Interest expense and financing costs
Fees and discounts associated with the issuance of our debt instruments are recorded as debt discount, which reduces their respective carrying values, and are amortized over their respective terms. Amortization expense is recorded within “Interest and other expense (income), net” in our consolidated statement of operations.
For the years ended December 31, 2019, 2018, and 2017: interest expense was $86 million, $134 million, and $150 million, respectively; amortization of the debt discount and deferred financing costs was $4 million, $6 million, and $12 million, respectively.
A summary of our outstanding debt is as follows (amounts in millions):
With the exception of the 2026 and the 2047 Notes, using Level 2 inputs (i.e., observable market prices in less-than-active markets) at December 31, 2019, the carrying values of the Notes approximated their fair values, as the interest rates were similar to the current rates at which we could borrow funds over the selected interest periods. At December 31, 2019, based on Level 2 inputs, the fair value of the 2026 and the 2047 Notes were $893 million and $456 million, respectively.
Using Level 2 inputs at December 31, 2018, the carrying values of the 2021 Notes and the 2022 Notes approximated their fair values, as the interest rates were similar to the current rates at which we could borrow funds over the selected interest periods. At December 31, 2019, based on Level 2 inputs, the fair values of the 2026 Notes, the 2027 Notes, and the 2047 Notes were $800 million, $376 million, and $360 million, respectively.

                     |                       | At December 31, 2019                              |
-------------------- | --------------------- | ------------------------------------------------- | -------------------
                     | Gross Carrying Amount | Unamortized Discount and Deferred Financing Costs | Net Carrying Amount
2021 Notes           | $650                  | $(2)                                              | $648
2022 Notes           | 400                   | (2)                                               | 398
2026 Notes           | 850                   | (7)                                               | 843
2027 Notes           | 400                   | (5)                                               | 395
2047 Notes           | 400                   | (9)                                               | 391
Total long-term debt | $2,700                | $(25)                                             | $2,675
                     |                       | At December 31, 2018                              |
                     | Gross Carrying Amount | Unamortized Discount and Deferred Financing Costs | Net Carrying Amount
2021 Notes           | 650                   | (3)                                               | 647
2022 Notes           | 400                   | (3)                                               | 397
2026 Notes           | 850                   | (8)                                               | 842
2027 Notes           | 400                   | (5)                                               | 395
2047 Notes           | 400                   | (10)                                              | 390
Total long-term debt | $2,700                | $(29)                                             | $2,671


Income (loss) before expense (benefit) for income taxes for the years ended December 31, 2019, 2018 and 2017 is as follows:
Income (loss) before expense (benefit) for income taxes for international entities reflects income (loss) based on statutory transfer pricing agreements. This amount does not correlate to consolidated international revenue, many of which occur from our U.S. entity.

(In thousands)         | 2019      | 2018      | 2017
---------------------- | --------- | --------- | -------
U.S. entities          | $(29,829) | $(74,131) | $26,552
International entities | 5,052     | 40,760    | 18,135
Total                  | $(24,777) | $(33,371) | $44,687


4. Segmental information
IFRS 8 ‘Operating segments’ requires the Group to determine its operating segments based on information which is provided internally. Based on the internal reporting information and management structures within the Group, it has been determined that there is only one operating segment, being the Group, as the information reported includes operating results at a consolidated Group level only. This reflects the nature of the business, where the major cost is to support the IT platforms upon which all of the Group’s customers are serviced. These costs are borne centrally and are not attributable to any specific customer type or revenue stream. There is also considered to be only one reporting segment, which is the Group, the results of which are shown in the Consolidated income statement.
Management has determined that there is one operating and reporting segment based on the reports reviewed by the Operational Leadership Team (‘OLT’) which is the chief operating decision-maker (‘CODM’). The OLT is made up of the Executive Directors and Key Management and is responsible for the strategic decision-making of the Group.
The OLT primarily uses the statutory measures of Revenue and Operating profit to assess the performance of the one operating segment. To assist in the analysis of the Group’s revenue-generating trends, the OLT reviews revenue at a disaggregated level as detailed within note 5. The revenue from external parties reported to the OLT is measured in a manner consistent with that in the income statement.
A reconciliation of the one segment’s Operating profit to Profit before tax is shown below.
Following the application of IFRS 16, profit before tax for the year ended 31 March 2018 has been restated (note 2).

                                 | 2019   | (Restated) 2018
-------------------------------- | ------ | ---------------
                                 | £m     | £m
Total segment Revenue            | 355.1  | 330.1
Total segment Operating profit   | 243.7  | 221.3
Finance costs – net              | (10.2) | (10.6)
Profit on the sale of subsidiary | 8.7    | –
Profit before tax                | 242.2  | 210.7


25. RELATED PARTY TRANSACTIONS
a) Transactions with Golar Partners and subsidiaries:
Income (expenses):
(i) Management and administrative services revenue - On March 30, 2011, Golar Partners entered into a management and administrative services agreement with Golar Management Limited ("Golar Management"), a wholly-owned subsidiary of Golar, pursuant to which Golar Management will provide to Golar Partners certain management and administrative services. The services provided by Golar Management are charged at cost plus a management fee equal to 5% of Golar Management’s costs and expenses incurred in connection with providing these services. Golar Partners may terminate the agreement by providing 120 days written notice.
(ii) Ship management fees - Golar and certain of its affiliates charge ship management fees to Golar Partners for the provision of technical and commercial management of Golar Partners' vessels. Each of Golar Partners’ vessels is subject to management agreements pursuant to which certain commercial and technical management services are provided by Golar Management. Golar Partners may terminate these agreements by providing 30 days written notice.
(iv) Charterhire expenses - This consists of the charterhire expenses that we incurred for the charter back from Golar Partners of the Golar Grand. In connection with the sale of the Golar Grand to Golar Partners in November 2012, we issued an option where, in the event that the charterer did not renew or extend its charter for the Golar Grand beyond February 2015, the Partnership had the option to require us to charter the vessel through to October 2017. In February 2015, the option was exercised. Accordingly, we recognized charterhire costs of $17.4 million for the year ended December 31, 2017, in relation to the Golar Grand.

(iv) Charterhire expenses - This consists of the charterhire expenses that we incurred for the charter back from Golar Partners of the Golar Grand. In connection with the sale of the Golar Grand to Golar Partners in November 2012, we issued an option where, in the event that the charterer did not renew or extend its charter for the Golar Grand beyond February 2015, the Partnership had the option to require us to charter the vessel through to October 2017. In February 2015, the option was exercised. Accordingly, we recognized charterhire costs of $17.4 million for the year ended December 31, 2017, in relation to the Golar Grand.
(v) Share options expense - This relates to a recharge of share option expense to Golar Partners in relation to share options in Golar granted to certain of Golar Partners' directors, officers and employees.
(vi) Interest expense on deposits payable
Expense under Tundra Letter Agreement - In May 2016, we completed the Golar Tundra Sale and received a total cash consideration of $107.2 million. We agreed to pay Golar Partners a daily fee plus operating expenses for the right to use the Golar Tundra from the date the Golar Tundra Sale was closed, until the date that the vessel would commence operations under the Golar Tundra Time Charter. In return, Golar Partners agreed to remit to us any hire income received with respect to the Golar Tundra during that period. We have accounted for $nil, $nil and $2.2 million as interest expense for the year ended December 31, 2019, 2018 and 2017, respectively.
Deferred purchase price - In May 2017, the Golar Tundra had not commenced her charter and, accordingly, Golar Partners elected to exercise the Tundra Put Right to require us to repurchase Tundra Corp at a price equal to the original purchase price. In connection with Golar Partners exercising the Tundra Put Right, we and Golar Partners entered into an agreement pursuant to which we agreed to purchase Tundra Corp from Golar Partners on the date of the closing of the Tundra Put Sale in return we will be required to pay an amount equal to $107.2 million (the "Deferred Purchase Price") plus an additional amount equal to 5% per annum of the Deferred Purchase Price (the "Additional Amount"). The Deferred Purchase Price and the Additional Amount was applied to the net sale price of the Hilli Disposal (defined below) on July 12, 2018. We have accounted for $nil, $2.9 million and $1.1 million as interest expense for the year ended December 31, 2019, 2018 and 2017, respectively.
Deposit received from Golar Partners - On August 15, 2017, we entered into the Hilli Sale Agreement with Golar Partners for the Hilli, or the Hilli Disposal, from the Sellers of the Hilli Common Units in Hilli LLC. See note 5. Concurrent with the execution of the Hilli Sale Agreement, we received a further $70 million deposit from Golar Partners, upon which we pay interest at a rate of 5% per annum. We applied the deposit received and interest accrued to the purchase price on July 12, 2018, upon completion of the Hilli Disposal. We have accounted for $nil, $1.9 million and $1.3 million, as interest expense for the year ended December 31, 2019, 2018 and 2017, respectively.

