containing ipd group limited financial statements to 31...

containing IPD Group Limited financial statements to 31 December 2011

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Contents

IPD Group Limited (“the Company”) is the parent of the IPD group of companies (“IPD” or “the Group”)

Chairman’s statement 2IPD’s coverage around the world 4Group Managing Director’s report 6IPD products and services 10Serving global markets better 16Group Finance Director’s report 20Board of Directors 22Management team 23Corporate governance 24The IPD Protocol 26Business assurance 28Corporate responsibility 30Directory of advisors 33Financial statements 34

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1

2011• IPD measures one quarter of the world’s

institutional real estate

• IPD provides services in 32 countries, with indices in 25 countries

• 76,494 index downloads from IPD.com (2010: 66,335)

• 62,368 properties in the IPD global database (2010: 52,411)

• 27,831 reports accessed via IPD Client Extranet (2010: 22,045)

• 570 IPD benchmarks produced (2010: 492)

• 335 IPD staff worldwide (2010: 314)

• 126 indices released during 2011 (2010: 85)

• 94% renewal rate with our clients year on year

highlights

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2 IPD Annual Report 2011

Property investors and managers want to understand what is happening in theirindustry and need to present their market as transparent and trustworthy to national and international investors.

The process of tracking commercial propertyis more complex than for other asset classes.Buildings and locations are different; leasecontracts vary; there is no central marketplace; transactions can be infrequent; andlarge samples are required to illustrate trends.

Our business model provides the necessaryincentives for investors and managers tosupply IPD with accurate information on theirleases, properties and funds so they canbenefit from reports about their portfolios, and illustrate the returns coming from theirchosen market segments.

The strength of our business model, and its flexibility to deal with new circumstances,is evident throughout this report.

One example is the increased demand forinformation on leases, operating costs andincome security, as investors concentrate onincreasing income and reducing costs. Similarly,we have experienced strong demand frombanks who seek a better understanding of theunderlying security in their property loan books.We have been working closely with theInternational Monetary Fund and EuropeanCentral Bank over this past year on howcommercial property interacts with the wider economy.

The property investment process is now largelyconducted by property investment managersacting on behalf of institutional and other owners.We not only analyse underlying assets but alsoshow the performance of property funds aroundthe world – we can explain why these fundsperform as they do, including the contributionof asset allocation, financial leverage, andmanagement costs to performance.

2011 has been a demanding year in the property market.Values and the volume of transactions are still below thelevels of the late 2000s; IPD’s business and marketcoverage has however grown throughout the crisis.

Chairman’sstatement


3

Property does not stand still … and we arefocusing on expanding our services in emergingmarkets including Central and Eastern Europe,South America and Southern Africa. By the sametoken we have been providing measures for theincreasing interest of property investors in newmarkets, such as social housing, healthcare,hotels, and the impact of environmental quality onbuilding performance. In each of these marketswe define standards for describing buildings,accounting and valuation codes, and thenprovide a market index and portfolio measure.

In order to serve the industry properly, IPD must have sufficient financial strength so I am pleased to report another consistent year of performance. IPD’s turnover rose by 8.8% to nearly £30m while profit before tax was£2.76m; a 3.4% increase on the 2010 figure of £2.67m.

IPD is essentially a collaborative effort,conducted on behalf of the major players in the property industry. I am delighted towelcome Francis Salway, CEO of LandSecurities until this March, to the IPD GroupBoard. He has pioneered a technical approach to property investment for many years and I look forward to his insight and experiencecontributing to IPD’s future business.

I would like to acknowledge the tremendoussupport we receive from many industry leadersin defining and refining our products, and ofcourse the great efforts of our skilled staff in turning this into a valuable service.

Rupert NabarroChairman

Chairman’s statement

For something to last for 25 years is a major achievement, but for something to become a global leader in its field in 25 years is

quite outstanding. I look forward to seeing IPD continue to push for innovation and increase transparency in the real estate industry.”

Francis SalwayFormer CEO, Land Securities

“



IPD’s coveragearound the world

NOTE: Sectors constituting‘other’ include but are not limitedto hotels, healthcare, leisure,forestry and educational facilities.

SECTORS COVERED IN THE IPD GLOBAL DIRECT PROPERTY DATABASE

AMERICASMarket size IPD

Number of Value estimate coverageassets (€ bn) (€ bn) (%)

DIRECT PROPERTYCanada 2,141 72.0 139.8 51.5United States 3,193 104.1 1,516.2 6.9

SPECIALIST MARKETSGiliberto-Levy Commercial Mortgage Performance Index (new) 145

IPD SERVICES IN DEVELOPMENTBotswana and Brazil

IPD now measures more than 1,500 funds globally.”“

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5IPD Annual Report 2011

Coverage data quoted as at 31 December 2011. Data on IPD’s coverage throughout this report is quoted in Euros, as the currency of the largest number of markets measured by IPD.

ASIA PACIFICMarket size IPD


DIRECT PROPERTYAustralia 1,670 103.8 182.5 56.9Japan 2,131 90.7 595.7 15.2Korea 120 9.4 38.1 24.7New Zealand 574 6.2 9.5 65.9Pan-Asia* 3,576 152.8(China, Hong Kong, Indonesia, Malaysia, Singapore, Taiwan, Thailand)

SPECIALIST MARKETSAustralia green buildings (new) 482 38.5Australia hotels (new) 99 4.4Australia healthcare (new) 49 0.8

*as at 31 December 2010

PROPERTY FUNDSAustralia 17 30.6

EMEAMarket size IPD


DIRECT PROPERTYAustria 595 6.7 22.8 29.2Belgium 376 8.2 47.6 17.3Czech Republic (new) 120 2.9 11.2 25.9Denmark 1,033 14.7 34.4 42.6Finland (KTI) 2,272 21.3 42.9 49.6France 6,932 109.5 236.3 46.3Germany 4,364 50.0 270.3 18.5Hungary (new) 107 2.2 9.1 23.7Ireland 328 2.3 2.5 90.1Italy 1,998 28.3 79.5 35.6Netherlands 4,620 38.9 117.2 33.2Norway 569 16.2 40.2 40.2Pan-Europe 51,096 599.3 1,518.1 39.5Poland 232 5.4 16.2 33.5Portugal 998 9.9 15.1 65.5South Africa 2,017 19.5 30.9 63.3Spain 523 17.8 41.0 43.4Sweden 1,401 29.3 107.3 27.3Switzerland 4,172 58.6 140.2 41.8UK 20,456 177.4 284.1 62.5

Number of Valueassets (€ bn)

SPECIALIST MARKETSNetherlands social housing 9,413 61.7Sweden residential 2,820 20.7UK forestry 144 0.2UK healthcare 625 2.4UK rural 488 2.6

PROPERTY FUNDSFrance OPCI 45 6.3German open ended funds 22 75.3Italy 39 8.3Nordics (new) 16 3.4Pan-Europe open ended funds 16 7.0Portugal (new) 37 5.9UK 56 33.2

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With the second half of the year overtaken by the European sovereign debt restructuringas politics drove the economic agenda, it wasuncertainty that defined the thirty-two countriesglobally in which IPD operates. Continuing into2012, the heightened risk of recession hasslowed investment activity and raised significantconcerns over short term performance.

It is in these challenging market conditionsthat IPD continues to be gaining relevance forour clients. We serve the industry as a providerof intelligent analysis that is critical for clients todefine their strategy and find value in today’smarkets. The need for fast, accurate andcomplete information, such as interpretation of information through insightful analytics, has increased rather than lessened.

We continue to establish analysis tools andperformance indicators in new markets, stayingin step with investors’ appetite for emerginginstitutional property markets. We have launchedeight new indices in 2011 to track new ways ofinvesting in real estate. New releases include fourdirect property indices covering Czech Republic,pan-Europe, Australia hotels and Australia greenbuildings; fund indices across Australia, theNordics and Europe, and the Giliberto-Levyindex. We are also establishing services thataddress the impact of regulation and thechanging role of lenders.

IPD’s strategies are always informed by therapid changes in technology that allow us toimprove and expand our methods to capture,validate, store and deliver data to meet themore sophisticated demands of our clients.


The real estate markets may have entered 2011 in arelatively optimistic mood after a year of positive returns formany markets. However, as 2011 progressed that sentimentwas replaced by the familiar uncertainty of the crisis years.

The IPD direct property global database contains 62,368 properties valued at nearly €1 trillion, representing 24.8%

of the world’s institutional real estate investments.”Source: IPD Global Annual Property Index 2011

“

Group ManagingDirector’s report



Demand for core service remains high

Current investing trends play to the strengths of our core performance and risk measurementservices, with clients looking to drive value,reduce costs in their portfolios and improvebest practices.

The depth of information in all IPD databases,on a national and global scale, has enabled usto expand the levels of performance and riskdata we provide to the market.

During 2011 we introduced more markets,additional sectors, and detailed city level data,adding significant value to the suite of marketinformation we offer our clients.

We are now gathering more data from ourexisting markets, such as detailed leaseinformation in the US, Canada and South Africa,adding to our established income and leaseservices in the UK, France and Germany. Overthe past year, we have received informationfrom more than 50 new portfolios, contributingto the 10% increase in the size of our database.

In 2011, we significantly improved the timing of our release dates, publishing each of ournational indices, on average, two days earlierthan previously.

We will continue to look for ways to increaseefficiencies in our service delivery schedule,while ensuring the same high level of quality and accuracy for our clients.

The frequency of the service is also important and we aim to evolve all annual services toquarterly, with a biannual interim step in somecases. Recent changes include the UKresidential index now being released quarterly,and the German open ended funds index now a monthly publication.

These developments are dependent on reliablevaluations and we are committed to workingwith the valuation industry to deliver theseimprovements. We are also looking at quarterlytransaction data for transaction-linked indices,which could provide further insight into marketmovements, complementing our alreadystrong suite of valuation-based indices.

IPD performance and risk analytics are widelyrecognised as the industry standard in realestate. With our client satisfaction survey tellingus each year how valuable IPD data is to ourclients’ marketing efforts, the ‘IPD MeasuredFund’ logo was established to support clientsin their marketing and investor relations. Thisendorsement helps managers promote theirfund performance as independently measured,and enables investors to identify, more readily,professionally managed investments.

Group Managing Director’s report

“ IPD affects everything we do and is a major partner in our analyticalprocess, providing detailed analysis on all 15 of our portfolios.”

Peter CuthbertHead of Canadian Real Estate, Standard Life Investments


8

Modernes Immobilien-Portfolio-Management kommt ohneBenchmarking nicht mehr aus. Die IPD GmbH schafft für Kapitalanleger und Immobilienmanager wertvolle Marktvergleiche.Benchmarking is absolutely essential in modern real estate portfoliomanagement, and IPD provides valuable benchmarks to real estate managers and investors.”Bernhard BergSprecher der Geschäftsführung/Chairman, IVG Institutional Funds GmbH

“



Innovations in data delivery

Investment in data underpins the success of our business and we continually pursue more powerful ways of analysing, distributingand reporting information.

