Preliminary results and board changes

29 June 2021

D4t4 Solutions Plc

Preliminary Results for the year ended 31 March 2021

Revenues up 4.6% as transition to ARR model continues

 

D4t4 Solutions Plc (AIM: D4T4, "the Group", "D4t4"), the data solutions provider, announces its preliminary results for the year ended 31 March 2021.

 

Financial Highlights

 

 

Operational Highlights

 

 

Post period-end

 

Outlook

 

Pete Kear, CEO of D4t4 Solutions commented:

 

"D4t4 has performed strongly during the year, despite the difficult circumstances, growing revenues by 4.6% whilst also making significant progress in the transition to more visible and better quality earnings, with our key ARR metric advancing 11% in the year.

 

Throughout FY21 we have continued to innovate; the recent addition of the Fraud Data Platform to the Celebrus product family provides access to a growing $18 billion risk and fraud market and demonstrates the strength of our creative and technical talent. We have also grown geographically, deepened our existing relationships with strategic partners and developed a robust pipeline of new business as demand for enterprises' digital transformation increases.

 

We have entered the new financial year in a strong position after a record second half and are well positioned for continued delivery in the year ahead."

 

Enquiries

 

D4t4 Solutions Plc Peter Kear, Chief Executive Officer Bill Bruno, Deputy Chief Executive Officer Nitil Patel, Interim Chief Financial Officer	+44 (0) 1932 893333 [email protected]
finnCap (Nominated Adviser & Joint Broker) Julian Blunt / Edward Whiley, Corporate Finance Alice Lane, ECM	+44 (0) 20 7220 0500
Canaccord Genuity (Joint Broker) Simon Bridges / Andrew Potts	+44 (0) 20 7523 8000
Instinctif Partners Rozi Morris / Hannah Campbell	+44 (0) 20 7457 2020 [email protected]

 

About D4t4 Solutions plc

 

D4t4 Solutions plc (www.d4t4solutions.com) provides data solutions through its Celebrus suite of products and services, which is comprised of two distinct complementary offerings - its proprietary Customer Data Platform (CDP), Customer Data Management (CDM) solution, and the newly launched Fraud Data Platform (FDP). The Celebrus family of products offer data capture, data migration, data synchronisation, data management and data monitoring.

 

Celebrus CDP is an enterprise software product which captures customer behaviour in real time across all digital channels to enable a range of applications including identity, customer analytics, personalised marketing, data science, and advertising.

 

Celebrus CDM is an integrated platform that automates the ingestion, integration, transformation, and delivery of customer data from streaming, persisted or historical sources, whether as an appliance on-premises or in the cloud, to deliver real-time, unified, and trusted multidimensional views of customer data for personalisation, risk, fraud, analytics, and recommendation applications.

 

Celebrus FDP provides a single source of truth for digital data across all devices to allow organizations to catch the fraudster before the fraud. Backed by behavioural biometrics and analytics, combined with the industry's most complete first-party solution to digital identity, the Celebrus FDP protects business and their customers from the growing threat of digital fraud around the globe in partnership with leading fraud management solutions.

 

The Group has offices in the UK, USA, India and Australia with employees across the UK, US, Europe, India and Australia.  D4t4's blue chip global customers are largely within the financial services, retail and consumer sectors.

 

Celebrus, the company's flagship first-party product suite, is fully compliant with all major data privacy regulations and the Group is accredited to ISO27001: Information Security Management

 

Chairman's statement

 

Despite the unprecedented and challenging circumstances of the last year, I am pleased to report that D4t4 Solutions has continued to deliver on its strategic objectives - increasing revenues from our   Celebrus family of software products and continuing the transition to an Annual Recurring Revenue model (ARR). This has led to increased revenue visibility and better-quality earnings.

 

We have continued to invest in our existing   Celebrus Customer Data Platform (CDP) and following positive market soundings invested in the development of the Celebrus Fraud Data Platform (FDP) which has been launched in June 2021.

 

Our geographic expansion has continued, and we have expanded and deepened our partner relationships in existing and different verticals. I am very pleased with the progress made and can confidently confirm the year has been a strong one for    D4t4, building the foundations for further growth.

 

D4t4's financial performance in the year was ahead of our expectations, reflecting the strength of our product offering and partner relationships, as well as the fundamental shift of businesses online and the essential   part we play in that digital transformation. However, the global pandemic situation inevitably forced some customers to focus on internal challenges, resulting in some client projects and new initiatives being paused or slowed. This had a modest impact on top line growth in 2020/21.

 

We enter the new financial year with positive market tailwinds and continue to   proactively develop our product offering so to empower clients to maximise the value gained from their customer data, with the objective of delivering major uplifts in terms of their revenue and profitability.

 

Our position

 

During the year, global events have increased the speed at which companies have transitioned their businesses online and the volume of data that is now being produced. Enterprises are increasingly focused on improving and differentiating their customer experience in a crowded marketplace. The expectations and sophistication of successful businesses is creating increased demands for products which capture customer experience in real time across a wide variety of platforms. This is resulting in a real opportunity, as our products provide that real time data to enable and improve these experiences in a   relevant, compliant and personalised way.

