Tableau Software Inc
Annual Report 2018

Plain-text annual report

GlobalData Plc Annual report and accounts For the year ended 31 December 2018 COMPANY NO. 03925319 Contents STRATEGIC REPORT 2018 Highlights Our Business Principal Activity Our Business Model Executive Chairman’s Statement Chief Executive’s Report Chief Financial Officer’s Report Risk and Uncertainties Going Concern and Viability DIRECTORS’ REPORT The Directors Corporate Governance Report Corporate Social Responsibility Audit Committee Report Directors’ Remuneration Report Statement of Directors’ Responsibilities INDEPENDENT AUDITOR’S REPORT FINANCIAL STATEMENTS Group Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Company Company Statement of Financial Position Company Statement of Changes in Equity Company Statement of Cash Flows Notes to the Company Financial Statements Advisers 5 7 7 9 13 15 18 21 22 24 30 32 34 36 37 44 45 46 47 48 49 86 87 88 89 99 2018 Highlights Group revenue increased by 33% to £157.6m (2017: £118.6m) 2018 2017 £157.6m £118.6m Invoiced forward revenue increased by 34% to £81.4m (2017: £60.6m) 2018 2017 £81.4m £60.6m Adjusted EBITDA increased by 38% to £32.2m (2017: £23.4m) 2018 2017 £32.2m £23.4m Cash from operations of £25.1m (2017: £14.2m) 2018 2017 £25.1m £14.2m Total dividend increased to 11p per share (2017: 8p) 2018 2017 11.0p 8.0p Reliance on this document Our Business Review on pages 7 to 21 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 the 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. 3 ANNUAL REPORT AND ACCOUNTS 2018 “We are helping our clients to decode the future, enabling them to be more successful and innovative.” Bernard Cragg, Executive Chairman 2018 Highlights Group revenue increased by 33% to £157.6m (2017: £118.6m) . m 6 7 5 1 £ . m 6 8 1 1 £ Operational Highlights • Continued strong organic revenue growth of 9% • Increased revenue visibility • Good progress on the integration of MEED and Research Views Limited (“RVL”), with both businesses performing well • New integrated user platform launched, incorporating new sectors, further improved user interface, industry insights and real-time technology • Group management and operational capability further strengthened Financial Highlights • Group revenue increased by 33% to £157.6m (2017: £118.6m) • Underlying organic revenue growth of 9%, on a constant currency basis • Invoiced forward revenue(3) increased by 34% to £81.4m (2017: £60.6m) • Adjusted EBITDA(1) increased by 38% to £32.2m (2017: £23.4m) • Improved Adjusted EBITDA margin(1) of 20.5% (2017: 19.7%) • Cash generated from operations of £25.1m (2017: £14.2m) • Final Dividend of 7.5 pence per share (2017: 5.0 pence); total dividend of 11.0 pence per share, up 38% from the previous year (2017: 8.0 pence) • Statutory loss before tax of £7.7m (2017: loss of £0.8m), which is inclusive of non-cash charges of £20.4m of amortisation of acquired intangibles, £5.7m share based payments and £1.4m of unrealised operating foreign exchange losses. 2018 2017 • Net debt(2) of £64.1m (2017: £43.0m) Note 1: Adjusted EBITDA: Earnings before interest, tax, depreciation and amortisation, unrealised operating exchange rate movements, impairment, share based payments, adjusted for costs associated with derivatives, acquisitions and restructuring of the Group. Adjusted EBITDA margin is defined as: Adjusted EBITDA as a percentage of revenue. Note 2: Net Debt: Short and long-term borrowings less cash and cash equivalents. Note 3: Invoiced forward revenue: Invoiced forward revenue relates to amounts that are invoiced to clients at the balance sheet date, which relate to future revenue to be recognised over the course of the following 12 months. 5 ANNUAL REPORT AND ACCOUNTS 2018Strategic Report“GlobalData is positioned to help thousands of companies, organisations and industry professionals across the world’s largest industries profit from faster, more informed decisions.” Bernard Cragg, Executive Chairman Our Business PRINCIPAL ACTIVITY OUR BUSINESS MODEL The principal activity of GlobalData Plc and its subsidiaries (‘the Group’) is the provision of high quality proprietary data and analytics to clients in multiple sectors. The Group produces and owns premium data and analytics for each of our markets. We provide data, insight and analysis across multiple 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, which address a global demand, together with powerful analysis supporting our clients’ businesses. The fundamental principle of our business model is to provide our clients subscription access to our data, analytics and insights platform, with the offering of ancillary services such as bespoke research, single copy reports and events. Our clients typically subscribe for 12 months access, which is paid for at the beginning of the contract term. This approach drives the following business model attributes: • Repeat subscriptions, leading to recurring revenue streams • Strong incremental margins • Robust working capital and operational cash flow • Scalable opportunities 7 ANNUAL REPORT AND ACCOUNTS 2018Strategic Report“To deliver increased shareholder returns over the medium to long term; the Group aims to exceed client expectations, to achieve repeatable organic growth.” Bernard Cragg, Executive Chairman Executive Chairman’s Statement It has been another transformative year for GlobalData, with significant acquisitions in addition to driving strong underlying organic revenue growth of 9% and overall Adjusted EBITDA growth of 38%. During April we concluded the acquisition of Research Views Limited which significantly expanded on our existing breadth of coverage by adding comprehensive capabilities across multiple industry sectors. GlobalData is positioned to help thousands of companies, organisations and industry professionals across the world’s largest industries profit from faster, more informed decisions. Within each industry sector our proprietary data, human insight, and innovative technologies create trusted, actionable, and forward-looking intelligence. With comprehensive coverage, we can access multiple selling points within a client and around the world. This means that our ambitions are not constrained by demand. Our content and expert insights are tailored to serving our clients’ major value creating activities and become embedded into key workflows and decision making processes. With around 75% of our revenues derived from annual subscription contracts, we have created a long-term business partnership with our clients and within our target markets. The 2018 results are encouraging. We concluded some significant acquisitions and continued our strong organic revenue growth and exit the year with significant invoiced revenue for 2019. Our overall financial performance, our high proportion of quality subscription revenues and our scalable proposition means that we enter 2019 confident that we will continue to deliver against our objectives. Whilst the Group made a statutory loss for the year of £7.7m (2017: £0.8m loss), the bulk of the loss is represented by non-cash accounting charges for amortisation of acquired intangible assets, brought in as part of our significant M&A activity in this and in previous years, and our share option scheme. The Adjusted PBT, which we believe to be a fair measure of the Group’s underlying performance grew from £19.0m to £27.8m. Our Mission We are helping our clients to decode the future, enabling them to be more successful and innovative. Our aim is to provide our clients with innovative solutions to complex issues delivered via a single online platform, which leverages our unique data and expert analysis across multiple markets and geographies. We help our clients with their strategic planning, market intelligence, innovation & new product development and sales & channel management, together with insight into latest developments in their markets and views of leading opinion formers. Looking Forward We are an ambitious and highly innovative business which challenges itself on a daily basis to continually be better at what we do. We provide our clients with world-class products and client service, with an ambition to exceed their expectations at every interaction. For our employees, we aim to be an employer of choice providing an enriching and rewarding environment to work in and for our shareholders we aim to provide returns which reflect our reported earnings and long-term prospects. To deliver increased shareholder returns over the medium to long term the Group aims to: • Exceed client expectations, to achieve strong repeatable organic growth: We have significant headroom to grow across all our markets. We will continue to create world-class solutions, and explore new opportunities, leveraging our sales capability to target the right opportunity, at the right time, with the right proposition. • Make acquisitions that are strategic and earnings accretive: We look for acquisitions that are strategic in nature and which over a reasonable time frame increase total returns. We also, from time to time, make small bolt-on acquisitions that either broaden our offering or extend our client reach in an existing market. Our acquisition process is robust and diligent and is supervised by the Board. We look to leverage our infrastructure with unique content which will deliver good margin. • Maintain a progressive dividend policy: Our business is focused on revenue growth, management of costs, working capital and increased cash generation. We believe we can invest in the business, achieve growth in profits and service a progressive dividend policy that reflects our growth and long- term prospects. This year is a good example. There continues to be significant uncertainty following the UK’s vote to leave the European Union (EU), (‘Brexit’). As a Board, we have carried out a detailed assessment to understand both the risks and the opportunities that Brexit poses for the Group. We believe that our data and analytics business model currently limits the direct impact of a “no-deal” scenario (such as tariffs on goods and cross border trade of goods). However, we continue to monitor key aspects applicable to us, such as access to workforce and implications that each scenario may have to colleagues within our Group. We have set out a more detailed analysis within the risk and uncertainties section of the strategic report (page 18). 9 ANNUAL REPORT AND ACCOUNTS 2018Strategic ReportFor our shareholders we aim to provide returns which reflect our reported earnings and long-term prospects Executive Chairman’s Statement Our Employees Our Employees once again have made vast contributions in what has been another significant year of progress and challenge for the Group. The quality, talent and commitment of our colleagues around the world, not only delivered a good set of results, but has also delivered substantial corporate projects such as the acquisition and successful integration of both Research Views (completed April 2018) and MEED (completed December 2017). I am pleased these results have been confirmed by the Audit and Remuneration Committees to fulfil the performance condition for the exercisability of 2.1m employee share options. Dividend Having regard to the performance and prospects for the Group and the cash requirements of the business for the year ahead, the Board is pleased to announce a final dividend of 7.5 pence per share (2017: 5.0 pence). The proposed final dividend will be paid on 26 April 2019 to shareholders on the register at the close of business on 22 March 2019. The ex-dividend date will be on 21 March 2019. The proposed final dividend increases the total dividend for the year to 11.0 pence per share (2017: 8.0 pence), an increase of 38%. Current Trading and Outlook We enter 2019 with good fundamentals including strong invoiced revenue for 2019 and a visible renewal base. We ended 2018 strongly and have begun 2019 positively and we remain confident that we will make further progress. Bernard Cragg Executive Chairman 24 February 2019 11 ANNUAL REPORT AND ACCOUNTS 2018Strategic ReportOur focus remains on achieving our stated objective to become the leading provider of premium subscription based data & analytics and insights across the world’s largest industries. KEY ACHIEVEMENTS • • Revenues of £157.6 million: Group revenue has grown by 33% including the benefit of our acquisitions in the year. Our underlying organic revenue growth was 9%. Invoiced forward revenue of £81.4m: Invoiced forward revenue has grown by 34% and organically by 9%. This gives the Group strong visibility over its revenues for the forthcoming year. • Acquisition of Research Views: The acquisition of Research Views enhances the Group’s breadth of industry coverage. • Strengthened business infrastructure and commercial scale: In addition to the acquisition of MEED, which adds further scale to our business, we have also improved our Group infrastructure and sales capability. We now have significant sales operations across Asia Pacific and in the US. • Restructuring of organisation: We made good progress towards eliminating duplicate cost resulting from our M&A activity. 2018 was a year of further progression for the Group. We again strengthened the Group via our selective M&A activity, whilst continuing to organically grow and have improved our Adjusted EBITDA margin. Our focus remains on achieving our stated objective to become the leading provider of premium subscription based data & analytics and insights across the world’s largest industries. We are consistent in our approach to achieving our objective and we have made strong operational progress towards it. The acquisition of Research Views was not only strategically important because it further broadened our sector coverage but significantly, also had the important attributes common to our strategy. As the world becomes more complex, uncertain, and fast-moving than ever before, our clients face unprecedented opportunities and challenges. Our proprietary data, human innovative technologies create the trusted, expertise, and actionable, and forward-looking insight they need to make faster, more informed decisions. is underpinned by our powerful The quality of our content Intelligence Centre platform, which delivers our data and analysis through a dynamic and intuitive user interface. We are continually innovating and the platform has seen significant development over the last three years, as we have sought to leverage our scale and ensure world class delivery in all of our industry sectors. KEY PERFORMANCE INDICATORS The key performance indicators selected are used by the Executive Directors to monitor the Group’s performance and progress. 2018 2017 % growth Revenue Adjusted EBITDA £157.6m £118.6m 33% £32.2m £23.4m 38% Adjusted EBITDA margin 20.5% 19.7% 0.8p.p Net Debt1 £64.1m £43.0m 49% Note 1: Net debt: Short and long-term borrowings less cash and cash equivalents. Group revenue has grown by 33% including the benefit of our acquisitions in the year. Our organic revenue growth was 9%. 13 ANNUAL REPORT AND ACCOUNTS 2018Chief Executive’s ReportStrategic ReportOUR STRATEGIC PRIORITIES We continue to pursue our four strategic priorities: • World Class Products • Sales Excellence • Operational Agility • Client Centric World Class Products Our content is data driven and analyst led and provides our clients with strategic and tactical insights for the markets that they operate in. We fully-integrate our unique data, expert analysis, and innovative solutions into our digital platform. Giving our clients real-time access to deep, sector-specific intelligence, and powerful analytics, and workflow tools. Over the past few years we have been focused on ensuring the taxonomy of our data is consistent across all of our data sets, enabling consistent categorisation and dynamic search functionality for our clients. A key operation during 2018 was bringing the acquisitions into this data framework, content management system and delivering through our single client platform, which is now largely complete. We have launched a number of analysis tools and functionalities across our platform, which now give our clients a significantly more powerful and enhanced product, with insight into global trends. Sales Excellence Our priority has been to ensure that all of our sales staff fully understand their market and the value proposition of our products, helping them to find the right opportunity, at the right time. Whilst managing a global sales team remains challenging, our globalised product means that our proposition is consistent across regions and as a result we can apply consistent training, commission structures and selling material. We now have a global data & analytics sales force and we have made good progress across all regions. We have increased our sales operations in the US and Asia Pacific. Whilst the largest contributors of our revenues are still in UK and Europe (43%), our presence in the Americas continues to grow and represents 34% of our Group revenues. Operational Agility Our business model is a relatively simple one: create the content once and leverage sales from that content across multiple formats (subscriptions, reports, bespoke research engagements and events) and geographies. In doing so costs remain relatively fixed thereby allowing for a higher percentage of the sales value achieved to translate to profit. Acquisitions tend to suppress this structural benefit as they often bring a duplication of both processes and infrastructure which have to be rationalised. Following our recent acquisitions and the relative speed that we have put the Group together over the past three years, we have performed a strategic review of our cost base to ensure investment funds are directed into the right areas of the business. As a result of this we are more confident that we can significantly invest in our products and people without significantly increasing our overall cost base. This operational agility will keep us at the forefront of product development for our clients, whilst delivering progressive margins. Our medium term Adjusted EBITDA margin target remains circa 25% and we are confident of achieving this over the medium term and further expanding our margin over the longer term. Consistent with our objective, our margins have increased by 0.8 percentage points to 20.5%. Client Centric Outstanding client service is a critical component in delivering client satisfaction and improved retention. Our aim is to deliver best in class client service at every point of interaction. We have increased resources focused on first-line response significantly, and continue to explore and adopt new technologies. The progress we have made since we reformed as GlobalData in 2016 has been made possible because of the hard work and commitment of our employees and I would like to express my own and my fellow Board members’ appreciation to all our colleagues across the globe. Today we are a transformed business focused on the provision of data and analytics to global markets, all of which present opportunities for long-term profitable growth. Mike Danson Chief Executive Officer 24 February 2019 14 ANNUAL REPORT AND ACCOUNTS 2018Chief Executive’s ReportStrategic ReportContinuing operations Income statement analysis Revenue Statutory loss before tax Depreciation Amortisation of software Amortisation of acquired intangible assets Finance costs EBITDA2 Restructuring costs Revaluation of short and long-term derivatives Share based payments charge Unrealised operating foreign exchange loss M&A costs Adjusted EBITDA1 Adjusted EBITDA margin1 Cash flow analysis Cash flow generated from operations Adjusted operating cash flow 3 Underlying cash flow conversion %3 Adjusted earnings performance Adjusted EBITDA1 Depreciation Amortisation of software Finance costs Adjusted Profit Before Tax Tax (as charged to the Income Statement) Adjusted Profit After Tax Basic Shares Diluted Shares Attributable to equity holders: Basic loss per share (pence) Adjusted earnings per share (pence) Adjusted diluted earnings per share (pence) 2018 £000s 2017 £000s Movement 157,553 118,649 33% (7,664) 742 1,165 20,422 2,487 17,152 3,661 1,150 5,679 1,407 3,181 32,230 20.5% 25,058 30,542 95% 32,230 (742) (1,165) (2,487) 27,836 (3,408) 24,428 113,319 124,128 (9.87) 21.56 19.68 (795) 829 2,126 11,962 1,444 15,566 2,436 (1,266) 5,323 417 911 23,387 19.7% 14,196 19,669 84% 23,387 (829) (2,126) (1,444) 18,988 (1,371) 17,617 102,346 112,968 (2.12) 17.21 15.59 10% 38% 77% 55% 47% 39% 25% 26% Note 1: Adjusted EBITDA: Earnings before interest, tax, depreciation and amortisation, impairment, share based payments, adjusted for costs associated with derivatives, acquisitions, unrealised operating exchange rate movements and restructuring 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 £5.7 million for share based payments (2017: £5.3 million). Note 3: Adjusted operating cash flow: Adjusted operating cash flow is cash generated from operations adjusted for exceptional cash items. Underlying cash flow conversion is Adjusted operating cash flow divided by Adjusted EBITDA. 15 ANNUAL REPORT AND ACCOUNTS 2018Chief Financial Officer’s ReportStrategic ReportTHE GROUP’S PERFORMANCE THIS YEAR 1. Revenue Revenues increased by 33% to £157.6m (2017: £118.6m), which reflects both good underlying organic growth (9%) and the benefit of the Research Views and MEED acquisitions. The acquired businesses are performing well and in line with our expectations. 2. Invoiced forward revenue Invoiced forward revenue (previously described as deferred revenue prior to the impact of IFRS 15) at 31 December 2018 increased by 34% to £81.4m (2017: £60.6m) which is inclusive of growth as a result of the Research Views acquisition, but also includes underlying organic growth of 9%. 3. Adjusted EBITDA Adjusted EBITDA increased by 38% to £32.2m (2017: £23.4m). Our Adjusted EBITDA margin increased by 0.8 percentage points to 20.5% (2017: 19.7%) as we continue to integrate a relatively fixed cost base after significant M&A and corporate development activity over the past 3 years. 4. Non-recurring and non-cash charges The Group made a statutory loss from continuing operations of £7.7m (2017: loss of £0.8m) The reason for making the loss is that we incurred non-cash charges relating to amortisation of acquired intangibles of £20.4m (2017: £12.0m) reflecting our M&A activity over recent years, £5.7m of share based payments charge (2017: £5.3m) reflecting the accounting charge for our long term incentive plan and revaluation loss on derivatives (currency forward contracts) of £1.2m (2017: gain of £1.3m). Together with items relating to restructuring and acquisition fees of £6.8m (2017: £3.3m) and increased finance costs from increased debt. Once the above adjusting items have been taken into consideration, the Adjusted Profit Before Tax grew to £27.8m (2017: £19.0m) 5. Cash Generation The operating cash flow was £25.1m (2017: £14.2m). Excluding the cash costs associated with M&A, restructuring and other exceptional costs (£5.4m) the adjusted operating cash flow was £30.5m, which is 95% of Adjusted EBITDA. The Group repaid debt of £6.0m and paid dividends of £9.1m. The Group also paid for acquisitions of £4.6m, which were funded under facilities agreed in the previous year. Capital expenditure was £1.6m in 2018 (£1.8m in 2017). This includes £0.9m on software (£1.1m in 2017). 6. Foreign exchange impact on results The Group derives around 60% of revenues in currencies other than Sterling. The impact of currency movements in the year had a negative impact on revenues of around £2m, which was offset in the income statement by approximately £2m of benefit in the Group costs, meaning that currency had minimal impact on the overall profitability. The main driver for the movement was the movements of pound sterling in comparison to US dollar. In 2017 the average rate through the year was 1.29 compared to a stronger pound, on average, in 2018 of 1.34. 