REG - GlobalData PLC - Full Year Results
27/02/2023 07:00
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RNS Number : 0634R GlobalData PLC 27 February 2023
27 February 2023
GlobalData Plc
Full Year Results
31 December 2022
GlobalData Plc (AIM: DATA, GlobalData, the Group), a leading provider of
industry intelligence, today publishes its results for the year ended 31
December 2022 (FY22).
· Our strong performance in 2022 has accelerated our Adjusted
EBITDA earnings expectations for FY23
· Delivered target of 10% underlying revenue growth and Adjusted
EBITDA margin of 36%
· Proposed final dividend increases total dividend by 35% to 26.0
pence per share
· Strong momentum with >80% visibility on FY23 revenue and
accelerating towards 40% Adjusted EBITDA margin
· Well positioned for sustainable organic growth, supported by
earnings enhancing M&A
Mike Danson, Chief Executive Officer of GlobalData Plc, commented:
"Today we are reporting an excellent set of results for FY22 with overall
revenue growth of 28%, including underlying revenue growth of 10% and Adjusted
EBITDA margin of 36%, delivering our near-term financial targets. As signalled
in our trading update on 10 January 2023, our strong performance in 2022 has
brought forward our Adjusted EBITDA earnings expectations by a year.
We have delivered on our previously stated near-term financial targets and
continue to drive the business forward. The resilient nature of our business
model underpins confidence in our ability to continue to achieve double-digit
revenue growth, significant margin progression and to pay a progressive
dividend.
This year, we have continued to invest heavily in our people, our platform and
in our unique product which is yielding such strong results. Our product
continues to deliver mission-critical intelligence and insights to our
customers driving strong growth across both new and existing customers. I
would like to thank the team for all their efforts to evolve our scalable One
Platform, which now covers 20 sectors, delivering must-have critical
information to a growing global customer base.
We enter 2023 in a position of strength with visibility on more than 80% of
our FY23 revenue guidance, giving us the confidence for both growth and margin
expansion into 2023 and beyond. I believe we are at an inflection point in our
journey and poised to leverage the platform further. With a strong business
model and differentiated product, GlobalData is well placed to capitalise on
the multiple levers open to us to create long-term compounding growth and
shareholder returns in the year ahead and beyond."
Highlights
Financial results for the year ended 31 December 2022.
Key performance metrics 2022 2021 Growth Underlying growth(1)
Revenue £243.2m £189.3m +28% +10%
Operating profit £56.0m £38.2m +47%
Adj. EBITDA(2) £86.4m £64.4m +34%
Adj. EBITDA margin(2) 36% 34% +2p.p.
Statutory profit before tax (PBT) £38.4m £32.6m +18%
Earnings per share (EPS) 27.1p 21.9p +24%
Adj. EPS(3) 43.3p 36.2p +20%
Total dividends 26.0p 19.3p +35%
Invoiced Forward Revenue(4) £133.5m £107.7m +24% +12%
Net bank debt(5) £249.6m £177.6m +41%
Financial Highlights
· Strong growth in both revenues and profit means we delivered our
'rule of 40' goal
o Underlying(1) revenue growth of 10%, underpinned by subscriptions - 81% of
total revenues.
o Demonstrates the significant opportunity for GlobalData to grow revenue
organically, aided by the benefit of acquisitions and currency tailwinds for
reported growth of 28%.
· Adjusted EBITDA(2) up 34% to £86.4m (2021: £64.4m) and Adjusted
EBITDA margin(2) improvement of 2 percentage points to 36%.
· Statutory PBT grew by £5.8m to £38.4m (2021: £32.6m)
reflecting an 18% increase on prior year.
· Operating cash flow grew by 41% to £85.4m (2021: £60.5m) which
was 99% of Adjusted EBITDA (2021: 94%).
· Continued improvement of Invoiced Forward Revenue(4) growth of
24% up to £133.5m at 31 December 2022 (2021: £107.7m), which includes
underlying growth of 12%, the benefit of acquisitions and currency tailwinds.
· Final dividend of 18.3p, up 39% (2021: 13.2p); total
dividend of 26.0p, up 35% (2021: 19.3p).
Operational Highlights
· Delivering on our Growth Optimisation Plan via four key pillars:
o Customer Obsession, World-Class Product, Sales Excellence and Operational
Agility.
· Customer Obsession remains our number one priority
o Enhanced our client relationships with focused initiatives contributing to
improved renewal rates, increased average client value and continued traction
with multi-year deals.
· Continued investment in our World-Class Product, embedding
artificial intelligence and machine learning
o Scalable 'One Platform' now covers 20 sectors, delivering must-have
critical information.
o Our unique platform is ideally positioned to integrate new datasets and
verticals.
· Immediate value derived following completion of two further
strategic acquisitions
o Media Business Insight - a new vertical with deep media sector
intelligence.
o TS Lombard - bringing global economic and political research filling a gap
in thematic intelligence.
o Integrations on track.
· Focus on strong Sales Excellence driving results
o We start the year with 80% visibility of budgeted revenues for 2023.
· Delivering Operational Agility with continued disciplined
approach to cost
· Completed refinancing to support future M&A strategy
Current Trading and Outlook
· Entering the new financial year from a position of strength and
scope for further margin improvement.
· Set to deliver resilient growth - uncertainty driving demand for
our 'gold standard' data, delivered through our One Platform.
· A focused approach to cost management and capital discipline,
including mitigating the impact of inflation through advancements in
technology and efficiency savings, whilst ensuring the business remains
appropriately invested for sustainable growth and systematic M&A activity.
· Clear financial targets for FY23 and beyond:
o In FY23, at least 10% underlying revenue growth, adjusted EBITDA margin of
40%.
o Beyond FY23, platform in place to drive further margin enhancement through
organic and inorganic growth.
Note 1: Underlying growth: Defined as growth in business excluding impact of
movement in exchange rates and adjusts for the proforma results of acquired
business.
Note 2: Adjusted EBITDA: Earnings before interest, tax, depreciation and
amortisation, adjusted to exclude costs associated with acquisitions,
restructuring of the Group, share-based payments, impairment, unrealised
operating exchange rate movements and the impact of foreign exchange
contracts. Adjusted EBITDA margin is defined as: Adjusted EBITDA as a
percentage of revenue. This is reconciled to the statutory operating profit on
page 8.
Note 3: Adjusted EPS: Adjusted profit after tax per share (reconciliation
between statutory profit and adjusted profit shown on page 8).
Note 4: Invoiced Forward Revenue: Invoiced Forward Revenue relates to amounts
that are invoiced to clients at the statement of financial position date,
which relate to future revenue to be recognised. This is reconciled to
deferred revenue on page 13.
Note 5: Net bank debt: Short and long-term borrowings (excluding lease
liabilities) less cash and cash equivalents.
ENQUIRIES
GlobalData Plc
Mike Danson, Chief Executive Officer 0207 936 6400
Graham Lilley, Chief Financial Officer
J.P. Morgan Cazenove (Nomad and Joint Broker) 0207 742 4000
Bill Hutchings / Mose Adigun
Panmure Gordon (Joint Broker) 0207 886 2500
Rupert Dearden / Dougie McLeod
Numis Securities (Joint Broker) 0207 260 1000
Nick Westlake / Iqra Amin
FTI Consulting LLP (Financial PR) 0203 727 1000
Edward Bridges / Dwight Burden / Emma Hall
Notes to Editors
About GlobalData Plc
GlobalData Plc (AIM: DATA) is a leading data, insights, and analytics platform
for the world's largest industries. Our mission is to help our clients decode
the future, make better decisions, and reach more customers.
One Platform Model
GlobalData's One Platform model is the foundation of our business and is the
result of years of continuous investment, targeted acquisitions, and organic
development. This model governs everything we do, from how we develop and
manage our products, to our approach to sales and customer success, and
supporting business operations. At its core, this approach integrates our
unique data, expert analysis, and innovative solutions into an integrated
suite of client solutions and digital community platforms, designed to serve a
broad range of industry markets and customer needs on a global basis. The
operational leverage this provides means we can respond rapidly to changing
customer needs and market opportunities, and continuously manage and develop
products quickly, at scale, with limited capital investment as well as
providing unique integration opportunities for M&A.
Strategic Priorities
GlobalData's four strategic priorities are: Customer Obsession, World-Class
Product, Sales Excellence and Operational Agility.
Growth Optimisation Plan
GlobalData's Growth Optimisation Plan is a set of initiatives designed to
drive revenue growth and profitability. The Plan's initiatives operate
across all of GlobalData's operations but are organised around the
strategic priorities noted above.
CHIEF EXECUTIVE'S REVIEW
At GlobalData we are on a mission to help our c.4,700 clients to decode the
future, make better decisions, and reach more customers. In the last 12
months, clear progress has been made to enhance our position as a leading
intelligence and insights platform through sustained underlying momentum and
further execution of our M&A strategy.
Uncertainty drives demand for our business. Our mission critical data is a
'must-have' rather than 'nice to have' for a wide range of blue-chip
corporates, and once embedded, provides all the insight our clients need to
navigate a challenging macro backdrop. We create our intelligence from a deep
pool of experts across the globe, including 2,000 analysts and researchers,
250 data scientists and 100 journalists.
Continued momentum in 2022 has been clearly demonstrated through our strong
financial and operational performance. Investing for growth throughout 2022,
in our people and in our scalable One Platform, which now covers 20 sectors,
has enabled the Group to enhance its highly valued, must-have, critical
information to a growing global customer base.
We have now reached the next stage of our development; the 'leveraging the
platform' phase is where we intend to capitalise on the multiple levers open
to us to create growth. As we enter the new financial year, the management
team and Board remain focused on delivering long-term, compounding growth and
shareholder returns.
Underlying growth
With a continued strong performance throughout the year, I am pleased to
report that GlobalData successfully delivered its near-term financial target
of at least 10% revenue growth and Adjusted EBITDA margin of 35-40%. In the
last five years, subscriptions have grown from approximately 70% of revenues
to more than 80%, with margin nearly doubling.
The Group reported revenue of £243.2m (2021: £189.3m), including 10%
underlying growth. Operating profit grew by 47% to £56.0m (2021: £38.2m) and
Adjusted EBITDA increased by 34% to £86.4m (2021: £64.4m). The growth in
Adjusted EBITDA was driven by our strong revenue growth and our ability to
control what is a relatively fixed cost base, delivering an Adjusted EBITDA
margin of 36%. The Group had a strong finish to the year with underlying
Invoiced Forward Revenue growth of 12% at 31 December 2022, with overall
growth of 24%.
Traction with our subscription model continued through the year, with
improving renewal rates evidenced in both volume and value at 84% (2021:83%)
and 101% (2021: 97%) for our larger clients (>£20k) respectively. We have
demonstrated our ability to optimise pricing in 2022 and there remains
significant opportunity to continue with price increases and deliver enhanced
value for customers, particularly in recently acquired businesses. As a
result, with inherently predictable and recurring revenue, the Group enters
the new financial year with c.80% revenue visibility for FY2023.
A continued trend is the growth of multi-year deals. Over the last three
years, multi-year deals by value have grown from 20% to 39%, which highlights
the strength of our product, the criticality of our platform to our customers
and the growing resilience of our revenue growth.
Platform ideally positioned to integrate new datasets and verticals
Our underlying growth is also supported by strategic M&A opportunities.
Our scalable platform is ideally positioned to integrate new datasets and
content into our existing vertical offering or expand our breadth into new
vertical markets. Our M&A strategy is disciplined and systematic, with
value creation being a core competence of the Group.
Following completion of the Life Sciences acquisition in November 2021 and LMC
in December 2021, we completed two more acquisitions during 2022. We acquired
Media Business Insight (MBI) in June 2022, bringing new and unique gold
standard datasets across the film, TV and media markets to GlobalData. This,
combined with our existing Technology content, provides the Group with a new
vertical with deep media sector intelligence and related services while
strengthening clients' access to a more comprehensive range of industry
expertise.
In September 2022, we announced the completion of the TS Lombard acquisition,
which provides global economic and political research to businesses and
financial markets to clients across the globe, with a particular strength in
China and emerging markets. This move further enables us to sell our full
product suite, not only to the asset management industry, but increasingly to
other corporates, and it has been integrated onto the GlobalData platform. TS
Lombard brings to us a strong team of research analysts and economists who
have on-the-ground networks and insights from developed and emerging markets.