 

This unique real time capability, along with   global digital transformation is helping  us to drive our reach into new sectors and verticals. Customers and partners are finding that our capabilities can provide vital functionality beyond our traditional core focus of financial services and into the retail, automotive, telecoms and healthcare sectors.

 

It is our strong partner relationships and customer-led approach that have driven our innovation in R&D. New releases of Celebrus CDP have provided key solutions for clients such as seamless integration with other software, natural language and machine learning capabilities and  reductions in data storage costs.

 

Research into other markets where real time, highly granular client interaction would be value enhancing has led us to invest in a new fraud detection and identity verification tool. This product has been launched, post period end. Known as Celebrus FDP, this product is built on the foundations of the Celebrus CDP and represents a completely new vertical for us. This product has a huge addressable market and is the result of nearly two years of design, development and testing.

 

Although the addressable market for the Celebrus FDP is incremental with client spend often controlled by a different budget holder to the rest of the Celebrus offering, its core focus is Financial Services where we already have strong customer references and a strong following. This, combined with the   underlying similarities in code with the already successful Celebrus CDP product,   gives me a high level of confidence that the FDP opportunity represents a high value, low risk business opportunity worthy of significant investment to build a parallel and highly complementary Annual Recurring Revenue stream.

 

Geographic expansion has also been an important driver. During the year we      opened a new APAC office in Sydney, Australia and have added to our operations in Cary, US and Chennai, India.

 

Global pandemic

 

On behalf of the Board, I would like to say how grateful I am to our leadership team and staff across the world for their commitment to the business and the way    they have responded to the challenges of    the pandemic.

 

Despite having to close our offices at short   notice, our staff have been able to work from home with little interruption and have maintained the highest levels of customer service. Following the lockdowns across the world, the Board reviewed the impact on all roles across the business. Although a few roles were not required during the office closures, the Group did not use taxpayer funded furlough schemes in any geographies.

 

Whilst we are a technology driven company, we are also a people led business and innovation is driven from personal interaction across the firm and with customers, so we look forward to returning to a more hybrid working model.  We envisage this as a combination of home and office working, whilst optimising opportunities for creative interaction, communication and efficient working.

 

Board changes

 

In January 2021, John Lythall announced his intention to retire as a Non-Executive   Director at the end

of March 2021.  Formerly CEO of D4t4 until he stepped down in 2016, John co-founded the business along with Peter Kear and has been instrumental in the Group's development. We wish him the very best    for his retirement.

 

In February 2021, Charles Irvine, CFO, announced his decision to leave the Group to pursue another opportunity outside of the public markets. Charles has   been replaced by interim CFO Nitil Patel and the search for a permanent CFO is ongoing.

 

After the period end, in April 2021, Peter Kear, CEO, announced his plans to retire by June 2022. Peter's energy, leadership skills and strength of personality have been critical to the success of D4t4 since he co-founded the Group back in 1985 and   became CEO in 2016. On behalf of the entire Board, I would like to thank Peter for   all his contributions to the business and would like to say a personal thank you for the professional manner in which he has handled the process and contributed pro- actively to the search for his successor.

 

Following an extensive search process led by Monika Biddulph, Chair of the Nominations  Committee, I am delighted that Peter will be replaced by Bill Bruno, previously Vice President of D4t4's US business. I am confident that following a well-managed handover the business will continue to thrive and develop a host of new global opportunities under Bill's leadership.

 

Prior to joining D4t4 in 2018, Bill was CEO of Stratigent between 2009-2013 until it was acquired by Ebiquity. He then served as Ebiquity's CEO (North America) until 2018. Bill's wealth of industry knowledge and excellent track record in the digital data market and in growing an international digital media, analytics and intelligence business will be of great  benefit to D4t4 as it moves into the next  phase of its development.

 

Additionally, we are intending to create a new Group Operations Board below the main D4t4 Board which will consist of Jim Dodkins (CTO), Mark Boxall (COO) and a number of our existing senior managers; accordingly, Jim and Mark will both step down from the D4t4 Board on the 30th of June 2021 to lead the formation of the Group Operations Board.  This will enable them to focus entirely on the execution and delivery of Group strategy.

 

I would personally like to take this opportunity to thank Jim and Mark for all their hard work and support and I know that they will ensure the success of the new management structure.

 

This gives the opportunity to streamline the main D4t4 Board to allow increased focus on corporate governance, group strategy formulation as well as investor and wider stakeholder relations. From the 1st of July 2021 the Board of D4t4 will consist of the Chief Executive Officer, the Non-Executive Chairman, two Non-Executive Directors and (upon making a permanent appointment) the Chief Financial Officer.

 

Dividend

 

Notwithstanding the global pandemic, the Board has maintained dividend payments during FY21 reflecting the financial strength of the Group, its significant liquidity position and the Board's longer term confidence in the performance of the business.

