27 February 2023

GlobalData Plc

Full Year Results

 31 December 2022

GlobalData Plc (AIM: DATA, GlobalData, the Group), a leading provider of industry intelligence, today publishes its results for the year ended 31 December 2022 (FY22).

·      Our strong performance in 2022 has accelerated our Adjusted EBITDA earnings expectations for FY23

·      Delivered target of 10% underlying revenue growth and Adjusted EBITDA margin of 36%

·      Proposed final dividend increases total dividend by 35% to 26.0 pence per share

·      Strong momentum with >80% visibility on FY23 revenue and accelerating towards 40% Adjusted EBITDA margin

·      Well positioned for sustainable organic growth, supported by earnings enhancing M&A

Mike Danson, Chief Executive Officer of GlobalData Plc, commented:

"Today we are reporting an excellent set of results for FY22 with overall revenue growth of 28%, including underlying revenue growth of 10% and Adjusted EBITDA margin of 36%, delivering our near-term financial targets. As signalled in our trading update on 10 January 2023, our strong performance in 2022 has brought forward our Adjusted EBITDA earnings expectations by a year.

We have delivered on our previously stated near-term financial targets and continue to drive the business forward. The resilient nature of our business model underpins confidence in our ability to continue to achieve double-digit revenue growth, significant margin progression and to pay a progressive dividend.

This year, we have continued to invest heavily in our people, our platform and in our unique product which is yielding such strong results. Our product continues to deliver mission-critical intelligence and insights to our customers driving strong growth across both new and existing customers. I would like to thank the team for all their efforts to evolve our scalable One Platform, which now covers 20 sectors, delivering must-have critical information to a growing global customer base.

We enter 2023 in a position of strength with visibility on more than 80% of our FY23 revenue guidance, giving us the confidence for both growth and margin expansion into 2023 and beyond. I believe we are at an inflection point in our journey and poised to leverage the platform further. With a strong business model and differentiated product, GlobalData is well placed to capitalise on the multiple levers open to us to create long-term compounding growth and shareholder returns in the year ahead and beyond."

Highlights

Financial results for the year ended 31 December 2022.

Financial Highlights 

·      Strong growth in both revenues and profit means we delivered our 'rule of 40' goal

o  Underlying¹ revenue growth of 10%, underpinned by subscriptions - 81% of total revenues.

o  Demonstrates the significant opportunity for GlobalData to grow revenue organically, aided by the benefit of acquisitions and currency tailwinds for reported growth of 28%.

·      Adjusted EBITDA² up 34% to £86.4m (2021: £64.4m) and Adjusted EBITDA margin² improvement of 2 percentage points to 36%. 

·      Statutory PBT grew by £5.8m to £38.4m (2021: £32.6m) reflecting an 18% increase on prior year.

·      Operating cash flow grew by 41% to £85.4m (2021: £60.5m) which was 99% of Adjusted EBITDA (2021: 94%).

·      Continued improvement of Invoiced Forward Revenue⁴ growth of 24% up to £133.5m at 31 December 2022 (2021: £107.7m), which includes underlying growth of 12%, the benefit of acquisitions and currency tailwinds.

·      Final dividend of 18.3p, up 39% (2021: 13.2p); total dividend of 26.0p, up 35% (2021: 19.3p). 

Operational Highlights

·      Delivering on our Growth Optimisation Plan via four key pillars:

o  Customer Obsession, World-Class Product, Sales Excellence and Operational Agility.

·      Customer Obsession remains our number one priority

o  Enhanced our client relationships with focused initiatives contributing to improved renewal rates, increased average client value and continued traction with multi-year deals.

·      Continued investment in our World-Class Product, embedding artificial intelligence and machine learning

o  Scalable 'One Platform' now covers 20 sectors, delivering must-have critical information.

o  Our unique platform is ideally positioned to integrate new datasets and verticals.

·      Immediate value derived following completion of two further strategic acquisitions

o  Media Business Insight - a new vertical with deep media sector intelligence.

o  TS Lombard - bringing global economic and political research filling a gap in thematic intelligence.

o  Integrations on track.

·      Focus on strong Sales Excellence driving results

o  We start the year with 80% visibility of budgeted revenues for 2023.

