TIDMD4T4
RNS Number : 4352R
D4T4 Solutions PLC
06 July 2022
6 July 2022
D4t4 Solutions Plc
Final Results for the year ended 31 March 2022
Significant ARR growth and developing pipeline
D4t4 Solutions Plc (AIM: D4T4, "the Group", "D4t4"), the data
solutions provider, announces its final results for the year ended
31 March 2022.
Financial Highlights
-- Annual recurring revenue* (ARR) up 32% to GBP14.0 million (2021: GBP10.6 million)
-- Revenues up 7.3% to GBP24.5 million (2021: GBP22.8 million)
-- ARR as percentage of total revenue increased to 57% (2021:
47%), delivering significant progress against medium term target of
65%
-- Gross profit margin of 51.9% (2021: 62.4%)
-- Adjusted profit before tax** of GBP3.3 million (2021: GBP4.4
million), and statutory profit before tax of GBP1.8 million (2021:
GBP3.0 million)
-- Diluted Adjusted EPS of 7.1p (2021: 9.5p), and Diluted Basic EPS of 4.1p (2021: 6.75p)
-- Proposed final dividend of 2.07p (2021: 2.00p), making a
total dividend for the year of 2.92p (2021: 2.81p), an increase of
3.9%
-- Year-end cash position GBP11.4 million (2021: GBP14.2
million), increased to free cash of GBP26.5 million as at 30 June
2022.
-- Proposed special dividend of 12.5p per share.
Operational Highlights
-- Launch of Celebrus FDP to address the needs of customers in
protecting their end-customers against fraud.
-- Key wins and upsells in the period including;
o A new win in the Healthcare sector
o An upsell of an existing banking customer of our CDM business
to both the FDP and the CDP which marks our first paying customer
of the FDP
o Continued conversion of existing customers onto ARR based
contracts
-- Prickly Cactus acquisition fully integrated and assisting in
bringing stronger account management disciplines and relationships
with customers.
-- Started building a direct sales channel, and investing in the
marketing automation to support, whilst also seeking new strategic
partnerships for sales.
-- Continued development of the pipeline of CDP/FDP
opportunities with a strong year end position.
-- Valuable enhancements to CDP product during the year
including the Identity Graph and 100 new marketing signals.
-- Numerous key hires at senior level to strengthen the
management team, including in Sales, Marketing, HR and Information
Security.
-- Investment into a group-wide systems infrastructure to better
support scalability and growth.
-- Restructured plc board and newly formed Operations Board
working effectively, with a clear separation between strategy,
operations and execution.
-- Improvements to corporate governance and publication of the
Group's first ESG report including a carbon audit.
Outlook
-- Delivering ARR growth remains our key strategic focus.
-- Trading during the new financial year has been in line with
the Board's expectations with good levels of both existing and new
client activity
-- Strong pipeline of sales opportunities at last year end has continued to build in FY23 .
-- Market conditions are moving in the Group's favour, with
growing distrust and reduced usage of third-party cookies, and
tighter regulation of financial institutions to enforce better
management of fraud
-- Continued investment, into marketing, sales, and product
development to grow ARR and maintain the Group's competitive
advantage.
-- Board is highly confident in the Group's strategy and ability
to deliver results and create significant shareholder value in the
coming years
-- After the period, we secured another FDP win in the Retail sector.
* ARR (Annual Recurring Revenue) is the amount of revenue
currently contracted at a point in time that is expected to recur
within the next twelve months.
** Adjusted profit before tax is calculated before amortisation
of intangibles, restructuring costs, acquisition costs, foreign
exchange gains/losses and share based payment charges.
Bill Bruno, CEO of D4t4 Solutions, said:
"This has been a transformational year for the Group as we built
for scale globally. That we have been able to do so whilst
delivering a strong financial performance and building our key ARR
metric is a tribute to all concerned. We have made good progress in
strengthening the management team to maximise our potential in the
fast-growing markets of customer experience/digital marketing and
cybersecurity/fraud prevention as market trends and increased
regulation continue to evolve in our favour.
With a strong commercial pipeline and improved revenue
visibility, we enter the new financial year confident of delivering
further growth while continuing to strategically invest to support
our anticipated growth in future years."
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014, as retained and applicable in
the UK pursuant to S3 of the European Union (Withdrawal) Act 2018
("MAR").
Enquiries
D4t4 Solutions Plc +44 (0) 1932 893333
Bill Bruno, Chief Executive Officer moreinfo@d4t4solutions.com
Ash Mehta, Chief Financial Officer
finnCap (Nominated Adviser & Joint
Broker)
Julian Blunt / E dward 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 +44 (0) 20 7457 2020
Rozi Morris / Joe Quinlan D4t4Solutions@instinctif.com
About D4t4 Solutions plc
D4t4 Solutions plc (AIM: D4t4) was founded around a passion for
helping global enterprises derive value from their data assets.
Supporting customers in financial services, retail, travel,
healthcare, and telecommunications across 27 countries, D4t4
enables businesses to make smarter, informed decisions via
Celebrus, the company's flagship first party product suite.
Celebrus CDP automatically captures, contextualises, and activates
user-based behavioural data in real-time across all digital
channels. Through behavioural biometrics and analytics, Celebrus
FDP helps companies prevent fraud before it happens. Celebrus CDM
provides an enterprise platform that automates the integration and
transformation of customer data from all relevant data sources,
whether on-premises or cloud, to deliver customer and regulatory
analytics.
The Group has offices in the UK, USA, India, and Australia with
key talent in all markets to drive the growth of the business.
Celebrus is fully compliant with all major data privacy regulations
and the Group is accredited to ISO27001: Information Security
Management.