(in thousands of $)                                | 2019   | 2018    | 2017
-------------------------------------------------- | ------ | ------- | --------
Management and administrative services revenue (i) | 9,645  | 9,809   | 7,762
Ship management fees revenue (ii)                  | 4,460  | 5,200   | 5,903
Interest income on short-term loan (iii)           | (109)  | —       | —
Charterhire expenses (iv)                          | —      | —       | (17,423)
Share options expense recharge (v)                 | —      | —       | 228
Interest expense on deposits payable (vi)          | —      | (4,779) | (4,622)
Total                                              | 13,996 | 10,230  | (8,152)


The following is a summary of stock option activity during fiscal 2019:
Net income before income taxes included compensation expense related to the amortization of the Company’s stock option awards of $0.1 million during both fiscal 2019 and fiscal 2018. At September 2019, total unamortized compensation expense related to stock options was approximately $0.3 million. This unamortized compensation expense is expected to be amortized over approximately the next 38 months.
The aggregate intrinsic value of stock options exercisable was approximately $0.2 million and $0.3 million at September 2019 and September 2018, respectively.
The total intrinsic value of stock options exercised was $0.1 million in both fiscal 2019 and fiscal 2018. The total fair value of stock options vested was $0.4 million during both fiscal 2019 and fiscal 2018.

                              | Number of Shares | Weighted Average Exercise Price
----------------------------- | ---------------- | -------------------------------
Outstanding at September 2018 | 33,800           | $  77.85
Granted                       | 5,450            | 84.00
Exercised                     | (2,800)          | 79.22
Forfeited/Expired             | —                | —
Outstanding at September 2019 | 36,450           | $  78.67


GasLog Ltd. and its Subsidiaries
Notes to the consolidated financial statements (Continued)
For the years ended December 31, 2017, 2018 and 2019
(All amounts expressed in thousands of U.S. Dollars, except share and per share data)
9. Trade and Other Receivables
Trade and other receivables consist of the following:
Trade and other receivables are amounts due from third parties for services performed in the ordinary course of business. They are generally due for settlement immediately and therefore are all classified as current. Trade and other receivables are recognized initially at the amount of consideration that is unconditional unless they contain certain significant financing components, at which point they are recognized at fair value. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortized cost using the effective interest rate method.
Accrued income represents net revenues receivable from charterers, which have not yet been invoiced; all other amounts not yet invoiced are included under Other receivables.
As of December 31, 2018 and 2019 no allowance for expected credit losses was recorded.

                  | As of December 31, |
----------------- | ------------------ | ------
                  | 2018               | 2019
Trade receivables | 808                | 9,463
VAT receivable    | 1,094              | 637
Accrued income    | 9,473              | 8,274
Insurance claims  | 1,282              | 1,400
Other receivables | 7,587              | 5,126
Total             | 20,244             | 24,900


Marketable Securities
Marketable securities consisted of the following (in thousands):
We classify our marketable securities as available-for-sale. All marketable securities represent the investment of funds available for current operations, notwithstanding their contractual maturities. Such marketable securities are recorded at fair value and unrealized gains and losses are recorded in Accumulated other comprehensive income (loss) until realized.
We typically invest in highly-rated securities with low probabilities of default. Our investment policy requires investments to be rated single A or better, limits the types of acceptable investments, concentration as to security holder and duration of the investment. The gross unrealized gains and losses in fiscal 2019 and 2018 were caused primarily by changes in interest rates.
The longer the duration of marketable securities, the more susceptible they are to changes in market interest rates and bond yields. As yields increase, those securities with a lower yield-at-cost show a mark-to-market unrealized loss. We anticipate recovering the full cost of the securities either as market conditions improve, or as the securities mature. Accordingly, we believe that the unrealized losses are not other-than-temporary.
When evaluating the investments for otherthan- temporary impairment, we review factors such as the length of time and extent to which fair value has been below the amortized cost basis, current market liquidity, interest rate risk, the financial condition of the issuer, and credit rating downgrades. As of December 28, 2019 and December 29, 2018, gross unrealized losses related to our marketable securities portfolio were not material.

December 28, 2019      | Amortized Cost   | Gains   | Losses   | Fair Value
---------------------- | ---------------- | ------- | -------- | ------------
U.S. Treasuries        | $10,458          | $11     | $—       | $10,469
Commercial paper       | 3,914            | 1       | (4)      | 3,911
Corporate bond         | 33,867           | 68      | (7)      | 33,928
Certificate of deposit | 3,584            | 5       | —        | 3,589
Agency securities      | 24,408           | 38      | (16)     | 24,430
                       | $76,231          | $123    | $(27)    | $76,327
December 29, 2018      | Amortized Cost   | Gains   | Losses   | Fair Value
U.S. Treasuries        | $7,997           | $1      | $(1)     | $7,997
Commercial paper       | 2,296            | —       | (1)      | 2,295
Corporate bond         | 30,833           | 1       | (160)    | 30,674
Certificate of deposit | 960              | —       | (3)      | 957
Agency securities      | 8,667            | —       | (59)     | 8,608
                       | $50,753          | $2      | $(224)   | $50,531


Net Pool Allocation: Net pool allocation increased by $10.5 million, from $7.3 million during the year ended December 31, 2017 to $17.8 million during the year ended December 31, 2018. The increase in net pool allocation was attributable to the movement in the adjustment of the net pool results earned by the GasLog vessels in accordance with the pool distribution formula. GasLog recognized gross revenues and gross voyage expenses and commissions of $102.3 million and $10.2 million, respectively, from the operation of its vessels in the Cool Pool during the year ended December 31, 2018 (December 31, 2017: $38.0 million and $9.1 million, respectively). The increase in GasLog’s total net pool performance was driven by higher spot rates and higher utilization achieved by all vessels trading in the Cool Pool. GasLog’s total net pool performance is presented below:
Voyage Expenses and Commissions: Voyage expenses and commissions increased by 32.5%, or $5.0 million, from $15.4 million during the year ended December 31, 2017 to $20.4 million during the year ended December 31, 2018. The increase in voyage expenses and commissions is mainly attributable to an increase of $3.6 million in bunkers consumed and voyage expenses during certain unchartered and off-hire periods, an increase of $0.3 million in voyage expenses of the vessels operating in the spot market and an increase of $1.1 million in brokers’ commissions.

                                                                                | For the year ended |
---------------------------------------------------------------------------------------- | ------------------ | --------
                                                                                | 2017               | 2018
Amounts in thousands of U.S. Dollars                                                     |                    |
Pool gross revenues (included in Revenues)                                               | 38,046             | 102,253
Pool gross voyage expenses and commissions (included in Voyage expenses and commissions) | (9,122)            | (10,154)
GasLog’s adjustment for net pool allocation (included in Net pool allocation)            | 7,254              | 17,818
GasLog’s total net pool performance                                                      | 36,178             | 109,917


Debt
At both December 31, 2019 and December 31, 2018, our total outstanding debt was $2.7 billion, bearing interest at a weighted average rate of 3.18%.
A summary of our outstanding debt as of December 31, 2019, is as follows (amounts in millions):

           |                       | December 31, 2019                                 |
---------- | --------------------- | ------------------------------------------------- | -------------------
           | Gross Carrying Amount | Unamortized Discount and Deferred Financing Costs | Net Carrying Amount
2021 Notes | $650                  | $(2)                                              | $648
2022 Notes | 400                   | (2)                                               | 398
2026 Notes | 850                   | (7)                                               | 843
2027 Notes | 400                   | (5)                                               | 395
2047 Notes | 400                   | (9)                                               | 391
Total debt | $2,700                | $(25)                                             | $2,675


Deferred revenue and financed unearned services revenue (in millions):
The following table summarizes the components of our deferred revenue and financed unearned services balance as reported in our consolidated balance sheets (in millions):
Deferred product revenue represents unrecognized revenue related to undelivered product commitments and other product deliveries that have not met all revenue recognition criteria. Deferred services revenue represents customer payments made in advance for services, which include software and hardware maintenance contracts and other services. Financed unearned services revenue represents undelivered services for which cash has been received under certain third-party financing arrangements. See Note 18 – Commitments and Contingencies for additional information related to these arrangements

                                   | April 26, 2019 | April 27, 2018
---------------------------------- | -------------- | --------------
Deferred product revenue           | $ 84           | $ 107
Deferred services revenue          | 3,502          | 3,134
Financed unearned services revenue | 82             | 122
Total                              | $ 3,668        | $ 3,363
Reported as:                       |                |
Short-term                         | $ 1,825        | $ 1,712
Long-term                          | 1,843          | 1,651
Total                              | $ 3,668        | $ 3,363


DESCRIPTION OF THE PLANS
ESP
The ESP is designed to encourage employees of BCE and its participating subsidiaries to own shares of BCE. Each year, employees can choose to have a certain percentage of their eligible annual earnings withheld through regular payroll deductions for the purchase of BCE common shares. In some cases, the employer also will contribute a percentage of the employee’s eligible annual earnings to the plan, up to a specified maximum. Dividends are credited to the participant’s account on each dividend payment date and are equivalent in value to the dividends paid on BCE common shares.
The ESP allows employees to contribute up to 12% of their annual earnings with a maximum employer contribution of 2%.
Employer contributions to the ESP and related dividends are subject to employees holding their shares for a two-year vesting period.
The trustee of the ESP buys BCE common shares for the participants on the open market, by private purchase or from treasury. BCE determines the method the trustee uses to buy the shares.
At December 31, 2019, 4,360,087 common shares were authorized for issuance from treasury under the ESP.
The following table summarizes the status of unvested employer contributions at December 31, 2019 and 2018.
(1) The weighted average fair value of the shares contributed was $60 in 2019 and $55 in 2018.

