 

 

0.4

 

In line with the provision of IFRS 3, fair value adjustments may be required within the 12-month period from the date of acquisition. Any fair value adjustments will 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 Group incurred legal expenses of £2,000 in relation to the acquisition. In the period from the date of acquisition to 31 December 2020, the trade of Progressive Content Limited generated revenues of £2.2m and loss before tax of £1.7m.

 

Progressive Content Limited was an entity under common control at the time of acquisition, by virtue of being controlled by Mike Danson. IFRS 3 scopes out combinations of entities under common control. The Group has therefore applied IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors' and used management judgement in developing and applying an accounting policy that results in information which is reliable and relevant. Management have determined it is most appropriate to follow the principles of IFRS3,and apply acquisition accounting for acquisitions of entities under common control.

 

Cash Cost of Acquisitions

The cash cost of acquisitions comprises:

 

 

31 December 2020

Unaudited

 

 

£m

Acquisition of Progressive Content Limited:

 

 

  Cash consideration

 

-

  Cash acquired as part of opening balance sheet

 

(0.1)

Deferred consideration payment CHM Research Limited

 

0.7

Deferred consideration payment Competenet

 

0.4

 

 

1.0

 

 

 

 

 

 

12.  Related party transactions

 

Mike Danson, GlobalData Plc's Chief Executive, owns 64.9% of the Company's ordinary shares as at 1 March 2021. Mike Danson owns a number of businesses that interact with GlobalData Plc. The principal transactions, which are all conducted on an arm's length basis, are as follows:

 

Accommodation

GlobalData Plc rents three buildings from Estel Property Investments Limited, a company wholly owned by Mike Danson. The total rental expense, including service and management fees, in relation to the buildings owned by Estel Property Investments for the year ended 31 December 2020 was £2.9m (2019: £2.7m). In addition, GlobalData Plc sub-leases office space to other companies owned by Mike Danson. The total sub-lease income for the year ended 31 December 2020 was £1.3m (2019: £1.3m). This is presented as other income on the face of the Income Statement.

 

Corporate support services

Corporate support services are provided to and from other companies owned by Mike Danson, principally finance (payroll services), human resources, IT and facilities management. These are recharged to companies that consume these services based on specific drivers of costs, such as proportional occupancy of buildings for facilities management and headcount for human resources, finance and IT services. The net recharge made from GlobalData Plc to these companies for the year ended 31 December 2020 was £0.4m (2019: £0.6m).

 

Loan to Progressive Trade Media Limited

As part of the 2016 disposal of non-core B2B print businesses, the Group made a loan to Progressive Trade Media Limited to fund the purchase consideration. This loan is for £4.5m and repayable in 5 instalments, with the next instalment due in January 2022 (fourth instalment received in January 2021). Interest of 2.25% above LIBOR is charged on the loan, with £0.1m charged in the year ended 31 December 2020 (2019: £0.1m).

 

Revenue contract containing IP sharing clause

In June 2020 the Group entered into a 5-year service contract with NS Media Group Limited, an entity related by virtue of common control. The agreed suite of data services provided to NS Media Group Limited have been contracted on terms equivalent to those that prevail in arm's length transactions. A key clause within the contract enables the Group to retain ownership of all IP internally generated during the contracted period. Similarly, NS Media Group Limited also are entitled to retain and perpetually use the IP generated. In the year ended 31 December 2020, the total revenue generated from this contract was £0.8m, and the net contribution generated was £0.5m. Each years' fixed fees are invoiced annually in advance, except for any variable components which are invoiced quarterly in advance. In addition to the IP and content, there are other shared costs such as software development and webinar production with NS Media Group, for which GlobalData received a charge of £0.4m.

 

As at 31 December 2020, the total balance receivable from NS Media Group Limited was £nil. 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 £nil.

 

Directors and Key Management Personnel

The remuneration of Directors will be disclosed within the Directors' Remuneration Report within the Annual Report and Accounts for the year ended 31 December 2020.

 

Amounts outstanding

The Group has taken advantage of the exemptions contained within IAS 24 - 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:

 

No trading balances were outstanding at the year end (2019: nil).

 

 

 

 

 

 

Non-Trading Balances

Amounts due in greater than one year:

31 December 2020

Unaudited

31 December 2019

Audited

 

£m

£m

Progressive Trade Media Limited

0.9

1.9

 

0.9

1.9

 

Amounts due within one year:

31 December 2020

Unaudited

31 December 2019

Audited

 

£m

£m

Progressive Trade Media Limited

0.9

0.9

 

0.9

0.9

 

Acquisition

On 7 May 2020, the Group acquired 100% of the share capital of Progressive Content Limited for cash consideration of £1. Because of the common ownership of Mike Danson, this acquisition is a related party transaction under IAS 24. The transaction was overseen by an independent committee of the Board. Further details is given in note 11.

 

Other

As explained in the financial review and note 9, following the year end the Directors became aware that distributions made during 2019 and 2020 to the Employee Benefit Trust and shareholders (the "Relevant Contributions") did not comply with the requirements of section 838 of the Companies Act, due to interim accounts not having been filed with Companies House prior to the Relevant Contribution being made.

 

In order to correct the position, the Company will file interim accounts with Companies House in advance of the Annual General Meeting to demonstrate sufficient reserves. At the Company's Annual General Meeting, on 20 April 2021, the Company shall propose a resolution to remove any right the Company may have to claim from Directors and Shareholders in respect of the relevant contributions and distributions. The deed of release to Directors and Shareholders will constitute a related party transaction under IAS 24. No accounting entries need to be made to correct the position and the resolutions, if passed, will remedy the matter.

 

 

 

 

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