This addition has helped us to fill a gap in our thematic intelligence
offering, allowing us to arm clients with a globally integrated macro story
which in times of uncertainty is in increasing demand as clients seek to
navigate and make sensible, proactive decisions quickly.
We welcome these new businesses into the GlobalData family. Both represent
strategic bolt-on acquisitions of data assets, efficiently complementing our
One Platform model and adding value to our global and scalable product.
In August 2022, we agreed a new three-year £410m debt financing facility
which will be used to support our long-term growth, including future M&A
opportunities.
Delivering our Growth Optimisation Plan
The Growth Optimisation Plan, launched in 2020, is our framework to invest for
growth with the aim to be the leading data, analytics, and insights platform
for the world's largest industries. As a responsible business, sustainability
sits at the heart of our plan and, as a team, GlobalData is a firm believer
that our Company can drive positive change and be a force for good through our
critical information and technology innovations.
With multiple levers for growth, supplemented with M&A activity, we are
delivering on the Plan via four key pillars: Customer Obsession, World-Class
Product, Sales Excellence and Operational Agility.
1) Customer Obsession remains our number one priority
Customer Obsession remains our priority and is central to our strategy. It
runs through everything we do, and we continue to focus on client needs and on
providing unique and innovative solutions. We strive to maintain strong
customer relationships and endeavour to build even deeper relationships.
Our ongoing initiatives are aimed at providing clients with world-class
solutions delivered with exceptional levels of service. Our focus on top-tier
clients is gaining traction, and we continued to increase resources throughout
the year, enhanced usability and grew via our top-750 programme.
Usage of our product is aimed at multiple use cases and job functions within
an organisation, giving opportunity to expand usage within our existing
clients, resulting in more seats taken. This focus meant that Average Client
Value improved 13% in 2022 to £47,900 (2021: £42,400).
The net result of our Customer Obsession is improving renewal rates by volume
and value, as well as greater levels of profitability. Looking ahead, we
remain laser focused on improving in the different areas of Customer
Obsession. This should enhance some of our key operational metrics: for
example, the volume renewal rate in 2022 for clients paying more than £20k
p.a. was 84%; a priority is to increase volume renewal rates to over 90% or
more over the medium term.
2) Continued investment in our World-Class Product provides a resilient
model, geared for growth
We have developed a World-Class Product enabling us to offer our clients 'gold
standard' data. Our unique selling point is the intelligence created by more
than 800 analysts, 2,000 researchers and 100 journalists in our business. Our
One Platform empowers the world's largest 20 industries and is highly
scalable. Having invested in our technology stack and enhanced our artificial
intelligence powered solutions through the year, we are now able to offer a
more personalised experience to our clients.
We continue to invest in our product, to keep it best-in-class and scalable.
This is particularly evident in our efforts to optimise the production of our
digital content with investments in artificial intelligence and machine
learning, which are now truly embedded in our offering.
Our routes to market continue to expand with our multiple media sites. Our
media assets provide limited free-to-access insight through to high value,
paywalled custom products and continues to prove a powerful go-to-market
proposition, driving new customers up the value curve over time.
We are focusing on usability and strong adoption across our entire user base,
ensuring that our newly acquired assets integrate efficiently and provide
immediate synergies for our business and our clients.
Following the successful integration of the Life Sciences business as well as
the LMC integration, we are now on the final stretch to fully integrate our
most recent acquisitions of MBI and TS Lombard. We are already seeing the
immediate value of these new assets.
TS Lombard has significantly expanded our Thematic Intelligence capability,
strengthening our "macro themes" product and making GlobalData a market leader
in tech, industry, macro and ESG themes. Through this acquisition, we have
also gained exposure to TS Lombard's clients, who are predominantly
institutional investors, a market in which we have historically been
underrepresented.
The depth of industry verticals we cover, combined with our One Platform
approach, provides c.4,700 businesses around the world with mission-critical
data to make informed business decisions. As a result, we are seeing improving
customer retention, pricing power and an increasing shift to multi-year deals.
3) Acute focus on Sales Excellence is driving results
Our sales teams performed well during 2022, delivering 10% underlying growth
in the year and 12% underlying growth in Invoiced Forward Revenue.
Looking ahead, our sales teams have a clear focus on the key levers for
growth. Linked to our Customer Obsession initiatives, our ambitious target is
to take our volume renewal rate in our larger clients (>£20k) from 84% to
over 90%, through increasing client engagement and enhancing client and user
experience. We will also look to embed further AI-driven tools into our
renewals workflow, both in terms of helping our clients derive more value from
their partnership and also to alert internal teams on the health of our client
relationships. Reducing the churn of our existing clients sets a greater
platform for growth and de-risks some of the upsell and new business growth
levers.
We continue to see a significant opportunity to add greater value to our
existing clients, including via sales synergies in acquired businesses. There
is also a large white space in the market, for example, where we believe there
are 125,000 client opportunities, with significant latent growth in the US and
professional services markets.
4) Demonstrating Operational Agility with disciplined approach to cost
With an ongoing disciplined approach to cost, we continue to maintain a
largely fixed cost base. During the year, as we have invested heavily in
advancing our product, we have been able to achieve price increases for our
renewing clients as we continue to push more relevant content, in a timely
manner and in an increasingly personalised way - just as our clients want it.
In August 2022, GlobalData secured a new three-year £410.0m debt financing
facility, providing the Group with additional firepower to execute its M&A
growth strategy. This facility matures on 5 August 2025, with an option to
extend further by a year. The debt facility comprises a £290.0m term loan, to
be used in part to repay existing indebtedness of £229.2m, as well as a
Revolving Credit Facility ("RCF") of £120.0m. The RCF is currently undrawn,
but will be used to support long-term growth of the business, including
M&A.
We thank our existing lenders, who have all extended their support through
participation in this issuance, plus our new lenders as we seek to create
shareholder value through further strategic acquisitions.
We have a clear capital allocation policy to operate within 2-3x net bank debt
leverage, in relation to EBITDA. The Group reviews leverage on a look forward
basis and the high degree of visibility it has on its revenue and earnings
gives the Group comfort. Furthermore, the free cash flow profile of the
business sees the Group de-lever reasonably quickly subject to any additional
M&A and share buy-backs.
Dividends
We are pleased to propose a final dividend of 18.3 pence per share (2021: 13.2
pence), to be paid on 28 April 2023 to shareholders on the register at the
close of business on 31 March 2023. The ex-dividend date will be on 30 March
2023. The proposed final dividend increases the total dividend for the year to
26.0 pence per share (2021: 19.3 pence), an increase of 35% in line with
growth in Adjusted EBITDA.
Our Colleagues
We have delivered another strong set of results and our success is underpinned
by the talent and dedication of our GlobalData team. Investment in enhancing
our One Platform and in our people throughout the year has continued and I am
confident that through our acute focus on our Growth Optimisation Plan we will
celebrate further achievements in 2023 and beyond.
I would like to thank all my GlobalData team and welcome the new colleagues
who have joined us and bring a wealth of knowledge via the MBI and TS Lombard
acquisitions. Together, we are building a responsible business that invests in
its people and our clients' success, delivering highly valued, must-have,
critical information to a growing audience.
Current Trading and Outlook
As stated in the recent year-end trading update, GlobalData enters the new
financial year from a position of strength with 80% revenue visibility for
FY2023 and scope for further margin improvement. The business continues to
deliver resilient growth. Uncertainty is driving demand for our business, as
customers continue to rely on and embed our 'gold standard' data, delivered
through our One Platform.
As we enter the new financial year, we maintain a focused approach to cost
management and capital discipline, whilst ensuring the business remains
appropriately invested for sustainable growth and opportunistic on M&A
activity.
The management team at GlobalData have clear financial targets for the year of
at least 10% underlying revenue growth and Adjusted EBITDA margins of 40%,
which leaves us well positioned to deliver on the 'rule of 50' in the longer
term.
Mike Danson
Chief Executive Officer
27 February 2023
CHIEF FINANCIAL OFFICER'S REVIEW
£m Year ended Year ended
31 December 2022 31 December 2021
Revenue 243.2 189.3
Operating profit 56.0 38.2
Adjusting items
Depreciation 6.4 6.8
Amortisation of acquired intangible assets 9.1 5.6
Amortisation of software 1.0 0.9
Share-based payments charge 4.1 9.2
Costs relating to share-based payments scheme 0.9 -
Restructuring and refinancing costs 2.5 1.4
Unrealised operating foreign exchange loss/(gain) 2.5 (0.1)
M&A and contingent consideration costs 3.9 2.4
Adjusted EBITDA 86.4 64.4
Adjusted EBITDA margin(1) 36% 34%
Statutory profit before tax 38.4 32.6
Amortisation of acquired intangible assets 9.1 5.6
Share-based payments charge 4.1 9.2
Costs relating to share-based payments scheme 0.9 -
Restructuring and refinancing costs 2.5 1.4
Unrealised operating foreign exchange loss/(gain) 2.5 (0.1)
M&A and contingent consideration costs 3.9 2.4
Adjusted profit before tax 61.4 51.1
Adjusted income tax expense(2) (12.6) (10.0)
Adjusted profit after tax 48.8 41.1
Cash flow generated from operations 85.4 60.5
Interest paid (14.0) (3.4)
Income taxes paid (9.5) (5.1)
Principal elements of lease payments (5.9) (5.8)
Purchase of intangible and tangible assets (2.7) (1.3)
Free cash flow 53.3 44.9
Operating cash flow conversion %(3) 99% 94%
Free cash flow conversion %(4) 87% 88%
Earnings attributable to equity holders:
Basic earnings per share (pence) 27.1 21.9
Diluted earnings per share (pence) 26.2 20.2
Adjusted basic earnings per share (pence) 43.3 36.2
Adjusted diluted earnings per share (pence) 41.9 33.4
(1) Adjusted EBITDA margin is defined as: Adjusted EBITDA as a percentage of
revenue. Note 2 discloses the rationale for the adjusting items in detail.
(2) Adjusted income tax expense represents the statutory income tax expense
adjusted for the tax effect on adjusting items. In addition, the adjusted
income tax expense includes the effect of any tax rate changes. Adjusted
income tax expense has been reconciled on page 12.
(3) Operating cash flow conversion is defined as: Cash flow generated from
operations divided by Adjusted EBITDA.
(4) Free cash flow conversion is defined as: Free cash flow generated from
operations; being cash flow generated from operations less interest paid,
income taxes paid, principal elements of lease payments and purchase of
intangible and tangible assets; divided by Adjusted profit before tax. We have
updated the definition to include principal elements of lease payments
compared with the Annual Report for the year ended 31 December 2021,
accordingly the comparative has been adjusted above.
The financial position and performance of the business are reflective of the
core financial elements of our business model: visible and recurring revenues,
high incremental margins, scalable opportunity and strong cash flows.
The Directors believe that Adjusted EBITDA, Adjusted EBITDA margin, Adjusted
profit before tax, Adjusted profit after tax and Adjusted earnings per share
provide additional useful information on the core operational performance of
the Group to shareholders, and internally we review the results of the Group
using these measures. The term 'adjusted' is not a defined term under IFRS and
may not therefore be comparable with similarly titled profit measures reported
by other companies. It is not intended to be a substitute for, or superior to,
IFRS measures of profit.
Financial Key Performance Indicators
The financial KPIs below are used, in addition to statutory reporting
measures, by the Executive Directors to monitor the Group's performance and
progress. These KPIs are used to measure progress against strategy, the
strength of the business and long-term prospects for our stakeholders.
Revenue Invoiced Forward Revenue Adjusted EBITDA Adjusted EBITDA margin Net bank debt
2022 £243.2m £133.5m £86.4m 36% £249.6m
2021 £189.3m £107.7m £64.4m 34% £177.6m
% reported growth 28% 24% 34% 2p.p. 41%
% underlying growth 10% 12% 36% 2p.p. 41%
The Group delivered on its ambition to achieve at least 10% underlying revenue
growth and achieve margin of 35-40% and now sets its target on exceeding 40%
margin.