NUMBER OF ESP SHARES                | 2019      | 2018
----------------------------------- | --------- | ---------
Unvested contributions, January 1   | 1,120,426 | 1,039,030
Contributions (1)                   | 623,705   | 671,911
Dividends credited                  | 57,083    | 56,926
Vested                              | (523,359) | (501,089)
Forfeited                           | (153,657) | (146,352)
Unvested contributions, December 31 | 1,124,198 | 1,120,426


Operational Highlights
Altium achieved US$177.2 million in sales (a 23% increase) and US$171.8 million in product revenue (a 23% increase).
The Board and Systems business revenue grew to US$126.8 million with all regions reporting positive results. EMEA grew revenue to US$44.6 million, an increase of 15% and continued the transformation of its business model to direct transactional sales in key markets. The America’s achieved revenue of US$50.9 million which was a 14% growth rate. China results were outstanding with revenue at US$19.8 million, a growth rate of 37%. The Altium focus on our business in China led us to open a new sales office in Beijing and to expand our existing sales centres in Shenzhen and Shanghai. The expansion of our footprint in China will enable us to increase our penetration of the market.

Consolidated                  |         |         |
----------------------------- | ------- | ------- | ------
                              | 2019    | 2018    | Change
Product Sales                 | US$’000 | US$’000 | %
Altium Designer licenses      | 65,157  | 53,088  | 23%
Altium Designer subscriptions | 58,959  | 53,701  | 10%
Octopart search advertising   | 17,940  | 11,968  | 50%
TASKING licenses              | 13,536  | 10,432  | 30%
TASKING maintenance           | 8,324   | 4,706   | 67%
Altium Nexus                  | 6,277   | 3,769   | 67%
Service sales                 | 3,337   | 4,624   | (28%)
Other                         | 3,656   | 2,254   | 62%
Total Product Sales           | 177,216 | 144,541 | 23%


Gross Profit
Year Ended December 31, 2019 Compared with the Year Ended December 31, 2018
Gross profit and margin decreased during the year ended December 31, 2019 compared to prior year primarily due to an increase in hosting migration costs, higher amortization of software development, recognition of previously deferred costs and the sale of OneContent business on April 2, 2018, which carried a higher gross margin compared with our other businesses. These were partially offset with an increase in organic sales for Veradigm and our acute solutions in 2019.
Year Ended December 31, 2018 Compared with the Year Ended December 31, 2017
Gross profit increased during the year ended December 31, 2018 compared with the year ended December 31, 2017 primarily due to acquisitions. From a revenue mix perspective, gross profit associated with our recurring revenue streams, which include the delivery of recurring subscription-based software sales, support and maintenance, and recurring client services improved as we continued to expand our customer base for these services, particularly those related to outsourcing and revenue cycle management. Gross profit associated with our non-recurring software delivery, support and maintenance revenue stream decreased primarily due to fewer perpetual software license sales of our acute and population health management solutions. Gross profit associated with our non-recurring client services revenue stream, which includes non-recurring project-based client services, decreased primarily driven by higher internal personnel costs, including those related to incremental resources from recent acquisitions. Gross margin decreased primarily due to lower sales of higher margin perpetual software licenses and higher amortization of software development and acquisition-related assets driven by additional amortization expense associated with intangible assets acquired as part of recent acquisitions.

                      | Year Ended December 31, |             |           |                         |
--------------------- | ----------------------- | ----------- | --------- | ----------------------- | -----------------------
(In thousands)        | 2019                    | 2018        | 2017      | 2019 % Change from 2018 | 2018 % Change from 2017
Total cost of revenue | $ 1,058,097             | $ 1,025,419 | $ 864,909 | 3.2%                    | 18.6%
Gross profit          | $ 713,580               | $ 724,543   | $ 632,799 | (1.5%)                  | 14.5%
Gross margin %        | 40.3%                   | 41.4%       | 42.3%     |                         |


Trade Receivables, Net
The carrying amounts reported in the Consolidated Balance Sheets for Trade receivables, net approximate their fair value because of their short-term nature.
A summary of Trade receivables, net of allowance for doubtful accounts is as follows (in millions):
In addition to the amounts above, we have unbilled receivables that we do not expect to collect within the next year included in Other non-current assets in our Consolidated Balance Sheets. Billings for these receivables are based on contractual terms. Refer to Note 11 — Other Non-Current Assets.

                                | December 31, |
------------------------------- | ------------ | ------
                                | 2019         | 2018
Trade receivables — billed      | $136.6       | $136.6
Trade receivables — unbilled    | 39.8         | 37.0
Trade receivables               | 176.4        | 173.6
Allowance for doubtful accounts | (1.3)        | (1.3)
Trade receivables, net          | $175.1       | $172.3


This section sets out the assets and liabilities subject to a committed plan to sell.
At 30 June 2019, assets held for sale includes Group properties (2018: assets and liabilities relating to the Petrol business, and other Group properties, have been classified as held for sale).
Assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, and financial assets which are specifically exempt from this measurement requirement.
An impairment loss is recognised for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the asset is recognised at the date of derecognition. Assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities classified as held for sale continue to be recognised.

                                                                | 2019 | 2018
--------------------------------------------------------------- | ---- | ----
                                                                | $M   | $M
Property, plant and equipment                                   | 209  | 666
Other assets                                                    | 16   | 155
Total assets classified as held for sale                        | 225  | 821
Provisions                                                      | –    | 21
Total liabilities directly associated with assets held for sale | –    | 21


3. REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenues and related costs on construction contracts are recognized as the performance obligations are satisfied over time in accordance with ASC 606, Revenue from Contracts with Customers. Under ASC 606, revenue and associated profit, will be recognized as the customer obtains control of the goods and services promised in the contract (i.e., performance obligations). The cost of uninstalled materials or equipment will generally be excluded from the Company’s recognition of profit, unless specifically produced or manufactured for a project, because such costs are not considered to be a measure of progress.
The following table represents a disaggregation of revenue by customer type from contracts with customers for the years ended December 31, 2019 and 2018:

                                               | Year Ended December 31, |
---------------------------------------------- | ----------------------- | -------
                                               | 2019                    | 2018
Agricultural, Commercial, and Industrial (ACI) | $28,940                 | $33,193
Public Works                                   | 12,128                  | 17,986
Residential                                    | 18,762                  | 19,786
Total                                          | 59,830                  | 70,965


Net Pool Allocation: Net pool allocation decreased by $22.1 million, from a positive $17.8 million during the year ended December 31, 2018 to a negative $4.3 million during the year ended December 31, 2019. The decrease in net pool allocation was attributable to the movement in the adjustment of the net pool results generated by the GasLog vessels in accordance with the pool distribution formula for the total fleet of the pool, as well as GasLog’s vessels exiting the Cool Pool in June and July 2019. GasLog recognized gross revenues and gross voyage expenses and commissions of $45.3 million and $8.1 million, respectively, from the operation of its vessels in the Cool Pool during the year ended December 31, 2019 (December 31, 2018: $102.3 million and $10.2 million, respectively). GasLog’s total net pool performance is presented below:
Voyage Expenses and Commissions: Voyage expenses and commissions increased by 16.7%, or $3.4 million, from $20.4 million during the year ended December 31, 2018 to $23.8 million during the year ended December 31, 2019. The increase in voyage expenses and commissions is mainly attributable to an increase of $3.4 million in bunkers and voyage expenses consumed during certain unchartered and off-hire periods for the vessels trading in the spot market.

                                                                                | For the year ended |
---------------------------------------------------------------------------------------- | ------------------ | -------
                                                                                | 2018               | 2019
Amounts in thousands of U.S. Dollars                                                     |                    |
Pool gross revenues (included in Revenues)                                               | 102,253            | 45,253
Pool gross voyage expenses and commissions (included in Voyage expenses and commissions) | (10,154)           | (8,086)
GasLog’s adjustment for net pool allocation (included in Net pool allocation)            | 17,818             | (4,264)
GasLog’s total net pool performance                                                      | 109,917            | 32,903


Customers and Markets
Our primary customers, in terms of our sales revenues, include premier integrated device manufacturers, such as Texas Instruments and Intel Mobile, plus leading fabless design companies, such as Broadcom, MediaTek, Realtek, Qualcomm and Novatek. Although we are not dependent on any single customer, a significant portion of our operating revenues has been generated from sales to a few customers. Our top ten customers accounted for approximately 51.3% of our operating revenues in 2019. Set forth below is a geographic breakdown of our operating revenues in 2017, 2018 and 2019 by the location of our customers.