 

The Board recognises the importance of returns to shareholders so we are delighted today to be recommending the payment of a final dividend, subject to shareholder approval at the 2021 AGM, of 2.0p per share (2020: 1.9p).  The final dividend is expected to be paid on 17 September 2021 to shareholders on the register as at the close of business on 13 August 2021.

 

The Board expects to maintain a dividend payment in line with adjusted profit before tax and cash generation metrics, though always subject to the constant assessment of the impact of the global pandemic on the Group.

 

Outlook

 

Despite the obvious challenges of the pandemic the business has continued to thrive over the last year as evidenced by our financial and operational performance, proving that our robust strategy continues to deliver. Our high level of customer retention, excellent customer references and increasing recurring revenue visibility  position the Group well.

 

We enter FY22 in a solid financial position, with high profit margins, a strong cash position with no debt and a well proven business model.  Trading during the new financial year has been in line with the Board's expectations with strong    levels of both existing and new client activity.

 

The Board is excited about the growth opportunity represented by the new FDP product and has now launched a comprehensive program to market the product and build the associated team to ensure a successful global launch during FY22. Whilst FDP is only expected to drive modest initial recurring revenues this year customer and partner interest levels are already encouraging, with several currently using and evaluating the technology.

 

The Board remains highly confident in the Group's strategy; our underlying business is delivering against our key KPI's  and performing well, and D4t4 is well positioned in its key markets. The current revenue visibility, order book and pipeline of  opportunities all bode well for the future.

 

Peter Simmonds

Chairman

29 June 2021

 

Chief Executive Officer's statement

 

The year to 31 March 2021 was one of good progress for D4t4, despite the impact of the global pandemic. After a slightly slower start to the year while customers got used to the "new normal" way of conducting business remotely, our customers accelerated their efforts to affect their digital business transformations, with an industry report (Dynatrace) suggesting digital transformation accelerated by 89% in the last 12 months, with further momentum expected.

 

The Group delivered revenue and adjusted profit before tax of £22.8 million and £4.5 million respectively, ahead of the Board's prior expectations and with significant progress on our strategy of migrating towards an ARR model. ARR increased by 11% year on year to £10.6 million (2020: £9.55 million), providing more revenue visibility and better quality earnings. Statutory profit before tax was £3.0 million which was in line with expectations.

 

We are proud to have achieved this without any assistance from government schemes, with no staff furloughed and whilst continuing to pay all relevant taxes.

 

With the emphasis on businesses' online offerings growing hugely due to the global pandemic, we saw strong demand for our Celebrus family of products. Being able to optimise a customer's online experience and harness the data generated in real time have become ever more important as our clients seek to differentiate themselves and their digital offering in a crowded marketplace.

 

This demand resulted in a healthy sales pipeline, with new contract wins in the healthcare and telecoms sectors broadening our customer base beyond our traditional financial and consumer markets.

 

Constantly innovating, we have continued to invest in the development of our products and were proud to launch both Celebrus CDP 9.2 and 9.3 versions during the year. These included newly embedded machine learning and natural language processing capabilities as well as cloud connectivity, reducing data storage costs for clients.

 

This drive for innovation and the current emphasis on the importance of identity, privacy and data protection has led to the development of our new Celebrus Fraud Data Platform (FDP) which was launched post period-end, taking D4t4 into an exciting new area of fraud prevention and security, along with its associated verticals.

 

Strategy and position

 

We have delivered real progress on our aim to transition towards a predominantly ARR model which has had a positive impact on the visibility and stability of our revenue. The shift is being driven by new product innovations and uptake, although the pace is ultimately driven by customer requirements.

 

We are progressing on our strategy of growing product revenues within our Celebrus family of products. This has been enabled by broadening our offering to target additional verticals such as healthcare, retail, telecoms, automotive and travel, as well as developing innovative capabilities in new versions of our Celebrus CDP software.

 

Global Reach

 

We have focused on international expansion during the year, establishing a presence in APAC, as well as investing in our operations in the US and India, which will all be key drivers going forward.

With customers extending the use of our products into additional territories, our software is now used in 27 countries around the globe.

 

Sales overview

 

During the year, we saw new international sales wins from customers across Europe, the US, Asia and the Middle East.

 

These were not only in our core areas of financial services, but also included the automotive, online retail and telecoms sectors. The majority of these contracts are on an ARR basis, helping to drive our ARR transition. Existing clients were also key customers over the year, often adding geographical expansions and additional capabilities to current contracts.

 

Revenue for the year grew by 4.6% to £22.8 million (2020: £21.8 million) with adjusted profit before tax of £4.5 million (2020: £5.0 million).  Sales of our Celebrus product family of software and services now make up 81% of total company revenue (2020: 80%). As a result of the improved quality of revenues, gross margins also improved to 62.4% (2020: 60.7%).

 

We closed the year with £14.2 million in cash up 11% on last year's £12.8 million, and due to the successful fourth quarter, we ended the year with £10.2 million in debtors, which is expected to unwind by the next reporting date.

 

As we invest behind our newly launched Celebrus FDP fraud product, we expect an increase in operating expenditure as we recruit specialists in this new sector and increase our marketing spend for our new product family.

