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View Annual Report ANNUAL REPORT 2016 Letter to Shareholdeers Notice of 2017 Annuaual General Meeeting Proxy Statement 20166 Form 101 -K Annn uau l ReR pop rrtt February 21, 2017 Letter to Shareholders Dear Fellow Shareholders: 2016 was a momentous year for IHS Markit as we merged two world-class organizations in record time. There is so much for us to celebrate from 2016, and much more to look forward to in our first full year as a combined company. The merger created a global information powerhouse with unrivalled information, analytics and talent. We have leading positions in the Energy, Financial Services, and Transportation industries, among others, and we have deep, senior, and strategic relationships across corporate, government, consumer and financial services customers. This transaction has provided immediate financial and strategic benefits while creating new long-term opportunities for next generation products. The strong cultural foundations at each company clearly directed us to a consolidated values-driven culture focused on innovation, customer satisfaction and colleague success. The size and scale of the combined company provides a broad opportunity to create value for shareholders through cost synergies in the near term and revenue synergies over the longer term. Importantly, the combined management team has a proven track record of successful M&A integration. IHS Markit has very strong financial attributes with 82% recurring revenues, significant operating leverage with increasing margins and profitability, and substantial free cash flow. This financial profile will allow the combined company to support robust capital return and to continue with disciplined M&A. At the time of the merger, we announced that we expected to return $1 billion of capital through share repurchases in each of 2017 and 2018, and we are well on our way. In fact, we plan to buy back $1.2 billion in 2017. Business Highlights We closed on our merger on July 12, 2016 and immediately started to execute our integration plan led by our President, Lance Uggla. I am very proud of the hard work that our teams have done to come together and collaborate on integrating these two companies. Some of our segment highlights for 2016 include: Transportation had a great year of innovation-driven revenue growth in Auto, where we have found new ways to support our customers in areas such as recall solutions, digital marketing, vehicle compliance and performance, and technology & components analytics. We also successfully acquired and integrated CARPROOF, which extended our market leadership in vehicle history reports across North America. Within Aerospace & Defense, we signed the largest contract in the history of that line of business. We strengthened our leadership position within Resources by helping our Energy customers manage through the uncertainty that came as a result of the worst industry downturn in recent history. We also successfully acquired and integrated OPIS, which extended our Resources value chain into downstream pricing intelligence. And our Chemicals business had yet another solid year with strong organic growth and a focus on margin improvement. Across Financial Services, there were a number of notable achievements. Within Information, we continued to strengthen our Indices franchise, with key wins within our index administration business and ETF assets under management exceeding $100 billion. In addition, we completed significant bond pricing deals with many of the world’s largest asset managers and distribution platforms. Within Processing, we launched automated customer service tools in MarkitSERV, servicing more than 2,000 customers and dramatically improving the customer experience and our own efficiency, risk mitigation, and responsiveness. Within Solutions, we launched new hosted and managed services offerings that have shortened implementation times and increased customer satisfaction. Consolidated Markets and Solutions fully launched the Engineering Workbench, which will drive the future strategic direction of our product design business. Technology, Media & Telecom made good progress by rationalizing our lower revenue non- recurring products and creating larger recurring revenue product bundles. This has improved our underlying cost structure and should improve our revenue retention. In 2016, IHS Markit came together to form a best-in-class company with the goals of delivering strong value to customers, being a great place to work for our colleagues, and delivering strong returns for our shareholders. Financial Performance In 2016, we successfully executed our merger and delivered significant value to shareholders, as demonstrated by the information in the table below. To show growth, the information below is provided by fiscal year and reported by each legacy company. The most recent non-GAAP reconciliations