The platform economics of our business model meant that a significant
proportion of the underlying revenue growth filtered through to EBITDA without
material incremental cost of sale. This therefore gave the Group a
significantly improved margin from 34% to 36%, achieving our previous margin
range target.
In addition to the underlying performance of the business, the deployed debt
also brought in two further acquisitions to the Group, MBI and TS Lombard.
These additions also contributed to the revenue growth and increased
profitability in the year.
Operational Key Performance Indicators
The operational key performance indicators ("KPIs") below are used by the
Directors to monitor the quality of revenue growth and understand underlying
performance. Our operational KPIs are:
Value Renewal Rate - this is calculated by dividing the total subscription
sales value closed in the year compared with subscription value available for
renewal (based upon prior year value).
Volume Renewal Rate - this is calculated by dividing the total volume of
subscription sales closed in the year compared with subscription volume
available for renewal.
Average Client Value - this is calculated using the total value of sales
across our clients and showing an average value.
Our operational KPIs reference sales orders rather than revenue and therefore
impact both revenue recognised in the year as well as Invoiced Forward
Revenue.
As at 31 December 2022, the total number of clients (>£5,000 spend) was
4,735 (2021: 4,732).
Clients >£20,000 All Clients
(above £5,000)
Value renewal rate Volume renewal Average client value Value renewal rate Volume renewal Average client value
rate rate
2022 101% 84% £75,100 99% 78% £47,900
2021 97% 83% £72,900 95% 75% £42,400
Movement 4p.p. 1p.p. 3% 4p.p. 3p.p. 13%
Strong performance in underlying operational KPIs helped deliver 10%
underlying growth. We improved our Group volume renewal rates by 3 percentage
points to 78% compared with 2021. The Group also demonstrated strong pricing
power, as well as a good performance in selling more licences and product to
its existing client base. The additional value meant that the value renewal
rate for the Group was 99% compared with 95% in 2021, with a particularly
strong performance in our larger client base.
The Group's Performance This Year
1. Revenue
Revenue grew by 28% to £243.2m, driven largely from underlying growth of 10%
and aided by revenue from recent M&A and the benefit of currency gains
(2021: £189.3m). On an underlying basis, subscriptions (representing 81% of
revenue (2021: 81%)) grew by 10% underpinned by improving renewal rates,
strong pricing and client contract growth as well as new business wins.
2. Profit before tax
Profit before tax for the year grew by £5.8m to £38.4m (2021: £32.6m),
which partly reflects the operating leverage which has driven Adjusted EBITDA
to grow by £22.0m to £86.4m (2021: £64.4m), offset with increases in
finance and other operating costs.
£m Year ended Year ended Change %
31 December 2022 31 December 2021
Revenue 243.2 189.3 +28%
Operating costs (156.8) (124.9) +26%
Adjusted EBITDA 86.4 64.4 +34%
Depreciation (6.4) (6.8) -6%
Amortisation of acquired intangible assets (9.1) (5.6) +63%
Amortisation of software (1.0) (0.9) +11%
Share-based payments charge (4.1) (9.2) -55%
Costs relating to share-based payment schemes (0.9) - +100%
Refinancing costs (1.9) (0.2) +850%
Restructuring costs (0.6) (1.2) -50%
Revaluation loss on short and long-term derivatives (0.6) (0.9) -33%
Unrealised operating foreign exchange losses (1.9) 1.0 +290%
M&A costs (2.9) (2.4) +21%
Contingent consideration (1.0) - +100%
Finance costs (17.6) (5.6) +214%
Profit before tax 38.4 32.6 +18%
Adjusted EBITDA
Adjusted EBITDA increased by 34% to £86.4m (2021: £64.4m). The growth in
Adjusted EBITDA was driven by our strong revenue growth and our ability to
control what is a relatively fixed cost base.
We have an established operating cost base and given the economics of our
platform business, which sees limited incremental cost of sale, our overall
margin increased by 2 percentage points to 36% (2021: 34%).
Adjusting items
Adjusting items grew by £4.5m in total, with some significant individual
movements of note:
· The amortisation charge for acquired intangibles has increased by
£3.5m to £9.1m (2021: £5.6m). This is reflective of intangible assets
acquired as part of the four business combinations over the past 15 months and
resulting increases in amortisation.
· The share-based payment charge has decreased from £9.2m to
£4.1m, largely due to the vesting of Scheme 1 in August 2022, which carried
no charge in 2022.
The charge for 2022 included IFRS2 costs for Schemes 2 and 4 including the
modification disclosed within note 10. The modification was effective from 30
November 2022 and therefore only had an impact of £0.5m increase in charge in
the year. It is expected that the charge will increase in future years because
of the modification.
· M&A costs grew year on year, reflecting continued M&A
transactions in 2022.
Finance costs
Finance costs have increased by 214% to £17.6m (2021: £5.6m) which is
inclusive of a non-cash IFRS9 charge of £2.1m (2021: £0.8m) and IFRS16
leases interest of £1.3m (2021: £1.5m). The cash paid in interest in 2022
was £14.0m (2021: £3.4m).
This reflects the increase in average drawn debt in 2022 compared with 2021,
which funded the M&A activity over the past 15 months and purchase of own
shares, in addition to the increase in interest rates.
Finance costs are calculated on drawn debt based upon on a margin range of
275-375bps, dependent on Group net leverage, plus SONIA (Sterling Overnight
Index Average rate). The Group entered into a swap arrangement on SONIA on 21
October 2022 amid the backdrop of rising rates. The arrangement fixed SONIA at
4.9125% over the remaining life of the term loan. Undrawn debt carries
interest at one third of the prevailing margin.
Leases
Within our operating costs, depreciation in relation to right-of-use assets
was £4.7m (2021: £5.0m). Other income, in relation to sub-let income on
right-of-use assets was £0.1m (2021: £0.4m). Our net finance costs include
interest of £1.3m in relation to lease liabilities (2021: £1.5m).
3. Foreign exchange impact on results
The Group derives around 60% of revenues in currencies other than Sterling,
compared with around 40% of its cost base. The impact of currency movements in
the year increased revenue by £7.9m, which mainly reflected Sterling weakness
against US Dollar (average rate: 2022: 1.25, 2021: 1.38), with £6.0m currency
benefit also reflected in Invoiced Forward Revenue. Cost inflation as a result
of currency movements fully offset the gain in the year and impacted the
results by £8.8m. The full impact of currency on Adjusted EBITDA was a
reduction of £0.9m.
£m Revenue Operating costs(1) Adjusted EBITDA Margin Invoiced Forward Revenue
As reported 243.2 (156.8) 86.4 36% 133.5
Add back currency movements
US Dollar (8.1) 6.8 (1.3) (6.0)
Euro 0.3 - 0.3 -
Other (0.1) 2.0 1.9 -
Constant currency 235.3 (148.0) 87.3 37% 127.5
2021 - as reported 189.3 (124.9) 64.4 34% 107.7
Constant currency growth 24% 18% 36% 3.p.p. 18%
(1)Operating costs excluding adjusting items.
4. Taxation
The Group's effective income tax rate (ETR) for the reporting period is 20.6%
which exceeds the statutory UK income tax rate of 19.0%. The major
components impacting the income tax expense are higher tax rates in certain
overseas jurisdictions where the Group operates, specifically the United
States and India (increasing the Group's ETR), expenses that are
non-deductible for tax purposes (increase to ETR) and the remeasurement of
deferred tax assets to 25.0% to recognise the change in UK tax rate from 1
April 2023 (decrease to ETR).
Key factors that may impact the Group's future tax charge as a percentage of
underlying profits are the mix of profits and losses between the jurisdictions
in which the Group operates and the corresponding tax rates in those
territories, the impact of non-deductible expenditure and non-taxable income
and the utilisation (with a corresponding reduction in cash tax payments) of
previously unrecognised deferred tax assets.
Reconciliation of statutory income tax charge to adjusted income tax charge is
presented below:
£m Year ended Year ended
31 December 2022 31 December 2021
Statutory income tax charge 7.9 7.7
Amortisation of acquired intangible assets 1.8 0.9
Share-based payments charge 0.8 1.5
Costs relating to share-based payment schemes 0.2 -
Restructuring and refinancing costs 0.4 0.1
Unrealised operating foreign exchange loss/(gain) 0.5 (0.2)
Corporate tax rate change 1.3 (0.6)
Movement in unrecognised deferred tax (0.3) 0.6
Adjusted income tax charge 12.6 10.0
5. Earnings per share
Basic EPS was 27.1 pence per share (2021: 21.9 pence per share). Fully diluted
profit per share was 26.2 pence per share (2021: 20.2 pence per share).
Adjusted earnings per share grew from 36.2 pence per share to 43.3 pence per
share, representing 20% growth.
6. Dividends
We are pleased to propose a final dividend of 18.3 pence per share (2021: 13.2
pence), to be paid on 28 April 2023 to shareholders on the register at the
close of business on 31 March 2023. The ex-dividend date will be on 30 March
2023. The proposed final dividend increases the total dividend for the year
to 26.0 pence per share (2021: 19.3 pence), an increase of 35%.
7. Cash generation
Cash generated from operations grew by 41% to £85.4m (2021: £60.5m),
representing 99% of Adjusted EBITDA (2021: 94%). We would normally expect
operating cash flow to be in excess of 100% of Adjusted EBITDA and if we add
back one-off cash costs in the year (restructuring, refinancing and M&A),
cash flow conversion is 103%.
Capital expenditure was £2.7m in 2022 (2021: £1.3m), including £1.7m on
software (2021: £0.5m). Capital expenditure represented 1.1% of revenue
(2021: 0.7%).
Total cash flows from operating activities was £61.9m (growth of £9.9m from
2021), which represented 111% of operating profit (2021: 136%), with an
increase in interest paid of £10.6m to £14.0m being the main reason for the
lower conversion rate. During the year, the Group paid out £23.6m in
dividends (2021: £20.4m).
Short- and long-term borrowings increased by £83.4m to £283.6m as at 31
December 2022 (2021: £200.2m). The debt drawn was focused on two main areas
of expenditure:
· M&A - The Group purchased MBI and TS Lombard during 2022 for
a combined cash consideration of £32.9m. In addition, £0.7m was paid in
relation to the target working capital adjustment for LMC, which completed in
2021. The cash costs of acquisitions are set out on page 39.
· Purchase of shares through Employee Benefit Trust - The Group
purchased 5.3m shares for its employee LTIP for net consideration of £66.6m.
The Employee Benefit Trust held 5.6m shares as at 31 December 2022, to satisfy
options in issue of 7.1m.
8. Net bank debt:
Net bank debt increased to £249.6m as at 31 December 2022 (2021: £177.6m).
The increase principally reflects strong operating cash flows, offset by
M&A activity of £33.6m, contributions to the Employee Benefit Trust to
buy back shares of £66.6m, dividends of £23.6m and capital expenditure of
£2.7m.
The Group defines Net bank debt as short- and long-term borrowings (note 8)
less cash and cash equivalents. The amount excludes items related to leases.
£m 2022 2021
Short- and long-term borrowings (note 8) 283.6 200.2
Cash (34.0) (22.6)
Net bank debt 249.6 177.6
9. Invoiced Forward Revenue
Invoiced Forward Revenue grew by 24% to £133.5m from the 31 December 2021
balance of £107.7m, reflecting good momentum on sales orders during 2022
(underlying growth of 12%) and the impact of acquisitions. Invoiced Forward
Revenue is a major component of our significant revenue visibility for the
forthcoming year.
£m 2022 2021
Deferred revenue 104.0 81.4
Amounts not due/subscription not started at 31 December 29.5 26.3
Invoiced Forward Revenue 133.5 107.7
10. Intangible assets
Intangible assets have increased by £32.4m during the year, from £347.7m as
at 31 December 2021, to £380.1m as at 31 December 2022. The majority of the
increase relates to the two acquisitions made during the year of MBI and TS
Lombard in which the Group recognised goodwill and intangible assets on
acquisition of £24.9m and £15.1m respectively. Offsetting against these
increases was an amortisation charge for the year of £10.1m (2021: £6.5m),
which represented an increase of 55% reflecting the acquisitions made over the
past 15 months.