 

Partnerships

 

Our strategic industry partnerships continue to be a focus for future growth and providing geographical reach and business diversity beyond our own core verticals and territories. During the year we have strengthened relationships with key partners including Teradata, Pegasystems, SAS and Dell, working together to innovate and to ensure seamless product integration.

 

This resulted in the development and launch of a joint innovation with Teradata in April 2020. Celebrus CDP's real time capabilities were integrated with Teradata's Vantage CX software, enabling it to provide customer behaviour data instantly from across all digital channels to create personalised and optimised customer experiences, at scale.

 

Post period-end, D4t4 also launched a key joint update with Pegasystems to its Pega Customer Profile Designer platform, integrating Celebrus CDP to generate complete, compliant, individual-level digital behaviour data, enabling enterprises to create relevant, contextualised offers and messaging in real-time, for every customer.

 

Channel partner sales contribute a major proportion of our revenues, so working closely with our partner base to provide solutions driven by customer need is a priority. Further collaborations with our strategic partners are underway and are expected to continue to provide valuable product innovations and updates in the short to medium term.

 

Markets and opportunities

 

The benefits of this partner focus are demonstrated by the new opportunities that arise - we are being introduced to different user groups within partners and customers which want to use the depth and quality of our data in new ways. One particular area has been in risk and fraud, which has driven both the development of our new Celebrus FDP software and the requirement for new strategic partnerships to exploit the use of our software and data in those areas.

 

Technology platform leadership

 

The evolution of our Celebrus CDP software has continued during the year and we are proud that it remains the leading real time, multi-channel digital data collection platform, used by many of the world's largest financial services and consumer organisations.

 

This drive for excellence and innovation has resulted in the launch of our completely new capability, the Celebrus Fraud Data Platform (FDP).

 

Using automated behavioural biometrics to eliminate fraud around the three core fraud use cases of Account Opening, Account Takeover and Payment Processing, FDP is able to identify potentially fraudulent signals in real-time so as to pre-empt occurrence, enabling enterprises to improve their fraud management processes, avoid losses, reduce reputational damage and help with identification of fraudsters even before a fraud has taken place.

 

FDP helps businesses protect their customers through:

The launch will incur additional expenditure in the current financial year as the new product will be supported by a new specialist fraud team which is being recruited and we will also be supplementing our installed base customer success team with a number of new hires around the globe.

 

New board structure

 

As previously announced, I will be retiring by the end of June 2022 with Bill Bruno (currently Deputy CEO) assuming the CEO role in due course.  Bill and I are currently working closely together to ensure an orderly transition over the coming months, and I will continue to support him after the formal handover through to 30 June 2022.

 

Additionally, we are intending to create a new Group Operations Board below the main D4t4 Board which will consist of Jim Dodkins (CTO), Mark Boxall (COO) and a number of our existing senior managers; accordingly, Jim and Mark will both step down from the D4t4 Board on the 30th of June 2021 to lead the formation of the Group Operations Board.  This will enable them to focus entirely on the execution and delivery of Group strategy.

 

I would personally like to take this opportunity to thank Jim and Mark for all their hard work and support during the last six years while I have been CEO and I know that they will ensure the success of the new management structure.

 

This gives the opportunity to streamline the main D4t4 Board to allow increased focus on corporate governance, group strategy formulation as well as investor and wider stakeholder relations. From the 1st of July 2021 the Board of D4t4 will consist of the Chief Executive Officer, the Non-Executive Chairman, two Non-Executive Directors and (upon making a permanent appointment) the Chief Financial Officer.

 

Looking forward

 

D4t4 has performed well during a challenging year. Our strategic focus continues to pay off with good growth in the business and significant progress in the transition to ARR. We continue to lead in our technology segment, through innovation and through customer and partner led development.

 

We are expanding geographically and are working to develop new partner relationships in different verticals.

 

As demonstrated by the number new product launches alongside digital transformation tailwinds, we have entered the current financial year with strong momentum. With the launch of our new fraud offering, and with our improved revenue visibility, order book and pipeline, we are optimistic about the year ahead.

 

Peter Kear

Chief Executive Officer

29 June 2021

 

Chief Financial Officer Report

 

Income statement

 

Revenue

 

The Group achieved continuing operations revenue growth of 4.6% despite the impact of the global pandemic to working practices. Revenue was £22.8 million (2020: £21.8 million). The quality of the revenue growth is evidenced by increased Annual Recurring Revenues (ARR) of 11.0% to £10.6 million (2020: £9.55 million).

 

The Group maintained its international growth with non-UK revenues accounting for 87% of the total revenue for the year (2020: 81%).

 

As the Group continues the migration to ARR, emphasis on CDP and CDM continues. As the new Celebrus Fraud Data Platform (FDP) product gains traction we expect it to achieve the same prominence, especially to new clients and/or partners. Sales of the Celebrus product family of software and services now make up 81% of total Group revenue (2020: 80%).

 

Gross margin

 

The gross margin for continuing operations was 62.4% (2020: 60.7%). The increase in gross margin comes from the growth in revenue from CDP sales. The Group continues to see value in both the direct and indirect models of selling and hence will continue to invest in building long term ARR.