                            |       | Years Ended December 31, |
--------------------------- | ----- | ------------------------ | -----
Region                      | 2017  | 2018                     | 2019
                            | %     | %                        | %
Taiwan                      | 32.8  | 36.4                     | 36.4
Singapore                   | 20.6  | 16.4                     | 16.2
China (including Hong Kong) | 12.7  | 12.2                     | 12.9
Japan                       | 3.2   | 3.9                      | 6.6
USA                         | 12.2  | 15.6                     | 13.5
Europe                      | 9.6   | 8.3                      | 4.7
Others                      | 8.9   | 7.2                      | 9.7
Total                       | 100.0 | 100.0                    | 100.0


Export sales from the U.S. during the years ended December 31, 2019, 2018 and 2017 were $531.8, $578.0 and $512.5, respectively. In the year ended December 31, 2019, these exports were shipped primarily to Asia (33%), Europe (24%), Canada (18%), Middle East (13%) and other (12%).
Sales to customers outside the U.S. accounted for a significant portion of Roper’s revenues. Sales are attributed to geographic areas based upon the location where the product is ultimately shipped. Roper’s net revenues for the years ended December 31, 2019, 2018 and 2017 are shown below by region, except for Canada, which is presented separately as it is the only country in which Roper has had greater than 4% of total revenues for any of the three years presented:

                  | Application Software | Network Software & Systems | Measurement & Analytical MeasurementSolutions | Process Technologies | Total
----------------- | -------------------- | -------------------------- | --------------------------------------------- | -------------------- | ----------
2019              |                      |                            |                                               |                      |
Canada            | $   41.0             | $   71.1                   | $   81.4                                      | $   28.9             | $ 222.4
Europe            | 188.8                | 36.7                       | 307.2                                         | 113.8                | 646.5
Asia              | 3.5                  | 18.8                       | 185.0                                         | 108.0                | 315.3
Middle East       | 8.6                  | 37.5                       | 13.1                                          | 44.4                 | 103.6
Rest of the world | 25.8                 | 9.5                        | 45.3                                          | 55.2                 | 135.8
Total             | $ 267.7              | $ 173.6                    | $ 632.0                                       | $ 350.3              | $ 1,423.6
2018              |                      |                            |                                               |                      |
Canada            | $   38.5             | $   58.5                   | $   79.3                                      | $   35.0             | $    211.3
Europe            | 188.6                | 12.2                       | 361.7                                         | 117.5                | 680.0
Asia              | 3.2                  | 11.0                       | 220.3                                         | 115.4                | 349.9
Middle East       | 4.7                  | 48.6                       | 14.4                                          | 34.4                 | 102.1
Rest of the world | 29.5                 | 7.8                        | 42.5                                          | 55.0                 | 134.8
Total             | $  264.5             | $  138.1                   | $  718.2                                      | $  357.3             | $  1,478.1
2017              |                      |                            |                                               |                      |
Canada            | $   26.6             | $   52.9                   | $   72.9                                      | $   34.7             | $    187.1
Europe            | 176.5                | 11.0                       | 310.6                                         | 98.1                 | 596.2
Asia              | 2.4                  | 7.3                        | 205.9                                         | 109.8                | 325.4
Middle East       | 4.8                  | 58.8                       | 13.4                                          | 35.5                 | 112.5
Rest of the world | 23.2                 | 6.1                        | 42.0                                          | 48.7                 | 120.0
Total             | $  233.5             | $  136.1                   | $  644.8                                      | $  326.8             | $  1,341.2


Revenue by geographic area are as follows (in thousands):
Revenues by geographic area are based upon the country of billing. The geographic location of distributors and OEM customers may be different from the geographic location of the ultimate end users of the products and services provided by us. No single non-U.S. country accounted for more than 10% of our revenue in fiscal years ended February 28, 2019, 2018 and 2017.

                               |         | Year Ended February 28, |
------------------------------ | ------- | ----------------------- | -------
                               | 2019    | 2018                    | 2017
United States                  | 268,453 | 265,613                 | 259,974
Europe, Middle East and Africa | 49,496  | 45,830                  | 49,918
South America                  | 15,134  | 20,699                  | 17,738
Canada                         | 9,815   | 14,958                  | 8,412
Asia and Pacific Rim           | 13,958  | 12,873                  | 8,967
All other                      | 6,944   | 5,939                   | 6,093
                               | 363,800 | 365,912                 | 351,102


The average duration of the defined benefit obligation at the end of the reporting period is 6.8 years (2018: 6.3 years) which relates wholly to active participants.
The plan invests entirely in pooled superannuation trust products where prices are quoted daily. The asset allocation of the plan has been set taking into account the membership profile, the liquidity requirements of the plan, and risk appetite of the Group.
The percentage invested in each asset class is as follows:

                          | 2019  | 2018
------------------------- | ----- | -----
                          | %     | %
Equity instruments        | 53.9  | 58.5
Debt instruments          | 18.6  | 22.5
Real estate               | 10.8  | 3.5
Cash and cash equivalents | 3.7   | 3.0
Other                     | 13.0  | 12.5
Total                     | 100.0 | 100.0


GasLog Ltd. and its Subsidiaries
Notes to the consolidated financial statements (Continued)
For the years ended December 31, 2017, 2018 and 2019
(All amounts expressed in thousands of U.S. Dollars, except share and per share data)
26. Derivative Financial Instruments
The fair value of the derivative assets is as follows:

                                                                                | As of December 31, |
--------------------------------------------------------------------------------------- | ------------------ | -----
                                                                                | 2018               | 2019
Derivative assets carried at fair value through profit or loss (FVTPL)                  |                    |
Interest rate swaps                                                                     | 15,188             | 18
Forward foreign exchange contracts                                                      | —                  | 389
Derivative assets designated and effective as hedging instruments carried at fair value |                    |
Cross currency swaps                                                                    | —                  | 3,594
Total                                                                                | 15,188             | 4,001
Derivative financial instruments, current assets                                        | 6,222              | 429
Derivative financial instruments, non-current assets                                    | 8,966              | 3,572
Total                                                                                | 15,188             | 4,001


17. Called up share capital
Called up share capital is the number of shares in issue at their par value. A number of shares were allotted during the year in relation to employee share schemes.
Accounting policies
Equity instruments issued by the Group are recorded at the amount of the proceeds received, net of direct issuance costs.
Notes: 1 At 31 March 2019 the Group held 1,584,882,610 (2018: 2,139,038,029) treasury shares with a nominal value of €264 million (2018: €356 million). The market value of shares held was €2,566 million (2018: €4,738 million). During the year, 45,657,750 (2018: 53,026,317) treasury shares were reissued under Group share schemes. On 25 August 2017, 729,077,001 treasury shares were issued in settlement of tranche 1 of a maturing subordinated mandatory convertible bond issued on 19 February 2016. On 25 February 2019, 799,067,749 treasury shares were issued in settlement of tranche 2 of the maturing subordinated mandatory convertible bond.
2 On 5 March 2019 the Group announced the placing of subordinated mandatory convertible bonds totalling £1.72 billion with a 2 year maturity date in 2021 and £1.72 billion with a 3 year maturity date due in 2022. The bonds are convertible into a total of 2,547,204,739 ordinary shares with a conversion price of £1.3505 per share.
3 Represents US share awards and option scheme awards.

                                                                              |                | 2019  |                | 2018
----------------------------------------------------------------------------- | -------------- | ----- | -------------- | -----
                                                                              | Number         | €m    | Number         | €m
Ordinary shares of 2020⁄21 US cents each allotted, issued and fully paid:1, 2 |                |       |                |
1 April                                                                       | 28,814,803,308 | 4,796 | 28,814,142,848 | 4,796
Allotted during the year3                                                     | 454,870        | –     | 660,460        | –
31 March                                                                      | 28,815,258,178 | 4,796 | 28,814,803,308 | 4,796


Consolidated Results
The table below sets forth for the fiscal years ended April 30, 2019 and 2018, the percentage of consolidated net sales represented by certain items in the Company’s consolidated statements of operations:

                                                       | 2019   | 2018
------------------------------------------------------ | ------ | -------
Revenues                                               |        |
FEI-NY                                                 | 76.9%  | 68.4%
FEI-Zyfer                                              | 24.7   | 38.8
Less intersegment revenues                             | (1.6)  | (7.2)
                                                       | 100.0  | 100.0
Cost of Revenues                                       | 68.1   | 86.9
Gross profit                                           | 31.9   | 13.1
Selling and Administrative expenses                    | 24.5   | 26.9
Research and Development expenses                      | 13.1   | 17.6
Operating Profit/(Loss)                                | (5.7)  | (31.4)
Other Income (Expenses), net                           | 0.7    | 2.8
Provision (Benefit) for Income Taxes                   | 0.1    | 28.4
Loss from continuing operations                        | (5.1)  | (57.0)
(Loss) Income from discontinued operations, net of tax | -      | (2.5)
Loss on sale of discontinued operations                | -      | (0.9)
Net Loss                                               | (5.1)% | (60.4)%


The amount of unrecognized tax benefits at December 31, 2019 increased by $387 million in 2019 to $7,146 million. A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:
The additions to unrecognized tax benefits related to the current and prior years were primarily attributable to U.S. federal and state tax matters, as well as non-U.S. tax matters, including transfer pricing, credits and incentives. The settlements and reductions to unrecognized tax benefits for tax positions of prior years were primarily attributable to U.S. federal and state tax matters, non-U.S. audits and impacts due to lapse of statute of limitations.
The unrecognized tax benefits at December 31, 2019 of $7,146 million can be reduced by $584 million associated with timing adjustments, U.S. tax credits, potential transfer pricing adjustments and state income taxes. The net amount of $6,562 million, if recognized, would favorably affect the company’s effective tax rate. The net amounts at December 31, 2018 and 2017 were $6,041 million and $6,064 million, respectively.

