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2023 Reportglobaldata PlC annual rePort and aCCounts For the year ended 31 deCember 2015 ComPany no. 03925319 Formerly Progressive digital media grouP PlC 1 Contents stRategiC RepoRt 2015 highlights our Business principal activity our Business model Chairman’s statement Chief executive’s Report operational Review Development of the Business Chief Financial officer’s Report Financial performance Key performance indicators principal Risks and Uncertainties DiReCtoRs’ RepoRt the Directors Corporate governance Report audit Committee Report Directors’ Remuneration Report statement of Directors’ Responsibilities Company highlights gRoUp RevenUe (ContinUing opeRations) 2015 2014 £60.5m £48.3m DeFeRReD RevenUe BalanCe 2015 2014 aDjUsteD eBitDa 2015 2014 £29.3m £21.5m £12.0m £8.1m 5 7 7 9 11 12 13 14 15 16 18 22 24 26 inDepenDent aUDitoR’s RepoRt 280 Cash geneRation 2015 2014 £1.3m DiviDenD peR shaRe 2015 2014 Nil £10.9m 2.5 pence FinanCial statements group Consolidated income statement 32 Consolidated statement of Comprehensive income 33 Consolidated statement of Financial position Consolidated statement of Changes in equity Consolidated statement of Cash Flows notes to the Consolidated Financial statements Company independent auditor’s Report (Company) Company statement of Financial position Company statement of Changes in equity Company statement of Cash Flows notes to the Company Financial statements advisers 34 35 36 37 69 70 71 72 73 85 Reliance on this document Our Business Review on pages 3 to 15 has been prepared in accordance with the Strategic Report requirements of section 414C of the Companies Act 2006. The intention of this document is to provide information to shareholders and is not designed to be relied upon by any other party or for any other purpose. Forward-looking statements This document contains forward-looking statements which are made by the directors in good faith based on information available to them at the time of approval of this report. In particular, all statements that express forecasts, expectations and projections with respect to future matters, including trends in results of operations, margins, growth rates, overall market trends, the impact of interest or exchange rates, the availability of financing, anticipated costs savings and synergies and the execution of GlobalData Plc’s strategy, are forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will occur in future. There are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including a number of factors outside of GlobalData Plc’s control. Any forward- looking statements speak only as of the date they are made, and GlobalData Plc gives no undertaking to update forward-looking statements to reflect any changes in its expectations with regard thereto or any changes to events, conditions or circumstances on which any such statement is based. Who we are and what we do We produce and own premium business information for each of our verticals. We provide data, insight and analysis across multiple platforms that enable our customers to gain a competitive advantage in their markets. Timeline 2010 Acquisition of Canadean 2012 Acquisition of Kable 2014 Acquisition of Current Analysis and ERC announced acquisition of globalData 2011 Started Conlumino 2013 Acquisition of Pyramid Research 2015 Datamonitor Consumer, Verdict, Datamonitor FS and Marketline employees 700 730 790 880 900+ 1100+ Key milestones Established Acquisition & Integration A business infomation company 3 globaldata plc annual RepoRt and accounts 2015 GlobalData is a world leading provider of data and analysis for consumer, technology and healthcare businesses. 4 G l o b a l d a t a p l c an n u a l R e p oRt a n d ac c o u n t s 2 0 1 5 Strategic Report 2015 Highlights Group revenue (continuing operations) Group revenue up 25% Organic revenue up 14% Deferred revenue up 36% £60.5m £48.8m £29.3m Key highlights and achievements � Organic growth and acquisitions have transformed the business � Organic revenue growth of 14.1% � Deferred revenue increased by 36.3% to £29.3m � Maiden dividend of 2.5p pence per share reflecting the improved prospects for the Group � Completed two major acquisitions � Changed name to GlobalData Financial Highlights continuing operations(1) � Group revenue increased by 25.1% to £60.5m (2014: £48.3m) � Adjusted EBITDA(2) increased by 47.5% to £12.0m (2014: £8.1m) � Adjusted EBITDA margin(2) increased by 300 basis points to 19.8% (2014: 16.8%) � Cash generated from continuing operations increased by 731.7% to £10.9m (2014: £1.3m) � Reported loss before tax from continuing operations of £2.8m (2014: loss of £3.1m) note 1: Continuing operations: include the part year effect of the Consumer acquisition and exclude the disposal of the non-core B2B print business. The results do not include any contribution from the recently completed acquisition of the Healthcare business information assets from GlobalData Ltd. note 2: adjusted eBitDa: Earnings before interest, tax, depreciation and amortisation, non-trading exchange rate losses, impairment, share based payments, adjusted for costs associated with derivatives, acquisitions, integration and restructure of the Group. Adjusted EBITDA margin is defined as: Adjusted EBITDA as a percentage of revenue. 5 globaldata plc annual RepoRt and accounts 2015 “This is a Group transformed and one which is clearly focused on the provision of premium business information services to global industries, all with significant opportunities for long-term growth.” BeRnaRD CRagg CHAIRmAn 6 Globaldata plc annual RepoRt and accounts 2015 Strategic Report Our Business principal activity The principal activity of GlobalData Plc (GD) and its subsidiaries (‘the Group’) is to enable organisations in the Consumer, Information Communications Technology (ICT) and Healthcare markets to gain competitive advantage by providing unique, high quality business information and services across multiple platforms. our Business model The Group produces and owns premium business information for each of our markets. We provide insight and analysis across multiple data, platforms that enable our customers to gain a competitive advantage in their markets. We have a clear philosophy of owning our own data and intellectual property together with powerful analysis supporting our clients’ businesses. Our business model is designed to generate revenues off a relatively fixed operating cost base, allowing for operational gearing to drive increased cash generation and profit growth. The key features are: � Strong asset base with scalable business model - premium intelligence and customer datasets � Global coverage of Consumer, Healthcare information markets ICT and � Focus on subscription revenues - high quality recurring income, with high barriers to entry and pricing power � Investment in human capital. 7 globaldata plc annual RepoRt and accounts 2015 Business Information Consumer Healthcare he a l t hC aRe Technology 8 G l o b a l d a t a p l c an n u a l R e p oRt a n d ac c o u n t s 2 0 1 5 Strategic Report Chairman’s Statement This has been a year of transition for the Group; we completed one significant acquisition, announced another and exited from the more traditional B2B print sector. The net effect of these transactions is a Group transformed and one which is clearly focused on the provision of premium business information services to global industries, all with significant opportunities for long-term growth. In recognition of this transformation and to reflect our business more fully, the Group has renamed itself GlobalData Plc and has, as previously announced, made a number of changes to the Board and senior management team. It is exciting that mike Danson has agreed to assume the role of Chief Executive of the enlarged group and I am proud to become its non-Executive Chairman. The overall change in structure and the integration of the acquisitions will result in a more focused management team. For the forthcoming year we expect to make further progress as we position the Group to take advantage of its strong market positions. our markets Since the Group formed we have been consistent in our strategy of developing the business information side of the company. The recent acquisitions, coupled with the disposal of the non-core B2B print assets, are consistent with this strategy. Following these transactions, the Group will operate in three key global business information verticals (namely Consumer, Information Communications Technology (ICT) and Healthcare) with a combined addressable market estimated at over US$10 billion. Whilst distinct from one another, our verticals do share some common characteristics: large global industry, no dominant supply side provider and with a demand side which is large, fragmented and with a history of spend on business information products and services. We now have geographical reach and operational scale with each vertical represented, globally, by one or more of the Group’s brands; Consumer being served by Canadean, ICT by Current Analysis and Healthcare by GlobalData. our employees It has been a challenging year for the Group and its employees. That so much has been achieved and that we continued to grow during a period of such transformation is a testament to the quality, dedication and hard work of our staff. I would like to express my own and my fellow Board members’ appreciation of the continued commitment of our colleagues and wish them all every success for the year ahead. Board changes I am delighted that murray Legg has agreed to join the Board of the Company as a non-Executive Director succeeding me as Chairman of the Audit Committee. maiden dividend Our business is one that is focused on the efficient management of working capital and increased cash generation. The Board therefore believes it can invest in the business, achieve growth in profits and service a progressive dividend policy. Having regard to the improved prospects for the Group and the cash requirements of the business for the year ahead, the Board is pleased to announce a proposed maiden final dividend of 2.5 pence per share. The proposed final dividend will be paid on 3rd June 2016 to shareholders on the register at the close of business on 13th may 2016. Corporate governance Good corporate governance is a key contributor to the long- term success of the Group and the Board aspire to the UK Corporate Governance Code to the extent that it considers relevant. We have reported on our Corporate Governance arrangements on page 18. The Board sets and monitors the Group’s strategy, reviewing trading performance, ensuring adequate funding, examining development possibilities and formulating policy on key issues. The Board is also responsible for monitoring the risk and control environment. I believe the Board, with its diverse skill set and wealth of experience in the media and business information industries, provides the leadership required to enable the Group to meet its objectives. Current trading and outlook We have had a good start to the year and despite an uncertain economic climate we remain confident for the remainder of the year. Bernard Cragg Chairman 1 march 2016 9 globaldata plc annual RepoRt and accounts 2015 Revenue Mix by Geography North America 28.9% Europe 28.2% United Kingdom 28.1% Rest of World 14.8% 10 Globaldata plc annual RepoRt and accounts 2015 Strategic Report Chief Executive’s Report The Group delivered a good set of financial results for the year, increasing revenues, margins and cash generation. That we performed so well during a period of such transformation is, I believe, a testament to the robustness of our business model, confirmation that our strategy is sound and more importantly, a reflection of the quality and commitment of our staff. The business has changed significantly over the last year. We now have a business with largely annualised global revenues. The confidence in the business has resulted in a maiden dividend of 2.5 pence a share. Operational Review the group’s performance this year – continuing operations Continuing operations include the part year effect of the Consumer acquisition and exclude the disposal of the non-core B2B print business. Additionally, the results do not include any contribution from the recently completed acquisition of the Healthcare business information assets from GlobalData Ltd. 1. Revenue On a continuing basis, revenues increased by 25.1% to £60.5m (2014: £48.3m) which reflects both good organic growth (14.1%) and the part year benefit of the Consumer acquisition. The acquired Consumer business is, I am pleased to report, performing well and in line with management expectations. With the acquisition of the Healthcare business our business information revenues will, broadly speaking, be equally balanced across the three industry verticals. 2. Deferred Revenue Deferred revenue increased by 36.3% to £29.3m (2014: £21.5m). On a pro-forma basis, deferred revenue, including the acquired deferred revenue for the Healthcare business, was £36.0m at 31 December 2015, providing significant visibility on 2016 expected revenues. 3. adjusted eBitDa Adjusted EBITDA increased by 47.5% to £12.0m (2014: £8.1m) with the Group’s margin improving by 3.0% to 19.8% (2014: 16.8%). The EBITDA margin growth reflects the benefit of operational gearing. 4. Cash generation Cash generation improved significantly during the year, with cash generated from continuing operations increasing by £9.6m to £10.9m (2014: £1.3m). Cash conversion (cash generated from operations as a percentage of Adjusted EBITDA) increased to 91.2% from 16.2% in the prior year. Development of the Business acquisitions During 2015 we completed the acquisition of the Consumer business from Informa Plc, announced the acquisition of the Healthcare business (completed January 2016) and divested from our legacy B2B print business. The net result of these transactions is to transform the Group to one that is solely focused on the provision of business information with high levels of forward (deferred) revenues and improved cash generation. acquisition of Consumer Business from informa plc The £25.1 million acquisition of the Consumer business information assets from Informa Plc provides scale, depth and additional categories in an important industry sector. Operational metrics Group revenue up 25% Deferred revenue up 36% Cash Generation up 731.7% £29.3m £10.9m £60.5m 11 globaldata plc annual RepoRt and accounts 2015 “the business has changed significantly over the last year. We now have a business with largely annualised global revenues. the confidence in the business has resulted in a maiden dividend of 2.5 pence a share.” acquisition of healthcare Business The £66.5 million acquisition of the Healthcare business industry vertical to the Group’s adds a third global existing business information proposition. Additionally, the acquisition provides further geographic and operational scale in the important north American market, where previously the Group was under represented. Disposal of B2B print assets Exit from non-core B2B print businesses, which allows the Group to focus on Business Information in verticals which have more favourable long-term growth prospects. strategy Our principal objective is to become one of the world’s leading providers of premium, subscription based business information products and services to the verticals we serve. To that end, we have four core strategic priorities: � To develop world class products and services � To continue to develop our sales capabilities � To improve operational effectiveness � To provide best in class customer service Developing world class products and services Our content is data driven and analyst led and provides our clients with strategic and tactical insights for the markets that they operate in. Our content is robust, relevant and unique; the majority of which can be accessed via our online delivery platforms that give our clients real time access to critical business information and an increasing array of work flow tools. Increase our geographic sales capabilities The business information market is dominated by north America, which accounts for 50% of global spend, followed by Europe and Asia Pacific. Our goal is to create more geographical balance in our business reflecting market size. Consequently, the Group will look to increase its management and sales operations in the important north American and Asia Pacific markets. and client delivery. The Group constantly seeks to improve these systems and processes in order to drive improved these efficiencies and operating margins. moreover, common systems and processes ease expansion into new geographies and reduce integration risk. Providing best in class customer service We believe that outstanding customer service is a critical component in delivering customer satisfaction and improved customer retention. Our aim is to deliver best in class customer service at every point of interaction with our clients. If successful we should expect to see upper quartile renewal rates by volume for our subscription products. Future Developments Our focus for the year ahead is to integrate the recent acquisitions, to further embed our products and services in our existing client base and to secure new business wins through increased sales headcount and improved customer service. The key objectives for the forthcoming year are: � Integration, investment and growth from our recent acquisitions � Expand our sales footprint in north America and Asia Pacific � Increase subscription renewal rates across our three verticals and geographies � Improve operating margins and cash generation. We are a transformed business focused solely on the provision of business information to three global verticals, all of which present opportunities for long-term profitable growth. We expect that 2016 will be a year of progress and opportunity for the Group. We have a simple strategy, with clear goals and achievable objectives. Improve operational effectiveness The Group has a number of common systems and processes from sales management to content production mike Danson Chief Executive 1 march 2016 12 Globaldata plc annual RepoRt and accounts 2015 Strategic Report Chief Financial Officer’s Report Financial Performance The recent acquisitions and exit from the legacy B2B print business has improved the financial profile of the business. I am pleased that on a continuing basis, for the twelve months ended 31 December 2015, revenue increased by 25.1% to £60.5m, Adjusted EBITDA increased by 47.5% to £12.0m and cash generated from continuing operations increased to £10.9m being some 91.2% of Adjusted EBITDA. Financial highlights Positive movement across all key trading metrics. � Group revenue increased by 25.1% to £60.5m (2014: £48.3m) � Organic revenue increased by 14.1% � Deferred Revenue increased by 36.3% to £29.3m (2014: £21.5m) � Adjusted EBITDA(1) increased by 47.5% to £12.0m (2014: £8.1m) � Adjusted EBITDA margin(1) increased by 3.0% to 19.8% (2014: 16.8%) � Reported EBITDA(2) increased to £3.2m (2014: £0.4m) � Reported loss before tax from continuing operations of £2.8m (2014: loss of £3.1m) inclusive of £4.3m restructuring costs and £2.1m share based payments charge � Cash generated from continuing operations increased by 731.7% to £10.9m (2014: £1.3m) � net debt(3) of £25.5m (2014: £8.7m) Continuing operations Revenue Loss before tax Depreciation Amortisation Finance costs eBitDa2 Restructuring costs Property related provisions Revaluation of short and long-term derivatives Share based payments charge Exceptional property costs non-trading foreign exchange loss m&A costs Deal costs adjusted eBitDa1 Adjusted EBITDA margin1 2015 £’000s 2014 £’000s movement 60,466 48,344 25.1% (2,803) (3,100) 676 4,392 886 3,151 4,258 61 216 2,066 6 774 1,464 6 12,002 19.8% 547 2,425 484 356 2,237 (221) 15 4,371 13 787 431 146 8,135 16.8% 785.1% 47.5% note 1: adjusted eBitDa: Earnings before interest, tax, depreciation and amortisation, impairment, share based payments, adjusted for costs associated with derivatives, acquisitions, non-trading exchange losses, integration and restructure of the Group. Adjusted EBITDA margin is defined as: Adjusted EBITDA as a percentage of revenue. note 2: eBitDa: Earnings before interest, tax, depreciation, amortisation and impairment. Includes a non-cash charge of £2.1 million for share based payments (2014: £4.4 million). note 3: net debt: Cash and cash equivalents less short and long-term borrowings. 13 globaldata plc annual RepoRt and accounts 2015 Strategic Report Chief Financial Officer’s Report Key Performance Indicators The key performance indicators selected are used by the Executive Directors to monitor the Group’s performance and progress from continuing operations. During the year we have made good progress across our revenue and deferred revenue metrics. Eliminating the benefit of our recent acquisition, continuing revenues grew by 14.1%. Deferred revenues grew as a combined result of our recent acquisition and strong sales in the last quarter of the year, with underlying organic year-on-year growth of 4%. During the year the Group obtained further financing facilities to fund the acquisition of the Consumer business information assets, which is reflected in the net debt position at year end. Revenue adjusted eBitDa adjusted eBitDa margin Deferred Revenue net Debt(1) 2015 2014 % growth £60.5m £48.3m 25.1% £12.0m £8.1m 47.5% 19.8% 16.8% 3.0% £29.3m £21.5m 36.3% £25.5m £8.7m 193.5% note 1: net debt: Short and long-term borrowings less cash and cash equivalents. earnings per share Basic loss per share from continuing operations was (4.08) pence per share (2014: loss of (4.29) pence per share). Fully diluted loss per share from continuing operations was also (4.08) pence per share (2014: loss of (4.29) pence per share) due to the share options in issue being anti-dilutive. Cash flow The Group generated £12.0 million of Adjusted EBITDA in 2015, which excludes £0.2 million paid in relation to onerous leases. Working capital movements reduced the cash generated from continuing operations to an inflow of £10.9 million. Trade and other receivables were lower than the previous year at £32.1 million (2014: £33.0 million), reflecting the transfer of assets held for sale in 2015, offset by strong billings in the last quarter of the year as well as the effect of the Consumer acquisition from Informa Plc. A further draw down on the Banking facilities negotiated with The Royal Bank of Scotland in 2014 resulted in a cash inflow of £10.0 million. In addition to this, a new term loan of £10.0 million was taken from The Royal Bank of Scotland, meaning a total inflow from financing activities of £20.0 million. During the year, the Group repaid an aggregate of £1.9m of its term loans to The Royal Bank of Scotland in accordance with the repayment terms. Capital expenditure (excluding balances in relation to acquisitions) was £1.5 million in 2015 (£2.3 million in 2014). This included £1.1 million on software (£1.1 million in 2014). Currency rate risk 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, Euro and Indian Rupee exchange rates with Sterling. Whilst commercially this hedges the Group’s currency exposures, it does not meet the requirements for hedge accounting and accordingly any movements in the fair value of the foreign exchange contracts are recognised in the income statement. 