for IHS and IHS Markit were furnished as an exhibit to our Form 8-K filed on January 17, 2017. The non-IFRS reconciliations for fiscal year 2015 Markit were furnished as an exhibit to the Markit Ltd. Form 6-K filed on February 10, 2016. They are available on our website (http://investor.ihsmarkit.com). Financial Performance Markit IHS 2015 2016 2015 2016 Revenue (1) $1,113 million $1,165 million $2,184 million $2,286 million Adjusted EPS (legacy companies) (2) $1.44 $1.60 Adjusted EPS (IHS Markit) (3) $1.80 $1.80 Stock Price as of November 30 $29.50 $35.94 $34.67(4) $35.94 (1) Revenue for IHS and Markit is reported on the IHS Markit fiscal year basis ending November 30, except for FY15 revenue for Markit, which is reported on Markit’s historical fiscal year basis ending December 31. IHS revenue represents the combined revenue from the Resources, Transportation and Consolidated Markets and Solutions segments. Markit revenue represents FY15 revenue for Markit and pro forma FY16 revenue from the Financial Services segment. Please see note 3 to our audited financial statements in our annual report on Form 10-K for the year ended November 30, 2016 for further information on our pro forma FY2016 revenue. (2) Adjusted EPS for FY15 for IHS reflects the reported Adjusted EPS for IHS for its stand-alone fiscal year from December 1, 2014 to November 30, 2015. Adjusted EPS for Markit reflects the reported Adjusted EPS for Markit for its stand-alone fiscal year from January 1, 2015 to December 31, 2015. (3) Adjusted EPS for FY16 is for the IHS Markit fiscal year from December 1, 2015 to November 30, 2016, and includes the results from the Financial Services segment for the period from the completion date of the Merger until November 30, 2016. (4) The November 30, 2015 stock price for IHS has been adjusted for the 3.5566 Merger exchange ratio. Shareholder Return One of the more compelling reasons for this merger was the ability to drive stronger and quicker return to shareholders. As shown below, our Total Shareholder Return since the time of the merger announcement was 20% higher than the S&P 500 Index. A $100 investment made on March 14, 2016 in our shares would be worth approximately $137 as of Feb 10, 2017, whereas the same investment in the S&P 500 Index would be worth approximately $117. Total Shareholder Return represents the cumulative share price appreciation plus reinvestment of dividends on the ex-dividend date. Shareholder Return Comparison $140 IHS Markit $129 $124 $130 $137 $118 S&P 500 $120 $110 $100 Peer Group $100 $90 $80 3/14/2016 5/31/2016 8/31/2016 11/30/2016 2/10/2017 Source: IHS Markit Total Shareholder Return 3/14/2016 - 2/10/2017 40% 37% 35% 30% 25% 20% 17% 18% 15% 10% 5% 0% IHS Markit S&P 500 Peer Group Source: IHS Markit If we benchmark to the value at the time of the Markit IPO in June 2014, we have likewise driven strong returns. As shown below, our Total Shareholder Return since the Markit IPO was 14% higher than the S&P 500 Index. A $100 investment made on June 19, 2014 in our shares would be worth approximately $135 as of November 30, 2016, whereas the same investment in the S&P 500 Index would be worth approximately $118. Total Shareholder Return Since IPO vs. S&P 500 $160 IHS Markit $135 $140 +14% vs. $110 S&P 500 $120 $106 $118 } $100 $109 S&P 500 $100 $80 $95 $60 $40 $20 $0 6/19/2014 11/30/2014 11/30/2015 11/30/2016 Source: IHS Markit For 2016, our Total Shareholder Return also exceeded the S&P 500 Index by 13%. A $100 investment made on December 1, 2015 in our shares would be approximately $122 as of November 30, 2016, whereas the same investment in the S&P 500 Index would be approximately $108. Total Shareholder Return During FY 16 vs. S&P 500 IHS Markit $140 $122 +13% vs. $120 S&P 500 $108 } $100 $100 S&P 500 $80 $60 $40 $20 $0 11/30/2015 11/30/2016 Source: IHS Markit Looking to the Future 2016 laid a very strong foundation for our new company. We executed upon the day-to-day work of delighting our customers and delivering solid financial performance to close out fiscal 2016. And we have been executing against our integration plan with great progress to date. Our initial integration efforts were focused on areas where we had some of the most significant overlaps such as shared services, corporate functions and facilities. In addition, we have made good progress on revenue synergies and are excited about the immense potential of the combined enterprise. We focused early on ensuring that our colleagues shared the vision of our opportunity and that we built a strong combined culture to ensure the foundation of the company was a sturdy one on which to build. It is a great blessing to work at this company where our people wake up every morning thinking about how they will deliver great value to our customers, while working together to support one another in building an ever greater company.
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