Markit Ltd. (Nasdaq:MRKT), a leading global diversified provider of financial information services, today announced financial results under International Financial Reporting Standards (IFRS) for the third quarter ended September 30, 2014.
Financial highlights in third quarter 2014
- Revenue increased by $31.3 million, or 13.1% from third quarter 2013, to $269.7 million
- On a constant currency basis, revenue grew by 11.1% from third quarter 2013, comprising organic revenue growth of 8.1% and acquisition related revenue growth of 3.0%
- Organic revenue growth across all three business segments: Information (+4.8%), Processing (+9.4%) and Solutions (+13.1%)
- Recurring revenue of 94.9%; recurring fixed revenue increased from $121.1 million or 50.8% of total revenue in third quarter 2013 to $144.6 million or 53.6% of total revenue
- Adjusted EBITDA grew 14.5% to $126.8 million from third quarter 2013 with an Adjusted EBITDA margin of 47.3%
- Adjusted Earnings grew 6.2% to $68.7 million while Adjusted earnings per share, diluted were unchanged at $0.37 compared to third quarter 2013
“I am pleased to report strong performance this quarter,” said Lance Uggla, chairman and chief executive officer of Markit. “Our three business segments all produced solid results as customer demand for our products and services continued to grow. As the market adapts to new regulations and reporting requirements, we are focused on helping customers comply with these requirements and achieve operating efficiencies, which means we are well positioned to reach our long term financial objectives."
Table 1: Markit Ltd. selected financial information | |||||||||||||||||||
For the three months ended September | For the nine months ended September | ||||||||||||||||||
| ($ millions except percentages and per share amounts) | 2014 | 2013 | YoY | 2014 | 2013 | YoY | |||||||||||||
| Revenue | 269.7 | 238.4 | 13.1% | 793.7 | 704.1 | 12.7% | |||||||||||||
| Operating expenses | (142.6) | (127.7) | 11.7% | (429.9) | (379.7) | 13.2% | |||||||||||||
| Adjusted EBITDA (1) | 126.8 | 110.7 | 14.5% | 363.5 | 312.9 | 16.2% | |||||||||||||
| Adjusted EBITDA margin (2) | 47.3% | 46.4% | N/A | 45.9% | 46.0% | N/A | |||||||||||||
| Adjusted Earnings (1) | 68.7 | 64.7 | 6.2% | 209.9 | 183.0 | 14.7% | |||||||||||||
| Adjusted earnings per share, diluted (3) | 0.37 | 0.37 | - | 1.14 | 1.04 | 9.6% | |||||||||||||
| Weighted average number of shares used to compute earnings per share, diluted | 187.9 | 176.5 | 6.5% | 183.6 | 175.8 | 4.4% | |||||||||||||
| (1) | See “Reconciliation to Non-IFRS Financial Measures” for definitions of Adjusted EBITDA and Adjusted Earnings, which are non-IFRS financial measures, and for reconciliations to their most directly comparable IFRS financial measures. | |
| (2) | Adjusted EBITDA margin is defined as Adjusted EBITDA divided by revenue, excluding revenue attributable to non-controlling interests. | |
| (3) | Adjusted earnings per share, diluted is defined as Adjusted Earnings divided by the weighted average number of shares used to compute earnings per share, diluted. See the Consolidated Income Statement (unaudited) for the weighted average number of shares used to compute earnings per share, diluted for each period. | |
Revenue
Revenue increased by $31.3 million, or 13.1%, to $269.7 million for the three months ended September 30, 2014, from $238.4 million for the three months ended September 30, 2013. On a constant currency basis, our revenue growth was 11.1%, or $26.4 million, for the three months ended September 30, 2014 as compared to the three months ended September 30, 2013.
Organic revenue growth accounted for $19.3 million, or 8.1% of the 13.1% increase. This was driven by new business wins across our Solutions and Information segments, and increased volumes in our Processing segment during the third quarter of 2014.
Acquisitions contributed $7.1 million to revenue growth, or 3.0% of the 13.1% increase in revenue, largely associated with the acquisitions in our Solutions segment of thinkFolio and Compliance Technologies International LLP (“CTI”) which were acquired in January 2014 and July 2014, respectively.
We experienced a favourable movement in exchange rates period-over-period, which increased our revenue growth by $4.9 million, or 2.0% of the 13.1% increase in revenue. Our revenue currency exposure for the three months ended September 30, 2014 was 69.2% in US dollars, 26.8% in Pounds Sterling, and 4.0% in other currencies.