For more information, please see www.d4t4solutions.com
Chairman's statement
I'm very pleased with the progress that we have made over the
last year. This has seen a transition to a restructured board, a
strengthened management team, improvements to our corporate
governance and the production of our first ESG report. It has also
seen investment into a new product launch, an acquisition and
significant ARR growth, all whilst delivering market expectations
for revenue and adjusted profit before tax.
As I outlined in last year's statement, during this past year we
have restructured the board to create a leaner board focused on
strategy and governance, with the creation of an Operations Board
to focus on execution of the strategy. We believe this is the right
structure to deliver growth in future periods. The board now
consists of three non-executive directors and two executive
directors. Peter Kear stepped down from the board on 31 March 2022
and left the Group on 30 June 2022, after a successful handover of
the CEO role to Bill Bruno. We thank Peter for his contribution to
the Group's success over the last 37 years and wish him well for
his retirement. In June 2021, Jim Dodkins and Mark Boxall stepped
down from the D4t4 Board. Jim continues to work for D4t4 on a
part-time basis whilst Mark left the Company earlier this year. I
would personally like to take this opportunity to thank Jim and
Mark for all their hard work and support over the years.
The Nominations Committee undertook two major searches last year
for the roles of CEO and CFO and we are delighted to have chosen
Bill Bruno, as CEO, who was previously our VP North America, and
Ash Mehta as CFO who has a track record in growing public
companies.
Since his appointment in August 2021, Bill has created a Group
Operations Board with the successful recruitment of key talent into
vital roles such as VP Global Sales, VP Marketing, Head of HR
People and Culture and most recently a Chief Security Officer. The
latter role signifies the importance we place on information
security and the trust our multinational customers place in us in
helping them manage their critical data. With this management team
in place, I am confident we have the right people to drive future
growth.
With the change in board structure, we have taken the
opportunity to review and strengthen our corporate governance with
the adoption of new Terms of Reference for our Board committees as
well as a new Matters Reserved for the Board schedule, in line with
current best practice. This clarifies the split of responsibilities
between the main Board and the Operations Board ensuring firm
oversight of operational matters.
I'm pleased to report that we have produced our first ever ESG
report, having appointed consultants to undertake a carbon audit.
The report provides a valuable insight into our carbon footprint
and actions we plan to take to reduce our impact on the
environment, as well as outlining how we interface with our
communities and protect and support our employees.
During the year, we launched a new product, the Celebrus Fraud
Data Platform, to address the needs of our customers in protecting
their end-customers in real-time across all digital devices, using
automated behavioural touchpoints. Fraud is an ever-growing threat
causing distress and financial loss to a growing number of victims,
and the current regulatory focus on addressing this problem creates
a strong opportunity for our product especially as regulators move
towards holding banks fully responsible for compensating customers
who become victims of fraud. This provides an impetus to banks to
address the issue to avoid such losses. Our first sale of FDP was
made in December 2021 and with several organisations currently
trialing the product, we anticipate further contract wins in the
coming months.
As well as launching FDP, during the year we have made numerous
product developments to our CDP product to maintain our competitive
advantage in the market and add further value to our customers.
Against this backdrop of significant change within the business,
we have successfully met market expectations delivering on Revenue
and Adjusted Profit before Tax, as well as growing ARR by 32%,
generating cash and paying a growing dividend.
The Board is today proposing a final dividend, subject to
shareholder approval at the 2022 AGM, of 2.07p per share which
along with the interim dividend paid of 0.85p per share in January
2022 brings the full year dividend to 2.92p per share, an increase
of 3.9% over last year. The final dividend is expected to be paid
on 24 August 2022 to shareholders on the register as at the close
of business on 15 July 2022.
Whilst the Group has increased investment in recent years, cash
generation continues to be strong. The board has considered uses
for the cash, and although the search for acquisition opportunities
is an ongoing one, with no such opportunities in sight the board
will focus investment on organic growth, in the knowledge that our
product set is market-leading, and the market opportunity is
large.
We will maintain a regular dialogue with shareholders on
potential uses for the cash, but even after allowing for all
investments that may be required as we continue to grow, the Board
is of the view that we are in a position to return some excess cash
to shareholders.
Therefore, I'm delighted to announce that as a result of the
Group's healthy cash balance, the board is also proposing a special
dividend of 12.5p per share payable to shareholders on the register
as at the close of business on 7 October 2022. The special dividend
is expected to be paid on 27 October 2022.
The Group's significant progress in the year is a testament to
our many staff across our four locations around the world and I
thank them for their efforts, especially during a period when we
have had the instability of intermittent coronavirus lockdowns
still ongoing. We are increasing our focus on our people. The new
Executive team is evolving the Group culture to be one which is
more empowered, accountable and enjoyable, as we aim to become an
even better company to work for. This is vital in a global economy,
post-lockdown, in which there is a shortage of talent and intense
competition for good people.
Outlook
We start the new financial year in a good position with products
well aligned with market requirements and trends, a strengthened
management team, a healthy cash balance, and most importantly a
strong pipeline of sales opportunities. I'm delighted to say that
the Board is highly confident in the Group's strategy and our
ability to deliver results and create significant shareholder value
in the coming years. Therefore, we will continue to invest wisely
where we see opportunities for good returns on investment.
Peter Simmonds
Chairman
6 July 2022
Chief Executive Officer's statement
I'm delighted to present my first annual statement to
shareholders since taking on the CEO role in October 2021, and I'd
like to thank Peter Kear, the outgoing CEO, for his contribution to
building the company we have today. We have market-leading products
which can form the basis of a sizeable business, creating
significant shareholder value over the coming years.