11. Trade receivables
Net trade receivables as at 31 December 2022 were £54.4m, representing 29%
growth compared with the 31 December 2021 balance of £42.3m, the impact of
the acquired companies and sales growth mainly driving the increase.
Financial Risk Management
The Group's primary objective in managing foreign currency risk is to protect
against the risk that the eventual Sterling net cash flows will be affected by
changes in foreign currency exchange rates. To do this, the Group enters into
foreign exchange contracts that limit the risk from movements in US Dollar and
Euro exchange rates with Sterling. Due to the Group's operations in India, the
Group also enters into foreign exchange contracts that limit the risk from
movements in US Dollars with the Indian Rupee exchange rate. While
commercially and from a cash flow perspective this hedges the Group's currency
exposures, the Group elects not to apply hedge accounting and accordingly any
movements in the fair value of the foreign exchange contracts are recognised
in the income statement.
As a data and analytics company, we are not currently impacted by cross-border
tariffs and we do not currently expect the renegotiation of tariffs to
materially impact our business. Furthermore, the company is continuing to
monitor the Inclusive Framework Project established by the OECD, including
Pillar One (determining where tax should be paid and on what basis) and Pillar
Two (the design of a system that ensures multinational enterprises pay a
minimum level of tax), which is expected to move into an implementation phase
during 2023. However, the application thresholds will be aimed at the very
largest companies, and therefore the rules are unlikely to impact the Group.
Interest Rate Risk
Interest rate risk is the impact that fluctuations in market interest rates
can have on the value of the Group's interest-bearing assets and liabilities
and on the interest charge recognised in the income statement. On 21 October
2022, GlobalData Plc (the parent company) entered into an interest rate swap
arrangement, to fix the floating element of the interest rate (based upon
SONIA) to a fixed rate of 4.9125%. The Group has applied hedge accounting in
accordance with IFRS9 (Financial Instruments); as such any gains or losses on
the interest rate swap, to the extent that they are effective, are recognised
directly within other comprehensive income of both the Group and the parent
company.
Liquidity Risk and Going Concern
The Group's approach to managing liquidity risk is to ensure, as far as
possible, that it has sufficient liquidity to meet its liabilities as they
fall due, with surplus facilities to cope with any unexpected variances in
timing of cash flows. The Group meets its day-to-day working capital
requirements through free cash flow, being operations generated cash (with no
external financing required). Although the statement of financial position
shows net current liabilities (current assets less current liabilities),
included in current liabilities is £104.0m of deferred revenue that
represents future income earnings. Excluding deferred revenue, the Group has
net current assets of £56.4m (2021: £27.8m).
Based on cash flow projections, the Group considers the existing financing
facilities to be adequate to meet short-term commitments. The Directors have a
reasonable expectation that there are no material uncertainties that cast
significant doubt about the Group's ability to continue in operation and meet
its liabilities as they fall due for the foreseeable future, being a period of
at least 12 months from the date of approval of the financial statements.
Accordingly, the Group has prepared the Annual Report and Accounts on a going
concern basis. The Directors have prepared a Going Concern and Long-Term
Viability statement within the Group's Annual Report and Accounts for the year
ended 31 December 2022 (page 32).
Consolidated Income Statement
Notes Year ended 31 December 2022 Year ended 31 December 2021
Continuing operations £m £m
Revenue 3 243.2 189.3
Operating expenses 4 (186.6) (150.8)
Losses on trade receivables (0.7) (1.2)
Other income 0.1 0.9
Operating profit 56.0 38.2
Net finance costs (17.6) (5.6)
Profit before tax 38.4 32.6
Income tax expense (7.9) (7.7)
Profit for the year 30.5 24.9
Attributable to:
Equity holders of the parent 30.5 24.9
Earnings per share attributable to equity holders:
Basic earnings per share (pence) 6 27.1 21.9
Diluted earnings per share (pence) 6 26.2 20.2
Reconciliation to Adjusted EBITDA(1):
Operating profit 56.0 38.2
Depreciation 6.4 6.8
Amortisation of software 1.0 0.9
Adjusting items 5 23.0 18.5
Adjusted EBITDA(1) 86.4 64.4
(1) We define Adjusted EBITDA as EBITDA adjusted to exclude costs associated
with acquisitions, restructuring of the Group, share-based payments,
impairment, unrealised operating exchange rate movements and the impact of
foreign exchange contracts. We present Adjusted EBITDA as additional
information because it is used internally as a key indicator to assess
financial performance. However, other companies may present Adjusted EBITDA
differently. EBITDA and Adjusted EBITDA are not measures of financial
performance under IFRS and should not be considered as an alternative to
operating profit or as a measure of liquidity or an alternative to net income
as indicators of our operating performance or any other measure of performance
derived in accordance with IFRS. Adjusted EBITDA margin is defined as:
Adjusted EBITDA as a percentage of revenue.
Consolidated Statement of Comprehensive Income
Year ended 31 December 2022 Year ended 31 December 2021
£m £m
Profit for the year 30.5 24.9
Other comprehensive income
Items that will be classified subsequently to profit or loss when specific
conditions are met:
Cash flow hedge - effective portion of changes in fair value (3.9) -
Net exchange loss on translation of foreign entities (0.4) (0.5)
Other comprehensive loss, net of tax (4.3) (0.5)
Total comprehensive income for the year 26.2 24.4
Attributable to:
Equity holders of the parent 26.2 24.4
Consolidated Statement of Financial Position
Notes 31 December 2022 31 December 2021
£m £m
Non-current assets
Property, plant and equipment 31.0 35.3
Intangible assets 7 380.1 347.7
Net investment in sub lease - 0.1
Deferred tax assets 2.3 2.1
413.4 385.2
Current assets
Trade and other receivables 62.7 51.2
Current tax receivable 0.6 -
Short-term derivative assets 0.9 0.6
Cash and cash equivalents 34.0 22.6
98.2 74.4
Total assets 511.6 459.6
Current liabilities
Trade and other payables (137.3) (114.3)
Short-term borrowings 8 - (5.0)
Short-term lease liabilities 8 (5.4) (4.1)
Current tax payable (1.7) (4.2)
Short-term derivative liabilities (1.3) (0.3)
Short-term provisions (0.1) (0.1)
(145.8) (128.0)
Net current liabilities (47.6) (53.6)
Non-current liabilities
Long-term provisions (1.3) (0.7)
Deferred tax liabilities (4.1) -
Long-term derivative liabilities (3.9) (0.1)
Long-term lease liabilities 8 (24.6) (29.3)
Long-term borrowings 8 (283.6) (195.2)
(317.5) (225.3)
Total liabilities (463.3) (353.3)
Net assets 48.3 106.3
Equity
Share capital 9 0.2 0.2
Treasury reserve 9 (70.8) (66.6)
Other reserve 9 (44.3) (44.3)
Cash flow hedge reserve 9 (3.9) -
Foreign currency translation reserve 9 (0.7) (0.3)
Retained profit 167.8 217.3
Equity attributable to equity holders of the parent 48.3 106.3
Consolidated Statement of Changes in Equity
Notes Share capital Share premium account Treasury reserve Other reserve Merger reserve Foreign currency translation reserve Cash flow hedge reserve Retained profit Equity attributable to equity holders of the parent
£m £m £m £m £m £m £m £m £m
Balance at 1 January 2021 0.2 0.7 (21.4) (37.1) 163.8 0.2 - 31.3 137.7
Profit for the year - - - - - - - 24.9 24.9
Other comprehensive income:
Net exchange loss on translation of foreign entities - - - - - (0.5) - - (0.5)
Total comprehensive income for the year - - - - - (0.5) - 24.9 24.4
Transactions with owners:
Share buy-back 9 - - (46.5) - - - - - (46.5)
Dividends 9 - - - - - - - (20.4) (20.4)
Vesting of share options 10 - - 1.3 - - - - (1.3) -
Bonus issue of shares 171.0 - - (7.2) (163.8) - - - -
Capital reduction (171.0) (0.7) - - - - - 171.7 -
Share-based payments charge 10 - - - - - - - 9.2 9.2
Tax on share-based payments - - - - - - - 1.9 1.9
Balance at 31 December 2021 0.2 - (66.6) (44.3) - (0.3) - 217.3 106.3
Profit for the year - - - - - - - 30.5 30.5
Other comprehensive income:
Cash flow hedge - effective portion of changes in fair value - - - - - - (3.9) - (3.9)
Net exchange loss on translation of foreign entities - - - - - (0.4) - - (0.4)
Total comprehensive income for the year - - - - - (0.4) (3.9) 30.5 26.2
Transactions with owners:
Share buy-back 9 - - (66.6) - - - - - (66.6)
Dividends 9 - - - - - - - (23.6) (23.6)
Vesting of share options 10 - - 62.4 - - - - (62.4) -
Share-based payments charge 10 - - - - - - - 4.1 4.1
Tax on share-based payments - - - - - - - 1.9 1.9
Balance at 31 December 2022 0.2 - (70.8) (44.3) - (0.7) (3.9) 167.8 48.3
Consolidated Statement of Cash Flows
Continuing operations Year ended Year ended
31 December 2022 31 December 2021
Cash flows from operating activities £m £m
Profit for the year 30.5 24.9
Adjustments for:
Depreciation 6.4 6.8
Amortisation 10.1 6.5
Gain on disposal of property, plant and equipment - (0.2)
Impairment of goodwill - 0.4
Net finance costs 17.6 5.6
Taxation recognised in profit or loss 7.9 7.7
Share-based payments charge 4.1 9.2
Increase in trade and other receivables (9.2) (3.2)
Increase in trade and other payables 17.2 2.2
Revaluation of short- and long-term derivatives 0.6 0.9
Increase/(decrease) in provisions 0.2 (0.3)
Cash generated from operations 85.4 60.5
Interest paid (14.0) (3.4)
Income taxes paid (9.5) (5.1)
Total cash flows from operating activities 61.9 52.0
Cash flows from investing activities
Acquisitions (33.6) (97.7)
Cash received from repayment of loans 0.9 0.9
Proceeds from disposal of property, plant and equipment - 0.6
Purchase of property, plant and equipment (1.0) (0.8)
Purchase of intangible assets (1.7) (0.5)
Total cash flows used in investing activities (35.4) (97.5)
Cash flows from financing activities
Repayment of borrowings (2.5) (5.0)
Settlement of loan (229.2) -
Proceeds from borrowings 321.0 129.0
Loan refinancing fee (8.0) (0.4)
Acquisition of own shares (66.6) (46.5)
Principal elements of lease payments (5.9) (5.8)
Dividends paid (23.6) (20.4)
Total cash flows (used in)/from financing activities (14.8) 50.9
Net increase in cash and cash equivalents 11.7 5.4
Cash and cash equivalents at beginning of year 22.6 17.7
Effects of currency translation on cash and cash equivalents (0.3) (0.5)
Cash and cash equivalents at end of year 34.0 22.6
Notes to the Preliminary Results
1. General information
Nature of operations
The principal activity of GlobalData Plc and its subsidiaries (together 'the
Group') is to provide business information in the form of high quality
proprietary data, analytics and insights to clients in multiple sectors.
GlobalData Plc ('the Company') is a company incorporated in the United Kingdom
(England & Wales) and listed on the Alternative Investment Market (AIM),
therefore is publicly owned and limited by shares. The registered office of
the Company is John Carpenter House, John Carpenter Street, London, EC4Y 0AN.
The registered number of the Company is 03925319.
Basis of preparation
The condensed financial statements have been prepared on the historical cost
basis, except for derivative financial instruments, which are measured at fair
value. While the information included in the condensed financial statements
has been prepared in accordance with United Kingdom adopted international
accounting standards and in conformity with the requirements of the Companies
Act 2006 and International Financial Reporting Standards as issued by the
IASB, this announcement does not itself contain sufficient information to
comply with United Kingdom adopted International Accounting Standards. The
condensed financial statements for the year ended 31 December 2022 have been
prepared on a consistent basis with the financial accounting policies set out
in the Accounting Policies section of GlobalData Plc's Annual Report and
Accounts for the year ended 31 December 2022. These condensed financial
statements are presented in Pounds Sterling (£).