In addition to upgrades to the IPD ReportingPortal, a key development underway is the new calculation engine. This project bringsimprovements to the core underlying systembehind our benchmarking products, and clients will see improvements in efficiency and effectiveness of their analysis, including the interface with reporting.

The calculation engine utilises events-baseddata capture rather than ’snapshots’, allowingscenario analysis such as modelling changes in portfolios following transactions.

Adapting to client segmentation

A maturing market has resulted in more clientsegmentation, particularly as our clients’businesses become more diverse, withregional and global investment strategies.

We have built on the strong relationships with our largest clients and, through bettercoordination with our business units, can offerservices that mirror their international footprintas well as meet their local market needs. We aredeveloping bespoke and flexible reporting formultinational clients, funds and their investors, as well as for US clients and large UK fundmanagement houses.

We are producing fast-track peer groupbenchmarks for those clients able to deliverdata quickly and more frequently such as REITsand pan-European managers. In 2011, morethan 570 different benchmarks were produced,replicating the strategy and constraints of eachportfolio we measure.

Expanding debt coverage

We are responding to increased need forinformation on debt markets and have tailoredour loan data to provide customised analysis.

We are committed to supporting lenders and have already delivered IPD products such as the IPD Rental Information Service(IRIS) Digest and Loan Book Analysis Service,providing data that aids the decision-makingprocess and helps manage risk, particularlygiven the increasing regulatory pressures.

Taking us forward in becoming a source fordebt indices for the market, IPD has assumedresponsibility for distribution of the influentialGiliberto-Levy Commercial Mortgage PerformanceIndex in the US. This investment benchmarkmeasures the quarterly total return produced by amodel portfolio of institutional-grade commercialmortgage whole loans. Leveraging off this index,IPD benchmarking services are being developedin the US and we are also exploring additionalnon-US real estate debt indices.

Laurent TernisienGroup Managing Director

Group Managing Director’s report



The industry has, up until now, had a lightburden of regulation; this has dramaticallychanged since the financial downturn of 2008.

How we as an industry respond to the increasedregulatory pressure for risk management is driven by a series of changes including Basel III and Solvency II. Furthermore, theimplementation of the Alternative InvestmentFund Managers Directive (AIFMD) from 2013 will be a major event for our business.

Under AIFMD fund managers will be required tohave a permanent risk management function toidentify, measure, manage and monitor a broadrange of risks within their business. This will bea huge shift for fund managers, but one thatIPD is already strongly positioned to supportwith the robust datasets we have on hand toprovide the sophisticated levels of analysis to meet the AIFMD’s requirements.

We are also witnessing the growth of the real estate asset class in both its scale andsophistication. The institutionalisation of realestate investment will result in greater pressurefor performance measurement and managementof the industry.

Here we recognise the importance of deepermarket penetration for core IPD services and our analysis must support the demands of an increasingly sophisticated and rigorousclient base.

We are increasing the global reach of ourservices and expanding in line with our clients’appetite for investing. We will use our experienceto show that with the institutionalisation of localmarkets comes the expectation of a strongfoundation of transparency.

Finally, the increasing pace of technologicalchange is having an ever greater impact on real estate investment management. We areadopting technologies to increase the ability ofclients to interact with our datasets and give themthe scope for more flexible and dynamic analysis.

By understanding and responding to these secular trends today, IPD can ensure that its business continues to adapt and grow in a fast-evolving industry.

Peter HobbsGroup Business Development Director

While the market is focused on the impact of the economic cycle; looking further ahead, it is clear that these cyclicalpressures overlay a series of more profound secular trends that are driving the growth of IPD’s business.

IPD products and services




IPD’s benchmarking service forms an important part of Allianz’s internal performance measurement process. We rely on benchmarks

from IPD not only at a national but also a European level.”OIivier Piani

CEO, Allianz Real Estate GmbH

“Performance and risk analytics

IPD’s Portfolio Analysis Service (PAS) is pivotalto our clients’ day-to-day property investmentdecisions. It helps portfolio and fund managersmake informed decisions, owners and occupiersto reduce costs, and consultants to differentiatethemselves by demonstrating performance andtrack record for managers and investors alike. It is increasingly relevant in today’s challengingreal estate markets as owners focus onmaximising value and returns, while reducingcosts and monitoring market, credit, liquidity,counter-party and operational risks.

The service continues to evolve and we now have the interactive IPD Reporting Portalto deliver information to clients securely in anintegrated and intuitive environment. In 2011,this was rolled out to our clients globally.

The secure Portal comprises nine modules forclients to navigate through their information,increasing the usability of the data and analysisbeing delivered to them. Core predefinedreports as shown here can be accessed anddownloaded, while an interactive reportingapplication gives clients the flexibility tocustomise parameters, to undertake individualanalysis, moving to different levels of analysis:from fund to portfolio, asset to tenancy. Improvednavigation allows them to drill through to theunderlying data behind each report.

The Portal will become the central hub fordelivery of all our performance and risk analysisservices as well as our standard and customisedresearch products.

IPD Reporting Portal samplepredefined reports



We plan to develop our fund level analyticswhere there is demand from investors in Europeand across the world to support the developmentof a global fund index and benchmark.

In 2011, we launched the IPD Pan-EuropeanProperty Fund Index. This index captures theinvestment performance of open ended crossborder funds and is just one of the productsthat addresses clients’ increasing need for peer group benchmarking.

The index has a seven-year quarterly historyand comprises 16 open ended European cross border funds with a capital value of €11bn,reflecting an estimated 82% of the total market.German open ended funds are excluded fromthe sample as they are separately tracked in the IPD German Open Ended Funds Index.

This pan-European index is the first-ever‘investable’ property fund index for Europe,comprised exclusively of open ended fundsavailable for new investment. It also establishesa cross border benchmark to help managersand investors develop a more informed view of market performance when making peergroup comparisons.

Contributors to the new fund index also receivean equivalent quarterly pan-European directproperty benchmark. This allows us to reconcilethe performance difference between investingdirectly and indirectly across Europe and toprovide investors with invaluable insight aboutthe impact of gearing and financial structure on overall fund performance.

Bridging the gap between property and fund level analysis

The IPD Pan-European Property Fund Index covers a representative group of the core balanced/specialist pan-European funds that the

multi-manager industry can access. It is also available comparatively soonafter the quarter end, making it very useful for client reporting and benchmarking.”

Ivo de WitDirector Fund of Funds, CBRE Investors Global Multi-Manager

“



13

“ The management of large realestate portfolios has become increasinglycomplex over the past decade. At thesame time, competition among managershas intensified. The analytical tools thatIPD provides Clarion Partners afford usthe ability to achieve market leadinginvestment returns, while managingportfolio risks.”Stephen HansenManaging Director, Clarion Partners

“ IPD is considered to be animportant partner of HSBC and over the next 12 months will have a key role to play in a number of initiatives to beintroduced by the bank involving its UKreal estate business.”Lennox WilliamsSenior Project Manager, Real Estate, Commercial Banking, HSBC Bank plc




Market information and indices

With the extensive and authoritative informationalready held in IPD’s databases, the side-by-side comparison of major global cities was anatural and valuable addition to our service. In2011 we developed the Global Cities Report,providing global comparative analysis of annualreal estate performance at the city level.

With data covering all four major property types where available (retail, office, industrialand residential), this new product has alreadyreceived significant interest from key clients and global investors. The full report withquarterly data on 60 key cities across 24countries will be launched in mid 2012.

Throughout 2011, we continued to expand our coverage of direct property markets with the addition of the Czech Republic. Thisexpansion is a direct response to our investorclients as they reassess their core investmentmarkets and require our support for transparentperformance data.

Fund indices continue to be a majordevelopment for the business. This can be through country or region indices such asthe Nordic Property Fund Index, launched inSeptember 2011, or by bringing together funddata in relevant peer groupings such as thePan-European Property Fund Index.

We have also streamlined our deliverymechanisms with index releases now beingautomated through IPD.com. This new processenhances our quality controls during publicationof headline index results and has enabled us to expedite release schedules for many nationaldirect property indices.

Debt services

Our rich datasets position us well to supportlenders as they look to assess and managetheir risks through the lending process. This is an evolving part of the industry and we are at the forefront of supporting existing and newlenders in demands for transparency to supporttheir lending decisions and provide essentialservices in light of regulation such as Basel III.

We provide a secure platform to hold real estateloan data for analysis against relevant marketdata such as collateral assets, tenants, leases,guarantors and documentation associated witheach loan. We have the ability to collate informationfrom multiple sources and systems to providecustomised analysis including historic cash flows,tenancy strengths and lease event data.

We also have the expertise to create in-housecommercial real estate market forecasts, scenarioanalysis and stress testing based on actual cashflow projections. Information can also be trackedas we monitor and analyse the performance ofreal estate assets and the underlying collateralfor loans.

In order to complement our existing management information systems,we began to collaborate with IPD in late 2009 to develop a bespoke service

that would organise and analyse the collateral, lease & tenant data for aproportion of our real estate loan book. This partnership has proved invaluable

in efficiently responding to data requests. The depth of data now available tous has enhanced understanding of our real estate collateral, and has been

a cornerstone of our strategy of a risk-based approach to deleveraging.”Lloyds Banking Group Corporate Real Estate Business Support

“



IPD Occupiers

In June 2011 IPD hosted the 13th annualOccupiers’ Conference, hosting discussionsaround how both commercial real estate andfacilities managers can define value and developoperating models to deliver better businessoutcomes. With IPD occupiers’ services wellestablished in public sector organisations, theconference also addressed achieving value inthe face of major cost reductions and publicsector sharing space initiatives.

The IPD Occupiers Blue Chip Office consultativeindex was released in December 2011.Developed alongside investors, suppliers andoccupiers, index data is based on IPD’s occupierbenchmarking service, which has a client baseincluding many of the largest occupiers of realestate. The full release of the index is due inJuly 2012.

Furthermore, the breadth and depth of ourproducts for occupiers has increased, with IPD’sservices offered in France, Germany, South Africaand the UK.

We are developing a benchmarking serviceto assist global corporate real estate teamsunderstand, optimise and report on theirportfolios. We successfully implemented aninternational benchmarking pilot in 2011 workingwith a number of organisations including:

• Cisco

• Ericsson

• HSBC

• Pfizer

• Renault

• Societé Générale

• Standard Chartered Bank

• State Street

• Symantec

We will be launching this new service in July 2012.

Through increasing data transparency and active use of performancedata we have helped businesses understand the value and opportunities withintheir corporate estates. Our engagement with central government departmentsand successful partnership with the Government Property Unit helps report andsupport the delivery of the challenging savings expected from public sector property.”

Victoria MejevitchUK Director of Occupiers, IPD

“



It remains a priority for us to match the globalfootprint of our clients while ensuring ourcoverage is in depth for each market aroundthe world.