Since my appointment, our Chief Financial Officer and I have
been focused on implementing the building blocks to drive and
manage the growth we anticipate. Core to this has been ensuring
that the business is scalable and that we minimise the growing
pains that arise during periods of growth. This covers ongoing
investment into a number of areas including internal systems,
processes, reporting, employee empowerment and accountability and
not least company culture.
This is being undertaken in parallel with ensuring that the
day-to-day business continues to perform, and I'm pleased to report
a good set of financial results for the year ended 31 March 2022
("FY22") with Revenue up by 7.3% during the year and a very healthy
growth in ARR of 32%.
Strategy and Market trends
Our strategy remains unchanged, with the key objective being to
grow ARR through increased sales of CDP and FDP to customers. The
market trends during the year have been in our favour and we aim to
capitalise on these in the coming year through our strengthened
Sales and Marketing teams.
For the CDP product, the trends towards greater control of
privacy of data are evidenced by the deprecation of third-party
cookies, the impacts of Apple Intelligent Tracking Prevention (ITP)
and other browser changes relating to privacy for consumers.
Celebrus CDP is not impacted by any of these as we help our clients
collect first-party data, utilising our IP, which is not affected
by these trends in the way that our competitors' products are. Our
approach to compliance, identity, and instant data activation
provides us with a strong go-to-market strategy. This ultimately
has allowed us to retain and upsell our existing account base,
while also building significant pipeline activity through both key
partners and our direct sales capacity.
On the fraud side, there are two key trends: the speed at which
fraud occurs and the ongoing regulatory discussions in many
jurisdictions about reimbursing consumers who are victims of scams.
This regulatory trend is strongest in Europe, and like GDPR which
was a European initiative, we believe best practice will quickly be
adopted around the world. With millisecond data capture and
contextualisation, our Celebrus FDP ultimately helps brands catch
the fraudster before the fraud. The data that we capture offers
unique and differentiated solutions for preventing scams, saving
banks millions of pounds and ultimately protecting consumers.
Products and technologies
Of course, despite market trends being in our favour we continue
to develop functionality to maintain our market leading position in
the realm of data capture, data contextualisation, and data
management.
During the year, we added another 100+ automated marketing
signals to CDP providing customers with greater ability to identify
and convert valuable potential end-customers, as well as adding the
world's only first-party real-time Identity Graph to better
identify end-customers across a range of devices they might be
using.
We have continued our commitment of providing two major platform
updates each year for the Celebrus CDP and FDP, which is driven by
our product roadmap. That roadmap has several inputs: our
experience and expertise, feedback from our customers during
Advisory Board meetings, our Partners, and research projects within
our Engineering team which we continue to grow.
Our technology focus is on innovation and differentiation and
the ability to cater for the ever-growing needs of our customers.
Most recently, this was demonstrated by our ability to rapidly
establish CDP to be HIPAA compliant in the United States. HIPAA is
a series of regulations covering the use and disclosure of health
information in the United States, and CDP compliance is a requisite
for our healthcare customers.
In June 2022, our technologies received recognition from The
Global InfoSec Awards in the categories of "Most Comprehensive in
Identity Management" and "Most Comprehensive in Account Takeover
Protection", as well as from IDC MarketScape which named Teradata
Vantage (powered by Celebrus CDP) as a "Leader" in the CDP
market.
We will continue to innovate our Celebrus CDP and FDP to ensure
we remain differentiated and are able to solve some of the most
complex data challenges in the industry today.
Route to market
This past year had some great wins for our business, including
our first contracted customer for FDP just six months after its
launch in June 2021. This was an existing customer: a major
financial institution in the United States, and they upsold to both
our CDP and FDP in addition to our existing CDM relationship with
the bank. We are in dialogue with other existing customers,
particularly in the Financial Services and retail sectors, and we
have built up our partner program in the fraud sector to build a
healthy pipeline of FDP opportunities.
Our customer success team, boosted by the addition of the
Prickly Cactus team acquired in August 2021, has done a great job
instilling new account management disciplines and focus and
expanding our relationships with existing accounts, while our new
business team has continued to win in our core markets of Financial
Services, Insurance, Healthcare, and Telcos.
We continue to focus on driving pipeline and measuring what is
working and what isn't in the market so that we can learn and adapt
rapidly around the globe.
Traditionally our business has gone to market exclusively via
partners. While that continues to be a strategic pillar of our
business, during the year we began to build a direct sales channel.
This has already yielded success in the United States, and we are
now supporting a global rollout of direct sales via our
restructured and better-aligned Sales and Marketing teams.
We believe that the industry trends described above make this an
opportune time to build up the direct sales channel, to supplement
our partner's efforts with our own direct approach. This will
support our objective of accelerating sales growth by building as
many revenue streams as possible to create a stronger pipeline for
better, sustained growth in the coming years.
Partners
We have had some great success in our key markets with
technology partners including Teradata, Pega, SAS, Quantexa, and
Dell. We have deepened our relationships with partners at a
corporate level but also at a local level across all territories to
reinforce the value-add that CDP and FDP provide to partner
offerings. This is illustrated by the announcement, in May 2022,
that CDP will be integrated into Always-On Insights, a new offering
combining the capabilities of Pegasystems' Customer Decision
Hub(TM) with Celebrus CDP.
We launched our API connector in v9.5 of our CDP and FDP product
last November, and at that time we signaled to the market that we
would focus on bringing our data together with leading technology
across the globe in a meaningful and simple way that creates a
synergistic offering for our customers. I'm pleased to say that we
are in discussions about new partner opportunities that bring a
unique offering to our customers, and we look forward to further
progress on this in the coming year.