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. 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 as a going concern. Accordingly, the Group has prepared the Annual Report and Accounts on a going concern basis. 14 Globaldata plc annual RepoRt and accounts 2015 Strategic Report Chief Financial Officer’s Report Principal Risks and Uncertainties The Directors consider that the principal risks and uncertainties facing the Group are: Risk Description potential impact mitigation staff Recruitment and Retention The Group is a people-based business; failure to attract or retain key employees could seriously impede future growth. � Failure to recruit or retain key staff could lead to reduced innovation and progress in the business. Competition and Clients The Group operates in highly competitive yet fragmented markets. � Loss of market share due to changing markets. � Reduced financial performance arising from competitive threats. � The Group operates a competitive remuneration package. � Long-term incentive schemes with over 100 senior management participants. � The introduction of the Senior Leadership Team to encourage motivation and engagement with the business. � Continued development of must have content with improved workflow and delivery platforms thereby becoming a provider of choice in the markets we serve. � Embed our products and service in client organisations thereby increase switching costs. � Provide improved and best in class client support thereby improving customer satisfaction and retention. � The Group operates in fragmented niche markets offering high barriers to entry. economic The Group’s businesses operate in three key geographic markets namely Europe, north America and Asia Pacific all of which have near term economic challenges. Financial Currency exchange rate fluctuations could adversely impact the Group’s consolidated results. � Reduction in client spending or postponing spending on the services offered by the Group and/ or changes to payment terms which can lead to reduced profitability and cash flow. � management of headcount and overheads. � Increased controls over capital expenditure and working capital. � Strategic focus on north American market which is the biggest market for business information and where the Group remains under-represented. � The Group’s reporting � The Group hedges the currency element of its net currency is Pounds Sterling. Given the Group’s significant international operations, fluctuations in currency exchange rates can affect the Group’s consolidated results. assets using foreign currency borrowings. � The balance sheet and cash flows of the Group are hedged by borrowing in the currency of those cash flows. � The Group’s treasury position is a recurring agenda item for the Audit Committee. it and systems Failure � Significant operational disruption caused by a major disaster. � Business continuity plans have been implemented across the Group, including disaster recovery programmes, and plans to minimise business disruption. � The Group also has relevant insurance cover for certain occurrences. � IT Infrastructure is managed by third party provider with 24 hour management and monitoring with back up and disaster protocols. simon pyper Chief Financial Officer, approving the Strategic Report on behalf of the Board 1 march 2016 15 globaldata plc annual RepoRt and accounts 2015 The Directors Bernard Cragg Chairman Mike Danson Chief executive Simon Pyper Chief Financial officer Mike Danson is Founder and Chief Executive of GlobalData Plc. He founded Datamonitor Plc, an online information company, in 1990. In 2000, Datamonitor completed its flotation on the London Stock Exchange and was sold to Informa for £502 million in 2007. He founded GlobalData Plc in 2009 by reversing into TMN Media. Simon Pyper is Founder and Chief Financial Officer of GlobalData Plc. Previously, Simon was Group Finance Director of Datamonitor Plc until its sale to Informa Plc. During his tenure at Datamonitor Plc he supported the business as it delivered significant increases in revenues, earnings and shareholder returns. Simon received an MBA from Henley in 2003 and is a qualified accountant. Bernard Cragg is Chairman of GlobalData Plc. Bernard currently sits on the boards of Alternative Networks Plc, Astro Malaysian Holdings Berhad, Astro Overseas Limited and Astro All Asia Network Limited. Bernard qualified with Price Waterhouse as a chartered accountant before joining Carlton Communications becoming Chief Financial Officer and Finance Director. Bernard was the Chairman of Datamonitor Plc and during his time there he was an integral part of the executive team which oversaw the rapid growth of the business and its eventual successful sale in 2007. 16 Globaldata plc annual RepoRt and accounts 2015 Mark Freebairn non-executive Director Peter Harkness non-executive Director Kelsey van Musschenbroek non-executive Director Murray Legg Non-Executive Director Mark Freebairn is the head of the CFO practice and a member of the Board Practice at Odgers Berndtson, one of the UK’s leading executive search firms. Mark has over eighteen years of experience in the recruitment and executive search industry working principally in Board- level recruitment. Mark has been retained by a number of quoted companies across a broad range of industry sectors to find and recruit both Executive Directors and Non-Executive Directors who can help deliver on their strategic and operational objectives. Peter Harkness has more than 30 years’ experience as a Director or Chairman of several successful businesses, predominantly in the media sector. Peter has played an active role in a number of private equity deals and has gained extensive experience on the boards of both public and private companies. He is currently Chairman of Chrysalis Venture Capital Trust Plc, of the travel media group, Volanti Holdings and e-commerce group MyTimeMedia. Peter was a Non-Executive Director of Datamonitor until its sale to Informa. He was Chairman of the Butler Group until its sale to Datamonitor and was Executive Chairman of media monitoring group, Precise Media, now part of WPP. Kelsey van Musschenbroek joined the Group as a Non- Executive Director on 1 September 2010 upon the acquisition of Canadean. Prior to this, Kelsey was one of the founders of Canadean and has been a Director of Canadean since its beginnings in the early 1970’s as a specialist strategic think tank for the food and drinks industry. Kelsey has a wealth of experience in market research and analysis including the food and drinks industry, and in particular European soft drinks. After graduating from St Andrew’s University, he joined the Financial Times, finishing his time there as Commercial Editor with special responsibility for the international food and drinks industries. Murray Legg is a chartered accountant with over 35 years of audit and advisory experience gained with PwC in the UK where until retirement in 2013 he held a variety of senior management, governance and client roles. As a partner he spent 15 years supporting and advising a number of major UK companies whose operations covered a broad range of industry sectors. Murray is currently a Non- Executive Director of Tower Bridge Ventures and Sutton and East Surrey Water Plc. 17 globaldata plc annual RepoRt and accounts 2015 Directors’ Report Corporate Governance Report The Group is committed to high standards of corporate governance. Companies can choose to voluntarily adopt the UK Corporate Governance Code. Whilst the Group does not voluntarily adopt all provisions of the Code, we have reported on our Corporate Governance arrangements on pages 18 to 21 by drawing upon best practice available, including those aspects of the UK Corporate Governance Code we consider to be relevant to the company and best practice. the Board The Group is led by the Board, which is now made up of two Executive Directors and five non-Executive Directors. As a result of the announced Board changes, the Chairman of the Board is now Bernard Cragg, who will resign his position as the senior independent non-Executive Director and Chairman of the Audit Committee. murray Legg will succeed Bernard as the Audit Committee Chairman following his appointment on 1 march 2016. The non-Executive Directors’ shareholdings are detailed in the Directors’ Interests table on page 21 of the report. The Board has determined that all the non-Executive Directors are independent and that their shareholding in the Company does not affect their independence. In 2015, the Board met 11 times during the year and there is a formal schedule of matters reserved for the consideration of the Board. The Board is responsible to the shareholders for the proper management of the Group. The Board sets and monitors the Group strategy, reviewing trading performance, ensuring adequate funding, examining development possibilities and formulating policy on key issues. The Board is also responsible for monitoring the risk and control environment. The Chairman is responsible for the running of the Board and together with the Board members, determining the strategy of the Group. The Chief Executive is responsible for the running of the Group’s businesses. The non-Executive Directors have the opportunity to meet without the Executive Directors in order to discuss the performance of the Board, its committees and individual Directors. All Directors are required to stand for re-election every year. The terms and conditions of appointment of the non-Executive Directors are available for inspection at our registered office. The Company Secretary ensures that the Board and its committees are supplied with papers to enable them to consider matters in good time for meetings and to enable them to discharge their duties. Procedures are in place for the Directors in the furtherance of their duties to take independent professional advice, if necessary at the Company’s expense. The Board has established Audit and Remuneration Committees with mandates to deal with specific aspects of its business. The table below details the membership and attendance of individual Directors at Board and committee meetings held during the year ended 31 December 2015. Board meetings during the year: number of meetings Peter Harkness Bernard Cragg mark Freebairn Kelsey van musschenbroek mike Danson Simon Pyper 18 Board audit Committee Remuneration Committee 10 11 11 9 11 11 4 4 3 4 n/A n/A 1 1 1 1 n/A n/A Globaldata plc annual RepoRt and accounts 2015 Directors’ Report Corporate Governance Report Remuneration Committee The Remuneration Committee comprises the Chairman mark Freebairn, Peter Harkness, Bernard Cragg and Kelsey van musschenbroek. The Remuneration Committee is responsible for determining the service contract terms, remuneration and other benefits of the Executive Directors, details of which are set out in the Remuneration Report on pages 24 and 25. The terms of reference of the Remuneration Committee are available for inspection on request. audit Committee The Audit Committee comprised the Chairman Bernard Cragg (until 1 march 2016 at which time murray Legg assumed the role as Chairman), Peter Harkness, mark Freebairn and Kelsey van musschenbroek. murray Legg is a Chartered Accountant with recent and relevant financial experience. Bernard was appointed Chairman of the Board following the acquisition of the Healthcare business in January 2016. The Board confirm that prior to becoming Group Chairman and throughout 2015, Bernard was independent in his role as Audit Committee Chairman. The Committee met four times in the year with the external auditors in attendance. The Committee is responsible for reviewing the Interim Report and the Annual Report and Accounts and it oversees the controls necessary to ensure the integrity of the financial information reported to shareholders. The Audit Committee discusses the nature, scope and findings of the audit with the external auditors and monitors the independence of the external auditors. The Committee is also responsible for considering the appointment or re-appointment of external auditors and the audit fee. The terms of reference of the Audit Committee are available for inspection on request. The Audit Committee discharges its responsibilities through receiving reports from management and advisers, working closely with the auditors, carrying out and reviewing risk assessments and taking counsel where appropriate in areas when required to make a judgement. The Audit Committee has considered the need for a separate internal audit function but due to the size of the Group and procedures in place to monitor both trading performance and internal controls, it was concluded the costs of a separate internal audit department would outweigh the benefits. internal control and risk management The Board has overall responsibility for the Group’s system of internal controls and for monitoring its effectiveness. However, such a system is designed to manage rather than eliminate risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. The Directors review the effectiveness of the Group’s system of internal controls. This review extends to all controls including financial, operational, compliance and risk management. Formal risk review is a regular Board agenda item. The key controls in place have been reviewed by the Board and comprise the following: � The preparation of comprehensive annual budgets and business plans integrating both financial and operational performance objectives, with an assessment of the associated business and financial risks. The overall Group budget and business plan is subject to approval by the Board. � Weekly revenue reports are produced and reviewed by management. � monthly management accounts are prepared and reviewed by the Board. This includes reporting against key performance indicators and exception reporting. � An organisational structure with formally defined lines of responsibility. Authorisation limits have been set throughout the Group. � The quarterly preparation and Board review of management accounting control checklists. going concern The Group meets its day-to-day working capital requirements through free cash flow. Based on cash flow projections, the Group considers the existing financing facilities to be adequate to meet short-term commitments. 19 globaldata plc annual RepoRt and accounts 2015 Directors’ Report Corporate Governance Report The Directors have a reasonable expectation that there are no material uncertainties that cast significant doubt about the Group’s ability to continue as a going concern. Accordingly, the Group has prepared the Annual Report and Accounts on a going concern basis. viability statement The Directors have assessed the prospect of the Group over a longer period than the 12 months required by the ‘Going Concern’ provision. In making their assessment, the Board have considered financial forecasts for the next three years as part of the annual planning process and also during the decision making processes on the acquisitions announced and completed in 2015. Within the review, the Board considered the Group’s cash flows including debt repayment profile and profit forecasts through to the end of 2018. In addition to the three year forecasts, the Board has considered the strategic 2020 plan, which sets out objectives and targets for key metrics on profitability and cashflow as well as non-financial metrics such as product quality and customer retention rates. The principal risks detailed on page 13 have been considered and in the opinion of the Board, the Group has adequate contingencies in place to mitigate these risks. Based on the results of their review, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the three year period of their assessment. shareholder relationships The Company operates a corporate website at www.globaldata.com where information is available to potential investors and shareholders. The Board will use the Annual General meeting to communicate with shareholders and seek their participation. The notice of the Annual General meeting will be circulated more than 21 working days prior to the meeting. employee policies The Group places considerable value on the involvement of its employees and keeps them informed on matters affecting them as employees and on the factors affecting the performance of the Group. This is achieved through formal and informal meetings. The Group benefits from the diversity and variety of its workforce and is fully committed to maintaining and encouraging diversity. It is the Group’s policy to give full and fair consideration to the employment of disabled persons, the continuing employment of employees becoming disabled, and to the full development of the careers of disabled employees, having regard to their particular abilities. The Group does not discriminate on the grounds of gender, race, disability, sexuality, religion, philosophical belief, political belief, trade union membership or age as guided by the Equality Act 2010. At 31 December 2015, the Group employed the following number of employees of each gender: 2015 no. 697 395 1,092 2014 no. 720 379 1,099 male Female 20 Globaldata plc annual RepoRt and accounts 2015 Directors’ Report Corporate Governance Report health and safety It is the policy of the Group to conduct all business activities in a responsible manner, free from recognised hazards and to respect the environment, health and safety of our employees, customers, suppliers, partners, neighbours and the community at large. political donations The Group has not made any political donations during the year. supplier payments policy It is the Group’s policy to abide by the payment terms agreed with suppliers whenever it is satisfied that the supplier has provided the goods and services in accordance with agreed terms and conditions. At 31 December 2015 the Group had 38 days’ purchases outstanding (2014: 49 days) subsequent events It was announced on the 22 January 2016 that the Group had completed the acquisition of the Healthcare business GlobalData Holding Limited and simultaneously disposed of a number of non-core B2B print assets. Relevant disclosures on these post balance sheet events have been made in note 28 of the financial statements. Financial instruments Use of financial instruments and exposure to various financial risks has been discussed within the Strategic Report (page 14). Future developments Future developments have been discussed within the Strategic Report (page 12). Directors’ Interests Details of the Company’s share capital are set out in note 22 to the financial statements. As at 1 march 2016, mike Danson had a beneficial interest of 69.7 per cent of the issued ordinary share capital of the Company. no other person has notified any interest in the ordinary shares of the Company, in accordance with AIm Rule 17. The interests of the Directors in the ordinary shares of the Company were as follows: mike Danson Bernard Cragg mark Freebairn Peter Harkness Kelsey van musschenbroek Simon Pyper number of ordinary shares 71,304,325 140,000 48,944 70,000 374,780 171,048 21 globaldata plc annual RepoRt and accounts 2015 Directors’ Report Audit Committee Report The Audit Committee plays an important role in the governance of the Group and I am pleased to present our report to you for 2015. I am delighted that murray Legg has agreed to join the Board as a non-Executive Director succeeding me as Chairman of the Audit Committee. murray will assume his position from 1 march 2016. As Chairman of the Audit Committee it was my responsibility to ensure that the Committee was rigorous and effective in its role of monitoring and reviewing: � The integrity of the financial statements of the Group and any formal announcements relating to financial performance � The effectiveness of internal controls and risk management framework � The integrity of the Group’s relationship with the external auditors and the effectiveness of the audit process. During the year the Audit Committee met on four occasions and I am satisfied that we were presented with papers of good quality and in a timely fashion. The Audit Committee now consists of murray Legg (Chairman), Bernard Cragg (former Chairman), Peter Harkness, mark Freebairn and Kelsey van musschenbroek. the integrity of financial reporting We reviewed the integrity of the financial statements and all formal announcements relating to financial performance during 2015. As part of the review, we engaged in discussion with the external auditors on whether significant areas of judgement and significant risks were adequately reported and disclosed. We have adopted the enhanced audit report for the 2015 Annual Report and Accounts. This is not a mandatory requirement, as the Group is AIm listed and has not voluntarily adopted the UK Corporate Governance Code; however the enhanced disclosure has been included as a matter of best practice. the effectiveness of internal controls and risk management framework The Committee has a clear process for identifying, evaluating and managing risk. Significant risks faced by the Group are documented in the Group’s risk register and considered regularly. The external auditors include a review of the Group’s risk register in their audit approach. Furthermore, the Board holds an ‘Away Day’ each year when the Group’s performance, strategy and significant risks are critically evaluated, including a review of the effectiveness of internal controls. external auditor The Committee recommends the reappointment of Grant Thornton UK LLP for 2016. We believe their independence, the objectivity of the external audit and the effectiveness of the audit process is safeguarded and remains strong. This is displayed through their robust internal processes, their continuing challenge, their focused reporting and their discussions with both management and the Audit