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RNS
D4T4 Solutions PLC   -  D4T4   

Final Results

Released 07:00 25-Jun-2019

RNS Number : 2597D
D4T4 Solutions PLC
25 June 2019
 

D4t4 Solutions Plc

(the "group", "D4t4" or "company")

'ALL ABOUT THE DATA'

 

Final results for the year ended 31 March 2019

and

Notice of Annual General Meeting

 

 

  London: Tuesday 25 June 2019:  D4t4 Solutions Plc (AIM: D4T4) publishes the group's audited Annual report and financial statements for the year ended 31 March 2019 and Notice of AGM which are available to view and download at www.d4t4solutions.com.  A summary is provided below:

 

Performance summary:

 

·      Another strong year of profitable growth for the group culminating in the signing of a number of major contracts.

 

·      Continued focus on evolving the business into the data and analytics market space with emphasis on growing the Celebrus software customer base and the group's hybrid cloud data platform services.

 

·      Notable sales success in both North America, following the continued investment in the region, and in Europe where we won our largest Celebrus contract to date.

 

·      Continued evolution of the sales mix of sales:

 

·      Further growth in term licence sales of the Celebrus product is continuing to benefit the visibility of future revenue and quality of earnings, impacting in the short term on perpetual licence revenues.

 

·      Increase in demand for our hybrid cloud data platform services, particularly in the North American market.

 

Key performance indicators

Summary financials continuing operations

(audited)

Year ended

31 March 2019

Year ended

31 March 2018 (restated)

Year on year

growth

Revenue:

 

 

 

Products Own IP

Products 3rd Party

Delivery Services

Support & Maintenance

£9.20m

£7.35m

£3.13m

£5.56m

£6.81m

£3.92m

£2.93m

£4.78m

+35.16%

+87.68%

+7.02%

+16.35%

 

Total revenue**

£25.24m

£18.43m

+36.97%

Gross profit***

£14.31m

£10.44m

+37.04%

GP margin

56.69%

56.66%

+0.05%

Profit before tax***

£6.34m

£3.33m

+90.70%

Adjusted profit before tax*

£6.02m

£4.07m

+47.84%

Basic earnings per share

14.78p

7.62p

+93.96%

Adjusted diluted earnings per share

13.89p

8.82p

+57.48%

Unadjusted diluted earnings per share

14.53p

7.30p

+99.04%

Dividend for the period

3.00p

2.50p

+20.00%

Net cash

£3.85m

+185.27%

*before amortisation of intangibles, share-based payments charges and foreign exchange gains

** Includes an IFRS 15 adjustment of £1.67m

*** Includes an IFRS 15 adjustment of £1.08m

 

 

Peter Kear, D4t4's CEO commented:

"I am delighted to report a 37% increase in organic top-line growth with total revenues for the group rising to £25.24m.  Importantly, we have been able to maintain our gross profit margins through a combination of own IP product sales, hybrid cloud data platform services  and our recurring revenue business.  All of this has contributed to a 48% growth in underlying profitability yielding an adjusted pre-tax profit of £6.02m, enabling the board to lift the final dividend by 23%."

 

"Our strategy continues to deliver and is reflected in the strong growth reported today. We continue to innovate our product, grow geographically and deepen our relationships with our strategic partners.  The business enters the new financial year in robust shape after closing a number of significant contracts in the second half of the year benefitting 2018-19 and subsequent years.  The Board is greatly encouraged by the opportunities and outlook for the business."

 

ENQUIRIES

 

D4t4 Solutions Plc

Peter Kear, Chief Executive Officer

Carmel Warren, Chief Financial Officer

Tel: +44 (0) 1932 893333

Email: moreinfo@d4t4solutions.com

 

finnCap

(Nominated adviser & broker)

Julian Blunt/Hannah Boros - Corporate Finance

Alice Lane - ECM

Tel: +44 (0) 20 7220 0500

 

TooleyStreet Communications (IR & media relations)

Fiona Tooley:

Tel: +44 (0) 7785 703523

or email: fiona@tooleystreet.com

 

 

EDITOR'S NOTE -

 

D4t4 Solutions Plc

'ALL ABOUT THE DATA'

D4t4 Solutions Plc operates within the fast-growing data and analytics market.  This market encompasses 'big data', artificial intelligence, machine learning and the business intelligence market; this market which has been estimated to be valued at U$150 billion by the global independent analyst International Data Corporation (IDC), with a projected growth of 11.9% annually until 2020 when the market is anticipated to be worth circa.U$210 billion.