·      Delivering Operational Agility with continued disciplined approach to cost

·      Completed refinancing to support future M&A strategy

Current Trading and Outlook

·      Entering the new financial year from a position of strength and scope for further margin improvement.

·      Set to deliver resilient growth - uncertainty driving demand for our 'gold standard' data, delivered through our One Platform.

·      A focused approach to cost management and capital discipline, including mitigating the impact of inflation through advancements in technology and efficiency savings, whilst ensuring the business remains appropriately invested for sustainable growth and systematic M&A activity.

·      Clear financial targets for FY23 and beyond:

o  In FY23, at least 10% underlying revenue growth, adjusted EBITDA margin of 40%.

o  Beyond FY23, platform in place to drive further margin enhancement through organic and inorganic growth.

Note 1: Underlying growth: Defined as growth in business excluding impact of movement in exchange rates and adjusts for the proforma results of acquired business.

Note 2: Adjusted EBITDA: Earnings before interest, tax, depreciation and amortisation, adjusted to exclude costs associated with acquisitions, restructuring of the Group, share-based payments, impairment, unrealised operating exchange rate movements and the impact of foreign exchange contracts. Adjusted EBITDA margin is defined as: Adjusted EBITDA as a percentage of revenue. This is reconciled to the statutory operating profit on page 8.

Note 3: Adjusted EPS: Adjusted profit after tax per share (reconciliation between statutory profit and adjusted profit shown on page 8).

Note 4: Invoiced Forward Revenue: Invoiced Forward Revenue relates to amounts that are invoiced to clients at the statement of financial position date, which relate to future revenue to be recognised. This is reconciled to deferred revenue on page 13.

Note 5: Net bank debt: Short and long-term borrowings (excluding lease liabilities) less cash and cash equivalents.

ENQUIRIES

Notes to Editors 

About GlobalData Plc  
GlobalData Plc (AIM: DATA) is a leading data, insights, and analytics platform for the world's largest industries. Our mission is to help our clients decode the future, make better decisions, and reach more customers. 

One Platform Model 

GlobalData's One Platform model is the foundation of our business and is the result of years of continuous investment, targeted acquisitions, and organic development. This model governs everything we do, from how we develop and manage our products, to our approach to sales and customer success, and supporting business operations. At its core, this approach integrates our unique data, expert analysis, and innovative solutions into an integrated suite of client solutions and digital community platforms, designed to serve a broad range of industry markets and customer needs on a global basis. The operational leverage this provides means we can respond rapidly to changing customer needs and market opportunities, and continuously manage and develop products quickly, at scale, with limited capital investment as well as providing unique integration opportunities for M&A.

Strategic Priorities  

GlobalData's four strategic priorities are: Customer Obsession, World-Class Product, Sales Excellence and Operational Agility. 
 

Growth Optimisation Plan 

GlobalData's Growth Optimisation Plan is a set of initiatives designed to drive revenue growth and profitability.  The Plan's initiatives operate across all of GlobalData's operations but are organised around the strategic priorities noted above. 

CHIEF EXECUTIVE'S REVIEW

At GlobalData we are on a mission to help our c.4,700 clients to decode the future, make better decisions, and reach more customers. In the last 12 months, clear progress has been made to enhance our position as a leading intelligence and insights platform through sustained underlying momentum and further execution of our M&A strategy.

Uncertainty drives demand for our business. Our mission critical data is a 'must-have' rather than 'nice to have' for a wide range of blue-chip corporates, and once embedded, provides all the insight our clients need to navigate a challenging macro backdrop. We create our intelligence from a deep pool of experts across the globe, including 2,000 analysts and researchers, 250 data scientists and 100 journalists.

Continued momentum in 2022 has been clearly demonstrated through our strong financial and operational performance. Investing for growth throughout 2022, in our people and in our scalable One Platform, which now covers 20 sectors, has enabled the Group to enhance its highly valued, must-have, critical information to a growing global customer base.

We have now reached the next stage of our development; the 'leveraging the platform' phase is where we intend to capitalise on the multiple levers open to us to create growth. As we enter the new financial year, the management team and Board remain focused on delivering long-term, compounding growth and shareholder returns.