Committee. We judge Grant Thornton UK LLP through the quality of their audit findings, management’s response and stakeholder feedback. In order to maintain the independence of the external auditors, the Board has determined that non-audit work will not be offered to the external auditors unless there are clear efficiencies and value added benefits to the Group. The Audit Committee annually reviews the remuneration received by the auditors for audit services and non-audit work. Their audit and non-audit fees are set, monitored and reviewed throughout the year (see note 4 of the financial statements). The non-audit fees in the year were not material in the context of the overall fee and the Committee deemed that no conflict existed between such audit and non-audit work. 22 Globaldata plc annual RepoRt and accounts 2015 Directors’ Report Audit Committee Report tenure of auditor Grant Thornton UK LLP have been the Auditor for the Group since the reverse takeover of Tmn Group Plc in 2009 and were also the Auditor of Tmn Group Plc prior to that date. To maintain the objectivity of the audit process the Group actively supports audit partner rotation. Bernard Cragg Former Chairman of the Audit Committee 1 march 2016 Gl o b a l d a t a p l c an n u a l R e p oRt a n d ac c o u n t s 2 0 1 5 23 Directors’ Report Directors’ Remuneration Report Unaudited information the Remuneration Committee I am pleased to present the Remuneration Committee’s report to you for 2015. The Remuneration Committee consists of the Chairman mark Freebairn, Peter Harkness, Bernard Cragg and Kelsey van musschenbroek. In the matters to be decided, members have no personal financial interests, other than as shareholders. Directors’ remuneration policy The Board is responsible for setting the Group’s policy on Directors’ remuneration and the Remuneration Committee decides on the remuneration package of each Executive Director. The primary objectives of the Group’s policy on executive remuneration are that it should be structured so as to attract and retain executives of a high calibre with the skills and experience necessary to develop the Company successfully and, secondly, to reward them in a way which encourages the creation of value for the shareholders. The performance measurement of the Executive Directors and the determination of their annual remuneration package is undertaken by the Remuneration Committee. no Director is involved in setting his own remuneration. The main elements of the Executive Directors’ remuneration are: � Basic annual salary - The salaries of the Executive Directors are reviewed annually and reflect the executives’ experience, responsibility and the Group’s market value. � Bonus - Based upon performance. � Other benefits - Other benefits include medical cover and car allowances. � Share based payments - Full details of the share option scheme operated by the Group are set out in note 23. non-executive Directors’ remuneration All non-Executive Directors have letters of appointment and their remuneration is determined by the Board, having considered the level of fees in similar companies. non-Executive Directors are not entitled to any pension contributions. Directors’ service agreements It is the Group’s policy that Directors should not have service agreements with notice periods capable of exceeding twelve months. The existing service agreements have neither fixed terms nor contractual termination payments but do have fixed notice periods. non-Executive Directors have letters of appointment with the Company. The details of the service agreements of the current Directors are: non-executive Directors Peter Harkness Bernard Cragg mark Freebairn Kelsey van musschenbroek executive Directors mike Danson Simon Pyper 24 Contract date 25 June 2009 20 July 2009 13 July 2009 1 September 2010 notice period 1 month 1 month 1 month 1 month 25 June 2009 25 June 2009 12 months 12 months Globaldata plc annual RepoRt and accounts 2015 Directors’ Report Directors’ Remuneration Report Directors’ emoluments Audited information non-executive Directors Bernard Cragg Peter Harkness mark Freebairn Kelsey van musschenbroek executive Directors mike Danson Simon Pyper Basic salary £’000s other benefits £’000s 2015 total £’000s 2014 total £’000s 50 30 30 30 50 290 - - - - 39 1 50 30 30 30 89 291 50 30 30 30 86 1,005 The other benefits consist of company cars and health insurance cover. As at 31 December 2015, Simon Pyper had 1,120,000 share options in issue (2014: 1,120,000). no options were exercised during 2015 (2014: 280,000 options). no other Directors have share options. share options 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) at any time during a prescribed period from the vesting date to the date the option lapses. In order for the remaining options to be exercised, the Group’s earnings before interest, taxation, depreciation and amortisation, as adjusted by the Remuneration Committee for significant or one-off occurrences, must exceed targets of £18.5 million and £23.5 million respectively. The Remuneration Committee will review these targets during 2016 in light of the acquisition made during 2015 and the acquisition which completed after the balance sheet date. The total charge recognised for the scheme during the year ended 31 December 2015 was £2.1 million (2014: £4.4 million). The awards of the scheme are settled with ordinary shares of the Company. By order of the Board mark Freebairn Chairman of the Remuneration Committee 1 march 2016 25 globaldata plc annual RepoRt and accounts 2015 Directors’ Report Statement of Directors’ responsibilities in respect of the Annual Report and the financial statements The Directors are responsible for preparing the Annual Report, the Directors’ Remuneration Report and the Group and the parent Company financial statements in accordance with applicable law and regulations. auditors A resolution to reappoint Grant Thornton UK LLP as auditors to the Company will be proposed at the Annual General meeting. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the Company and the Group for that period. In preparing these financial statements, the Directors are required to: Disclosure of information to auditors The Directors confirm that: so far as each Director is aware, there is no relevant audit information of which the Group’s auditors are unaware, and the Directors have taken all steps that they ought to have taken in order to make themselves aware of any relevant audit information and establish that the Group’s auditors are aware of that information. annual general meeting The Annual General meeting will be held on 17 may 2016 at John Carpenter House, John Carpenter Street, London EC4Y 0An at 12 noon. � select suitable accounting policies and then apply them On behalf of the Board consistently; � make judgements and accounting estimates that are reasonable and prudent; � state whether applicable IFRSs have been followed, subject to any material departures disclosed and explained in the financial statements; � prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. mike Danson Chief Executive 1 march 2016 26 Globaldata plc annual RepoRt and accounts 2015 Global Business Gl o b a l d a t a p l c an n u a l R e p oRt a n d ac c o u n t s 2 0 1 5 27 Independent Auditor’s Report to the Members of GlobalData Plc (formerly Progressive Digital Media Group Plc) our opinion on the group financial statements is unmodified In our opinion the group financial statements: � give a true and fair view of the state of the group’s affairs as at 31 December 2015 and of its loss for the year then ended; � have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union; and � have been prepared in accordance with the requirements of the Companies Act 2006 and Article 4 of the IAS regulation. other matter We have reported separately on the parent company financial statements of GlobalData plc for the year ended 31 December 2015. Who are we reporting to This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. What we have audited GlobalData plc’s group financial statements for the year ended 31 December 2015 comprise the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity, the consolidated statement of cash flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and IFRSs as adopted by the European Union. overview of our audit approach � Overall group materiality: £364,000, which represents approximately 3.5% of the group’s Earnings before Interest, Taxation, Depreciation and Amortisation (‘EBITDA’); � We performed full scope audit procedures for UK locations and full scope and targeted audit procedures for overseas locations; and � Key audit risks were identified as: • Revenue recognition; • Acquisition of Verdict Research Limited; • Intangibles impairment review; and • Management override of controls. our assessment of risk In arriving at our opinions set out in this report, we highlight the following risks that, in our judgement, had the greatest effect on our audit. 28 Globaldata plc annual RepoRt and accounts 2015 Independent Auditor’s Report to the Members of GlobalData Plc (formerly Progressive Digital Media Group Plc) audit risk how we responded to the risk Revenue recognition Under International Standards on Auditing (ISAs) (UK and Ireland), there is a presumed risk of fraud in revenue recognition. Because of this, we focused on revenue recognition, particularly given the Group’s multiple revenue streams which have different recognition criteria dependent upon the service provided or product sold. We therefore identified revenue recognition as a significant risk requiring special audit consideration. acquisition of verdict Research limited On 1 September 2015 the group acquired Verdict Research Limited for a cash consideration of £25.1 million. As a result of this acquisition, the Group recorded intangible assets and goodwill of £16.6 million and £11.9 million respectively. Key judgements made by management relate to the allocation of the purchase price to the assets and liabilities acquired and adjustments made to align accounting policies. from the acquisition required To determine the intangible assets and goodwill arising the application of a valuation model to determine the fair value of the identifiable intangible assets. We therefore identified the valuation and allocation of the purchase price to the assets and liabilities acquired as a significant risk requiring special audit consideration. Our audit work included, but was not restricted to: � an assessment of the methodology and internal control environment surrounding revenue recognition. This involved assessing the design of key controls in the revenue business cycle as well as reviewing whether the implementation of these key controls were satisfactory; � reviewing the Group’s revenue recognition policy for each revenue stream and assessed whether it was in accordance with IFRSs as adopted by the European Union; and � performing substantive audit tests. The key substantive testing that we performed was on sales transactions throughout the year across each of the revenue streams to evaluate whether revenue is recognised in accordance with the contract terms, having considered the principles of IFRSs as adopted by the European Union and the commercial substance of the contracts. The substantive testing also addressed whether revenue had been recognised in the correct period given when the service was delivered or product was sold and to ensure appropriate cut off procedures have been applied as well as the recognition of revenue on a gross or net basis. The substantive testing addressed accrued income and deferred revenue balances. The Group’s accounting policy in respect of revenue recognition is included in note 2 to the financial statements and related disclosures are included in note 3. Our audit work included, but was not restricted to: � reading the sales and purchase agreement to assess whether management had identified all the intangible assets; � engaging our internal valuations specialists to assist the audit team in assessing the underlying assumptions used in the multi-period excess earnings method model and royalty rate model performed by management, and challenging and testing management’s calculations and assumptions used. This involved challenging both the identification and valuation of intangible assets. The valuation model includes certain assumptions which are judgemental in nature including estimates of future revenue, growth rates, customer retention rates and discount rates; and � challenging these assumptions with reference to historic data, sensitivity analysis, re-computation and benchmarking against industry data available. � � The group’s accounting policy on the valuation of the acquired intangible assets is shown in notes 1 and 2 to the financial statements and related disclosures are included in note 26. 29 globaldata plc annual RepoRt and accounts 2015 Independent Auditor’s Report to the Members of GlobalData Plc (formerly Progressive Digital Media Group Plc) is intangibles impairment review A significant balance on the consolidated balance intangible assets of £62.5 million, sheet including goodwill of £44.1 million. Goodwill has an indefinite life, and under International Accounting Standard of Assets (‘IAS 36’) requires an annual review for impairment. Other intangibles are subject to an impairment test when there is an indication that an asset may be impaired. The process for measuring and recognising impairment under IAS 36 is complex and judgemental. We therefore identified impairment reviews as a significant risk requiring special audit consideration. Impairment 36: management override of controls Under ISAs (UK and Ireland), for all of our audits we are required to consider the risk of management override of controls. Due to the unpredictable nature of this risk we are required to assess it as a significant risk requiring special audit consideration. Our audit work included, but was not restricted to: � challenging the methodology and assumptions used by management in conducting the impairment review; � challenging the forecasts prepared by management, where we evaluated the forecasts by comparing them to historic performance and growth rates, understanding the key performance indicators driving revenue and comparing this to market expectations. We challenged the key assumptions in the model for goodwill and intangible assets such as cash flow projections, discount rates, long term growth rates and sensitivities used; and � evaluating the disclosures related to impairment review. � The group’s accounting policy on impairment of intangible assets is shown in note 2 to the financial statements and related disclosures are included in note 11. Our audit work included, but was not restricted to: � specific procedures relating to this risk that are required by ISA (UK and Ireland) 240 ‘The Auditors Responsibilities relating to Fraud in an Audit of Financial Statements’. This included profiling journal entries and focusing on unusual items. We tested a sample of journal entries by tracing the journal entries to source documentation and ensuring these were appropriately approved, they were posted to the correct account codes and correct periods as well as valid company expenses; � evaluating the key judgements and assumptions in management’s estimates and tested for significant transactions outside the normal course of business; and � a detailed review of related party transactions to understand the nature of transaction and movements from the prior year. Our application of materiality and an overview of the scope of our audit materiality We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality in determining the nature, timing and extent of our audit work and in evaluating the results of that work. We determined materiality for the Group financial statements as a whole to be £364,000, which is approximately 3.5% of the group’s Earnings before Interest, Taxation, Depreciation and Amortisation (‘EBITDA’) at the planning stage of our audit. This benchmark is considered the most appropriate because, in our view, this is the metric against which the financial performance of the Group is measured both internally and externally. no revision to the materiality that we determined at the planning stage of our audit was necessary as we judged that it remained appropriate in the context of the group’s actual financial results. materiality for the current year is lower than the level that we determined for the year ended 31 December 2014 to reflect the differences in the group’s Earnings before Interest, Taxation, Depreciation and Amortisation (‘EBITDA’) this year. We use a different level of materiality, performance materiality, to drive the extent of our testing and this was set at 75% of financial statement materiality for the audit of the group financial statements. We also determine a lower level of specific materiality for certain areas such as directors’ remuneration and related party transactions. We determined the threshold at which we will communicate misstatements to the Audit Committee to be £18,200. In addition we will communicate misstatements below that threshold that, in our view, warrant reporting on qualitative grounds. 30 Globaldata plc annual RepoRt and accounts 2015 Independent Auditor’s Report to the Members of GlobalData Plc (formerly Progressive Digital Media Group Plc) overview of the scope of our audit A description of the generic scope of an audit of financial statements is provided on the Financial Reporting Council’s website at www.frc.org.uk/auditscopeukprivate. We conducted our audit in accordance with ISAs (UK and Ireland). Our responsibilities under those standards are further described in the ‘Responsibilities for the financial statements and the audit’ section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. We are independent of the Group in accordance with the Auditing Practices Board’s Ethical Standards for Auditors, and we have fulfilled our other ethical responsibilities in accordance with those Ethical Standards. Our audit approach was based on a thorough understanding of the group’s business and is risk based, and in particular included: � an audit of the financial statements of the parent company, GlobalData Plc. � evaluating controls over key financial systems identified as part of our risk assessment. This included a review of the general IT controls, the accounts production process and the controls addressing critical accounting matters identified in our risk assessment. � substantive testing on significant transactions, balances and disclosures, the extent of which was based on various factors such as our overall assessment of the control environment, the effectiveness of controls over individual systems and the management of specific risks. � an assessment of the Group entities. The Group is predominately based within the UK and comprises a number of UK subsidiaries which are centrally managed and controlled. In establishing the overall approach to the Group audit, we determined the UK subsidiaries that required an audit, to a subsidiary level of materiality, which provides coverage of over 85% of Group revenues and 80% of EBITDA. Whilst the majority of the Group’s operations are located in the UK, there are a number of overseas subsidiaries. We assessed the work required in respect of overseas subsidiaries to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the consolidated financial statements as a whole. The audit testing for the overseas subsidiaries in respect of the group audit was performed by ourselves. Other reporting required by regulations our opinion on other matters prescribed by the Companies act 2006 is unmodified In our opinion the information given in the Strategic Report and Directors’ Report for the financial year for which the group financial statements are prepared is consistent with the group financial statements. matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: � certain disclosures of directors’ remuneration specified by law are not made; or � we have not received all the information and explanations we require for our audit. Responsibilities for the financial statements and the audit What the directors are responsible for: As explained more fully in the Statement of Directors’ Responsibilities set out on page 24, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. What are we responsible for: Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors. nicholas page Senior Statutory Auditor For And On Behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants, London 1 march 2016 31 globaldata plc annual RepoRt and accounts 2015 Consolidated Income Statement notes year ended 31 December 2015 £’000s year ended 31 December 2014 £’000s Continuing operations Revenue Cost of sales gross profit Distribution costs Administrative costs Other expenses operating loss Analysed as: adjusted eBitDa1 Items associated with acquisitions and restructure of the Group Other adjusting items eBitDa2 Amortisation Depreciation operating loss Finance costs loss before tax from continuing operations Income tax expense loss for the year from continuing operations (Loss)/profit for the year from discontinued operations loss for the year attributable to: Equity holders of the parent non-controlling interest 3 5 4 5 5 8 9 25 loss per share attributable to equity holders from continuing operations: 10 Basic loss per share (pence) Diluted loss per share (pence) (loss)/ earnings per share attributable to equity holders from discontinued operations: Basic (loss)/ earnings per share (pence) Diluted (loss)/ earnings per share (pence) total basic loss per share (pence) total diluted loss per share (pence) 60,466 (36,745) 23,721 (804) (12,391) (12,443) (1,917) 12,002 (5,795) (3,056) 3,151 (4,392) (676) (1,917) (886) (2,803) (306) (3,109) (7,992) (11,101) (11,101) - (4.08) (4.08) (10.48) (10.48) (14.56) (14.56) 48,344 (29,730) 18,614 (792) (11,132) (9,306) (2,616) 8,135 (2,606) (5,173) 356 (2,425) (547) (2,616) (484) (3,100) (157) (3,257) 1,036 (2,221) (2,106) (115) (4.29) (4.29) 1.52 1.37 (2.77) (2.77) The accompanying notes form an integral part of this financial report. 1 We define Adjusted EBITDA as EBITDA adjusted for costs associated with acquisitions, integration, restructure of the Group, share based payments, non-trading exchange losses, impairment and impact of foreign exchange contracts. See note 5 of the financial statements for details. We present Adjusted EBITDA as additional information because we understand that it is a measure used by certain investors and because it is used as the measure of Group profit or loss. 