We continue to reinforce our real estate marketpresence by investing in key markets such asGermany, Asia and the US, as well as increasingour datasets across sectors and building types.The size of IPD’s databases increased by 10%during 2011; through new funds joining ourbenchmarking services, positive capital growthrecorded, and greater net investment in thefunds we measure.

Here we look at some highlights of IPD’sactivities around the world during 2011.

UK and Ireland

IPD’s UK business, which constitutes 50% of IPD’s group turnover, has continued to deliver high quality services for clientsthroughout the year.

As the most mature market in which weoperate, close to 80% of all funds in the UKdatabase are now measured quarterly, withmost clients subscribing to the full suite ofperformance and risk measurement reportingavailable to them.

We have continued to expand the breadth of services we offer and are developing newproducts to serve management house reporting,asset management benchmarking and portfoliosimulation. Our work with banks also increasedsignificantly throughout the year, with ouranalytics now being used by a number of largemultinational lenders. Our banking clients havebenefited from our range of services, from loanbook tracking to full statistical stress test analysis.

In September 2011 we released the findings ofour study on the performance of UK commercialproperty developments, sponsored by GeraldEve and HSBC. This research, incorporatingIPD’s development data back to 1983, hashelped initiate a new IPD service measuring riskand return characteristics within this aspect ofthe market.

Our partnerships with the industry continue todirect a number of our key initiatives. Throughoutthe course of 2011 we are delighted to haveworked closely with the Investment PropertyForum, the Association of Real Estate Funds,British Property Federation, the Association ofBritish Insurers and RICS. In addition wecontinue to maintain strong working relationswith all leading agents that sponsor our researchreports and direct market index publications.

As a leading property fund management house, Legal & General place significant value on the reporting and comparative analysis

we receive from IPD to inform our investment strategies.”Bill Hughes

Managing Director, Legal & General Property

“

Serving globalmarkets better


17

Netherlands

As one of the most transparent investmentmarkets in the world, our Dutch commercialproperty benchmarking services are amongstthe most established that IPD offers globally.Measuring one third of the local market, theNetherlands database holds data on more than4,600 properties valued at nearly €40bn.

IPD’s social housing services in the Netherlandsare going through a period of change as theyadapt to national and European policy measuresto decrease the property stock which providessocial housing services.The long term effectwill be a bigger and gradually growing part of the Dutch social housing sector beingcommercialised, requiring participants to have a deeper understanding of the drivers of theirbusiness and portfolio performance.

As social housing in Europe continues thisevolution away from public provision, indicesthat support the analysis and evaluation ofperformance become increasingly important.The IPD/aeDex Social Housing Annual PropertyIndex is a forerunner in the collection and analysisof this type of data with over €60 bn worth ofassets under management and a time seriesback to 1999.

Our work on social housing in the Netherlandsalso has application in other markets. IPD is nowsupporting seven social housing associations ina pilot feasibility study to establish social housingbenchmarking services in England.

Serving global markets better

Een professionele vastgoedbeleggingsmarkt kan niet zonder een robuuste portefeuille analyse en benchmark service. De IPD/ROZ Nederlandse Vastgoedindex is voor de Nederlandse

vastgoedbeleggingsmarkt al ruim 15 jaar de standaard.A professionally managed property investment market cannot do

without a robust portfolio analysis and benchmarking service. The IPD/ROZ Netherlands Property Index already sets the standard for the Dutch property investment industry for more than 15 years.”

Cyril van de HoogenCFO Altera Vastgoed NV, Amstelveen

“


18

Solvency II

A major concern for the industry in 2011 was the passage of the Solvency II directive. Theimplementation of this risk-based framework was expected to reduce insurance companies’allocations to real estate as it forced a large capital adequacy provision for the asset class.

IPD was commissioned by seven key industry associations to develop a research report that tested the underlying principles of the directive. IPD’s development work on transactionlinked indices showed patterns of extra volatility that also vary by market and region. Theresulting report was widely used to inform the industry on this key change and to support the associations’ lobbying efforts with European policymakers.

Our work with Solvency II demonstrates the reach of the IPD datasets and how we can use our expertise to adapt to changing information needs in the market. With the advent of AIFMD in 2013, we expect our data and analysis to be a key requirement for the fundmanagement industry as it looks to comply with the AIFMD’s risk management requirements.



Asia Pacific

The second release of the Pan Asia ReturnResearch in June 2011 was another steptowards greater transparency in the Asiaproperty market. The study introduces for thefirst time, a basis for comparisons betweenassets, sectors, locations and funds across Asia.

In addition to the seven markets included in the previous year’s study (Japan, Korea, China,Hong Kong, Malaysia, Singapore and Thailand),the 2011 release now incorporates Indonesiaand Taiwan. With IPD indices already wellestablished for Japan and Korea, in 2001 and2005 respectively, and national indicators forthe remaining seven markets, there is now atleast a five-year performance history for mostof these markets.

Our Australian business is leading the way for IPD’s sustainability market information withits green property index. The index tracks theinvestment performance of office buildings thathave been awarded a Green Star rating fromthe Green Building Council, or ratings by theNational Australian Built Environment RatingSystem (NABERS) for Energy and Water. Theresults provide key information on the contributionof green rated buildings, constituting close to87% of office assets in the IPD database.

South America

Brazil has seen extraordinary economic growthin recent years. With low levels of debt in theproperty markets, and an extensive pension fundsector with around 5% of all assets invested inproperty, Brazil is an emerging market looking toincrease its focus on valuations and transparency.Based on our research undertaken in 2011, weare looking to work with the industry to developan IPD index and performance measurementservice for Brazil.

North America

We have built a solid foundation in North Americaand have continued to raise industry awarenessof IPD’s services, supported by our relationshipswith the Pension Real Estate Association andInstitutional Real Estate, Inc.

Adapting IPD’s performance and risk analyticsto local market needs has markedly increasedthe value of our benchmarking services, andresulted in significant growth in our client baseof institutional investors and fund managers. Tobuild on this, we plan to establish a US propertyfund index in 2012 with full attribution ofperformance from direct property to fund return.

There continues to be strong demand for high-quality, validated information across theindustry and we see great potential to supplyIPD’s global market information, includingreports focussed on global key cities, to abroad range of clients, both directly and viaother financial data distribution channels.

In Canada, we made a number of structuralchanges in our business and established a newpartnership with REALpac, the Real PropertyAssociation of Canada.

The focus for 2012 will be on establishing anIPD office in Toronto and delivering our servicesmore directly to our institutional clients.

We will be expanding the range of localproducts in line with our global offering, and as part of this programme, we plan to developour services for REITs and introduce a Canadaproperty fund index.

Serving global markets better



Sales revenue

IPD’s sales revenue rose by 8.8% to £29.7mfrom £27.3m in 2010. In the UK, IPD’s mostmature market, we continued to produceproducts and services which meet the needs of clients, giving steady growth of 8.9%. Theproblems in the Eurozone experienced from themiddle of 2011 clearly had an impact, however,and we saw relatively slower growth in IPD’scontinental European revenue of just 2.5%. In the rest of the world, we saw stronger growthof 25.9% and with IPD’s market coverage lowerin these markets, there is greater potential here.

Investment in people

IPD staff costs were £17.6m in 2011 (2010:£16.5m), reflecting a 6.6% increase. Staff costscontinue to represent approximately two-thirdsof the Group’s total costs. Average headcountrose to 333 (2010: 310) including recruitment of 89 people, as we continue to invest in theappropriate resources to deliver IPD’s productsand services. Retention among staff alsoincreased with employees now staying with thecompany for 4.3 years compared with 4.0 yearsin 2010, improving continuity for our clients.

We recognise the contribution of our staffthrough short-term cash incentives and longer-term equity incentive schemes. These aredesigned to reward staff for the success ofindividual parts of the business as well as the overall profitability of the Group.

In 2011, 45 people, mainly directors andemployees of IPD, acquired a 5% stake in theCompany from Invista Real Estate InvestmentManagement. Participants included seniormanagement, non-executive directors, anddirectors and staff of IPD in seven of ourbusiness units. This parcel of shares had beenacquired by Invista as part of the acquisition of a 30% stake in IPD by institutional investors in 2005.

Ownership of the Company continues to be apartnership with the industry. IPD employeesand directors now own just over 50% of the ordinary share capital of the Company,demonstrating staff’s continued commitment and alignment to the Company’s futureperformance; with the remainder held by real estate investors, fund managers and the largest global property advisors.

IPD’s profit before tax was £2.76m (2010: £2.67m),an increase of 3.5% from 2010. Profit after tax was£1.91m (2010: £1.67m), an increase of 14.6%.

Group FinanceDirector’s report


21

Investment in technology

We increased our technology spend in 2011 by 18% to £4.6m (2010: £3.9m), reflecting 15%of IPD’s revenues. Of this total, £2.3m relates toinvestments in product development, modernisingand upgrading existing products.

Dividends

An interim dividend distribution of £15.00 pershare was paid to shareholders in December2011 with a final dividend of £35.00 per sharedue to be paid in June 2012, making a totaldividend of £50.00 per share in respect of 2011.A dividend was paid in respect of 2010 of£49.00 per share.

Payment of dividends must be balanced against the investment we make in thebusiness, particularly people and technology.We invested more into our people with costs for staff rising 6.6% and more in technologyimprovements, with technology costs rising 18%.

Taxation

IPD’s charge to tax was £0.84m in 2011 (2010:£1.0m) representing an effective rate of 30.6%(2010: 37.4%). This is higher than the statutorytax rate due to losses in overseas subsidiariesand non-deductable amortisation expense.

We expect the effective rate of taxation for IPD to reduce in the coming years, in line with theUK government’s stated policy of a phasedreduction in corporation tax. As our investmentin developing countries is rewarded by greaterprofits, so the overall charge will come down.

Cash flow

We will continue to exercise our fiduciary duty ineffective working capital management, includinginvoicing our clients and collecting cash in atimely manner, and making prompt payments tocreditors. IPD aims to operate neutral cash flowwithout recourse to overdrafts to fund workingcapital, through strong management of thetiming of invoicing and collection of cash. Theprincipal borrowing is the loan taken out to fundthe acquisition of aeDex in the Netherlands,which will be fully repaid in September 2012.