7. Net Debt Net Debt increased to £64.1m as at 31 December 2017 (2017: £43.0m). This increase principally reflects £4.6m spent on M&A activity and £16.9m on the purchase of own shares in order to satisfy the Group’s long term incentive plan. 8. Loss per share Basic loss per share from continuing operations was 9.87 pence per share (2017: loss of 2.12 pence per share). Fully diluted loss per share from continuing operations was 9.87 pence per share (2017: loss of 2.12 pence per share). On an adjusted basis, the adjusted earnings per share grew from 17.21 pence per share to 21.56 pence, representing 25% growth. 9. Share based payments The share based payments charge for 2017 has increased from £5.3m to £5.7m. The key driver for this increase is because of the share price performance during 2018 compared with previous awards. 16 ANNUAL REPORT AND ACCOUNTS 2018Chief Financial Officer’s ReportStrategic ReportCurrency rate and market 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 and from a cash flow perspective 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. Whilst the longer-term implications of the United Kingdom’s vote to leave the European Union are unknown, we do know, in the absence of other relevant factors, that a sustained weakening of Sterling should be of benefit as we derive the majority of our revenues in currencies other than Sterling (principally US Dollar and Euro) and have a more limited exposure to non-Sterling costs. The exchange rate movements have had a largely neutral impact on our 2018 results. As a data and analytics company, we are not currently impacted by cross border tariffs and we do not currently expect the re-negotiation of tariffs to materially impact our business. Interest rate risk Interest rate risk is the impact that fluctuations in market interest rates can have on the value of the Group’s interest-bearing assets and liabilities and on the interest charge recognised in the income statement. The Group does not manage this risk with the use of derivatives. 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. The Directors have prepared a Going Concern and Long-Term Viability statement on page 21, within the Strategic Report. Graham Lilley Chief Financial Officer 24 February 2019 17 ANNUAL REPORT AND ACCOUNTS 2018Chief Financial Officer’s ReportStrategic ReportGlobalData’s mission is ‘to help our clients succeed by decoding the future’ Our vision is to become the Bloomberg of the vertical markets by being the world’s trusted source of strategic industry intelligence. The Group recognises that in order to be successful, we are required to take risks. The Board and the broader Group understand, however, that risks need to be taken in a controlled environment where our approach is one of responsible risk taking in line with the principles, culture, tolerance and appetite as directed by the Board. GlobalData’s approach to the identification, evaluation and mitigation of risk and uncertainty is taken seriously. Our internal controls seek to minimise the impact of risks. As Globaldata has grown significantly in the past 18 months, the Board felt it an appropriate point to conduct a detailed review of its approach to risk management. As a result of this review, a Risk Management Action Plan (RMAP) has been created and agreed actions are currently being delivered. The new Risk Management Framework outlined in the RMAP, will further embed risk management throughout the organisation. The Framework will be overseen and directed by the Board, with day to day delivery provided by all colleagues. The Board sets the Group’s risk appetite. In doing so, the Board considers our strategic objectives, approves the Group’s principle risks and assesses against the long-term viability of the Group. The Board also considers the views of the Executive Management and Audit Committee as part of its systematic review of internal controls. The Board Audit Committee Review and Confirmation The Board’s responsibilty is to review and approve the Group’s strategy and objectives and determine the Group’s appetite for risk and then establish the Group’s risk management processes and internal control. Challenge and Review Risks and mitigations reviewed by the Audit Committee and input into the risk management and internal control procedures. Executive Management Committee Ongoing Review, control and implementation There is ongoing review on the internal controls and risk is embedded into the decision making process of the business. During the year we have continued to develop controls in response to risk and ensure that the new acquisitions are embedded and have consistent controls with the rest of the Group. Whilst we have made good progress, throughout the forthcoming year the Group will deliver the RMAP, which will include the introduction of a formal annual risk review, a more detailed assessment of risk appetite and risk tolerance, in addition to regular reviews with members of the Executive Management Committee. The Audit Committee will continue to monitor the adequacy and effectiveness of internal control and risk management systems and ensure that a robust assessment of the principal risks facing the Group has been undertaken. 18 ANNUAL REPORT AND ACCOUNTS 2018Risk and uncertaintiesStrategic ReportThe directors consider that the principal risks and uncertainties facing the Group are: Risk Description Potential Impact Mitigation Product The success of the Group is dependent on the quality and relevance of our products. People and Succession The Group is a people-based business; failure to attract or retain key employees could seriously impede future growth. Competition and Clients The Group operates in highly competitive yet fragmented markets. Loss of revenues from new and renewable business if the quality and relevance of our products diminishes. One of our key strategic priorities is World Class products. The Executive Management Committee regularly review renewal and usage rates of our products which is a key indicator of quality. In order to ensure the highest quality we; • Have a robust data integrity platform and processes. • Continue to invest in recruiting and retaining high quality analysts and Failure to recruit or retain key staff could lead to reduced innovation and progress in the business. researchers. • We are continually developing innovative solutions which enhance both the content quality and our client’s user interface experience. • Focus on client feedback. • External consultants engaged to review quality control procedures. The Group actively manages its talent and ensures that there are succession plans for its Board and Executive Management Committee. • The Group operates a competitive remuneration package, with competitive commission and incentive schemes. • Experienced management team with a robust on boarding programme for sales people which allows talented and motivated employees to flourish. • Long-term incentive schemes with over 100 senior management participants. • The strengthening of the Senior Leadership Team to encourage motivation and engagement with the business. Loss of market share due to changing markets and reduced financial performance arising from competitive threats. • The Group routinely reviews the competitive landscape to identify potential threats and acquisition opportunities. • We constantly monitor new technology capabilities and innovation to ensure that our products are always contemporary and relevant, which allows us to respond to new competitive threats as they arise. • Our data sets and technology platforms are both unique and difficult to replicate. • Aim to embed our products and service in client organisations thereby increase Economic and Global Political Changes The Group’s businesses operate in three key geographic markets namely Europe, North America and Asia Pacific. Economic and political uncertainty could lead to a reduction or delay in client spending on the services offered by the Group and/ or restriction on the Group’s ability to trade in certain jurisdictions. switching costs. • Provide improved and best in class client support thereby improving customer satisfaction and retention. • The Group provides high quality data and analytics services, which are embedded in the day to day operations of our clients. In times of uncertainty, we aim to provide clarity and insight. • Management of headcount and overheads. • • We operate in different geographies and therefore operate in a balanced portfolio Increased controls over capital expenditure and working capital. of markets. • As a data and analytics company, we are not currently impacted by cross border tariffs and we do not expect the re-negotiation of tariffs to impact our business, however we monitor the impact of political change and how this affects the Group. 19 ANNUAL REPORT AND ACCOUNTS 2018Risk and uncertaintiesStrategic Report Risk Description Potential Impact Mitigation Financial Currency exchange rate fluctuations could adversely impact the Group’s consolidated results. The Group’s reporting currency is Pounds Sterling. Given the Group’s significant international operations, fluctuations in currency exchange rates can affect the Group’s consolidated results. A significant mitigation is the natural hedge we have from our global operations. We generate around 60% of revenues from currencies other than sterling, which is predominantly US dollar whilst around 40% of costs derived from non-sterling currencies, which are all primarily linked to movements of US dollar. The net cash flow exposure is then managed by entering into foreign exchange contracts that limit the risk from movements in US Dollar, Euro and Indian Rupee exchange rates with Sterling. The Group does not fully mitigate its exposure to currency movements and around 20% of its net currency cash flow is unhedged each quarter. The Group’s treasury position is a recurring agenda item for the Audit Committee. IT, Cyber, Systems Failure and data integrity. Significant operational or client disruption caused by a major IT disaster or cyber attack/ databreach. • • Business continuity plans have been implemented across the Group, including disaster recovery programmes, and plans to minimise business disruption. IT Infrastructure is managed by third party providers with 24 hour management and monitoring with back up and disaster protocols. • The Group regularly reviews its cyber security and website security protocols, and has undergone a review from an external third party. The Group may be subject to regulations restricting its activities or effecting changes in taxation. The failure to successfully identify and integrate key acquisitions could lead to loss of profits, inefficient business processes, inconsistent corporate culture and weakened brand. The uncertainty surrounding the UK’s exit from the European Union and potential “no-deal” scenario will pose direct and indirect threats and opportunities to the Group. • The majority of the Group’s operations are based in the United Kingdom, United States of America and India. Appropriate advisors are employed in all geographies to ensure the Group remains compliant with local laws and regulations. The Group has an anti-bribery policy that has been distributed amongst staff. • All acquisitions are subject to rigorous due diligence and operational review, the findings of which are presented to the main Board as part of the supervision and approval process. • Where necessary external advisors with either technical and/or local knowledge are engaged. • For smaller acquisitions. A separate investment committee, with delegated responsibility from the Board, review the diligence process. The Group has performed a detailed risk assessment of the impact of Brexit on our business. Whilst we expect that the majority of the impact will be indirect, due to the service nature of our business model, the Group has assessed the below specific risks to our Group: • Workforce - The Group employs over 3,000 employees worldwide, of which 886 are based in the UK. Of the 886 employees in the UK, approximately 79% are British citizens, 15% EU (non-British) and 6% are from outside the EU. The Group will act as a support network to our colleagues affected and try to clarify the various processes and documentation that they will need to navigate through in either a “deal” or “no-deal” scenario. The supply of skilled applicants may also fall, particularly in London if EU workers leave the UK. We will continue to monitor the number of applicants for each role and take action where necessary. • Cross Border Trade – We currently aren’t affected by cross border tariffs because of the service nature of our trade. We will continue to monitor the situation. Regulatory Compliance Acquisition and Disposal Risk Brexit 20 ANNUAL REPORT AND ACCOUNTS 2018Risk and uncertaintiesStrategic Report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. 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. Long Term Viability The Directors have formally assessed the viability of the Group to December 2022, taking account of the Group’s current position, its cash flows and the potential impact of the principal risks as outlined on pages 18 to 20 of this Annual Report. The Group’s prospects are assessed primarily through the annual budgeting process. Detailed plans are prepared by the Executive Management Committee and are presented to the Board at the annual away day, which allows a deep dive into various areas of the business and gives opportunity for input and scrutiny by the Board which ensures alignment with the overall Group strategy. Progress against plan is presented to the Board throughout the year, commenting on performance and any newly identified risks. The individual plans are then consolidated into an overall Group plan. As noted on page 7 of the Annual Report, our business model has strong fundamental attributes; significant recurring and visible revenue streams, strong incremental margins, robust working capital and operational cash flow and scalable opportunity. The Board feels that the Group’s four strategic priorities give the appropriate focus to protect the business from risks, threats and uncertainties as well as giving the agility to pursue opportunities as they arise and to capitalise on the business model attributes. The focus on being client centric, developing world class products, sales excellence and operational agility are the correct focuses aligned with the Group’s Mission and Vision. The Group has a combined facility of £100m with The Royal Bank of Scotland, HSBC and Bank of Ireland. The Board have reviewed cash flows until 2022 which demonstrate ability to trade with headroom on its facilities and to meet ongoing repayments of the term loan. There is a remaining £12 million to draw on the facility. The directors have also reviewed the forecast against the financial covenants on this facility and over the same period and there are no forecasted breaches of covenants. The Board are satisfied that the current financial position of the Group, its significant visibility on revenues and other business model fundamentals provide a stable platform for the Group to pursue its mission and vision for the Group. The Board are confident that in pursuing the four stated strategic priorities will protect business interests against threats and allow the Group to pursue opportunities that will drive growth. Mike Danson Chief Executive, approving the Strategic Report on behalf of the Board 24 February 2019 21 ANNUAL REPORT AND ACCOUNTS 2018Going concern and viabilityStrategic ReportBernard Cragg Executive Chairman Mike Danson Chief Executive Graham Lilley Chief Financial Officer Bernard Cragg is Executive Chairman of GlobalData Plc. 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 that oversaw the rapid growth of the business and its eventual successful sale to Informa in 2007. Mike Danson 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. GlobalData acquired the Datamonitor Financial, Datamonitor Consumer, MarketLine and Verdict businesses from Informa Plc in 2015. Graham joined the Group in 2011 and progressed through to Group Finance Director before becoming Chief Financial Officer in January 2018. Graham started his career at PricewaterhouseCoopers, where he qualified as a Chartered Accountant and subsequently joined Datamonitor when it was part of the Informa Group. Graham’s involvement and experience in data subscription businesses provides a valuable view on financial performance and understanding of the business model. 22 ANNUAL REPORT AND ACCOUNTS 2018The DirectorsDirectors’ ReportMurray Legg Non-Executive Director Peter Harkness Non-Executive Director Annette Barnes Non-Executive Director Andrew Day Non-Executive Director Murray Legg is a Chartered Accountant with over 35 years of audit and advisory experience gained with PricewaterhouseCoopers in the UK where he held a variety of senior management, governance and client roles. As a partner he spent 15 years auditing and advising a number of major UK companies whose operations covered a broad range of industry sectors. Murray is currently also a Non- Executive Director of Sutton and East Surrey Water Plc. Annette joined the Board in February 2017. In her Executive Career, Annette was most recently Managing Director of Wealth & Mass Affluent for Lloyds Banking Group and CEO of Lloyds Bank Private Banking Limited. Prior to that, Annette was Managing Director of Bank of Scotland (Retail). Annette has over 30 years of Financial Services experience, working for Lloyds Banking Group, Bank of America, MBNA Europe Bank Ltd and NWS Bank Ltd. Annette is also a Non- Executive Director of Leeds Building Society. Annette’s prior experience has given her an excellent understanding of Technology, product channels to meet customer needs, Operational Management and Risk Management. Andrew David Day, is currently employed as Group Chief Data Officer for Pepper Financial Services Group where he is responsible for driving the adoption of data, analytics and machine learning across the group businesses to drive positive commercial and customer outcomes. Prior to joining Pepper Andrew was Group Chief Data Officer at J Sainsbury Plc, Business Intelligence Director at News UK and General Manager of Business Intelligence at Telefonica. With over 25 years’ experience of commercially orientated data and analytics experience, Andrew has a successful track record for implementing transformational data driven change across a number of industry sectors. Peter Harkness has more than 32 years’ experience as a Director or Chairman of several successful businesses, predominantly in the media sector. In addition to leading a number of private equity deals, Peter has also spent a total of 18 years as a Non- Executive Director of 5 quoted companies, including Walker Greenbank Plc and Chrysalis VCT Plc, and has twice been a Plc Chairman. Peter was a Non-Executive Director of Datamonitor until its sale to Informa and was chairman of the Butler Group until its sale to Datamonitor. Peter has also undertaken board roles in the Third Sector and is currently chair of a charitable trust which manages arts and sports facilities in Gloucestershire. Peter’s experience and understanding of the media and information subscription sector is an excellent asset for the GlobalData Board, in particularly how we sell and the selling process. 23 ANNUAL REPORT AND ACCOUNTS 2018The DirectorsDirectors’ ReportThe Board has set out its responsibility for preparing the Annual Report and Accounts on page 36. The Board consider the Annual Report and the Accounts, taken as a whole, is fair balanced and understandable and provides the information necessary for shareholders to assess the company’s position and performance, business model and strategy. The Board is committed to the highest standards of corporate governance and has adopted all requirements of the UK Corporate Governance Code that are applicable to it as a ‘smaller company’ (defined in the UK Corporate Governance Code as being a company below the FTSE 350). The UK Corporate Governance Code is publically available at: www.frc.org.uk/directors/corporate-governance-and-stewardship/uk-corporate-governance-code Details of details of GlobalData’s corporate governance practices are publicly available on its website www.globaldata.com. Responsibility for governance matters lies with the Board, which is accountable to shareholders and wider stakeholders for the activities of the Group. The Board has voluntarily set out its report on Corporate Governance released in 2018 for accounting periods effective after 1 January 2019. Board Leadership and Company Purpose The Group is led by the Board. The Executive Directors meet regularly with Investors to discuss the performance and governance of the Group and any feedback is communicated and distributed to the wider Board. The Chair of the Remuneration and Audit Committees make themselves available to discuss with Investors annually at the AGM. The Board assess the basis on which the company generates and preserves value over the long-term and have prepared a long-term viability statement on page 21. The Board considers the opportunities and threats to the business model and assessment is made on how the Group’s strategy is aligned to addressing the Group’s mission and protecting the sustainability of the business. The regular challenge and governance provided by the Board keeps the Executive Management Committee and the entire organisation united in achieving the company goals. The Board have recognised within the long-term viability statement that culture is an important aspect of its four strategic priorities which ultimately drives the Group towards its Mission. The Group is a diverse, global business but we aim to have a common tone across the organisation. We promote agility, innovation, hard work and ethical behaviours underpinned by our framework of ethical codes. We invest in our employees training and development with clear progression and career plans that allow our colleagues to flourish. We deliver consistent training, communication and policy across the company and within different work groups. We recognise that it is advantageous to promote differing cultures within different functions of the organisation which all contribute to the overall culture of the business, for example we have implemented a reward structure within our sales teams which is consistent across the globe and is aimed to get the best out of sales teams, but the reward structures elsewhere in the business differ dependent on performance metrics. The Company operates a “VOICES” network, which is an employee group working together to drive positive change for GlobalData. We encourage our employees to share their feedback and ideas on the issues that matter to them and their colleagues. This group is the platform to gather and discuss feedback, suggest ideas for improvement, and help to implement them. The results of the initiatives led by VOICES is published to colleagues on the internal intranet. Our colleagues can also raise concerns in confidence and anonymously via our whistle blowing hotline, which is monitored by the Senior Independent Non-Executive Director. The Directors believe that the VOICES and whistleblowing forums give the Board sufficient insight of the view of the workforce and that representation on the Board is not currently required. 