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. 2 EBITDA is defined as earnings before interest, tax, depreciation, amortisation and impairment. 32 Globaldata plc annual RepoRt and accounts 2015 Consolidated Statement of Comprehensive Income Loss for the year other comprehensive income Items that will be classified subsequently to profit or loss: Translation of foreign entities Other comprehensive loss, net of tax total comprehensive loss for the year attributable to: Equity holders of the parent non-controlling interest The accompanying notes form an integral part of this financial report. year ended 31 December 2015 £’000s year ended 31 December 2014 £’000s (11,101) (2,221) (55) (55) (11,156) (11,156) - (166) (166) (2,387) (2,272) (115) 33 globaldata plc annual RepoRt and accounts 2015 Consolidated Statement of Financial Position notes 31 December 2015 £’000s 31 December 2014 £’000 non-current assets Property, plant and equipment Intangible assets Deferred tax assets Current assets Inventories Current tax receivable Trade and other receivables Short-term derivative assets Cash and cash equivalents non-current assets and current assets classified as held for sale total assets Current liabilities Trade and other payables Short-term borrowings Current tax payable Short-term derivative liabilities Short-term provisions non-current liabilities Long-term provisions Deferred tax liabilities Long-term derivative liabilities Long-term borrowings Liabilities directly associated with non-current assets and current assets classified as held for sale total liabilities net assets equity Share capital Share premium account Other reserve Special reserve Foreign currency translation reserve Retained profit total equity 12 11 16 14 15 13 25 17 18 13 20 20 16 13 18 25 22 1,297 62,540 2,042 65,879 77 432 32,089 - 10,117 42,715 6,425 115,019 (46,061) (5,214) - (201) (1,649) (53,125) (954) (3,218) (24) (30,359) (34,555) (2,128) (89,808) 25,211 154 200 (37,128) 48,422 (181) 13,744 25,211 1,510 42,403 2,226 46,139 150 - 33,049 106 8,261 41,566 - 87,705 (32,567) (1,283) (1,240) (89) (368) (35,547) (84) (1,769) (26) (15,651) (17,530) - (53,077) 34,628 154 200 (37,128) 48,422 (126) 23,106 34,628 These financial statements were approved by the board of directors on 1 march 2016 and signed on its behalf by: Bernard Cragg Chairman mike Danson Chief Executive The accompanying notes form an integral part of this financial report. Company number - 03925319. 34 Globaldata plc annual RepoRt and accounts 2015 Consolidated Statement of Changes in Equity l a t i p a c e r a h s i m u m e r p e r a h s t n u o c c a e v r e s e r r e h t o e v r e s e r l a i c e p s y c n e r r u c n g i e r o F n o i t a l s n a r t e v r e s e r / t fi o r p d e n i a t e R ) s s o l ( e l b a t u b i r t t a y t i u q e s r e d l o h y t i u q e o t t n e r a p e h t f o g n i l l o r t n o c - n o n t s e r e t n i y t i u q e l a t o t £’000s £’000s £’000s £’000s £’000s £’000s £’000s £’000s £’000s Balance at 1 january 2014 153 Loss for the year other comprehensive income: Translation of foreign entities total comprehensive loss for the year Transactions with owners: Issue of share capital: ERC acquisition Issue of share capital: share based payments scheme Dividends Share based payments charge Excess deferred tax on share based payments - - - - 1 - - - - - - - 200 - - - - (37,128) 48,422 - - - - - - - - - - - - - - - - 40 - 20,508 31,995 116 32,111 (2,106) (2,106) (115) (2,221) (166) - (166) - (166) (166) (2,106) (2,272) (115) (2,387) - - - - - - (1) - 200 - - 4,371 4,371 334 334 Balance at 31 December 2014 154 200 (37,128) 48,422 (126) 23,106 34,628 Loss for the year other comprehensive income: Translation of foreign entities total comprehensive loss for the year Transactions with owners: Share based payments charge Excess deferred tax on share based payments - - - - - - - - - - - - - - - - - - - - - (11,101) (11,101) (55) - (55) (55) (11,101) (11,156) - - 2,066 2,066 (327) (327) Balance at 31 December 2015 154 200 (37,128) 48,422 (181) 13,744 25,211 The accompanying notes form an integral part of this financial report. - - (1) - - - - - - - - - 200 - (1) 4,371 334 34,628 (11,101) (55) (11,156) 2,066 (327) 25,211 35 globaldata plc annual RepoRt and accounts 2015 Consolidated Statement of Cash Flows Continuing operations Cash flows from operating activities Loss for the year from continuing operations Adjustments for: Depreciation Amortisation Finance costs Taxation recognised in profit or loss Profit on disposal of subsidiary Loss on disposal of property, plant and equipment non-trading foreign exchange loss Share based payments charge Increase in trade and other receivables Decrease in inventories Increase in trade payables Revaluation of short and long-term derivatives movement in provisions Cash generated from continuing operations Interest paid (continuing operations) Income taxes paid (continuing operations) net cash from/ (used in) operating activities (continuing operations) net (decrease)/ increase in cash and cash equivalents from discontinued operations total cash flows from operating activities Cash flows from investing activities (continuing operations) Acquisition of Pyramid Research Acquisition of ERC Group Acquisition of Current Analysis Inc Acquisition of Verdict Research Limited Proceeds from disposal of subsidiary Purchase of property, plant and equipment Purchase of intangible assets net cash used in investing activities (continuing operations) net increase in cash and cash equivalents from discontinued operations total cash flows from investing activities Cash flows from financing activities (continuing operations) Repayment of short-term borrowings Proceeds from long-term borrowings net cash from financing activities (continuing operations) net decrease in cash and cash equivalents from discontinued operations total cash flows from financing activities net increase/ (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Effects of currency translation on cash and cash equivalents Cash and cash equivalents at end of year The accompanying notes form an integral part of this financial report. 36 year to 31 December 2015 £’000s year to 31 December 2014 £’000s (3,109) (3,257) 676 4,392 886 306 - - 774 2,066 (6,504) 73 9,018 216 2,151 10,945 (775) (2,182) 7,988 (1,624) 6,364 - - - (20,679) - (468) (1,066) 547 2,425 484 157 (106) 8 902 4,371 (4,465) 5 529 15 (299) 1,316 (220) (1,364) (268) 518 250 (2,006) (543) (11,168) - 58 (1,212) (1,128) (22,213) (15,999) - 4 (22,213) (15,995) (1,920) 20,000 18,080 - 18,080 2,231 8,261 (375) 10,117 - 10,000 10,000 (6) 9,994 (5,751) 14,178 (166) 8,261 Globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements 1. General information nature of operations The principal activity of GlobalData Plc and its subsidiaries (‘the Group’) is to enable organisations in the Consumer, ICT and Healthcare markets to gain competitive advantage by providing unique, high quality business information and services across multiple platforms. GlobalData Plc (‘the Company’) is a company incorporated in the United Kingdom and listed on the Alternative Investment market. 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 These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention as modified by the revaluation of derivative financial instruments. These financial statements have been prepared in accordance with the accounting policies detailed below. The accounting policies have been applied consistently throughout the Group. These financial statements are presented in Pounds Sterling (£), which is also the functional currency of the Company. These financial statements have been approved for issue by the Board of Directors. 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 relate to valuation of acquired intangible assets, provisions for share based payments, provision for bad debts and carrying value of goodwill and other intangibles. Valuation of acquired intangibles management identified and valued acquired intangibles on acquisitions that were made during the periods disclosed in the financial statements. management has applied judgements in identifying and valuing intangible assets separate from goodwill that consist of assessing the value of software, brands, intellectual property rights and customer relationships. The intangibles were valued based on either the net present value of the future cash flows associated with the intangible, or on the cost to recreate an intangible. Assumptions are made on the useful life of an intangible and if shortened, would increase the amortisation charge recognised in the income statement. The identified intangibles are set out in note 11. There are a number of assumptions in estimating the present value of future cash flows including management’s expectation of future revenue, renewal rates for subscription customers, costs, timing and quantum of future capital expenditure, long- term growth rates and discount rates. Share based payments The Group operates a share based compensation plan 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. The total amount to be expensed is determined by reference to the fair value of the options granted, excluding the impact of any non-market service and performance vesting conditions (for example, profitability, sales growth targets and remaining an employee of the entity over a specified time period). non-market vesting conditions are included in assumptions about the number of options and awards that are expected to vest. The total amount expensed is recognised over the vesting period, which is the period over which all of the specified existing conditions are to be satisfied. At each reporting date, the entity revises its estimates of the number of options and awards that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to the share based payments reserve within equity. Additional disclosures on the calculation of share based payments are provided in note 23. Provision for bad debt The Group is required to judge when there is sufficient objective evidence to require the impairment of individual trade receivables. It does this on the basis of the age of the relevant receivables, external evidence of the credit status of the customer entity and the status of any disputed amounts. The provision for bad debts and the ageing of overdue trade receivables are included in note 15 to the financial statements. Additional disclosures on the assumptions behind the provision are provided in note 19 within the section on credit risk. 37 globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements Carrying value of goodwill and other intangibles The carrying value of goodwill and other intangibles is assessed at least annually to ensure that there is no need for impairment. Performing this assessment requires management to estimate future cash flows to be generated by the related cash generating unit, 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. See note 11 for further details on intangibles and goodwill. going concern The Group meets its day-to-day working capital requirements through free cash flow. Based on cash flow projections the Group considers the existing financing facilities to be adequate to meet short-term commitments. In July 2014, the Group refinanced its debt position. A US$17 million term loan was issued by The Royal Bank of Scotland to partially fund the acquisition of Current Analysis Inc. This is repayable in quarterly instalments over 4 years. The first instalment was made in July 2015, with total repayments due in 2016 being US$4 million. The Group took out an additional term loan of £10 million in August 2015, which is repayable in quarterly instalments over 4 years. The first instalment was made in October 2015, with total repayments due in 2016 being £2.5 million. Additionally, the Group drew a further £10 million in August 2015 from its revolving capital facility (RCF) with The Royal Bank of Scotland. As at 31 December 2015, the Group had a total draw down of £16.4 million against a total facility of £17 million. Interest is charged on the term loan and drawn down RCF at a rate of 2.25% over the London Interbank Offered Rate. Interest is charged on the undrawn RCF at 0.9%. The finance facilities were issued with debt covenants which are measured on a quarterly basis. There were no breaches of these covenants during the year and as at 31 December 2015. management have reviewed forecasted 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 as a going concern. Accordingly, the Group has prepared the annual report and financial statements on a going concern basis. 2. Accounting policies a) Basis of consolidation The consolidated financial statements include the accounts of the Company and all of its subsidiary undertakings. � Subsidiaries are those entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an enterprise taking into account any potential voting rights. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. � Intra-group transactions, balances and unrealised gains on transactions between Group companies are eliminated; unrealised losses are also eliminated unless costs cannot be recovered. Where necessary, accounting policies of subsidiaries have been changed to ensure consistency with the Group’s accounting policies. � The results and cash flows relating to a business are included in the consolidated income statement and the consolidated statement of cash flows from the date of acquisition or are excluded from the date of disposal as appropriate. b) Change to accounting policies This report has been prepared based on the accounting policies detailed in the Group’s financial statements for the year ended 31 December 2015 and is consistent with the policies applied in the previous year. international Financial Reporting standards (“standards”) in issue but not yet effective c) The Group has not applied the following new and revised IFRSs that have been issued but are not yet effective: � IFRS 9 Financial Instruments (IASB effective date 1 January 2018) � IFRS 14 Regulatory Deferral Accounts (effective 1 January 2016) � IFRS 15 Revenue from Contracts with Customers (effective 1 January 2017) � Clarification of Acceptable methods of Depreciation and Amortisation – Amendments to IAS 16 and IAS 38 (IASB effective date 1 January 2016) � Annual Improvements to IFRSs 2010-2012 Cycle (IASB effective date generally 1 July 2014) � Annual Improvements to IFRSs 2012-2014 Cycle (effective 1 January 2016) � Disclosure Initiative: Amendments to IAS 1 Presentation of Financial Statements (effective 1 January 2016). � IFRS 16 Leases (effective 1 January 2019) 38 Globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements management are reviewing the impact of IFRS 9 and IFRS 16 and apart from these it is anticipated that there will be minimal impact on the financial statements from the adoption of these new and revised standards. none of the above standards are effective and therefore have not been applied in the financial statements. d) Revenue recognition Revenue is measured at the fair value of consideration received or receivable and comprises amounts derived from services performed by the Group during the year. � Subscription revenue is recognised on a straight-line basis over the period of the contractual term � Print media revenue is recognised on publication � Event revenue is generally recognised when the event is held. However, given the nature of services provided, revenue is recognised in line with cost incurred � Internet revenue is recognised on a straight-line basis over the contractual term (typically twelve months) � Revenue from email advertising, lead generation sources and website publishing is recognised on completion of the relevant campaign or transaction after performance criteria have been fulfilled. Commission from pay for performance actions such as clicks, leads or sales generated resulting from advertising of a merchant’s products or services on customers’ websites is recognised on completion of performance criteria and any defined cancellation period � Revenue from the provision of online research and fieldwork services is recognised by reference to stage of completion. Stage of completion is measured by reference to the extent of services completed on a project by project basis Where amounts have been invoiced in advance of services performed, this is included within deferred revenue. e) property, plant and equipment Property, plant and equipment is stated at historic cost, including expenditure that is directly attributable to the acquired item, less accumulated depreciation and impairment losses. Depreciation is calculated on a straight line basis over the estimated useful life of an asset and is applied to the cost less any residual value. The asset classes are depreciated over the following periods: � Fixtures, fittings and equipment – over 3 to 5 years � Leasehold improvements – over 3 to 10 years The useful life, the residual value and the depreciation method are reassessed at each reporting date. Where there is an indication of impairment, the carrying value of the property, plant and equipment is compared to the higher of value in use and the fair value less costs to sell. If the carrying value exceeds the higher of the value in use and fair value less the costs to sell the asset then the asset is impaired and its value reduced. intangible assets f) goodwill Goodwill is recognised to the extent that it arises through a business combination and represents the difference between the consideration transferred and the fair value of net identifiable assets acquired. Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to appropriate cash generating units (those expected to benefit from the business combination) and is tested annually for impairment. In testing for impairment, the recoverable amount of a CGU based on value-in-use calculations is compared to the carrying value of goodwill. These calculations use pre-tax cash flow projections based on five-year financial budgets approved by management. Cash flows beyond the five year period are extrapolated using estimated long term growth rates. Any impairment losses in respect of goodwill are not reversed. acquired intangible assets Acquired intangible assets include software, customer relationships, brands and intellectual property (IP) rights. These assets are capitalised on acquisition at cost and included in intangible assets. Intangible assets acquired in material business combinations are capitalised at their fair value as determined by reference to the expected present value of their future cash flows. Intangible assets are amortised on a straight-line basis over their estimated useful lives of three to ten years for brands and customer relationships and twenty years for IP rights. Amortisation charges are accounted for within the other expenses category within the income statement. Impairment charges are accounted for within the other expenses category within the income statement. Computer software and websites non-integral computer software purchases are capitalised at cost as intangible assets. The Group also capitalises development costs associated with new products in accordance with the development criteria prescribed within IAS 38 “Intangible Assets”. These costs are amortised over their estimated useful lives of 3 years. Costs associated with 39 globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements implementing or maintaining computer software programmes are recognised as an expense. Amortisation and impairment charges are accounted for within the administrative costs category within the income statement. impairment of intangible assets Assets that have an indefinite useful life are not subject to amortisation but are reviewed for impairment annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). g) taxation Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the year, using rates substantively enacted at the reporting date, and any adjustments to the tax payable in respect of previous years. Deferred taxation is provided in full on temporary differences between the carrying amount of the assets and liabilities in the financial statements and the tax base. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax is determined using the tax rates that have been enacted or substantially enacted by the reporting date, and are expected to apply when the deferred tax liability is settled or the deferred tax asset is realised. Deferred tax is provided on temporary differences arising on investments in subsidiaries except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is not provided on temporary differences arising on the initial recognition of goodwill or on assets and liabilities other than in a business combination. Tax is recognised in the income statement, except where it relates to items recognised as other comprehensive income, in which case it is recognised in the statement of other comprehensive income, and tax which related to items recognised in equity is recognised in equity. h) Foreign currencies The results are presented in Pounds Sterling (£) which is the presentation currency of the Group. Foreign currency transactions are translated into Sterling at the rates of exchange ruling at the date of the transaction, and if still in existence at the year end the balance is retranslated at the rates of exchange ruling at the reporting date. Differences arising from changes in exchange rates during the year are taken to the income statement. The assets and liabilities of entities with a functional currency other than Sterling are expressed in Sterling using exchange rates prevailing on the reporting date. Income and expense items and cash flows are translated at the average exchange rates for the period and exchange differences arising are recognised in other comprehensive income. Such translation differences are recognised in the income statement in the period in which a foreign operation is disposed of. i) pensions The Group’s contributions to pension schemes for its employees, all of which are defined contribution schemes, are charged to the income statement as incurred. j) provisions A provision is recognised in the statement of financial position when the Group has a legal obligation or constructive obligation as a result of a past event, it is more likely than not that an outflow of resources will be required to settle that obligation, and a reliable estimate of the amount can be made. Provisions are discounted if the time value of money is material. k) Cash and cash equivalents Cash and cash equivalents include cash in hand and deposits held on call, together with other short term highly liquid investments that are readily convertible to known amounts of cash which are subject to an insignificant risk of changes in value. 