Recurring fixed revenue as a percentage of total revenue increased from 50.8% for the three months ended September 30, 2013, to 53.6% for the three months ended September 30, 2014, and increased from $121.1 million for the three months ended September 30, 2013 to $144.6 million for the three months ended September 30, 2014. This is due to new business wins in our Information and Solutions segments, a result of a number of existing customers moving from variable-revenue contracts to fixed-revenue contracts in the Information Valuation and Trading Services sub-division, and the acquisition of thinkFolio in our Solutions Enterprise Software sub-division.
Recurring variable revenue as a percentage of total revenue decreased from 45.3% for the three months ended September 30, 2013, to 41.3% for the three months ended September 30, 2014. However, recurring variable revenue increased from $108.0 million for the three months ended September 30, 2013 to $111.4 million for the three months ended September 30, 2014. This was largely due to increased revenue within the Processing segment, partially offset by the previously mentioned change in customer contracts in the Information Valuation and Trading Services sub-division.
Non-recurring revenue as a percentage of total revenue increased from 3.9% for the three months ended September 30, 2013, to 5.1% for the three months ended September 30, 2014, and increased from $9.3 million for the three months ended September 30, 2013 to $13.7 million for the three months ended September 30, 2014. This was principally due to new business wins in our Solutions segment.
Operating expenses
Operating expenses increased by $14.9 million, or 11.7%, to $142.6 million for the three months ended September 30, 2014, from $127.7 million for the three months ended September 30, 2013. As a percentage of revenue, operating expenses decreased from 53.6% for the three months ended September 30, 2013 to 52.9% for the three months ended September 30, 2014.
Personnel costs as a percentage of total operating expenses decreased from 61.0% for the three months ended September 30, 2013 to 60.8% for the three months ended September 30, 2014. Personnel costs increased by $8.8 million, or 11.3%, to $86.7 million for the three months ended September 30, 2014. This increase was driven by several factors, including the addition of employees due to acquisitions, continued investment in products to facilitate future growth, increases in employee cash compensation levels, and the impact of unfavourable movements in foreign exchange rates.
Exceptional items
Exceptional items for the three months ended September 30, 2014 were $9.4 million; consisting principally of $8.3 million of impairment charges and $1.1 million of legal advisory fees.
An $8.3 million impairment of other intangible assets was taken in regard to Credit Centre, within our Processing segment, following a recent decision to close the business. The legal advisory fees of $1.1 million for the three months ended September 30, 2014, related to ongoing antitrust investigations by the U.S. Department of Justice and the European Commission and the associated consolidated class action lawsuit relating to credit derivatives and related markets.
Exceptional items for the three months ended September 30, 2013 were $14.3 million and included $12.7 million relating to an impairment of Markit Trade Reporting in our Information segment and $1.6 million of legal advisory fees related to the ongoing antitrust investigations by the U.S. Department of Justice and the European Commission and the associated consolidated class action lawsuit relating to credit derivatives and related markets.
Income tax expense
Income tax expense was $11.6 million for the three months ended September 30, 2014, compared to $16.5 million for the three months ended September 30, 2013, a decrease of $4.9 million, or 29.7%. This reflects the impact of acquisition related deferred tax accounting adjustments associated with both current and out of period acquisition related items, partially offset by an out of period amendment to deferred tax related to internally developed intangible assets. The impact of the out of period adjustments was a $12.5 million reduction in our income tax expense. The deferred tax adjustments were identified as a result of a detailed tax balance sheet review undertaken by management, which had a primary focus on tax balances associated with acquisition accounting. Our effective tax rate was 12.8% for the three months ended September 30, 2014, compared to 33.7% for the three months ended September 30, 2013. The decrease in the effective tax rate principally reflects the impact of the aforementioned deferred tax adjustments.
Adjusted EBITDA and Adjusted EBITDA margin
Adjusted EBITDA of $126.8 million for the three months ended September 30, 2014 increased by $16.1 million, or 14.5%, from $110.7 million for the three months ended September 30, 2013. This growth was across all three segments, and reflects operating performance as described above. See “Reconciliation to non-IFRS financial measures” for a reconciliation of Adjusted EBITDA to profit for the period from continuing operations.