24 ANNUAL REPORT AND ACCOUNTS 2018Corporate Governance ReportDirectors’ ReportDivision of Responsibilities The Board is made up of three Executive Directors and four Non-Executive Directors. The Executive Directors who have served during the year are Bernard Cragg, Mike Danson, and Graham Lilley. The Executive 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 business. The Code requires that the Chairman should, on appointment, meet the independence criteria set out in code. As the Chairman is an Executive Director and participates in the Company’s employee share option scheme he is not considered independent. Nevertheless, the Board considers the Executive nature of his role and his participation in the employee share option scheme (with vesting targets based on time rather than Company performance) does not influence the Chairman’s independence of character and judgement within the meaning of the code nor does it influence him or the Board in the proper discharge of their duties and the operation of the business of the Group. Our non-executive team comprises Peter Harkness, the Senior Independent Director, Annette Barnes, Andrew Day and Murray Legg. Peter Harkness has served on the Board as non-executive Director since 25 June 2009. The Board and the Nominations Committee have specifically considered Peter’s independence and is of the opinion that length of service is not necessarily a complete or accurate measure of a Director’s independence. In the Board’s opinion, Peter continues to fulfil the requirements of acting as an independent director and he is an important member of the team with experience of the Group’s operations and history over his term which is a key asset in assisting the executives in delivering the Group’s strategy. The Non-Executive Directors’ shareholdings are detailed in the Directors’ Interests table on page 29 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 2018, the Board met 12 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 and has set out its approach to risk on page 18. 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. 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. 25 ANNUAL REPORT AND ACCOUNTS 2018Corporate Governance ReportDirectors’ ReportComposition, Succession and Evaluation The Board has established a Nomination Committee to lead the process for appointments and manage succession plans for its executives. The committee is comprised of two Executive Directors and two Non-Executive Directors, with the casting vote going to Peter Harkness, the Non-Executive Chair of the Nominations Committee. Where the Nominations Committee uses an external search agency to appoint a member of the Board, it is disclosed in the Annual Report. No new appointments were made during the year. The Group benefits from the diversity and variety of its workforce and is fully committed to maintaining and encouraging diversity, including the composition of the Board. The Board is currently made up of 6 male directors and 1 female and the Executive Management Committee had 9 male employees and 2 female employees serve during the year. 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 Board conducts an annual evaluation process, which involves the performance appraisal of both the Executive and Non-Executive members of the Board. The review is undertaken by all Directors via an online survey on the overall performance of the Board during the year, which is fed back and debated at the annual Away Day, which then drives the actions and objectives of the Board for the forthcoming year. Individual Directors are appraised by virtue of their role within the Board, whereby the Chairman appraises the Chief Executive and the Non- Executive Directors, the Chief Executive appraises the Chief Financial Officer and the entire Board appraise the Chairman which is delivered by the Senior Non-Executive Director. As a ‘smaller company’ (defined in the UK Corporate Governance Code as being a company below the FTSE 350) the Board have decided that the internal evaluation conducted in the year is sufficient and that external facilitation of the board performance review is not necessary in this financial period. Audit, Risk and Internal Control The Board has established Audit, Nomination 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 2018. Board meetings during the year: Number of meetings Bernard Cragg Mike Danson Graham Lilley Murray Legg Peter Harkness Annette Barnes Andrew Day Board 12 12 12 12 12 12 12 12 Audit Committee 4 Remuneration Committee 2 Nomination Committee 1 N/A N/A N/A 4 4 4 4 N/A N/A N/A 2 2 2 2 1 1 N/A 1 1 N/A N/A The Audit Committee is comprised of the Chairman Murray Legg, Peter Harkness, Annette Barnes and Andrew Day. Murray Legg is a Chartered Accountant with recent and relevant financial experience. The Committee met four times in the year with the external auditors in attendance. 26 ANNUAL REPORT AND ACCOUNTS 2018Corporate Governance ReportDirectors’ ReportThe Committee is responsible for: • monitoring the integrity of the financial statements and any formal announcements relating to the company’s financial performance, and reviewing significant financial reporting judgements contained in them; • providing advice on whether the annual report and accounts, taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the company’s position and performance, business model and strategy; reviewing the company’s internal financial controls and internal control and risk management systems; • • considering annually whether there is a need for an internal audit function and reporting its view and findings to the Board; • conducting the tender process and making recommendations to the Board, about the appointment, reappointment and removal of the external auditor, and approving the remuneration and terms of engagement of the external auditor; • reviewing and monitoring the external auditor’s independence and objectivity; • reviewing the effectiveness of the external audit process, taking into consideration relevant UK professional and regulatory requirements; • developing and implementing policy on the engagement of the external auditor to supply non-audit services, ensuring there is prior approval of non-audit services, considering the impact this may have on independence, taking into account the relevant regulations and ethical guidance in this regard, and reporting to the board on any improvement or action required; and 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 Board has overall responsibility for the Group’s system of internal controls and for monitoring its effectiveness. 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 internal controls are considered within the Risk and Uncertainties section of the Strategic Report on page 18. During the year, the Board set up a separate independent committee to oversee the acquisition of Research Views Limited, a related party acquisition. The committee was comprised of a majority of Non-Executive Directors and did not include Mike Danson, who was not deemed to be independent on the transaction. The committee oversaw the process and received independent advice and reports from advisors on legal, financial and valuation matters. 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 sales 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 review of management accounting control checklists Remuneration The Remuneration Committee comprises the Chairman Peter Harkness, Murray Legg, Annette Barnes and Andrew Day. 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 34 and 35. The terms of reference of the Remuneration Committee are available for inspection on request. 27 ANNUAL REPORT AND ACCOUNTS 2018Corporate Governance ReportDirectors’ Report 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. 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. Long Term Viability The Directors have set out a long-term viability statement on page 21 of the Strategic report. 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. The directors’ interests are disclosed on page 29, which includes the shareholding of Mike Danson who owns 81,028,349 shares, representing 68.6% of the total share capital. There are no other individual shareholders owning more than 10% of the company’s issued share capital. 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. The Company has authority to purchase its own shares. The authority, limits the maximum number of shares which can be purchased to approximately 5% of the Company’s current issued share capital. The authority is proposed each year as a resolution at the company’s AGM for shareholders to vote on. 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 2018, the Group employed the following number of employees of each gender: Male Female 28 2018 No. 2,011 1,232 3,243 2017 No. 1,492 1,064 2,556 ANNUAL REPORT AND ACCOUNTS 2018Corporate Governance ReportDirectors’ 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 2018 the Group had 71 days purchases outstanding (2017: 61 days). Subsequent events On 4 January 2019, the Group acquired the entire share capital of the Aroq Limited Group for cash consideration of £6.8m. Aroq provides global business information in the auto, drinks, food and style sectors. Further details is given in Note 31 of the financial statements. Financial instruments Use of financial instruments and exposure to various financial risks has been discussed within the Strategic Report (page 17). Future developments Future developments have been discussed within the Strategic Report (page 9). Directors’ Interests Details of the Company’s share capital are set out in note 24 to the financial statements. As at 24 February 2019, Mike Danson had a beneficial interest of 68.6 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 as at 24 February 2019 in the ordinary shares of the Company were as follows: Bernard Cragg Mike Danson Murray Legg Peter Harkness Number of ordinary shares 390,000 81,028,349 23,000 70,000 29 ANNUAL REPORT AND ACCOUNTS 2018Corporate Governance ReportDirectors’ ReportSustainability is key part of our strategy, and for us at GlobalData it is about safeguarding future growth not only for us as company but also for our employees, clients and shareholders. When GlobalData was formed in early 2016 we recognised that how we engage with our people, clients, business partners, the wider community and environment is fundamental to the Group’s success. The Group is committed to focus on creating and maintaining positive long-term relationships with our broad base of stakeholders. Sustainability Themes For us at GlobalData, our sustainability activities are focused around four key themes: Our People Our commitment to our people remains paramount as we recognise that the motivation, creativity and engagement of our people is critical to the Group’s success. We aim to be an employer of choice and one where our people feel respected, rewarded and engaged. Our success and are future success depends on GlobalData being able to attract and retain the right talent and we operate a “VOICES” network, which is an employee group working together to drive positive change for GlobalData. Areas of focus: • Strong internal training scheme • Enhanced benefits packages available • Annual performance reviews and internal movement • Diversity in geographies, languages and experience • Staff social and charity events, team building across groups and geographies. Our Clients Our data, analytics and insight help our clients to “decode the future”. Our data and analytical insight allows our clients contextualise the competitive landscape they operate within, helping them make better informed and timelier decisions. Areas of focus: • Trust in our data • • Ethical standards • Privacy and data protection Integrity of our research methodologies 30 ANNUAL REPORT AND ACCOUNTS 2018Corporate Social ResponsibilityDirectors’ ReportGlobalData SustainabilityOur PeopleSocialInvestmentEnvironmentOur Clients Social Investment Social Investment allows GlobalData to contribute to the success of charities and organisations; we help to ensure that they can achieve their aims in a sustainable, long-term way. Areas of focus: • Social engagements to raise money for selected charities • Helping our communities to access basic and improved education Environment We are a data and analytics company in which our products are created and distributed digitally. Our carbon footprint is considerably smaller than for many other companies of our size. Despite the structural benefits that we have as a digital company, we are committed to minimising the impact of our operations on the environment. Areas of focus: • Energy waste reduced through smart office lighting systems • Travel and accommodation policies encourage carbon offsetting and minimising the Group’s carbon footprint. • Focus on modern business practices such as video and virtual meetings to reduce the need to travel CSR Case Study: Creating a brighter future for local children GlobalData has funded a number of CSR initiatives in India over the last year, supporting education and children in the local community. The projects include a logic, language and life skills program focused on improving reading, logic and life enhancing skills; supporting an orphanage to improve the standard of living and education for children from vulnerable backgrounds; and funding better learning for marginalised groups in government schools. Our teams in India enjoy the chance to see the benefit of this work first hand, having visited the orphanage to interact with the children, organising games, competitions and a talent show. These projects are funded through employee generosity and various office fundraising activities, as well as support from the business, which has donated over £18,000 combined to these causes. 31 ANNUAL REPORT AND ACCOUNTS 2018Corporate Social ResponsibilityDirectors’ 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 2018. 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 the Group’s 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 consists of the Chairman Murray Legg, Peter Harkness, Annette Barnes and Andrew Day. The integrity of financial reporting We reviewed the integrity of the financial statements and all formal announcements relating to financial performance during 2018. As part of the review, we engaged in discussion with the external auditors on whether significant areas of judgement and significant risks were adequately evaluated, reported and disclosed. During 2018, we focused upon the following areas: • The Group Going Concern and long term viability of the Group, in discussion with the Board • Assessing the impact of IFRS 15 ‘Revenue from Contracts with Customers’ and IFRS 9 ‘Financial Instruments‘, both were effective 1 January 2018 • Assessing the impact of IFRS16 ‘Leases’, which is effective 1 January 2019 • Fair value review of Research Views Limited • Review of the appropriateness of the Adjusted EBITDA measure reported for 2018, including the Employee Share Award Target and adjustments made to reported EBITDA. In accordance with the revised ISA 700, ‘Forming an Opinion and Reporting on Financial Statements’, our auditor has adopted the enhanced audit report for the 2018 Annual Report and Accounts. 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. External Auditor The Committee recommends the reappointment of Grant Thornton UK LLP for 2019. We believe that their independence, their objectivity and the effectiveness of the external audit remains strong. This is safeguarded through their continuing challenge, their focused reporting and their discussions with both management and the Audit Committee in planning and concluding their work. 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 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. 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 6 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. 32 ANNUAL REPORT AND ACCOUNTS 2018Audit Committee ReportDirectors’ ReportTenure of Auditor Grant Thornton UK LLP have been the Auditor for the Group since the acquisition 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, which occurred during 2017. Murray Legg Chairman of the Audit Committee 24 February 2019 33 ANNUAL REPORT AND ACCOUNTS 2018Audit Committee ReportDirectors’ ReportDirectors’ Report Directors’ Remuneration Report Unaudited information The Remuneration Committee I am pleased to present the Remuneration Committee’s report to you for 2018. The Remuneration Committee consists of the Chairman Peter Harkness, Murray Legg, Annette Barnes and Andrew Day. 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 their 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 25. Non-Executive Directors’ remuneration All Non-Executive Directors have letters of appointment with the Company and their remuneration is determined by the Board, having considered the level of fees in similar companies. 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. The details of the service agreements of the Directors as at 24 February 2019 are: Contract date Notice period 12 April 2016 1 October 2008 1 November 2018 23 February 2016 25 June 2009 24 January 2017 24 January 2017 3 months 12 months 12 months 3 months 1 month 3 months 3 months Executive Directors Bernard Cragg Mike Danson Graham Lilley Non-Executive Directors Murray Legg Peter Harkness Annette Barnes Andrew Day 34 ANNUAL REPORT AND ACCOUNTS 2018Directors’ Report Directors’ Remuneration Report Audited Information Directors’ emoluments Executive Directors Bernard Cragg Mike Danson Graham Lilley Simon Pyper Non-Executive Directors Kelsey van Musschenbroek Mark Freebairn Murray Legg Peter Harkness Annette Barnes Andrew Day Basic salary Other benefits £000s £000s 2018 total £000s 2017 total £000s 150 - 167 - - - 40 40 30 30 - 50 - - - - - - - - 150 50 167 - - - 40 40 30 30 150 98 - 122 10 10 40 40 25 25 The other benefits consist of company cars and health insurance cover. As at 31 December 2018, Graham Lilley had 200,000 share options in issue (2017: 200,000) and Bernard Cragg had 250,000 share options in issue (2017: 250,000). Further details are given in note 25. No options were exercised during 2018 (2017: nil). No other Directors as at 31 December 2018 had share options. The Remuneration Committee is currently reviewing the existing long-term incentive for its top executives, including the Chief Executive Officer. 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 £32 million, £41 million and £52 million respectively (2017: £28 million and £39 million respectively). The targets were revised during 2018 following the acquisition of MEED and Research Views Limited. The total charge recognised for the scheme during the year ended 31 December 2018 was £5.7 million (2017: £5.3 million). The awards of the scheme are settled with ordinary shares of the Company. The Remuneration Committee received notification from the Audit Committee that the quality of Adjusted EBITDA in 2018 of £32.2 million was sufficient to satisfy the first target of £32 million. The employees who have share options dependent on the meeting of the £32 million target will therefore get the opportunity to vest their options following the publication of the results. By order of the Board Peter Harkness Chairman of the Remuneration Committee 24 February 2019 35 ANNUAL REPORT AND ACCOUNTS 2018Directors’ Report Statement of Directors’ responsibilities in respect of the Annual Report and the financial statements The Directors are responsible for preparing the Strategic Report, the Directors’ Report and the Group and the parent Company financial statements in accordance with applicable law and regulations. 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: • select suitable accounting policies and then apply them 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. Auditors A resolution to reappoint Grant Thornton UK LLP as auditors to the Company will be proposed at the Annual General Meeting. 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 23 April 2019 at John Carpenter House, John Carpenter Street, London EC4Y 0AN at 10am. On behalf of the Board Mike Danson Chief Executive 24 February 2019 36 ANNUAL REPORT AND ACCOUNTS 2018OPINION Our opinion on the financial statements is unmodified We have audited the financial statements of GlobalData Plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2018 which comprise the consolidated income statement, the consolidated statement of comprehensive income, the consolidated and company statement of financial position, the consolidated and company statement of changes in equity, the consolidated and company statement of cash flows and notes to the consolidated and company financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in the preparation of the group and company financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. In our opinion: • the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2018 and of the group’s loss for the year then ended; the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. • • • BASIS FOR OPINION We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the group and the parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. CONCLUSIONS RELATING TO PRINCIPAL RISKS, GOING CONCERN AND VIABILITY STATEMENT • We have nothing to report in respect of the following information in the annual report, in relation to which the ISAs (UK) require us to report to you whether we have anything material to add or draw attention to: • the disclosures in the annual report 1 set out on page 18 that describe the principal risks and explain how they are being managed or mitigated; the directors’ confirmation, set out on page 36 of the annual report that they have carried out a robust assessment of the principal risks facing the group, including those that would threaten its business model, future performance, solvency or liquidity; the directors’ statement, set out on page 36 of the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting in preparing the financial statements and the directors’ identification of any material uncertainties to the group’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements; • whether the directors’ statement relating to going concern required under the Listing Rules in accordance with Listing Rule 9.8.6R(3) is • • materially inconsistent with our knowledge obtained in the audit; or the directors’ explanation, set out in page 21 of the annual report as to how they have assessed the prospects of the group, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the group will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. Note 1 the term used to describe the annual report should be the same as that used by the directors. 37 ANNUAL REPORT AND ACCOUNTS 2018Independent Auditor’s Report To The Members Of GlobalData Plc Independent Auditor’s ReportOverview of our audit approach • Overall group materiality: £1,128,000, which represents 3.5% of the Group’s Adjusted EBITDA. • We performed full scope audit procedures on key business operations in the UK, United Arab Emirates and USA and targeted audit procedures on business operations in the UK and India. • Key audit matters were identified for the Group as: • • • Revenue recognition; Acquisition accounting of Research Views Limited; and Impairment of intangible assets. • Key audit matter identified for the parent company as: • Impairment of investments. KEY AUDIT MATTERS Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those that had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matter - Group How the matter was addressed in the audit - Group Revenue recognition The Group enters into a high volume of revenue transactions and is the first year of adoption of IFRS 15. As such, we identified the occurrence of revenue recognition as a significant risk which was one of the most significant assessed risks of material misstatement. Our audit work included, but was not restricted to: • An assessment of the methodology and the internal control environment relating to revenue recognition. This involved assessing the design and implementation of relevant controls in the revenue business cycle relevant to the audit as well as testing the operating effectiveness of these relevant controls. We tested the operating effectiveness of relevant controls through inquiry, observation and inspection; • We have compared management’s assessment of the IFRS 15 transition analysis against the requirements of the standard. We have obtained a sample of contracts to corroborate the terms and conditions noted in the analysis. • we performed substantive testing on a sample of revenue transactions throughout the year across each of the significant 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. In addition: • the occurrence of revenue testing was tested by obtaining signed customer contracts, ensuring that a service was provided by checking the online subscription platform to ensure the customers had access and verifying that the delivery of the products had occurred; whether revenue was recognised in accordance with the group’s revenue accounting policies; whether revenue was recognised in the correct period by checking evidence that verifies when the service was delivered or product was sold; and for a sample of revenue contracts we tested managements’ recognition of income by recalculating revenue recorded with reference to the contractual arrangements and/or contractual project milestone deliveries; • • • The Group’s accounting policy on revenue is shown in note 2 to the group financial statements and related disclosures are included in note 3. Key observations Our testing did not identify significant deficiency in the design and operating effectiveness of relevant controls that would have required us to expand the nature or scope of our planned detailed test work. We have not noted any significant issues with respect to the recognition of revenue through the audit work undertaken. 