Underlying growth

With a continued strong performance throughout the year, I am pleased to report that GlobalData successfully delivered its near-term financial target of at least 10% revenue growth and Adjusted EBITDA margin of 35-40%. In the last five years, subscriptions have grown from approximately 70% of revenues to more than 80%, with margin nearly doubling.

The Group reported revenue of £243.2m (2021: £189.3m), including 10% underlying growth. Operating profit grew by 47% to £56.0m (2021: £38.2m) and Adjusted EBITDA increased by 34% to £86.4m (2021: £64.4m). The growth in Adjusted EBITDA was driven by our strong revenue growth and our ability to control what is a relatively fixed cost base, delivering an Adjusted EBITDA margin of 36%. The Group had a strong finish to the year with underlying Invoiced Forward Revenue growth of 12% at 31 December 2022, with overall growth of 24%.

Traction with our subscription model continued through the year, with improving renewal rates evidenced in both volume and value at 84% (2021:83%) and 101% (2021: 97%) for our larger clients (>£20k) respectively. We have demonstrated our ability to optimise pricing in 2022 and there remains significant opportunity to continue with price increases and deliver enhanced value for customers, particularly in recently acquired businesses. As a result, with inherently predictable and recurring revenue, the Group enters the new financial year with c.80% revenue visibility for FY2023.

A continued trend is the growth of multi-year deals. Over the last three years, multi-year deals by value have grown from 20% to 39%, which highlights the strength of our product, the criticality of our platform to our customers and the growing resilience of our revenue growth.

Platform ideally positioned to integrate new datasets and verticals

Our underlying growth is also supported by strategic M&A opportunities. Our scalable platform is ideally positioned to integrate new datasets and content into our existing vertical offering or expand our breadth into new vertical markets. Our M&A strategy is disciplined and systematic, with value creation being a core competence of the Group.

Following completion of the Life Sciences acquisition in November 2021 and LMC in December 2021, we completed two more acquisitions during 2022. We acquired Media Business Insight (MBI) in June 2022, bringing new and unique gold standard datasets across the film, TV and media markets to GlobalData. This, combined with our existing Technology content, provides the Group with a new vertical with deep media sector intelligence and related services while strengthening clients' access to a more comprehensive range of industry expertise.

In September 2022, we announced the completion of the TS Lombard acquisition, which provides global economic and political research to businesses and financial markets to clients across the globe, with a particular strength in China and emerging markets. This move further enables us to sell our full product suite, not only to the asset management industry, but increasingly to other corporates, and it has been integrated onto the GlobalData platform. TS Lombard brings to us a strong team of research analysts and economists who have on-the-ground networks and insights from developed and emerging markets. This addition has helped us to fill a gap in our thematic intelligence offering, allowing us to arm clients with a globally integrated macro story which in times of uncertainty is in increasing demand as clients seek to navigate and make sensible, proactive decisions quickly.

We welcome these new businesses into the GlobalData family. Both represent strategic bolt-on acquisitions of data assets, efficiently complementing our One Platform model and adding value to our global and scalable product.

In August 2022, we agreed a new three-year £410m debt financing facility which will be used to support our long-term growth, including future M&A opportunities.

Delivering our Growth Optimisation Plan

The Growth Optimisation Plan, launched in 2020, is our framework to invest for growth with the aim to be the leading data, analytics, and insights platform for the world's largest industries. As a responsible business, sustainability sits at the heart of our plan and, as a team, GlobalData is a firm believer that our Company can drive positive change and be a force for good through our critical information and technology innovations.

With multiple levers for growth, supplemented with M&A activity, we are delivering on the Plan via four key pillars: Customer Obsession, World-Class Product, Sales Excellence and Operational Agility.

1)    Customer Obsession remains our number one priority

Customer Obsession remains our priority and is central to our strategy. It runs through everything we do, and we continue to focus on client needs and on providing unique and innovative solutions. We strive to maintain strong customer relationships and endeavour to build even deeper relationships.

Our ongoing initiatives are aimed at providing clients with world-class solutions delivered with exceptional levels of service. Our focus on top-tier clients is gaining traction, and we continued to increase resources throughout the year, enhanced usability and grew via our top-750 programme.

Usage of our product is aimed at multiple use cases and job functions within an organisation, giving opportunity to expand usage within our existing clients, resulting in more seats taken. This focus meant that Average Client Value improved 13% in 2022 to £47,900 (2021: £42,400).