 

The business is focused on the finance and consumer sectors.  The specific areas of focus for D4t4 are data and analytics related to the collection of data on how consumers interact with digital channels, the management and analysis of that data and the implementation of cost effective platforms to assist companies get real value from their data assets.  Celebrus, our software product, is a customer data platform that is in a market, according to research by the Customer Data Platform Institute (CPDI), that is expected to grow from £300m in 2016 to £1bn in 2019-20.

 

We service clients in 21 countries.

 We are energetically focused on data platforms that enable clients who operate within the financial services, retail and consumer sectors to get the most from their data. From capture, through to management and analysis, we provide comprehensive products and services that drive value from our clients' information assets. 

 

We are accredited to ISO27001: Information Security Management and PCI Data Security Standard.  

 

To find out more, visit www.d4t4solutions.com

 

 

The following information is a summary taken from the group's audited Annual report and financial statements for the year ended 31 March 2019, which is available to view and download at www.d4t4solutions.com   

  

D4t4 Solutions Plc

'ALL ABOUT THE DATA'

 

Quote from Chairman's statement

"Our focus over the year on the financial services industry, higher levels of brand awareness from industry analysts and demonstrable return on investment by organisations with high levels of data maturity have all contributed to a very successful year with revenue growth of 37% compared to last year."

Peter Simonds

Non-executive Chairman

 

Extracts from the Chairman's letter to shareholders:

Overview

It has been another excellent year for D4t4 with strong growth in revenues and profitability, delivering overall results slightly ahead of market expectations and with very good progress achieved against the key areas of strategic focus for the future.

It was pleasing to see the phasing of revenues return to a more normal distribution between H1 and H2 and the nature of the product and services revenue has given the Board greater visibility of order pipeline throughout the year.

Products

Our data collection product, Celebrus, continues to evolve and now provides one of the best real time omnichannel customer data platforms ("CDPs").

People

At 31 March 2019 the Group employed a total of 125 staff in its operations located in India, EMEA and the USA. Our people are vital to our success and we will continue to build upon our Company culture with its high levels of staff engagement with a focus on people development, retention and recruitment of the highest calibre people.

Outlook and current trading

The new financial year is trading in line with the Board's expectations which together with a healthy level of new business opportunities in our pipeline, leads us to be confident for the year ahead.

Looking forward there are many opportunities to continue our growth in our core markets where we expect to develop our business with existing and new customers, increase our share of current markets and continue to expand internationally.

D4t4 Solutions Plc

25th June 2019

 

Quote from CEO statement

"As a business we have successfully grown our top line revenue and profits over the previous year. It is pleasing to report that the Group has achieved notable sales success for both our Celebrus software product (with both Perpetual Licence and Annual Recurring Revenue licence sales) and in our hybrid cloud data platform service business, which provides a scalable platform to allow our clients to focus on understanding their customers' behaviour better, calculate risk and ensure regulatory compliance".

Peter Kear

Chief Executive Officer

 

 

Extracts from the CEO's report to shareholders:

Overview

D4t4 has made great progress with continued investment in its international regions.  Headcount additions have been made in key functions such as project management, consultancy and client support, whilst further investment has been made in strengthening relationships with strategic partners.

We have continued to build on our previously stated strategic objectives of empowering our clients to gain significant value from their customer data and through this to deliver major uplifts in terms of their revenues and profitability.

As a result, I am delighted to report a 37% (2018 restated: 4%) increase in top-line growth with total revenues for the Group rising to £25.24m (2018 restated: £18.43m).

Importantly, we have been able to maintain gross profit margin levels through a combination of our own intellectual property sales, our hybrid cloud data platform, our delivery services business and our recurring revenue business, which has resulted in a 48% growth in underlying profitability yielding an adjusted pre-tax profit for the Group of £6.02m (2018 restated: £4.07m).

During the year in review we implemented IFRS15 which had a one-time effect on our 2017/18 and 2018/19 results; further detail is set out in the financial tables below.