In addition to technology partners, we continue to seek
opportunities to expand our Solution Integrator (SI) partnerships.
While we focus on innovating our software and IP, we need partners
that can efficiently implement these platforms to assist our
objective of building a scalable business and minimising growing
pains. This approach will also help us manage costs as we grow. We
are building a partner toolkit encompassing training and
certifications for SI partners for rapid onboarding and
success.
Branding
Since the year-end, we have revamped the branding not only of
our Celebrus product family, but also of the D4t4 brand. The new
branding is the work of our Marketing team led by our new VP
Marketing based in the United States and is more representative of
our ethos, messaging, and approach to the market. The message is
simpler, conversationally sophisticated, and focuses on being a
disruptor in the market. The new branding has enabled us to align
Marketing and Sales more closely around the globe to ensure better
coordination and success in the coming year.
Robust systems to support growth
We have been busy in the year improving transparency,
accountability and reporting whilst establishing greater automation
with a view to creating a group-wide systems infrastructure to
better support scalability and growth.
We have implemented a new Customer Relationship Management
system to support our Sales Strategy. This system will manage our
customer lifecycle all the way from lead generation to winning new
customers through to customer satisfaction and advocacy.
We are also implementing an HR system which will enable us to
automate and better manage key HR processes, and most importantly
better engage and communicate with our employee base in four
countries and time zones.
We have started to implement a new Finance system which will
provide us with better visibility and granularity into our
performance to support our initiative of increased empowerment and
accountability for our teams.
These systems will set up our teams for better, measurable
success and create transparency for our teams globally to better
understand what we are trying to do as a business and the role they
play in helping us achieve our goals. These systems and processes
will also help us create better accountability amongst our leaders
across the business, a key value of our culture, so that we can
make efficient decisions globally.
Our employees
From a people perspective, we have restructured the business and
brought in top talent to drive growth in our key markets. We
formalised the Operations Board, established our Leadership Team,
brought in new talent to the global roles of VP-Marketing and
VP-Global Sales both in the United States, as well as creating new
roles such as Head of HR, People, and Culture and Chief Security
Officer both in the UK.
The role of Head of HR, People, and Culture is a crucial one
because we regard an effective culture established and created by
our talent throughout the business as critical in building
high-performance teams to drive our growth plans. That culture will
be one of openness, empowerment, and accountability.
The Chief Security Officer role is also a vital part of our
strategy in the coming year. Whilst the Group has always placed
data and cybersecurity high on its priorities the increasing
complexity in this area demands a role dedicated to this
activity.
I'd like to thank all our employees around the world, who have
helped us deliver great results in this past year, during a time of
global economic uncertainty, and internal transformation and
change.
We recognise the competitive global environment for talent, and
we believe that the new culture will provide greater engagement and
job satisfaction for our employees which we will consider
supplementing with further enhancements to remuneration and benefit
packages where appropriate.
Outlook
Our goal in the year ahead will be to continue to improve our
go-to-market approach, rapidly develop new partners, and ensure our
brand platform and market share continues to grow. These targeted
measures are what we believe will deliver ARR growth and
shareholder value.
We will also continue to increase investment into sales and
marketing activities and product development whilst ensuring we can
still generate healthy profits and cash for future investment. It's
important that we look ahead, as part of our three-year plan, to
ensure we are investing in the right places now to support that
desired growth.
As well as seeking organic growth, we will continue to monitor
the space for potential acquisition opportunities to grow the
business or bring bolt-on technology into our CDP or FDP
products.
We have started the new financial year with a stronger pipeline,
revenue already committed to the current financial year, solid
growth in ARR. I believe we have an experienced team that can
deliver, and I am optimistic about the year ahead.
Bill Bruno
Chief Executive Officer
Chief Financial Officer's Report
Overview
This has been a year of strong financial performance which is
all the more pleasing given the significant organisational change
we have been making over the same period.
Whilst investing significantly in our new FDP product we have
delivered against expectations on Revenue and Adjusted PBT, as well
as increasing Annual Recurring Revenue by 32%. The overall
performance and financial position of the Group provides us with
ample comfort to be able to increase the full year dividend by 3.9%
over last year, as well as propose a special dividend of 12.5p per
share.
During the year, we also strengthened the business by an
acquisition which provides us with improved account management
expertise to better service, maintain and grow share of wallet with
our new and existing customers alike.
We undertook a share buyback programme to hold shares in
Treasury to mitigate the dilutive effect of future share option
exercises.
We believe that all these measures along with additional steps
described below put us on a strong footing for future growth.
Income Statement
Group Revenue grew 7.3% to GBP24.5m (FY21: GBP22.8m) during a
year when the ongoing impact of the pandemic along with the global
economic situation continued to slow down buying decisions by our
prospective customers. However, the quality of revenues increased
significantly, with ARR growing 32% to GBP14.0m (FY21: GBP10.6m)
and now accounting for approximately 57% (FY21: 47%) of revenues.
We expect this ratio to continue to increase up to a level of
around 65% in the medium term.
The gross margin was 51.9% (FY21: 62.4%) due to a change in mix
of revenues. In the year there was a higher proportion of
third-party products supplied to customers which have a much lower
gross margin than the other revenue streams. We expect this to
revert in the current year to a figure in line with historic
levels.
Operating expenses reduced during the year to GBP11.0 million
(FY21: GBP11.2 million). This includes restructuring charges of
GBP0.4m (FY21: GBP0.1 million) arising from the board changes and
creation of the Operations Board. The average number of employees
increased during the year to 149 (FY21: 139) primarily due to
investment into Sales and Marketing and addition of staff with
domain expertise in the fraud space.