The net result of our Customer Obsession is improving renewal rates by volume and value, as well as greater levels of profitability. Looking ahead, we remain laser focused on improving in the different areas of Customer Obsession. This should enhance some of our key operational metrics: for example, the volume renewal rate in 2022 for clients paying more than £20k p.a. was 84%; a priority is to increase volume renewal rates to over 90% or more over the medium term.

2)    Continued investment in our World-Class Product provides a resilient model, geared for growth

We have developed a World-Class Product enabling us to offer our clients 'gold standard' data. Our unique selling point is the intelligence created by more than 800 analysts, 2,000 researchers and 100 journalists in our business. Our One Platform empowers the world's largest 20 industries and is highly scalable. Having invested in our technology stack and enhanced our artificial intelligence powered solutions through the year, we are now able to offer a more personalised experience to our clients.

We continue to invest in our product, to keep it best-in-class and scalable. This is particularly evident in our efforts to optimise the production of our digital content with investments in artificial intelligence and machine learning, which are now truly embedded in our offering.

Our routes to market continue to expand with our multiple media sites. Our media assets provide limited free-to-access insight through to high value, paywalled custom products and continues to prove a powerful go-to-market proposition, driving new customers up the value curve over time.

We are focusing on usability and strong adoption across our entire user base, ensuring that our newly acquired assets integrate efficiently and provide immediate synergies for our business and our clients.

Following the successful integration of the Life Sciences business as well as the LMC integration, we are now on the final stretch to fully integrate our most recent acquisitions of MBI and TS Lombard. We are already seeing the immediate value of these new assets.

TS Lombard has significantly expanded our Thematic Intelligence capability, strengthening our "macro themes" product and making GlobalData a market leader in tech, industry, macro and ESG themes. Through this acquisition, we have also gained exposure to TS Lombard's clients, who are predominantly institutional investors, a market in which we have historically been underrepresented.

The depth of industry verticals we cover, combined with our One Platform approach, provides c.4,700 businesses around the world with mission-critical data to make informed business decisions. As a result, we are seeing improving customer retention, pricing power and an increasing shift to multi-year deals.

3)    Acute focus on Sales Excellence is driving results

Our sales teams performed well during 2022, delivering 10% underlying growth in the year and 12% underlying growth in Invoiced Forward Revenue.

Looking ahead, our sales teams have a clear focus on the key levers for growth. Linked to our Customer Obsession initiatives, our ambitious target is to take our volume renewal rate in our larger clients (>£20k) from 84% to over 90%, through increasing client engagement and enhancing client and user experience. We will also look to embed further AI-driven tools into our renewals workflow, both in terms of helping our clients derive more value from their partnership and also to alert internal teams on the health of our client relationships. Reducing the churn of our existing clients sets a greater platform for growth and de-risks some of the upsell and new business growth levers.

We continue to see a significant opportunity to add greater value to our existing clients, including via sales synergies in acquired businesses. There is also a large white space in the market, for example, where we believe there are 125,000 client opportunities, with significant latent growth in the US and professional services markets.

4)    Demonstrating Operational Agility with disciplined approach to cost

With an ongoing disciplined approach to cost, we continue to maintain a largely fixed cost base. During the year, as we have invested heavily in advancing our product, we have been able to achieve price increases for our renewing clients as we continue to push more relevant content, in a timely manner and in an increasingly personalised way - just as our clients want it.

In August 2022, GlobalData secured a new three-year £410.0m debt financing facility, providing the Group with additional firepower to execute its M&A growth strategy. This facility matures on 5 August 2025, with an option to extend further by a year. The debt facility comprises a £290.0m term loan, to be used in part to repay existing indebtedness of £229.2m, as well as a Revolving Credit Facility ("RCF") of £120.0m. The RCF is currently undrawn, but will be used to support long-term growth of the business, including M&A.

We thank our existing lenders, who have all extended their support through participation in this issuance, plus our new lenders as we seek to create shareholder value through further strategic acquisitions.

We have a clear capital allocation policy to operate within 2-3x net bank debt leverage, in relation to EBITDA. The Group reviews leverage on a look forward basis and the high degree of visibility it has on its revenue and earnings gives the Group comfort. Furthermore, the free cash flow profile of the business sees the Group de-lever reasonably quickly subject to any additional M&A and share buy-backs.