Summary review of the year ended 31 March 2019

D4t4 has had another highly successful financial year. Our business delivered revenues of £25.24m (2018 restated: £18.43m) producing an adjusted profit before tax of £6.02m (2018 restated: £4.07m), with a statutory profit before tax of £6.34m (2018 restated: £3.33m). The Group remains strongly cash generative; year end cash reserves were £11.00m (2018:  £3.85m) and the Group had no borrowings. Trade debtors at the year-end had returned to more normal levels at £4.06m (2018 restated: £19.53m).

The last twelve months have seen an acceleration of the evolution of our business into the data platform software and services market space with continued focus on growing both our Celebrus software Customer Data Platform base and our hybrid cloud data platform services sales, which in turn contribute to our own IP, recurring and delivery services revenues.

We have invested in our partner, sales and pre-sales teams, particularly in North America, the outcome of which we are pleased to report is the winning of several significant contracts with both new and existing clients. We have also invested in our partner-based sales strategy and in 2019/20 we will continue to scale up these relationships which will reap rewards in both this coming year and in the future.

During the last 12 months we have seen a shift in the mix of sales within the Group, firstly, through the growth in the demand for term or recurring licence sales of our Celebrus product set which had an impact on the perpetual licence sales that we have enjoyed in the past. This has had the beneficial effect of increasing our visibility on future revenues. Celebrus sales now represent 24.53% (2018 restated: 21.72%) of Group revenue.

Secondly, we have seen an increase in demand for our hybrid cloud data platform services which have developed well in the year, particularly in the North American market. As with our Celebrus sales we are beginning to see customer demand for the provision of our cloud data platform to be delivered as a "Platform as a Service" (PaaS), recurring revenue styled service.

Our own IP product revenues have increased in the year under review to £9.20m (2018 restated: £6.81m) driven by the increase in sales of both our Celebrus customer data platform and our hybrid cloud data platform.

Our 3rd party product revenues also increased as a result of the increase in sales from our hybrid cloud data platform business and finished the year at £7.35m (2018 restated: £3.92m).

Delivery services revenues enjoyed good growth and are underpinned by the increase in sales of our own intellectual property products which resulted in revenues of £3.13m (2018 restated: £2.93m).

Recurring revenues from our managed service and software licence support and maintenance service enjoyed strong growth and delivered income of £5.56m (2018 restated: £4.78m). This marks a return to double digit growth as a result of completing the transition from our old Systems Integration business model to our newer data and analytics business model. As mentioned above this steady growth in performance was due in part to the increase in our Celebrus software revenues and hybrid cloud data platform sales during the year.

Gross profit in the year was £14.31m (2018 restated: £10.44m) whilst statutory profit before tax for the period was £6.34m (2018 restated: £3.33m). Administration costs were £8.02m (2018 restated: £7.15m) due in part to staff cost increases resulting in reported profit from operations of £6.34m (2018 restated: £3.36m) and adjusted pre-tax profits of £6.02m (2018 restated: £4.07m). This includes a foreign exchange gain for the year of £0.73m (2018: £0.40m loss), the gain was due primarily to the significant shift in the US Dollar exchange rate early in the year.

Cash and cash equivalents at 31 March 2019 stood at £11.00m (2018: £4.63m). Total net assets at the end of the year were £24.84m (2018 restated: £20.11m).

Adjusted fully diluted earnings per share grew 57.48% to 13.89 pence (2018: 8.82 pence), diluted earnings per share were 14.53 pence (2018: 7.30 pence) which was up 99.04%. This was attributable not only to the underlying growth in the business but also the IFRS 15 adjustment and the low effective tax rate for this year.

Dividend

As stakeholders are aware, the Company remains committed to a progressive dividend policy whilst balancing its investments for future growth. It is the Board's intention to declare future dividends based on the overall Company performance.

The Board is recommending a final dividend of 2.3p (2018 restated: 1.875p) which, if approved by shareholders at the Annual General Meeting, which is to be held on the 22 August 2019, will be paid on 13 September 2019 to Members on the Register at the close of business on 9 August 2019. The Ordinary shares will become ex-dividend on 8 August 2019.

Outlook

The Group remains strongly cash generative and net cash reserves were at £11.00m at the year end. This has enabled us to increase our level of activity to search out potential value enhancing acquisitions with particular emphasis on opportunities to accelerate international expansion and add adjacent or complimentary products.

As documented in our trading update released in April, during the last quarter of the year under review we signed a number of significant contracts some of which were recognised during the year in review whilst others will be recognised during 2019/20 and beyond.