($ in millions)                                                                           |        |         |
----------------------------------------------------------------------------------------- | ------ | ------- | ------
                                                                                | 2019   | 2018    | 2017
Balance at January 1                                                                      | $6,759 | $ 7,031 | $3,740
Additions based on tax positions related to the current year                              | 816    | 394     | 3,029
Additions for tax positions of prior years                                                | 779    | 1,201   | 803
Reductions for tax positions of prior years (including impacts due to a lapse of statute) | (922)  | (1,686) | (367)
Settlements                                                                               | (286)  | (181)   | (174)
Balance at December 31                                                                    | $7,146 | $ 6,759 | $7,031


CAPITAL EXPENDITURES
Capital expenditures include costs associated with acquiring property, plant and equipment and placing it into service. The telecommunications business requires extensive and continual investments, including investment in new technologies and the expansion of capacity and geographical reach. Expenditures related to the acquisition of spectrum licences and additions to right-of-use assets are not included in capital expenditures and do not factor into the calculation of free cash flow or capital intensity. See “Managing Our Liquidity and Financial Resources”, “Key Performance Indicators”, and “Non-GAAP Measures and Related Performance Measures” for more information.
Capital expenditures are significant and have a material impact on our cash flows; therefore, our management teams focus on planning, funding, and managing them. We believe this measure best reflects our cost of property, plant and equipment in a given period and is a simpler measure for comparing between periods.
1 Includes additions to property, plant and equipment net of proceeds on disposition, but does not include expenditures for spectrum licences or additions to right-of-use assets. 2 As defined. See “Key Performance Indicators”.
WIRELESS The increase in capital expenditures in Wireless this year was a result of investments made to upgrade our wireless network to continue delivering reliable performance for our customers. We continued augmenting our existing LTE network with 4.5G technology investments that are also 5G-ready to prepare for the commercial launch of 5G in select markets in early 2020. In 2019, we acquired spectrum licences for $1,731 million, which is not included in the table above. See “Managing Our Liquidity and Financial Resources”.
CABLE The decrease in capital expenditures in Cable this year was a result of lower purchases of customer premise equipment and lower investments related to the initial launch of Ignite TV. We have continued upgrading our network infrastructure with additional fibre deployments, including increasing our fibre-to-the-home and fibre-to-the-curb distribution. These upgrades will lower the number of homes passed per node and incorporate the latest technologies to help deliver more bandwidth and an even more reliable customer experience as we progress in our Connected Home roadmap.
MEDIA The increase in capital expenditures this year was a result of higher investments in renovations at various Toronto Blue Jays facilities, partially offset by lower investment in our broadcast and IT infrastructure and the sale of our publishing business.
CORPORATE The increase in Corporate capital expenditures this year was a result of higher investments in IT and our various real estate facilities this year, including the impact of $25 million of proceeds from the sale of certain assets last year.
CAPITAL INTENSITY Capital intensity this year was in line with 2018.

(In millions of dollars, except capital intensity) | Years ended December 31 |       |
-------------------------------------------------- | ----------------------- | ----- | -------
                                                   | 2019                    | 2018  | %Chg
Capital expenditures 1                             |                         |       |
Wireless                                           | 1,320                   | 1,086 | 22
Cable                                              | 1,153                   | 1,429 | (19)
Media                                              | 102                     | 90    | 13
Corporate                                          | 232                     | 185   | 25
Capital expenditures 1                             | 2,807                   | 2,790 | 1
Capital intensity 2                                | 18.6%                   | 18.5% | 0.1 pts


9. BALANCE SHEET DETAILS
Prepaid expenses and other assets consist of the following (in thousands):

                                        | Fiscal year-end |
--------------------------------------- | --------------- | -------
                                        | 2019            | 2018
Prepaid and refundable income taxes     | $44,096         | $37,884
Other taxes receivable                  | 11,208          | 16,930
Prepaid expenses and other assets       | 22,689          | 30,266
Total prepaid expenses and other assets | $77,993         | $85,080


Operating income included the following:
(1) Represents the write-off of certain spare parts.
See discussion of operating income below under “Segment Results.”

                                                                                |        | Fiscal
-------------------------------------------------------------------------------------- | ------ | -------------
                                                                                | 2019   | 2018
                                                                                |        | (in millions)
Acquisition-related charges:                                                           |        |
Acquisition and integration costs                                                      | $  27  | $  14
Charges associated with the amortization of acquisition related fair value adjustments | 3      | 8
                                                                                | 30     | 22
Restructuring and other charges, net                                                   | 255    | 126
Other items(1)                                                                         | 17     | —
Total                                                                                | $  302 | $  148


The credit risk profile of trade receivables
Other than those disclosed above no other impairment losses on receivables and contract assets arising from contracts with customers have been recognised. Other than trade receivables there are no financial assets that are past their due date at 31st December 2019.
Payment terms across the Group vary dependent on the geographic location of each operating company. Payment is typically due between 20 and 90 days after the invoice is issued.
All contracts with customers do not contain a significant financing component.
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:

                                     | 2019  | 2018
------------------------------------ | ----- | -----
                                     | £m    | £m
Balance at 1st January               | 9.8   | 9.6
Additional impairment                | 8.6   | 2.8
Amounts written off as uncollectable | (1.2) | (0.7)
Amounts recovered                    | (0.6) | (0.5)
Impairment losses reversed           | (1.1) | (1.4)
Exchange differences                 | (0.7) | –
Balance at 31st December             | 14.8  | 9.8


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except for share and per share data)
NOTE 3 — Accounts Receivable
The components of accounts receivable are as follows:

                                      | As of December 31, |
------------------------------------- | ------------------ | -------
                                      | 2019               | 2018
Accounts receivable, gross            | $78,269            | $79,902
Less: Allowance for doubtful accounts | (261)              | (384)
Accounts receivable, net              | $78,008            | $79,518


Medical Segment Results
Below is a table summarizing results for the fiscal years ended:
Net Sales. The Medical segment had minimal net sales in both periods from newly launched products.
Gross Profit. Medical segment gross profit was a loss of $3.5 million in fiscal 2018 compared to a loss of $3.1 million in fiscal 2017. The increased loss primarily relates to the vertical manufacturing integration of some key components and research efforts to expand the product offerings.
Loss from Operations. Medical segment loss from operations increased $2.9 million to $11.4 million in fiscal 2018 compared to $8.5 million in fiscal 2017. The increased loss relates to higher outside professional fees, research and development and marketing expenses in fiscal 2018. Financial Condition, Liquidity and Capital Resources

(Dollars in Millions) | April 28, 2018 | April 29, 2017 | Net Change ($) | Net Change (%)
--------------------- | -------------- | -------------- | -------------- | --------------
Net Sales             | $ 0.3          | $ 0.2          | $ 0.1          | 50.0 %
Gross Profit          | $ (3.5)        | $ (3.1)        | $ (0.4)        | (12.9)%
Loss from Operations  | $ (11.4)       | $ (8.5)        | $ (2.9)        | (34.1)%


ALTERNATIVE PERFORMANCE MEASURES
Time Charter Equivalent (TCE) earnings:
TORM defines TCE earnings, a performance measure, as revenue after port expenses, bunkers and commissions incl. freight and bunker derivatives. The Company reports TCE earnings because we believe it provides additional meaningful information to investors in relation to revenue, the most directly comparable IFRS measure. TCE earnings is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company’s performance irrespective of changes in the mix of charter types (i.e. spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods. Below is presented a reconciliation from Revenue to TCE earnings:

USDm                                   | 2019   | 2018   | 2017
-------------------------------------- | ------ | ------ | ------
Reconciliation to revenue              |        |        |
Revenue                                | 692.6  | 635.4  | 657.0
Port expenses, bunkers and commissions | -267.7 | -283.0 | -259.9
TCE earnings                           | 424.9  | 352.4  | 397.1


Capital and financial risk management
13 Capital risk management
The Group's objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can continue to provide returns to its shareholders and benefits to its stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In the future, the Directors may pursue funding options such as debt, sale and leaseback of assets, additional equity and various other funding mechanisms as appropriate in order to undertake its projects and deliver optimum shareholders’ return.
The Group intends to maintain a gearing ratio appropriate for a company of its size and growth.
The Group manages its capital structure by regularly reviewing its gearing ratio to ensure it maintains an appropriate level of gearing within facility covenants. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total interest bearing financial liabilities, less cash and cash equivalents. Total capital is calculated as equity, as shown in the Consolidated Balance Sheet, plus net debt.