Adjusted EBITDA margin increased to 47.3% for the three months ended September 30, 2014 compared to the Adjusted EBITDA margin of 46.4% for the three months ended September 30, 2013 due to positive contributions from our Processing and Information segments in the quarter, largely as a result of the revenue performance mentioned above.
Adjusted Earnings
Adjusted Earnings for the three months ended September 30, 2014, increased $4.0 million, or 6.2%, to $68.7 million from $64.7 million for the three months ended September 30, 2013. This reflects the financial performance discussed above, including an additional $7.5 million tax expense related to an out of period deferred tax adjustment associated with internally developed intangible assets. See “Reconciliation to non-IFRS financial measures” for a reconciliation of Adjusted Earnings to profit for the period from continuing operations.
Table 2: Segmental analysis | |||||||||||||
For the three months ended | For the nine months ended | ||||||||||||
| ($ in millions, except percentages) | 2014 | 2013 | 2014 | 2013 | |||||||||
| Segmental data: | |||||||||||||
| Information | 123.4 | 115.5 | 363.3 | 342.7 | |||||||||
| Processing | 72.2 | 64.2 | 216.4 | 200.3 | |||||||||
| Solutions | 74.1 | 58.7 | 214.0 | 161.1 | |||||||||
| Total revenue | 269.7 | 238.4 | 793.7 | 704.1 | |||||||||
| Information | 61.1 | 54.4 | 174.9 | 160.8 | |||||||||
| Processing | 41.9 | 34.6 | 120.1 | 108.3 | |||||||||
| Solutions | 24.1 | 21.7 | 68.8 | 55.3 | |||||||||
| Non-controlling interests | (0.3) | - | (0.3) | (11.5) | |||||||||
| Total Adjusted EBITDA | 126.8 | 110.7 | 363.5 | 312.9 | |||||||||
| Information | 49.5% | 47.1% | 48.1% | 46.9% | |||||||||
| Processing | 58.0% | 53.9% | 55.5% | 54.1% | |||||||||
| Solutions | 32.5% | 37.0% | 32.1% | 34.3% | |||||||||
| Total Adjusted EBITDA margin (1) | 47.3% | 46.4% | 45.9% | 46.0% | |||||||||
| (1) | Adjusted EBITDA margin is total Adjusted EBITDA divided by total revenue, excluding revenue attributable to non-controlling interests. | |
Table 3: Revenue growth | ||||||||||||||||||||||||
| For the three months ended September 30, 2014 | For the nine months ended September 30, 2014 | |||||||||||||||||||||||
| (in percentages) | Organic | Acquisition | Foreign | Total | Organic | Acquisition | Foreign | Total growth | ||||||||||||||||
Information | 4.8% | -- | 2.0% | 6.8% | 3.8% | -- | 2.2% | 6.0% | ||||||||||||||||
| Processing | 9.4% | -- | 3.1% | 12.5% | 4.8% | -- | 3.2% | 8.0% | ||||||||||||||||
| Solutions | 13.1% | 12.1% | 1.0% | 26.2% | 18.9% | 12.8% | 1.1% | 32.8% | ||||||||||||||||
| Total Markit | 8.1% | 3.0% | 2.0% | 13.1% | 7.5% | 2.9% | 2.3% | 12.7% | ||||||||||||||||
Information
Revenue in our Information segment increased by $7.9 million, or 6.8%, to $123.4 million for the three months ended September 30, 2014, compared to $115.5 million for the three months ended September 30, 2013. The revenue increase was largely driven by new business wins within the Pricing and Reference Data sub-division, and by the positive impact of foreign exchange movements across the segment. Organic revenue growth contributed 4.8% of the 6.8% increase in revenue. Favourable movements in exchange rates period-over-period contributed 2.0% of the 6.8% increase in revenue.
Adjusted EBITDA in our Information segment increased by $6.7 million, or 12.3%, to $61.1 million for the three months ended September 30, 2014, compared to $54.4 million for the three months ended September 30, 2013. This increase was largely attributable to the revenue growth described above. Adjusted EBITDA margin was 49.5% for the three months ended September 30, 2014, compared to 47.1% for the three months ended September 30, 2013.
Processing
Revenue in our Processing segment increased by $8.0 million, or 12.5%, to $72.2 million for the three months ended September 30, 2014, from $64.2 million for the three months ended September 30, 2013. This reflects increased revenue in our loans processing and derivatives processing products, and the impact of favourable foreign exchange movements. Organic revenue growth contributed 9.4% of the 12.5% increase in revenue. Favourable movements in exchange rates period-over-period contributed 3.1% of the 12.5% increase in revenue.