This gives us an excellent start to the current year and when combined with a growing opportunity pipeline the Board remains confident in the future of the business and believes that it has a clear strategy in place to develop the opportunities that will deliver sustainable growth and enable us to achieve our plans for the year ahead.

D4t4 Solutions Plc

25th June 2019

D4t4 Solutions Plc

Summary of Financial Statements

for the year ended 31 March 2019

 

 

Consolidated income statement for the year ended 31 March 2019


















2019


2018 restated





£'000


£'000

Continuing operations







Revenue



25,239


18,427


Cost of sales



(10,932)


(7,987)

Gross Profit




14,307


10,440


Administration expenses



(8,022)


(7,151)


Other operating income



57


67

Profit from operations



6,342


3,356


Finance income



9


1


Finance costs



(8)


(31)

Profit before tax



6,343


3,326


Tax



(511)


(424)

Attributable to equity holders of the parent


5,832


2,902

Earnings per share from continuing operations attributable to the equity holders of the parent





Statutory








Basic



14.78p


7.62p


Diluted



14.53p


7.30p

Adjusted








Basic



14.12p


9.21p


Diluted



13.89p


8.82p








 

 

 

 

 

 

Consolidated statement of comprehensive income for the year ended 31 March 2019


















2019


2018 restated





£'000


£'000

Attributable to equity holders of the parent


5,832


2,902

Other comprehensive income:






Items that will not be reclassified to profit or loss






Gains on property revaluation


70


706


Income tax on items that will not be reclassified to profit or loss


 -


 -

Total comprehensive income for the year attributable




to equity holders of the parent



5,902


3,608

 

 

Consolidated statement of changes in equity attributable to Equity Holders of the Parent for the year ended 31 March 2019













Share capital

Share premium

Merger reserve

Revaluation reserve

Own shares

Equity reserve

Retained earnings

Total £'000











Balance at 1 April 2017


759

1,923

5,804

323

(6)

242

8,504

17,549

Dividends paid


 -

 -

 -

 -

 -

 -

(884)

(884)

Purchase of own shares


 -

 -

 -

 -

(302)

 -

 -

(302)

Issue of new shares - exercise of share options


6

49

113

 -

 -

(51)

 -

117

Settlement of share based payments


 -

 -

 -

 -

 -

 -

(20)

(20)

Share-based payment charge


 -

 -

 -

 -

 -

 -

100

100

Deferred tax on outstanding share options


 -

 -

 -

 -

 -

(58)

4

(54)

Transactions with equity holders


6

49

113

0

(302)

(109)

(800)

(1,043)

Profit for the year (restated)


 -

 -

 -

 -

 -

 -

2,902

2,902

Other comprehensive income


 -

 -

 -

706

 -

 -

 -

706

Total comprehensive income


 -

 -

 -

706

 -

 -

2,902

3,608

Balance at 1 April 2018


765

1,972

5,917

1,029

(308)

133

10,606

20,114

Dividends paid


 -

 -

 -

 -

 -

 -

(980)

(980)

Purchase of own shares


 -

 -

 -

 -

(1,469)

 -

 -

(1,469)

Issue of new shares - exercise of share options


29

652

60

 -

 -

(26)

 -

715

Settlement of share based payments


 -

 -

 -

 -

650

(48)

(351)

251

Share-based payment charge


 -

 -

 -

 -

 -

 -

162

162

Deferred tax on outstanding share options


 -

 -

 -

 -

 -

(49)

178

129

Transactions with equity holders


29

652

60

 -

(819)

(123)

(991)

(1,192)

Profit for the year


 -

 -

 -

 -

 -

 -

5,832

5,832

Other comprehensive income


 -

 -

 -

70

 -

 -

 -

70

Total comprehensive income


 -

 -

 -

70

 -

 -

5,832

5,902

Foreign exchange and other movements








16

16

Balance at 31 March 2019


794

2,624

5,977

1,099

(1,127)

10

15,463

24,840

 

 

 

 

 

 

Consolidated statement of financial position as at 31 March 2019












2019


2018 restated





£'000


£'000

Non-current assets







Goodwill



8,696


8,696


Other intangible assets



1,014


1,261


Property, plant and equipment


4,106


3,892


Deferred tax assets



831


389





14,647


14,238

Current assets







Trade and other receivables


6,275


20,544


Inventories



45


590


Cash and cash equivalents



10,996


4,634





17,316


25,768

Total assets



31,963


40,006

Current liabilities







Trade and other payables



(6,774)