38 ANNUAL REPORT AND ACCOUNTS 2018Independent Auditor’s Report To The Members Of GlobalData Plc Independent Auditor’s Report Key Audit Matter - Group How the matter was addressed in the audit - Group Acquisition accounting of Research Views Limited During March 2018 GlobalData Plc finalised the acquisition of Research Views Limited for £97.3million. Consideration was settled in the form of additional shares within GlobalData Plc. As a result of this acquisition, the Group recorded intangible assets and goodwill of £33 million and £90 million respectively as stated in Note 29. Management has made key judgements in determining the allo- cation of the purchase price to the assets and liabilities acquired. The calculation of the intangible assets and goodwill arising from the acquisition required the application of management’s valuation model to determine the fair value of the identifiable intangible assets. We therefore identified the acquisition of Research Views Limited, including the valuation and allocation of the purchase price to the assets and liabilities acquired, as a significant risk, which was one of the most significant assessed risks of material misstatement. Impairment of intangible assets A significant balance on the consolidated statement of financial position is intangible assets of £258.5 million, including goodwill of £212.2 million as detailed in Note 13. The recovery of these assets depends on achieving sufficiently profitable business in the future. In accordance with International Accounting Standard 36: Impairment of Assets (‘IAS 36’) Goodwill is subject to an annual impairment test. 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 intangibles impairment review as a significant risk which was one of the most significant assessed risks of material misstatement. Our audit work included, but was not restricted to: • Obtaining relevant purchase documents to assess whether management had accounted for the acquisition appropriately; • Challenging the change of control date given the announcement, tax clearances and completion of all resolutions were held on different dates; • Engaging our internal valuations specialists to assist the audit team in assessing the reasonableness of the underlying assumptions used in the management’s valuation models performed by management’s external specialists; • Challenging the identification of intangible assets by obtaining the acquisition agreement and assessing management’s identification of intangible assets; • Challenging the valuation methodology of intangible assets by engaging our internal valuation specialists to assess whether management’s valuation models were in line with relevant valuation standards; • Auditing the opening balance sheet on acquisition, for example but not limited to, testing a representative sample for cash after date on trade receivables, post year end payments on creditors and recalculated the deferred income; and • Challenging management’s assumptions with reference to historic data, sensitivity analysis, re-computation and benchmarking against industry data available. The assumptions include estimates of future revenue, growth rates, customer retention rates and discount rates. The group’s accounting policy on the valuation of the acquired intangible assets is shown in notes 2 to the group financial statements and related disclosures are included in note 13. Key observations We have noted adjustments relating to the consideration value due to the change of control occurring when the irrevocable undertaking was issued rather than date of the shares being issued and incorrect capitalisation of acquisition related costs. Management has corrected these adjustments in the annual report. No further significant issues were raised on the identification of intangible assets and the purchase price allocation of intangible assets through the audit work undertaken Our audit work included, but was not restricted to: • An assessment of the methodology and the internal control environment relating to the intangible assets impairment review. This involved assessing the design and implementation of relevant controls, that changes are monitored, scrutinised by appropriate personnel and the final assumptions used in impairment testing have been appropriately approved; • Challenging the identification of cash generating units identified by management with reference to the guidance set out in IAS 36; • Testing the mathematical accuracy of the impairment calculations; • Testing the accuracy of management’s forecasting through comparison of historical budgets and growth rates to actual performance and growth rates. We challenged other key assumptions in the value in use calculations 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 test. The group’s accounting policy on impairment of intangible assets is shown in note 2 to the group financial statements and related disclosures are included in note 13. Key observations Our testing did not identify significant deficiencies in the design and implementation of relevant controls that would have required us to expand the nature or scope of our planned detailed test work. Based on our audit work there was sufficient headroom in the value in use calculation and hence we concur with management’s assessment that there is no impairment. 39 ANNUAL REPORT AND ACCOUNTS 2018Independent Auditor’s Report To The Members Of GlobalData Plc Independent Auditor’s Report Key Audit Matter - Group How the matter was addressed in the audit - Group Impairment of investments A significant balance on the parent company statement of financial position is investments of £175.1 million as detailed in Note 6 in the Company financial statements. The recovery of these assets depends on the cash generating units achieving sufficiently profitable business in the future. The investments 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 investment impairment review as a significant risk, which was one of the most significant assessed risks of material misstatement. Our audit work included, but was not restricted to: • Testing the design and implementation of relevant controls applied by the Company to provide assurance that the assumptions used in preparing the impairment calculations are updated, that changes are monitored, scrutinised by appropriate personnel and that the final assumptions used in impairment testing have been appropriately approved; • Challenging the methodology and assumptions used by management in conducting the impairment review. This also includes challenging management on their identification of cash generating units due to the interdependence among subsidiaries, with reference to the guidance set out in IAS 36; • Comparing the net assets in each of the cash generating units to the investment held in the parent company; • Testing the mathematical accuracy of the impairment calculations; • Challenging the forecasts prepared by management, we evaluated the forecasts by comparing them to historic performance and growth rates, understanding the key drivers of revenue and comparing these to market expectations. We challenged other key assumptions in the value in use calculations for goodwill and intangible assets such as discount rates, long term growth rates and sensitivities used by recalculating the discount rates and benchmarking against industry data where available; and • Evaluating the disclosures related to impairment test. The company’s accounting policy on impairment of investments is shown in note 2 to the Company financial statements and related disclosures are included in note 6. Key observations Our testing did not identify significant deficiencies in the design and implementation of relevant controls that would have required us to expand the nature or scope of our planned detailed test work. We found no errors in the calculations we tested. Based on our audit work there was sufficient headroom in the value in use calculation and hence we concur with management’s assessment that there is no impairment. 40 ANNUAL REPORT AND ACCOUNTS 2018Independent Auditor’s Report To The Members Of GlobalData Plc Independent Auditor’s Report OUR APPLICATION OF 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. Materiality was determined as follows: Materiality Measure Group Financial statements as a whole Materiality was set at £1,128,000 which was 3.5% of the Adjusted EBITDA (Adjusted EBITDA as defined by management on page 44). This benchmark is considered the most appropriate because this is used by readers of the group’s financials to judge the performance of the group and is a key performance indicator for management. Materiality for the current year is higher than the level that we determined for the year ended 31 December 2017 to reflect the increase in the Group’s Adjusted EBITDA. Parent Materiality was initially determined using total assets but capped at £800,000 which represents the component materiality (Component materiality was set at 70% of Group materiality). We consider this benchmark to be most appropriate as the parent company is a holding company therefore users would be most interested in its asset base. The benchmark has then been adjusted to an appropriately low level to reduce the probability that the aggregate of uncorrected and undetected misstatements in the group financial statements exceeds materiality for the group financial statements as a whole. Materiality for the current year has been consistently determined and has resulted in an increase in the level that we determined for the year ended 31 Dec 2017 to reflect the increase in the underlying performance and size of the Company. Performance materiality used to drive the extent of our testing Specific materiality 70% of financial statement materiality 70% of financial statement materiality We have determined a lower level of specific materiality for certain areas being directors’ remuneration and related party transactions. We have determined a lower level of specific materiality for certain areas being directors’ remuneration and related party transactions. Communication of misstatements to the audit committee £57,150 and misstatements below that threshold that, in our view, warrant reporting on qualitative grounds. £40,000 and misstatements below that threshold that, in our view, warrant reporting on qualitative grounds. AN OVERVIEW OF THE SCOPE OF OUR AUDIT Our audit approach was a risk-based approach founded on a thorough understanding of the group’s business, its environment and risk profile and in particular included: • Evaluation by the group audit team of identified components to assess the significance of that component and to determine the planned audit response based on a measure of materiality; • Evaluating the design, implementation and operating effectiveness of processes and controls over key financial systems identified as part of our risk assessment. This included gaining an understanding of the general IT controls, the accounts production process and the controls addressing critical accounting matters identified in our risk assessment; • There has been no significant changes to the scoping of key business operations for the current year Group audit from the scope of that of the prior year; • The Group is predominately based within the United Kingdom (UK) and comprises a number of UK subsidiaries which are centrally man- aged and controlled. • There are a number of overseas subsidiaries. The audit testing for the UK and overseas subsidiaries in respect of the group audit was performed by the Group audit team and Grant Thornton United Arab Emirates who acted as component auditors. • Our Group scoping ensures we have attained coverage on full scope and targeted procedures of 98% of Group revenues and 93% of Adjusted EBITDA and 95% of Total assets. The balance was tested analytically to Group materiality. 41 ANNUAL REPORT AND ACCOUNTS 2018Independent Auditor’s Report To The Members Of GlobalData Plc Independent Auditor’s Report Coverage of Group Revenues Coverage of Adjusted EBITDA Coverage of Total Assets Full scope Targeted procedures Analytical procedures Other information The directors are responsible for the other information. The other information comprises the information included in the annual report and accounts, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. In this context, we also have nothing to report in regard to our responsibility to specifically address the following items in the other information and to report as uncorrected material misstatements of the other information where we conclude that those items meet the following conditions: • Fair, balanced and understandable – the statement given on page 36 by the directors that they consider the annual report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the group’s performance, business model and strategy, is materially inconsistent with our knowledge obtained in the audit; or • Audit committee reporting - the section set out on page 32 to 33 does not appropriately address matters communicated by us to the audit committee; or • Directors’ statement of compliance with the UK Corporate Governance Code set out on page 24 – the parts of the directors’ statement required under the Listing Rules relating to the company’s compliance with the UK Corporate Governance Code containing provisions specified for review by the auditor in accordance with Listing Rule 9.8.10R(2) do not properly disclose a departure from a relevant provi- sion of the UK Corporate Governance Code. Our opinion on other matters prescribed by the Companies Act 2006 is unmodified In our opinion, based on the work undertaken in the course of the audit: • the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements. • 42 ANNUAL REPORT AND ACCOUNTS 2018Independent Auditor’s Report To The Members Of GlobalData Plc Independent Auditor’s ReportMATTERS ON WHICH WE ARE REQUIRED TO REPORT UNDER THE COMPANIES ACT 2006 In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report. MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION We have nothing to report in respect of the following matters in relation to which 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. RESPONSIBILITIES OF DIRECTORS FOR THE FINANCIAL STATEMENTS As explained more fully in the Statement of Directors’ responsibilities set out on page 31, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. USE OF OUR REPORT 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. Mark Henshaw Senior Statutory Auditor for and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants London 24 February 2019 43 ANNUAL REPORT AND ACCOUNTS 2018Independent Auditor’s Report To The Members Of GlobalData Plc Independent Auditor’s ReportConsolidated Income Statement Continuing operations Revenue Cost of sales Gross profit Administrative costs Other expenses Operating (loss)/ profit Analysed as: Adjusted EBITDA1 Items associated with acquisitions and restructure of the Group Other adjusting items EBITDA2 Amortisation Depreciation Operating (loss)/ profit 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 4 7 6 7 7 10 11 28 Loss per share attributable to equity holders from continuing operations: 12 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) The accompanying notes form an integral part of this financial report. Notes Year ended 31 December 2018 Year ended 31 December 2017 Restated £000s £000s 157,553 (98,153) 59,400 (29,077) (35,500) (5,177) 32,230 (6,842) (8,236) 17,152 (21,587) (742) (5,177) (2,487) (7,664) (3,408) (11,072) (1,255) (12,327) (12,434) 107 (9.87) (9.87) (1.11) (1.11) (10.97) (10.97) 118,649 (75,882) 42,767 (22,335) (19,783) 649 23,387 (3,347) (4,474) 15,566 (14,088) (829) 649 (1,444) (795) (1,371) (2,166) 10 (2,156) (2,156) - (2.12) (2.12) 0.01 0.01 (2.11) (2.11) 1 We define Adjusted EBITDA as EBITDA adjusted for costs associated with acquisitions, restructuring of the Group, share based payments, impairment, unrealised operating exchange rate movements, impairment and impact of foreign exchange contracts. See note 7 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. 44 ANNUAL REPORT AND ACCOUNTS 2018 Consolidated Statement of Comprehensive Income Loss for the year Other comprehensive income Items that will be classified subsequently to profit or loss: Net exchange gains/ (losses) on translation of foreign entities Other comprehensive gain/ (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 2018 £000s Year ended 31 December 2017 £000s (12,327) (2,156) 988 988 (11,339) (11,446) 107 (117) (117) (2,273) (2,273) - 45 ANNUAL REPORT AND ACCOUNTS 2018Consolidated Statement of Financial Position Notes 31 December 2018 31 December 2017 Restated 31 December 2016 Restated £000s £000s £000s Non-current assets Property, plant and equipment Intangible assets Trade and other receivables Deferred tax assets Current assets Inventories Current tax receivable Trade and other receivables Short-term derivative assets Cash and cash equivalents 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 borrowings Total liabilities Net assets Equity Share capital Share premium account Treasury reserve Other reserve Merger reserve Foreign currency translation reserve Retained profit Equity attributable to equity holders of the parent 14 13 30 18 16 17 15 19 20 15 22 22 18 20 24 24 24 24 24 1,314 258,492 2,775 6,709 269,290 - - 51,324 529 6,268 58,121 327,411 (92,660) (6,000) (5,204) (1,408) (364) (105,636) (437) (6,571) (64,341) (71,349) (176,985) 150,426 184 200 (19,142) (37,128) 163,810 798 41,704 150,426 1,243 150,548 3,700 4,947 160,438 6 - 42,421 369 2,952 45,748 206,186 (69,537) (6,000) (2,990) (98) (160) (78,785) (441) (3,014) (39,955) (43,410) (122,195) 83,991 173 200 (2,289) (37,128) 66,481 (190) 56,744 83,991 1,353 133,506 4,625 4,137 143,621 - 639 32,851 94 6,447 40,031 183,652 (55,018) (5,737) - (1,089) (1,364) (63,208) (223) (4,655) (26,162) (31,040) (94,248) 89,404 173 200 (960) (37,128) 66,481 (73) 60,711 89,404 These financial statements were approved by the board of directors on 24 February 2019 and signed on its behalf by: Bernard Cragg Executive Chairman Mike Danson Chief Executive Company Number 03925319 The accompanying notes form an integral part of this financial report. 46 ANNUAL REPORT AND ACCOUNTS 2018 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 y r u s a e r T e v r e s e r r e h t O e v r e s e r r e g r e M e v r e s e r n o i t a s n a r t l y c n e r r u c n g e r o F i l e b a t u b i r t t a y t i u q E l f o s r e d o h y t i u q e o t t n e r a p e h t g n i l l o r t n o c - n o N t s e r e t n i t fi o r p d e n a t e R i y t i u q e l a t o T £000s £000s £000s £000s £000s £000s £000s £000s £000s £000s Balance at 1 January 2017 173 200 (960) (37,128) 66,481 (73) 60,711 89,404 Loss for the year Other comprehensive income: Net exchange loss on translation of foreign entities Total comprehensive loss for the year Transactions with owners: Dividends Share buy back Share based payments charge - - - - - - - - - - - - - - - - (1,329) - - - - - - - - - - - - - - (2,156) (2,156) (117) - (117) (117) (2,156) (2,273) - - - (7,134) (7,134) - (1,329) 5,323 5,323 Balance at 31 December 2017 173 200 (2,289) (37,128) 66,481 (190) 56,744 83,991 - - - - - - - - 89,404 (2,156) (117) (2,273) (7,134) (1,329) 5,323 83,991 (Loss)/ profit for the year Other comprehensive income: Net exchange loss on translation of foreign entities Total comprehensive loss for the year Transactions with owners: Acquisition of entity with non-controlling interest Acquisition of non-controlling interest Issue of share capital Dividends Share buy back Share based payments charge Excess deferred tax on share based payments - - - - - 11 - - - - - - - - - - - - - - - - - - - - - (16,853) - - - - - - - - - - - - - - - - - 97,329 - - - - - (12,434) (12,434) 107 (12,327) 988 - 988 - 988 988 (12,434) (11,446) 107 (11,339) - - 546 546 (579) (579) (653) (1,232) - - - - - - - - 97,340 (9,110) (9,110) - (16,853) 5,679 5,679 1,404 1,404 Balance at 31 December 2018 184 200 (19,142) (37,128) 163,810 798 41,704 150,426 The accompanying notes form an integral part of this financial report. - - - - - - 97,340 (9,110) (16,853) 5,679 1,404 150,426 47 ANNUAL REPORT AND ACCOUNTS 2018 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 Non-trading foreign exchange gain Share based payments charge Decrease/ (increase) in trade and other receivables Increase in inventories Decrease 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 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) Acquisitions Purchase of property, plant and equipment Purchase of intangible assets Net cash used in investing activities (continuing operations) Net decrease in cash and cash equivalents from discontinued operations Total cash flows used in investing activities Cash flows from financing activities (continuing operations) Repayment of short-term borrowings Proceeds from long-term borrowings Loan fees Settlement of long-term borrowings Dividends paid Share buy back Net cash (used in)/ from financing activities (continuing operations) Net decrease in cash and cash equivalents from discontinued operations Total cash flows (used in)/ 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. 48 Year ended 31 December 2018 Year ended 31 December 2017 Restated £000s £000s (11,072) (2,166) 742 21,587 2,487 3,408 - 5,679 1,606 (26) (703) 1,150 200 25,058 (2,173) (2,255) 20,630 (912) 19,718 (4,607) (724) (890) (6,221) (235) (6,456) (6,000) 30,473 (285) (8,408) (9,110) (16,853) (10,183) - (10,183) 3,079 2,952 237 6,268 829 14,088 1,444 1,371 (274) 5,323 (1,147) - (3,020) (1,266) (986) 14,196 (1,412) (70) 12,714 267 12,981 (20,338) (612) (1,184) (22,134) - (22,134) (7,356) 51,100 - (29,520) (7,134) (1,329) 5,761 - 5,761 (3,392) 6,447 (103) 2,952 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements 1. GENERAL INFORMATION Nature of operations The principal activity of GlobalData Plc and its subsidiaries (together ‘the Group’) is to provide business information in the form of high quality proprietary data and analytics to clients in multiple sectors. GlobalData Plc (‘the Company’) is a company incorporated in the United Kingdom and listed on the Alternative Investment Market (AIM). The registered office of the Company is John Carpenter House, John Carpenter Street, London, EC4Y 0AN. The registered number of the Company is 03925319. Basis of preparation 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. The 2017 comparatives have been adjusted for the effect of discontinued operations to give a fair comparison of statement of financial position and income statement line items. Details of the discontinued operations are disclosed in note 28 of the financial statements. 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, recoverability of deferred tax assets, provisions for share based payments, provision for doubtful debts, carrying value of goodwill and other intangibles. Key sources of estimation of uncertainty Valuation of acquired intangibles Management identified and valued acquired intangible assets 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 Board have a policy of engaging professional advisors on acquisitions with a purchase price greater than £10 million to advise and assist in calculating intangible asset values. The Group consistently applies the following methodologies for each class of identified intangible: • Customer relationships – Net present value of future cash flows • • Brands – Royalty relief method Intellectual Property – Cost to recreate the asset 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 13. 