The financial information for the year ended 31 December 2022 does not
constitute statutory accounts as defined in section 434 of the Companies Act
2006. A copy of the statutory accounts for the year ended 31 December 2022
will be delivered to the Registrar of Companies in due course. The independent
auditors' report on the full financial statements for the year ended 31
December 2022 was unqualified and did not contain an emphasis of matter
paragraph or any statement under section 498 of the Companies Act 2006.
Critical accounting estimates and judgements
The Group makes estimates and assumptions regarding the future. Estimates and
judgements are continually evaluated based on historical experience and other
factors, including expectations of future events that are believed to be
reasonable under the circumstances.
In the future, actual experience may deviate from these estimates and
assumptions. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed in detail below.
Climate-related risks did not have a material impact on the financial
statements.
Key sources of estimation uncertainty
Carrying value of goodwill and other intangibles
The carrying value of goodwill and other intangibles is assessed annually to
ensure that there is no impairment of these assets. Performing this assessment
requires management to estimate future cash flows to be generated by the
related cash-generating unit (CGU), which entails making judgements including
the expected rate of growth of sales, margins expected to be achieved, the
level of future capital expenditure required to support these outcomes and the
appropriate discount rate to apply when valuing future cash flows.
Management has undertaken sensitivity analysis, taking into consideration the
impact of key impairment test assumptions arising from a range of possible
future trading and economic scenarios on each CGU. The
following individual scenarios would need to occur before impairment is
triggered within the Group:
Cash-generating unit Revenue growth falls by* Discount rate rises by*
Data, Analytics and Insights (17.0%) 36.8%
LMC (2.9%) 2.0%
Media Business Insights ("MBI") (2.4%) 3.7%
TS Lombard (1.8%) 2.1%
*percentage points
No indication of impairment was noted from Management's review; there
is headroom in each CGU. Management acknowledge the sensitivity of the
revenue growth and discount rate assumptions applied to the LMC, MBI and TS
Lombard CGUs; however, Management is comfortable with these assumptions and
will continue to monitor performance regularly for any indicators of
future impairment loss.
Management recognises that the 2% cost growth assumption is lower than the
current rate of inflation, however the Group operates a focused approach to
cost management, including mitigating the impact of inflation through
advancements in technology and efficiency savings and has a strong track
record of achieving this. Therefore, Management consider the assumption to be
reasonable.
Critical accounting judgements
Identification of Cash-Generating Units
IAS36 'Impairment of Assets' requires that assets be carried on the statement
of financial position at no more than their recoverable amount. An asset or
cash-generating unit (CGU) is the smallest identifiable group of assets that
generates cash inflows and is impaired when its carrying amount exceeds its
recoverable amount. As at the date of the impairment review (30 September
2022), Management made the judgement that the Group had four CGUs, being Data,
Analytics and Insights, LMC, MBI and TS Lombard. In previous years, the Group
had identified MEED (a subsidiary based in the United Arab Emirates) as an
individual CGU; however, during the course of 2022 and prior to the date of
the impairment review, the MEED cash inflows were fully integrated into the
Data, Analytics and Insights CGU. In making this judgement Management has
determined that the assets acquired as part of the original acquisition of
MEED are no longer generating cash flows that are separately identifiable. The
cash flows, in addition to being generated by the acquired assets of MEED, are
also now being generated from the assets acquired across many of the Group's
historic acquisitions. Likewise, the Data, Analytics and Insights cash inflows
are also now being generated in part by the MEED assets. Management therefore
concluded that this level of consolidation and integration does not make it
possible for MEED to meet the definition of a separately identifiable CGU as
required by IAS36.
Going concern
The Group meets its day-to-day working capital requirements through free cash
flow. The Group has closing cash of £34.0m as at 31 December 2022 and net
bank debt of £249.6m (31 December 2021: net bank debt of £177.6m), being
cash and cash equivalents less short- and long-term borrowings, excluding
lease liabilities. The Group has an outstanding term loan of £290.0m which is
syndicated with 12 lenders. As at 31 December 2022, the Group had undrawn RCF
of £120.0m which is syndicated with 13 lenders. The Group's banking
facilities are in place until August 2025, at which point the Group will be
required to renew or extend its financing arrangements. The Group has
generated £85.4m in cash from operations during 2022. Based on cash flow
projections the Group considers the existing financing facilities to be
adequate to meet short-term commitments.
The finance facilities were issued with debt covenants which are measured on a
quarterly basis. There have been no breaches of covenants in the year ended 31
December 2022. Management has reviewed forecast cash flows and there is no
indication that there will be any breach in the next 12 months.
The Directors have a reasonable expectation that there are no material
uncertainties that cast significant doubt about the Group's ability to
continue in operation and meet its liabilities as they fall due for the
foreseeable future, being a period of at least 12 months from the date of
approval of the financial statements. The Directors have modelled a number of
worst-case scenarios to consider their potential impact on the Group's
results, cash flow and loan covenant forecast. Key assumptions built into the
scenarios focus on revenue and cost growth. In addition to performing scenario
planning, the Directors have also conducted stress testing of the Group's
forecasts and, taking into account reasonable downside sensitivities
(acknowledging that such risks and uncertainties exist), the Directors are
satisfied that the business is expected to operate within its facilities. The
plausible downside scenarios modelled were as follows: (i) revenue growth in
2023 being 10% lower than expectation (ii) cost growth in line with the
current UK rate of inflation and (iii) both scenarios combined. There remains
headroom on the covenants under each scenario and cash remained in excess of
the 31 December 2022 balance of £34.0m in all months.
Through our normal business practices, we are in regular communication with
our lenders and are satisfied they will be in a position to continue
supporting us for the foreseeable future.
The Directors therefore consider the strong balance sheet, with good cash
reserves and working capital along with financing arrangements, provide ample
liquidity. Accordingly, the Directors have prepared the financial statements
on a going concern basis.
2. Accounting policies
These condensed financial statements have been prepared based on the
accounting policies detailed in the Group's financial statements for the year
ended 31 December 2022 and is consistent with the policies applied in the
previous year, except for the following new standards The new standards which
are effective during the year (and have had a minimal impact on the financial
statements) are:
· Amendments to IAS16: Property, Plant and Equipment (effective for
periods beginning on or after 1 January 2022);
· Amendments to IAS37: Provisions, Contingent Liabilities and
Contingent Assets (effective for periods beginning on or after 1 January
2022); and
· Amendments to IFRS3: Business Combinations (effective for periods
beginning on or after 1 January 2022).
Presentation 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 and associated costs Share-based payment expenses are excluded from Adjusted EBITDA as they are a
non-cash charge, the awards are equity-settled and the Directors believe they
result in a level of charge that would distort the user's view of the core
trading performance of the Group.
Restructuring, M&A (including contingent consideration) and refinancing The Group excludes these costs from Adjusted EBITDA where the nature of the
costs item, or its size, is not related to the core underlying trading of the Group.
This is to assist the user of the financial statements to better understand
the results of the core operations of the Group and allow comparability of
underlying results.
Amortisation and impairment 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 historical investment activities. Any impairment charges
recognised in relation to these intangible assets are also excluded from
Adjusted EBITDA. This is a common adjustment made by acquisitive information
service businesses and is therefore consistent with peers.
Revaluation of short- and long-term derivatives Gains and losses are recognised within Adjusted EBITDA when they are realised
in cash terms and therefore we exclude non-cash movements arising from
fluctuations in exchange rate as these may not reflect the underlying
performance of the Group, which better aligns Adjusted EBITDA with the cash
performance of the business.
Unrealised operating foreign exchange gain/loss
3. Segmental analysis
The principal activity of GlobalData Plc and its subsidiaries (together 'the
Group') is to provide business information in the form of high quality
proprietary data, analytics and insights to clients in multiple sectors.
IFRS8 "Operating Segments" requires the segment information presented in the
financial statements to be that which is used internally by the chief
operating decision maker to evaluate the performance of the business and to
decide how to allocate resources. The Group has identified the Chief Executive
as its chief operating decision maker.
The Group maintains a centralised operating model and single product platform
(One Platform), which is underpinned by a common taxonomy, shared development
resource, and new data science technologies. The fundamental principle of the
GlobalData business model is to provide our clients with subscription access
to our proprietary data, analytics, and insights platform, with the offering
of ancillary services such as consulting, single copy reports and events. The
vast majority of data sold by the Group is produced by a central research team
which produces data for the Group as a whole. The central research team
reports to one central individual, the Managing Director of the India
operation, who reports to the Group Chief Executive. 'Data, Analytics and
Insights' is therefore considered to be the operating segment of the Group.
The Group profit or loss is reported to the Chief Executive on a monthly basis
and consists of earnings before interest, tax, depreciation, amortisation,
central overheads and other adjusting items. The Chief Executive also monitors
revenue within the operating segment.
The Group considers the use of a single operating segment to be appropriate
due to:
· The Chief Executive reviewing profit or loss at the Group level;
· Utilising a centralised operating model;
· Being an integrated solutions based business, rather than a
portfolio business; and
· The M&A strategy of the Group being to fully integrate within
the One Platform.
A reconciliation of Adjusted EBITDA to profit before tax from continuing
operations is set out below:
( )
Year ended Year ended
31 December 2022 31 December 2021
£m £m
Adjusted EBITDA 86.4 64.4
Restructuring costs (0.6) (1.2)
M&A costs (2.9) (2.4)
Contingent consideration (1.0) -
Refinancing costs (1.9) (0.2)
Share-based payment charge (4.1) (9.2)
Costs relating to share-based payment schemes (0.9) -
Revaluation loss on short and long-term derivatives (0.6) (0.9)
Unrealised operating foreign exchange (losses)/gains (1.9) 1.0
Amortisation of acquired intangibles (9.1) (5.6)
Depreciation (6.4) (6.8)
Amortisation (excluding amortisation of acquired intangible assets) (1.0) (0.9)
Finance costs (17.6) (5.6)
Profit before tax 38.4 32.6
The Group generates revenue from services provided over a period of time such
as recurring subscriptions and other services which are deliverable at a point
in time such as reports, events and custom research.
Subscription income for online services, data and analytics (typically 12
months) is normally invoiced at the beginning of the services and is therefore
recognised as a contract liability, "deferred revenue", in the statement of
financial position. Revenue is recognised evenly over the period of the
contractual term as the performance obligations are satisfied evenly over the
term of subscription.
The revenue on services delivered at a point in time is recognised when our
contractual obligation is satisfied, such as delivery of a static report or
delivery of an event. The obligation on these types of contracts is a discrete
obligation, which once met satisfies the Group performance obligation under
the terms of the contract.
Any invoiced contracted amounts which are still subject to performance
obligations and where the payment has been received or is contractually due
are recognised within deferred revenue at the statement of financial position
date. Typically, the Group receives settlement of cash at the start of each
contract and standard terms are zero days. Similarly, if the Group satisfies a
performance obligation before it receives the consideration or is
contractually due the Group recognises a contract asset within accrued income
in the statement of financial position.
Revenue recognised in the Consolidated Income Statement Deferred Revenue recognised within the Consolidated Statement of Financial
Position
Year ended 31 December 2022 Year ended 31 December 2021 As at 31 December 2022 As at 31 December 2021
£m £m £m £m
Services transferred:
Over a period of time 196.5 156.9 91.6 73.1
At a point in time 46.7 32.4 12.4 8.3
Total 243.2 189.3 104.0 81.4
As subscriptions are typically for periods of 12 months the majority of
deferred revenue held at 31 December will be recognised in the income
statement in the following year. As at 31 December 2022, £1.1m (2021: £0.4m)
of the deferred revenue balance will be recognised beyond the next 12 months.
In the year ended 31 December 2022 the Group recognised revenue of £81.0m
(2021: £74.1m) that was included in the deferred revenue balance at the
beginning of the period.
As at 31 December 2022, the total non-cancellable obligations within deferred
revenue to fulfil revenue amounted to £104.0m (2021: £81.4m). As at the same
date, the total non-cancellable obligations within Invoiced Forward Revenue to
fulfil revenue amounted to £133.5m (2021: £107.7m).
In instances where the Group enters into transactions involving a range of the
Group's services, for example a subscription and custom research, the total
transaction price for a contract is allocated amongst the various performance
obligations based on their relative stand-alone selling prices.
Geographical analysis
Our primary geographical markets are serviced by our global sales teams which
are organised as Europe, US and Asia Pacific by virtue of the team location.