Dividends

We are pleased to propose a final dividend of 18.3 pence per share (2021: 13.2 pence), to be paid on 28 April 2023 to shareholders on the register at the close of business on 31 March 2023. The ex-dividend date will be on 30 March 2023. The proposed final dividend increases the total dividend for the year to 26.0 pence per share (2021: 19.3 pence), an increase of 35% in line with growth in Adjusted EBITDA.

Our Colleagues

We have delivered another strong set of results and our success is underpinned by the talent and dedication of our GlobalData team. Investment in enhancing our One Platform and in our people throughout the year has continued and I am confident that through our acute focus on our Growth Optimisation Plan we will celebrate further achievements in 2023 and beyond.

I would like to thank all my GlobalData team and welcome the new colleagues who have joined us and bring a wealth of knowledge via the MBI and TS Lombard acquisitions. Together, we are building a responsible business that invests in its people and our clients' success, delivering highly valued, must-have, critical information to a growing audience.

Current Trading and Outlook

As stated in the recent year-end trading update, GlobalData enters the new financial year from a position of strength with 80% revenue visibility for FY2023 and scope for further margin improvement. The business continues to deliver resilient growth. Uncertainty is driving demand for our business, as customers continue to rely on and embed our 'gold standard' data, delivered through our One Platform.

As we enter the new financial year, we maintain a focused approach to cost management and capital discipline, whilst ensuring the business remains appropriately invested for sustainable growth and opportunistic on M&A activity.

The management team at GlobalData have clear financial targets for the year of at least 10% underlying revenue growth and Adjusted EBITDA margins of 40%, which leaves us well positioned to deliver on the 'rule of 50' in the longer term.

Mike Danson

Chief Executive Officer

27 February 2023

CHIEF FINANCIAL OFFICER'S REVIEW

¹ Adjusted EBITDA margin is defined as: Adjusted EBITDA as a percentage of revenue. Note 2 discloses the rationale for the adjusting items in detail.

² Adjusted income tax expense represents the statutory income tax expense adjusted for the tax effect on adjusting items. In addition, the adjusted income tax expense includes the effect of any tax rate changes. Adjusted income tax expense has been reconciled on page 12.

³ Operating cash flow conversion is defined as: Cash flow generated from operations divided by Adjusted EBITDA.

⁴ Free cash flow conversion is defined as: Free cash flow generated from operations; being cash flow generated from operations less interest paid, income taxes paid, principal elements of lease payments and purchase of intangible and tangible assets; divided by Adjusted profit before tax. We have updated the definition to include principal elements of lease payments compared with the Annual Report for the year ended 31 December 2021, accordingly the comparative has been adjusted above.

The financial position and performance of the business are reflective of the core financial elements of our business model: visible and recurring revenues, high incremental margins, scalable opportunity and strong cash flows.

The Directors believe that Adjusted EBITDA, Adjusted EBITDA margin, Adjusted profit before tax, Adjusted profit after tax and Adjusted earnings per share provide additional useful information on the core operational performance of the Group to shareholders, and internally we review the results of the Group using these measures. The term 'adjusted' is not a defined term under IFRS and may not therefore be comparable with similarly titled profit measures reported by other companies. It is not intended to be a substitute for, or superior to, IFRS measures of profit.

Financial Key Performance Indicators

The financial KPIs below are used, in addition to statutory reporting measures, by the Executive Directors to monitor the Group's performance and progress. These KPIs are used to measure progress against strategy, the strength of the business and long-term prospects for our stakeholders.

The Group delivered on its ambition to achieve at least 10% underlying revenue growth and achieve margin of 35-40% and now sets its target on exceeding 40% margin.

The platform economics of our business model meant that a significant proportion of the underlying revenue growth filtered through to EBITDA without material incremental cost of sale. This therefore gave the Group a significantly improved margin from 34% to 36%, achieving our previous margin range target.

In addition to the underlying performance of the business, the deployed debt also brought in two further acquisitions to the Group, MBI and TS Lombard. These additions also contributed to the revenue growth and increased profitability in the year.