40 Globaldata plc annual RepoRt and accounts 2015 Notes to the Comsolidated Financial Statements l) operating leases Rentals applicable to operating leases where substantially all of the benefits and risks of ownership do not transfer to the lessee are charged to the income statement on a straight line basis over the period of the lease. Rental income from sub- leasing property space is recognised on a straight line basis over the period of the relevant lease. m) Financial instruments The Group has derivative and non-derivative financial instruments which comprise foreign currency contracts, receivables, cash, loans and borrowings, and trade payables. Financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit and loss, any directly attributable transaction costs. A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are de-recognised if the contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control of substantially all risks and rewards of the asset. Financial liabilities are de-recognised if the Group’s obligations specified in the contract expire or are discharged or cancelled. Cash comprises cash balances and highly liquid call deposits. Bank overdrafts that form an integral part of the Group’s cash management are included as a component of cash for the purpose of the statement of cash flows. Derivative financial instruments The Group uses derivative financial instruments to reduce its exposure to fluctuations in foreign currency exchange rates. Derivatives are measured at fair values and any movement in fair value is recognised in the income statement. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. These assets are carried at amortised cost using the effective interest method, less any impairment losses. Accounts receivable are recorded initially at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment due to bad and doubtful accounts. The provision for doubtful debts is based on management’s assessment of amounts considered uncollectible for specific customers or groups of customers based on age of debt, history of payments, account activity, economic factors and other relevant information. The amount of the provision is the difference between the asset’s unamortised cost and the present value of estimated future cash flows, discounted at an effective interest rate. The provision expense is recognised in the income statement. Bad debts are written off against the provision for doubtful debts in the period in which it is determined that the debts are uncollectible. If those debts are subsequently collected then a gain is recognised in the income statement. Trade and other payables Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest method. inventories n) Inventories are stated at the lower of cost and net realisable value. Cost is determined using a weighted average method. o) Borrowings and borrowing costs Borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months from the reporting date. Borrowing costs, being interest and other costs incurred in connection with the servicing of borrowings, are recognised as an expense when incurred. 41 globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements p) share based payments The Group operates a share based compensation plan 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 (determined using the market value at the date of grant), excluding the impact of any non-market service and performance vesting conditions (for example, profitability, sales growth targets and remaining an employee of the entity over a specified time period). non-market vesting conditions are included in assumptions about the number of options and awards that are expected to vest. The total amount expensed is recognised over the vesting period, which is the period over which all of the specified existing conditions are to be satisfied. At each reporting date, the entity revises its estimates of the number of options and awards that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to the share based payments reserve within equity. q) Dividends Dividends on the Group’s ordinary shares are recognised as a liability in the Group’s financial statements, and as a deduction from equity, in the period in which the dividends are declared. Where such dividends are proposed subject to the approval of the Group’s shareholders, the dividends are only declared once shareholder approval has been obtained. 3. Segmental analysis The principal activity of GlobalData Plc and its subsidiaries (‘the Group’) is to enable organisations in the Consumer, ICT and Healthcare markets to gain competitive advantage by providing unique, high quality business information and services across multiple platforms. IFRS 8 “Operating Segments” requires the segment information presented in the financial statements to be that which is used internally by the chief operating decision maker to evaluate the performance of the business and to decide how to allocate resources. The Group has identified the Executive Directors as its chief operating decision maker. Business information is provided to customers through multiple channels by a dedicated content team that is centrally managed by Research Directors who report directly to the Executive Directors. Business information is therefore considered to be the operating segment of the Group. The Group profit or loss is reported to the Executive Directors on a monthly basis and consists of earnings before interest, tax, depreciation, amortisation, central overheads and other adjusting items. The Executive Directors also monitor revenue within the operating segment. A reconciliation of Adjusted EBITDA to loss before tax from continuing operations is set out below: Business Information total Revenue adjusted eBitDa Other expenses (see note 5) Depreciation Amortisation (excluding amortisation of acquired intangible assets) Finance costs year ended 31 December 2015 £’000s year ended 31 December 2014 £’000s 60,466 60,466 12,002 (12,443) (676) (800) (886) 48,344 48,344 8,135 (9,306) (547) (898) (484) loss before tax from continuing operations (2,803) (3,100) 42 Globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements geographical analysis From continuing operations year ended 31 December 2015 Revenue from external customers year ended 31 December 2014 Revenue from external customers UK £’000s 17,001 UK £’000s 11,633 europe £’000s 17,054 europe £’000s 16,902 north america £’000s 17,457 north america £’000s 11,684 Rest of World £’000s 8,954 Rest of World £’000s 8,125 total £’000s 60,466 total £’000s 48,344 4. Operating profit Operating loss is stated after the following expenses relating to continuing operations: Depreciation of property, plant and equipment Amortisation of intangible assets Loss on foreign exchange Operating lease expense – land and buildings Operating lease expense – other Auditor’s remuneration auditor’s remuneration Audit of the Company's and the consolidated financial statements Audit of subsidiary companies' financial statements Services relating to refinancing Audit-related assurance services Other non-audit services year ended 31 December 2015 £’000s year ended 31 December 2014 £’000s 676 4,392 105 1,836 46 198 547 2,425 1,285 1,970 41 210 year ended 31 December 2015 £’000s year ended 31 December 2014 £’000s 70 92 - 25 11 198 60 85 40 25 - 210 43 globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements 5. Other expenses Restructuring costs Property related provisions Exceptional property costs Deal costs m&A costs items associated with acquisitions and restructure of the group Share based payments charge Revaluation of short and long-term derivatives non-trading foreign exchange loss Amortisation of acquired intangibles total other expenses year ended 31 December 2015 £’000s year ended 31 December 2014 £’000s 4,258 61 6 6 1,464 5,795 2,066 216 774 3,592 12,443 2,237 (221) 13 146 431 2,606 4,371 15 787 1,527 9,306 � Restructuring costs relates to redundancies and other restructuring, largely in relation to the integration of acquisitions made during the year. Included in this number is a loss of £2,316,000 relating to an onerous contract acquired as part of the acquisition of Verdict Research Limited. Redundancies were announced prior to 31 December 2015. � Property related provisions relate to the consolidated income statement impact of the provision made for onerous property leases and dilapidations (see note 20). � Exceptional property costs relate to additional costs incurred on properties that are not occupied and are provided for within the onerous property lease provision. � Deal costs represent costs incurred in respect of the refinancing of loans issued by the Royal Bank of Scotland in 2014 (see note 18). � The m&A costs relate to due diligence and corporate finance activity during the year. � The share based payments charge relates to the share option scheme (see note 23). � The revaluation of short and long-term derivatives relates to movement in the fair value of the short and long-term derivatives detailed in note 13. � non-trading foreign exchange losses relate to non-cash exchange losses made on non-trading items such as loans denominated in foreign currencies. 44 Globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements 6. Particulars of employees employee benefit expense Wages and salaries Social security costs Pension costs year ended 31 December 2015 £’000s year ended 31 December 2014 £’000s 32,269 2,974 441 35,684 27,757 2,043 407 30,207 Pension costs represents payments made into defined contribution schemes. number of employees The average monthly number of persons, including Executive Directors, employed by the Group during the year was as follows: Sales and administrative staff 7. Key management compensation Short-term employee benefits Long-term employee benefits Share based payments year ended 31 December 2015 no. year ended 31 December 2014 no. 978 863 year ended 31 December 2015 £’000s year ended 31 December 2014 £’000s 1,666 12 800 2,478 1,526 9 1,737 3,272 Information regarding Directors’ remuneration, share options, bonuses and pension contributions are set out in the Directors’ Remuneration Report on pages 24 to 25. 8. Finance income and costs Bank interest charge/ (credit) Loan interest Other interest year ended 31 December 2015 £’000s year ended 31 December 2014 £’000s 14 801 71 886 (49) 523 10 484 45 globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements 9. Income tax income statement Current income tax: Current income tax Adjustments in respect of prior years Deferred income tax: Excess of depreciation over capital allowances on property, plant and equipment and intangible assets Deferred tax on acquired intangibles movement on losses Change in corporate tax rate Deferred tax on share based payments Adjustments in respect of prior years total income tax charge in income statement year ended 31 December 2015 £’000s year ended 31 December 2014 £’000s (2,572) 1,094 (1,478) 22 719 242 31 418 (260) 1,172 (306) (1,241) 1 (1,240) 58 336 (52) (68) 842 (33) 1,083 (157) The tax charge is reconciled to the standard corporation tax rate applicable in the UK as follows: Loss on ordinary activities before tax Tax at the UK corporation tax rate of 20.25% (2014: 21.5%) Effects of: Adjustments in respect of prior years Utilisation of losses not previously recognised for deferred tax Expenses not deductible for tax Overseas tax not at a standard rate Change in corporation tax rate Unprovided deferred tax year ended 31 December 2015 £’000s year ended 31 December 2014 £’000s (2,803) 568 834 - (859) (591) 31 (289) (306) (3,100) 667 (32) 21 (501) (204) 10 (118) (157) 46 Globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements 10. 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 year. The Group also has a share options scheme in place and therefore the Group has calculated the dilutive effect of these options. The below table shows earnings per share for both continuing and discontinued operations: Continuing operations Basic Loss for the year attributable to ordinary shareholders of the parent company (£000s) Weighted average number of shares (000s) Basic loss per share (pence) Diluted Loss for the year attributable to ordinary shareholders of the parent company (£000s) Weighted average number of shares* (000s) Diluted loss per share (pence) Discontinued operations Basic (Loss)/ profit for the year attributable to ordinary shareholders from discontinued operations (£000s) Less minority interest (£000s) (Loss)/ profit for the year attributable to ordinary shareholders of the parent company (£000s) Weighted average number of shares (000s) Basic (loss)/ earnings per share (pence) Diluted year ended 31 December 2015 year ended 31 December 2014 (3,109) 76,268 (4.08) (3,109) 76,268 (4.08) (7,992) - (7,992) 76,268 (10.48) (3,257) 75,941 (4.29) (3,257) 75,941 (4.29) 1,036 (115) 1,151 75,941 1.52 (Loss)/ profit for the year attributable to ordinary shareholders of the parent company (£000s) (7,992) 1,151 Weighted average number of shares* (000s) Diluted (loss)/ earnings per share (pence) total Basic Loss for the year attributable to ordinary shareholders of the parent company (£000s) Weighted average number of shares (000s) Basic loss per share (pence) Diluted Loss for the year attributable to ordinary shareholders of the parent company (£000s) Weighted average number of shares* (000s) Diluted loss per share (pence) 76,268 (10.48) (11,101) 76,268 (14.56) (11,101) 76,268 (14.56) 84,300 1.37 (2,106) 75,941 (2.77) (2,106) 75,941 (2.77) Reconciliation of basic weighted average number of shares to the diluted weighted average number of shares: Basic weighted average number of shares Share options in issue at end of year Diluted weighted average number of shares 31 December 2015 no’000s 31 December 2014 no’000s 76,268 7,558 83,826 75,941 8,359 84,300 * The share options in issue are anti-dilutive in respect of the diluted loss per share calculation in 2015 and 2014, therefore the options have not been included in the calculation. 47 globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements 11. Intangible assets Cost As at 1 January 2014 Additions: Business Combinations Additions: Separately Acquired Reclassification from PPE Disposals As at 31 December 2014 Additions: Business Combinations Additions: Separately Acquired Fair value adjustments Foreign currency retranslation Transfer to ‘Asset Held for Sale’ Classification software £’000s Customer relationships £’000s Brands £’000s ip rights £’000s goodwill £’000s total £’000s 3,994 316 1,128 114 (193) 5,359 - 1,066 - (2) - 11,039 3,154 - 1,893 - - - - - - 14,193 1,656 1,893 2,924 - - - - - - - - 11,902 485 - - (120) 12,267 7,337 - - - 27,999 13,023 - - - 41,022 16,551 - 241 - 54,934 18,871 1,128 114 (313) 74,734 28,468 1,066 241 (2) (8,207) (4,335) (12,542) as at 31 December 2015 6,423 15,849 4,817 11,397 53,479 91,965 amortisation As at 1 January 2014 Charge for the year Foreign currency retranslation Reclassification from PPE Disposals As at 31 December 2014 Charge for the year Charge for the year from Assets held-for-sale Foreign currency retranslation Transfer to ‘Asset Held for Sale’ Classification (2,570) (891) (2) (83) 186 (3,360) (984) - (2) - (8,897) (736) - - - (9,633) (982) - - - - (200) - - - (200) (441) - - - (9,300) (598) - - 120 (9,778) (1,985) (409) - 7,709 (9,360) (30,127) - - - - (2,425) (2) (83) 306 (9,360) (32,331) - - - - (4,392) (409) (2) 7,709 as at 31 December 2015 (4,346) (10,615) (641) (4,463) (9,360) (29,425) net book value as at 31 December 2015 As at 31 December 2014 2,077 1,999 5,234 4,560 4,176 1,693 6,934 2,489 44,119 31,662 62,540 42,403 An impairment in relation to assets held for sale of £6.2m was charged to the income statement in 2015. Further details are disclosed in note 25. 48 Globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements impairment tests for goodwill and intangible assets Goodwill and intangibles are allocated to the cash generating unit (CGU) that is expected to benefit from the use of the asset. The Group tests goodwill at each reporting date for impairment and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The recoverable amount of a CGU is determined based on value in use calculations. These calculations use pre-tax cash flow projections based on five year financial budgets approved by management. Cash flows beyond the five year period are extrapolated using estimated long term growth rates. The CGUs have been aggregated into the Business Information operating segment. The CGUs are individually assessed for impairment each year. Overall, the Group has significant headroom on its goodwill and intangibles carrying value and does not believe the assumptions used in the assessment to be critical judgements because of the insensitive nature of the assumptions used. assumptions The recoverable amounts of the CGUs are determined from value in use calculations, which are based on the cash flow projections for each CGU. The key assumptions are set out below:: increase in revenue (for years 1 to 5) increase in costs (for years 1 to 5) Discount rate terminal growth rate 2015 3.00% 2014 3.00% 2015 2.00% 2014 3.00% 2015 11.07% 2014 7.67% 2015 2.00% 2014 2.00% The value in use for aggregated operating segment is summarised below. All values in the table are in £ million Business Information goodwill 44.1 other intangible assets value-in-use headroom 18.4 176.6 114.1 management has undertaken sensitivity analysis taking into consideration the impact on key impairment test assumptions arising from a range of possible future trading and economic scenarios on each CGU. The following scenarios would need to occur before impairment is triggered within the Group: � Revenue growth falls from the assumption of 3% to -1.3% � Discount rate rises from 11.07% to 22.7% no indication of impairment was noted from management’s review, there is significant headroom in each CGU. Goodwill allocated to Consumer was £24.5 million which had surplus value-in-use of £31.5 million, with £21 million allocated to ICT with surplus of £81.2 million. The sensitivity analysis supports the substantial headroom and it would require a significant change in the trading environment for an impairment loss to be realised within the Group. amortisation Amortisation for purchased intangible assets is accounted for within the administrative costs category within the income statement. Amortisation for acquired intangible assets is accounted for within other expenses within the income statement. 49 globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements Fixtures, fittings & equipment £’000s motor vehicles £’000s leasehold improvements £’000s 3,190 64 986 (114) (12) (1,132) 2,982 468 2 (5) 3,447 (2,359) (545) (6) 83 9 1,116 (1,702) (652) (2) (2,356) 1,091 1,280 15 - - - - - 15 - - - 15 (15) - - - - - (15) - - (15) - - total £’000s 3,205 70 1,212 (114) (12) (1,132) 3,229 468 2 (5) - 6 226 - - - 232 - - - 232 3,694 - (2) - - - - (2) (24) - (26) 206 230 (2,374) (547) (6) 83 9 1,116 (1,719) (676) (2) (2,397) 1,297 1,510 12. Property, plant and equipment Cost As at 1 January 2014 Additions: Business Combinations Additions: Separately Acquired Reclassification to intangible assets Foreign currency retranslation Disposals As at 31 December 2014 Additions Foreign currency retranslation Disposals as at 31 December 2015 Depreciation As at 1 January 2014 Charge for the year (continuing operations) Charge for the year (discontinued operations) Reclassification to intangible assets Foreign currency retranslation Disposals As at 31 December 2014 Charge for the year Foreign currency retranslation as at 31 December 2015 net book value as at 31 December 2015 As at 31 December 2014 50 Globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements 13. Derivative assets and liabilities Short-term derivative assets Short-term derivative liabilities Long-term derivative liabilities net derivative liability 31 December 2015 £’000s 31 December 2014 £’000s - (201) (24) (225) 106 (89) (26) (9) Classification is based on when the derivatives mature. The fair values of derivatives are expected to impact the income statement over the next year, dependant on movements in the fair value of the foreign exchange contracts. The movement in the year was £216,000 (2014: £15,000). The Group uses derivative financial instruments to reduce its exposure to fluctuations in foreign currency exchange rates. The notional values of contract amounts outstanding are: Expiring in the year ending: 31 December 2016 31 December 2017 14. Inventories Raw materials Work in progress euro €’000s 1,175 - Us Dollar $’000s indian Rupee inR’000s 8,200 950 65,187 - 31 December 2015 £’000s 31 December 2014 £’000s 39 38 77 55 95 150 51 globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements 15. Trade and other receivables Trade receivables Prepayments and accrued income Other receivables Related party receivables (note 27) 31 December 2015 £’000s 31 December 2014 £’000s 24,045 2,888 5,156 - 32,089 26,368 3,115 3,154 412 33,049 The contractual value of trade receivables is £26.1 million (2014: £28.4 million). Their carrying value is assessed to be £24.0 million (2014: £26.4 million) after assessing recoverability. The contractual value and the carrying value of other receivables are considered to be the same. Trade receivables of £7.6 million have been re-classified under assets held-for-sale, which relate to the print and web business. Further details are disclosed in note 25. Amounts owed by related parties are repayable on demand and are non-interest bearing. The ageing analysis of these trade receivables showing fully performing and past due but not impaired is as follows: not overdue not more than 3 months overdue more than 3 months but not more than 1 year 31 December 2015 £’000s 31 December 2014 £’000s 20,273 1,646 2,126 24,045 21,047 2,005 3,316 26,368 The contractual amounts of the Group’s trade receivables are denominated in the following currencies: Pounds Sterling US Dollar Euro Australian Dollar 31 December 2015 £’000s 31 December 2014 £’000s 12,474 10,557 2,548 518 26,097 13,771 10,316 4,064 275 28,426 movement on the Group provision for impairment of trade receivables is as follows: Balance brought forward Provision for receivables impairment Receivables written off during the year as uncollectable Balance carried forward 31 December 2015 £’000s 31 December 2014 £’000s 2,058 841 (847) 2,052 822 2,280 (1,044) 2,058 The creation and release of provision for impaired receivables have been included within revenue in the income statement. Provisions are created and released on a specific customer level on a monthly basis when management assesses for possible impairment. The other classes within trade and other receivables do not contain impaired assets. The maximum exposure to credit risk at 31 December 2015 is the carrying value of each class of receivable mentioned above. The Group does not hold any collateral as security. Before accepting any new customer, the Group uses a credit scoring system to assess the potential customer’s credit quality. The trade receivables outstanding at year end have acceptable credit scores. There are no customers who represent more than 5% of the total balance of trade receivables. 