The adjusted profit before tax was GBP3.3 million (FY21: GBP4.4
million), whilst the unadjusted profit before tax was GBP1.8
million (FY21: GBP3.0 million). The increased difference between
the adjusted and unadjusted figures is due to a higher non-cash
charge for share-based payments arising from share option grants
during the year of GBP0.7 million (FY21: GBP0.3 million) and
restructuring costs of GBP0.4 million (FY21: GBP0.1 million).
Foreign currency risk
There was a high degree of volatility during the last few months
of the year. This impacts the Group which has around 70% of
revenues in US Dollars, but just 37% of Group expenses. The Group's
tighter policies and management of foreign currency risk meant that
the foreign currency loss was GBP0.1 million (FY21: GBP0.7
million).
Taxation
Taxable profits were lower for the year and the tax charge is
also lower for the year at an effective rate of 3.9% (FY21: 9.0%).
This low level is assisted by our significant investment into
research and development, much of which qualifies for R&D and
Patent Box tax credits in the UK. Proposed changes to qualifying
costs under the UK R&D tax credit scheme may result in smaller
claims being made in future, and a higher effective tax charge.
Financial position
The Intangibles balance of GBP10.3 million (FY21: GBP9.6
million) is comprised of Goodwill of GBP9.4 million (FY21: GBP8.7
million) from the acquisition of Celebrus in 2015, and GBP0.7
million from the acquisition of Prickly Cactus during 2021. The
balance of GBP0.8 million (FY21: GBP0.9 million) is comprised of
purchased IPR, trade names and capitalised development costs. The
Group expenses the majority of its R&D costs and capitalised
just GBP0.2 million in the year (FY21: GBP0.2 million).
Trade creditors decreased to GBP0.8 million (FY21: GBP1.4
million); this was due to normal operating cycles. The Group seeks
to pay all suppliers within terms and the supplier payment days at
the year-end were 25 days (FY21: 40 days).
Deferred revenue increased to GBP14.2 million (FY21: GBP6.3
million) partly due to a number of three-year contracts signed
during the year, as well as payment for services due to be
delivered in the first half of the current year.
Trade debtors were high at GBP25.0m (FY21: GBP10.2m) due to two
of our major partners paying just after the year end. Both of these
partners account for a number of end clients and the payments were
received during April.
The cash balance at the year-end was GBP11.4 million (FY21:
GBP14.2 million) for the reasons described above. Due to the size
and financial strength of our end customers, credit risk is not a
major risk for the Group and bad debt write-offs during the year
were nil (FY21: nil). Following the partner payments mentioned
above the free cash balance had increased to GBP26.5 million as at
30 June 2022.
Cashflow and funds
The Group used net cash in operations of GBP0.7 million (FY21:
net cash generated GBP3.3 million) primarily due to movements in
working capital from the delayed payment of debtors as described
above.
Financing activities in the year were GBP1.5 million (FY21:
GBP1.7 million) comprised mainly of dividends paid of GBP1.1
million (FY21: GBP1.1 million) and a net purchase of own shares of
GBP0.4 million (FY21: GBP0.9 million).
The Group continues to be debt free and maintains a robust
financial position whilst having claimed no funds from any
government support schemes.
The healthy cash balance is important not just to enable the
Group to invest in future growth as appropriate, but also to
counter any concerns about vendor risk from our customers, who are
typically large multinational businesses.
Annual Recurring Revenue
We define ARR as the amount of revenue contracted with a
customer, at a given point in time, that is expected to recur
within the next twelve months. As a recognised driver of
shareholder value in software businesses we use this as one of our
primary metrics.
Group ARR grew by GBP3.4m to GBP14.0 million (FY21: GBP10.6
million) during the year. The current ARR is comprised of Licenses
of GBP6.3 million (FY21: GBP3.0 million) and Support and
Maintenance of GBP7.7 million (FY21: GBP7.6 million). Therefore,
for the first time since the Group announced the move to an ARR
model the ARR value accounts for more than 50%, with a value of 57%
(FY21: 47%).
We see future growth in ARR coming primarily from CDP and FDP
sales and expect that the ARR/Revenue ratio could reach around 65%
in the medium term. We have some existing CDP customers still under
perpetual license that we will seek to convert to term licenses
with ARR. Moreover, all new proposals to prospective customers are
being issued as term licenses.
Acquisition of Prickly Cactus
In August 2021, the Company acquired Prickly Cactus Limited
("Prickly Cactus"), a UK data and analytics consultancy, for up to
GBP0.75 million. The Prickly Cactus team is experienced in product
management having previously worked with several of D4t4's partners
and customers in the key markets of Financial Services, Telecoms
and Insurance. Since the acquisition the Prickly Cactus team has
been instrumental in deepening our relationships with existing
customers identifying opportunities for greater customer engagement
and satisfaction as well as helping develop relationships with new
customers and partners.
A sum of GBP0.5 million is held as Deferred Consideration
payable to the Prickly Cactus vendors (all of whom have been
retained by D4t4) in the Statement of Financial Position contingent
upon the team's contribution to existing customer growth and the
acquisition of new customers for the CDP and FDP product groups, in
the period from acquisition to September 2023.
Earnings per share
Basic EPS for the year was 4.21p (2021: 6.88p) and diluted basic
EPS was 4.14p (2021: 6.75p). The basic figure has been calculated
using the weighted average number of shares in issue being
40,240,799 (2021: 40,235,856) and the diluted figure using
40,966,020 (2021: 41,007,252).
Adjusted basic EPS was 7.24p (2021: 9.72p) and adjusted diluted
EPS was 7.11p (2021: 9.54p) following adjustments for amortisation,
share based payments, exceptional items, foreign exchange expense
and tax on these adjustments.