 

Operating expenses

 

Adjusted operating profit before tax from continuing operations decreased by 11.8% from £5.1 million to £4.5 million. Operating expenses as a percentage of revenues moved from 38% to 49%. The main cost categories were increased employment costs, share based payments and foreign exchange expenses in the year.

 

The administration expenses increase relates to additional staff, salaries, bonuses and one-off FDP associated expenses (£1.2 million), foreign exchange charge in the year (£0.7 million) plus a comparative year on year movement from a foreign exchange credit of £0.4 million, share based payments (£0.2 million), director remuneration (£0.2m) and other costs (£0.2 million). This has resulted in an increase of £2.9m to £11.2 million for the year (2020: £8.3 million).

 

The addition of new staff and the retention, motivation and reward for success of our existing employees are critical for the Group and these additional expenses reflect these aims and the current employment environment. This and the additional costs associated with the development of our new FDP platform contributed to the extra administration expenses. Further, the foreign exchange expense is a consequence of the appreciation of the pound against dollar denominated contracts, which the Group will look to manage going forward, utilising forward foreign exchange contracts.

 

Taxation

 

Profitability in the year was lower than last year and as a consequence the tax liability decreased to £0.3 million (2020: £0.5 million). With an effective tax rate of 9%, the Group continues to utilise R&D and Patent Box tax credits. In addition, the Group benefited from the tax impact of share options being exercised in the year.

 

Earnings per share

 

Basic EPS for the year was 6.88p (2020: 11.12p) and diluted basic EPS was 6.75p (2020: 11.04p). The basic figure has been calculated using the weighted average number of shares in issue being 40,235,856 (2020: 39,976,957) and the diluted figure using 41,007,252 (2020: 40,276,951).

 

Adjusted basic EPS was 9.70p (2020: 11.28p) and adjusted diluted EPS was 9.52p (2020: 11.19p) following adjustments for amortisation, share based payments, exceptional items, foreign exchange expense and tax on these adjustments as set out in note 5 below.

 

Dividend

 

The Board is today proposing a final dividend, subject to shareholder approval at the 2021 AGM, of 2.0p per share (2020: 1.9p).  The final dividend is expected to be paid on 17 September 2021 to shareholders on the register as at the close of business on 13 August 2021.

 

Financial Position

 

Intangibles

 

Goodwill of £8.7 million (2020: £8.7 million) results from the acquisition of Celebrus (Speed- Trap) in 2015 with the net balance of £0.87 million (2020: £0.96 million) of other intangibles representing purchased IPR, trade name and capitalised development costs. The Group expenses the majority of its R&D costs and capitalised £0.2 million in the year (2020: £0.2 million).

 

Right of use Assets

 

The Group has applied IFRS 16 Leases for the year commencing 1 April 2020 as it was immaterial for the previous financial year.

 

The Group has applied the modified approach from 1 April 2020 but has not restated comparatives for the year ended 31 March 2020 as permitted under the specific transitional provisions in the standard. The net asset value at year end was £0.26 million (2020: £nil).

 

Working capital

 

The Group had strong cash management in the year with net cash generated from continuing operations of £3.3 million (2020: £2.4 million) an increase of 37.5%. The cash balance at the year end was £14.2 million (2020: £12.8 million).

 

The Group continues to be debt free and maintains a robust financial position following a full year of the global pandemic and with no recourse to any government support schemes. Investing activities increased in the year from £0.2 million to £1.7 million reflecting cash outflow on dividends paid and net purchase of own shares in the year.

 

Trade receivables have grown by 27.5% in the year to £10.2 million (2020: £8.0 million), reflecting revenue growth and timing differences at year end in relation to an outstanding debt received after the year end. Overall receivables have grown 31.9% due to the increases mentioned earlier and accrued income of £2.7 million (2020: £1.5 million). Inventories fell significantly to £0.1 million (2020: £1.3 million) as the Group delivered goods before the year end.

 

Trade payables and accruals decreased in the year to £4.1 million (2020: £4.8 million) as the Group continues to pay its suppliers on due dates. Deferred income increased significantly by 53.6% to £6.3 million (2020: £4.1 million) reflecting growth in ARR.

 

Purchase of own shares

 

During the year, the Group increased shares held in Treasury to 191,498 (2020: 159,133).

 

Equity

 

The principal increase in the year was retained earnings growing by £1.7 million to £20 million (2020: £18.3 million). As at 31 March 2021 the Group had £30.9 million (2020: £29.3 million) attributable to the shareholders of the company.

 

Total Assets

 

The Group ended the year with total assets of £41.9 million (2020: £38.9 million) an increase of £3 million.