Adjusted EBITDA in our Processing segment increased by $7.3 million, or 21.1%, to $41.9 million for the three months ended September 30, 2014, compared to $34.6 million for the three months ended September 30, 2013. This increase was largely attributable to the revenue growth described above, and cost reductions in our derivatives processing product. Our Adjusted EBITDA margin increased to 58.0% for the three months ended September 30, 2014, from 53.9% for the three months ended September 30, 2013.
Solutions
Revenue in our Solutions segment increased by $15.4 million, or 26.2%, to $74.1 million for the three months ended September 30, 2014, from $58.7 million for the three months ended September 30, 2013. Revenue growth was driven by new business wins across both the Enterprise Software and Managed Services sub-divisions, in addition to the acquisitions of thinkFolio and CTI. Constant currency revenue growth comprised 25.2% of the 26.2% increase in revenue. Organic revenue growth contributed 13.1% of the 26.2% increase in revenue.
Acquisitions contributed 12.1% of the 26.2% increase in revenue, as a result of the acquisitions of Markit Corporate Actions, thinkFolio and CTI in July 2013, January 2014 and July 2014 respectively. Note that whilst Markit Corporate Actions is still treated as acquisition related revenue under our definition, for the three months ended September 30, 2014 there was a full comparative period in 2013. Favourable movements in exchange rates period-over-period contributed 1.0% of the 26.2% increase in revenue.
Adjusted EBITDA in our Solutions segment increased by $2.4 million, or 11.1%, to $24.1 million for the three months ended September 30, 2014, from $21.7 million for the three months ended September 30, 2013. This increase was a result of the revenue growth described above, offset by investment in new product offerings in the Managed Services sub-division. Adjusted EBITDA margin decreased to 32.5% for the three months ended September 30, 2014, from 37.0% for the three months ended September 30, 2013.
Webcast and conference call information
Markit’s management will host a live audio webcast and conference call at 8.30am (EST) today to review and discuss the company’s results. The webcast can be accessed on Markit’s investor relations website at http://www.markit.com/company/investors. A replay of the webcast and the presentation used in the webcast will be available through the same link following the live webcast and conference call.
Note on IFRS reporting standards
We prepare and report our consolidated financial statements and financial information in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (the “IASB”). None of our financial statements were prepared in accordance with Generally Accepted Accounting Principles (GAAP) in the United States. We maintain our books and records in US dollars. We have made rounding adjustments to some of the figures included in this press release. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that precede them. Unless otherwise indicated, all references to currency amounts in this press release are in US dollars.
Use of non-IFRS financial measures
Non-IFRS results are presented only as a supplement to our financial statements based on IFRS. Non-IFRS financial information is provided to enhance understanding of our financial performance, but none of these non-IFRS financial measures are recognised terms under IFRS and non-IFRS measures should not be considered in isolation from, or as a substitute analysis for, our results of operations as determined in accordance with IFRS. Definitions and reconciliations of non-IFRS measures to the most directly comparable IFRS measures are provided within the schedules attached to this release.
We use non-IFRS measures in our operational and financial decision making, as we believe that it is useful to exclude certain items in order to focus on what we regard to be a more reliable indicator of the underlying operating performance of the business. As a result, internal management reports feature non-IFRS measures which are also used to prepare strategic plans and annual budgets and review management compensation. We also believe that investors may find non-IFRS financial measures useful for the same reasons, although investors are cautioned that non-IFRS financial measures are not a substitute for IFRS disclosures.
Non-IFRS measures are frequently used by securities analysts, investors and other interested parties in their evaluation of companies comparable to us, many of which present non-IFRS measures when reporting their results. Non-IFRS measures have limitations as an analytical tool. They are not presentations made in accordance with IFRS, are not measures of financial condition or liquidity and should not be considered as an alternative to profit or loss for the period determined in accordance with IFRS or operating cash flows determined in accordance with IFRS. Non-IFRS measures are not necessarily comparable to similarly titled measures used by other companies. As a result, you should not consider such performance measures in isolation from, or as a substitute analysis for, our results of operations as determined in accordance with IFRS.