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. Recoverability of deferred tax assets The Group has recognised a deferred income tax asset in its financial statements, which requires judgement for determining the extent of its recoverability at each statement of financial position date. The Group assesses recoverability with reference to Board approved forecasts of future taxable profits. These forecasts require the use of assumptions and estimates. Where the temporary differences are related to losses, relevant tax law is considered to determine the availability of the losses to offset against the future taxable profits. A deferred tax asset additionally exists in relation to the temporary tax and accounting difference in relation to the share based payment scheme. Additional disclosures on the calculation of share based payments are provided in note 25. 49 ANNUAL REPORT AND ACCOUNTS 2018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 equity. The significant judgements involved in calculating the share based payments charge are the fair value at the date of grant which is determined by using the Black-Scholes model, the senior management retention rate which is determined with reference to historical churn and the estimated vesting periods which are determined with reference to the Group’s forecasts. Additional disclosures on the calculation of share based payments are provided in note 25. Provision for doubtful debts 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 Group will also review the previous payment profile of the customer and liaise with the customers’ management team before concluding on whether a provision is required. The provision for doubtful debts and the ageing of overdue trade receivables are included in note 17 to the financial statements. Additional disclosures on the assumptions behind the provision are provided in note 21 within the section on credit risk. 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 13 for further details on intangibles and goodwill. Critical accounting judgements Segmental reporting IFRS 8 “Operating Segments” requires the segment information presented in the financial statements to be that which is used internally by the chief operating decision maker to evaluate the performance of the business and to decide how to allocate resources. The Group has identified the Executive Directors as its chief operating decision maker. Business information is provided to customers through one single brand via 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. Acquisition accounting On 28 March 2018, the Group took control of the entire share capital of Research Views Limited. Although the acquisition was subject to shareholder vote at a general meeting on 24th April, HMRC had approved the commercial aspects of the transaction and Mike Danson had signed an irrevocable undertaking to vote in favour of the acquisition. Therefore, at this stage the Group was certain the deal would be approved and started to integrate and manage the acquired business and hence it is management’s judgement that the date of acquisition was 28 March 2018. Management has determined it is most appropriate to follow the principles of IFRS 3 “Business Combinations”, and apply acquisition accounting for acquisitions of entities under common control. As the Group paid over and above the book value of Research Views Limited, this allows for the recognition of these intangibles and reflects the fact that the rights of the minority interest shareholders have been affected. Irrespective of both Globaldata Plc and Research Views Limited being under common control, management’s judgement is that the transaction was a combination of two businesses and the Group is expected to benefit from the synergies of combining the two businesses. Defined benefit pension asset As part of the acquisition of Research Views Limited and its subsidiaries, the Group acquired a defined benefit pension scheme. As at 31 December 2018 the scheme is in surplus, however management’s judgement is that the surplus should not be recognised in the statement of financial position. IFRIC14 came into effect on 1 January 2018 and applies to pension schemes reporting under IAS19. Under IFRIC14, recognition of a surplus should be considered in the context of whether a scheme sponsor has a future unconditional right to a refund of a scheme surplus that may arise. Management have considered the scheme rules which state that receipt of any refund would be conditional on how the trustees determine the overall surplus should be distributed. Management have therefore taken the view that the Group does not have an unconditional right to a refund and as such have not recognised the surplus as an asset. 50 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements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. The finance facilities were issued with debt covenants which are measured on a quarterly basis. 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 is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. 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. 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 2018 and is consistent with the policies applied in the previous year, except for the new standard now effective, IFRS 15 and IFRS 9. IFRS15: Revenue from contracts with customers IFRS 15 (effective from 1 January 2018) provides a single, principles based five-step model to be applied to all sales contracts, based on the transfer of control of goods and services to customers The major change is the requirement to identify and assess the satisfaction of delivery of each performance obligation in contracts in order to recognise revenue. Following an assessment of the financial impact of the changes required from the adoption of this new standard, there is no material change to the Consolidated Income Statement of the Group. The change only affects the recognition of bespoke research revenue, where we are no longer able to recognise revenue over the course of a contract on a completion basis, but instead must recognise revenue once performance obligations have been delivered. Materially, the delivery on a completion basis was very much aligned to delivery of key milestone in our contracts and therefore does not differ in materially when compared with the provisions of the new standard. The Consolidated Statement of Financial Position has been adjusted by the requirement to net down deferred income against trade receivables for amounts that have been invoiced but the service had not started at the 31 December 2018 and are not yet due. This adjustment has not affected the net assets of the Group. The Group has adopted IFRS 15 on 1 January 2018 using the ‘full’ retrospective approach. As a result, the prior period Consolidated Statement of Financial Position have been restated as detailed in note 5. IFRS9: Financial Instruments On 1 January 2018, IFRS9 ‘Financial Instruments’ also came into effect. The new standard is based on the concept that financial assets should be classified and measured at fair value, with changes in fair value recognized in profit and loss as they arise (“FVPL”), unless restrictive criteria are met for classifying and measuring the asset at either Amortized Cost or Fair Value through Other Comprehensive Income (“FVOCI”). The financial assets which the Group holds are loans and receivables, for which changes to the fair value are posted to the income statement. Similarly, any changes to the fair value of the forward contracts in place at the period end are also posted to the income statement. 51 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements c) International Financial Reporting Standards (“Standards”) in issue but not yet effective The Group has not applied the following new and revised IFRSs that have been issued but are not yet effective: • • IFRS 16 Leases (Issued on 13 January 2016 and effective for periods on or after 1 January 2019) IFRIC Interpretation 23 Uncertainty over Income Tax Treatments (Issued in June 2017 and effective for periods on or after 1 January 2019) • Amendments to IAS 19: Plan Amendment, Curtailment or Settlement (issued on 7 February 2018 and effective for periods on or after 1 January 2019) • Amendments to IFRS 3: Business Combinations (issued on 22 October 2018 and effective for periods on or after 1 January 2020) • Amendments to References to the Conceptual Framework in IFRS Standards (issued on 29 March 2018 and effective for periods on or after 1 January 2020) • Annual improvements to IFRS 2014-2016 Cycle (Issued 8 December 2016) - Relating to IFRS 12 Disclosure of interest in other entities • Annual Improvements to IFRS 2015-2017 Cycle (issued on 12 December 2017) – Relating to IAS 12 Income taxes, IAS 23 Borrowing costs, IFRS 3 Business combinations and IFRS 11 Joint Arrangements None of the above standards are effective and therefore have not been applied in the financial statements. It is anticipated that there will be minimal impact on the financial statements from the adoption of these new and revised standards with the exception of IFRS16 ‘Leases’ (effective 1 January 2019) which will have the following effect: • The total value of the Company’s future non-cancellable operating building lease commitments will be capitalised into property, plant and equipment • A corresponding finance lease liability will be recognised within liabilities • Operating lease costs in the income statement will be replaced by depreciation of the capitalised asset and interest cost of the finance lease liability. It is anticipated that these revised costs will be materially similar to the operating lease charge which would have been recognised if the changes to IFRS16 had not been enacted 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 in the normal course of business net of discounts, VAT and sales taxes, and provisions for cancellations and non-payment. • Subscription income for online services, data and analytics is normally received at the beginning of the services and is therefore recognised as a contract liability, “invoiced forward revenues”, on the balance sheet. Revenue is recognised evenly over the period of the contractual term as the performance obligations are satisfied evenly over the term of subscription. • Revenue from single copy reports are recognised upon delivery. The client pays for a single static report and the company meets its contract obligation at the point in time the report is delivered to the client. • Revenue from the provision of bespoke research services is recognised once contractual performance obligations have been delivered. Bespoke projects can have a single or series of different deliverables from reports, presentations or delivery of data workbooks. Revenue is recognised as each contractual obligation is satisfied. • Event revenue is recognised when the event is held in line with the contract obligations. • Other revenue is recognised in reference to performance obligations as contracted. Where amounts have been invoiced in advance of services performed and the amounts are due, this is included within invoiced forward revenue as a contract liability. 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. 52 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements f) Intangible assets 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. Intangible assets acquired in material business combinations are capitalised at their fair value as determined by reference to the methodologies, judgements and policies disclosed on page 49. 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. Within note 7, the Group separates out amortisation of acquired intangibles from other group amortisation charges. 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 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. 53 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statementsh) Foreign currencies The results are presented in Pounds Sterling (£) which is the presentation currency of the Company and 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. Additionally, opening reserves of entities with a functional currency other than Sterling are stated at the rate prevalent at the date of acquisition and 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 contributes to defined contribution pension schemes. Contributions to these schemes are charged to the income statement as incurred. The Group also operates a small defined benefit scheme, inherited from the Research Views Limited acquisition in 2018. The scheme is closed for future accrual. The cost of providing this benefit is determined using the Projected Unit Credit Method, with actuarial valuations carried out on a triennial basis. Net interest is calculated by applying a discount rate to the opening net defined benefit liability or asset and shown in finance costs, and the administration costs are shown as a component of operating expenses. Actuarial gains and losses are recognised in full in the period in which they occur, outside of the Consolidated Income Statement and in the Consolidated Statement of Comprehensive Income. The retirement benefit obligation recognised in the Consolidated Statement of Financial Position represents the actual deficit or surplus in the Group’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans. 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. 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. 54 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements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. n) Inventories 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. 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 (fair value at the date of grant determined using the Black-Scholes model), 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. r) Employee Benefit Trust The assets and liabilities of the Employee Benefit Trust have been included in the Group’s financial statements because the Employee Benefit Trust is controlled by the Group. The cost of purchasing own shares held by the Employee Benefit Trust are shown as a deduction in arriving at total shareholders’ equity. 55 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements3. SEGMENTAL ANALYSIS The principal activity of GlobalData Plc and its subsidiaries (together ‘the Group’) is to provide business information in the form of high quality proprietary data and analytics to clients in multiple sectors. IFRS 8 “Operating Segments” requires the segment information presented in the financial statements to be that which is used internally by the chief operating decision maker to evaluate the performance of the business and to decide how to allocate resources. The Group has identified the 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 7) Depreciation Amortisation (excluding amortisation of acquired intangible assets) Finance costs Loss before tax from continuing operations Year ended 31 December 2018 Year ended 31 December 2017 Restated £000s 157,553 157,553 32,230 (35,500) (742) (1,165) (2,487) (7,664) £000s 118,649 118,649 23,387 (19,783) (829) (2,126) (1,444) (795) Geographical analysis Our primary geographical markets are serviced by our global sales teams which are organised into European Key Accounts, Global Business Development, US and Asia Pacific. The below disaggregated revenue is derived from the geographical location of our customer rather than the team structure we are organised by. From continuing operations Year ended 31 December 2018 UK Europe Americas1 Asia Pacific MENA2 Rest of World Revenue from external customers £000s 25,322 £000s 42,848 £000s 54,263 £000s 14,967 £’000 14,662 £000s 5,491 Total £000s 157,553 Year ended 31 December 2017 UK Europe Americas1 Asia Pacific MENA2 Rest of World Total Revenue from external customers 20,847 33,381 £000s £000s £000s 45,067 £000s £’000 £000s £000s 12,428 3,544 3,382 118,649 1. Americas includes revenue to the United States of America of £51.4m (2017: £42.4m) 2. Middle East & North Africa Intangible assets held in the US and Canada were £23.2 million (2017: £13.1 million), of which £18.1 million related to Goodwill (2017: £11.6 million). Intangible assets held in the UAE were £17.5m (2017: £18.1 million) of which £11.4m related to Goodwill (2017: £10.3 million). All other non-current assets are held in the UK. The largest customer represented less than 2% of the Group’s consolidated revenue. 56 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements4. REVENUE The Group generates revenue from services provided over a period of time such as recurring subscription and other services which are deliverable at a point in time such as reports, events and custom research. Subscription income for online services, data and analytics (typically 12 month) is normally received at the beginning of the services and is therefore recognised as a contract liability, “invoiced forward revenues”, on the balance sheet. Revenue is recognised evenly over the period of the contractual term as the performance obligations are satisfied evenly over the term of subscription. The revenue on services delivered at a point in time is recognised when our contractual obligation is satisfied, such as delivery of a static report or delivery of an event. The obligation on these types of contracts is a discreet obligation, which once met satisfies the group performance obligation under the terms of the contract. Any invoiced contracted amounts which are still subject to performance obligations and where the payment has been received or is contractually due, is recognised within invoiced forward revenue at the statement of financial position date. Typically, the Group receives settlement of cash at the start of each contract and standard terms are zero days. Revenue recognised in Consolidated Income Statement Invoiced Forward Revenue recognised within the Consolidated Statement of Financial Position Year ended 31 December 2018 Year ended 31 December 2017 As at 31 December 2018 As at 31 December 2017 £000s 116,807 40,746 157,553 £000s 83,021 35,628 118,649 £000s 55,490 11,670 67,160 £000s 38,706 13,587 52,293 Services transferred: Over a period of time Immediately on delivery Total The impact of IFRS 15 reduced the invoiced forward revenue balance at 31 December 2018 for services transferred over a period of time from £69,759,000 to £55,490,000 which was a result of reducing the balance for contracted amounts whereby the service has not started and the payment is not contractually due. All service obligations are due within 1 year. At 31 Dec 2018, total 2019 revenue already invoiced totalled £81,429,000 (2017: £60,598,000) comprising the above amounts due and additional amounts not recognised in the statement of financial position which are contracted for receipt later in 2019. On a like for like basis the underlying growth of invoiced 2019 revenue (excluding the IFRS 15 adjustment) was 9%, with the additional amounts being added through businesses acquired in the year. The Group determines each contract value in negotiation with each client depending on the list price of each service and number and type of licence or delivery. The Group’s sales team are compensated in part by fixed salary and part by commission compensation based upon sales performance, the commission cost is recognised in full at the point of sale and is for contracts no longer than 1 year in length. 57 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements5. RESTATEMENT IFRS 15 came into effective from 1 January 2018 and following an assessment of the financial impact of the changes required from the adoption of this new standard, there is no material change to the Consolidated Income Statement of the Group. The change only affects the recognition of bespoke research revenue, where we are no longer able to recognise revenue over the course of a contract on a completion basis, but instead must recognise revenue once performance obligations have been delivered. Materially, the delivery on a completion basis was very much aligned to delivery of key obligation milestone within our contracts and therefore does not differ in materially when compared with the provisions of the new standard. The Consolidated Statement of Financial Position has been adjusted by the requirement to net down deferred income against trade receivables for amounts that have been invoiced but the service had not started at the 31 December 2018 and are not yet due. This adjustment has not affected the net assets of the Group. Effect on Statement of Financial Position as at 31 December 2018 Non-current assets Property, plant and equipment Intangible assets Trade and other receivables Deferred tax assets Current assets Trade and other receivables Short-term derivative assets Cash and cash equivalents 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 borrowings Total liabilities Net assets Equity Share capital Share premium account Treasury reserve Other reserve Merger reserve Foreign currency translation reserve Retained profit Equity attributable to equity holders of the parent 58 31 December 2018 As reported £000s IFRS 15 Adjustments Net down 31 December 2018 excluding IFRS 15 adj £000s £000s 1,314 258,492 2,775 6,709 269,290 51,324 529 6,268 58,121 327,411 (92,660) (6,000) (5,204) (1,408) (364) - - - - - (14,269) - - (14,269) (14,269) 1,314 258,492 2,775 6,709 269,290 65,593 529 6,268 72,390 341,680 14,269 (106,929) - - - - (6,000) (5,204) (1,408) (364) (105,636) 14,269 (119,905) (437) (6,571) (64,341) (71,349) (176,985) 150,426 184 200 (19,142) (37,128) 163,810 798 41,704 150,426 - - - - 14,269 - - - - - - - - - (437) (6,571) (64,341) (71,349) (191,254) 150,426 184 200 (19,142) (37,128) 163,810 798 41,704 150,426 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements The Group has adopted IFRS 15 on 1 January 2018 using the full retrospective approach. As a result, the Consolidated Statement of Financial Position at 31 December 2017 has been restated as detailed in the table below. 31 December 2017 As reported £000s IFRS 15 Adjustments Net down 31 December 2017 excluding IFRS 15 adj £000s £000s Non-current assets Property, plant and equipment Intangible assets Trade and other receivables Deferred tax assets Current assets Inventories Trade and other receivables Short-term derivative assets Cash and cash equivalents 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 borrowings Total liabilities Net assets Equity Share capital Share premium account Treasury reserve Other reserve Merger reserve Foreign currency translation reserve Retained profit Equity attributable to equity holders of the parent 1,243 150,548 3,700 4,947 160,438 6 42,421 369 2,952 45,748 206,186 (69,537) (6,000) (2,990) (98) (160) (78,785) (441) (3,014) (39,955) (43,410) (122,195) 83,991 173 200 (2,289) (37,128) 66,481 (190) 56,744 83,991 - - - - - - (8,305) - - (8,305) (8,305) 8,305 - - - - 8,305 - - - - 8,305 - - - - - - - - - 1,243 150,548 3,700 4,947 160,438 6 50,726 369 2,952 54,053 214,491 (77,842) (6,000) (2,990) (98) (160) (87,090) (441) (3,014) (39,955) (43,410) (130,500) 83,991 173 200 (2,289) (37,128) 66,481 (190) 56,744 83,991 Additionally, the Consolidated Income Statement for the year ending 31 December 2017 has been restated to reflect the discontinued operations (see note 28). 