Operational Key Performance Indicators

The operational key performance indicators ("KPIs") below are used by the Directors to monitor the quality of revenue growth and understand underlying performance. Our operational KPIs are:

Value Renewal Rate - this is calculated by dividing the total subscription sales value closed in the year compared with subscription value available for renewal (based upon prior year value).

Volume Renewal Rate - this is calculated by dividing the total volume of subscription sales closed in the year compared with subscription volume available for renewal.

Average Client Value - this is calculated using the total value of sales across our clients and showing an average value.

Our operational KPIs reference sales orders rather than revenue and therefore impact both revenue recognised in the year as well as Invoiced Forward Revenue.

As at 31 December 2022, the total number of clients (>£5,000 spend) was 4,735 (2021: 4,732).

Strong performance in underlying operational KPIs helped deliver 10% underlying growth. We improved our Group volume renewal rates by 3 percentage points to 78% compared with 2021. The Group also demonstrated strong pricing power, as well as a good performance in selling more licences and product to its existing client base. The additional value meant that the value renewal rate for the Group was 99% compared with 95% in 2021, with a particularly strong performance in our larger client base.

The Group's Performance This Year

1.     Revenue

Revenue grew by 28% to £243.2m, driven largely from underlying growth of 10% and aided by revenue from recent M&A and the benefit of currency gains (2021: £189.3m). On an underlying basis, subscriptions (representing 81% of revenue (2021: 81%)) grew by 10% underpinned by improving renewal rates, strong pricing and client contract growth as well as new business wins.

2.     Profit before tax

Profit before tax for the year grew by £5.8m to £38.4m (2021: £32.6m), which partly reflects the operating leverage which has driven Adjusted EBITDA to grow by £22.0m to £86.4m (2021: £64.4m), offset with increases in finance and other operating costs.

Adjusted EBITDA

Adjusted EBITDA increased by 34% to £86.4m (2021: £64.4m). The growth in Adjusted EBITDA was driven by our strong revenue growth and our ability to control what is a relatively fixed cost base. 

We have an established operating cost base and given the economics of our platform business, which sees limited incremental cost of sale, our overall margin increased by 2 percentage points to 36% (2021: 34%).

                Adjusting items

Adjusting items grew by £4.5m in total, with some significant individual movements of note:

·      The amortisation charge for acquired intangibles has increased by £3.5m to £9.1m (2021: £5.6m). This is reflective of intangible assets acquired as part of the four business combinations over the past 15 months and resulting increases in amortisation.

·      The share-based payment charge has decreased from £9.2m to £4.1m, largely due to the vesting of Scheme 1 in August 2022, which carried no charge in 2022.

The charge for 2022 included IFRS2 costs for Schemes 2 and 4 including the modification disclosed within note 10. The modification was effective from 30 November 2022 and therefore only had an impact of £0.5m increase in charge in the year. It is expected that the charge will increase in future years because of the modification.

·      M&A costs grew year on year, reflecting continued M&A transactions in 2022.

Finance costs

Finance costs have increased by 214% to £17.6m (2021: £5.6m) which is inclusive of a non-cash IFRS9 charge of £2.1m (2021: £0.8m) and IFRS16 leases interest of £1.3m (2021: £1.5m). The cash paid in interest in 2022 was £14.0m (2021: £3.4m).

This reflects the increase in average drawn debt in 2022 compared with 2021, which funded the M&A activity over the past 15 months and purchase of own shares, in addition to the increase in interest rates.

Finance costs are calculated on drawn debt based upon on a margin range of 275-375bps, dependent on Group net leverage, plus SONIA (Sterling Overnight Index Average rate). The Group entered into a swap arrangement on SONIA on 21 October 2022 amid the backdrop of rising rates. The arrangement fixed SONIA at 4.9125% over the remaining life of the term loan. Undrawn debt carries interest at one third of the prevailing margin.

Leases

Within our operating costs, depreciation in relation to right-of-use assets was £4.7m (2021: £5.0m). Other income, in relation to sub-let income on right-of-use assets was £0.1m (2021: £0.4m). Our net finance costs include interest of £1.3m in relation to lease liabilities (2021: £1.5m).