Alasdair EvansGroup Finance Director

Group Finance Director’s report

IPD Annual Report 2011

As a REIT, IPD’s benchmarking capability is integral for us to demonstrateour underlying performance to shareholders. The analysis is also central to our

remuneration and helps inform and assess our investment strategy.”Phil Redding

Chief Investment Officer, SEGRO

“



Michael Brodtman 1

Dr Ian Cullen 1

Prof. dr Piet Eichholtz

Alasdair Evans

Tom Hempenstall 3

Dr Peter Hobbs

Sir Stuart Lipton

Dr Paul McNamara OBE 1,2,3

Rupert Nabarro OBE,Chairman 2,3

Laurent Ternisien

1. Member of Business Audit Committee2. Member of Audit Committee3. Member of Remuneration Committee

Francis Salway (appointed 1 April 2012)

Board of Directors



Asia

Dr Kevin Swaddle, Managing DirectorToshiro Nishioka

Australia and New Zealand

Dr Anthony De Francesco, Managing Director

DACH

Dr Daniel Piazolo, Managing DirectorDr Nassos ManginasProf. Justus Vollrath

Netherlands

Arnoud Vlak, Managing Director

Nordics

Christina Gustafsson, Managing DirectorHåvard Bjora

North America

Simon Fairchild, Managing DirectorJim Valente

Southern Europe

Stephanie Galiègue, Managing DirectorOlivier Mège

South Africa

Stan Garrun, Managing Director

UK and Ireland

Phil Tily, Managing DirectorMalcolm HuntVictoria MejevitchMalcolm FrodshamJohn Bergman

IPD Group Services

Julian Self, Information Technology & OperationsNazma Kurimbokus, Business AssuranceChristina Cudworth, Marketing & EventsRolf Harrington, Business SolutionsDavide Manstretta, Performance & Risk Analytics

Pictured left to right in list order

Management team



IPD’s holding company structure ensuresshareholder interests are separated from day-to-day business operations, with the IPD Group Board accountable to shareholders andresponsible for corporate governance, dividendpolicy, financial statements, senior remunerationand contributing to strategy development. Webenefit greatly from the expertise and directfeedback from our non-executive directors, all of whom bring significant industry knowledge to the Board.

IPD’s business operations are run by the IPDLimited Board, led by the Group ManagingDirector, with responsibility for setting corporatestrategy, approving business plans, budgets,and monitoring performance. We also haveestablished executive boards across all IPDbusiness units, many with significant externalrepresentation from local industry.

The IPD Group Board has three sub-committees:

• Business Audit Committee: ensures IPD has an independently driven framework forexamining and reviewing core systems andquality controls, and is fully compliant withrelevant regulations

• Audit Committee: provides independentassistance in the oversight of financialstatements and compliance with legal,regulatory, accounting and audit requirements

• Remuneration Committee: providesindependent advice on remuneration tools and the remuneration of IPD’s executive directors.

We are proud to have been contributing data to IPD since itsinception in 1985. The value of IPD’s services was evident to

Scottish Widows Investment Partnership from the outset and it’srewarding to see the level of importance now placed on their

numbers throughout the UK property industry.”Malcolm Naish

Director of Real Estate, Scottish Widows Investment Partnership

“

Corporategovernance


25

An important component of our corporategovernance is the index consultativecommittees, which operate outside IPD’sgovernance structure, giving confidence to our clients and the real estate industry of theindependence and integrity of IPD indices.

The Global Index Consultative Group advises IPD on establishing and maintaining the rules andprocedures governing the technical specificationof IPD direct property and fund indices. We alsohave index consultative groups with externalrepresentation to advise on established anddeveloping indices in all markets by IPD.

We also hold steering and advisory group meetings regularly with clients andindustry representatives for our sustainability services, peer group benchmarks, conferencepartnerships and other key product areas.

A number of markets have seen significantgrowth over the past year and this industryconsultation will ensure we continue to deliver what is best for the local market.

Corporate governance

96% of clients are satisfied with the level of service they receive from IPD, an increase of 10% from last year.”

Source: IPD annual client satisfaction survey 2011“



Enshrined in IPD’s corporate governanceframework, procedure and technical manuals,and index and benchmarking rules, are a setof principles which underpin our day-to-dayoperations and ensure that the independence,accuracy and authority of our outputs arecontinuously protected and reinforced.

Every real estate fund, investment portfolio oroperational estate is a unique mix of financialstructures, property types and locations. Tobuild reliable and powerful benchmarks andindices from the pooled records of manyowners demands the assiduous application of the strictest standards. Our work thereforerests upon fifteen core principles, which maybe clustered into four main groups:

Industry standards

• Global data standards: IPD collectsinformation based on a single set of clearand unambiguous standards designed todefine all required data items, including, for example, market capital and rentalvaluations, all capital and revenue account cash flows and operating and occupational costs.

• Industry standard analysis methods:the computation of performance indicesand the construction of benchmarkedcomparisons are designed andimplemented in accordance with thedisciplines and methods contained inbroadly accepted industry wide guidelines.One important example is the GlobalInvestment Performance Standard.

Efficiency and accuracy

• Automated data capture: all information is collected, through pre-defined templates,which enshrine these data standards, direct from the information systems ofproperty investment teams – end investors,managers, valuers and/or occupiers. IPDconfines its data generation activities to rule based data compilation, so does not conduct valuations or infer/estimate cash flows.

• Asset level measurement: data areassembled for every individual building in order to give the detail needed tovalidate fully the input record; ensure that a single and consistent set of rules is applied to every asset in each portfolio in all territories; and support the widestrange of analyses.

• Whole portfolio reporting: records areassembled only for complete investmentportfolios or operational estates so as toensure that even handed comparisons canalways be made. This precludes the risks ofselective data provision, or cherry picking.

• Rigorous data checking: all records gothrough stringent and fully documentedconsistency and quality control testsutilising computerised validation systems,human scrutiny, supplier query and a finalsign-off from the originating and contractuallyresponsible client representatives. The aimis to ensure that all records are accurateand complete.

• Timely data updating and reporting:within the limits of the above conditions, all data are updated and reported as indices and benchmarked comparisons to challenging, pre-agreed and publishedtimetables, and in accordance with all thedisciplines demanded of the release of price sensitive information.

Reporting integrity

• Confidentiality: IPD ensures full clientprotection of commercially sensitiveinformation on properties and portfolios,and no quantified result is released toany party other than the data supplierunless it meets the aggregation ruleof including at least five assets in atleast three ownerships. All staff signa trust and confidence agreementwhich binds them tightly to the group’s security policy.

The IPD Protocol


27

• Dominance: IPD screens all summaryreports of benchmarks and marketinformation for the dominance of single data providers – whether investmentmanagers or valuers – to ensure that theweight of capital in the most recent resultsdoes not exceed pre-agreed thresholds and is reported wherever appropriate.

• Data security: all data and electronicinformation are stored securely on IPDmanaged computing systems, with thehighest standards of access control androbust protection against external intrusion,all governed by IPD’s group’s security policy.They are all backed up daily, and movedoffsite to a secure warehousing environmentonce every seven days.

• No consultancy or advice: all reporting and client support provided by IPD is tightlyrestricted to factual analysis and quantifiedcomparison, coupled with all the help whichmay be required for results interpretation, sothat conflicts of interest which might flowfrom participation in advisory or consultancyactivities are scrupulously avoided.

Governance

• Operational independence: a corporategovernance structure has been implementedwhich separates strategic business oversightat Group Board level, in which externalshareholding interests are representedthrough non-executive directorships, from detailed operational management at subsidiary levels, in which externalshareholding interests are excluded.

• Intellectual property: whilst ownership ofthe input data on properties and portfoliosremains with the providers, the intellectualproperty and database rights in theprocessed data and all derived outputs and reports remain with IPD, whether or not these are placed in the public domain.So permission must always be sought from IPD for the commercial or businessexploitation of these results and a licencewill normally be required.

• Accountability: the application anddevelopment of IPD’s rules and proceduresare overseen by index and benchmarkingconsultative groups, composed ofrepresentatives of the users of the services inthe majority of the national markets coveredby IPD. The most fundamental principles andrules are supervised by global consultativegroups, whose role is to act as guardians of all definitions, standards, methods andprocesses that ensure globally consistentanalysis and reports.

• Process management: application of the principles is monitored and policed byIPD’s internal but operationally independentBusiness Assurance Unit, supported by aninternal risk management committee and anexternal Business Audit Committee. This inturn ensures the conduct of regular andthorough internal and external audits of allIPD’s business processes and operates anincident management process that recordsand follows up all incidents that impact onIPD business activities in any way.

By following these principles, IPD turns tens of thousands of property records frommany hundreds of property owners acrossnational markets into standardised, fair and confidential benchmarked reports oninvestment performance and occupation. The same database delivers authoritativepublic domain market and fund indices to asingle global standard that boost the contentand quality of property research and supports a range of innovative financial products.

Dr Ian Cullen and Dr Paul McNamara




IPD indices have come to be relied upon notonly as definitive guides to market movements,but also for trusted authoritative records ofportfolio performance suitable for use forremuneration purposes.

IPD’s Business Assurance Unit (BAU) isindependent of IPD operational units and reportsto the external Business Audit Committee. TheBAU protects and enhances the accuracy andconfidentiality of IPD data through:

• maintaining data quality by auditing clientdata submissions, monitoring data definitions,and ensuring tight validation for data enteredinto the indices,

• providing consistent technical expertise and advice to all IPD business units, and

• auditing internal processes with the purpose of optimising company procedures.

Service auditing

IPD has a four year service audit programmewith Deloitte to test and report on the controlsover the Portfolio Analysis Service for three IPDbusiness units each cycle. In 2011/12, regionsbeing audited by Deloitte are North America, the Netherlands, and UK and Ireland. Twoauditing standards will be used: ISAE 3402 forthe Netherlands, UK and Ireland, and SSAE16 for North America.

Data quality

IPD has agreed with the real estate industry tofacilitate a process of self-regulation by auditingthe data supplied by clients, to ensure the qualityof data contributing to IPD indices, benchmarksand market reports. The BAU conducts annualaudits of client data supply in the UK and France,and is working with other business units to plansimilar audits.

IPD collects information based on agreedstandards clearly defining all required dataitems. IPD uses a global data standard whichreferences the Royal Institution of CharteredSurveyors (RICS) and the International ValuationStandards Council (IVSC) guidelines, ensuringconsistency across all markets and increasingglobal performance metrics comparability.

All data items undergo rigorous quality checks using automated validation systems,supplemented by manual verification and resolvedthrough client query and final sign-off from clientrepresentatives. Checks are continuously reviewedto address data issues, ensuring all records arecomplete and accurate when aggregated intouniverse datasets.

Technical experience

Calculations for portfolio performance metrics,analysis of market trends and construction ofbenchmarks are based upon industry standardssuch as the Global Investment PerformanceStandards (GIPS) and the Real Estate InvestorService (REIS). Before IPD outputs are releasedfor external consumption, they are scrutinisedusing powerful in-house diagnostic tools.

Businessassurance


29

Internal processes

The BAU carries out numerous internal processreviews to identify weaknesses and find ways to improve cost and time efficiencies.

The BAU also ensures that any identifiedimprovements, whether through incidentreporting or audit recommendations, areimplemented to achieve maximum benefits.

IPD operates consistent filing and retentionpolicies which are communicated to staff. To minimise information leakage, staff haveaccess only to the required information to carry out their roles and responsibilities.