Forward-looking statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that Markit expects, believes or anticipates will or may occur in the future are forward-looking statements. Markit’s estimates and forward-looking statements are mainly based on its current expectations and estimates of future events and trends, which affect or may affect its businesses and operations. Although Markit believes that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to several risks and uncertainties and are made in light of information currently available to Markit. When used in this press release, the words “anticipate,” “believe,” “intend,” “expect,” “estimate,” “plan,” “will” or other similar words are intended to identify forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Markit, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. Further information on such assumptions, risks and uncertainties is available in Markit’s filings with the US Securities and Exchange Commission. Markit undertakes no obligation and does not intend to update or correct these forward-looking statements to reflect events or circumstances occurring after the date of this press release, except as required by applicable law. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement.
Notes to Editors
About Markit
Markit is a leading global diversified provider of financial information services. We provide products that enhance transparency, reduce risk and improve operational efficiency. Our customers include banks, hedge funds, asset managers, central banks, regulators, auditors, fund administrators and insurance companies. Founded in 2003, we employ over 3,000 people in 10 countries. Markit shares are listed on Nasdaq under the symbol “MRKT.” For more information, please see www.markit.com.
Markit Ltd. | ||||||||||||
Three months |
Three months | Nine |
Nine | |||||||||
| $'m | $'m | $'m | $'m | |||||||||
| Revenue | 269.7 | 238.4 | 793.7 | 704.1 | ||||||||
| Operating expenses | (142.6) | (127.7) | (429.9) | (379.7) | ||||||||
| Exceptional items | (9.4) | (14.3) | (51.8) | (12.3) | ||||||||
| Acquisition related items | 16.0 | (0.1) | 11.0 | (0.2) | ||||||||
| Amortisation – acquisition related | (15.0) | (12.6) | (43.3) | (37.0) | ||||||||
| Depreciation and amortisation | (25.1) | (21.9) | (71.9) | (62.4) | ||||||||
| Share based compensation and related items | (0.7) | (2.0) | (6.8) | (5.9) | ||||||||
| Other gains/(losses) – net | 2.4 | (6.2) | (3.0) | 4.6 | ||||||||
| Operating profit | 95.3 | 53.6 | 198.0 | 211.2 | ||||||||
| Finance costs – net | (4.5) | (4.7) | (12.8) | (15.0) | ||||||||
| Profit before income tax | 90.8 | 48.9 | 185.2 | 196.2 | ||||||||
| Income tax expense | (11.6) | (16.5) | (36.8) | (52.1) | ||||||||
| Profit for the period | 79.2 | 32.4 | 148.4 | 144.1 | ||||||||
| Profit attributable to: | ||||||||||||
| Owners of the parent | 80.3 | 32.4 | 149.5 | 136.5 | ||||||||
| Non-controlling interests | (1.1) | - | (1.1) | 7.6 | ||||||||
| 79.2 | 32.4 | 148.4 | 144.1 | |||||||||
| $ | $ | $ | $ | |||||||||
| Basic earnings per share | 0.45 | 0.18 | 0.84 | 0.79 | ||||||||
| Diluted earnings per share | 0.43 | 0.18 | 0.81 | 0.78 | ||||||||
| Weighted average number of shares used to compute earnings per share, basic | 179,964,373 | 175,328,380 | 178,499,006 | 172,999,630 | ||||||||
| Weighted average number of shares used to compute earnings per share diluted | 187,893,323 | 176,547,638 | 183,630,386 | 175,835,360 | ||||||||
There were no discontinued operations for either period presented.