52 Globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements 16. Deferred income tax Balance brought forward Created upon acquisition of subsidiary Credited to profit and loss account (continuing operations) Charged to profit and loss account (discontinued operations) Deferred tax recognised directly in reserves in relation to share based payments Change in rate Balance carried forward The provision for deferred taxation consists of the tax effect of temporary differences in respect of: Intangible assets purchased Excess of tax allowances over depreciation on fixed assets Deferred tax on share based payments Trading losses Balance carried forward 31 December 2015 £’000s 31 December 2014 £’000s 457 (2,381) 1,203 (159) (327) 31 (1,176) (3,218) 136 1,904 2 (1,176) 1,490 (1,690) 1,116 (725) 334 (68) 457 (1,769) 289 1,934 3 457 The gross asset and liability positions have been detailed on the Group’s balance sheet, as management believe this provides a clearer representation of the deferred tax position as at 31 December 2015. Deferred tax asset Deferred tax liability net position 31 December 2015 £’000s 31 December 2014 £’000s 2,042 (3,218) (1,176) 2,226 (1,769) 457 As at 31 December 2015, the utilisation of the deferred tax asset relating to tax losses is dependent on future taxable profits of approximately £0.0 million and is subject to compliance with taxation authority requirements. The Group has continued to recognise these deferred tax assets as it is probable that there will be available taxable profits to offset these losses based on current forecasts and recent taxable profits in certain subsidiaries. As at 31 December 2015 the Group has unrecognised potential deferred tax assets of £1.1 million. This consisted of gross values of £0.1 million of temporary differences and £1.0 million of unrecognised losses, which would give a future tax benefit of £0.2 million. These tax losses and temporary differences may be available to be carried forward to offset against future taxable income. However their utilisation is contingent on the relevant subsidiaries producing taxable profits over a significant period of time and is subject to compliance with the relevant taxation authority requirements. As at 31 December 2015 these subsidiaries have not made a taxable profit and there is not convincing other evidence that sufficient taxable profit will be available in the future. 17. Trade and other payables Trade payables Other taxation and social security Accruals and deferred revenue Related party creditors (note 27) 31 December 2015 £’000s 31 December 2014 £’000s 5,098 3,312 37,646 5 46,061 5,433 1,983 25,151 - 32,567 53 globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements 18. Borrowings Current Loans due within one year non-current Long-term loans 31 December 2015 £’000s 31 December 2014 £’000s 5,214 1,283 30,359 15,651 term loan and RCF In July 2014, the Group refinanced its debt position. A US$17 million term loan was issued by The Royal Bank of Scotland to partially fund the acquisition of Current Analysis Inc. This is repayable in quarterly instalments over 4 years. The first instalment was made in July 2015, with total repayments due in 2016 being US$4 million. The Group took out an additional term loan of £10 million in August 2015, which is repayable in quarterly instalments over 4 years. The first instalment was made in October 2015, with total repayments due in 2016 being £2.5 million. Additionally, The Group drew a further £10 million in August 2015 from its revolving capital facility (RCF) with The Royal Bank of Scotland. As at 31 December 2015, the Group had total draw down of £16.4 million against a total facility of £17 million. Interest is charged on the term loan and drawn down RCF at a rate of 2.25% over the London Interbank Offered Rate. Interest is charged on the undrawn RCF at 0.9%. non-current borrowings can be reconciled as follows: Term loans issued by The Royal Bank of Scotland RCF issued by The Royal Bank of Scotland Capitalised fees, net of amortised amount 31 December 2015 £’000s 31 December 2014 £’000s 19,552 16,408 (387) 35,573 10,902 6,375 (343) 16,934 54 Globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements 19. Financial assets and liabilities The Group is exposed to foreign currency, interest rate, liquidity, credit and equity risks. Each of these risks, the associated financial instruments and the management of those risks are detailed below. The Group’s financial instruments are classified under IFRS as follows: 31 December 2015 Current assets Cash Trade receivables Other receivables Accrued income Current liabilities Short-term borrowings Short-term derivative liabilities Trade accounts payable Related party payables Accruals Non-current liabilities Long-term derivative liabilities Long-term borrowings 31 December 2014 Current assets Cash Short-term derivative assets Trade receivables Other receivables Related party receivables Current liabilities Short-term borrowings Short-term derivative liabilities Trade accounts payable Accruals Non-current liabilities Long-term borrowings Long-term derivative liabilities Fair value (through profit or loss) £’000s loans and receivables £’000s amortised cost £’000s - - - - - - (201) - - - (201) (24) - (24) 10,117 24,045 5,156 672 39,990 - - - - - - - - - - - - - - (5,214) - (5,098) (5) (8,467) (18,784) - (30,359) (30,359) Fair value (through profit or loss) £’000s loans and receivables £’000s amortised cost £’000s - - - - - - (1,283) - (5,433) (3,672) - 106 - - - 106 - (89) - - (89) - (26) (26) 8,261 - 26,368 3,154 412 38,195 - - - - - - - - total £’000s 10,117 24,045 5,156 672 39,990 (5,214) (201) (5,098) (5) (8,467) (18,985) (24) (30,359) (30,383) total £’000s 8,261 106 26,368 3,154 412 38,301 (1,283) (89) (5,433) (3,672) (10,388) (10,477) (15,651) - (15,651) (15,651) (26) (15,677) 55 globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements Maturity analysis The long term borrowing’s contractual features are detailed in note 18 and it is not expected that those loans will be repaid within a year or until replaced with equivalent debt or equity financing. The debt shown in the table below is inclusive of the projected interest payments in accordance with IFRS 7 (interest on short and long-term borrowings £3,633,000). less than 1 month £’000s 1 to 3 months £’000s 3 months to 1 year £’000s 1 to 5 years £’000s Current liabilities Short-term borrowings Short-term derivative liabilities Trade accounts payable Accruals Non-current liabilities Long-term derivative liabilities Long-term borrowings (1,558) (113) (4,659) - - - - (56) (439) (8,467) - - (4,675) (32) - - - - (6,330) (8,962) (4,707) total £’000s (6,233) (201) (5,098) (8,467) - - - - (24) (24) (32,973) (32,997) (32,973) (52,996) Reclassifications There have been no reclassifications between financial instrument categories during the years ended 31 December 2015 and 31 December 2014. Fair value of financial instruments Financial instruments are either carried at amortised cost, less any provision for impairment, or fair value. The fair value of long-term borrowings is the same as the carrying value of long-term borrowings as at 31 December 2015. The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: � Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities; � Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; and � Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data. As at 31 December 2015, the only financial instruments measured at fair value were derivative financial liabilities and these are classified as Level 2. Cash, trade receivables and trade accounts payable The carrying amounts of these balances are approximately equivalent to their fair value because of the short term to maturity. Market risk The Group is exposed to market risk primarily from changes in foreign currency exchange rates and interest rates. Currency risk 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 adversely affected by changes in foreign currency exchange rates. Due to the Group’s operation in India, the Group has entered into foreign exchange contracts that limit the risk from movements in the Indian Rupee exchange rate with Sterling. The Group additionally enters into foreign exchange contracts that limit the risk from movements in US Dollars and Euros with Sterling. 56 Globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements The Group’s exposure to foreign currencies arising from financial instruments is: 31 December 2015 Exposures Cash Short and long-term derivative assets/(liabilities) Short and long-term borrowings Trade receivables Trade accounts payable net balance sheet exposure 31 December 2014 Exposures Cash Short and long-term derivative assets/(liabilities) Short and long-term borrowings Trade receivables Trade accounts payable net balance sheet exposure UsD £’000s 2,860 (239) (10,204) 10,557 (135) 2,839 UsD £’000s 1,302 (114) (10,902) 10,316 (855) (253) eUR £’000s other £’000s total £’000s 684 (25) - 2,548 - 3,207 1,266 39 - 518 - 1,823 eUR £’000s other £’000s 1,655 54 - 4,064 (101) 5,672 169 51 - 275 - 495 4,810 (225) (10,204) 13,623 (135) 7,869 total £’000s 3,126 (9) (10,902) 14,655 (956) 5,914 Forecast sales and purchases in foreign currencies have not been included in the table above as they are not financial instruments. As at 31 December 2015 a movement of 10% in Sterling would impact the income statement as detailed in the table below: Impact on net earnings before income tax: USD EUR 10% decrease 10% increase 2015 £’000s 2014 £’000s 2015 £’000s 2014 £’000s 314 356 670 36 (516) (480) (259) (292) (551) (13) 630 617 This analysis assumes a movement in Sterling across all currencies and only includes the effect of foreign exchange movements on financial instruments. All other variables remain constant. Interest rate risk The Group is exposed to interest rate risk on its overdraft and the outstanding loans to The Royal Bank of Scotland. The Group does not manage this risk with the use of derivatives. no other liabilities accrue interest. The table below shows how a movement in interest rates of 100 basis points would impact the income statement based on the additional interest expense for the year then ended: 100 basis point decrease 100 basis point increase 2015 £’000s 2014 £’000s 2015 £’000s 2014 £’000s Impact on: net earnings before income tax 356 173 (356) (173) This analysis assumes all other variables remain constant. 57 globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements Liquidity risk Liquidity risk represents the Group’s ability to meet its contractual obligations. The Group evaluates its liquidity requirements on an ongoing basis. In general, the Group generates sufficient cash flows from its operating activities to meet its financial liabilities. The Group’s main source of financing for its working capital requirements is free cash flow. The Group’s exposure to liquidity risk arises from trade accounts payable and loans due to the Royal Bank of Scotland. All contractual cash flows from trade accounts payable are the same as the carrying value of the liability due to their short- term nature. At 31 December 2015, the Group has a revolving credit facility of £16.4 million, a US$17 million term loan and a £10 million term loan outstanding with the Royal Bank of Scotland. See note 18 for further details. Credit risk In the normal course of its business, the Group incurs credit risk from cash and trade and other receivables. The Group has a credit policy that is used to manage this exposure to credit risk, including credit checking prior to contracts being signed. The Group’s financial instruments do not have significant concentration of risk with any related parties. £40.0 million of the Group’s assets are subject to credit risk (31 December 2014: £38.3 million). The Group does not hold any collateral over these amounts. See note 15 for further details of the Group’s receivables. The Group maintains a provision for estimated losses expected to arise from customers being unable to make required payments. This provision takes into account known commercial factors impacting specific customer accounts, as well as the overall profile of the Group’s receivables portfolio. In assessing the provision, factors such as past collection history, the age of receivable balances, the level of activity in customer accounts, as well as general macro-economic trends, are taken into account. Significant changes in these factors would likely necessitate changes in the doubtful debts provision. At present, however, the Group considers the current level of its allowance for doubtful accounts to be adequate to cover expected credit losses on trade receivables. Bad debt expenses are reported in the income statement. Equity risk It is the Group’s policy to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain the development of the business. See note 22 for further details of the Group’s equity. 58 Globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements 20. Provisions The movement in the provisions is as follows: At 1 January 2014 Increase in provision Utilised Release of unutilised provision at 31 December 2014 Increase in provision Utilised Release of unutilised provision at 31 December 2015 Current: Non-current: onerous leases £’000s Dilapidations £’000s other £’000s total £’000s 177 345 (101) (204) 217 15 (185) (5) 42 42 - 369 15 (78) (172) 134 80 (44) (31) 139 45 94 156 131 (141) (45) 101 2,421 (80) (20) 2,422 1,562 860 702 491 (320) (421) 452 2,516 (309) (56) 2,603 1,649 954 Onerous lease Provision has been made for the net present value of future residual leasehold commitments. This provision has been calculated making assumptions on future rental income, market rents, insurance and rates and this has then been discounted using a discount rate of 2% per annum. This provision is expected to be utilised over the period of each specific lease. Dilapidations Provision has been made for the net present value of future dilapidations that are owed due to legal or constructive obligations under the Group’s operating leases of office premises. The provision is expected to be utilised over the period to the end of each specific lease. Other Within other provisions, a liability has been recognised of £2.3m for an unfavourable contract acquired as part of Verdict Research Limited. The contract became onerous as a result of a management restructuring decision made post-acquisition and therefore the loss related to the provision was charged to the income statement in the year ended 31 December 2015. The remainder of the other provision relates to the Group’s obligations to pay commission to registered users of the Group’s websites. The closing balance for this liability was £0.1m. 59 globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements 21. Operating lease commitments As at 31 December 2015 the Group had outstanding commitments for future minimum lease payments under non- cancellable leases, which fell due as follows: land and buildings Within 1 year Within 2 to 5 years Over 5 years other Within 1 year Within 2 to 5 years 31 December 2015 £’000s 31 December 2014 £’000s 2,187 7,890 20,290 30,367 53 25 78 2,341 7,688 21,960 31,989 64 77 141 The Group sub-lets certain areas of its property portfolio. As at 31 December 2015, the Group had contracts with sub- tenants for the following future minimum lease rentals: land and buildings Within 1 year Within 2 to 5 years Over 5 years 22. Equity Share capital 31 December 2015 £’000s 31 December 2014 £’000s 160 641 27 828 331 641 187 1,159 allotted, called up and fully paid: 31 December 2015 31 December 2014 no ’000s £’000s no ’000s £’000s Ordinary shares at 1 January (1/14th pence) 76,268 54 74,487 Issue of shares: partial consideration ERC Issue of shares: other Issue of shares: share based payments scheme Ordinary shares c/f 31 December (1/14th pence) Deferred shares of £1.00 each - - - 76,268 100 76,368 - - - 54 100 154 76 4 1,701 76,268 100 76,368 53 - - 1 54 100 154 Share Option Scheme The Group issued 1,400,000 ordinary shares on 7 march 2014 and 305,080 ordinary shares on 14 march 2014 following the exercise of options by employees pursuant to the vesting of the Company’s Capital Appreciation Plan. These shares rank pari passu with the existing GD ordinary shares in issue. 60 Globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements Capital management The Group’s capital management objectives are: � To ensure the Group’s ability to continue as a going concern � To fund future growth and provide an adequate return to shareholders and, when appropriate, distribute dividends The capital structure of the Group consists of net debt, which includes borrowings (note 18) 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 Group is one that is focused on the efficient management of working capital and increased cash generation. The Board therefore believes it can invest in the business, achieve growth in profits and service a progressive dividend policy. Having regard to the improved prospects for the Group and the cash requirements of the business for the year ahead, the Board has announced a proposed maiden final dividend of 2.5 pence per share. The proposed final dividend will be paid on 3rd June 2016 to shareholders on the register at the close of business on 13th may 2016. The disclosures above are for both the Group and the Company. Other reserve Other reserves consist of a reserve created upon the reverse acquisition of the Tmn Group Plc. 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. Special reserve The special reserve was created upon the capital reduction which occurred during 2013. In order to facilitate the proposed dividend, the special reserve, constituted by an undertaking to the Court given in connection with the reduction of the Company’s share premium account undertaken in may 2013 (the “Special Reserve”), has been released in accordance with its terms pursuant to a resolution of the Board dated 23 February 2016 (all relevant creditors having been discharged or otherwise consented to the reduction). Unaudited interim accounts for the two month period to 29 February 2016 prepared for the purposes of section 836 Companies Act 2006 and showing, inter alia, the effect of the release of the Special Reserve will be filed at Companies House prior to the despatch of the notice of AGm to be held on 17 may 2016. 61 globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements 23. Share-based payments 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) at any time during a prescribed period from the vesting date to the date the option lapses. 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 market value at the date of grant. The market values were compared to the Black-Scholes model and there were no significant differences. The following assumptions were used in the valuation: award tranche Award 1 Award 3 Award 4 Award 5 Award 6 Award 7 Award 8 Award 9 grant Date 1 January 2011 1 may 2012 7 march 2014 8 September 2014 22 September 2014 9 December 2014 31 December 2014 21 April 2015 Fair value of share price at grant Date exercise price (pence) estimated Forfeiture rate p.a. Weighted average of Remaining Contractual life £1.09 £1.87 £2.55 £2.575 £2.525 £2.075 £2.025 £2.05 0.0714p 0.0714p 0.0714p 0.0714p 0.0714p 0.0714p 0.0714p 0.0714p 15% 15% 15% 15% 15% 15% 15% 15% 2.5 2.5 2.5 2.7 2.5 2.6 2.6 3.0 The estimated forfeiture rate assumption is based upon management’s expectation of the number of options that will lapse over the vesting period. The assumptions were determined when the scheme was set up in 2011 and are reviewed annually. management believe the current assumptions to be reasonable based upon the rate of lapsed options. Each of the awards are subject to the following vesting criteria: vesting Criteria group achieves £10m eBitDa group achieves £18.5m eBitDa group achieves £23.5m eBitDa Award 1-4 20% Vest Award 5 Award 6 Award 7 Award 8 Award 9 n/a n/a n/a n/a n/a 40% Vest 30% Vest 50% Vest 40% Vest 50% Vest 40% Vest 40% Vest 70% Vest 50% Vest 60% Vest 50% Vest 60% Vest The total charge recognised for the scheme during the twelve months to 31 December 2015 was £2,066,000 (2014: £4,371,000). The awards of the scheme are settled with ordinary shares of the Company. Reconciliation of movement in the number of options is provided below. option price (pence) 1/14th 1/14th 1/14th 1/14th number of options 8,358,880 1,079,960 (1,881,000) 7,557,840 31 December 2014 Granted Forfeited 31 December 2015 62 Globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements The following table summarises the Group’s share options outstanding at 31 December 2015: Reporting date 31 December 2011 31 December 2012 31 December 2013 31 December 2014 31 December 2015 options outstanding option price (pence) Remaining life (years) 5,004,300 4,931,150 4,775,050 8,358,880 7,557,840 1/14th 1/14th 1/14th 1/14th 1/14th 3.7 4.3 3.3 2.5 2.5 24. Capital commitments There were no capital commitments at 31 December 2015 (2014: £nil). 25. Assets held for sale and discontinued operations As the business becomes more focused on its business information offering, a number of legacy non-core print business units have been discontinued in recent years. On 23rd December 2015, the Group announced that it was in advanced negotiations to sell some of its non-core B2B print businesses to a related party. The Board feel that the assets no longer fit with the Group‘s strategy of being a solely business information focused business. The completion of the disposal was confirmed on 19 January 2016. The B2B print assets subject to the disposal currently provide marketing, advertising and online solutions to a wide number of clients operating in a number of the Group’s non-core industry verticals, including Automotive, Oil & Gas and Hospitality. The disposal represents an exit from non-core businesses, which operate in markets that are contracting and are inconsistent with the remainder of the Group. Pursuant to the provisions of IFRS 5, the business has been classified as held for sale as at 31 December 2015 and its operations have been separated out as discontinued. non-current assets consisting of: Goodwill Intangible assets Current assets consisting of: Trade receivables Other receivables total non-current and Current assets Current liabilities consisting of: Trade payables Deferred income Accruals total Current liabilities net assets held-for-sale Carrying value £000s Fair value adjustments £000s Fair value £000s 4,335 497 7,553 265 12,650 (270) (1,077) (781) (2,128) 10,522 (4,335) (497) (1,393) - (6,225) - - - - (6,225) - - 6,160 265 6,425 (270) (1,077) (781) (2,128) 4,297 A fair value review was conducted by management prior to the assets being classified as held-for-sale. As a result, an impairment of £6.2 million was recorded in the income statement. 