The risk of external unauthorised access isaddressed by an annual systems securitycheck undertaken by a third party provider.

Risk management

IPD has developed and implemented a robustset of policies and procedures to cover allaspects of security and confidentiality. IPDrecords quality, confidentiality and securitybreaches (the Incident Register) covering allincidents impacting IPD’s business, rangingfrom security breaches to loss of productivity. All incidents lead to recommendations to preventrecurrence. Weekly reviews are provided to the executive management team, with annualreports to the IPD Group Board andconsultative committees.

An internal IPD risk management committeeidentifies and monitors risks that could impact the business and evaluates methods for handlingthese risks and actions taken. It maintains thegroup risk register and assists business units to maintain local registers.

The principal risks for IPD and how they aremanaged include:

Operational risks:

• Break in business continuity: managed bycontinuity plans which ensure all IPD officeshave emergency provisions in place; remoteworking which ensures a critical levelworkforce; and migration of servers tooffsite location to maintain key services.

• Failure in data supply: managed by robustdata update plans which inform clients ofdelivery schedules and data requirements;regular audits of clients’ data supply anddata quality meetings which ensure non-conformities are addressed promptly.

• Breach in data confidentiality: managedby security policy and training for all staff;security measures around internal ITsystems and delivery mechanisms; andterms and conditions agreed with clientsand suppliers which protect the businessfrom external threats.

• Damage to integrity of service: managedby vigorous validation and verificationprocedures at all stages of data processing.

Strategic risks:

• Decline in market coverage: managed byinvestment in expanding the products andservices in all markets.

• Loss of human resources: managed byrecruitment and retention of the most valuablepeople; formal objectives for employees; andlearning and development for staff.

• Increased competition: managed bytechnological upgrades which address the needs of our clients; and monitoring of competitor activity and mergers.

• Consolidation of client base: managed bysupporting clients with information duringsuch change.

Financial risks:

• Foreign exchange variation: managed bysimple currency derivative instruments whichreduce foreign currency fluctuation risk.

• Increased inflation risk: managed by pricingmechanisms that fairly allocate escalation ofcosts which IPD cannot absorb to clients.

• Attempted fraud: managed by systematicinternal controls and management supervision.

• Greater client covenant risk: clients fallinginto administration/receivership is a greaterrisk during market downturns and closemonitoring is required.

• Third party litigation: although no part ofIPD is currently in litigation with any party.


Business assurance



Our people

With unemployment rising in many parts of theworld due to economic difficulties, we are veryproud to report steady growth in our staff numbersfor 2011, with 89 new employees joining IPDduring the course of the year. We also becamemore diverse with 39 different nationalitiesworking at the company, compared to 36 lastyear. Our gender split remains unchanged with60% males and 40% females working at IPD.

Learning and development

As part of our training agenda in 2011, we held training sessions for staff to learn moreabout IPD’s business and how clients work with IPD data.

We also organised personal developmentsessions on influencing skills, managing stress,emotional intelligence and people management.

With a strong focus on increasing ourcommercial outlook, we also provided tailoredtraining for business development and clientmanagement teams to sharpen their skills inthese areas.

To help us achieve our ongoing businessobjectives, we strive to ensure that we have a pipeline of talent by attracting the bestcandidates. We have developed the IPDtrainee analyst scheme, a structured two-yeardevelopment programme for analysts in thecore part of our business.

The scheme is aligned with business needsand focuses on developing the skills that willbest support our clients and future growth.Training is built around our values and coreskills including IPD specific performancemeasurement, wider property industryknowledge and technical skills.

Trainees will achieve IPD certification oncompletion. In the summer of 2012, we willrecruit the first intake, and we look forward to some of the future leaders of IPD and theindustry being recruited from the scheme.

Employee voice

To give our staff the opportunity to providefeedback we conducted our sixth group-widestaff survey in 2011. Overall results were goodwith virtually all areas of working life at IPDseeing improvement.

Staff indicated their appreciation of theopportunities available to them within thecompany such as training, secondments,international placements and open feedbackfrom management.

IPD is extremely proud of the continued loyaltyand commitment shown by staff who arededicated to the overall success of the business.

Corporateresponsibility



Our community

We believe that our community, like IPD, is trulyglobal, and we want our commitment to thosein need to have the same geographical reachas our business.

Fundraising

For a number of years IPD has supported theSaigon Children’s Charity, an independent UKregistered charity working exclusively in Vietnamsince 1992 to help disadvantaged children. This organisation was chosen by IPD staff who wished to support a charity dedicated to children and education.

In 2010/11 IPD staff successfully raised £10,000for the construction of two classrooms withlavatories, and a schoolyard fence fordisadvantaged children in Soc Tre hamlet in Tra Vinh province. The school was opened inApril 2011 and now serves an average of 60children, aged three to five, every day.

Academic engagement

IPD works closely with the academiccommunity, partnering on various researchinitiatives and providing performance data tounderstand better the operation of propertymarkets. Our online academic services includenational IPD index data, which is made availableone year after its public release, free of charge.

Now in its eighth year, the IPD Real WorldConference in Cambridge, a non-profit event,brings together researchers and academics todiscuss the most pressing property issues.

We are regular contributors to variousconferences and research bodies including the annual European Real Estate SocietyConference, Real Estate Research Institute and Private Equity Real Estate.

We also have a number of affiliations with academic institutions including:

• University of Reading

• Maastricht University

• HAWK Fachhochschule

• CUREM

• University of Zurich

• Technical University of Dresden

• Cologne Institute for Economic Research

• Rotterdam University

• Reitaku University

• University of New South Wales

• European Business School

• Cass Business School.

Corporate responsibility

Having joined IPD in London in 2005, I’ve worked in a number ofdifferent areas of the business. Last year I had the opportunity to work in our

Sydney office helping to establish our Asia Pacific operation. Working in adynamic and mature property market like Australia was challenging and

extremely rewarding. All in all, a fantastic and invaluable experience from both a personal and professional stand point.”

Chris WoodleyGlobal Accounts Manager, IPD

“

Phu Can Kindergarten, Soc Tre, Southern Vietnam



Our environment

IPD has an environment policy in place and wehave monitored our outputs of energy, water,waste and paper since 2008. We work hard to reduce our carbon footprint and lessen theimpact our business has on climate change;most of our carbon emissions come from travel and energy use in buildings.

We encourage responsible resource use,particularly for paper, and use only 100% recycledpaper in London. In 2011, 33.5 tonnes of generalwaste was recycled from IPD’s London office ina materials recycling facility, with 39 tonnes ofsolid waste sent for specific materials recycling.

The open plan layout of the IPD London officeallows us efficient use of space whilst stillproviding a quality work environment for staff.

Our industry

Through our index consultative groups weensure our responses to topics, such aslegislative changes, asset managementbenchmarking and income management, are in tune with industry needs.

Many of our directors are members and fellows of various industry committees and boards around the world including:

• Investment Property Forum

• Society of Property Researchers

• Real Estate Research Institute

• INREV

• Open Standards Consortium for Real Estate

• Royal Institution of Chartered Surveyors

• Observatoire Regional de l'Immobilierd’Entreprise

We also maintain close working relationshipswith a number of real estate associationsglobally including:

• German Property Federation

• Property Council of Australia

• ROZ Foundation

• AEDES Foundation

• Svenskt Fastighetsindex

As part of our environmental strategy, we arechampioning the development of environmentalservices in the real estate industry.

The Global Estate Measurement Standards(GEMS), developed by IPD Occupiers, provide a consistent platform for organisations tomeasure their environmental impact. Thesestandards are available free of charge andincorporate the IPD Environment Code, IPDSpace Code and IPD Cost Code, settingglobal standards for measuring propertycharacteristics, functions and cost.

During 2011, we further established oursustainability services with the UK launch ofEcoPAS, an independent service designed forinvestors and valuers to help them understandthe potential environmental risks to which theirportfolios are subjected. This initiative wasdeveloped by IPD, CBRE and five leadinginstitutional investors (Aviva Investors,Henderson Global Investors, Hermes, Legal & General, and Prupim). The RICS supportsour activities and is encouraging all valuationsurveyors to collect EcoPAS information aspart of their appraisal process.

IPD’s market information relating to sustainableproperties has also grown, predominantly in theAustralian market, with the introduction of theIPD Australia Green Property Index, whichprovides information on the contribution ofgreen rated buildings.

In France, IPD created a Green BuildingIndicator, in partnership with Certivéa andsponsored by CBRE. The sample sizes arecurrently small, but a technical committee ofinvestors is determined to improve this. We are also actively collecting environmental data in many other markets, notably Canada andSouth Africa.

Corporate responsibility


Directory of advisorsLegal adviser:

Linklaters LLPOne Silk StreetLondon EC2Y 8HQ

Auditors:

MacIntyre Hudson LLPEuro House1394 High RoadLondon N20 9YZ

Business auditor:

Deloitte LLP2 New Street SquareLondon EC4A 3BZ

Principal bankers:

Barclays Corporate BankLevel 271 Churchill PlaceLondon E14 5HP

Financial advisers:

Lazard & Co. Ltd50 Stratton StreetLondon W1J 8LL

T R Van Oss32 Durand GardensLondon SW9 0PP

Authorised and regulated by the Financial Services Authority

33



Directors’ report

The directors have pleasure in presenting their report and the financial statements of the Company and Group for the yearended 31 December 2011.

Principal activities The principal activity of the Company during the year was that of a holding company for subsidiaries providing data servicesrelating to the real estate industry. Under the trading name of IPD, the Group owns and operates databases holding realestate data for the real estate industry as a whole. IPD data is used to supply benchmarks, indices and researchinformation.

DirectorsThe board of directors consists of:

Rupert Nabarro – ChairmanLaurent Ternisien – Managing DirectorMichael BrodtmanDr Ian CullenProfessor Dr Piet EichholtzAlasdair EvansTom Hempenstall

Robert Burrow is an alternate director for Sir Stuart Lipton.Francis Salway has been appointed as a non-executive director on 1 April 2012.The company secretary is Kishor Dattani.

Directors’ liability insuranceA group wide policy with Chartis, covering the Company and its subsidiaries, is in place insuring all directors, officers and employees with managerial and supervisory capacity; the policy covers for wrongful acts with a total indemnity limit of £2,500,000. The policy is due for renewal in June 2012.

Creditor payment policyIt is the Group’s policy to pay suppliers in accordance with their agreed terms and conditions, and has internal systemswhich allow for regular payments to our suppliers. Terms and conditions are agreed in advance of each transaction typeand the Company aims to comply with such terms once the satisfactory performance of service or receipt of goods isachieved. At 31 December 2011, the trade creditors of the group represented 49 days (2010: 49 days) of the purchasesmade during the year.

Results and dividends

The results for the year and the Group’s financial position at the end of the year are shown in the attached financial statements.