59 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements6. OPERATING (LOSS)/ PROFIT Operating (loss)/ profit 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 Audit-related assurance services Other non-audit services 7. OTHER EXPENSES Restructuring costs M&A costs Items associated with acquisitions and restructure of the Group Share based payments charge Revaluation of short and long-term derivatives Unrealised operating foreign exchange loss Amortisation of acquired intangibles Total other expenses Year ended 31 December 2018 Year ended 31 December 2017 £000s 742 21,587 365 4,746 41 383 £000s 829 14,088 1,230 3,013 100 253 Year ended 31 December 2018 Year ended 31 December 2017 £000s £000s 83 263 34 3 383 77 147 26 3 253 Year ended 31 December 2018 Year ended 31 December 2017 £000s 3,661 3,181 6,842 5,679 1,150 1,407 20,422 35,500 £000s 2,436 911 3,347 5,323 (1,266) 417 11,962 19,783 During the year the Group has undergone significant M&A activity, particularly the acquisition of Research Views Limited therefore costs associated with the M&A has been adjusted from Adjusted EBITDA. Furthermore, the Group’s M&A and expansion over the past three years meant the Group underwent some significant restructuring, principally as a result of the Research Views Limited, but also to remove duplicated costs from prior acquisitions and to align the Group’s cost base to its strategy and needs going forward. The adjustments made are as follows: • The M&A costs relate to due diligence and corporate finance activity. • Restructuring costs relates to redundancies and other restructuring. • The share based payments charge relates to the share option scheme (see note 25). • 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 15. • Unrealised operating foreign exchange losses relate to non-cash exchange losses made on operating items. 60 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements8. PARTICULARS OF EMPLOYEES Employee benefit expense From continuing operations Wages and salaries Social security costs Pension costs Share based payments charge (note 25) Year ended 31 December 2018 Year ended 31 December 2017 Restated £000s 90,218 5,200 1,208 5,679 102,305 £000s 71,321 5,058 893 5,323 82,595 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 admin Researchers & Analysts 9. KEY MANAGEMENT COMPENSATION Short-term employee benefits Long-term employee benefits Share based payments Year ended 31 December 2018 Year ended 31 December 2017 No. 1,419 1,900 3,319 No. 1,238 1,166 2,404 Year ended 31 December 2018 Year ended 31 December 2017 £000s 2,812 76 1,113 4,001 £000s 2,139 57 946 3,142 Information regarding Directors’ remuneration, share options, bonuses and pension contributions are set out in the Directors’ Remuneration Report on pages 34 to 35. 10. FINANCE INCOME AND COSTS Bank interest charge Loan interest Other interest receivable Year ended 31 December 2018 Year ended 31 December 2017 £000s 76 2,514 (103) 2,487 £000s 40 1,513 (109) 1,444 61 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements 11. 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 Deferred tax 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 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 19% (2017: 19.25%) Effects of: Adjustments in respect of prior years Adjustments in respect of prior years – share based payments Income not taxable Timing differences for which deferred tax is not provided Deferred tax movement on losses Permanent difference on IFRS2 charge Expenses not deductible for tax Overseas tax not at standard rate Change in corporation tax rate 12. EARNINGS PER SHARE Year ended 31 December 2018 Year ended 31 December 2017 £000s £000s (4,379) 56 (4,323) (281) 3,126 (1,878) (214) (107) 269 915 (3,408) (3,124) (698) (3,822) (93) 1,629 (176) (1,274) 1,863 503 2,451 (1,371) Year ended 31 December 2018 Year ended 31 December 2017 £000s (7,664) 1,456 324 (1,031) 1,178 17 (2,624) (139) (1,711) (664) (214) (3,408) £000s (795) 153 (195) - - - (70) 838 (506) (317) (1,274) (1,371) 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: 62 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements Continuing operations Basic Loss for the period attributable to ordinary shareholders (£000s) Less: non-controlling interest Loss for the period attributable to ordinary shareholders of the parent company (£000s) Weighted average number of shares (000s) Basic loss per share (pence) Diluted Loss for the period attributable to ordinary shareholders (£000s) Less: non-controlling interest Loss for the period 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 of the parent company (£000s) Weighted average number of shares (000s) Basic (loss)/ profit per share (pence) Diluted (Loss)/ profit for the year attributable to ordinary shareholders of the parent company (£000s) Weighted average number of shares* (000s) Diluted (loss)/ profit per share (pence) Total Basic Loss for the period attributable to ordinary shareholders (£000s) Less: non-controlling interest Loss for the period attributable to ordinary shareholders of the parent company (£000s) Weighted average number of shares (000s) Basic loss per share (pence) Diluted Loss for the period attributable to ordinary shareholders (£000s) Less: non-controlling interest Loss for the period attributable to ordinary shareholders of the parent company (£000s) Weighted average number of shares* (000s) Diluted loss per share (pence) Year ended 31 December 2018 Year ended 31 December 2017 Restated (11,072) 107 (11,179) 113,319 (9.87) (11,072) 107 (11,179) 113,319 (9.87) (1,255) 113,319 (1.11) (1,255) 113,319 (1.11) (12,327) 107 (12,434) 113,319 (10.97) (12,327) 107 (12,434) 113,319 (10.97) (2,166) - (2,166) 102,346 (2.12) (2,166) - (2,166) 102,346 (2.12) 10 102,346 0.01 10 112,968 0.01 (2,156) - (2,156) 102,346 (2.11) (2,156) - (2,156) 102,346 (2.11) 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 2018 31 December 2017 No’000s 113,319 10,809 124,128 No’000s 102,346 10,622 112,968 * Where the share options in issue are anti-dilutive in respect of the diluted loss per share calculation in 2018 and 2017, the options have not been included in the calculation. 63 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements 13. INTANGIBLE ASSETS Cost As at 1 January 2017 Additions: Business Combinations Additions: Separately Acquired Foreign currency retranslation Disposals As at 31 December 2017 Additions: Business Combinations Additions: Separately Acquired Fair value adjustment Foreign currency retranslation Disposals As at 31 December 2018 Amortisation As at 1 January 2017 Additions: Business Combinations Charge for the year Foreign currency retranslation Disposals As at 31 December 2017 Additions: Business Combinations Charge for the year Impairment of goodwill Fair value adjustment Foreign currency retranslation Disposals Software Customer relationships Brands IP rights and Database Goodwill Total £000s £000s £000s £000s £000s £000s 7,577 117 1,036 (47) (1) 8,682 371 890 (177) 7 (48) 9,725 (5,716) (73) (1,118) 38 1 25,575 7,180 - - - 32,755 9,921 - (65) - - 10,695 1,596 148 - - 12,439 3,268 - - - - 42,611 15,707 22,529 4,356 111,455 16,779 - - - - - - 26,885 21,465 128,234 94,120 - - - (1,287) 47,063 - 406 - - 177,831 30,028 1,184 (47) (1) 208,995 129,145 890 164 7 (1,335) 222,760 337,866 (13,559) (2,597) (13,093) (9,360) (44,325) - - - (3,097) (1,290) (8,583) - - - - - - - - - - (73) (14,088) 38 1 (6,868) (16,656) (3,887) (21,676) (9,360) (58,447) (199) (1,115) - 85 (14) 48 - - - (4,197) (4,280) (11,343) - - (2) - - - (6) - - - (4) 1,287 - (652) (535) - - - (199) (21,587) (535) 85 (26) 1,335 As at 31 December 2018 (8,063) (20,855) (8,173) (31,736) (10,547) (79,374) Net book value As at 31 December 2018 As at 31 December 2017 1,662 1,814 21,756 16,099 7,534 8,552 15,327 5,209 212,213 118,874 258,492 150,548 Additions as a result of business combinations in the year have been disclosed in further detail in note 29. The impairment charge of £535,000 related to discontinued operations. Further details of discontinued operations have been disclosed in note 28. As at 31 December 2018, the carrying value and remaining amortisation period of the Brand assets were as follows: GlobalData Verdict MEED Global Ad Source 64 Carrying Value £000s 4,619 2,132 745 38 7,534 Remaining Amortisation Period 12 years 12 years 2 years 1 year ANNUAL REPORT AND ACCOUNTS 2018Notes 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 Group operates within a single operating segment, being Business Information. However, in accordance with IAS 36, Impairment of assets, the Group has to consider impairment indicators for goodwill and intangible assets on the value of the cash generating units. The cash generating units identified are Healthcare, Technology, Consumer, Construction, Energy and Financial Services. Overall, the Group has significant headroom on its goodwill and intangibles carrying value and the assumptions used in the assessment are of an insensitive nature. 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. Value in use projections are based on Board approved forecasts, which cover the period 2019 - 2023. A terminal value calculation has been determined post 2023. The key assumptions are set out below: Increase in revenue (for years 1 to 5) 2018 3.00%* 2017 3.00% Increase in costs (for years 1 to 5) 2018 2.00% 2017 2.00% * 7% for Construction and Energy The value in use for each CGU is summarised below. All values in the table are in £ million Discount rate Terminal growth rate 2018 9.69% 2017 8.70% 2018 2.00% 2017 2.00% Consumer Technology Healthcare Construction Energy Financial Services Total Goodwill Other Intangible assets Value-in-use Headroom 34.6 17.2 79.3 36.2 29.2 15.7 212.2 6.7 1.9 17.9 10.8 5.5 2.3 45.1 151.0 28.6 247.4 115.0 40.8 27.1 609.9 109.7 9.5 150.2 68.0 6.1 9.1 352.6 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: Consumer Technology Healthcare Construction Energy Financial Services Revenue Growth Falls To Discount Rate Rises To (3.4%) 2.2% (3.9%) (0.5%) 5.7% 0.9% 29.1% 13.2% 21.3% 19.5% 10.9% 13.4% No indication of impairment was noted from management’s review, there is headroom in each CGU. The sensitivity analysis supports the 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. 65 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements 14. PROPERTY, PLANT AND EQUIPMENT Fixtures, fittings & equipment Motor vehicles Leasehold Improvements £000s £000s £000s 4,992 298 612 (51) (116) 5,735 585 575 10 (1) 6,904 (3,820) (231) (805) 48 116 (4,692) (491) (703) (17) 1 (5,902) 1,002 1,043 15 - - - (15) - - - - - - (15) - - - 15 - - - - - - - Cost As at 1 January 2017 Additions: Business Combinations Additions: Separately Acquired Foreign currency retranslation Disposals As at 31 December 2017 Additions: Business Combinations Additions: Separately Acquired Foreign currency retranslation Disposals As at 31 December 2018 Depreciation As at 1 January 2017 Additions: Business Combinations Charge for the year Foreign currency retranslation Disposals As at 31 December 2017 Additions: Business Combinations Charge for the year Foreign currency retranslation Disposals As at 31 December 2018 Net book value As at 31 December 2018 As at 31 December 2017 15. DERIVATIVE ASSETS AND LIABILITIES Short-term derivative assets Short-term derivative liabilities Net derivative (liability)/ asset Total £000s 5,241 359 612 (53) (131) 6,028 588 724 14 (1) 7,353 (3,888) (249) (829) 50 131 (4,785) (494) (742) (19) 1 234 61 - (2) - 293 3 149 4 - 449 (53) (18) (24) 2 - (93) (3) (39) (2) - (137) (6,039) 312 200 1,314 1,243 31 December 2018 31 December 2017 £000s 529 (1,408) (879) £000s 369 (98) 271 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 a £1,150,000 charge to the income statement (2017: credit of £1,266,000). 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 2019 66 Euro €’000 4,664 US Dollar $’000 20,953 Indian Rupee INR’000 852,004 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements 16. INVENTORIES Raw materials 17. TRADE AND OTHER RECEIVABLES Trade receivables Prepayments Other receivables and accrued income Related party receivables (note 30) 31 December 2018 31 December 2017 £000s £000s - - 6 6 31 December 2018 31 December 2017 Restated £000s 43,594 3,329 3,563 838 51,324 £000s 34,950 3,527 3,017 927 42,421 The contractual value of trade receivables is £47.7 million (2017 Restated: £37.2 million). Their carrying value is assessed to be £43.6 million (2017 Restated: £35.0 million) after assessing recoverability. The contractual value and the carrying value of other receivables are considered to be the same. 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 The ageing analysis of trade receivables which have been impaired is as follows: Not overdue Not more than 3 months overdue More than 3 months but not more than 1 year 31 December 2018 31 December 2017 Restated £000s 33,021 5,718 4,855 43,594 £000s 27,137 5,028 2,785 34,950 31 December 2018 31 December 2017 £000s 7 - 4,106 4,113 £000s 13 4 2,228 2,245 The contractual amounts of the Group’s trade receivables are denominated in the following currencies: Pounds Sterling US Dollar Euro Australian Dollar 31 December 2018 31 December 2017 Restated £000s 20,816 22,739 3,649 503 47,707 £000s 23,216 9,806 3,884 289 37,195 67 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial StatementsMovement on the Group’s provision for doubtful debts is as follows: Balance brought forward Provision for doubtful debts Receivables written off during the year as uncollectable Balance carried forward 31 December 2018 31 December 2017 £000s 2,245 2,341 (473) 4,113 £000s 1,670 855 (280) 2,245 The creation and release of the provision for doubtful debts 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. At each year and half end, management will assess for further impairment based upon expected credit loss over and above the specific impairments noted through the year. The other classes within trade and other receivables do not contain impaired assets. The maximum exposure to credit risk at 31 December 2018 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 turnover. Further details on credit risk have been disclosed within note 21. 18. DEFERRED INCOME TAX 31 December 2018 31 December 2017 Balance brought forward Created upon acquisition of subsidiary Credited to profit and loss account (continuing operations) Prior year adjustment not impacting tax charge 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 £000s 1,933 (3,629) 1,129 (464) 1,383 (214) 138 (6,570) 127 4,263 2,318 138 £000s (518) - 3,725 - - (1,274) 1,933 (3,014) 187 2,966 1,794 1,933 Deferred tax asset Deferred tax liability Net position 31 December 2018 31 December 2017 £000s 6,709 (6,571) 138 £000s 4,947 (3,014) 1,933 As at 31 December 2018, the utilisation of the deferred tax asset relating to tax losses is dependent on future taxable profits of approximately £13.6 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 2018 the Group has unrecognised potential deferred tax assets of £1.1 million. These tax losses 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 2018 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. 68 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements 19. TRADE AND OTHER PAYABLES Trade payables Other taxation and social security Invoiced forward revenue Accruals 20. BORROWINGS Current Loans due within one year Non-current Long-term loans 31 December 2018 31 December 2017 Restated £000s 8,809 1,747 67,160 14,944 92,660 £000s 6,780 1,422 52,293 9,042 69,537 31 December 2018 31 December 2017 £000s £000s 6,000 6,000 64,341 39,955 Term loan and RCF In April 2017, the Group refinanced its debt position. The facility consists of a £30.0 million term loan to replace the previous facilities held with The Royal Bank of Scotland. This is repayable in quarterly instalments over 5 years, with total repayments due in the next 12 months of £6.0 million. The outstanding balance as at 31 December 2018 was £19.5 million. In addition to the term loan, the Group also has a revolving capital facility (RCF) of £70.0 million. As at 31 December 2018, the Group had a total draw down against the RCF facilities of £51.6 million. These facilities have been provided by The Royal Bank of Scotland, HSBC and Bank of Ireland. Interest is charged on the term loan and drawn down RCF at a rate of 2.5% over the London Interbank Offered Rate. Borrowings can be reconciled as follows: Term loan RCF Capitalised fees, net of amortised amount 31 December 2018 31 December 2017 £000s 19,500 51,573 (732) 70,341 £000s 25,500 21,100 (645) 45,955 69 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements21. 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 2018 Non-current assets Related party receivables Current assets Cash Short-term derivative assets Trade receivables Other receivables and accrued income Related party receivables Current liabilities Trade payables Short-term derivative liabilities Short-term borrowings Accruals Non-current liabilities Long-term borrowings 31 December 2017 Non-current assets Related party receivables Current assets Cash Short-term derivative assets Trade receivables Other receivables and accrued income Related party receivables Current liabilities Short-term borrowings Short-term derivative liabilities Trade payables Accruals Non-current liabilities Long-term borrowings 70 Fair value (through profit or loss) £000s Loans and receivables £000s Amortised cost £000s - - - 529 - - - 529 - (1,408) - - (1,408) - - 2,775 2,775 6,268 - 43,594 3,563 838 54,263 - - - - - - - - - - - - - - - (8,809) - (6,000) (14,944) (29,753) (64,341) (64,341) Fair value (through profit or loss) £000s Loans and receivables £000s Amortised cost £000s - - - 369 - - - 369 - (98) - - (98) - - 3,700 3,700 2,952 - 34,950 3,017 927 41,846 - - - - - - - - - - - - - - - (6,000) - (6,780) (9,042) (21,822) (39,955) (39,955) Total £000s 2,775 2,775 6,268 529 43,594 3,563 838 54,792 (8,809) (1,408) (6,000) (14,944) (31,161) (64,341) (64,341) Total £000s 3,700 3,700 2,952 369 34,950 3,017 927 42,215 (6,000) (98) (6,780) (9,042) (21,920) (39,955) (39,955) ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements Maturity analysis Non-current assets Related party receivables Current assets Cash Short-term derivative assets Trade receivables Other receivables and accrued income Related party receivables Current liabilities Short-term borrowings Short-term derivative liabilities Trade accounts payable Accruals Non-current liabilities Long-term borrowings Less than one month One to three months Three months to one year £000s £000s £000s One to five years £000s Total £000s - 6,268 32 14,757 - 838 - - (3,866) - - 18,029 - - 77 23,077 3,563 - (2,061) (664) (4,943) (14,944) - 4,105 - - 420 5,760 - - (6,185) (744) - - - (749) 2,775 2,775 - - - - - - - - 6,268 529 43,594 3,563 838 (8,246) (1,408) (8,809) (14,944) (71,734) (68,959) (71,734) (47,574) The long term borrowing’s contractual features are detailed in note 20 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 above is inclusive of the projected interest payments in accordance with IFRS 7 (interest on short and long-term borrowings £9,369,000). Reclassifications There have been no reclassifications between financial instrument categories during the years ended 31 December 2018 and 31 December 2017. 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 2018. 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 2018, the only financial instruments measured at fair value were derivative financial assets/ liabilities and these are classified as Level 2. Type of Financial Instrument at Level 2 Measurement technique Main assumptions Main inputs used Derivative assets and liabilities Present-value method Determining the present value of financial instruments as the current value of future cash flows, taking into account current market exchange rates Observable market exchange rates 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. 71 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements 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 operations 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. The Group’s exposure to foreign currencies arising from financial instruments is: Total £000s 6,765 (940) 26,891 (267) 32,449 Total £000s 4,583 271 13,979 (191) 18,642 2017 £000s (1,315) (462) (1,777) 31 December 2018 Exposures Cash Short and long-term derivative assets/ (liabilities) Trade receivables Trade accounts payable Net exposure 31 December 2017 Exposures Cash Short and long-term derivative assets/ (liabilities) Trade receivables Trade accounts payable Net exposure USD £000s 3,749 (1,278) 22,739 (114) 25,096 USD £000s 2,389 225 9,806 (141) 12,279 EUR £000s 690 (129) 3,649 1 4,211 EUR £000s 427 (80) 3,884 (12) 4,219 Other £000s 2,326 467 503 (154) 3,142 Other £000s 1,767 126 289 (38) 2,144 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 2018 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 2018 £000s 2,788 468 3,256 2017 £000s 1,608 565 2,173 2018 £000s (2,281) (383) (2,664) 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 syndicated loans. 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 2018 £000s 2017 £000s 2018 £000s 2017 £000s Impact on: Net earnings before income tax 703 460 (703) (460) This analysis assumes all other variables remain constant. 72 ANNUAL REPORT AND ACCOUNTS 2018Notes 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 syndicated loans. 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 2018, the Group has a revolving credit facility of £51.6 million and a £30.0 million term loan (of which £19.5 million is outstanding as at 31 December 2018) outstanding. See note 20 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’s financial instruments do not have significant concentration of risk with any related parties. £57.6 million of the Group’s assets are subject to credit risk (31 December 2017: £45.9 million). The Group does not hold any collateral over these amounts. See note 17 for further details of the Group’s receivables. The Group operates a credit risk management process within the finance and credit control teams. The process starts prior to a contract being entered into, whereby factors such as company size, location and payment history are taken into account before the contract is signed. Following the commencement of contract, which are usually signed on a zero day payment policy unless other agreements are reached, the credit control team will monitor debt in reference to the due date. When the credit control team start to assess that the debt is becoming more of a credit risk (usually around 90 days after due date or sooner if escalated) it is then escalated to our internal debt recovery team. At this point it the debt recovery team will review on a debt by debt basis taking into to consideration: • The responses received back from the client • • The status of the transfer of services, such as delays and disputes • A re-assessment of credit worthiness Internal responses from the client service and account management team The debt recovery team and credit manager will then decide whether an impairment is made, but the team will continue to pursue the debt and also use means such as legal advice to further advance the process. Contract errors or delivery disputes, whereby we are either at fault or a commercial decision to appease the client has been made, credit notes are issued. Following the detailed line by line review of debts and potential impairment, an overall review will be made for the reasonableness of provision for potential credit write off based upon the write off as a percentage of revenue which guides management as to the general trend of credit write-off. The write-off history, including 2018, is shown as below Revenue Provision added for bad debt % of revenue 2018 2017 2016 157,553 118,649 100,013 2,341 1.5% 855 0.7% 912 0.9% 2015 60,466 841 1.4% 2014 63,161 2,280 3.6% 2013 54,342 824 1.5% Management have provided for all debts greater than 1 year, except for instances whereby there is sufficient reasonable grounds of recovery. This will be assessed by the nature of the debts and communication between the Group and the clients involved. Once the debt recovery team have explored all particular avenues of recovery, including legal advice and professional recovery services and the debt is deemed completely unrecoverable, the amount is fully written off from the debt ledger and from within the provision. At each year and half end, management will assess for further impairment based upon expected credit loss over and above the specific impairments noted through the year. The Group considers the current level of its allowance for doubtful debts to be adequate to cover expected credit losses on trade receivables. Bad debt expenses are reported in the income statement. The Group’s financial instruments do not have significant concentration of risk with any related parties. 