63 globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements In addition to the disposal of the non-core B2B print business, included in the discontinued operations are those activities which ceased during 2014, including the Group’s German subsidiary, the disposal of its 75% shareholding in Office Solutions media Limited as well as a lead generation and market research business. a) the results of the discontinued operation are as follows: Discontinued operations Revenue Cost of sales gross profit Distribution costs Administrative costs Other income (loss)/ profit before tax from discontinued operations Income tax credit/ (expense) (loss)/ profit for the year from discontinued operations b) loss before tax This is arrived after charging: Depreciation Amortisation Impairment c) Cash flows from discontinued operations Cash (outflows)/ inflows from operating activities Cash inflows from investing activities Cash outflows from financing activities total cash (outflows)/ inflows from discontinued operations year ended 31 December 2015 £’000s year ended 31 December 2014 £’000s 10,145 (10,013) 132 - (8,925) - (8,793) 801 (7,992) 16,155 (11,522) 4,633 (19) (2,312) 86 2,388 (1,352) 1,036 year ended 31 December 2015 £’000s year ended 31 December 2014 £’000s - 409 6,225 year ended 31 December 2015 £’000s (1,624) - - (1,624) 6 - - year ended 31 December 2014 £’000s 518 4 (6) 516 26. Acquisitions verdict Research limited On 1 September 2015 the Group acquired the Datamonitor Financial, Datamonitor Consumer, MarketLine and Verdict businesses from Informa Plc for cash consideration of £25,087,290. The acquisition was effected by Informa Plc transferring the above named businesses to Verdict Research Limited, the entire share capital of which was acquired by GlobalData Plc. During 2015, Verdict Research Limited changed its name to Progressive Digital Media Limited. 64 Globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements The amounts recognised for each class of assets and liabilities at the acquisition date were as follows: Carrying value £000s Fair value adjustments £000s Fair value £000s Intangible assets consisting of: Brand Customer relationships Intellectual Property and Content net assets acquired consisting of: Tangible fixed assets Cash Trade receivables Trade and other payables Deferred revenue Deferred tax Fair value of net assets acquired Cash consideration Less net assets acquired goodwill - - - 17 4,408 1,106 - (5,438) 2 95 2,924 1,656 7,337 (17) - (270) (193) (611) (2,385) 8,441 2,924 1,656 7,337 - 4,408 836 (193) (6,049) (2,383) 8,536 25,087 (8,536) 16,551 In line with the provisions of IFRS 3, further fair value adjustments may be required within the 12 month period from the date of acquisition. Any fair value adjustments will result in an adjustment to the goodwill balance reported above. In 2014 the acquired businesses had revenues of £17.8 million and profits before tax of £3.7 million. The businesses have generated revenues of £5.3 million and Adjusted EBITDA of £1.9 million in the period from acquisition to 31 December 2015. If the acquisition had occurred on 1 January 2015, the Group year to date revenue for 2015 would have been £71.2 million and the Group profit before tax from continuing operations would have been £0.7 million. The goodwill that arose on the combination can be attributed to revenue and cost synergies expected to arise upon the integration of the acquired businesses into the Group. The Group incurred legal and professional costs of £331,000 in relation to the acquisition, which were recognised in other expenses (note 5). The total cash cost of the acquisition is reconciled as follows: Cash consideration Cash acquired as part of opening balance sheet total cash cost 25,087 (4,408) 20,679 27. Related party transactions mike Danson, GlobalData Plc’s Chief Executive, owns 69.7% of the Company’s ordinary shares as at 1 march 2016. mike Danson owns a number of businesses that interact with GlobalData Plc. The principal transactions, which are all conducted on an arm’s length basis, are as follows: accommodation Following the sale of the freehold property, GlobalData Plc entered into a property lease with Estel Property Investments for a period of 25 years. In September 2009, GlobalData Plc entered into a second lease with Estel Property Investments for another property for a period of 25 years. The buildings are also occupied by a number of other businesses that are owned by mike Danson (see overleaf). The total rental expense, including service and management fees, in relation to the buildings owned by Estel Property Investments for the year ended 31 December 2015 was £2,083,700 (2014: £1,949,500). 65 globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements Corporate support services Corporate support services are provided to and from other companies owned by mike Danson, principally finance, human resources, IT and facilities management. These are recharged to companies that consume these services based on specific drivers of costs, such as proportional occupancy of buildings for facilities management, headcount for human resources services, revenue or gross profit for finance services and headcount for IT services. The recharge made from GlobalData Plc to these companies for the year ended 31 December 2015 was £1,346,000 (2014: £404,900). acquisition of globalData holding limited and disposal of B2B print business On 23rd December 2015, the Group announced that it was in advanced negotiations to purchase the Healthcare business information provider, GlobalData Holdings Limited (a related party) and to sell some of its non-core B2B print businesses also to a related party. Further information on the acquisition can be found in note 28, with details of the disposal in note 25. Directors and Key management personnel The remuneration of Directors is discussed within the Directors’ Remuneration Report on pages 24 and 25. Remuneration of key management personnel is detailed in note 7. amounts outstanding The Group has taken advantage of the exemptions contained within IAS 24 - Related Party Disclosures from the requirement to disclose transactions between Group companies as these have been eliminated on consolidation. The amounts outstanding for other related parties were: 31 December 2015 £’000s 31 December 2014 £’000s Global Data Ltd Global Data Publications Inc World market Intelligence Ltd Progressive media International Ltd Estel Property Investments Ltd Estel Property Investments no.2 Ltd Estel Property Investments no.3 Ltd Progressive media International middle East FZ LLC Financial news Publishing Ltd World market Intelligence Pty Ltd Progressive Global markets Korea Ltd Progressive media Group UK Ltd Progressive Luxury Publications Ltd Sportcal.com Ltd Digital Insights & Research Pvt Ltd Knowledge Pool Ltd The Samling Ltd 26 (2) 589 - (618) - - - - - - - - - - - - 79 3 (242) 5,706 (4,602) 291 (832) (70) (154) 203 32 (21) 3 9 3 3 1 The parent company’s balances with related parties are disclosed on pages 83 and 84 of the annual report. The Group has right of set off over these amounts. (5) 412 66 Globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements subsidiary undertakings subsidiary undertaking Country of registration holding % principal activity Tmn media Limited England & Wales Ordinary shares 100% non-trading mutualPoints Limited England & Wales Ordinary shares 100% Online direct marketing Electronic Direct Response Limited England & Wales Ordinary shares 100% non-trading Kable Business Intelligence Limited England & Wales Ordinary shares 100% Business Information ICD Research Limited England & Wales Ordinary shares 100% non-trading Internet Business Group Limited England & Wales Ordinary shares 100% Performance advertising Progressive media Group Limited* England & Wales Ordinary shares 100% Business Information Dewberry Redpoint Limited* England & Wales Ordinary shares 100% Business Information Conlumino Limited* England & Wales Ordinary shares 100% Dormant Progressive Digital media (Holdings) Limited England & Wales Ordinary shares 100% Holding company Progressive Capital Limited* England & Wales Ordinary shares 100% Holding company SPG media Group Limited* England & Wales Ordinary shares 100% Holding company SPG media Limited* England & Wales Ordinary shares 100% non-trading Progressive Digital media Pty Ltd Australia Ordinary shares 100% Business Information Progressive Digital media Inc United States of America Ordinary shares 100% Business Information Progressive Digital media Pvt Ltd India Ordinary shares 100% Business Information ERC Group Limited England & Wales Ordinary shares 100% Business Information ERC Holdings Limited* England & Wales Ordinary shares 100% Holding company ERC Statistics International Limited* England & Wales Ordinary shares 100% non-trading Progressive Digital media Holdings, Inc United States of America Ordinary shares 100% Holding company Current Analysis, Inc* United States of America Ordinary shares 100% Business Information Current Intelligence and Analysis Ltd* England & Wales Ordinary shares 100% Business Information Current Analysis SAS* France Ordinary shares 100% Business Information Current Analysis Asia Pacific Pty. Ltd* Singapore Ordinary shares 100% Business Information Cornhill Publications Limited* England & Wales Ordinary shares 100% non-trading Canadean Limited England & Wales Ordinary shares 100% Business Information Progressive Digital media EBT Ltd* England & Wales Ordinary shares 100% Dormant Progressive Intelligence Limited* England & Wales Ordinary shares 100% Dormant Apex Subscription Agency Limited* England & Wales Ordinary shares 100% Dormant Kable Intelligence Limited* England & Wales Ordinary shares 100% Business Information Canadean mexico Y Centro America, F. De R.L. De C.V* mexico Ordinary shares 100% Business Information Progressive Digital media Limited (formerly Verdict Research Limited) Canadean Brasil Consultoria E Pesquisas De mercado Ltda* *indirectly held England & Wales Ordinary shares 100% Business Information Brazil Ordinary shares 100% Business Information 67 globaldata plc annual RepoRt and accounts 2015 Notes to the Consolidated Financial Statements 28. Post Balance Sheet Events In January 2016 the Group completed the acquisition of Healthcare business information provider GlobalData Holding Limited, a private company owned by mike Danson and Wayne Lloyd (and his connected parties) for a total consideration satisfied by the issue 26,078,431 Ordinary Shares. In accordance with IFRS3.B66, management has not been able to estimate the fair value of goodwill and intangible assets acquired as the acquisition occurred in close proximity of the year end. no revenues or profits are included in the Group’s results for the year ended 31 December 2015. In 2015 the acquired Healthcare business had revenues of £19.1 million and profits before tax of £1.4 million. In addition, the Group also completed the disposal of its non-core B2B print assets to Research Views Limited, also controlled by mike Danson and Wayne Lloyd (and his connected parties). The disposal was for consideration of £1, together with a guaranteed loan agreement from the related party acquirers. As a result of the above transactions, the Group changed its name to GlobalData Plc which better reflects the business and its operations. On 1 march 2016, the Group announced its maiden dividend. Further details can be found in note 22. 68 Globaldata plc annual RepoRt and accounts 2015 Independent Auditor’s Report to the Members of GlobalData Plc (formerly Progressive Digital Media Group Plc) We have audited the parent company financial statements of GlobalData Plc for the year ended 31 December 2015 which comprise the company statement of financial position, the company statement of changes in equity, the company statement of cash flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As explained more fully in the Statement of Directors’ responsibilities, set out on page 26, the directors are responsible for the preparation of the parent company financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the parent company financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors. scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at www.frc.org.uk/auditscopeukprivate. opinion on financial statements In our opinion the parent company financial statements: � give a true and fair view of the state of the company’s affairs as at 31 December 2015; � have been properly prepared in accordance with IFRS as adopted by the European Union; and � have been prepared in accordance with the requirements of the Companies Act 2006. opinion on other matter prescribed by the Companies act 2006 In our opinion the information given in the Strategic Report and Directors’ Report for the financial year for which the financial statements are prepared is consistent with the parent company financial statements. matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: � adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or � the parent company financial statements are not in agreement with the accounting records and returns; or � certain disclosures of directors’ remuneration specified by law are not made; or � we have not received all the information and explanations we require for our audit. other matters We have reported separately on the group financial statements of GlobalData Plc for the year ended 31 December 2015. nicholas page Senior Statutory Auditor for and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants London 1 march 2016 69 globaldata plc annual RepoRt and accounts 2015 Company Statement of Financial Position notes 31 December 2015 £’000s 31 December 2014 £’000s non-current assets Property, plant and equipment Intangible assets Investments Current assets Trade and other receivables Short-term derivative assets Current tax receivable Cash and cash equivalents total assets Current liabilities Trade and other payables Short-term derivative liabilities Short-term borrowings non-current liabilities Long-term provisions Long-term derivative liabilities Long-term borrowings total liabilities net assets equity Share capital Share premium account Other reserve Special reserve Retained earnings equity attributable to equity holders 5 4 6 7 8 9 8 11 10 8 11 1,126 1,625 94,541 97,292 13,009 - 1,810 14,524 29,343 126,635 (31,869) (240) (5,214) (37,323) (58) (25) (30,359) (30,442) (67,765) 58,870 154 200 7,174 48,422 2,920 58,870 1,220 1,009 67,388 69,617 14,763 106 - 8,576 23,445 93,062 (14,761) (89) (1,283) (16,133) (59) (26) (15,651) (15,736) (31,869) 61,193 154 200 7,174 48,422 5,243 61,193 These financial statements were approved by the board of directors on 1 march 2016 and signed on its behalf by: Bernard Cragg Chairman mike Danson Chief Executive The accompanying notes form an integral part of this financial report. Company number: 03925319 70 Globaldata plc annual RepoRt and accounts 2015 Company Statement of Changes in Equity l a t i p a c e r a h s i m u m e r p e r a h s t n u o c c a e v r e s e r r e h t o e v r e s e r l a i c e p s d e n i a t e R i s g n n r a e y t i u q e l a t o t £’000s £’000s £’000s £’000s £’000s £’000s 7,174 48,422 2,479 58,228 Balance at 1 january 2014 Loss for the year transactions with owners: Issue of share capital: ERC Issue of share capital: share based payments scheme Share based payments charge Balance at 31 December 2014 Loss for the year transactions with owners: Share based payments charge Balance at 31 December 2015 153 - - 1 - - - 200 - - - - - - - - - - 154 200 7,174 48,422 - - - - - - - - 154 200 7,174 48,422 The accompanying notes form an integral part of this financial report. (1,606) (1,606) - (1) 200 - 4,371 5,243 4,371 61,193 (4,389) (4,389) 2,066 2,920 2,066 58,870 71 globaldata plc annual RepoRt and accounts 2015 Company Statement of Cash Flows Cash flows from operating activities Loss after taxation Adjustments for: Depreciation Amortisation Finance expense Revaluation of foreign currency loan movement in provision Revaluation of derivatives Decrease/ (increase) in trade and other receivables Increase/ (decrease) in trade and other payables Cash generated by/ (used in) operations Interest paid Income taxes paid net cash from/ (used in) operating activities Cash flows from investing activities Purchase of property, plant and equipment Purchase of intangible assets Acquisition of Verdict Research Limited Acquisition of Current Analysis Inc Acquisition of ERC Group net cash used in investing activities Cash flows from financing activities Proceeds from long-term borrowings Repayment of short-term borrowings net inflow from inter-company loans net cash from financing activities net increase/ (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year The accompanying notes form an integral part of this financial report. year ended 31 December 2015 £’000s year ended 31 December 2014 £’000s (4,389) (1,606) 489 440 854 569 (1) 256 1,427 3,310 2,955 (775) (1,810) 370 (395) (1,056) (25,087) - - (26,538) 20,000 (1,920) 14,036 32,116 5,948 8,576 14,524 233 254 480 902 (1) 15 (763) (412) (898) (215) - (1,113) (1,102) (979) - (11,529) (708) (14,318) 10,000 - 4,491 14,491 (940) 9,516 8,576 72 Globaldata plc annual RepoRt and accounts 2015 Notes to the Company Financial Statements 1. General information nature of operations The principal activity of GlobalData Plc is as a holding company of subsidiary entities which are engaged in enabling organisations in the Consumer, ICT and Healthcare markets to gain competitive advantage by providing unique, high quality business information and services across multiple platforms. GlobalData Plc (‘the Company’) is a company incorporated in the United Kingdom and listed on the Alternative Investment market. The registered office of the Company is John Carpenter House, John Carpenter Street, London, EC4Y 0An. The registered number of the Company is 03925319. going concern The Company meets its day-to-day working capital requirements through free cash flow. Based on cash flow projections the Company considers the existing financing facilities to be adequate to meet short-term commitments. In July 2014, the Company refinanced its debt position. A US$17 million term loan was issued by The Royal Bank of Scotland to partially fund the acquisition of Current Analysis Inc. This is repayable in quarterly instalments over 4 years. The first instalment was made in July 2015, with total repayments due in 2016 being US$4 million. The Company took out an additional term loan of £10 million in August 2015, which is repayable in quarterly instalments over 4 years. The first instalment was made in October 2015, with total repayments due in 2016 being £2.5 million. Additionally, the Company drew a further £10 million in August 2015 from its revolving capital facility (RCF) with The Royal Bank of Scotland. As at 31 December 2015, the Company had a total draw down of £16.4 million against a total facility of £17 million. Interest is charged on the term loan and drawn down RCF at a rate of 2.25% over the London Interbank Offered Rate. Interest is charged on the undrawn RCF at 0.9%. The finance facilities were issued with debt covenants which are measured on a quarterly basis. There were no breaches of these covenants during the year and as at 31 December 2015. management have reviewed forecasted 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 Company’s ability to continue as a going concern. Accordingly, the Company has prepared the annual report and financial statements on a going concern basis. Critical accounting estimates and judgements The Company 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 relate to carrying value of investments, provisions for share based payments and the provision for bad debts. Carrying value of investments The carrying value of investments is assessed at least annually to ensure that there is no need for impairment. Performing this assessment requires management to estimate future cash flows to be generated by the related investment, which may entail 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. Share based payments The Group operates a share based compensation plan 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 Group income statement. The total amount to be expensed is determined by reference to the fair value of the options granted, excluding the impact of any non-market service and performance vesting conditions (for example, profitability, sales growth targets and remaining an employee of the entity over a specified time period). non-market vesting conditions are included in assumptions about the number of options and awards that are expected to vest. The total amount expensed is recognised over the vesting period, which is the period over which all of the specified existing conditions are to be satisfied. At each reporting date, the entity revises its estimates of the number of options and awards that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the Group income statement, with a corresponding adjustment to the share based payments reserve within equity. 73 globaldata plc annual RepoRt and accounts 2015 Notes to the Company Financial Statements The Company does not directly employ those participating in the share based payments scheme as they are employed by other Group companies. The issue of share incentives by the Company to employees of its subsidiaries represents additional capital contributions. An addition to the Company’s investment in Group undertakings is reported with a corresponding increase in shareholders’ funds. Provision for bad debt The Company is required to judge when there is sufficient objective evidence to require the impairment of individual trade receivables. It does this on the basis of the age of the relevant receivables, external evidence of the credit status of the customer entity and the status of any disputed amounts. 