(18,575)


Tax liabilities



(133)


(291)


Borrowings



-


(695)





(6,907)


(19,561)

Non-current liabilities







Borrowings



-


(85)


Deferred tax liabilities



(216)


(246)





(216)


(331)

Total liabilities



(7,123)


(19,892)

Net assets



24,840


20,114








Equity







Share capital



794


765


Share premium account



2,624


1,972


Merger reserve



5,977


5,917


Revaluation reserve



1,099


1,029


Own shares



(1,127)


(308)


Equity reserve



10


133


Retained earnings



15,463


10,606

Attributable to equity holders of the parent

24,840


20,114








 

 

 

Consolidated cash flow statement for the year ended

31 March 2019














2019


2018 restated




£'000


£'000

Operating activities






Profit before tax


6,343


3,326

Adjustments for:






Depreciation of property, plant and equipment

315


251


Amortisation of intangible assets


247


246


Finance income


(9)


(1)


Finance expense


8


31


Share-based payments


162


100


Settlement of share based payments


-


(20)


Gain on sale of property, plant and equipment

(3)


-


Income tax expense





Operating cash flows before movements in working capital

7,063


3,933


Decrease / (Increase) in receivables


14,269


(16,275)


Decrease / (Increase) in inventories


545


(249)


(Decrease) / Increase in payables


(11,811)


13,699

Cash generated from operations


10,066


1,108


Income taxes paid


(983)


(400)

Net cash generated from operating activities


9,083


708

Investing activities






Interest received


9


1


Purchase of property, plant and equipment


(459)


(844)

Net cash used in investing activities


(450)


(843)

Financing activities






Dividends paid


(980)


(884)


Repayment of borrowings


(763)


(414)


Interest paid


(8)


(31)


Payments to finance lease creditors


(17)


(7)


Purchase of own shares


(1,469)


(302)


Sale of own shares on exercise of options


966


117

Net cash used in financing activities


(2,271)


(1,521)

Net increase / (decrease) in cash and cash equivalents

6,362


(1,656)


Cash and cash equivalents at start of year


4,634


6,290

Cash and cash equivalents at end of year


10,996


4,634

 

 

 

 

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 one, ultimate controlling party.  The address of its registered office, registered number and principal place of business is disclosed on the inside cover of the financial statements. 

 

The financial statements of D4t4 Solutions Plc and its subsidiaries (the group) for the year ended 31 March 2019 were authorised and issued by the Board of Directors on 24 June 2019 and the Consolidated statement of financial position was signed on the Board's behalf by Peter Kear.

 

The statutory accounts for the year ended 31 March 2019 will be delivered to the Registrar of Companies following the group's Annual General Meeting and can be obtained from the investor section of the group's website at www.d4t4solutions.com.  Statutory accounts for the year ended 31 March 2018 have been filed with the Registrar of Companies.  The auditor's report for the year ended 31 March 2019 was unqualified, did not include a reference to any matter to which the auditor drew attention by way of emphasis without qualifying their report and did not contain any statement under section 498(2) or (3) of the Companies Act 2006.

 

BASIS OF PREPARATION

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) adopted by the European Union and the Companies Act 2006 applicable to companies reporting under IFRS.  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 preliminary financial information does not constitute full statutory accounts within the meaning of section 434 of the Companies Act 2006 but is derived from statutory accounts for the periods ended 31 March 2019 and 31 March 2018, both of which are audited. The preliminary announcement is prepared on the same basis as set out in the statutory accounts for the year ended 31 March 2019. While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS), as adopted by the European Union (EU), this announcement does not itself contain sufficient information to comply with IFRSs.

 

GOING CONCERN

The group and company's business activities, together with the factors likely to affect its future development, performance and position and the risks and uncertainties are presented in the Strategic Report within the Annual Report.  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 future plans and projections for the business, the Directors believe 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.

ADOPTION OF NEW AND REVISED STANDARDS

Standards, amendments and interpretations effective in the period to 31 March 2019 (all effective 1 January 2018, not early adopted last year):

·    IFRS 9 (New Standard) Financial Instruments

·    IFRS 15 (New Standard) Revenue from Contracts with Customers

·    IFRIC 22 (Amendment) Foreign Currency Transactions and Advance Consideration

·    IFRS 2 (Interpretation) Share Based Payments

·    IAS 40 (Interpretation) Investment Property

 

IFRS 9 and IFRS 15 are discussed below separately. No significant impact is foreseen by the Group in respect of all other amendments and interpretations.