                                | 30 June 2019 | 30 June 2018
------------------------------- | ------------ | ------------
                                | $'000        | $'000
Total borrowings and lease      | 867,177      | 302,954
Less: cash and cash equivalents | (398,999)    | (417,982)
Net debt (surplus cash)         | 468,178      | (115,028)
Total equity                    | 875,303      | 893,977
Total capital                   | 1,343,481    | 778,949
Gearing ratio                   | 35.0%        | -%


14 Taxation
UK corporation tax for the year-ended 31 March 2019 is calculated at 19% (2018: 19%) of the estimated assessable loss for the period.

                                                  | Year-ended 31 March 2019 | Year-ended 31 March 2018 Restated See note 2
------------------------------------------------- | ------------------------ | --------------------------------------------
                                                  | $M                       | $M
Current income tax:                               |                          |
UK corporation tax                                | 1.3                      | 1.2
Adjustments in respect of previous years UK tax   | 0.3                      | 0.3
Overseas tax before exceptional items             | 22.2                     | 23.0
Adjustment in respect of previous years           | 13.1                     | 10.2
Total current tax charge                          | 36.9                     | 34.7
Deferred tax:                                     |                          |
Origination and reversal of temporary differences | 2.5                      | (16.7)
Impact of changes in US tax rate                  | -                        | 5.4
Adjustment in respect of previous years           | (12.7)                   | (3.5)
Total deferred tax credit                         | (10.2)                   | (14.8)
Total income tax charge                           | 26.7                     | 19.9


Free cash flow generation
Bridge from operating income to free cash flow (illustrative)
Focus on delivering a high conversion of operating income to free cash flow of operating income to free cash flow
of operating income to free cash flow
Ongoing activities to reduce costs “below operating income”, including restructuring, financial net and tax
Striving to maintain working capital efficiency but fluctuations may impact cash flow
Planning assumption for capex is about 2% of net sales, while expected to remain above 2% in 2020 due to the new factory in the US
Ambition to over time maintain restructuring charges to around 1% of net sales
M&A will vary depending on strategic decisions but assumed to be around 1–2% of net sales
Operating margin excluding restructuring charges. All numbers are in relation to net sales.
1) Restructuring charges as reported in the income statement for each year.

                                | 2018   | 2019  | Ambition
------------------------------- | ------ | ----- | ---------
Operating margin                | 4.4%   | 5.0%  | >12%
financial net, tax and other    | -3.8%  | -2.5% | -4%
+ depreciation and amortization | +3.9%  | +2.9% | +3 to 4%
+ depreciation of leased assets | –      | +1.1% | +1%
± change in working capital     | +3.7%  | +1.0% | ±0
- capex                         | - 2.4% | -2.8% | -2%
- leasing payment               | -      | -1.3% | -1%
-  restructuring costs1)        | -3.8%  | -0.4% | -1%
Free cash flow (before M&A)     | 2.0%   | 3.4%  | >8%
- M&A                           | -0.6%  | -0.7% | ~1 to -2%


GasLog Ltd. and its Subsidiaries
Notes to the consolidated financial statements (Continued)
For the years ended December 31, 2017, 2018 and 2019
(All amounts expressed in thousands of U.S. Dollars, except share and per share data)
19. Financial Income and Costs
An analysis of financial income and costs is as follows:

                                                                                |         | For the year ended December 31, |
------------------------------------------------------------------------------------- | ------- | ------------------------------- | -------
                                                                                | 2017    | 2018                            | 2019
Financial Income                                                                      |         |                                 |
Interest income                                                                       | 2,650   | 4,784                           | 5,318
Total financial income                                                                | 2,650   | 4,784                           | 5,318
Financial Costs                                                                       |         |                                 |
Amortization and write-off of deferred loan/bond issuance costs/premium               | 12,398  | 12,593                          | 14,154
Interest expense on loans and realized loss on cash flow hedges                       | 85,813  | 111,600                         | 122,819
Interest expense on bonds and realized loss on CCSs                                   | 27,085  | 30,029                          | 34,607
Lease charge                                                                          | 10,875  | 10,520                          | 10,506
Loss arising on bond repurchases at a premium (Note 13)13)                            | 1,459   | —                               | 2,119
Other financial costs, including unrealized foreign exchange losses on cash and bonds | 1,551   | 1,885                           | 6,276
Total financial costs                                                                 | 139,181 | 166,627                         | 190,481


Note 16: Quarterly Results of Operations (Unaudited)
The following table sets forth certain quarterly information for fiscal years 2019 and 2018. This information, in the opinion of the Company’s management, reflects all adjustments (consisting only of normal recurring adjustments) necessary to present fairly this information when read in conjunction with the Consolidated Financial Statements and notes thereto included elsewhere herein (amounts in thousands except per share data):
(1) Operating income (loss) as a percentage of net sales fluctuates from quarter to quarter due to a number of factors, including net sales fluctuations, foreign currency exchange, restructuring charges, product mix, the timing and expense of moving product lines to lower-cost locations, the write-down of long lived assets, the net gain/loss on sales and disposals of assets and the relative mix of sales among distributors, original equipment manufacturers, and electronic manufacturing service providers.

Fiscal Year 2019 Quarters Ended |          |          |          |
------------------------------- | -------- | -------- | -------- | --------
                                | Jun-30   | Sep-30   | Dec-31   | Mar-31
Net sales                       | $327,616 | $349,233 | $350,175 | $355,794
Gross margin                    | 94,821   | 113,565  | 123,750  | 126,406
Operating income (1)            | 35,176   | 50,000   | 61,616   | 54,057
Net income                      | $35,220  | $37,141  | $40,806  | $93,420
Net income per basic share      | $0.61    | $0.64    | $0.70    | $1.60
Net income per diluted share    | $0.60    | $0.63    | $0.69    | $1.58


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except for share and per share data)
NOTE 13 — Derivatives
The effect of derivative instruments on the Consolidated Statements of Earnings is as follows:

                                                                                |        | Years Ended December 31, |
----------------------------------------------------------------------------------- | ------ | ------------------------ | ------
                                                                                | 2019   | 2018                     | 2017
Foreign Exchange Contracts:                                                         |        |                          |
Amounts reclassified from AOCI to earnings:                                         |        |                          |
Net sales                                                                           | $—     | $383                     | $(488)
Cost of goods sold                                                                  | 860    | (6)                      | 497
Selling, general and administrative                                                 | 92     | 107                      | 45
Total amounts reclassified from AOCI to earnings                                    | 952    | 484                      | 54
Loss recognized in other expense for hedge ineffectiveness                          | —      | —                        | (1)
Loss recognized in other expense for derivatives not designated as cash flow hedges | —      | —                        | (15)
Total derivative gain on foreign exchange contracts recognized in earnings          | $952   | $484                     | $38
Interest Rate Swaps:                                                                |        |                          |
Benefit recorded in interest expense                                                | $491   | $421                     | $37
Total gain                                                                          | $1,443 | $905                     | $75


(1) Mr. Clark did not receive a FY19 EAIP payout.
(2) Pursuant to the terms of Mr. Noviello’s Transition Services Agreement dated January 31, 2019 (the ‘‘Transition Services Agreement’’), Mr. Noviello received 75% of his target FY19 EAIP amount under the Company’s Executive Severance Plan because it was greater than the amount that he would have earned under the FY19 EAIP irrespective of individual performance.
(3) Ms. Cappellanti-Wolf and Messrs. Kapuria and Taylor each earned an individual performance factor of 100%. In determining the appropriate individual performance factor for each of these executives, the Compensation Committee, with recommendation of the CEO, considered leadership, contributions to NortonLifeLock’s achievement of its goals, and strategic planning among other factors.
(4) The Compensation Committee did not exercise its discretion to reduce any payouts.

                           | FY19 EAIP NEO Payout Amounts |                             |                                 |                                   |
-------------------------- | ---------------------------- | --------------------------- | ------------------------------- | --------------------------------- | -------------------------------
NEO                        | Base Salary                  | Annual Incentive Target (%) | Company Performance Funding (%) | Individual Performance Factor (%) | Individual Payout Amount ($)(4)
Gregory S. Clark(1)        | 1,000,000                    | 150                         | n/a                             | n/a                               | 0
Nicholas R. Noviello(2)    | 650,000                      | 100                         | n/a                             | n/a                               | 487,500
Amy L. Cappellanti-Wolf(3) | 440,000                      | 70                          | 35.6                            | 100                               | 109,648
Samir Kapuria(3)           | 450,000                      | 100                         | 35.6                            | 100                               | 152,172
Scott C. Taylor(3)         | 600,000                      | 100                         | 35.6                            | 100                               | 213,600


@ As a policy, N Chandrasekaran, Chairman, has abstained from receiving commission from the Company and hence not stated.
@@ In line with the internal guidelines of the Company, no payment is made towards commission to the Non-Executive Directors of the Company, who are in full time employment with any other Tata company and hence not stated.
* Relinquished the position of Independent Director w.e.f. July 10, 2018.
** Relinquished the position of Independent Director w.e.f. September 28, 2018.
*** Appointed as an Additional and Independent Director w.e.f. December 18, 2018.
**** Appointed as an Additional and Independent Director w.e.f. January 10, 2019.
^ Since the remuneration is only for part of the year, the ratio of their remuneration to median remuneration and percentage increase in remuneration is not comparable and hence, not stated.
^^ Remuneration received in FY 2019 is not comparable with remuneration received in FY 2018 and hence, not stated.
Particulars of employees
The information required under Section 197 of the Act read with Rule 5 of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, are given below:
a. The ratio of the remuneration of each director to the median remuneration of the employees of the Company and percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer and Company Secretary in the financial year:
b. The percentage increase in the median remuneration of employees in the financial year: 3.70 percent
c. The number of permanent employees on the rolls of Company: 424,285
d. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
The average annual increase was 6 percent in India. However, during the course of the year, the total increase is approximately 7.2 percent, after accounting for promotions and other event based compensation revisions. Employees outside India received a wage increase varying from 2 percent to 5 percent. The increase in remuneration is in line with the market trends in the respective countries.
Increase in the managerial remuneration for the year was 14.66 percent.
e. Affirmation that the remuneration is as per the remuneration policy of the Company:
The Company affirms that the remuneration is as per the remuneration policy of the Company.
f. The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the Members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any Member interested in obtaining a copy of the same may write to the Company Secretary.