 

 

Nitil Patel

Interim Chief Financial Officer

29 June 2021

 

 

Consolidated income statement for the year ended 31 March 2021
										2021					2020
										£'000					£'000
Continuing operations
	Revenue									22,792					21,748
	Cost of sales									(8,566)					(8,537)
Gross Profit										14,226					13,211
	Administration expenses									(11,234)					(8,343)
	Other operating income									58					58
Profit from operations										3,050					4,926
	Finance income									25					43
	Financing									(32)					-
Profit before tax										3,043					4,969
	Tax									(274)					(522)
Attributable to equity holders of the parent										2,769					4,447
Earnings per share from continuing operations attributable to the equity holders of the parent
Statutory
	Basic									6.88p					11.12p
	Diluted									6.75p					11.04p
Consolidated statement of comprehensive income for the year ended 31 March 2021
										2021					2020
										£'000					£'000
Attributable to equity holders of the parent										2,769					4,447
Other comprehensive income:
Items that will not be reclassified to profit or loss
	Gains on property revaluation									70					71
	Exchange differences on translation of foreign operations									61					24
Total comprehensive income for the year attributable
to equity holders of the parent										2,900					4,542
Consolidated statement of changes in equity attributable to Equity Holders of the Parent for the year ended 31 March 2021

 

	Share capital	Share premium	Merger reserve	Revaluation reserve	Own shares	Equity reserve	Retained earnings	Total £'000
Balance at 1 April 2019	794	2,624	5,977	1,099	(1,127)	10	15,463	24,840
Dividends paid	-	-	-	-	-	-	(1,235)	(1,235)
Purchase of own shares	-	-	-	-	(69)	-	-	(69)
Issue of new shares - exercise of share options	14	741	-	-	-	-	-	755
Settlement of share-based payments	-	-	4	-	856	(3)	(516)	341
Share-based payment charge	-	-	-	-	-	-	97	97
Deferred tax on outstanding share options	-	-	-	-	-	(7)	-	(7)
Transactions with equity holders	14	741	4	-	787	(10)	(1,654)	(118)
Profit for the year	-	-	-	-	-	-	4,447	4,447
Other comprehensive income	-	-	-	71	-	-	24	95
Total comprehensive income	-	-	-	71	-	-	4,471	4,542
Balance at 1 April 2020	808	3,365	5,981	1,170	(340)	-	18,280	29,264
Dividends paid	-	-	-	-	-	-	(1,090)	(1,090)
Purchase of own shares	-	-	-	-	(868)	-	-	(868)
Settlement of share-based payments	-	-	-	-	666	-	(262)	404
Share-based payment charge	-	-	-	-	-	-	276	276
Transactions with equity holders	-	-	-	-	(202)	-	(1,076)	(1,278)
Profit for the year	-	-	-	-	-	-	2,769	2,769
Other comprehensive income	-	-	-	70	-	-	61	131
Total comprehensive income	-	-	-	70	-	-	2,830	2,900
Balance at 31 March 2021	808	3,365	5,981	1,240	(542)	-	20,034	30,886

 

 

 

Consolidated statement of financial position as at 31 March 2021
			2021			2020
			£'000			£'000
Non-current assets
	Goodwill		8,696			8,696
	Other intangible assets		872			956
	Property, plant and equipment		4,141			4,099
	Deferred tax assets		-			283
			13,709			14,034
Current assets
	Trade and other receivables		13,362			10,137
	Tax receivables		414			649
	Inventories		129			1,266
	Cash and cash equivalents		14,241			12,772
Total Current Assets			28,146			24,824
Total assets			41,855			38,858
Equity
	Share capital		808			808
	Share premium account		3,365			3,365
	Merger reserve		5,981			5,981
	Revaluation reserve		1,240			1,170
	Own shares		(542)			(340)
	Retained earnings		20,034			18,280
Total equity			30,886			29,264
Current liabilities
	Trade and other payables		10,691			9,377
	Tax liabilities		-			-
	Lease obligations		83			-
			10,774			9,377
Non-current liabilities
	Lease obligations		194			-
	Deferred tax liabilities		1			217
			195			217
Total liabilities			10,969			9,594
Total equity and liabilities			41,855			38,858

 

 

 

Consolidated cash flow statement for the year ended 31 March 2021
			2021		2020
			£'000		£'000
Cash generated from operations			3,258		3,116
	Taxes received / (paid)		80		(738)
Net cash generated from operating activities			3,338		2,378
Investing activities
	Interest received		25		43
	Purchase of property, plant and equipment		(34)		(249)
	Capitalisation of development costs		(195)		(188)
Net cash used in investing activities			(204)		(394)
Financing activities
	Dividends paid		(1,090)		(1,235)
	Lease repayments		(79)		-
	Interest paid		(32)		-
	Purchase of own shares		(868)		(69)
	Exercise of share options		404		1,096
Net cash used in financing activities			(1,665)		(208)
Net increase in cash and cash equivalents			1,469		1,776
	Cash and cash equivalents at start of year		12,772		10,996
Cash and cash equivalents at end of year			14,241		12,772

 

 

 

Notes to the financial statements

 

1.         General information

 

D4t4 Solutions plc is a public limited company incorporated and domiciled in England and Wales and quoted on the AIM Market, hence there is no ultimate controlling party.

 

2.         Significant accounting policies

 

Basis of preparation

 

The financial statements have been prepared in accordance with International Accounting Standards adopted by the Companies Act 2006 applicable to companies reporting under International Accounting Standards.