IFRS 9 is effective for the year ending 31 March 2019 onwards. IFRS 9 introduces:

·    New requirements for the classification and measurement of financial assets and financial instruments;

·    A new model for recognising provisions based on expected credit losses; and

·    Simplified hedge accounting by aligning hedge accounting more closely with an entity's risk   management methodology.

Following a review and further impact assessment, it was concluded that the Group's use of financial instruments is limited to short term trading balances such as receivables and payables. The Group has no financial borrowings and does not have complex financial instruments in place. Furthermore, there have also been no material changes arising from the adoption of the expected losses impairment model or loss allowance provisions made in respect of trade receivables and amounts due from Group Companies. On this basis the Group have concluded that adoption does not have a material impact on either the Income Statement or Statement of Financial Position of the Group or Company.

IFRS 15 is also effective for the year ended 31 March 2019 onward. The Group applied the standard for the first time in the half year report ending 30 September 2018 retrospectively under a full restatement approach, which has resulted in a restatement of the year end 31 March 2018 results (see Note 30 for full details). IFRS 15 replaces existing accounting standards used to determine the measurement and timing of revenue recognition and requires an entity to align the recognition of revenue to the transfer of goods and services at an amount that the entity expects to be entitled to in exchange for those goods and services.

Standards, amendments and interpretations to existing standards that have not been early adopted by the Group (all effective 1 January 2019):

·    IFRS 16 Leases

·    Various Annual Improvements to IFRSs 2015 - 2017 Cycle

·    IFRIC 23 Uncertainty over Income Tax Treatments

·    IAS 28 Investments in Associates and Joint Ventures

·    IAS19 Employee Benefits (Plan Amendment, Curtailment or Settlement)

 

IFRS 16 will be effective for the year ending 31 March 2020. On the adoption of IFRS 16, lease arrangements will give rise to a right-of-use asset and a lease liability for future lease payables. The asset will be depreciated on a straight line basis over the life of the lease. Interest will be recognised on the lease liability, resulting in a higher interest expense in the earlier years of the lease term. The total expenses recognised in the Income Statement over the life of the lease will be unaffected by the new standard. However, IFRS 16 will result in the timing of lease expenses recognition being accelerated for leases which would be currently accounted for as operating leases. The Group has one leased property in India and the Directors are currently reviewing the requirements of the new standard to determine its impact.

The Directors anticipate that the adoption of IFRS16 will not have a material impact on the financial statements of the Group.

The Directors do not expect the adoption of the other standards, interpretations and amendments in future periods to have any material impact on the financial statements of the Group.

 

BUSINESS AND GEOGRAPHICAL SEGMENTS

IFRS 8 Operating Segments requires operating segments 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.

During the year, there has been a change in the way information is presented to the Board. In the past, information has been reported to the Board on the basis of:

·    Licence sales

·    Project work

·    Recurring revenues

 

 The Group has now identified four tightly integrated service lines that are offered to clients. These service lines combine one or more of 4 types of revenue to deliver on our core services. Information is now presented to the Board on the revenue analysis below:

·    Product - Own IP

·    Product - 3rd party

·    Delivery services

·    Support and maintenance

 

 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 segment reporting set out below is consistent with that provided to the Board of Directors and has been prepared under both the original segmental reporting analysis and now the current segmental reporting analysis.

The revised segmental reporting analysis is as follows:
















Continuing operations 2019





Group






2019


2018 restated







£'000


£'000


Products - Own IP





9,198


6,805


Products - 3rd party





7,349


3,915


Delivery services





3,132


2,928


Support & Maintenance





5,560


4,779


Revenue





25,239


18,427


Cost of sales





(10,932)


(7,987)


Gross profit





14,307


10,440


Other operating costs and income




(7,965)


(7,084)


Investing and financing activities





1


(30)


Profit before tax





6,343


3,326





























Major customers (partners) over 10% of revenue


2019


2018 restated






£'000

£'000


£'000






Customer 1

Customer 2


Customer 1











Products - Own IP




5,576

1,581


4,590


Products - 3rd party




6,774

 -


3,226


Delivery services




1,055

48


1,107


Support & Maintenance




2,206

1,102


1,808


Total Revenue




15,611

2,731


10,731










 