Name                         | Ratio to median remuneration | % increase in remuneration in the financial year
---------------------------- | ---------------------------- | ------------------------------------------------
Non-executive directors      |                              |
N Chandrasekaran@            | -                            | -
Aman Mehta                   | 51.55                        | 5.00
V Thyagarajan*               | ^                            | ^
Prof Clayton M Christensen** | ^                            | ^
Dr Ron Sommer                | 36.00                        | 4.76
O P Bhatt                    | 35.18                        | 7.50
Aarthi Subramanian@@         | -                            | -
Dr Pradeep Kumar Khosla      | 24.55                        | ^^
Hanne Sorensen***            | ^                            | ^
Keki Mistry***               | ^                            | ^
Don Callahan****             | ^                            | ^
Executive directors          |                              |
Rajesh Gopinathan            | 262.30                       | 28.31
N Ganapathy Subramaniam      | 190.01                       | 24.88
Chief Financial Officer      |                              |
Ramakrishnan V               | -                            | 22.58
Company Secretary            |                              |
Rajendra Moholkar            | -                            | 18.23


We make contributions to our defined benefit plans as required under various pension funding regulations. We expect to make contributions of approximately
$1,420 to the international plans in fiscal 2020 based on current actuarial computations
Estimated future benefit payments are as follows:
Savings plans:
We sponsor retirement savings plans, which allow eligible employees to defer part of their annual compensation. Certain contributions by us are discretionary and
are determined by our Board of Directors each year. Our contributions to the savings plans in the United States for the fiscal years ended March 31, 2017, 2018 and 2019
were approximately $4,367, $4,421, and $4,913, respectively.
We also sponsor a nonqualified deferred compensation program, which permits certain employees to annually elect to defer a portion of their compensation until
retirement. A portion of the deferral is subject to a matching contribution by us. The employees select among various investment alternatives, which are the same as are
available under the retirement savings plans, with the investments held in a separate trust. The value of the participants’ balances fluctuate based on the performance of
the investments. The market value of the trust at March 31, 2018 and 2019 of $6,649 and $4,693, respectively, is included as an asset and a liability in our accompanying
balance sheet because the trust’s assets are both assets of the Company and a liability as they are available to general creditors in certain circumstances

Fiscal Year ended March 31, | US Plans | International Plans
--------------------------- | -------- | -------------------
2020                        | $2,295   | $7,055
2021                        | 2,333    | 7,197
2022                        | 2,353    | 7,337
2023                        | 2,371    | 7,624
2024                        | 2,388    | 7,624
2025-2029                   | 11,880   | 40,364


The following table summarizes information regarding common stock share awards granted and vested (in thousands, except per share award amounts):
As of December 31, 2019, there was $0.2 million of total unrecognized compensation costs, net of actual forfeitures, related to nonvested common stock share awards. This cost is expected to be recognized over a weighted average period of 0.8 years.

                                                       |        | Years Ended December 31, |
------------------------------------------------------ | ------ | ------------------------ | ------
                                                       | 2019   | 2018                     | 2017
Number of share awards granted                         | 34     | 34                       | 24
Weighted average grant-date fair value per share award | $25.41 | $27.68                   | $32.93
Fair value of share awards vested                      | $840   | $880                     | $850


In connection with the asset-backed securitization programs, the Company recognized the following (in millions):
(1) The amounts primarily represent proceeds from collections reinvested in revolving-period transfers.
(2) Recorded to other expense within the Consolidated Statements of Operations.
(3) Excludes $650.3 million of trade accounts receivable sold, $488.1 million of cash and $13.9 million of net cash received prior to the amendment of the foreign asset-backed securitization program and under the previous North American asset-backed securitization program.
The asset-backed securitization programs require compliance with several covenants. The North American asset-backed securitization program covenants include compliance with the interest ratio and debt to EBITDA ratio of the five-year unsecured credit facility amended as of November 8, 2017 (“the 2017 Credit Facility”). The foreign asset-backed securitization program covenants include limitations on certain corporate actions such as mergers and consolidations. As of August 31, 2019 and 2018, the Company was in compliance with all covenants under the asset-backed securitization programs.

                                                    |         | Fiscal Year Ended August 31, |
--------------------------------------------------- | ------- | ---------------------------- | ------
                                                    | 2019(3) | 2018                         | 2017
Trade accounts receivable sold                      | $4,057  | $8,386                       | $8,878
Cash proceeds received(1)                           | $4,031  | $7,838                       | $8,300
Pre-tax losses on sale of receivables(2)            | $26     | $15                          | $9
Deferred purchase price receivables as of August 31 | $—      | $533                         | $569


6.3 Changes in group structure
Discontinued operations
On 21 December 2018, the Group executed a share sale agreement to sell Infochoice Pty Ltd, a wholly owned subsidiary.
At 30 June 2019, Infochoice Pty Ltd was classified as a discontinued operation. The business of Infochoice Pty Ltd represented the Group’s financial services and products comparison operating segment. With Infochoice Pty Ltd being classified as a discontinued operation, its operating results are no longer presented in the segment note. The sale of Infochoice Pty Ltd was completed on 18 February 2019. The results of Infochoice Pty Ltd for the period are presented below:

                                                      | CONSOLIDATED   |
----------------------------------------------------- | -------------- | --------------
                                                      | JUN 2019 $’000 | JUN 2018 $’000
Revenue                                               | 426            | 1,208
Expenses                                              | (1,035)        | (989)
Operating income                                      | (609)          | 219
Interest revenue                                      | 5              | 9
Impairment of other intangible assets                 | (603)          | (16,902)
Profit/(loss) before tax from discontinued operations | (1,207)        | (16,674)
Tax benefit/(expense) related to current pre-tax loss | (1,150)        | (55)
Post-tax profit/(loss) of  discontinued operations    | (2,357)        | (16,729)


Fiscal 2018 Restructuring Plan
During Fiscal 2018 and in the context of our acquisitions of Covisint, Guidance and Hightail (each defined below), we began to implement restructuring activities to streamline our operations (collectively referred to as the Fiscal 2018 Restructuring Plan). The Fiscal 2018 Restructuring Plan charges relate to workforce reductions and facility consolidations. These charges require management to make certain judgments and estimates regarding the amount and timing of restructuring charges or recoveries. Our estimated liability could change subsequent to its recognition, requiring adjustments to the expense and the liability recorded. On a quarterly basis, we conduct an evaluation of the related liabilities and expenses and revise our assumptions and estimates as appropriate.
Since the inception of the plan, approximately $10.7 million has been recorded within "Special charges (recoveries)" to date. We do not expect to incur any further significant charges relating to this plan.
A reconciliation of the beginning and ending liability for the year ended June 30, 2019 and 2018 is shown below.