The directors have authorised dividends as follows:

2011 2010£ £

Paid interim dividend of £15.00 per share ( 2010: £15.00 per share) 333,000 330,585

Paid final dividend of £34.00 per share 750,006 –

Paid interim and final dividend of £47.50 per share * – 1,048,990

Total dividend paid 1,083,006 1,379,575

Proposed final dividend for 2011 results is £35.00 per share (2010: £34.00 per share)* The paid interim and final dividend of £1,048,990 paid in 2010 refers to the total dividend from 2009 profits.

Dr Peter HobbsSir Stuart LiptonDr Paul McNamaraFrancis Salway

IPD Group Limited

Financial statementsyear ended 31 December 2011

Company registration number 02357371



DonationsDuring the year the Company made the following donations:

2011 2010

£ £

Charitable 6,750 15,085

The majority of the donations are to registered charities supporting the homeless and education.

AuditorsOn 21 November 2011, the Company’s auditors adopted the trading name MHA MacIntyre Hudson. A resolution to re-appoint MHA MacIntyre Hudson as auditors for the ensuing year will be proposed at the annual general meeting in accordance with section 485 of the Companies Act 2006.

Registered office: 2nd Floor, 1 St. John’s Lane, London EC1M 4BL

Approved by the directors on 16 April 2012

Signed by order of the directors

Kishor DattaniCompany Secretary

Statement of directors’ responsibilities

The directors are responsible for preparing the Annual Report and the 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom AccountingStandards and applicable law). Under Company law the directors must not approve the financial statements unless they are satisfied that they give a trueand fair view of the state of affairs of the Group and the Company and of their profit or loss for that period. In preparing those financial statements, thedirectors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• prepare the financial statements on a going concern basis unless it is inappropriate to presume that the company and group 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 withreasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the CompaniesAct 2006. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection offraud and other irregularities.

In so far as each and every director is aware:

• there is no relevant audit information of which the Company’s auditor is unaware; and

• each and every director has taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.

Laurent Ternisien Managing DirectorAlasdair Evans Group Finance Director

IPD Group LimitedFinancial statements year ended 31 December 2011




Independent auditor’s report to the shareholders of IPD Group Limited

We have audited the financial statements of IPD Group Limited for the year ended 31 December 2011 which comprise the Group profit and loss account, Group and Company balance sheets, the Group cash flow statement, the Groupstatement of total recognised gains and losses and the related notes. The financial reporting framework that has beenapplied in their preparations is applicable law and United Kingdom Accounting Standards (United Kingdom GenerallyAccepted Accounting Practice).

This report is made solely to the Company’s shareholders, as a body, in accordance with Chapter 3 of Part 16 of theCompanies Act 2006. Our audit work has been undertaken so that we might state to the Company’s shareholders thosematters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted bylaw, we do not accept or assume responsibility to anyone other than the Company and the Company’s shareholders as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditorAs explained more fully in the Directors’ Responsibilities Statement set out on page 4, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statementsAn audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to givereasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group’s and the Company’scircumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accountingestimates made by directors; and the overall presentation of the financial statements. In addition we read all the financial and non-financial information in the Annual Report to identify inconsistencies with the audited financial statements. If webecome aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statementsIn our opinion the financial statements:

• give a true and fair view of the state of the Group’s and the Company’s affairs as at 31 December 2011 and of the Group’s profit for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

• the parent company financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit

BRENDAN SHARKEY FCA (Senior Statutory Auditor)

For and on behalf of MHA MACINTYRE HUDSONEuro House Chartered Accountants & Statutory Auditor, 394 High Road, London N20 9YZ




Group profit and loss account

2011 2010

Note £ £

Group turnover 1 29,738,801 27,337,653

Staff expenses 3 17,572,754 16,479,272

Operating expenses 9,381,953 8,162,933

Operating profit 2 2,784,094 2,695,448

Interest receivable and similar income 13,863 14,583

Interest payable and similar charges 5 (40,226) (44,328)

Profit on ordinary activities before taxation 2,757,731 2,665,704

Tax on profit on ordinary activities 6 844,538 996,178

Profit on ordinary activities after taxation 1,913,193 1,669,527

Minority interest 19 – 20,157

Profit attributable to members of the parent company 18 1,913,193 1,689,683

All of the activities of the group are classed as continuing.The Company has taken advantage of section 408 of the Companies Act 2006 not to publish its own profit and loss account.

Group statement of total recognised gains and losses

2011 2010

£ £

Profit for the financial year attributable to the shareholders of the parent company 1,913,193 1,689,683

Currency translation differences on foreign currency net investments (323,439) (167,544)

Total gains and losses recognised in the year 1,589,754 1,522,139

The notes on pages 44 to 52 form part of these financial statements




Group balance sheet Company number 02357371

2011 2010

Note £ £

Fixed assets

Intangible assets 9 1,996,737 2,304,897Tangible assets 10 1,976,408 1,922,075Investments 11 2 34,368 234,368

4,207,513 4,461,340

Current assets

Debtors 12 6,187,469 4,915,144Cash at bank 3,600,413 3,937,041

9,787,882 8,852,185

Creditors

Amounts falling due within one year 13 6,986,201 6,259,679

6,986,201 6,259,679

Total assets less current liabilities 7,009,194 7,053,846

Creditors and provision for liabilities

Amounts falling due after more than one year 14 – 375,030Provision for liabilities and charges 15 154,751 395,687

154,751 770,717

Total assets less total liabilities 6,854,443 6,283,129

Capital and reserves

Called-up equity share capital 17 229 265Share premium reserve 18 86,253 86,253Other reserves 18 585 549Profit and loss account 18 6,767,376 6,196,062

Shareholders’ funds 18 6,854,443 6,283,129Minority interest 19 – –

Total capital and reserves 6,854,443 6,283,129

These financial statements were authorised for issue and approved by the directors on 16 April 2012 and are signed on their behalf by:

Laurent Ternisien and Alasdair Evans





Company balance sheet Company number 02357371

2011 2010

Note £ £

Fixed assets

Investments 23 3,845,995 3,873,294

3,845,995 3,873,294

Current assets

Debtors 24 2,558,417 165,900Cash at bank 46,959 77,272

2,605,376 243,172

Creditors

Amounts falling due within one year 25 6 57,743 3,164,121

657,743 3,164,121

Total assets less current liabilities 5,793,628 952,345

Creditors and provision for liabilities

Amounts falling due after more than one year 26 – 323,448Provision for liabilities and charges 27 129,112 378,225

129,112 701,673

Total assets less total liabilities 5,664,516 250,672

Capital and reserves

Called up equity share capital 229 265Share premium reserve 28 86,253 86,253Capital redemption reserve 28 178 142Investment in own shares 28 (165,271) (193,793) Profit and loss account 28 5,743,127 357,805

Shareholders’ funds 28 5,664,516 250,672

These financial statements were authorised for issue and approved by the directors on 16 April 2012 and are signed on their behalf by:

Laurent Ternisien and Alasdair Evans





Group cash flow statement

2011 2010

£ £

Net cash inflow from operating activities 2,475,066 4,262,727

Returns on investments and servicing of finance

Interest received 13,863 14,584Interest paid (40,226) (44,328)

Net cash outflow for returns on investments and servicing of finance (26,363) (29,744)

Taxation

Tax paid (976,272) (492,504)

Net cash outflow for taxation (976,272) (492,504)

Capital expenditure and financial investment

Payment to acquire intangible fixed assets – (23,836)Payment to acquire tangible fixed assets (1,126,369) (1,077,770)Net receipt/(payment) on ESOP shares 28,522 (21,967)

Net cash outflow for capital expenditure and financial investment (1,097,847) (1,123,573)

Acquisitions and disposals

Acquisitions of shares in group undertakings (5,970) (431,068)

Net cash outflow for acquisitions and disposals (5,970) (431,068)

Equity dividends paid

Dividend paid (1,083,006) (1,379,575)

Cash (outflow)/inflow before financing (714,394) 806,263

Financing

Repayment of long-term borrowings (431,265) (431,265)Proceeds from short-term borrowings 809,030 –

Net cash (outflow)/inflow from financing 377,765 (431,265)

(Decrease)/increase in cash (336,629) 374,998





Notes to group cash flow statement

Reconciliation of operating profit to net cash inflow 2011 2010

from operating activities £ £

Operating profit 2,784,094 2,695,448

Net amortisation 286,811 208,990

Depreciation 1,052,896 819,045

(Increase)/decrease in debtors (1,249,662) 657,857

(Decrease) in creditors (158,136) (18,431)

Share option provision 36,043 –

Loss on disposal of intangible and tangible fixed assets 46,459 67,362

Foreign exchange losses (323,439) (167,544)

2,475,066 4,262,727

Reconciliation of operating profit to net cash inflow 2011 2010

to movement in net funds £ £

(Decrease)/increase in cash in the year (336,628) 374,998Decrease/(increase) in debt (377,765) 431,265

Movement in net funds in the year (714,393) 806,263

Net funds at 1 January 3,182,327 2,376,064

Net funds at 31 December 2,467,934 3,182,327

Analysis of changes in net funds At 1 January 2011 Cash flow At 31 December 2011

£ £ £

Net cash:Cash at bank 3,937,041 (336,628) 3,600,413

Debt due within one year (431,265) (701,214) (1,132,479)

3,505,776 (1,037,842) 2,467,934

Debt due after one year (323,449) 323,449 –

Total net funds 3,182,327 (714,393) 2,467,934





Accounting policies

Basis of accountingThe financial statements have been prepared under the historical cost convention and in accordance with applicableaccounting standards.

Basis of consolidationThe consolidated financial statements incorporate the financial statements of the Company and all Group undertakings.These are adjusted, where appropriate, to conform to Group accounting policies. As a consolidated profit and loss accountis published, a separate profit and loss account for the Company is omitted from the Group financial statements by virtue ofsection 408 of the Companies Act 2006. Minority interests are not recognised on loss making subsidiaries as the othershareholders have no legal requirement to fund the company’s accumulated losses.

TurnoverThe turnover shown in the Group profit and loss account represents services rendered to customers supplied at sellingprice, exclusive of Value Added Tax.

In respect of long-term contracts and contracts for on-going services, turnover represents the value of work done in theyear, including estimates of amounts not invoiced at the year end. Turnover in respect of long-term contracts and contractsfor on-going services is recognised by reference to the stage of completion and value to the customer.

Intangible assetsGoodwill arising on the acquisition of a subsidiary undertaking is the difference between the fair value of the considerationpaid and accrued and the fair value of the assets and liabilities acquired. It is amortised over its estimated useful life as noted below, not exceeding ten years from the date that the goodwill arises. An impairment review is undertaken at the end of each year and any necessary write downs are accounted for in the financial year in which they arise.

Other intangible assets are recorded at cost less accumulated amortisation.