Markit Ltd. | |||||||
| September 30, | December 31, | ||||||
| 2014 | 2013 | ||||||
| Assets | $'m | $'m | |||||
| Non-current assets | |||||||
| Property, plant and equipment | 60.3 | 62.3 | |||||
| Intangible assets | 2,889.8 | 2,717.8 | |||||
| Deferred income tax assets | 156.4 | 108.5 | |||||
| Derivative financial instrument assets | 1.6 | 0.3 | |||||
| Total non-current assets | 3,108.1 | 2,888.9 | |||||
| Current assets | |||||||
| Trade and other receivables | 282.4 | 231.2 | |||||
| Derivative financial instruments | 2.8 | 0.9 | |||||
| Current income tax receivables | 4.6 | 3.6 | |||||
| Cash and cash equivalents | 81.1 | 75.3 | |||||
| Total current assets | 370.9 | 311.0 | |||||
| Total assets | 3,479.0 | 3,199.9 | |||||
| Equity | |||||||
| Capital and reserves | |||||||
| Common shares | 1.8 | 0.2 | |||||
| Share premium | 441.0 | 372.9 | |||||
| Other reserves | (52.9) | 19.5 | |||||
| Retained earnings | 1,798.8 | 1,663.3 | |||||
| Equity attributable to owners of the parent | 2,188.7 | 2,055.9 | |||||
| Non-controlling interest | 36.6 | - | |||||
| Total equity | 2,225.3 | 2,055.9 | |||||
| Liabilities | |||||||
| Non-current liabilities | |||||||
| Borrowings | 419.2 | 472.7 | |||||
| Trade and other payables | 138.1 | 29.6 | |||||
| Derivative financial instruments | 0.3 | 0.3 | |||||
| Deferred income tax liabilities | 205.1 | 140.6 | |||||
| Total non-current liabilities | 762.7 | 643.2 | |||||
| Current liabilities | |||||||
| Borrowings | 90.2 | 101.9 | |||||
| Trade and other payables | 199.9 | 198.6 | |||||
| Deferred income | 180.9 | 177.9 | |||||
| Current income tax liabilities | 17.4 | 14.3 | |||||
| Derivative financial instruments | 2.6 | 8.1 | |||||
| Total current liabilities | 491.0 | 500.8 | |||||
| Total liabilities | 1,253.7 | 1,144.0 | |||||
| Total equity and liabilities | 3,479.0 | 3,199.9 | |||||
Markit Ltd. | |||||||
Nine September |
Nine | ||||||
| $'m | $'m | ||||||
| Profit before income tax | 185.2 | 196.2 | |||||
| Adjustment for: | |||||||
| Amortisation – acquisition related | 43.3 | 37.0 | |||||
| Depreciation and amortisation - other | 71.9 | 62.4 | |||||
| Impairment of goodwill | - | 12.7 | |||||
| Impairment of assets | 8.3 | - | |||||
| Profit on sale of available-for-sale financial assets | - | (4.2) | |||||
| Fair value gains on derivative financial instruments | - | (3.5) | |||||
| Fair value (gains)/losses on contingent consideration | (15.6) | (0.1) | |||||
| Share based compensation and related items | 14.1 | 5.9 | |||||
| Finance costs - net | 12.8 | 15.0 | |||||
| Foreign exchange losses/(gains) and other non-cash charges in operating activities | 2.4 | (0.6) | |||||
| Changes in working capital: | |||||||
| Increase in trade and other receivables | (51.7) | (28.2) | |||||
| Increase in trade and other payables | 8.1 | 0.4 | |||||
| Cash generated from operations | 278.8 | 293.0 | |||||
| Cash flows from operating activities | |||||||
| Cash generated from operations | 278.8 | 293.0 | |||||
| Interest paid | (5.2) | (5.7) | |||||
| Income tax paid | (35.0) | (49.6) | |||||
| Net cash generated from operating activities | 238.6 | 237.7 | |||||
| Cash flows from investing activities | |||||||
| Disposal of subsidiaries, net of cash disposed | (1.4) | - | |||||
| Acquisition of subsidiaries, net of cash acquired | (127.2) | (46.0) | |||||
| Purchases of property, plant and equipment | (18.4) | (23.5) | |||||
| Proceeds from sale of available-for-sale financial assets | - | 5.3 | |||||
| Purchases of intangible assets | (69.6) | (71.2) | |||||
| Interest received | 0.1 | 0.3 | |||||
| Net cash used in investing activities | (216.5) | (135.1) | |||||
Markit Ltd. | |||||||
Nine |
Nine | ||||||
| $'m | $'m | ||||||
| Cash flows from financing activities | |||||||
| Proceeds from issuance of common shares | 56.8 | 47.6 | |||||
| Share buy back | (77.8) | (77.8) | |||||
| Transactions with non-controlling interest in subsidiaries | - | (178.0) | |||||
| Proceeds from borrowings | 100.0 | 177.0 | |||||
| Repayments of borrowings | (90.0) | (145.0) | |||||
| Prepaid facility fees | (4.1) | - | |||||
| Net cash used in financing activities | (15.1) | (176.2) | |||||
| Net increase/(decrease) in cash and cash equivalents | 7.0 | (73.6) | |||||
| Cash and cash equivalents at beginning of period | 75.3 | 110.2 | |||||
| Net increase/ (decrease) in cash and cash equivalents | 7.0 | (73.6) | |||||
| Exchange losses on cash and cash equivalents | (1.2) | (1.1) | |||||
| Cash and cash equivalents at end of period | 81.1 | 35.5 | |||||
Markit Ltd.