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 24 for further details of the Group’s equity. The impact of the sensitivity analysis noted in the various risk categories above would impact the income statement for the year. 73 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements22. PROVISIONS The movement in the provisions is as follows: At 1 January 2017 Increase in provision Foreign exchange Utilised Release of unutilised provision At 31 December 2017 Increase in provision Foreign exchange Utilised Release of unutilised provision At 31 December 2018 Current: Non-current: Onerous leases Dilapidations £000s £000s 34 380 (3) (344) (4) 63 758 2 (582) - 241 241 - 292 235 (18) - (59) 450 140 13 - (43) 560 123 437 Other £000s 1,261 153 - (1,319) (7) 88 - - - (88) - - - Total £000s 1,587 768 (21) (1,663) (70) 601 898 15 (582) (131) 801 364 437 Onerous leases 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. 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 The other provision relates to the Group’s obligations to pay commission to survey respondents. 74 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements23. OPERATING LEASE COMMITMENTS As at 31 December 2018 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 2018 31 December 2017 £000s £000s 5,560 14,718 21,406 41,684 3 - 3 3,985 8,526 17,243 29,754 24 16 40 The Group sub-lets certain areas of its property portfolio. As at 31 December 2018, 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 24. EQUITY Share capital Allotted, called up and fully paid: Ordinary shares at 1 January (1/14th pence) Issue of shares: Consideration Research Views Limited Ordinary shares c/f 31 December (1/14th pence) Deferred shares of £1.00 each 31 December 2018 31 December 2017 £000s £000s 824 3,241 3,204 7,269 230 623 799 1,652 31 December 2018 31 December 2017 No’000 £000s No’000 £000s 102,346 15,957 118,303 100 118,403 73 11 84 100 184 102,346 - 102,346 100 102,446 73 - 73 100 173 Share Buyback As detailed in note 25, during the period the Group purchased an aggregate amount of 2,869,289 shares at a total market value of £16,853,000. The purchased shares will be held in treasury for the purpose of satisfying the exercise of share options under the Company’s Employee Share Option Plan. 75 ANNUAL REPORT AND ACCOUNTS 2018Notes 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 20) and cash and cash equivalents, and equity. The Company has two classes of shares. The ordinary shares carry no right to fixed income and each share carries the right to one vote at general meetings of the Company. The deferred shares do not confer upon the holders the right to receive any dividend, distribution or other participation in the profits of the Company. The deferred shares do not entitle the holders to receive notice of or to attend and speak or vote at any general meeting of the Company. On distribution of assets on liquidation or otherwise, the surplus assets of the Company remaining after payments of its liabilities shall be applied first in repaying to holders of the deferred shares the nominal amounts and any premiums paid up or credited as paid up on such shares, and second the balance of such assets shall belong to and be distributed among the holders of the ordinary shares in proportion to the nominal amounts paid up on the ordinary shares held by them respectively. There are no specific restrictions on the size of a holding nor on the transfer of shares, which are both governed by the general provisions of the Articles of Association and prevailing legislation. The Directors are not aware of any agreements between holders of the Company’s shares that may result in restrictions on the transfer of securities or on voting rights. No person has any special rights of control over the Company’s share capital and all its issued shares are fully paid. With regard to the appointment and replacement of Directors, the Company is governed by its Articles of Association, the Companies Act and related legislation. The Articles themselves may be amended by special resolution of the shareholders. The powers of Directors are described in the Board Terms of Reference, copies of which are available on request. Dividends The final dividend for 2017 was 5.0p per share and was paid in April 2018. The total dividend for the current year was 11.0 pence per share, with an interim dividend of 3.5 pence per share paid on 3 October 2018 to shareholders on the register at the close of business on 31 August 2018 and a final dividend of 7.5 pence per share will be paid on 26 April 2019 to shareholders on the register at the close of business on 22 March 2019. The ex-dividend date will be on 21 March 2019. Merger reserve The merger reserve was created to account for the premium on the shares issued in consideration for the purchase of GlobalData Holding Limited in 2016. The premium on the shares issued in consideration for the purchase of Research Views Limited and its subsidiaries (note 29) of £97.3 million was recognised in the merger reserve in the period ending 30 June 2018. Treasury reserve The treasury reserve contains shares held in treasury by the Group and in the Group’s Employee Benefit Trust for the purpose of satisfying the exercise of share options under the Company’s Employee Share Option Plan. Other reserve Other reserves consist of a reserve created upon the reverse acquisition of the TMN Group Plc in 2009. The parent company reserve differs from this due to the restatement of consolidated reserves at the time of the reverse acquisition. The parent company other reserve was generated in 2008 upon the issue of shares to fund acquisitions. The disclosures above are for both the Group and the Company. Foreign currency translation reserve The foreign currency translation reserve contains the translation differences that arise upon translating the results of subsidiaries with a functional currency other than Sterling. Such exchange differences are recognised in the income statement in the period in which a foreign operation is disposed of. During the year, there is a reclassification of £1.4m, which debits the corporation tax charge in the year ended 31 December 2018 and credits Retained Earnings within equity, in relation to deferred tax on share based payments. Further information is given in note 25. 76 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements 25. 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 Black-Scholes model. The inputs used in the model were: • share price at date of grant • exercise price • • annual risk-free interest rate and; • annualised volatility time to maturity The following assumptions were used in the valuation: Award Tranche Grant Date Fair Value of Share Price at Grant Date Exercise Price (Pence) Estimated Forfeiture rate p.a. Weighted Average of Remaining Contractual Life (Years) Award 1 Award 3 Award 4 Award 6 Award 7 Award 8 Award 9 Award 10 Award 11 Award 12 Award 13 Award 14 Award 15 Award 16 Award 17 Award 18 Award 19 Award 20 Award 21 Award 22 1 January 2011 1 May 2012 7 March 2014 22 September 2014 9 December 2014 31 December 2014 21 April 2015 28 September 2015 17 March 2016 17 March 2016 21 October 2016 21 March 2017 21 March 2017 21 March 2017 21 September 2017 20 March 2018 20 March 2018 23 October 2018 23 October 2018 23 October 2018 £1.09 £1.87 £2.55 £2.525 £2.075 £2.025 £2.040 £2.490 £2.064 £2.064 £4.425 £5.465 £5.465 £5.465 £5.740 £3.070 £3.070 £2.720 £2.720 £2.720 0.0714p 0.0714p 0.0714p 0.0714p 0.0714p 0.0714p 0.0714p 0.0714p 0.0714p 0.0714p 0.0714p 0.0714p 0.0714p 0.0714p 0.0714p 0.0714p 0.0714p 0.0714p 0.0714p 0.0714p 7.5% 10% 10% 0% 10% 10% 10% 10% 0% 10% 10% 20% 20% 20% 20% 20% 20% 20% 20% 0% 1.3 1.4 1.4 1.3 1.5 1.5 1.5 1.3 2.0 1.6 1.6 1.6 1.7 1.3 1.8 1.8 2.0 1,7 1.7 1.3 Awards 2 and 5 have been fully forfeited. The estimated forfeiture rate assumption is based upon management’s expectation of the number of options that will lapse over the vesting period. The assumptions were determined when the scheme was set up in 2011 and are reviewed annually. Management believe the current assumptions to be reasonable based upon the rate of lapsed options. The risk free interest rate and annualised volatility for awards granted in October 2018 were 1.2% and 17% respectively. The risk free interest rate and annualised volatility for awards granted in March 2018 were 1.4% and 23% respectively. Each of the awards are subject to the vesting criteria set by the Remuneration Committee. In order for the remaining options to be exercised, the Group’s earnings before interest, taxation, depreciation and amortisation, as adjusted by the Remuneration Committee for significant or one-off occurrences, must exceed targets of £32 million, £41million and £52 million respectively (2017: £28 million and £39 million respectively). The targets were revised during 2018 following the acquisition of Research Views Limited and MEED (2017: revised following the acquisition of the Pharmsource and Infinata businesses). 77 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial StatementsAward 1-4 Award 6 Award 7 Award 8 Award 9 Award 10 Award 12 Award 13 Award 14 Award 15 Award 16 Award 17 Award 18 Award 19 Award 20 Award 21 Award 22 Group Achieves £10m EBITDA Group Achieves £32m EBITDA Group Achieves £41m EBITDA 20% Vest N/a N/a N/a N/a N/a N/a N/a N/a N/a N/a N/a N/a N/a N/a N/a N/a 25% Vest 25% Vest 20% Vest 20% Vest 20% Vest 25% Vest 18% Vest 18% Vest 18% Vest 13% Vest 25% Vest 10% Vest 10% Vest 0% Vest 10% Vest 10% Vest 25% Vest 25% Vest 25% Vest 20% Vest 20% Vest 20% Vest 25% Vest 18% Vest 18% Vest 18% Vest 13% Vest 25% Vest 10% Vest 10% Vest 0% Vest 10% Vest 10% Vest 25% Vest Award 11 relates to options awarded to Executive Chairman, Bernard Cragg during 2016. The options will vest on 31 January 2019 and 31 January 2021 in equal tranches. The total charge recognised for the scheme during the twelve months to 31 December 2018 was £5,679,000 (2017: £5,323,000). The awards of the scheme are settled with ordinary shares of the Company. During the period the Group purchased an aggregate amount of 2,869,289 shares at a total market value of £16,853,000. The purchased shares will be held in treasury and in the Group’s Employee Benefit Trust for the purpose of satisfying the exercise of share options under the Company’s Employee Share Option Plan. Reconciliation of movement in the number of options is provided below. 31 December 2017 Granted Forfeited 31 December 2018 Option price (pence) Number of options 1/14th 1/14th 1/14th 1/14th 10,621,857 1,428,400 (1,241,396) 10,808,861 The following table summarises the Group’s share options outstanding at each year end: Reporting date 31 December 2011 31 December 2012 31 December 2013 31 December 2014 31 December 2015 31 December 2016 31 December 2017 31 December 2018 78 Options outstanding Option price (pence) Remaining life (years) 5,004,300 4,931,150 4,775,050 8,358,880 7,557,840 9,450,183 10,621,857 10,808,861 1/14th 1/14th 1/14th 1/14th 1/14th 1/14th 1/14th 1/14th 3.7 4.3 3.3 2.5 2.5 3.2 2.2 1.4 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements During 2018 the Group identified that in years prior to 2017 the share based Payment charge in the Group profit and loss account had been overstated by an aggregate £3.6m, as the charge had not been appropriately trued up each year for leavers. Because the annual charge is reversed each year in the Retained profit reserve, there has been no annual or cumulative misstatement of the Groups net assets or reserves. The error in 2017 was immaterial and accordingly the share based payment charge for that year has not been restated. The basis of calculation of the charge has been corrected for 2018 and future years. The impact of the above has meant that there is a reclassification of £1.4m, which debits the corporation tax charge in the year ended 31 December 2018 and credits Retained Earnings within equity, in relation to deferred tax on share based payments. The Remuneration Committee received notification from the Audit Committee that the quality of Adjusted EBITDA in 2018 of £32.2 million was sufficient to satisfy the first target of £32 million. The employees who have share options dependent on the meeting of the £32 million target will therefore get the opportunity to vest their options following the publication of the results. 26. CAPITAL COMMITMENTS There were no capital commitments at 31 December 2018 (2017: £nil). 27. RETIREMENT BENEFIT SCHEMES As a result of the Research Views Limited acquisition, the Group has a final salary defined benefit pension scheme, the Progressive Media Markets Limited Pension Scheme. The scheme operates within the standard UK regulatory framework for employer-sponsored pension schemes. Funding rates are agreed between the scheme’s trustees and the Company, based on a prudent assessment of the scheme liabilities. The scheme is no longer open to future accrual, closing on 31 August 2017. The Trustees are required to carry out an actuarial valuation every three years. An actuarial valuation was carried out for IAS 19 purposes as at 31 December 2018. The Group’s contribution to the scheme since acquisition was £nil. As the scheme is now closed to future accrual, it is not expected that the Group will contribute to the scheme over the accounting year to 31 December 2019. The scheme is exposed to a number of risks and sensitivities, including: • • • Longevity risk: changes in the estimation of mortality rates of current and former employees. Investment risk: movement of discount rate used against the return from plan assets Interest rate risk: decreases/increases in the discount rate used will increase/decrease the defined benefit obligation Net interest income of £24,000 has been incurred on the assets of the scheme in the year with a past service cost of £51,000. The net pension expense of £27,000 has not been recognised in the Income Statement of the Group on the basis that the corresponding gain of £27,000 in the Other Comprehensive Income Statement has also not been recognised. The Group is working with the Trustees to de-risk any future gains or losses by aligning the investment strategy to the nature of the scheme’s liabilities. Changes in the present value of defined benefit obligations are as follows: Defined benefit obligation at acquisition Interest expense on defined benefit obligation Benefits paid Past service cost Re-measurement Closing defined benefit obligation 31 December 2018 £000s (5,287) (130) 213 (51) 153 (5,102) 79 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial StatementsChanges in the present value of defined benefit assets are as follows: Fair value of plan assets at acquisition Interest income on plan assets Re-measurement Benefits paid Closing fair value of scheme assets The closing assets represent £5,949,000 Gilts and £44,000 cash. Defined benefit obligation Fair value of plan assets Net defined benefit asset 31 December 2018 £000s 6,262 154 (210) (213) 5,993 31 December 2018 £000s (5,102) 5,993 891 The asset had not been recognised on the Statement of Financial Position as the Group does not have an unconditional right to a refund. The assumptions which have the most significant effect on the result of the IAS 19 valuation for the scheme are those relating to the discount rate, the rates of increases in price inflation and pensions and life expectancy. The main assumptions adopted are: Discount rate RPI inflation rate CPI inflation rate Increases to pensions in deferment: Non-GMP accrued before 6 April 2009 Non-GMP accrued on or after 6 April 2009 Increases to pensions in payment: Pre 88 GMP Post 88 GMP Pre 97 Excess Post 97 Life expectancy: Male currently aged 65 Female currently aged 65 Male currently aged 45 Female currently aged 45 GMP: Guaranteed minimum pension The sensitivities regarding the principal assumptions used to measure the scheme liabilities are: 31 December 2018 % pa 2.8% 3.6% 2.6% 2.6% 2.5% Nil 3.0% 3.0% 3.0% 87 89 89 91 Change in assumption Impact on scheme liabilities 0.5% decrease Increase by £390,000 0.5% increase 0.5% increase Increase by £90,000 Increase by 85,000 Assumption Discount rate Price inflation Mortality rate 80 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements28. DISCONTINUED OPERATIONS On 1 October 2018 the Group sold Dewberry Redpoint Limited, a wholly owned indirect subsidiary of GlobalData Plc. As part of our strategy to become a world leading data and analytics provider, over the past 2-3 years, the Group has discontinued and disposed of several non- core assets, which were mainly focused on lower margin print and web media that traditionally have a more transactional revenue base. The disposal of Dewberry Redpoint Limited is a continuation of this strategy. The principal activity of Dewberry Redpoint Limited was the publication of trade journals and the production and organisation of trade events and conferences. The results of the discontinued operations are as follows; Discontinued operations Revenue Cost of sales Gross (loss)/ profit Distribution costs Administrative costs (Loss)/ profit before tax from discontinued operations Income tax Loss/ profit for the year from discontinued operations a) (Loss)/ profit before tax This is arrived at after charging: Impairment b) Cash flows from discontinued operations Cash outflows from operating activities Total cash outflows from discontinued operations Year ended 31 December 2018 Year ended 31 December 2017 £000s £000s 1,933 (1,976) (43) - (1,381) (1,424) 169 (1,255) 3,029 (1,776) 1,253 (65) (1,178) 10 - 10 Year ended 31 December 2018 Year ended 31 December 2017 £000s 535 £000s - Year ended 31 December2018 Year ended 31 December 2017 £000s 912 912 £000s 267 267 Dewberry Redpoint Limited was sold for consideration of £75,000, settled in cash amounts of £30,000 and deferred payment of £45,000. The Group made a loss on disposal of £1.1 million. 29. ACQUISITIONS Research Views Limited On 28 March 2018, the Group took control of the entire share capital of Research Views Limited. Although the acquisition was subject to shareholder vote at a general meeting on 24th April, HMRC had approved the commercial aspects of the transaction and Mike Danson (68.6% majority shareholder at the time) had signed an irrevocable undertaking to vote in favour of the acquisition. Therefore, at this stage the Group was certain the deal would be approved and started to integrate and manage the acquired business. The transaction was effected by a share for share exchange, in which GlobalData Plc issued 15,957,447 shares to the shareholders of Research Views Limited. Based on GlobalData’s share price of £6.10 on 28 March 2018 (the date of transfer of control), the acquisition value was £97.3 million. 81 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial StatementsThe amounts recognised for each class of assets and liabilities at the acquisition date were as follows: Intangible assets consisting of: Brand Customer relationships Intellectual property and content Net liabilities acquired consisting of: Property, plant and equipment Intangible assets Cash and cash equivalents Trade and other receivables Trade and other payables Corporation tax payable Deferred tax Fair value of net (liabilities)/ assets acquired Attributable to: Equity holders of the parent Non-controlling interest The goodwill recognised in relation to the acquisition is as follows: Consideration Less net assets acquired (equity holders of the parent) Goodwill Carrying Value £000s Fair Value Adjustments £000s - - - 95 3,187 585 4,159 (25,454) (161) 373 (17,216) 3,089 9,319 20,430 - (3,028) - (151) (261) - (4,821) 24,577 Fair Value £000s 3,089 9,319 20,430 95 159 585 4,008 (25,715) (161) (4,448) 7,361 6,815 546 Fair Value £000s 97,340 (6,815) 90,525 In line with the provision 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. The goodwill that arose on the combination can be attributed to the assembled workforce, know-how and expertise. The intangible asset valuations are provisional as at the interim reporting date. The Group incurred legal and professional costs of £1.2 million in relation to the acquisition, which were recognised in other expenses. The group additionally incurred £0.5 million of stamp duty payable upon the acquisition which was recognised within other expenses. In the year ended 31 December 2017 the trade of Research Views Limited and its subsidiaries generated revenues of £26.0 million and EBITDA of £2.7 million. The business has generated revenues of £19.9 million from the period from acquisition to 31 December 2018. If the acquisition had occurred on 1 January 2018, the Group revenue for 2018 would have been £163.0 million and the Group loss before tax from continuing operations would have been £5.0 million. Research Views Limited and its subsidiaries were entities under common control at the time of acquisition, by virtue of being controlled by Mike Danson. IFRS 3 scopes out combinations of entities under common control. The Group has therefore applied IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’ and used management judgement in developing and applying an accounting policy that results in information which is reliable and relevant. Management have determined it is most appropriate to follow the principles of IFRS3, and apply acquisition accounting for acquisitions of entities under common control. Sportcal Global Communications Limited, an indirect subsidiary of Research Views Limited, has a minority shareholder owning 26% of the shares of the Company. As such, the Group has allocated a portion of the acquisition date values to non-controlling interests and recognised non-controlling interest in relation to the Company’s profit for the period. The Group took control of the remaining part of the share capital on 24 December 2018 when the Minority Interest exercised a put option for us to acquire the remaining shares for £1.2 million. The exercise notice was irrevocable and the Group had the obligation to purchase. As a result, the Group considered the acquisition of the remaining 24% of share capital on 24 December 2018. The consideration was paid on 28 January 2019 and was when the share transfer legally took place. 82 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial StatementsOther acquisitions The Group also made three small acquisitions in the period for a total consideration of £4.4 million, on which goodwill of £2.8 million has been recognised. The goodwill that arose on the combinations can be attributed to the assembled workforce, know-how and research methodology which the Group is now utilising across all of our data and analytics products. The Group incurred legal and professional costs of £112,000 in relation to the acquisitions, which were recognised in other expenses. Cash Cost of Acquisitions The cash cost of acquisitions comprises: Acquisition of CHM Research Limited Acquisition of Competenet Acquisition of Research Views Limited: Cash acquired as part of opening balance sheet Acquisition of Global Ad Source Acquisition of Ascential Jersey Holdings: Cash consideration Cash acquired as part of opening balance sheet Acquisition of Infinata 30. RELATED PARTY TRANSACTIONS Year ended 31 December 2018 Year ended31 December 2017 £000s (1,499) (869) 585 (2,037) (787) - - (4,607) £000s - - - - (13,158) 524 (7,704) (20,338) Mike Danson, GlobalData Plc’s Chief Executive, owns 68.6% of the Company’s ordinary shares as at 24 February 2019. Mike Danson owns a number of businesses that interact with GlobalData Plc. The principal transactions, which are all conducted on an arm’s length basis, are as follows: Accommodation GlobalData Plc occupies buildings which are owned by Estel Property Investments Limited, a company wholly owned by Mike Danson. The total rental expense, including service and management fees, in relation to the buildings owned by Estel Property Investments for the year ended 31 December 2018 was £2,551,900 (2017: £2,061,600). 