AmortisationAmortisation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economiclife of that asset as follows:

Goodwill Straight line over the period that the benefit accrues, not exceeding ten years from the pointthat the goodwill arises as directors believe this is an appropriate useful economic life for thebusiness acquired.

Intellectual property rights Straight line over the period that the benefit accrues.

Tangible assetsTangible assets are stated at historical cost less accumulated depreciation.

External costs on a development project which enhances a product are capitalised.

DepreciationDepreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economiclife of that asset as follows:

Premises improvements Length of the office leaseFurniture and equipment Straight line method over two to seven yearsMotor vehicles Straight line method over four yearsComputer equipment Straight line method over three yearsSoftware development Straight line method over three years

Capitalised software development costs are depreciated on a straight line basis over their useful economic lives once therelated software product or enhancement is available for use and/or is generating an income stream.

Fixed asset investmentsFixed asset investments represent investments in subsidiary undertakings and unquoted investments.

These investments are stated at cost less provisions for impairment, if any.

Operating lease agreementsRentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessorare charged against profits on a straight line basis over the period of the lease.

Pension costsThe payments under the Group’s pension schemes are accounted for in the profit and loss account as they arise.




Deferred taxationDeferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more tax, with the following exceptions:

• Provision is made for tax on gains arising from the revaluation (and similar fair value adjustments) of fixed assets, and gains on disposal of fixed assets that have been rolled over into replacement assets, only to the extent that, at the balance sheet date, there is a binding agreement to dispose of the assets concerned. No provision is madewhere, on the basis of all available evidence at the balance sheet date, it is more likely than not that the taxable gain will be rolled over into replacement assets and charged to tax only where the replacement assets are sold.

• Provision is made for deferred tax that would arise on remittance of the retained earnings of overseas subsidiaries, associates and joint ventures only to the extent that, at the balance sheet date, dividends have been accrued as receivable.

• Deferred tax assets are recognised only to the extent that the directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal will arise.

Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

Foreign currenciesAssets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Exchange differences are taken into account in arriving at the operating profit.

The assets, liabilities and results of foreign subsidiaries are translated into sterling at the rates of exchange ruling at the balance sheet date. Exchange differences arising from the retranslation of the opening net investment in foreignsubsidiaries are shown as movements on consolidated reserves.

Share schemesThe Group issues equity-settled share-based payments to certain employees (including directors). Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straightline basis over the vesting period, together with a corresponding increase in shareholders’ funds, based upon the Group’s estimate of the number of shares that will eventually vest.

Fair value is measured using the dividend yield based pricing model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

Employee Share Ownership Plan Trusts (“ESOP”)ESOP are accounted for in accordance with the provisions of Urgent Issues Task Force 38 ‘Accounting for ESOP trusts’. Accordingly any consideration paid or received for the purchase or sale of the Company’s own shares in an ESOP are taken directly against reserves. All assets and liabilities external to the Group are consolidated under theacquisition accounting method.

Financial instruments Financial instruments are classified and accounted for according to the substance of the contractual arrangement, either as financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.




Notes to the Group financial statements

1. TurnoverThe turnover and profit before tax are attributable to the one principal activity of the Group.

Turnover analysis by region 2011 2010

£ £

United Kingdom 14,904,900 13,683,103Europe (excluding UK) 10,312,447 10,064,554 Rest of the world 4,521,454 3,589,996

29,738,801 27,337,653

2. Operating profitOperating profit is stated after charging/(crediting):

2011 2010

£ £

Amortisation 286,811 284,415Depreciation 1,052,896 819,091Auditor’s remuneration 42,850 40,000Non-audit services – consultancy 24,635 18,195Net (gain)/loss on foreign currency translation (158,924) (154,432)Operating lease rental:Land and buildings 973,883 937,123Plant and machinery 316,885 282,502Loss on disposal of tangible fixed assets 10,792 17,448 Impairment write-back – 61,050Share option costs 36,043 –

3. Employees

Staff cost (including directors) 2011 2010

£ £

Wages and salaries 14,735,326 13,900,777Social security costs 2,095,457 1,892,083Other pension costs 741,971 686,412

17,572,754 16,479,272

The average number of worldwide full-time equivalent employees of the Group during the year were:

2011 2010

Number Number

Total number of employees 333 310

IPD Group mainly operates for its employees a defined contribution scheme. The assets of the scheme are held separately from those of the Company in anindependently administered fund.

IPD Nederland BV operates three pension schemes of which two are defined benefit schemes and one is defined contribution scheme. These schemes aredetailed below:

• All staff employed by aeDex on acquisition by IPD on 27 August 2009 participate in a defined benefits scheme based on average salary. The scheme isrun by SPW, the Housing Association Pension Fund Foundation in the Netherlands. The current regular cost is 36.3% of gross annual salary, includingpre-pension transition. This applies to seven current members of staff.

• All staff employed by ROZ on acquisition by IPD on 21 June 2010 participate in a defined benefits scheme based on average salary. The scheme is runby Zwitzersleven under a contract for five years to 31 December 2014. Staff contribute 5% of gross annual salary. This applies to two current membersof staff.

• All staff employed by IPD Nederland BV since these acquisitions participate in a defined contribution scheme. Staff contribute 5% of gross annual salary.




4. Directors’ emolumentsThe directors’ remuneration is disclosed below:

2011 2010

£ £

Executive directors’ emoluments 775,047 545,027Non-executive directors’ emoluments 37,700 45,000Value of company pension contributions to money purchase scheme 57,700 34,586

870,447 624,613

Emoluments of highest paid director 2011 2010

£ £

Total emoluments (excluding pension contributions) 191,945 213,589Value of company pension contributions to money purchase scheme 15,500 15,175

207,445 228,764

The number of directors who accrued benefits under company pension and share option schemes was as follows:

2011 2010

Number Number

Money purchase schemes 5 5

Share option schemes 3 1

5. Interest payable and similar charges

2011 2010

£ £

Interest payable on bank borrowing 40,191 44,328

6. Taxation on ordinary activities

Analysis of current tax charge 2011 2010

£ £

Current taxUK corporation tax: 26.5% (2010: 28%) 542,316 573,712 Foreign tax 322,469 427,715

Total current tax expense 864,785 1,001,427

Deferred taxOrigination and reversal of timing differences:Capital allowances (20,247) (5,249)

Total deferred tax (note 17) (20,247) (5,249)

Tax on profit on ordinary activities 844,538 996,178

The movement in the deferred taxation asset during the year was:

Brought forward 84,931 79,502Increase 20,248 5,429

Carried forward 105,179 84,931





Factors affecting current tax charge 2011 2010

£ £

Profit on ordinary activities before taxation 2,757,731 2,665,705

Tax on profit on ordinary activities at 26.5% (2010: 28%) 730,799 746,397 Effects of:

Expenditure disallowed for tax purposes 9,053 26,219Excess depreciation over capital allowances 57,992 28,871Other factors 9,162 –Non deductible amortisation arising on consolidation 76,005 109,574Foreign taxation factors (18,603) 94,082Movement on pension contributions unpaid at the year end 377 (3,716)

Total current tax expense (note 6 above) 864,785 1,001,427

Effective tax rate 31.4% 37.6%

7. Share schemesAt the general meeting held on 17 November 2010 holders of ordinary shares approved two share schemes, the Executive Directors Share Scheme (EDSS)and the Company Share Option Plan (CSOP).

Both these share schemes are over Ordinary Shares.

The EDSS gives awards based on the profit performance of the Group over the five years 2011 to 2011 to 2015. The CSOP gives awards which vest after three years, and is subject to a 10 % profit growth condition. In April 2011, 509 awards were made under the EDSS. After the balance sheet date, in January 2012, 111 awards were made under the CSOP. In April 2012, 68 awards were under the EDSS.

Under the 2010 unapproved share option plan, 280 options were issued of which 113 remain outstanding at 31 December 2011.

The Company previously operated an approved share option scheme for directors and staff. Details of the outstanding options under this scheme are as follows:

2003 2004 2006

At 1 January 2011 122 185 395

Exercised during the year (24 ) (5 ) (20 )

At 31 December 2011 (all exercisable) 98 180 375

Share price at date of grant £200 £240 £375

Exercise price £0.01 £0.01 £0.01

Remaining contractual life 1 year 2 years 4 years

The 2005 share options have lapsed as they did not meet the first year’s performance criteria.

In 2011 the total cost of all share schemes was £36,043 (2010:nil), based on current valuation and the share options vesting period.

8. Employee share ownership plan trust (“ESOP”)The IPD Group Limited Employee Share Ownership Plan Trust was set up in 2007. The purpose of the ESOP is to purchase and sell shares in IPD GroupLimited, predominantly with employees of the Group. The trustee changed to IPD Trustee Limited on 31 December 2011.

In 2011 £6,759 was paid and deducted from reserves for twenty A Ordinary Shares and one hundred and thirty two options awarded in 2010 wereexercised for a total value of £36,300.

The movement on shares held in the ESOP is summarised as follows:

Brought Options Carriedforward Additions exercised forward

A Ordinary Shares of £0.01 each 371 20 (132) 2592001 Preference Shares of £1 each 1 – – 1




9. Intangible fixed assets

Analysis of current tax charge Goodwill Intellectual Totalproperty rights

£ £ £

CostAt 1 January 2011 3,125,534 105,060 3,230,594Additions 5,970 – 5,970Disposals – (50,724) (50,724)

At 31 December 2011 3,131,504 54,336 3,185,840

AmortisationAt 1 January 2010 858,347 67,350 925,697Charge for the year 286,811 – 286,811Impairment provision/release on disposals – (23,405) (23,405)

At 31 December 2010 1,145,158 43,945 1,189,103

Net book valueAt 31 December 2011 1,986,346 10,391 1,996,737

At 31 December 2010 2,267,187 37,710 2,304,897

Goodwill arising on business combinations is amortised over ten years, subject to being reviewed in line with the policy for impairment on an annual basis.

The additional goodwill reflects an increase in consideration paid to the former members of ROZ Performancemeting B.V. compared to previous estimates.

10. Tangible fixed assets

Premises Furniture and Motor Computer Software Totalimprovement equipment vehicles equipment development

£ £ £ £ £ £

CostAt 1 January 2011 325,453 1,182,706 45,765 3,765,674 869,499 6,189,097Additions 35,357 171,038 34,705 413,313 471,956 1,126,369Disposals (5,208) (60,697) (25,675) (143,244) – (234,824)

At 31 December 2011 355,602 1,293,047 54,795 4,035,743 1,341,455 7,080,642

DepreciationAt 1 January 2011 258,194 697,904 33,296 2,796,977 480,651 4,267,022Charge for the year 28,417 231,489 14,628 516,331 262,031 1,052,896Disposals (5,208) (48,847) (21,970) (139,659) – (215,684)

At 31 December 2011 281,403 880,546 25,954 3,173,649 742,682 5,104,234

Net book valueAt 31 December 2011 74,199 412,501 28,841 862,094 598,773 1,976,408

At 31 December 2010 67,259 484,802 12,469 968,697 388,848 1,922,075





11. InvestmentsAt 31 December 2011 the Group held investments as set out below:

2011 2010

£ £

Unquoted investment 234,368 234,368

At 31 December 2011 234,368 234,368

The unquoted investment represents 9.4% in HBS Research, a French company, whose principal activity is to manage information relating to real estate.