Dividend
The Board is today proposing a final dividend, subject to
shareholder approval at the 2022 AGM, of 2.07p per share (2021:
2.0p), which along with the interim dividend paid of 0.85p per
share (2021: 0.81p) in January 2022 brings the full year dividend
to 2.92p per share (2021: 2.81p), an increase of 3.9%. The final
dividend is expected to be paid on 24 August 2022 to shareholders
on the register as at the close of business on 15 July 2022.
The board is also proposing a special dividend of 12.5p per
share , subject to shareholder approval at the 2022 AGM, payable to
shareholders on the register as at the close of business on 7
October 2022. The special dividend is expected to be paid on 27
October 2022.
Purchase of own shares
In December 2021, the Company commenced a share buyback
programme to acquire up to 200,000 ordinary shares of 2p in the
capital of the Company. The shares will be held for the purpose of
satisfying future obligations in relation to its employees' or
other share schemes, thereby mitigating dilution for existing
investors.
By 31 March 2022, 64,434 shares had been acquired at an average
price of 291p bringing the number of shares held in Treasury to
224,932. Since the year end, the programme has continued and the
shares held in Treasury now total 268,936.
Equity
At the year end, the Group had GBP31.9 million (FY21: GBP30.9
million) attributable to the shareholders of the company. The
increase in the year was mainly due to retained earnings in the
year of GBP1.7 million (FY21: GBP2.8 million) set off against
dividends paid during the year of GBP1.1 million (FY21: GBP1.1
million), and share buybacks of GBP0.4 million (FY21: GBP0.9
million).
Ash Mehta
Chief Financial Officer
Consolidated income statement for the year ended 31 March
2022
Note 2022 2021
GBP'000 GBP'000
-------------- ------------------------- ----- --------- ---------
Continuing operations
Revenue 3 24,459 22,792
Cost of sales (11,755) (8,566)
========================== ============= ===== ========= =========
Gross Profit 12,704 14,226
Administration expenses (11,000) (11,234)
Other operating income 58 58
========================== ============= ===== ========= =========
Profit from operations 1,762 3,050
Finance income 22 25
Financing costs (21) (32)
============= ===== ========= =========
Profit before tax 4 1,763 3,043
Tax (68) (274)
========================== ============= ===== ========= =========
Attributable to equity holders
of the parent 1,695 2,769
------------------------------------------ ----- --------- ---------
Earnings per share from continuing
operations attributable to the
equity holders of the parent
Statutory
Basic 5 4.21p 6.88p
Diluted 5 4.14p 6.75p
========================== ============= ========= =========
Consolidated statement of comprehensive income for the year
ended 31 March 2022
2022 2021
GBP'000 GBP'000
----------------------------------------- -------- --------
Attributable to equity holders
of the parent 1,695 2,769
Other comprehensive income:
Items that will not be reclassified
to profit or loss
Gains on property revaluation 70 70
Exchange differences on
translation of foreign
operations (21) 61
========================================== ======== ========
Total comprehensive income for the year
attributable
to equity holders of the
parent 1,744 2,900
------------------------------------------ -------- --------
Consolidated statement of changes in equity attributable to
Equity Holders of the Parent for the year ended 31 March
2022
Share Share Merger Revaluation Own Equity Retained Total
capital premium reserve reserve shares reserve earnings GBP'000
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 1 April 2021 808 3,365 5,981 1,240 (542) - 20,034 30,886
Dividends paid - - - - - - (1,147) (1,147)
Purchase of own shares - - - - - (377) - (377)
Issue of new shares:
exercise of share options 1 - 50 - - - - 51
Settlement of share-based
payments - - - - - 249 (140) 109
Share-based payment charge - - - - - - 619 619
Transactions with equity
holders 1 - 50 - - (128) (668) (745)
=========================== ========= ========= ========= ============ ======== ========= ========== =========
Profit for the year - - - - - - 1,695 1,695
Other comprehensive income - - - 70 - - (21) 49
Total comprehensive
income - - - 70 - - 1,674 1,744
=========================== ========= ========= ========= ============ ======== ========= ========== =========
Balance at 31 March
2022 809 3,365 6,031 1,310 (670) - 21,040 31,885
--------------------------- --------- --------- --------- ------------ -------- --------- ---------- ---------
Consolidated statement of financial position as at 31 March
2022
Note 2022 2021
GBP'000 GBP'000
--- ------------------------------ --- -------- --------- -----------
Non-current assets
Goodwill 9,446 8,696
Other intangible assets 808 872
Property, plant and equipment 4,012 4,141
Deferred tax assets 232 -
14,498 13,709
====================================== ======== ========= ===========
Current assets
Trade and other receivables 7 27,385 13,362
Tax receivables 573 414
Inventories - 129
Cash and cash equivalents 11,430 14,241
39,388 28,146
====================================== ======== ========= ===========
Total assets 53,886 41,855
=================================== === ======== ========= ===========
Current liabilities
Trade and other payables 8 (21,344) (10,691)
Lease obligations (54) (83)
=================================== ======== ========= ===========
(21,398) (10,774)
Non-current liabilities
Lease obligations (146) (194)
Deferred tax liabilities (457) (1)
(603) (195)
====================================== ======== ========= ===========
Total liabilities (22,001) (10,969)
Net assets 31,885 30,886
----------------------------------- --- -------- --------- -----------
Equity
Share capital 809 808
Share premium account 3,365 3,365
Merger reserve 6,031 5,981
Revaluation reserve 1,310 1,240