3.     Foreign exchange impact on results

The Group derives around 60% of revenues in currencies other than Sterling, compared with around 40% of its cost base. The impact of currency movements in the year increased revenue by £7.9m, which mainly reflected Sterling weakness against US Dollar (average rate: 2022: 1.25, 2021: 1.38), with £6.0m currency benefit also reflected in Invoiced Forward Revenue. Cost inflation as a result of currency movements fully offset the gain in the year and impacted the results by £8.8m. The full impact of currency on Adjusted EBITDA was a reduction of £0.9m.

¹Operating costs excluding adjusting items.

4.     Taxation

The Group's effective income tax rate (ETR) for the reporting period is 20.6% which exceeds the statutory UK income tax rate of 19.0%.  The major components impacting the income tax expense are higher tax rates in certain overseas jurisdictions where the Group operates, specifically the United States and India (increasing the Group's ETR), expenses that are non-deductible for tax purposes (increase to ETR) and the remeasurement of deferred tax assets to 25.0% to recognise the change in UK tax rate from 1 April 2023 (decrease to ETR).

Key factors that may impact the Group's future tax charge as a percentage of underlying profits are the mix of profits and losses between the jurisdictions in which the Group operates and the corresponding tax rates in those territories, the impact of non-deductible expenditure and non-taxable income and the utilisation (with a corresponding reduction in cash tax payments) of previously unrecognised deferred tax assets.

Reconciliation of statutory income tax charge to adjusted income tax charge is presented below:

5.     Earnings per share

Basic EPS was 27.1 pence per share (2021: 21.9 pence per share). Fully diluted profit per share was 26.2 pence per share (2021: 20.2 pence per share).

Adjusted earnings per share grew from 36.2 pence per share to 43.3 pence per share, representing 20% growth.

6.     Dividends

We are pleased to propose a final dividend of 18.3 pence per share (2021: 13.2 pence), to be paid on 28 April 2023 to shareholders on the register at the close of business on 31 March 2023. The ex-dividend date will be on 30 March 2023.  The proposed final dividend increases the total dividend for the year to 26.0 pence per share (2021: 19.3 pence), an increase of 35%.

7.     Cash generation

Cash generated from operations grew by 41% to £85.4m (2021: £60.5m), representing 99% of Adjusted EBITDA (2021: 94%). We would normally expect operating cash flow to be in excess of 100% of Adjusted EBITDA and if we add back one-off cash costs in the year (restructuring, refinancing and M&A), cash flow conversion is 103%.

Capital expenditure was £2.7m in 2022 (2021: £1.3m), including £1.7m on software (2021: £0.5m). Capital expenditure represented 1.1% of revenue (2021: 0.7%).

Total cash flows from operating activities was £61.9m (growth of £9.9m from 2021), which represented 111% of operating profit (2021: 136%), with an increase in interest paid of £10.6m to £14.0m being the main reason for the lower conversion rate. During the year, the Group paid out £23.6m in dividends (2021: £20.4m).

Short- and long-term borrowings increased by £83.4m to £283.6m as at 31 December 2022 (2021: £200.2m). The debt drawn was focused on two main areas of expenditure:

·      M&A - The Group purchased MBI and TS Lombard during 2022 for a combined cash consideration of £32.9m. In addition, £0.7m was paid in relation to the target working capital adjustment for LMC, which completed in 2021. The cash costs of acquisitions are set out on page 39.  

·      Purchase of shares through Employee Benefit Trust - The Group purchased 5.3m shares for its employee LTIP for net consideration of £66.6m. The Employee Benefit Trust held 5.6m shares as at 31 December 2022, to satisfy options in issue of 7.1m.

8.     Net bank debt:

Net bank debt increased to £249.6m as at 31 December 2022 (2021: £177.6m). The increase principally reflects strong operating cash flows, offset by M&A activity of £33.6m, contributions to the Employee Benefit Trust to buy back shares of £66.6m, dividends of £23.6m and capital expenditure of £2.7m.

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

9.     Invoiced Forward Revenue

Invoiced Forward Revenue grew by 24% to £133.5m from the 31 December 2021 balance of £107.7m, reflecting good momentum on sales orders during 2022 (underlying growth of 12%) and the impact of acquisitions. Invoiced Forward Revenue is a major component of our significant revenue visibility for the forthcoming year.