12. Debtors

2011 2010

£ £

Trade debtors 4,327,212 3,860,101Accrued income 461,076 227,039Other debtors and prepayments 1,274,125 725,610Deferred taxation 125,057 102,394

6,187,470 4,915,144

Deferred taxation is recoverable after more than one year, and represents a timing difference between the accounting value of capital assets and their valuefor tax purposes.

13. Creditors: amounts falling due within one year

2011 2010

£ £

Bank loan and overdrafts 1,132,479 431,265Trade creditors 1,094,354 945,596Corporation tax 523,958 589,626Social security liability 700,752 714,714VAT liability 758,508 320,783Sundry creditors 491,511 607,441Accruals and deferred income 2,284,639 2,650,253

6,986,201 6,259,678

Included in sundry creditors is an amount of £57,428 (2010: £56,007) which was owed to the Company’s pension scheme. This balance has subsequentlybeen paid. The Company entered into a three year term loan with Barclays Bank Plc of €1,500,000 to fund the acquisition of aeDex. Barclays Bank Plc hasa fixed and floating charge over the Company’s assets for both present and future liabilities securing the amount of £431,265 disclosed above. The facilityexpires in September 2012.

The Group has overdraft facilities in the UK for £1,000,000, in the Netherlands for €200,000 and in the US for US$99,000.

A guarantee of €150,000 has been provided to the former members of ROZ Performancemeting B.V. with regard to the second deferred considerationpayment due in June 2012.

In addition, the Group has arranged for certain bank guarantees to be provided to third parties in the ordinary course of business. The total amount of these guarantees is £39,422.




14. Creditors: amounts falling due after more than one year

2011 2010

£ £

Bank loan – 323,449Other creditors – 51,581

– 375,030

15. Provision for liabilities and charges

2011 2010

£ £

Consideration for aeDex payable in 2012 – 120,000Consideration for ROZ Performancemeting B.V. payable between 2012 and 2015 129,112 258,225Deferred tax – 17,463

129,112 395,688

16. Commitments under operating leasesAt 31 December 2011 the Group had annual commitments under non-cancellable operating leases as set out below.

2011 2010Land and Land andbuildings Other items buildings Other items

£ £ £ £

Operating leases which expire:In less than one year 105,000 52,297 54,672 12,479Between two to five years 798,448 263,252 834,850 237,742Greater than five years 71,583 – – 6,524

975,031 315,549 889,522 256,745

17. Share capital

At 31 December 2011 2010 2011 2010Number Number £ £

Ordinary Shares of £0.01 each 21,948 21,303 219 213A Ordinary Shares of £0.01 each 451 402 4 42000 Preference Shares of £1 each 2 24 2 242001 Preference Shares of £1 each 3 24 3 24

228 265

The Ordinary Shares and A Ordinary Shares rank parri passu for dividends. Each share is entitled to one vote per share and each class has unlimited rights to share in the surplus remaining in the event that the Company is wound up.

The Preference Shares are entitled to a dividend in respect of each share held equal to the dividend payable in aggregate on fifteen A Ordinary Shares. The voting entitlement conferred on the Preference Shares is equal to fifteen votes per share. In the event that the Company is wound up the PreferenceShares shall be entitled to a return of capital in respect of each share held equal to the capital returned in aggregate on fifteen A Ordinary Shares.

During the year holders of twenty-two 2000 Preference Shares and twenty-one 2001 Preference Shares exercised their options to convert their holdings to 645 Ordinary Shares. 3,655 Deferred Shares of £0.01 each were also created to maintain the nominal value of the shares in issue and were subsequently cancelled.

None of the classes of share carry any right to dividends other than those recommended by the directors.





18. Reconciliation of movements in group shareholders’ funds

Share Share Capital Profit capital premium redemption and loss 2011 2010

reserve reserve account total total£ £ £ £ £ £

Balance brought forward 265 86,253 549 6,196,062 6,283,129 6,223,594Retained profit for the year – – – 1,913,193 1,913,193 1,689,684Equity dividends paid – – – (1,083,006) (1,083,006 ) (1,379,575)Foreign currency translation – – – (323,438) (323,438 ) (167,544)Movement of unexpired share option provision – – – 36,043 36,043 –Release of minority interest – – – – – (61,063)Re-classification of shares (36 ) – 36 – – –Proceeds received related to ESOP 2010 options – – – 36,300 36,300 –Consideration paid by ESOP for purchase of own shares – – – (7,778) (7,778 ) (21,967)

Balance carried forward 229 86,253 585 6,767,376 6,854,443 6,283,129

19. Minority interests

2011 2010

£ £

Minority interest at 1 January – (40,906)Shares of (losses) for the period – (20,157)Release of minority interest in IPD Australia – 61,063

Closing shareholders’ funds – –

20. Related party transactionsTransactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation.

The following information is provided in accordance with FRS 8 ’Related party disclosures’, as being material transactions with related parties during the year. These transactions relate to dividends paid to directors of the Company and related parties in the normal course of business and are summarised below:

Rupert Nabarro £193,250Elizabeth Nabarro £105,595Dr Ian Cullen £64,900Laurent Ternisien £15,986Alasdair Evans £720Dr Peter Hobbs £600

21. Post balance sheet eventsOn 23 March 2012, the Group completed a transaction to terminate the agency agreement in Portugal it had with Imometrica Sistemas de Informacao deImobiliaro Lda for a consideration of EUR100,000, and a transaction with Antonio Gil Machado (the owner of the former agent) to acquire the Lisbon PrimeIndex for 50 shares in the Company.




Notes to the Company financial statements

22. Profit attributable to members of IPD Group Limited (the parent company)The profit dealt with in the financial statements of IPD Group Limited (the parent company) was £6,501,598 (2010: £1,244,116), which comprises dividendsreceived from subsidiary companies.

23. InvestmentsAt 31 December 2011 the Company held investments as set out below:

Subsidiaries undertakings Unquoted investments Total

Cost £ £ £

At 1 January 2011 3,638,926 234,368 3,873,294Additions 17,107 – 17,107Disposals (44,405) – (44,405)

At 31 December 2011 3,611,628 234,368 3,845,996

The Company has the following subsidiaries:

Country of Class of Proportion of Share capital issuedincorporation shares held voting rights and fully paid

Investment Property Databank Limited England Ordinary 100% GBP125IPD France SAS France Ordinary 100% EUR192,500Investment Property Databank GmbH Germany Ordinary 100% EUR75,000IPD Norden AB Sweden Ordinary 100% SEK100,000Investment Property Databank South Africa (Proprietary) Limited South Africa Ordinary 100% SAR100K.K. IPD Japan Japan Ordinary 100% JPY10,000,000Investment Property Databank Proprietary Limited Australia Ordinary 80% AUD10Investment Property Databank Limited USA Ordinary 93% USDNILIPD Nederland BV Netherlands Ordinary 100% EUR90,000Equity Property Databank Limited England Ordinary 100% GBP100IPD Trustee Limited England Ordinary 100% GBP100

The nature of business of the above listed subsidiaries is that of the provision of data services relating to real estate with the exception of IPD TrusteeLimited, which acts as a trustee, and Equity Property Databank Limited which is dormant. In addition to the above, the Group owns an unquoted investment of £234,368 in HBS Research, a French company, whose principal activity is to manage information relating to real estate. In December 2011 following the increase in share capital, the Group has now an unquoted investment of 9.4% in HBS Research.

At 31 December 2011, the Group transferred 10% of the shares in Investment Property Databank Proprietary Limited to the managing director of itsAustralian subsidiary to add to the 10% he already holds.

By an agreement dated April 2011 7% of Investment Property Databank Limited in North America were allocated to the managing director of this company.

In October 2011, the Group paid to the former members of aeDex Databank Vastgoedtaxaties B.V. an amount of €133,237 accrued consideration relatingto the purchase of the company.

In June 2011, the Group paid to the former members of ROZ Performancemeting B.V. an amount of €156,000 accrued consideration relating to thepurchase of the company.

On 31 March 2011, aeDex Databank Vastgoedtaxaties B.V. and ROZ Performancemeting B.V., two wholly owned companies of IPD Group Limited in the Netherlands, merged into one company to form IPD Nederland BV.

24. Debtors

2011 2010

£ £

Amounts owed by group companies 2,558,417 165,900

2,558,417 165,900



IPD Group LimitedFinancial s tatements year ended 31 December 2011

Notes to the Company financial statements

25. Creditors: amounts falling due within one year

2011 2010

£ £

Bank loan and overdrafts 323,449 431,265Amounts owed to group companies – 2,464,844Sundry creditors 334,294 268,012

657,743 3,164,121

Within bank loan and overdrafts is the future repayment of the three year term loan with Barclays Bank Plc taken out in August 2009 which is secured by the company via a fixed and floating charge which Barclays Bank Plc has over the Company’s assets. The facility expires in September 2012.

26. Creditors: amounts falling due after more than one year

2011 2010

£ £

Bank loan – 323,449

– 323,449

27. Provision for liabilities and charges

2011 2010

£ £

Consideration for aeDex payable in 2011 and 2012 – 120,000Consideration for ROZ Performancemeting B.V. payable between 2013 and 2015 129,112 258,225

129,112 378,225

On 28 May 2011, the Company gave a liquidity guarantee of €3,200,000 to IPD Nederland BV, which expired on 31 March 2012.

28. Shareholders’ funds

Share Share Capital Investment Profit capital premium redemption in own and loss 2011

reserve reserve shares account total£ £ £ £ £

Balance brought forward 265 86,253 142 (193,793) 357,805 250,672Retained profit for the year – – – – 6,457,192 6,457,192Re-classification of shares (36 ) – 36 – – –Movement of unexpired share option provisions – – – – 11,136 11,136Net receipt on ESOP shares – – – 28,522 – 28,522Equity dividends paid – – – – (1,083,006 ) (1,083,006)

Balance carried forward 229 86,253 178 (165,271) 5,743,127 5,664,516


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France

T +33 (0) 1 58 05 36 [email protected]/france

Germany

T +49 (0) 611 3344 [email protected]/germany

Hong Kong

T +85 2 8175 [email protected]/asia

Japan

T +81 3 5211 [email protected]/japan

Netherlands

T +31 (0) 88 328 22 [email protected]/netherlands

Sweden

T +46 (0) 8-400 252 [email protected]/nordic

South Africa

T +27 (0) 11 656 [email protected]/southafrica

Spain

T +34 (0) 917 610 [email protected]/spain

US

T +1 (0) 312 646 [email protected]/usa

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