 

The financial statements have been prepared under the historical cost convention, with the exception of land and buildings which is held at valuation.

 

The presentation and functional currency of the financial statements is British Pounds and amounts are rounded to the nearest thousand pounds.

 

The financial information contained in this preliminary announcement does not constitute the Group's statutory accounts for the year ended 31 March 2021. The statutory accounts for the year ended 31 March 2021 will be filed with the Registrar of Companies in due course.  The 2021 annual report will be made available on the Company's website for the purposes of the AIM Rules for Companies; a further announcement to this effect will be made at the relevant date, expected to be later in July 2021.

 

The auditors' report on the Annual Report and Financial Statements for the year ended 31 March 2020 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

 

Going concern

 

The Group and Company have sufficient financial resources to cover budgeted future cashflows, together with contracts with a number of customers and suppliers across different geographic areas and industries. As a consequence, the Directors believe that the Group and Company are well placed to manage their business risks successfully.

 

Having reviewed the impact of the global pandemic on the business, and stress-tested the Group's future plans and cash flow projections, the Directors are confident that the Group and Company have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

 

3.          Business and geographical segments

 

IFRS 8 Operating Segments requires these to be identified on the basis of internal reports about components of the Group that are      regularly reviewed by the chief operating decision maker to allocate resources to the segments and assess their performance.

 

The Group has four tightly integrated service lines that are offered  to clients. These service lines combine one or more of four types of revenue to deliver on our core services

 

Information is presented to the Board on the revenue analysis  below:

 

 

All revenue streams are recognised on a point in time basis apart  from Support and maintenance which is recognised over time.

 

No allocation of other income and costs to these categories is made because the Directors consider that any such allocation  would be arbitrary and contract sensitive, as would be any allocation of assets and liabilities.

 

The segmental reporting set out below is consistent with that  provided to the Board of Directors.

 

The segmental reporting analysis is as follows:

 

Continuing operations 2021						Group
						2021		2020
						£'000		£'000
	Products - Own IP					9,005		7,658
	Products - 3rd party					4,403		4,362
	Delivery services					2,886		3,629
	Support & Maintenance					6,498		6,099
	Revenue					22,792		21,748
	Cost of sales					(8,566)		(8,537)
	Gross profit					14,226		13,211
	Other operating costs and income					(11,176)		(8,285)
	Investing and financing activities					(7)		43
	Profit before tax					3,043		4,969

 

 

Major customers (partners) over 10% of revenue			2021		2020
			£'000	£'000	£'000	£'000
			Customer 1	Customer 2	Customer 1	Customer 2
Products - Own IP			3,682	1,154	3,855	1,363
Products - 3rd party			3,775	-	3,401	-
Delivery services			769	-	1,515	2
Support & Maintenance			2,764	1,663	2,616	1,767
Total Revenue			10,990	2,817	11,387	3,132

 

 

 

Geographical information
				Group
				2021		2020
				£'000		£'000
	United Kingdom			2,983		4,158
	Rest of Europe			2,396		3,162
	United States of America			16,699		13,327
	Others			714		1,101
				22,792		21,748
The geographical revenue segment is determined by the domicile of the external customer.

4       Dividends
						2021		2019
						£'000		£'000
Amounts recognised as distributions to equity holders
	Final dividend for the year ended 31 March 2020 of 1.9p (for the year ended 31 March 2019: 2.3p) per share					765		925
	Interim dividend for the year ended 31 March 2021 of 0.81p (31 March 2020: 0.77p) per share					325		310
						1,090		1,235
Proposed final dividend for the year ended 31 March 2021 of 2.0p
The proposed final dividend is subject to shareholders' approval at the AGM and has not been included as a liability in these financial statements.

 

 

5     Earnings per share
The calculation of earnings per share is based on profit attributable to owners of the parent and the weighted average number of ordinary shares in issue during the year.
The adjusted earnings per share figures have been calculated based on earnings before adjusted items. These have been presented to provide shareholders with an additional measure of the Group's year-on-year performance.
Details of the adjusted earnings per share are set out below:

 

 

					2021		2020
					£'000		£'000
Profit attributable to owners of the parent					2,769		4,447
Amortisation of intangible assets (see note 7)					279		246
Share-based payment					318		97
Net foreign exchange differences					746		(362)
Restructuring costs					58		96
Tax on the adjustments					(266)		(15)
Adjusted profit attributable to owners of the parent					3,904		4,509
					2021 No.		2020 No.
Basic weighted average number of shares, excluding own shares, in issue					40,235,856		39,976,957
Dilutive effect of share options					771,396		299,994
Diluted weighted average number of shares, excluding own shares, in issue					41,007,252		40,276,951
					2021		2020
					Pence per share		Pence per share
Basic Earnings per share					6.88		11.12
Diluted Earnings per share					6.75		11.04
Adjusted Basic Earnings per share					9.70		11.28
Adjusted Diluted Earnings per share					9.52		11.19

 

 

 