 

Previously reported segmental reporting analysis is as follows:
















Continuing operations 2019



Licence Sales

Project Work

Recurring revenues


Total





£'000

£'000

£'000


£'000


Sale of goods



4,196

-

-


4,196


Services



-

15,483

5,696


21,179


Adjustment for agency basis



-

-

(136)


(136)


Reported revenue



4,196

15,483

5,560


25,239











Segment result (gross profit)



3,666

7,261

3,380


14,307


Other operating costs and income






(7,965)


Investing and financing activities







1


Profit before tax







6,343











Major customers (partners) over 10% of revenue







Customer 1



323

12,717

2,571


15,611


Customer 2



1,581

48

1,102


2,731










The adjustment for agency basis relates to arrangements where the company acts as a supply channel on behalf of a software supplier. This software supplier dictates the sell and buy price and provides details of the customer.

 

Continuing operations 2018 restated



Licence Sales

Project Work

Recurring revenues


Total





£'000

£'000

£'000


£'000


Sale of goods



2,905

-

-


2,905


Services



-

10,742

5,012


15,754


Adjustment for agency basis



-

-

(232)


(232)


Reported revenue



2,905

10,742

4,780


18,427











Segment result (gross profit)



2,186

5,794

2,460


10,440


Other operating costs and income






(7,084)


Investing and financing activities







(30)


Profit before tax







3,326











Major customer (partner) over 10% of revenue








Customer 1



-

8,994

1,737


10,731

 

 

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.

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares arising from share options granted to employees where the exercise price is less than the market price of the Company's ordinary shares at the year end.  

Details of the adjusted earnings per share are set out below:













2019


2018 restated







£'000


£'000


Profit attributable to owners of the parent

 



5,832


2,902


Amortisation of intangible assets




247


246


Share-based payments





162


100


Net foreign exchange differences




(727)


402


Tax on the adjustments

 




60


(142)


Adjusted profit attributable to owners of the parent



5,574


3,508
















2019


2018 restated







No.


No.


Basic weighted average number of shares, excluding own shares, in issue


39,471,172


38,104,967


Dilutive effect of share options





654,078


1,670,139


Diluted weighted average number of shares, excluding own shares, in issue

40,125,250


39,775,106


 

 

 

 

 

 























2019


2018 restated







Pence per share


Pence per share


Basic Earnings per share





            14.78


                7.62


Diluted Earnings per share





            14.53


                7.30


Adjusted Basic Earnings per share




            14.12


                9.21


Adjusted Diluted Earnings per share




            13.89


                8.82










 

DIVIDENDS














2019


2018







£'000


£'000

Amounts recognised as distributions to equity holders








Final dividend for the year ended 31 March 2018 of 1.875p (for the year ended 31 March 2017: 1.70p) per share


713


645


Interim dividend for the year ended 31 March 2019 of 0.7p (31 March 2018: 0.625p) per share



267


239







980


884


Proposed final dividend for the year ended 31 March 2019 of 2.3p

 













The proposed final dividend is subject to shareholders' approval at the AGM and has not been included as a liability in these financial statements.









 IFRS 15 REVENUE FROM CONTRACTS WITH CUSTOMERS

 

An analysis of the key changes that IFRS 15 has on the Group's revenue streams, taking into account the move from the recognition of revenue on the transfer of risks and rewards to the transfer of control are summarised below:

The effect of implementing IFRS 15 is as follows:

·    12 months to 31 March 2019

 Prepared on an IFRS 15 basis

 

·    12 months to 31 March 2018

Restatement has been required as a result of moving from IAS 18 to IFRS 15.

 

The adoption of IFRS 15 has resulted in a reduction in FY 31 March 2018 revenue and profit before tax of £1.67m and £1.08m respectively. In addition, opening reserves at 1 April 2018 are £0.87m lower than the amount reported in the 31 March 2018 financial statements. These amounts are based on the Group applying the retrospective method in transitioning to IFRS 15.

The reductions of £1.67m and £1.08m arose on contracts spanning the prior year end where under IAS 18 it was permissible to recognise the software, despite the hardware not being delivered. Under IFRS 15 this would have constituted one performance obligation, therefore the software revenue invoiced pre 31 March 2018 has been deferred. The cost of sales impact is the derecognition of the associated cost of sales with the software sales derecognised.