2. Accounting policies a) Basis of preparation The parent company financial statements have been prepared in accordance with applicable IFRS as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006. As permitted by section 408 of the Companies Act 2006, the income statement of the Company is not presented. The Company’s loss for the year ended 31 December 2015 is £4.4 million (year ended 31 December 2014: loss £1.6 million). b) Change to accounting policies This report has been prepared based on the accounting policies detailed in the Group’s financial statements for the year ended 31 December 2015 and is consistent with the policies applied in the previous year. c) property, plant and equipment Property, plant and equipment is stated at historic cost, including expenditure that is directly attributable to the acquired item, less accumulated depreciation and impairment losses. Depreciation is calculated on a straight line basis over the deemed useful life of an asset and is applied to the cost less any residual value. The asset classes are depreciated over the following periods: � Computer and equipment – over 3 to 5 years � Leasehold improvements – over 3 to 10 years The useful life, the residual value and the depreciation method is assessed annually. Where there is an indication of impairment, the carrying value of the property, plant and equipment is compared to the higher of value in use and the fair value less costs to sell. If the carrying value exceeds the higher of the value in use and fair value less the costs to sell then the asset is impaired and an impairment loss recognised in profit or loss. d) intangible assets Computer software non-integral computer software purchases are capitalised at cost as intangible assets. The Company also capitalises development costs associated with new products in accordance with the development criteria prescribed within IAS 38 “Intangible Assets”. These costs are amortised over their estimated useful lives of 3 years. Costs associated with implementing or maintaining computer software programmes are recognised as an expense. investments e) Investments in subsidiaries are stated at cost less any provision for impairment. f) taxation Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the year, using rates substantively enacted at the reporting date, and any adjustments to the tax payable in respect of previous years. Deferred taxation is provided in full on temporary differences between the carrying amount of the assets and liabilities in the financial statements and the tax base. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax is determined using the tax rates that have been enacted or substantially enacted by the reporting date, and are expected to apply when the deferred tax liability is settled or the deferred tax asset is realised. 74 Globaldata plc annual RepoRt and accounts 2015 Notes to the Company Financial Statements Deferred tax is provided on temporary differences arising on investments in subsidiaries except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Tax is recognised in the income statement, except where it relates to items recognised as other comprehensive income, in which case it is recognised in the statement of other comprehensive income. Tax relating to items recognised in equity is recognised directly in equity. g) Foreign currencies The results are presented in Pounds Sterling (£) which is the functional currency of the Company. Foreign currency transactions are translated into Sterling at the rates of exchange ruling at the date of the transaction, and if still in existence at the year end the balance is retranslated at the rates of exchange ruling at the reporting date. Differences arising from changes in exchange rates during the year are taken to the income statement. h) provisions A provision is recognised in the balance sheet when the Company has a legal obligation or constructive obligation as a result of a past event, it is more likely than not that an outflow of resources will be required to settle that obligation, and a reliable estimate of the amount can be made. Provisions are discounted if the time value of money is material. i) Cash and cash equivalents Cash and cash equivalents include cash in hand and deposits held on call, together with other short term highly liquid investments that are readily convertible to known amounts of cash which are subject to an insignificant risk of changes in value. j) Dividends Dividends on the Company’s ordinary shares are recognised as a liability in the Company’s financial statements, and as a deduction from equity, in the period in which the dividends are declared. Where such dividends are proposed subject to the approval of the Company’s shareholders, the dividends are only declared once shareholder approval has been obtained. k) Financial instruments The Group has derivative and non-derivative financial instruments which comprise foreign currency contracts, investments in equity, receivables, cash, loans and borrowings, and trade payables. Financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit and loss, any directly attributable transaction costs. A financial instrument is recognised if the Company becomes a party to the contractual provisions of the instrument. Financial assets are de-recognised if the contractual rights to the cash flows from the financial assets expire or if the Company transfers the financial asset to another party without retaining control of substantially all risks and rewards of the asset. Financial liabilities are de-recognised if the Company’s obligations specified in the contract expire or are discharged or cancelled. Derivative financial instruments The Company uses derivative financial instruments to reduce its exposure to fluctuations in foreign currency exchange rates. Derivatives are measured at fair values and any movement in fair value is recognised in the income statement. Trade and other payables Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest method. l) Borrowings and borrowing costs Borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months from the reporting date. Borrowing costs, being interest and other costs incurred in connection with the servicing of borrowings, are recognised as an expense when incurred. 75 globaldata plc annual RepoRt and accounts 2015 Notes to the Company Financial Statements m) share based payments The Group operates a share based compensation plan 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 Group income statement. The total amount to be expensed is determined by reference to the fair value of the options granted (determined using the market value at the date of grant), excluding the impact of any non-market service and performance vesting conditions (for example, profitability, sales growth targets and remaining an employee of the entity over a specified time period). non-market vesting conditions are included in assumptions about the number of options and awards that are expected to vest. The total amount expensed is recognised over the vesting period, which is the period over which all of the specified existing conditions are to be satisfied. At each reporting date, the entity revises its estimates of the number of options and awards that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the Group income statement, with a corresponding adjustment to the share based payments reserve within equity. The Company does not directly employ those participating in the share based payments scheme as they are employed by other Group companies. The issue of share incentives by the Company to employees of its subsidiaries represents additional capital contributions. An addition to the Company’s investment in Group undertakings is reported with a corresponding increase in shareholders’ funds. 3. Dividends Having regard to the improved prospects for the Group and the cash requirements of the business for the year ahead, the Board has announced a proposed maiden final dividend of 2.5 pence per share. The proposed final dividend will be paid on 3rd June 2016 to shareholders on the register at the close of business on 13th may 2016 (December 2014: £nil). 4. Intangible assets Cost As at 1 January 2014 Additions Disposals As at 31 December 2014 Additions as at 31 December 2015 amortisation As at 1 January 2014 Charge for the year Disposals As at 31 December 2014 Charge for the year as at 31 December 2015 net book value as at 31 December 2015 As at 31 December 2014 76 Computer software £’000s 1,117 979 (128) 1,968 1,056 3,024 (833) (254) 128 (959) (440) (1,399) 1,625 1,009 Globaldata plc annual RepoRt and accounts 2015 Notes to the Company Financial Statements 5. Property, plant and equipment leasehold improvements £’000s Computer equipment £’000s Cost As at 1 January 2014 Additions Disposals As at 31 December 2014 Additions as at 31 December 2015 Depreciation As at 1 January 2014 Charge for the year Disposals As at 31 December 2014 Charge for the year as at 31 December 2015 net book value as at 31 December 2015 As at 31 December 2014 - 225 - 225 - 225 - - - - (22) (22) 203 225 1,215 877 (67) 2,025 395 2,420 (864) (233) 67 (1,030) (467) (1,497) 923 995 total £’000s 1,215 1,102 (67) 2,250 395 2,645 (864) (233) 67 (1,030) (489) (1,519) 1,126 1,220 77 globaldata plc annual RepoRt and accounts 2015 Notes to the Company Financial Statements 6. Investments Cost As at 1 January 2014 Acquisition of ERC Group Limited Acquisition of Current Analysis Inc Share based payments to employees of subsidiaries As at 31 December 2014 Share based payments to employees of subsidiaries Acquisition of Verdict Research Limited as at 31 December 2015 impairment as at 31 December 2014 and 2015 net book value as at 31 December 2015 As at 31 December 2014 group undertakings £’000s 60,857 908 11,529 4,371 77,665 2,066 25,087 104,818 (10,277) 94,541 67,388 share based payments to employees of subsidiaries The issue of share incentives by the Company to employees of its subsidiaries represents additional capital contributions. An addition to the Company’s investment in Group undertakings is reported with a corresponding increase in shareholders’ funds. impairment indicators management have performed an assessment to identify whether there are any indicators of impairment to the investment balances. Sufficient evidence has been obtained to support that there is no indication of impairment. 7. Trade and other receivables Prepayments and accrued income Other receivables Amounts owed by group undertakings Amounts owed by related parties Other taxation and social security 31 December 2015 £’000s 31 December 2014 £’000s 1,541 74 11,278 86 30 13,009 1,536 293 11,605 1,157 172 14,763 The carrying values are considered to be a reasonable approximation of fair value. . 8. Derivative assets and liabilities Short-term derivative assets Short-term derivative liabilities Long-term derivative liabilities net derivative liability 31 December 2015 £’000s 31 December 2014 £’000s - (240) (25) (265) 106 (89) (26) (9) Classification is based on when the derivatives mature. The fair values of derivatives are expected to impact the income statement over the next year, dependant on movements in the fair value of the foreign exchange contracts. The movement in the year was £256,000 (2014: £15,000). 78 Globaldata plc annual RepoRt and accounts 2015 Notes to the Company Financial Statements The Group uses derivative financial instruments to reduce its exposure to fluctuations in foreign currency exchange rates. The notional values of contract amounts outstanding are: Expiring in the year ending: 31 December 2016 31 December 2017 9. Trade and other payables Trade payables Other payables Accruals and deferred revenue Amounts owed to group undertakings Amounts owed to related parties euro €’000 1,175 - Us Dollar $’000 8,200 950 31 December 2015 £’000s 31 December 2014 £’000s 412 1 3,980 25,360 2,116 31,869 507 2 172 11,654 2,426 14,761 The directors consider the carrying amount of trade payables approximates to their fair value. The effect of discounting trade and other payables has been assessed and is deemed to be immaterial to the Company’s results. 10. Provisions At 1 January 2015 movement in provision at 31 December 2015 Current: Non-current: 11. Borrowings Current Loan due within one year non current Long-term loan Dilapidations £’000s 59 (1) 58 - 58 31 December 2015 £’000s 31 December 2014 £’000s 5,214 1,283 30,359 15,651 term loan and RCF In July 2014, the Group refinanced its debt position. A US$17 million term loan was issued by The Royal Bank of Scotland to partially fund the acquisition of Current Analysis Inc. This is repayable in quarterly instalments over 4 years. The first instalment was made in July 2015, with total repayments due in 2016 being US$4 million. The Group took out an additional term loan of £10 million in August 2015, which is repayable in quarterly instalments over 4 years. The first instalment was made in October 2015, with total repayments due in 2016 being £2.5 million. Additionally, The Group drew a further £10 million in August 2015 from its revolving capital facility (RCF) with The Royal Bank of Scotland. As at 31 December 2015, the Group had total draw down of £16.4 million against a total facility of £17 million. Interest is charged on the term loan and drawn down RCF at a rate of 2.25% over the London Interbank Offered Rate. Interest is charged on the undrawn RCF at 0.9%. 79 globaldata plc annual RepoRt and accounts 2015 Notes to the Company Financial Statements 12. Financial assets and liabilities The Company’s financial instruments are classified under IFRS as follows: Fair value (through profit or loss) £’000s loans and receivables £’000s amortised cost £’000s total £’000s 31 December 2015 Current assets Cash Other receivables Amounts owed by group undertakings Amounts owed by related parties - - - - - 14,524 74 11,278 86 25,962 Current liabilities Short-term derivative liabilities (240) Trade accounts payable Other payables Accruals Amounts owed to group undertakings Amounts owed to related parties Short-term borrowings Non-current liabilities Long-term derivative liabilities Long-term borrowings - - - - - - (240) (25) - (25) - - - - - - - - - - - - - - - - - (412) (1) (3,980) (25,360) (2,116) (5,214) (37,083) - (30,359) (30,359) 14,524 74 11,278 86 25,962 (240) (412) (1) (3,980) (25,360) (2,116) (5,214) (37,323) (25) (30,359) (30,384) 80 Globaldata plc annual RepoRt and accounts 2015 Notes to the Company Financial Statements 31 December 2014 Current assets Cash Short-term derivative assets Other receivables Amounts owed by group undertakings Amounts owed by related parties Current liabilities Short-term derivative liabilities Trade accounts payable Other payables Accruals Amounts owed to group undertakings Amounts owed to related parties Short-term borrowings Non-current liabilities Long-term derivative liabilities Long-term borrowings Fair value (through profit or loss) £’000s loans and receivables £’000s amortised cost £’000s total £’000s - 106 - - - 106 (89) - - - - - - (89) (26) - (26) 8,576 - 293 11,605 1,157 21,631 - - - - - - - - - - - - - - - - - - (507) (2) (172) (11,654) (2,426) (1,283) (16,044) - (15,651) (15,651) 8,576 106 293 11,605 1,157 21,737 (89) (507) (2) (172) (11,654) (2,426) (1,283) (16,133) (26) (15,651) (15,677) Maturity analysis The long-term borrowing’s contractual features are detailed in note 18 of the Group accounts and it is not expected that those loans will be repaid within a year or until replaced with equivalent debt or equity financing. The debt shown in the table overleaf is inclusive of the projected interest payments in accordance with IFRS 7 (interest on short and long-term borrowings £3,633,000). 81 globaldata plc annual RepoRt and accounts 2015 Notes to the Company Financial Statements less than 1 month £’000s 1-3 months £’000s 3 months to 1 year £’000s 1 to 5 years £’000s Current liabilities Short-term derivative liabilities Trade accounts payable Accruals Amount owed to group undertakings Amounts owed to related parties Short-term borrowings Non-current liabilities Long-term derivative liabilities Long-term borrowings (36) - - - - (1,558) - - (118) (412) (3,980) - - - - - (86) - - - (2,116) (4,675) - - (1,594) (4,510) (6,877) total £’000s (240) (412) (3,980) - - - (25,360) (25,360) - - (2,116) (6,233) (25) (32,973) (58,358) (25) (32,973) (71,339) Reclassifications There have been no reclassifications between financial instrument categories during the year ended 31 December 2015 and year ended 31 December 2014. Please refer to note 19 of the Group accounts on financial assets and liabilities for the Group’s exposure to risk. Credit risk In the normal course of its business, the Company incurs credit risk from cash and trade and other receivables. The Group has a credit policy that is used to manage this exposure to credit risk, including credit checking prior to contracts being signed. £26.0 million of the Company’s assets are subject to credit risk (31 December 2014: £21.6 million). The Company does not hold any collateral over these amounts. note 7 of the Company accounts give further details of the Company’s receivables, which are mainly amounts receiveable from Group undertakings. 82 Globaldata plc annual RepoRt and accounts 2015 Notes to the Company Financial Statements 13. Related party transactions Directors The remuneration of the Directors of the Group and Company is set out on page 25 in the consolidated accounts of the Group within the Directors Remuneration Report. Corporate support services Corporate support services are provided to the other companies owned by mike Danson, principally finance, human resources, IT and facilities management. These are recharged to companies that consume these services based on specific drivers of costs, such as proportional occupancy of buildings for facilities management, headcount for human resources services, revenue or gross profit for finance services and headcount for IT services. The recharge made from GlobalData Plc to these companies for the year to 31 December 2015 was £1,346,000 (2014: £404,900). acquisition of globalData holding limited and disposal of B2B print business On 23rd December 2015, the Group announced that it was in advanced negotiations to purchase the Healthcare business information provider, GlobalData Holding Limited (a related party) and to sell some of its non-core B2B print businesses, also to a related party. Further information on the acquisition can be found in the Group accounts in note 28, with details of the disposal in note 25. amounts outstanding to and from group undertakings The amounts outstanding group undertakings were: Amounts owed by group undertakings: Kable Business Intelligence Limited Progressive media Group Limited Progressive Digital media (Holdings) Limited Current Analysis Inc Current Intelligence & Analysis Limited AffiliateFuture Inc ERC Group Limited Progressive Digital media Pty Limited Amounts owed to group undertakings: Internet Business Group Limited Progressive media Group Limited ERC Group Limited Dewberry Redpoint Limited Tmn media Limited Electronic Direct Response Limited mutualPoints Limited Progressive Digital media Inc Progressive Digital Media PVT Limited 31 December 2015 £’000s 31 December 2014 £’000s 7,581 - 1,526 1,075 1,071 - - 25 5,374 2,290 3,030 446 353 78 20 14 11,278 11,605 (1,617) (13,918) (3) (1,677) (5,999) (672) (717) (64) (693) (2,108) - - (1,572) (6,000) (672) (728) (104) (470) (25,360) (11,654) 83 globaldata plc annual RepoRt and accounts 2015 Notes to the Company Financial Statements amounts outstanding to and from related parties The amounts outstanding for related parties were: Amounts owed by related parties: Progressive media International Limited Estel Properties Investments no.2 Limited Amounts owed to related parties: World market Intelligence Limited Estel Property Investments Limited Estel Property Investments no.3 Limited Progressive media UK Limited Financial news Publishing Limited Progressive media International middle East FZ-LLC Elite Luxury Publishing Inc 31 December 2015 £’000s 31 December 2014 £’000s 86 - 86 1,081 76 1,157 (1,628) (1,625) - - (149) (24) (238) (77) (265) (252) - (148) (63) (73) (2,116) (2,426) 14. Post balance sheet events In January 2016 the Group completed the acquisition of Healthcare business information provider GlobalData Holding Limited, a private company owned by mike Danson and Wayne Lloyd (and his connected parties) for a total consideration satisfied by the issue 26,078,431 Ordinary Shares. In accordance with IFRS3.B66, management has not been able to estimate the fair value of goodwill and intangible assets acquired as the acquisition occurred in close proximity of the year end. no revenues or profits are included in the Group’s results for the year ended 31 December 2015. In 2015 the acquired Healthcare business had revenues of £19.1 million and profits before tax of £1.4 million. In addition, the Group also completed the disposal of its non-core B2B print assets to Research Views Limited, also controlled by mike Danson and Wayne Lloyd (and his connected parties). The disposal was for consideration of £1, together with a guaranteed loan agreement from the related party acquirers. As a result of the above transactions, the Group changed its name to GlobalData Plc which better reflects the business and its operations. On 1 march 2016, the Group announced its maiden dividend. Further details can be found in note 22 of the Group accounts. 84 Globaldata plc annual RepoRt and accounts 2015 Advisers Company secretary Graham Lilley head office and Registered office John Carpenter House John Carpenter Street London EC4Y 0An Tel: + 44 (0) 20 7936 6400 nominated adviser and Broker nplus1 Singer Advisory LLP 1 Bartholomew Lane London EC2n 2AX solicitors Osborne Clarke 2 Temple Back East Temple Quay Bristol BS1 6EG auditor Grant Thornton UK LLP Grant Thornton House melton Street London nW1 2EP Registrars Capita Registrars Limited northern House Woodsome Park Fenay Bridge Huddersfield West Yorkshire HD8 0GA Bankers The Royal Bank of Scotland Plc 280 Bishopsgate London EC2m 4RB Registered number Company no. 03925319 85 globaldata plc annual RepoRt and accounts 2015 Notes 86 Globaldata plc annual RepoRt and accounts 2015 head office and Registered office John Carpenter House John Carpenter Street London EC4Y 0An Tel: + 44 (0) 20 7936 6400 www.globaldata.com g l o B a l D a t a p l C a n n U a l R e p o R t a n D a C C o U n t s 2 0 1 5
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