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 net recharge made from GlobalData Plc to these companies for the year ended 31 December 2018 was £490,400 (2017: £874,600). Loan to Progressive Trade Media Limited As part of the 2016 disposal of non-core B2B print businesses to a related party, the Group agreed to issue a loan to Progressive Trade Media Limited to fund the purchase consideration. This loan is for £4.5 million and repayable in 5 instalments, with the next instalment due in January 2020 (following payment received in January 2019). Interest of 2.25% above LIBOR is charged on the loan, with £117,000 charged in the year ended 31 December 2018 (2017: £112,000). Directors and Key Management Personnel The remuneration of Directors is discussed within the Directors’ Remuneration Report on pages 34 and 35. Remuneration of key management personnel is detailed in note 9. Acquisitions As detailed in note 29, Research Views Limited and its subsidiaries were acquired during the period. The entities were under common control at the time of acquisition, by virtue of being controlled by Mike Danson. Refer to note 29 for further details. 83 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements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: Non-Trading Balances Amounts due in greater than one year: Progressive Trade Media Limited Amounts due within one year: Progressive Trade Media Limited Trading Balances Amounts due within one year: Estel Property Group Limited Progressive Media Ventures (and subsidiaries) Compelo Group (and subsidiaries) Research Views Group (and subsidiaries) 31 December 2018 31 December 2017 £000s 2,775 2,775 £000s 3,700 3,700 31 December 2018 31 December 2017 £000s 925 925 £000s 925 925 31 December 2018 31 December 2017 £000s - - (1) - (1) £000s (523) 94 71 360 2 The parent company’s balances with related parties are disclosed on pages 97 and 98 of the annual report. The Group has right of set off over these amounts. In addition, the Group has a related party relationship with 3KSC, a Company owned by a Director of a subsidiary of the Group. At 31 December 2018 the Group had a loan balance due to 3KSC of £86,000. The loan was repaid in January 2019 and the Director is no longer a Director of the subsidiary Company. 31. SUBSEQUENT EVENTS On 4 January 2019, the Group acquired the entire share capital of the Aroq Limited Group for cash consideration of £6.8 million. Aroq provides global business information in the auto, drinks, food and style sectors. The business incurred legal expenses of £0.1 million which will be recognised in the period ending 31 December 2019. 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 2018. For the year ended 31 March 2018 the acquired Aroq business had revenues of £2.9 million and profits before tax of £0.4 million. 84 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial Statements Principal subsidiary undertakings The Group has a large number of subsidiaries because of the companies inherited through M&A. The Group is currently going through corporate simplification process and reducing the number of its subsidiaries and focussing operations through its main subsidiaries in its main territories. Subsidiary undertaking Adfinitum Networks Inc* Attentio Inc* Country of registration Holding Canada Ordinary shares United States of America Ordinary shares Attentio Research Centre Private Limited* India Ordinary shares Attentio Research Limited* Canadean Limited Canadean Mexico Y Centro America, F. De R.L. De C.V* England & Wales Ordinary shares England & Wales Ordinary shares % 100% 100% 100% 100% 100% Principal activity Data and analytics Data and analytics Data and analytics Data and analytics Data and analytics Mexico Ordinary shares 100% Data and analytics Current Analysis SAS* Current Analysis, Inc* France Ordinary shares United States of America Ordinary shares 100% 100% Data and analytics Data and analytics Digital Insights and Research Private Limited* India Ordinary shares 100% Data and analytics Financial News Publishing Limited England & Wales Ordinary shares GD Research Centre Private Limited* GlobalData Australia Pty Limited GlobalData Brasil, serviços e informações empresariais Ltda.* GlobalData Canada Inc* GlobalData Holding Limited GlobalData Japan KK* GlobalData Pte Limited* India Ordinary shares Australia Ordinary shares 100% 100% 100% Data and analytics Data and analytics Data and analytics Brazil Ordinary shares 100% Data and analytics Canada Ordinary shares England & Wales Ordinary shares Japan Ordinary shares Singapore Ordinary shares 100% 100% 100% 100% 100% 100% Data and analytics Holding company Data and analytics Data and analytics Data and analytics Data and analytics Global Data Publications, Inc* United States of America Ordinary shares GlobalData UK Limited* England & Wales Ordinary shares Internet Business Group Limited England & Wales Ordinary shares 100% Performance advertising Kable Business Intelligence Limited England & Wales Ordinary shares MEED Media FZ LLC* United Arab Emirates Ordinary shares Progressive Digital Media (Holdings) Limited England & Wales Ordinary shares Progressive Digital Media Holdings, Inc United States of America Ordinary shares Progressive Digital Media Inc United States of America Ordinary shares Progressive Digital Media Limited Progressive Digital Media Pvt Ltd England & Wales Ordinary shares India Ordinary shares Progressive Media Group Limited* England & Wales Ordinary shares Progressive Media International Middle East FZ LLC* United Arab Emirates Ordinary shares Progressive Media Korea Limited* South Korea Ordinary shares Progressive Media Ventures Limited* England & Wales Ordinary shares Progressive Ventures Limited* England & Wales Ordinary shares Research Views Limited* Sociable Data Limited* Sportcal.com Limited* GlobalData Singpore Pte Limited (formerly VRL Publishing Singapore Pte Limited)* England & Wales Ordinary shares England & Wales Ordinary shares England & Wales Ordinary shares Singapore Ordinary shares World Market Intelligence Inc* United States of America Ordinary shares World Market Intelligence Limited* England & Wales Ordinary shares World Market Intelligence Pty Limited* Australia Ordinary shares *indirectly held 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Data and analytics Data and analytics Holding company Holding company Data and analytics Data and analytics Data and analytics Data and analytics Data and analytics Data and analytics Holding company Holding company Holding company Data and analytics Non-trading Data and analytics Data and analytics Data and analytics Data and analytics 85 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Consolidated Financial StatementsCompany Statement of Financial Position Notes 31 December 31 December Non-current assets Property, plant and equipment Intangible assets Investments Current assets Trade and other receivables Short-term derivative assets Total assets Current liabilities Bank overdraft Trade and other payables Short-term derivative liabilities Short-term provisions Short-term borrowings Non-current liabilities Long-term provisions Long-term borrowings Total liabilities Net assets Equity Share capital Share premium account Treasury reserve Other reserve Merger reserve Retained earnings Equity attributable to equity holders 5 4 6 7 8 9 8 10 11 10 11 2018 £000s 873 933 175,121 176,927 169,574 - 169,574 346,501 (448) (91,134) (1,408) - (6,000) (98,990) (199) (64,341) (64,540) (163,530) 2017 £000s 794 1,167 169,442 171,403 41,494 241 41,735 213,138 (3,014) (53,363) (96) (25) (6,000) (62,498) (186) (39,955) (40,141) (102,639) 182,971 110,499 184 200 (19,142) 7,174 163,810 30,745 182,971 173 200 (2,289) 7,174 66,481 38,760 110,499 These financial statements were approved by the board of directors on 24 February 2019 and signed on its behalf by: Bernard Cragg Executive Chairman Mike Danson Chief Executive The accompanying notes form an integral part of this financial report. Company loss for the year: £4,584,000 (2017: loss of £2,983,000) Company number: 0392531 86 ANNUAL REPORT AND ACCOUNTS 2018 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 y r u s a e r T e v r e s e r r e h t O e v r e s e r r e g r e M i s g n n r a e d e n a t e R i y t i u q e l a t o T Balance at 1 January 2017 Loss for the year Transactions with owners: Dividends Share buyback Share based payments charge Balance at 31 December 2017 Loss for the year Transactions with owners: Issue of share capital Dividends Share buyback Share based payments charge Balance at 31 December 2018 £000s £000s £000s £000s £000s £000s £000s 173 200 (960) 7,174 66,481 43,554 116,622 - - - - 173 - 11 - - - - - - - - - (1,329) - - - - - - - - - (2,983) (2,983) (7,134) - 5,323 (7,134) (1,329) 5,323 200 (2,289) 7,174 66,481 38,760 110,499 - - - - - - - (16,853) - - - - - - (4,584) (4,584) 97,329 - 97,340 - - - (9,110) (9,110) - (16,853) 5,679 5,679 184 200 (19,142) 7,174 163,810 30,745 182,971 The accompanying notes form an integral part of this financial report. 87 ANNUAL REPORT AND ACCOUNTS 2018 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 used in operations Interest received/ (paid) Net cash generated from/ (used in) operating activities Cash flows from investing activities Purchase of property, plant and equipment Purchase of intangible assets Net cash used in investing activities Cash flows from financing activities Proceeds from long-term borrowings Loan fees Settlement of long-term borrowings Repayment of short-term borrowings Share Buyback Dividends paid Net inflow/ (outflow) from inter-company loans Net cash generated 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 2018 Year ended 31 December 2017 £000s £000s (4,584) (2,983) 455 807 (1,055) - (12) 1,553 141 2,163 (532) 1,368 836 (534) (573) (1,107) 30,473 (285) (8,408) (6,000) (16,853) (9,110) 13,020 2,837 2,566 (3,014) (448) 564 921 1,544 (274) 103 (1,180) (776) (777) (2,858) (1,489) (4,347) (310) (546) (856) 51,100 - (29,519) (7,356) (1,329) (7,134) (5,704) 58 (5,145) 2,131 (3,014) 88 ANNUAL REPORT AND ACCOUNTS 2018 1. GENERAL INFORMATION Nature of operations The principal activity of GlobalData Plc is as a holding company of subsidiary entities which are engaged in providing business information in the form of high quality proprietary data and analytics to clients in multiple sectors. 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. The existing finance facilities were issued with debt covenants, which are measured on a quarterly basis. 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 and provisions for share based payments. 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. The significant judgements involved in calculating the share based payments charge are the fair value at the date of grant which is determined by using the Black-Scholes model, the senior management retention rate which is determined with reference to historical churn and the estimated vesting periods which are determined with reference to the Group’s forecasts. 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. 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 2018 is £4.6 million (year ended 31 December 2017: loss £3.0 million). 89 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Company Financial Statements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 2018. The company accounts are unaffected by the impact of IFRS 15 as it does not have revenue contract obligations. The company was impacted by the introduction of IFRS 9. IFRS9: Financial Instruments On 1 January 2018, IFRS9 ‘Financial Instruments’ also came into effect. The new standard is based on the concept that financial assets should be classified and measured at fair value, with changes in fair value recognized in profit and loss as they arise (“FVPL”), unless restrictive criteria are met for classifying and measuring the asset at either Amortized Cost or Fair Value through Other Comprehensive Income (“FVOCI”). The financial assets which the Group holds are loans and receivables, for which changes to the fair value are posted to the income statement. Similarly, any changes to the fair value of the forward contracts in place at the period end are also posted to the income statement. 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. e) Investments 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. 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. 90 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Company Financial Statements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 Statement of Financial Position 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 Company 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 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. Cash comprises cash balances and highly liquid call deposits. Bank overdrafts that form an integral part of the Company’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. 91 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Company Financial Statements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 Company 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. 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 (fair value at the date of grant determined using the Black-Scholes model), 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 The final dividend for 2017 was 5.0p per share and was paid in April 2018. The total dividend for the current year was 11.0 pence per share, with an interim dividend of 3.5 pence per share paid on 3 October 2018 to shareholders on the register at the close of business on 31 August 2018 and a final dividend of 7.5 pence per share will be paid on 26 April 2019 to shareholders on the register at the close of business on 22 March 2019. The ex-dividend date will be on 21 March 2019. 4. INTANGIBLE ASSETS Computer software Cost As at 1 January 2017 Additions As at 31 December 2017 Additions As at 31 December 2018 Amortisation As at 1 January 2017 Charge for the year As at 31 December 2017 Charge for the year As at 31 December 2018 Net book value As at 31 December 2018 As at 31 December 2017 92 £000s 3,682 398 4,080 573 4,653 (2,140) (884) (3,024) (758) (3,782) 871 1,056 Brand £000s - 148 148 - 148 - (37) (37) (49) (86) 62 111 Total £000s 3,682 546 4,228 573 4,801 (2,140) (921) (3,061) (807) (3,868) 933 1,167 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Company Financial Statements 5. PROPERTY, PLANT AND EQUIPMENT Cost As at 1 January 2017 Additions As at 31 December 2017 Additions As at 31 December 2018 Depreciation As at 1 January 2017 Charge for the year As at 31 December 2017 Charge for the year As at 31 December 2018 Net book value As at 31 December 2018 As at 31 December 2017 6. INVESTMENTS Cost As at 1 January 2017 Share based payments to employees of subsidiaries As at 31 December 2017 Share based payments to employees of subsidiaries As at 31 December 2018 Impairment As at 31 December 2017 and 2018 Net book value As at 31 December 2018 As at 31 December 2017 Leasehold improvements £000s Computer equipment £000s 225 - 225 114 339 (44) (23) (67) (28) (95) 244 158 2,891 310 3,201 420 3,621 (2,024) (541) (2,565) (427) (2,992) 629 636 Total £000s 3,116 310 3,426 534 3,960 (2,068) (564) (2,632) (455) (3,087) 873 794 Group undertakings £000s 174,396 5,323 179,719 5,679 185,398 (10,277) 175,121 169,442 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. As the Company’s net assets exceeded the Group assets there is an indication of impairment. Sufficient evidence has been obtained to support that there is no impairment as the value in use forecasts have sufficient headroom over the carrying amount of the investments. 93 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Company Financial Statements7. TRADE AND OTHER RECEIVABLES Prepayments Other receivables Amounts owed by group undertakings Amounts owed by related parties Other taxation and social security 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 Net derivative (liability)/ asset 31 December 2018 31 December 2017 £000s £000s 1,966 1,031 166,227 - 350 169,574 1,616 94 38,004 1,235 545 41,494 31 December 2018 31 December 2017 £000s - (1,408) (1,408) £000s 241 (96) 145 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 a cost of £1,553,000 (2016: credit of £1,180,000). 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 2019 9. TRADE AND OTHER PAYABLES Trade payables Other payables Accruals Amounts owed to group undertakings Amounts owed to related parties Euro €’000 4,664 US Dollar $’000 20,953 31 December 2018 31 December 2017 £000s 723 143 3,301 86,967 - 91,134 £000s 174 11 648 51,472 1,058 53,363 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 2018 Increase in provision Release of unutilised provision At 31 December 2018 Current: Non-current: 94 Dilapidations £000s 211 13 (25) 199 - 199 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Company Financial Statements 11. BORROWINGS Current Loans due within one year Non-current Long-term loans 31 December 2018 31 December 2017 £000s £000s 6,000 64,341 6,000 39,955 Term loan and RCF In April 2017, the Group refinanced its debt position. The facility consists of a £30.0 million term loan to replace the previous facilities held with The Royal Bank of Scotland. This is repayable in quarterly instalments over 5 years, with total repayments due in the next 12 months of £6.0 million. The outstanding balance as at 31 December 2018 was £19.5 million. In addition to the term loan, the Group also has a revolving capital facility (RCF) of £70.0 million. As at 31 December 2018, the Group had a total draw down against the RCF facilities of £51.6 million. These facilities have been provided by The Royal Bank of Scotland, HSBC and Bank of Ireland. Interest is charged on the term loan and drawn down RCF at a rate of 2.5% over the London Interbank Offered Rate. 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 31 December 2018 Current assets Other receivables Amounts owed by group undertakings Current liabilities Bank overdraft Short-term derivative liabilities Trade accounts payable Other payables Accruals Amounts owed to group undertakings Short-term borrowings Non-current liabilities Long-term borrowings - - - (1,408) - - - - - (1,408) - - 1,031 166,227 167,258 - - - - - - - - - - - - (448) - (723) (143) (3,301) (86,967) (6,000) (97,582) (64,341) (64,341) Total £000s 1,031 166,227 167,258 (448) (1,408) (723) (143) (3,301) (86,967) (6,000) (98,990) (64,341) (64,341) 95 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Company Financial Statements31 December 2017 Current assets Short-term derivative assets Other receivables Amounts owed by related parties Amounts owed by group undertakings Current liabilities Bank overdraft 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 borrowings Maturity analysis Current assets Other receivables Amounts owed by group undertakings Current liabilities Bank overdraft Short-term derivative liabilities Trade accounts payable Other payables Accruals Short-term borrowings Non-current liabilities Long-term borrowings Fair Value (through profit or loss) £000s Loans and receivables £000s Amortised cost £000s 241 - - - 241 - (96) - - - - - - (96) - - - 94 1,235 38,004 39,333 - - - - - - - - - - - Less than one month One to three months Three months to one year £000s £000s £000s - - - (664) (267) (143) (3,301) (2,061) 1,031 - (744) (336) - - (6,185) - - (448) - (120) - - - - (568) - - - - - (3,014) - (174) (11) (648) (51,472) (1,058) (6,000) (62,377) (39,955) (39,955) One to five years £000s - 79,260 - - - - - - Total £000s 241 94 1,235 38,004 39,574 (3,014) (96) (174) (11) (648) (51,472) (1,058) (6,000) (62,473) (39,955) (39,955) Total £000s 1,031 79,260 (448) (1,408) (723) (143) (3,301) (8,246) - (6,436) - (6,234) (71,734) 7,526 (71,734) (5,712) The long-term borrowing’s contractual features are detailed in note 20 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 above is inclusive of the projected interest payments in accordance with IFRS 7 (interest on short and long-term borrowings £9,369,000). Reclassifications There have been no reclassifications between financial instrument categories during the year ended 31 December 2018 and year ended 31 December 2017. Please refer to note 21 of the Group accounts on financial assets and liabilities for the Group’s exposure to risk. 96 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Company Financial Statements Credit risk In the normal course of its business, the Company incurs credit risk from cash 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. £80.3 million of the Company’s assets are subject to credit risk (31 December 2017: £39.6 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 receivable from Group undertakings. 13. RELATED PARTY TRANSACTIONS Directors The remuneration of the Directors of the Group and Company is set out on page 35 in the consolidated accounts of the Group within the Directors Remuneration Report. 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 net recharge made from GlobalData Plc to these companies for the year ended 31 December 2018 was £490,400 (2017: £874,600). Amounts outstanding to and from group undertakings The amounts outstanding from group undertakings were: 31 December 2018 31 December 2017 £000s £000s Amounts owed by group undertakings: Progressive Capital Limited GlobalData UK Limited Progressive Digital Media Limited Progressive Digital Media (Holdings) Limited Current Analysis Inc Current Intelligence & Analysis Limited Dewberry Redpoint Limited SPG Media Group Limited GlobalData Japan KK GlobalData Pte Limited GlobalData Australia Pty Limited GlobalData Brasil, serviços e informações empresariais Ltda. Canadean Mexico Y Centro America, F. De R.L. De C.V GlobalData Canada Ltd Progressive Media International Middle East FZ LLC Progressive Media Ventures Limited Attentio Research Limited TMN Media Ltd GlobalData Singapore Pte Limited (formerly VRL Publishing Singapore Pte Ltd) World Market Intelligence Pty Limited World Market Intelligence Limited Research Views Limited 9,989 128,993 - 981 4,141 2,223 - 246 - 1,177 1,034 322 357 663 628 7,854 2,671 1,495 2,135 321 814 183 9,989 16,072 3,270 4,170 555 2,225 500 246 69 175 733 - - - - - - - - - - - 166,227 38,004 97 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Company Financial Statements 31 December 2018 31 December 2017 £000s £000s (5,270) (59,757) (24) (2,006) (2,263) - - - (5,182) (2,243) (1,692) (70) (347) (1,463) (456) (1,831) (878) (1,656) (704) (864) (201) (26) (34) (2,213) (40,983) (24) (456) (2,263) (357) (466) (847) (914) (1,447) (1,502) - - - - - - - - - - - - (86,967) (51,472) 31 December 2018 31 December 2017 £000s £000s - - - - - - 297 938 1,235 (149) (909) (1,058) Amounts owed to group undertakings: Internet Business Group Limited Progressive Media Group Limited Verdict Media Limited (formerly Kable Intelligence Limited) Kable Business Intelligence Limited Cornhill Publications Limited Progressive Media International Middle East FZ LLC TMN Media Limited Electronic Direct Response Limited Global Data Publications Inc Progressive Digital Media Inc Progressive Digital Media Pvt Limited CHM Research Ltd Canadean Limited Current Analysis Inc GlobalData Japan KK Financial News Publishing Limited ICD Research Limited MEED Media FZ LLC Progressive Media UK Limited Sociable Data Limited Sportcal Global Communications Limited World Market Intelligence Inc Attentio Inc Amounts outstanding to and from related parties The amounts outstanding for related parties were: Amounts owed by related parties: Estel Properties Investments Limited Compelo Group (and subsidiaries) Amounts owed to related parties: Progressive Media Ventures (and subsidiaries) Research Views Group (and subsidiaries) 98 ANNUAL REPORT AND ACCOUNTS 2018Notes to the Company Financial Statements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 N+1 Singer Advisory LLP 1 Bartholomew Lane London EC2N 2AX Solicitors ReedSmith 20 Primrose Street London, England EC2A 2RS Auditor Grant Thornton UK LLP 30 Finsbury Square London EC2A 1AG Registrars Link Asset Services 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 ANNUAL REPORT AND ACCOUNTS 2018 99 Head Office and Registered Office John Carpenter House John Carpenter Street London EC4Y 0AN Tel: + 44 (0) 20 7936 6400 100 ANNUAL REPORT AND ACCOUNTS 2016Chief Executive’s ReportStrategic Report

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