Own shares (670) (542)
Retained earnings 21,040 20,034
=================================== ======== ========= ===========
Attributable to equity holders
of the parent 31,885 30,886
-------------------------------------------------- --------- ---------
Consolidated cash flow statement for the year ended 31 March
2022
2022 2021
Note GBP'000 GBP'000
--------------------------------------- ------ --------- --------
Operating activities
Profit before tax 1,763 3,043
Adjustments for:
Depreciation of property, plant and
equipment 391 395
Amortisation of intangible
assets 306 279
Finance income (22) (25)
Finance expense 21 32
Share-based payments 619 276
Settlement of Share-based payments - 42
Gain on sale of property, plant and
equipment (16) (8)
Operating cash flows before movements
in working capital 3,062 4,034
================================================ ========= ========
(Increase) in receivables (14,023) (3,225)
Decrease in inventories 129 1,137
Increase in payables 10,171 1,312
=========
Cash generated from operations (661) 3,258
Taxes received / (paid) 1 80
=============================================== ========= ========
Net cash generated from operating
activities (660) 3,338
======================================== ====== ========= ========
Investing activities
Interest received 22 25
Purchase of property, plant
and equipment (197) (34)
Acquisition of subsidiary, net of
cash acquired 9 (200) -
Capitalisation of development
costs (242) (195)
Net cash used in investing activities (617) (204)
======================================== ====== ========= ========
Financing activities
Dividends paid (1,147) (1,090)
Lease repayments (98) (79)
Interest paid (21) (32)
Purchase of own shares (377) (868)
Exercise of share options 109 404
Net cash used in financing activities (1,534) (1,665)
======================================== ====== ========= ========
Net increase in cash and cash
equivalents (2,811) 1,469
Cash and cash equivalents at
start of year 14,241 12,772
Cash and cash equivalents at
end of year 11,430 14,241
---------------------------------------- ------ --------- --------
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 are
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 announcement does
not constitute the Group's statutory accounts for the year ended 31
March 2022 but is derived from those accounts which have been
audited and which will be filed with the Registrar of Companies in
due course.
The auditors' report on the Annual Report and Financial
Statements for the year ended 31 March 2022 was unqualified, did
not draw attention to any matters by way of emphasis and did not
contain a statement under s498(2) or s498(3) of the Companies Act
2006.
The 2022 Annual Report will be made available on the Company's
website for the purposes of the AIM Rules for Companies on 12 July
2022.
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 have been considered along
with any impact from the global economic situation and any further
impact of coronavirus.
The Directors have reviewed stress tests for future cashflows
over the 18 months to 30 September 2023 to ensure there are
sufficient financial resources, together with income from existing
contracts with a number of customers, to cover budgeted future
cashflows. On this basis, the Directors have adopted the going
concern basis in preparing these accounts.
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.
Whilst having three product groups, the Group operates the
business as a single business with no separation into divisions or
allocation or people or assets to a particular division. The
management team is responsible for all three product groups with no
individual having responsibility for a particular product group.
This is consistent with the internal reporting for management
purposes. Management does however monitor revenues by revenue
type.
Information is presented to the Board on the revenue analysis
below:
-- Product - Own IP
-- Product - 3rd party
-- Delivery services
-- Support and maintenance
The revenue analysis set out below is consistent with that
provided to the Board of Directors.
Group
2022 2021
GBP'000 GBP'000
-------- --------
Products - Own IP 6,137 9,005
Products - 3rd party 7,001 4,403
Delivery services 4,194 2,886
Support & Maintenance 7,127 6,498
Revenue 24,459 22,792
-------- --------
Major customers (partners) over 10% of revenue
2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- ---------
Customer Customer Customer Customer
1 2 1 2
Products - Own
IP 2,086 1,577 3,682 1,154
Products - 3rd
party 7,001 - 3,775 -
Delivery services 2,337 17 769 -
Support & Maintenance 2,538 1,159 2,764 1,663
Total Revenue 13,962 2,753 10,990 2,817
--------- --------- --------- ---------
Geographical information
Group
2022 2021
GBP'000 GBP'000
-------- --------
United Kingdom 3,962 2,983
Rest of Europe 2,421 2,396
United States of America 16,859 16,699
Others 1,217 714
24,459 22,792
-------- --------
The geographical revenue is determined by the domicile of the
customer.
4. Adjusted profit before tax
2022 2021
GBP'000 GBP'000
Profit before tax 1,763 3,043
Amortisation of intangible
assets 306 279
Share-based payment 678 318
Net foreign exchange differences 93 746
Costs related to acquisition during the
year 36 -
Restructuring costs 390 58
Adjusted profit before
tax 3,266 4,444
--------- ---------
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.
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:
2022 2021
GBP'000 GBP'000
----------- --- -----------------------
Profit attributable to owners
of the parent 1,695 2,769
Amortisation of intangible assets 306 279
Share-based payment 677 318
Net foreign exchange differences 93 746
Costs related to acquisition
during the year 36 -
Restructuring costs 390 58
Tax on the adjustments (284) (260)
Adjusted profit attributable to owners
of the parent 2,913 3,910
----------- --- -----------------------
2022 2021
No. No.