Reconciliation to
Non-IFRS financial measures
Adjusted EBITDA and Adjusted EBITDA margin
Adjusted EBITDA is defined as profit for the period from continuing operations before income taxes, net finance costs, depreciation and amortisation on fixed assets and intangible assets (including acquisition related intangible assets), acquisition related items, exceptional items, share-based compensation and net other gains or losses and excluding Adjusted EBITDA attributable to non-controlling interests.
Adjusted EBITDA margin is defined as Adjusted EBITDA divided by revenue, excluding revenue attributable to non-controlling interests.
The following table reconciles our profit for the period from continuing operations to our Adjusted EBITDA for the periods presented:
For the three months ended | For the nine months ended | ||||||||||||
| ($ in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||
| Profit for the period | 79.2 | 32.4 | 148.4 | 144.1 | |||||||||
| Income tax expense | 11.6 | 16.5 | 36.8 | 52.1 | |||||||||
| Finance costs – net | 4.5 | 4.7 | 12.8 | 15.0 | |||||||||
| Depreciation and amortisation – other | 25.1 | 21.9 | 71.9 | 62.4 | |||||||||
| Amortisation – acquisition related | 15.0 | 12.6 | 43.3 | 37.0 | |||||||||
| Acquisition related items | (16.0) | 0.1 | (11.0) | 0.2 | |||||||||
| Exceptional items | 9.4 | 14.3 | 51.8 | 12.3 | |||||||||
| Share based compensation and related items | 0.7 | 2.0 | 6.8 | 5.9 | |||||||||
| Other (gains) / losses – net | (2.4) | 6.2 | 3.0 | (4.6) | |||||||||
Adjusted EBITDA attributable to non-controlling interests | (0.3) | - | (0.3) | (11.5) | |||||||||
| Adjusted EBITDA | 126.8 | 110.7 | 363.5 | 312.9 | |||||||||
Adjusted Earnings
Adjusted Earnings is defined as profit for the period from continuing operations before amortisation of acquired intangibles, acquisition related items, exceptional items, share-based compensation, net other gains or losses and unwind of discount, less the tax effect of these adjustments and excluding Adjusted Earnings attributable to non-controlling interests.
In addition we use Adjusted Earnings to calculate Adjusted Earnings per share, diluted.
The following table reconciles our profit for the period from continuing operations to our Adjusted Earnings for the periods presented:
For the three months ended | For the nine months ended | ||||||||||||
| ($ in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||
| Profit for the period | 79.2 | 32.4 | 148.4 | 144.1 | |||||||||
| Amortisation – acquisition related | 15.0 | 12.6 | 43.3 | 37.0 | |||||||||
| Acquisition related items | (16.0) | 0.1 | (11.0) | 0.2 | |||||||||
| Exceptional items | 9.4 | 14.3 | 51.8 | 12.3 | |||||||||
| Share based compensation and related items | 0.7 | 2.0 | 6.8 | 5.9 | |||||||||
| Other (gains) / losses – net | (2.4) | 6.2 | 3.0 | (4.6) | |||||||||
| Unwind of discount (1) | 2.9 | 3.0 | 7.8 | 9.8 | |||||||||
| Tax effect of above adjustments | (20.4) | (5.9) | (40.5) | (12.0) | |||||||||
| Adjusted Earnings attributable to non-controlling interests | 0.3 | - | 0.3 | (9.7) | |||||||||
| Adjusted Earnings | 68.7 | 64.7 | 209.9 | 183.0 | |||||||||
(1) Unwind of discount represents the non-cash unwinding of discount, recorded through finance costs – net in the income statement, primarily in relation to our share buyback liability.
Contacts:
Media enquiries:
Teresa Chick, +44
(0)20 7260 2094
Managing Director, Corporate Communications
teresa.chick@markit.com
or
Ed
Canaday, +1 646 679 3031
Director, Corporate Communications
ed.canaday@markit.com
or
Investor
enquiries:
Matthew Kolby, +1 646 679 3140
Managing
Director, Investor Relations
ir@markit.com