6        Goodwill
						Group
Cost of goodwill						£'000
	Balance at 1 April 2019, 31 March 2020 and 31 March 2021					10,952
Accumulated impairment charges
	Balance at 1 April 2019, 31 March 2020 and 31 March 2021					2,256
Carrying amount at year end						8,696
Allocation of goodwill (Group and Company)						Speed-Trap
	Balance at 1 April 2019 and 31 March 2020			100	918	8,696
	Balance at 31 March 2021					8,696
Goodwill acquired in a business combination is allocated at acquisition to the cash-generating units (CGUs) that are expected to benefit from that business combination.
Goodwill is not amortised but tested annually for impairment with the recoverable amount being determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rate, growth rates, pre-tax cash flow and forecasts of income and costs.
The Group assessed whether the carrying value of goodwill was supported by the discounted cash flow forecasts of the Group based on financial forecasts approved by management covering a one-year period, taking into account both past performance and expectations for future market developments.
Management estimates the discount rate using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to each separate business unit if applicable. The impairment charge was £nil (2020: £nil). The recoverable amount of the CGU is determined from value in use calculations.
Key assumptions used for the value-in-use calculations
Value in use was determined by discounting future cash flows generated from the continuing use of the titles and was based on the following most sensitive assumptions:
·       cash flows for 2021/22 were projected based on the forecast for 2021/22, using the budget as a base and sensitising in light of the current environment;
·       forecasts based on current customer contracts and gross margins being achieved;
·       cash flows for year ending 31 March 2022 were projected based on the Group forecast for that year based on the current economic environment in respect of the global pandemic. For years ending 31 March 2023 onwards, cash flows were prepared using underlying growth rates of 2% based on a conservative view;
·       cash flows were discounted using the CGU's pre-tax discount rate of 11.6% (2020: 15%).
Based on the above sensitivity assumptions the calculations disclosed headroom against the carrying value of goodwill for the CGU. Management carried out several sensitivity scenarios on the data. These were based on best estimates under the current economic environment created by the global pandemic.
Sensitivity to changes in assumptions
The margins achieved are based on actual margins, the forecast revenues are based on budget for the current year and an ongoing 2% growth rate. The discount rate is considered to be the variable with the maximum impact. Varying this by 20% would still allow the recoverable amount to exceed the carrying value. Therefore, management is confident in the assumptions used. Management has considered the growth rates used in light of the global pandemic and remains confident that they are reasonable.
Management are satisfied that a reasonable change in the key assumptions used in assessing the recoverable amounts of the cash generating unit would not give rise to the recoverable amount exceeding the carrying value.
7     Other intangible assets
			Development Costs	Internally generated IPR	Purchased IPR	Trade name			Total
Group and company			£'000	£'000	£'000	£'000			£'000
Cost
	Balance at 1 April 2019		-	56	1,858	142			2,056
	Balance at 1 April 2019		-	56	1,858	142			2,056
	Additions		188						188
	Balance at 1 April 2020		188	56	1,858	142			2,244
	Additions		195	-	-	-			195
	Balance at 31 March 2021		383	56	1,858	142			2,439
Accumulated amortisation
	Balance at 1 April 2019		-	56	929	57			1,042
	Amortisation		-	-	232	14			246
	Balance at 1 April 2020		-	56	1,161	71			1,288
	Amortisation		33	-	232	14			279
	Balance at 31 March 2021		33	56	1,393	85			1,567
Carrying amount
	Balance at 1 April 2019		-	-	929	85			1,014
	Balance at 31 March 2020		188	-	697	71			956
	Balance at 31 March 2021		350	-	465	57			872
The amortisation charge for the year is booked to administration expenses.
Development Costs are amortised over 8 years.
The remaining amortisation period for the Purchased IPR is 2 years (2020: 3 years) and for the Trade name is 4 years (2020: 5 years).

 

 

 

8.   Trade and other receivables
								2021	2020
								£'000	£'000
	Trade receivables							10,165	7,970
	Other debtors							48	66
	Prepayments							595	567
	Accrued Income							2,554	1,534
								13,362	10,137
9.   Trade and other payables
								2021	2020
								£'000	£'000
	Trade payables							1,450	3,403
	Other taxes and social security							274	531
	Other creditors							36	22
	Accruals							2,643	1,364
	Deferred income							6,288	4,057
								10,691	9,377

 

10.     Group reconciliation of profit before corporation tax to cash generated from operations
		2021		2020
		£'000		£'000
Operating activities
	Profit before tax	3,043		4,969
Adjustments for:
	Depreciation of property, plant and equipment	395		327
	Amortisation of intangible assets	279		246
	Finance income	(25)		(43)
	Finance expense	32		-
	Share-based payments	276		97
	Settlement of Share-based payments	42		-
	Gain on sale of property, plant and equipment	(8)		-
Operating cash flows before movements in working capital		4,034		5,596
	(Increase) in receivables	(3,225)		(3,862)
	(Increase) / Decrease in inventories	1,137		(1,221)
	Increase in payables	1,312		2,603
Cash generated from operations		3,258		3,116

 

 

ENDS