Basic weighted average number of shares,
excluding own shares, in issue 40,240,799 40,235,856
Dilutive effect of
share options 725,221 791,396
Diluted weighted average number of
shares, excluding own shares, in issue 40,966,020 41,007,252
----------- -----------------------
2022 2021
Pence per Pence
share per share
Basic Earnings per
share 4.21 6.88
Diluted Earnings
per share 4.14 6.75
Adjusted Basic Earnings per
share 7.24 9.72
Adjusted Diluted Earnings
per share 7.11 9.54
6. Dividends
2022 2021
GBP'000 GBP'000
-------- ----- --------
Amounts recognised as distributions
to equity holders
Final dividend for the year
ended 31 March 2021 of 2.0p
(for the year ended 31 March
2020: 1.9p) per share 805 765
Interim dividend for the year
ended 31 March 2022 of 0.85p
(31 March 2021: 0.81p) per
share 342 325
1,147 1,090
-------- ----- --------
The proposed final dividend for the year ended 31 March 2022 of
2.07p, and the proposed special dividend of 12.5p, are subject to
shareholder approval at the AGM and have not been included as a
liability in these financial statements. The final dividend is
expected to be paid on 24 August 2022 to shareholders on the
register as at the close of business on 15 July 2022, whilst the
proposed special dividend of 12.5p is expected to be paid on 27
October 2022 to shareholders on the register as at the close of
business on 7 October 2022.
7. Trade and other receivables
Group
2022 2021
GBP'000 GBP'000
------------------------ ------------------
Trade receivables 24,992 10,165
Other debtors 66 48
Prepayments 670 595
Accrued Income 1,657 2,554
27,385 13,362
------------------------ ------------------
2022 2021
GBP'000 GBP'000
------------------------ ------------------
Less than 30 days 2,699 7,070
31 to 60 days 52 126
61 to 90 days 14 2,099
91 to 120 days 22,227 870
24,992 10,165
------------------------ ------------------
The majority of the debtors shown in 91-120 days were received
in April 2022.
The average credit period taken on sales of goods and services
was 111 days (2021: 80 days).
In accordance with IFRS 9, the Group performed a year end
impairment exercise to determine whether any write down in amounts
receivable was required, using an expected credit loss model. The
expected loss rate for receivables less than 120 days old is 0% and
above 120 days has not been considered on the basis of
immateriality. In determining the recoverability of a trade
receivable the Group considers any change in the credit quality of
the trade receivable from the date credit was initially granted up
to the reporting date.
8. Trade and other payables
Group
2022 2021
GBP'000 GBP'000
-------- --------
Trade payables 840 1,450
Other taxes and social
security 396 274
Other creditors 1,239 36
Contingent consideration 500 -
Accruals 4,169 2,643
Deferred income 14,200 6,288
21,344 10,691
-------- --------
There is no material difference between the fair value of
payables and their carrying value.
Trade payables comprise amounts outstanding for trade purchases
and ongoing costs. The average credit period taken for trade
purchases is 25 days (2021: 40 days). Their carrying value
approximates to their fair value.
Contingent consideration relates to the acquisition of Prickly
Cactus Limited as described in note 9.
9. Acquisition
On 2 August 2021, the Group acquired Prickly Cactus Limited
("Prickly Cactus"). Prickly Cactus provides digital transformation
consulting to companies across the globe and has had a strategic
relationship with D4t4 for some time.
The Prickly Cactus team are experienced in product management
and customer relationships, and have previously worked with several
of D4t4's partners and customers. Within D4t4, they are focused on
driving customer success in the key markets of Financial Services,
Telecoms and Insurance and building a stable of new Celebrus
customers via partners and direct relationships.
The acquisition was part of D4t4's investment in specialist
resources to capitalise on the market opportunity for both its
Celebrus Customer Data Platform (CDP) and Fraud Data Platform
(FDP). The addition of the Prickly Cactus team was to have a
positive impact on the Group's performance in the coming
periods.
The total consideration comprised an initial consideration of
GBP0.25 million which was satisfied by GBP0.2 million in cash
(funded from current cash reserves) and by the allotment of 13,897
new ordinary shares of 2p each in D4t4 and an earn-out of up to
approximately GBP0.5 million over the period to 31 December 2023
tied to both existing customer growth and the acquisition of new
customers for the CDP and FDP. The earn-out will also be satisfied
by a mixture of cash and shares at the Company's election.
Details of the fair value of identifiable assets and liabilities
acquired, and the purchase consideration are as follows:
Fair value
Balance of assets
sheet on Fair value and liabilities
acquisition adjustments acquired
GBP'000 GBP'000 GBP'000
------------------------------------ ------------- ------------- -----------------
Trade receivables and other assets 1 (1) -
Net assets acquired 1 (1) -
Amount settled and to be settled
in cash and shares
to the sellers
Total consideration 750
Goodwill 750
Prickly Cactus contributed GBPnil to Group revenues and
GBP275,000 loss to Group results between the date of acquisition
and 31 March 2022.
10. Investor presentation
The investor presentation will be available on the company's
website www.d4t4solutions.com/ later today.
Bill Bruno (CEO) and Ash Mehta (CFO) will provide a live
presentation relating to the full year results via the Investor
Meet Company platform today at 3.00pm BST.
Investors can sign up to Investor Meet Company for free and add
to meet D4t4 via:
https://www.investormeetcompany.com/d4t4-solutions-plc/register-investor
10. Annual Report and Accounts
The 2022 Annual Report will be posted on the company's website
on 12 July 2022 for purposes of the AIM Rules for Companies. Hard
copies will also be available from the Company's registered office
Windmill House, 91-93 Windmill Road, Sunbury-on-Thames, Middlesex,
TW16 7EF.
11. Annual General Meeting
The 2022 Annual General Meeting of the Company will be held at
9am on Wednesday 3 August at the Company's registered office. This
will comprise formal business only. The directors plan to broadcast
a Q&A session later in the day via videocall. Further
information will be available on the Company's website in due
course.
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END
FR FLFEADVIEIIF
(END) Dow Jones Newswires
July 06, 2022 02:00 ET (06:00 GMT)
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