The below disaggregated revenue is derived from the geographical location of
our customers rather than the team structure the Group is organised by.
From continuing operations
Year ended 31 December 2022 UK Europe Americas(1) Asia Pacific MENA(2) Rest of World Total
£m £m £m £m £m £m £m
Revenue from external customers 36.0 64.7 91.4 27.2 16.6 7.3 243.2
Year ended 31 December 2021 UK Europe Americas(1) Asia Pacific MENA(2) Rest of World Total
£m £m £m £m £m £m £m
Revenue from external customers 27.8 51.8 67.8 21.0 13.9 7.0 189.3
1. Americas includes revenue from the United States of America of
£86.7m (2021: £65.7m)
2. Middle East & North Africa
Intangible assets held in the US and Canada were £33.4m (2021: £34.3m), of
which £29.1m related to goodwill (2021: £29.1m). Intangible assets held in
the UAE were £12.8m (2021: £13.6m) of which £11.4m related to goodwill
(2021: £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 Year ended
31 December 2022 31 December 2021
£m £m
Cost of sales 125.7 101.8
Administrative costs 60.9 49.0
186.6 150.8
Losses on trade receivables 0.7 1.2
Total operating expenses 187.3 152.0
5. Adjusting items
Year ended Year ended
31 December 2022 31 December 2021
£m £m
Amortisation of acquired intangibles 9.1 5.6
Share-based payment charge 4.1 9.2
M&A costs 2.9 2.4
Refinancing costs 1.9 0.2
Unrealised operating foreign exchange loss/(gain) 1.9 (1.0)
Contingent consideration 1.0 -
Costs relating to share-based payments scheme 0.9 -
Restructuring costs 0.6 1.2
Revaluation loss on short- and long-term derivatives 0.6 0.9
Total adjusting items 23.0 18.5
The adjustments made are as follows:
· The share-based payments charge is in relation to
the share-based compensation plans (detailed in note 10) under which the
entity receives services from employees as consideration for equity
instruments (options) of the Group. The fair value of the employee services
received in exchange for the grant of the options and awards is recognised as
an expense in the income statement. The total amount to be expensed is
determined by reference to the fair value of the options granted. The original
fair value on grant date is charged to the income statement based upon the
Monte-Carlo method. Following modification on 30 November 2022, an additional
charge for the beneficial modification was determined by the Black-Scholes
method (more detail is contained within note 10).
· The M&A costs consist of professional fees
incurred in both performing due diligence relating to potential acquisition
targets and performing completion activities in relation to acquisitions made
during the year, in addition to redundancy costs in relation to group
integration projects.
· Refinancing costs consist of legal fees incurred
in relation to (i) the extension of the previously held term loan and RCF by
one year (completed during June 2022) and (ii) the arrangement of the new loan
facility which was drawn down upon during August 2022.
· Unrealised operating foreign exchange losses and
gains relate to non-cash exchange losses and gains made on operating items.
· The contingent consideration amounts relate to
payments due to the previous owners of MBI and TS Lombard between 2023 and
2025. These have been treated as remuneration costs due to their being
contingent upon the former owners remaining as employees of the Group at the
time of payment.
· Costs relating to share-based payments scheme
consist of employer taxes borne as a result of the vesting of the final
tranche of Scheme 1 during the year, and professional fees incurred in advice
obtained relating to the restructure of existing schemes.
· Restructuring relates to professional fees
incurred in relation to group reorganisation projects.
· The revaluation of short- and long-term
derivatives relates to movement in the fair value of the short- and long-term
derivatives.
6. Earnings per share
The calculation of the basic earnings per share is based on the earnings
attributable to ordinary shareholders of the parent company divided by the
weighted average number of shares in issue during the period. The Group also
has a share options scheme in place and therefore the Group has calculated the
dilutive effect of these options.
Year ended Year ended
31 December 2022 31 December 2021
Earnings per share attributable to equity holders from continuing operations:
Basic
Profit for the period attributable to ordinary shareholders of the parent 30.5 24.9
company (£m)
Weighted average number of shares (no' m) 112.7 113.5
Basic earnings per share (pence) 27.1 21.9
Diluted
Profit for the period attributable to ordinary shareholders of the parent 30.5 24.9
company (£m)
Weighted average number of shares (no' m) 116.6 123.0
Diluted earnings per share (pence) 26.2 20.2
Reconciliation of basic weighted average number of shares to the diluted
weighted average number of shares:
Year ended Year ended
31 December 2022 31 December 2021
No' m No' m
Basic weighted average number of shares, net of shares held in treasury 112.7 113.5
reserve
Share options in issue at end of period, net of shares not paid up 3.9 9.5
Diluted weighted average number of shares 116.6 123.0
7. Intangible assets
Software Customer relationships Brands IP rights and database Goodwill Total
£m £m £m £m £m £m
Cost
As at 1 January 2021 12.2 44.0 16.1 50.2 227.7 350.2
Additions: Business combinations 0.7 11.8 0.1 25.2 75.4 113.2
Additions: Separately acquired 0.4 - - 0.1 - 0.5
Reclassification to PPE (0.5) - - - - (0.5)
Fair value adjustment - - - - (0.4) (0.4)
As at 31 December 2021 12.8 55.8 16.2 75.5 302.7 463.0
Additions: Business combinations 0.9 9.5 10.0 2.4 19.2 42.0
Additions: Separately acquired 1.7 - - - - 1.7
Fair value adjustment - - - - 0.1 0.1
As at 31 December 2022 15.4 65.3 26.2 77.9 322.0 506.8
Amortisation
As at 1 January 2021 (9.9) (28.8) (10.7) (48.3) (10.5) (108.2)
Additions: Business combinations (0.5) - - - - (0.5)
Impairment - - - - (0.4) (0.4)
Charge for the year (0.9) (3.8) (0.6) (1.2) - (6.5)
Reclassification to PPE 0.3 - - - - 0.3
As at 31 December 2021 (11.0) (32.6) (11.3) (49.5) (10.9) (115.3)
Additions: Business combinations (0.8) - - (0.5) - (1.3)
Charge for the year (1.1) (5.2) (0.9) (2.9) - (10.1)
As at 31 December 2022 (12.9) (37.8) (12.2) (52.9) (10.9) (126.7)
Net book value
As at 31 December 2022 2.5 27.5 14.0 25.0 311.1 380.1
As at 31 December 2021 1.8 23.2 4.9 26.0 291.8 347.7
Additions as a result of business combinations in the year have been disclosed
in further detail in note 11.
8. Borrowings
31 December 2022 31 December
£m 2021
£m
Short-term lease liabilities 5.4 4.1
Short-term borrowings - 5.0
Current liabilities 5.4 9.1
Long-term lease liabilities 24.6 29.3
Long-term borrowings 283.6 195.2
Non-current liabilities 308.2 224.5
The changes in the Group's borrowings can be classified as follows:
Short-term borrowings Long-term borrowings Long-term lease liabilities(1) Total
Short-term lease liabilities(1)
£m £m £m £m £m
As at 1 January 2021 5.0 70.8 4.1 35.8 115.7
Cash flows:
- Repayment (5.0) - (5.8) - (10.8)
- Proceeds - 129.0 - - 129.0
- Loan fees paid - (0.4) - - (0.4)
Non-cash:
- Interest expense - 0.8 - - 0.8
- Lease additions - - 2.4 - 2.4
- Lease liabilities(2) - - 0.6 (3.7) (3.1)
- Reclassification 5.0 (5.0) 2.8 (2.8) -
As at 31 December 2021 5.0 195.2 4.1 29.3 233.6
Cash flows:
- Repayment (2.5) - (5.9) - (8.4)
- Proceeds - 321.0 - - 321.0
- Loan fees paid - (8.0) - - (8.0)
- Settlement of loan - (229.2) - - (229.2)
Non-cash:
- Interest expense - 2.1 - - 2.1
- Lease additions - - 0.6 - 0.6
- Lease liabilities(2) - - 1.5 0.4 1.9
- Reclassification (2.5) 2.5 5.1 (5.1) -
As at 31 December 2022 - 283.6 5.4 24.6 313.6
Term loan and RCF
On 5 August 2022, the Group successfully completed a refinancing of external
debt facilities. This resulted in settlement of the previously drawn-down
position of £229.2m and draw down on the new term loan facility of £290.0m
on 9 August 2022, increasing cash reserves of the Group. The settlement of the
previously held loan qualified as a substantial modification and therefore, in
accordance with IFRS9, the previous loan was derecognised from the statement
of financial position resulting in a credit to the income statement of £2.8m.
The new facilities have been arranged to cover a period of three years. There
are no fixed periodic capital repayments, with the full balance being due for
settlement when the facilities expire in August 2025. If the Group needs
further debt funding in order to support M&A activity, the new facility
includes a £120.0m revolving credit facility (RCF). The term loan is
syndicated between 12 lenders and the RCF is syndicated between 13 lenders.
As at 31 December 2022, the Group had fully drawn down the term loan of
£290.0m. The Group is yet to draw down the available RCF facility of
£120.0m. Due to offsetting of loan fees paid as part of the refinancing
process, the term loan is held on the statement of financial position with a
value of £283.6m.
Interest is currently charged on the term loan at a rate of 3.25% over the
Sterling Overnight Index Average rate (SONIA) and is payable at the end of
each calendar quarter. The Group entered into an interest rate swap during
October 2022, with an effective date of 30 September 2022 based on a notional
amount of £290.0m, which aligns to the current term loan draw down. The
agreement is to swap, on a calendar quarter basis, SONIA for a fixed rate of
4.9125%.
9. Equity
Share capital
Authorised, allotted, called up and fully paid:
31 December 2022 31 December 2021
No'000 £000s No'000 £000s
Ordinary shares (1/14(th) pence) 118,303 84 118,303 84
Deferred shares of £1.00 each 100 100 100 100
Total authorised, allotted, called up and fully paid 118,403 184 118,403 184
Share Purchases
During the year the Group's Employee Benefit Trust purchased an aggregate
amount of 5,274,462 shares (representing 4.5% of the total share capital),
each with a nominal value of 1/14(th) pence, at a total market value of
£66.6m. The purchased shares will be held for the purpose of satisfying the
exercise of share options under the Company's Employee Share Option Plan.
During the year, a total of 4,503,327 shares (representing 3.8% of the total
share capital), each with a nominal value of 1/14(th) pence, which were held
by the Group's Employee Benefit Trust were utilised as a result of the vesting
of the final tranche of Scheme 1 share options (at a total market value of
£57.0m), as disclosed in note 10.
The maximum number of shares (each with a nominal value of 1/14(th) pence)
held by the Employee Benefit Trust (at any time during the year ended 31
December 2022) was 6,068,381 (representing 5.1% of the total share capital).
The purchase of shares by the trust is to limit the eventual dilution to
existing shareholders. As at 31 December 2022, based upon the restructured
vesting schedules (see note 10), no dilution is forecast until 2027.
Vesting Schedule 2023 No. 2024 No. 2025 No. 2026 No. 2027 No. Total No.
Scheme 1* 997,227 997,226 - - - 1,994,453
Scheme 2 - 840,000 840,000 840,000 840,000 3,360,000
Scheme 4 - - 171,600 343,200 1,201,200 1,716,000
Total 997,227 1,837,226 1,011,600 1,183,200 2,041,200 7,070,453
Shares held in trust (997,227) (1,837,226) (1,011,600) (1,183,200) (543,772) (5,573,025)
Net dilution - - - - 1,497,428 1,497,428
Capital management
The Group's capital management objectives are:
· To ensure the Group's ability to continue as a going concern; and
· To fund future growth and provide an adequate return to
shareholders and, when appropriate, distribute dividends.
The capital structure of the Group consists of net bank debt, which includes
borrowings (note 8) and cash and cash equivalents, and equity.
The Company has two classes of shares. The ordinary shares carry no right to
fixed income and each share carries the right to one vote at general meetings
of the Company.
The deferred shares do not confer upon the holders the right to receive any
dividend, distribution or other participation in the profits of the Company.