There are no such similar contracts spanning the year end at 31 March 2019 and as such no disclosure has been given for revenue recognised in the year ended 31 March 2019 with different treatments under IFRS 15 and IAS 18.

The table below shows the effect of IFRS 15 on the restated Consolidated Statement of Consolidated Income as at 31 March 2018:

 








As previously reported

IFRS 15 Adj

Restated



£'000

£'000

£'000






Continuing operations





Revenue

20,092

(1,665)

18,427


Cost of sales

(8,577)

590

(7,987)

Gross Profit


11,515

(1,075)

10,440


Administration expenses

(7,151)


(7,151)


Other operating income

67


67

Profit from operations

4,431

(1,075)

3,356


Finance income

1


1


Finance costs

(31)


(31)

Profit before tax


4,401

(1,075)

3,326


Tax

(628)

204

(424)

Attributable to equity holders of the parent

3,773

(871)

2,902






Earnings per share from continuing operations



Statutory






Basic

9.90p

-2.28p

7.62p


Diluted

9.49p

-2.19p

7.30p

Adjusted






Basic

11.49p

-2.28p

9.21p


Diluted

11.01p

-2.19p

8.82p






 

 

The effect of adopting IFRS 15 primarily impacts on the following areas:

Technology revenues/margins recognised under contracts with customers, which include both the supply of software and hardware, representing one performance obligation under IFRS 15 result in revenue recognition at a point in time, which is different to the previous treatment whereby the supply of software and hardware were treated as separate sale arrangements.

The adoption of IFRS 15 has not altered the total contract value or timing of cash flows.

The Group has taken advantage of the practical expedient when applying IFRS 15 retrospectively in that for completed contracts, the Group is not required to restate contracts that begin and end within the same annual reporting period.

The table below shows the effect of IFRS 15 on the restated Consolidated Statement of Financial Position as at 31 March 2018:








As previously reported

IFRS 15 Adj

Restated



£'000

£'000

£'000






Non-current assets





Goodwill

8,696

-

8,696


Other intangible assets

1,261

-

1,261


Property, plant and equipment

3,892

-

3,892


Deferred tax assets

389

-

389



14,238

-

14,238

Current assets





Trade and other receivables

20,544

-

20,544


Inventories

-

590

590


Cash and cash equivalents

4,634

-

4,634



25,178

590

25,768

Total assets

39,416

590

40,006

Current liabilities





Trade and other payables

(16,910)

(1,665)

(18,575)


Tax liabilities

(495)

204

(291)


Borrowings

(695)

-

(695)



(18,100)

(1,461)

(19,561)

Non-current liabilities





Borrowings

(85)


(85)


Deferred tax liabilities

(246)


(246)



(331)

-

(331)

Total Liabilities

(18,431)

(1,461)

(19,892)

Net Assets

20,985

(871)

20,114






Equity






Share capital

765

-

765


Share premium account

1,972

-

1,972


Merger reserve

5,917

-

5,917


Revaluation reserve

1,029

-

1,029


Own shares

(308)

-

(308)


Equity reserves

133

-

133


Retained earnings

11,477

(871)

10,606

Attributable to equity holders of the parent

20,985

(871)

20,114






 

 

The table below shows the impact on Consolidated Statement of Cash Flows of IFRS 15 for the year ended 31 March 2018:

 








As previously reported

IFRS 15 Adj

Restated



£'000

£'000

£'000






Operating activities






Profit before tax

4,401

(1,075)

3,326

Operating cash flows before movements in working capital

5,008

(1,075)

3,933


Decrease / (increase) in inventories

341

(590)

(249)


Increase in payables

12,034

1,665

13,699

Cash generated from operations

1,108

-

1,108






 

The impact of IFRS 15 on the parent company's Statement of Financial Position and Statement of Cash Flows is as shown above.


The Group and Company have not presented a third Statement of Financial Position or Statement of Cash Flows as at 1 April 2017 as there were no transition adjustments at this date.



The Group has taken advantage of the practical expedient when applying IFRS 15 retrospectively in that for completed contracts,

the Group is not required to restate contracts that begin and end within the same annual reporting period.

 

ANNUAL GENERAL MEETING

The Annual General Meeting will be held on 22 August 2019 at 10am at the group's Registered office: Windmill House, 91-93 Windmill Road, Sunbury on Thames, Middlesex, TW16 7EF.

 

 

 


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