10.  Intangible assets

Intangible assets have increased by £32.4m during the year, from £347.7m as at 31 December 2021, to £380.1m as at 31 December 2022. The majority of the increase relates to the two acquisitions made during the year of MBI and TS Lombard in which the Group recognised goodwill and intangible assets on acquisition of £24.9m and £15.1m respectively. Offsetting against these increases was an amortisation charge for the year of £10.1m (2021: £6.5m), which represented an increase of 55% reflecting the acquisitions made over the past 15 months.

11.  Trade receivables

Net trade receivables as at 31 December 2022 were £54.4m, representing 29% growth compared with the 31 December 2021 balance of £42.3m, the impact of the acquired companies and sales growth mainly driving the increase.

Financial Risk Management

The Group's primary objective in managing foreign currency risk is to protect against the risk that the eventual Sterling net cash flows will be affected by changes in foreign currency exchange rates. To do this, the Group enters into foreign exchange contracts that limit the risk from movements in US Dollar and Euro exchange rates with Sterling. Due to the Group's operations in India, the Group also enters into foreign exchange contracts that limit the risk from movements in US Dollars with the Indian Rupee exchange rate. While commercially and from a cash flow perspective this hedges the Group's currency exposures, the Group elects not to apply hedge accounting and accordingly any movements in the fair value of the foreign exchange contracts are recognised in the income statement.

As a data and analytics company, we are not currently impacted by cross-border tariffs and we do not currently expect the renegotiation of tariffs to materially impact our business. Furthermore, the company is continuing to monitor the Inclusive Framework Project established by the OECD, including Pillar One (determining where tax should be paid and on what basis) and Pillar Two (the design of a system that ensures multinational enterprises pay a minimum level of tax), which is expected to move into an implementation phase during 2023. However, the application thresholds will be aimed at the very largest companies, and therefore the rules are unlikely to impact the Group.

Interest Rate Risk

Interest rate risk is the impact that fluctuations in market interest rates can have on the value of the Group's interest-bearing assets and liabilities and on the interest charge recognised in the income statement. On 21 October 2022, GlobalData Plc (the parent company) entered into an interest rate swap arrangement, to fix the floating element of the interest rate (based upon SONIA) to a fixed rate of 4.9125%. The Group has applied hedge accounting in accordance with IFRS9 (Financial Instruments); as such any gains or losses on the interest rate swap, to the extent that they are effective, are recognised directly within other comprehensive income of both the Group and the parent company.

Liquidity Risk and Going Concern

The Group's approach to managing liquidity risk is to ensure, as far as possible, that it has sufficient liquidity to meet its liabilities as they fall due, with surplus facilities to cope with any unexpected variances in timing of cash flows. The Group meets its day-to-day working capital requirements through free cash flow, being operations generated cash (with no external financing required). Although the statement of financial position shows net current liabilities (current assets less current liabilities), included in current liabilities is £104.0m of deferred revenue that represents future income earnings. Excluding deferred revenue, the Group has net current assets of £56.4m (2021: £27.8m).

Based on cash flow projections, the Group considers the existing financing facilities to be adequate to meet short-term commitments. The Directors have a reasonable expectation that there are no material uncertainties that cast significant doubt about the Group's ability to continue in operation and meet its liabilities as they fall due for the foreseeable future, being a period of at least 12 months from the date of approval of the financial statements. Accordingly, the Group has prepared the Annual Report and Accounts on a going concern basis.  The Directors have prepared a Going Concern and Long-Term Viability statement within the Group's Annual Report and Accounts for the year ended 31 December 2022 (page 32).

Consolidated Income Statement

¹ We define Adjusted EBITDA as EBITDA adjusted to exclude costs associated with acquisitions, restructuring of the Group, share-based payments, impairment, unrealised operating exchange rate movements and the impact of foreign exchange contracts. We present Adjusted EBITDA as additional information because it is used internally as a key indicator to assess financial performance. However, other companies may present Adjusted EBITDA differently. EBITDA and Adjusted EBITDA are not measures of financial performance under IFRS and should not be considered as an alternative to operating profit or as a measure of liquidity or an alternative to net income as indicators of our operating performance or any other measure of performance derived in accordance with IFRS. Adjusted EBITDA margin is defined as: Adjusted EBITDA as a percentage of revenue.

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position