The deferred shares do not entitle the holders to receive notice of or to
attend and speak or vote at any general meeting of the Company. On
distribution of assets on liquidation or otherwise, the surplus assets of the
Company remaining after payments of its liabilities shall be applied first in
repaying to holders of the deferred shares the nominal amounts and any
premiums paid up or credited as paid up on such shares, and second the balance
of such assets shall belong to and be distributed among the holders of the
ordinary shares in proportion to the nominal amounts paid up on the ordinary
shares held by them respectively.
There are no specific restrictions on the size of a holding nor on the
transfer of shares, which are both governed by the general provisions of the
Articles of Association and prevailing legislation. The Directors are not
aware of any agreements between holders of the Company's shares that may
result in restrictions on the transfer of securities or on voting rights.
No person has any special rights of control over the Company's share capital
and all its issued shares are fully paid.
With regard to the appointment and replacement of Directors, the Company is
governed by its Articles of Association, the Companies Act and related
legislation. The Articles themselves may be amended by special resolution of
the shareholders. The powers of Directors are described in the Board Terms of
Reference, copies of which are available on request.
Dividends
The final dividend for 2021 was 13.2 pence per share and was paid in April
2022. The total dividend for the current year is 26.0 pence per share, with an
interim dividend of 7.7 pence per share paid on 7 October 2022 to shareholders
on the register at the close of business on 9 September 2022, and a final
dividend of 18.3 pence per share which will be paid on 28 April 2023 to
shareholders on the register at the close of business on 31 March 2023. The
ex-dividend date will be 30 March 2023.
Treasury reserve
The treasury reserve represents the cost of shares held in the Group's
Employee Benefit Trust for the purpose of satisfying the exercise of share
options under the Company's Employee Share Option Plan.
The disclosures above are for both the Group and the Company.
Foreign currency translation reserve
The foreign currency translation reserve contains the translation differences
that arise upon translating the results of subsidiaries with a functional
currency other than Sterling. Such exchange differences are recognised in the
income statement in the period in which a foreign operation is disposed of.
Cash flow hedge reserve
The cash flow hedge reserve contains the fair valuation movements arising from
revaluation of interest rate swaps. Changes in fair value of derivative
financial instruments that are designated, and effective, cash flow hedges of
forecast transactions are recognised in other comprehensive income and
accumulated under the heading of cash flow hedge reserve, limited to the
cumulative change in fair value of the hedged item from inception of the
hedge. The gain or loss relating to the ineffective portion is recognised
immediately in profit or loss. The cumulative amount recognised in other
comprehensive income and accumulated in equity is reclassified into the
consolidated income statement out of other comprehensive income in the same
period when the hedged item is recognised in profit or loss.
10. Share based payments
Scheme 1 - fully vested and closed to new participants
The Group created a share option scheme during the year ended 31 December 2010
and granted the first options under the scheme on 1 January 2011 to certain
senior employees. Each option granted converts to one ordinary share on
exercise. A participant may exercise their options subject to employment
conditions and Adjusted EBITDA targets being met. For these options to be
exercised the Group's earnings before interest, taxation, depreciation and
amortisation, as adjusted by the Remuneration Committee for significant or
one-off occurrences, must exceed certain targets. The fair values of options
granted were determined using the Black-Scholes model. The inputs used in the
model were:
· share price at date of grant;
· exercise price;
· time to maturity;
· annual risk-free interest rate; and
· annualised volatility.
Each of the awards were subject to vesting criteria set by the Remuneration
Committee. As disclosed in the 2021 annual report and accounts, the final
vesting target of £52m Adjusted EBITDA (excluding the impact of IFRS16) was
met in the financial year ending 31 December 2021 and therefore the final
tranche of Scheme 1 options vested during 2022. Scheme 1 is now therefore
closed.
The total charge recognised for the scheme during the 12 months to 31 December
2022 was £nil (2021: £6.3m).
The Remuneration Committee approved the vesting of the final tranche of Scheme
1 on 11 August 2022. The awards of the scheme were settled with ordinary
shares of the Company. Whilst the majority of participants chose to exercise
their options (4.5m options), holders of the remaining 2.0m options chose to
defer their exercise, as allowable under the scheme rules. As a result of the
final tranche of options vesting during the year, £62.4m was transferred from
the Group's treasury reserve to retained earnings of which £58.6m is
distributable. The weighted average price of the exercised options at the date
of exercise was £13.85 per share.
Reconciliation of movement in the number of options is provided below. No new
grants were awarded during 2022.
Option exercise price Remaining life Number of
(pence) options
(years)
31 December 2021 1/14th 0.0 6,547,557
Exercised 1/14th N/A (4,503,327)
Forfeited 1/14th N/A (49,777)
31 December 2022 1/14th 0.0 1,994,453
The options carried forward as at 31 December 2022 are both outstanding and
exercisable. The maximum term of the remaining options outstanding is 10
years, ending in August 2033.
Schemes 2 and 4
During the year, the Remuneration Committee reviewed the structure of the
targets for Schemes 2 and 4 against the original objectives of the scheme. As
set out in detail within the Remuneration report on page 53 of the Group's
Annual Report and Accounts for the year ended 31 December 2022, the Committee
determined it appropriate to change the methodology of targets from a Total
Shareholder Return (TSR) basis to an EBITDA basis.
In order to account for the restructure, management firstly calculated the
fair value of each scheme based upon both the existing TSR targets and the
proposed new EBITDA targets. The valuation date was determined as 30 November
2022, being the date the change was verbally communicated to option holders.
· TSR basis - The fair value of Schemes 2 and 4 were calculated as
at 30 November 2022, based upon the remaining performance period and existing
TSR targets. The fair values of each individual tranche were determined using
the Monte Carlo method, using the inputs; valuation date and share price,
vesting dates, expected term, risk free rate, dividend yield and volatility.
· EBITDA basis - The fair value of Schemes 2 and 4 were calculated
as at 30 November 2022, based upon the remaining performance period and
proposed EBITDA targets. The fair values of each individual tranche were
determined using the Black-Scholes model, using the inputs; valuation date and
share price, exercise price, vesting dates, risk free rate, and volatility.
Management then determined whether or not it considered the modification to be
a beneficial modification. Whilst it concluded that the targets were
calculated based upon a comparable compounded growth rate when compared to the
original vesting targets, for accounting purposes it was deemed a beneficial
modification based upon:
· The significant increase in the fair value of per share moving
from market vesting to non-market vesting target criteria, as at 30 November
2022 when the changes were communicated to employees;
· The extension of the vesting period for Scheme 2 was partly
offset by splitting the target into four vesting targets, one of which was
brought forward from the original vesting period; and
· Scheme 2 option holders now have four opportunities to
participate, compared with a single "hit or miss" target under the old basis
for target.
As Management determined a beneficial modification, the delta of the fair
values as at 30 November (being the difference in the fair values of each
tranche using the two target models) has been charged to the income statement,
spread over the remaining vesting period for each tranche, from valuation date
of 30 November 2022, in accordance with IFRS2. In calculating this spreading
of charge, management also applied a churn assumption, based upon historical
employee churn data.
Scheme/ Tranche Fair value 30 November - TSR target basis Fair value 30 November - EBITDA target basis
(£ per grant) (£ per grant)
Scheme 2
Tranche 1 3.80 11.79
Tranche 2 3.80 11.43
Tranche 3 3.80 11.09
Tranche 4 3.80 10.76
Scheme 4
Tranche 1 4.44 11.43
Tranche 2 1.84 11.09
Tranche 3 1.71 10.76
The below table summarises the detail of the targets under the old and new
structures.
Scheme 2 (2019) Scheme 4 (2021)
Old basis for target The award will vest if the compounded annual growth (CAGR) in the Group's TSR The award will vest if the compounded annual growth (CAGR) in the Group's TSR
performance over the five-year performance period (ending March 2025) is equal performance over the five-year performance period (measured in the February
to or exceeds 16% per annum (100% vest). following year end) meets the below vesting criteria:
- If TSR achieves 6% compounded over 2022-2024 (10% vest)
- If TSR achieves 16% compounded over 2022-2025 (20% vest)
- If TSR achieves 16% compounded over 2022-2026 (70% vest)
New basis for target The awards will vest based upon the following proportions if Adjusted EBITDA The awards will vest based upon the following proportions if Adjusted EBITDA
targets are met, as measured in the year end results for the below years: targets are met, as measured in the year end results for the below years:
- 2023 £100m Adj EBITDA (25% Vest) - 2023 - Not Applicable
- 2024 £110m Adj EBITDA (25% Vest) - 2024 £110m Adj EBITDA (10% Vest)
- 2025 £125m Adj EBITDA (25% Vest) - 2025 £125m Adj EBITDA (20% Vest)
- 2026 £145m Adj EBITDA (25% Vest) - 2026 £145m Adj EBITDA (70% Vest)
The change to Scheme 2 rules has resulted in the remaining life of the scheme
being extended from March 2025 to March 2027.
Within both Schemes 2 and 4, each option granted converts to one ordinary
share on exercise.
Scheme 2 - 2019 scheme
The following assumptions were used in the valuation under the old performance
criteria:
Award tranche Grant date Fair value of share price at grant date Estimated forfeiture rate p.a. Weighted average of remaining contractual life (years)
Exercise price
(pence)
Award 1 31 October 2019 £2.02 0.0714p 0% 2.0
Award 2 7 May 2020 £4.62 0.0714p 0% 2.0
Award 3 25 May 2020 £5.50 0.0714p 0% 2.0
Award 4 23 June 2020 £6.12 0.0714p 0% 2.0
Award 5 22 September 2020 £6.35 0.0714p 0% 2.0
Award 6 17 November 2020 £7.12 0.0714p 0% 2.0
Award 7 23 March 2021 £5.15 0.0714p 0% 2.0
The following assumptions were used in the valuation under the new performance
criteria and vesting periods:
Award tranche Award 1 Award 2 Award 3 Award 5 Award 7
Grant date 31/10/19 07/05/20 25/05/20 22/09/20 23/03/21
Group achieves £100m EBITDA by 31 March 2024 25% vest 25% vest 25% vest 25% vest 25% vest
Fair value at modification date £11.79 £11.79 £11.79 £11.79 £11.79
Risk-free interest rate 3.169% 3.169% 3.169% 3.169% 3.169%
Estimated forfeiture rate 9% 9% 9% 9% 9%
Remaining contractual life 1.25 1.25 1.25 1.25 1.25
Group achieves £110m EBITDA by 31 March 2025 25% vest 25% vest 25% vest 25% vest 25% vest
Fair value at modification date £11.43 £11.43 £11.43 £11.43 £11.43
Risk-free interest rate 3.240% 3.240% 3.240% 3.240% 3.240%
Estimated forfeiture rate 15% 15% 15% 15% 15%
Remaining contractual life 2.25 2.25 2.25 2.25 2.25
Group achieves £125m EBITDA by 31 March 2026 25% vest 25% vest 25% vest 25% vest 25% vest
Fair value at modification date £11.09 £11.09 £11.09 £11.09 £11.09
Risk-free interest rate 3.201% 3.201% 3.201% 3.201% 3.201%
Estimated forfeiture rate 20% 20% 20% 20% 20%
Remaining contractual life 3.25 3.25 3.25 3.25 3.25
Group achieves £145m EBITDA by 31 March 2027 25% vest 25% vest 25% vest 25% vest 25% vest
Fair value at modification date £10.76 £10.76 £10.76 £10.76 £10.76
Risk-free interest rate 3.241% 3.241% 3.241% 3.241% 3.241%
Estimated forfeiture rate 25% 25% 25% 25% 25%
Remaining contractual life 4.25 4.25 4.25 4.25 4.25
Awards 4 and 6 had been forfeited at the time of modification. For all options
noted within the table above, the exercise price per option is 0.0714p
(equivalent to 1/14(th) pence) and the expected dividend yield is 3.06%, which
has been assumed to be paid throughout the performance period. The volatility
used within the calculations was 26.87% which was determined by calculating
the Group's observed historical volatility over a period equal to the time
until the end of the assumed maturity date. The initial share price used in
the calculations was £12.25.
The estimated forfeiture rate assumption is based upon management's
expectation of the number of options that will lapse over the vesting period
and are reviewed annually. Management believes the current assumptions to be
reasonable.
The total charge recognised for the scheme during the 12 months to 31 December
2022 was £3.3m (2021: £2.9m). The awards of the scheme will be settled with
ordinary shares of the Company.