Fiscal 2018 Restructuring Plan                  | Workforce reduction | Facility costs | Total
----------------------------------------------- | ------------------- | -------------- | -------
Balance payable as at June 30, 2017             | $—                  | $—             | $—
Accruals and adjustments                        | 8,511               | 1,643          | 10,154
Cash payments                                   | (8,845)             | (489)          | (9,334)
Foreign exchange and other non-cash adjustments | 892                 | 11             | 903
Balance payable as at June 30, 2018             | $558                | $1,165         | $1,723
Accruals and adjustments                        | (20)                | 535            | 515
Cash payments                                   | (337)               | (928)          | (1,265)
Foreign exchange and other non-cash adjustments | (51)                | (286)          | (337)
Balance payable as at June 30, 2019             | $150                | $486           | $636


Operating Revenues and Selected Operating Statistics
(1) Service and other revenues included in our Business segment amounted to approximately $27.9 billion and $28.1 billion for the years ended December 31, 2019 and 2018, respectively. Wireless equipment revenues included in our Business segment amounted to approximately $3.5 billion and $3.4 billion for the years ended December 31, 2019 and 2018, respectively. (2) As of end of period (3) Includes certain adjustments
Business revenues decreased $91 million, or 0.3%, during 2019 compared to 2018, primarily due to decreases in Global Enterprise and Wholesale revenues, partially offset by increases in Small and Medium Business and Public Sector and Other revenues.
Global Enterprise Global Enterprise offers services to large businesses, which are identified based on their size and volume of business with Verizon, as well as non-U.S. public sector customers. Global Enterprise revenues decreased $383 million, or 3.4%, during 2019 compared to 2018, primarily due to declines in traditional data and voice communication services as a result of competitive price pressures. These revenue decreases were partially offset by increases in wireless service revenue.
Small and Medium Business Small and Medium Business offers wireless services and equipment, tailored voice and networking products, Fios services, IP networking, advanced voice solutions, security and managed information technology services to our U.S.-based customers that do not meet the requirements to be categorized as Global Enterprise.
Small and Medium Business revenues increased $712 million, or 6.6%, during 2019 compared to 2018, primarily due to an increase in wireless postpaid service revenue of 11.7% as a result of increases in the amount of wireless retail postpaid connections.
These increases were further driven by increased wireless equipment revenue resulting from a shift to higher priced units in the mix of wireless devices sold and increases in the number of wireless devices sold, increased revenue related to our wireless device protection package, as well as increased revenue related to Fios services. These revenue increases were partially offset by revenue declines related to the loss of voice and DSL service connections.
Small and Medium Business Fios revenues totaled $915 million and increased $110 million, or 13.7%, during 2019 compared to 2018, reflecting the increase in total connections, as well as increased demand for higher broadband speeds.
Public Sector and Other Public Sector and Other offers wireless products and services as well as wireline connectivity and managed solutions to U.S. federal, state and local governments and educational institutions. These services include the business services and connectivity similar to the products and services offered by Global Enterprise, in each case, with features and pricing designed to address the needs of governments and educational institutions.
Public Sector and Other revenues increased $89 million, or 1.5%, during 2019 compared to 2018, driven by increases in networking and wireless postpaid service revenue as a result of an increase in wireless retail postpaid connections.
Wholesale Wholesale offers wireline communications services including data, voice, local dial tone and broadband services primarily to local, long distance, and wireless carriers that use our facilities to provide services to their customers. Wholesale revenues decreased $509 million, or 13.6%, during 2019 compared to 2018, primarily due to declines in core data and traditional voice services resulting from the effect of technology substitution and continuing contraction of market rates due to competition.

                                      |          |          | (dollars in millions) Increase/ (Decrease) |
------------------------------------- | -------- | -------- | ------------------------------------------ | ------
Years Ended December 31,              | 2019     | 2018     | 2019 vs. 2018                              |
Global Enterprise                     | $ 10,818 | $ 11,201 | $ (383)                                    | (3.4)%
Small and Medium Business             | 11,464   | 10,752   | 712                                        | 6.6
Public Sector and Other               | 5,922    | 5,833    | 89                                         | 1.5
Wholesale                             | 3,239    | 3,748    | (509)                                      | (13.6)
Total Operating Revenues(1)           | $ 31,443 | $ 31,534 | $ (91)                                     | (0.3)
Connections (‘000):(2)                |          |          |                                            |
Wireless retail postpaid connections  | 25,217   | 23,492   | 1,725                                      | 7.3
Fios Internet connections             | 326      | 307      | 19                                         | 6.2
Fios video connections                | 77       | 74       | 3                                          | 4.1
Broadband connections                 | 489      | 501      | (12)                                       | (2.4)
Voice connections                     | 4,959    | 5,400    | (441)                                      | (8.2)
Net Additions in Period (‘000):(3)    |          |          |                                            |
Wireless retail postpaid              | 1,391    | 1,397    | (6)                                        | (0.4)
Wireless retail postpaid phones       | 698      | 625      | 73                                         | 11.7
Churn Rate:                           |          |          |                                            |
Wireless retail postpaid              | 1.24%    | 1.19%    |                                            |
Wireless retail postpaid phones       | 0.99%    | 0.98%    |                                            |


Operational performance
A Leasing activity
We agreed 205 long-term leases in 2019, amounting to £26 million annual rent, at an average of 1 per cent above previous passing rent (like-for-like units) and in line with valuers’ assumptions. On a net effective basis (net of rent frees and incentives), rents were also 1 per cent ahead of previous rents. The upside from these new lettings added to like-for-like net rental income but was lower in magnitude than the negative impacts from administrations and CVAs and increased vacancy (see financial review on pages 30 to 37).
Our customers continue to focus on increasing their space in prime, high footfall retail and leisure destinations. Significant activity in 2019 included:
—pureplay online brands starting to open stores to increase their physical presence. Morphe, the digital native cosmetics brand, opened three of its six UK stores at intu Victoria Centre, intu Eldon Square and Manchester Arndale, and AliExpress, the consumer platform of Alibaba, opened its first store in Europe at intu Xanadú
—Harrods taking its first shopping centre store, launching a new beauty concept, H Beauty, at intu Lakeside
—a new flagship store for Zara at St David’s, Cardiff, where it is moving into the centre from the high street. This follows the recent upsizing of stores at intu Trafford Centre and intu Lakeside
—leisure brands increasing their space with Puttshack to open its fourth venue at intu Watford, following its successful opening at intu Lakeside. Namco is expanding its range of attractions at intu Metrocentre with Clip ‘n Climb and the first Angry Birds Adventure Golf in the UK and Rock Up is taking space at intu Lakeside
—international fashion brands continuing to expand in the UK with Spanish brand Mango due to open at intu Watford a
B Investment by customers
In the year, 256 units opened or refitted in our centres (2018: 262 stores), representing around 8 per cent of our 3,300 units. Our customers have invested around £125 million in these stores, which we believe is a significant demonstration of their long-term commitment to our centres.
C Rent reviews
We settled 159 rent reviews in 2019 for new rents totalling £45 million, an average uplift of 6 per cent on the previous rents.
D Occupancy
Occupancy was 94.9 per cent, in line with June 2019 (95.1 per cent), but a reduction against 31 December 2018 (96.7 per cent), impacted by units closed in the first half of 2019 from tenants who went into administration or through a CVA process in 2018. This had a 3.7 per cent negative impact on like-for-like net rental income in 2019 from both rents foregone and increased void costs.
E Weighted average unexpired lease term
The weighted average unexpired lease term was 6.3 years (31 December 2018: 7.2 years) illustrating the longevity of our income streams. The reduction against the prior year was primarily due to new lease terms on department stores that have been through a CVA or administration process.
F Footfall
Footfall in our centres increased by 0.3 per cent in the year. UK footfall was flat, significantly outperforming the Springboard footfall monitor for shopping centres which was down on average by 2.5 per cent. We believe this highlights the continued attraction of our compelling destinations against the wider market. In Spain, footfall was up by 3.5 per cent.
G Retailer sales
Estimated retailer sales in our UK centres, which totalled £5.2 billion in 2019, were down 1.6 per cent, impacted by some larger space users who have had difficulties and been through CVAs and those brands who operate successful multichannel models where in-store sales figures take no account of the benefit of the store to online sales. This compares favourably to the British Retail Consortium (BRC), where non-food retailer sales in-store were down 3.1 per cent on average in 2019.
The ratio of rents to estimated sales for standard units remained stable in 2019 at 12.0 per cent. This does not take into account the benefit to the retailer of their multichannel business, such as click and collect.
H Net promoter score
Our net promoter score, a measure of visitor satisfaction, ran consistently high throughout 2019 averaging 75, an increase of 2 over 2018. Visitor satisfaction is paramount to a shopper’s likelihood to visit, which in turn drives footfall and extended dwell time.
I Gross value of community investment
Gross value added, the measure of the economic contribution of intu to the local communities in the UK, remained stable in the year at £4.8 billion.
J Carbon emission intensity reduction
Annual reduction in carbon emission intensity has reduced in 2019. This is due to our continued focus on energy efficiency to reduce our overall energy demand each year, supported by the ongoing greening of the electricity grid as we become less reliant on coal and increase our renewable generation.
Our 2020 target was to reduce carbon emission intensity by 50 per cent, against a 2010 baseline. We reached this target three years ahead of plan and at the end of 2019, our reduction total was 69 per cent.

                                                          | Notes | 2019      | 201
--------------------------------------------------------- | ----- | --------- | --------
Leasing activity                                          | A     |           |
— number                                                  |       | 205       | 24
— new rent                                                |       | £26m      | £39m
— new rent relative to previous passing rent              |       | +1%       | +6%
Investment by customers                                   | B     | £125m     | £144m
Rental uplift on rent reviews settled                     | C     | +6%       | +7%
Occupancy (EPRA basis)                                    | D     | 94.9%     | 96.7%
— of which, occupied by tenants trading in administration |       | 2.8%      | 2.0%
Unexpired lease term                                      | E     | 6.3 years | 7.2 year
Footfall                                                  | F     | +0.3%     | –1.6%
Retailer sales                                            | G     | –1.6%     | –2.3%
Net promoter score                                        | H     | 75        | 7
Gross value added of community investment                 | I     | £4.8bn    | £4.8b
Carbon emission intensity reduction                       | J     | 15%       | 17%