Reconciliation of movement in the number of options in Scheme 2 is provided
below.
Option exercise price Remaining life Number of
(pence) options
(years)
31 December 2021 1/14th 3.0 3,660,000
Forfeited 1/14th N/A (300,000)
31 December 2022 1/14th 2.8 3,360,000
The options carried forward as at 31 December 2022 are both outstanding and
exercisable.
Scheme 4 - 2021 scheme
The following assumptions were used in the valuation under the old performance
criteria:
Award tranche Award 1
Grant date 07/03/22
TSR achieves 6% compounded over 2022-2024 10% vest
Fair value at modification date £4.44
Estimated forfeiture rate 20%
Remaining contractual life 2.25
TSR achieves 16% compounded over 2022-2025 20% vest
Fair value at modification date £1.84
Estimated forfeiture rate 26%
Remaining contractual life 3.25
TSR achieves 16% compounded over 2022-2026 70% vest
Fair value at modification date £1.71
Estimated forfeiture rate 31%
Remaining contractual life 4.25
The following assumptions were used in the valuation under the new performance
criteria:
Award tranche Award 1
Grant date 07/03/22
Group achieves £110m EBITDA by 31 March 2025 10% vest
Fair value at modification date £11.43
Risk-free interest rate 3.240%
Estimated forfeiture rate 20%
Remaining contractual life 2.25
Group achieves £125m EBITDA by 31 March 2026 20% vest
Fair value at modification date £11.09
Risk-free interest rate 3.201%
Estimated forfeiture rate 26%
Remaining contractual life 3.25
Group achieves £145m EBITDA by 31 March 2027 70% vest
Fair value at modification date £10.76
Risk-free interest rate 3.241%
Estimated forfeiture rate 31%
Remaining contractual life 4.25
For all options noted within the table above, the exercise price per option is
0.0714p (equivalent to 1/14(th) pence) and the expected dividend yield is
3.06%, which has been assumed to be paid throughout the performance period.
The volatility used within the calculations was 26.87% which was determined by
calculating the Group's observed historical volatility over a period equal to
the time until the end of the assumed maturity date. The initial share price
used in the calculations was £12.25.
The estimated forfeiture rate assumption is based upon management's
expectation of the number of options that will lapse over the vesting period
and are reviewed annually. Management believes the current assumptions to be
reasonable.
The total charge recognised for the scheme during the 12 months to 31 December
2022 was £0.8m (2021: £nil). The awards of the scheme will be settled with
ordinary shares of the Company.
Reconciliation of movement in the number of options in Scheme 4 is provided
below.
Option exercise price Remaining life Number of
(pence) options
(years)
31 December 2021 1/14th N/A -
Granted 1/14th N/A 1,772,000
Forfeited 1/14th N/A (56,000)
31 December 2022 1/14th 3.9 1,716,000
The options carried forward as at 31 December 2022 are both outstanding and
exercisable.
11. Acquisitions
Media Business Insight Holdings Limited
On 9 June 2022 the Group acquired 100% of the share capital of Media Business
Insight Holdings Limited ("MBI") for cash consideration of £22.9m. In August
2022, the Group paid a working capital adjustment of £0.3m following
finalisation of the completion accounts. MBI and its subsidiaries had a bank
balance of £3.5m on the acquisition balance sheet, therefore the net cash
cost of the acquisition to the Group was £19.7m. The companies within this
group specialise in providing content, insight and events for the creative
media industry. In addition, there are a number of contingent consideration
payments due for settlement between 2023-2025 up to a maximum amount of
£1.6m, which are being recognised as remuneration expenses within the income
statement and are disclosed as an adjusting item in note 5.
The amounts recognised for each class of assets and liabilities at the
acquisition date were as follows:
Carrying value Fair value adjustments Fair value
£m £m £m
Intangible assets consisting of:
Trade names - 9.4 9.4
Customer relationships - 5.5 5.5
Database - 0.4 0.4
Net assets acquired consisting of:
Property, plant and equipment 0.1 - 0.1
Intangible assets 0.9 (0.8) 0.1
Cash and cash equivalents 3.5 - 3.5
Trade and other receivables 2.8 (0.1) 2.7
Trade and other payables (4.1) 0.6 (3.5)
Corporation tax - (0.5) (0.5)
Deferred tax - (4.0) (4.0)
Fair value of net assets acquired 3.2 10.5 13.7
The goodwill recognised in relation to the acquisition is as follows:
Fair value
£m
Consideration 22.9
Working capital adjustment 0.3
Less net assets acquired (13.7)
Goodwill 9.5
In line with the provision of IFRS3, fair value adjustments may be made within
the 12-month period from the date of acquisition which would result in an
adjustment to the goodwill balance reported above. The goodwill that arose on
the combination can be attributed to the assembled workforce, know-how and
research methodology. The fair values of the identified intangible assets were
calculated in line with the policies detailed on page 83 of the Group's Annual
Report and Accounts for the year ended 31 December 2022. The amount of
goodwill which is expected to be deductible for tax purposes is £nil.
The Group incurred legal and professional expenses of £0.8m in relation to
the acquisition. In the period from the date of acquisition to 31 December
2022, the trade of MBI generated revenues of £7.4m and EBITDA of £1.0m. If
the acquisition had occurred on 1 January 2022, Group revenue would have been
£251.5m and Group Adjusted EBITDA would have been £88.8m.
TSL Research Group Limited
On 31 August 2022 the Group acquired 100% of the share capital of TSL Research
Group Limited ("TS Lombard") for cash consideration of £13.3m. The group of
companies acquired provide economic and political research, with a particular
strength in emerging markets. The acquisition provides the Group with further
access to the asset management sales channel to sell its full product suite
to. In addition, there are a number of contingent consideration payments due
for settlement during 2024 to a maximum amount of £3.0m, which are being
recognised as remuneration expenses within the income statement and are
disclosed as an adjusting item in note 5.
The amounts recognised for each class of assets and liabilities at the
acquisition date were as follows:
Carrying value Fair value adjustments Fair value
£m £m £m
Intangible assets consisting of:
Customer relationships - 4.0 4.0
Database - 1.5 1.5
Trade names - 0.6 0.6
Net assets acquired consisting of:
Cash and cash equivalents 0.1 - 0.1
Trade and other receivables 0.7 - 0.7
Trade and other payables (2.3) - (2.3)
Deferred tax - (0.3) (0.3)
Fair value of net (liabilities)/ assets acquired (1.5) 5.8 4.3
The goodwill recognised in relation to the acquisition is as follows:
Fair value
£m
Consideration 13.3
Less net assets acquired (4.3)
Goodwill 9.0
In line with the provision of IFRS3, fair value adjustments may be made within
the 12-month period from the date of acquisition which would result in an
adjustment to the goodwill balance reported above. The goodwill that arose on
the combination can be attributed to the assembled workforce, know-how and
research methodology. The fair values of the identified intangible assets were
calculated in line with the policies detailed on page 83 of the Group's Annual
Report and Accounts for the year ended 31 December 2022. The amount of
goodwill which is expected to be deductible for tax purposes is £nil.
The Group incurred legal and professional expenses of £1.1m in relation to
the acquisition. In the period from the date of acquisition to 31 December
2022, the trade of TS Lombard generated revenues of £1.7m and EBITDA of
£0.1m. If the acquisition had occurred on 1 January 2022, Group revenue would
have been £247.1m and Group Adjusted EBITDA would have remained at £86.4m.
Cash Cost of Acquisitions
The cash cost of acquisitions in 2022 comprises:
31 December 2022
£m
Acquisition of LMC: Working capital adjustment 0.7
Acquisition of MBI:
Cash consideration 22.9
Cash acquired (3.5)
Working capital adjustment 0.3
Acquisition of TS Lombard:
Cash consideration 13.3
Cash acquired (0.1)
33.6
12. Related party transactions
Mike Danson, GlobalData's Chief Executive Officer, owned 62.5% of the
Company's ordinary shares as at 31 December 2022 and 60.1% as at 27 February
2023 and is therefore the Company's ultimate controlling party. Mike Danson
owns a number of businesses that interact with GlobalData Plc, largely in part
as a result of past M&A transactions (GlobalData Holdings in 2016 and
Research Views Limited in 2018).
The Board has put in place an additional control framework to ensure related
party transactions are well controlled and managed. Related party transactions
are overseen by a subcommittee of the Board. The Related Party Transactions
Committee, consisting of 4 Non-Executive Directors and chaired by Murray Legg
meets to:
o Oversee all related party transactions;
o Ensure transactions are in the best interests of GlobalData and its wider
stakeholders; and
o Ensure all transactions are recorded and disclosed on an arm's length
basis.
As noted in the 2021 Annual Report, it is the intention of the Board and
management to reduce and eventually eliminate related party transactions and
wind down the service agreements that are currently in place. During 2022 we
have continued the progress made in 2021 and now expect to have eliminated all
legacy relationships with related parties by 31 December 2023.
During the year, the following related party transactions were entered into by
the Group:
Accommodation
During 2021, we eliminated all related party landlord arrangements, following
the sale of the John Carpenter and Essex Street properties by the Estel
Properties Group to third party landlords, and secondly, the surrender of the
Hatton Garden lease by GlobalData. These transactions completed in the first
half of 2021 and therefore charges during 2022 were £nil (2021:£0.8m).
In addition, GlobalData Plc sub-let office space to other companies owned by
Mike Danson, but this also materially ceased during 2021 with the exception of
one property (the related party tenant exited as at 31 December 2022 and
therefore no related party property transactions are expected in 2023). The
total sub-lease income for the year ended 31 December 2022 was £0.1m (2021:
£0.4m).
Corporate Support Services
In 2022 net corporate support charges of £0.6m were charged to the Group from
NS Media Group Limited ("NSMGL"), a related party by virtue of common
ownership (2021: £0.2m charge to NSMGL). The corporate support charges
principally consist of shared IT support and software development. The IT
contracts have been recharged on a consistent basis to the previous year and
are determined by headcount. The shared software support is clearly segregated
into separate GlobalData and NSMGL teams and the charges are based upon this
segregation with a benchmarked mark-up. The Group expects the related
contracts to end during 2023, which will result in the elimination of
corporate support services transactions. The Group expects that shared
software development and support will also cease in 2023.
Loan to Progressive Trade Media Limited
The previous outstanding loan was fully repaid on 31 January 2022 and
generated interest income in 2022 of £5,000 (2021: £0.05m). Interest was
charged throughout the term of the loan at a rate of 2.25% above LIBOR. The
balance at 31 December 2022 is £nil (2021: £0.9m). The loan was specifically
entered into in relation to the divestment of non-core print and advertising
businesses in 2016 and no further loan relationships are expected.
Revenue contract containing IP sharing clause
The Group entered into a five-year data services agreement with NSMGL in June
2020. The agreed suite of data services provided to NSMGL have been contracted
on terms equivalent to those that prevail in arm's length transactions. The
Group mutually agreed with NSMGL to terminate this agreement on 1 July 2022 in
order to reduce the amount of related party transactions as well as a
different strategic direction in NSMGL. The total revenue generated from this
contract was £0.4m (2021: £1.4m) and the net contribution generated was
£0.2m (2021: £0.8m). The cancellation was in accordance with the contracted
terms.
NSMGL also acted as a sales distributor for some GlobalData products. On these
transactions they charged agent fees of £0.2m (2021: £0.1m).
Charity Donations
During the year the Group paid donations of £0.1m (2021: £nil) to charities
in India which were funded by a related party entity, The Danson Foundation
(charity reference 1121928). This was a pass-through transaction, with the
Group facilitating payment to our charity partners in India.
Balances Outstanding
As at 31 December 2022, the total balance receivable from NSMGL was £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.
The Group has taken advantage of the exemptions contained within IAS24:
Related Party Disclosures from the requirement to disclose transactions
between Group companies as these have been eliminated on consolidation. The
amounts outstanding for other related parties were £nil (2021: £0.9m). There
were no other balances owing to or from related parties.
Directors and Key Management Personnel
The remuneration of Directors is disclosed within the Directors' Remuneration
Report on page 60 of the Group's Annual Report and Accounts for the year ended
31 December 2022.
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