®
Annual Report & Accounts
year ending 31 March 2017
Company Registration Number 01892751
Contents
Strategic report
What we do
Headlines
Statement by the Chairman
Statement by the Chief Executive Officer
Board of Directors
Strategic report
Corporate governance
Corporate governance
Directors’ report
Directors’ remuneration report
Statement of Directors’ responsibilities
Independent Auditor’s Report
Financial statements
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Consolidated balance sheet
Consolidated cash flow statement
Company statement of changes in equity
Company balance sheet
Company cash flow
Notes (forming part of the accounts)
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3
4
8
10
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18
21
26
31
32
34
35
36
37
38
39
40
41
What we do
D4t4 Solutions is ALL ABOUT THE DATA.
We are energetically focused on solutions that
enable you to get the most from your data – from
collection through to management and analytics,
D4t4 Solutions provides comprehensive
products and services that drive value from your
information assets.
D4t4 Solutions has constantly evolved to
embrace the importance of data in delivering
benefit to a business. We have developed
pioneering technology that pushes the boundaries
of accuracy and completeness in data collection,
while further augmenting our data expertise by
collaborating with industry-leading Partners that
specialise in data management and analysis.
Our drive to continually innovate, both in the
development of our own technology and in the
resourceful delivery of partner solutions, places us at
the leading-edge of how data is used by business.
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Headlines
Revenue
(£m)
2017
2016
GP margin
(%)
17.67
2017
55.82
18.61
2016
49.52
2015*
12.90
2015*
36.37
Down by £0.94m
Up by 6.3%
Adjusted profit before tax **
(£m)
Adjusted diluted EPS **
(pence)
2017
2016
4.22
2017
9.97
3.50
2016
8.24
2015*
1.22
2015*
3.86
Up by £0.72m
Up by 1.73p
Profit before tax
(£m)
Diluted EPS
(pence)
2017
2016
4.24
2017
10.02
3.22
2016
7.64
2015*
0.65
2015*
1.92
Up by £1.02m
Up by 2.38p
* 2015 (15 months)
** Before amortisation of intangibles, share based payments charges and foreign exchange gains as
per note 13 on page 50.
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D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
Statement by the Chairman
The Board remains confident in achieving
the current market expectations for the
financial year 2017/2018 and in the long-term
prospects for the Group.
Dear Shareholder
Welcome to our first Annual Report under our new company identity. Last year at the AGM in July 2016
shareholders approved the name changeover from IS Solutions Plc to D4t4 Solutions Plc (D4T4) and having
planned the process we successfully completed the rebranding of the Group. The new name better reflects
the business environment we operate within and we have been delighted by the very positive response from
our customers, the investing community, our business partners and our colleagues around the business.
Today we acknowledge our Company as one that has transitioned to an international business that is totally
driven by data, and in delivering value for our clients from their data, continues to bring rewards. Business
intelligence and Analytics remains one of the fastest growth areas in the global IT sector therefore, with
our combination of technical “know-how” and business skills we continue to attract more new clients who
require services to help with their need to find value in both historical and new customer data.
Our Celebrus Technologies software business, which we acquired in 2015, grew strongly throughout the
course of the financial year under review; it is pleasing to report that it now represents 28% of Group
revenue, up from 18% in the previous year. This strong improvement, combined with our Analytics and
Services offerings has enabled D4t4 to increase its footprint in key sectors, particularly the finance, retail,
telecommunications and the airline business sectors in both domestic and international markets.
Going forward, our focus will remain on the collection, management and analysis of data thereby assisting
our clients to derive considerable value from their customer data.
Summary review of the year ended 31 March 2017
D4t4 has had another successful financial year. Our business has delivered profit before tax of
£4.24 million (2016: £3.22m), driven from a 6.3% increase in gross profit margin (GP) to 55.82% which was
ahead of market expectations (2016: 49.52%). The Company remains strongly cash generative and this
resulted in cash reserves up from £5.01m in 2016 to £6.29 million at the end of the year under review. The
last twelve months to March 2017 has seen the exciting ongoing evolution of our business into the data and
analytics market space with a focus on growing our Celebrus software revenues. We are delighted therefore
to see this strategy already paying off evidenced by the year on year growth of 48.8% growth in Celebrus
sales. We have been delighted to win a number of significant major contracts with both new and existing
customers; we have also invested in our partner-based sales strategy which has resulted in a number of new
partner signings. Additionally, we have extended our partner and pre-sales teams, particularly in the USA
and EMEA.
4
Our Projects business delivered sales in the year of £9.47 million, (2016: £10.67m). This result reflects two
factors; first the American presidential elections caused nervousness within our American client base, with
both existing and new clients wanting to see what the outcome of the election would mean to them before
committing to new major projects. We are able to report that these concerns appear to be easing and
confidence is returning, and those delayed decisions now appear to be moving forward. The second factor
was the reduction in projects from one of our major Japanese clients who, due to the liquidation of part of
their American business, moderated its overall group spending.
Finally, Recurring Revenues from our managed private cloud and software licence maintenance services
business delivered income of £4.49 million (2016: £4.97m). This decrease was due to the discontinued
operations from one of our partners resulting in the termination of several of our older style business
contracts. During the last year the data and analytics portion of our Recurring revenues business has
continued to grow. We expect this area of our business to return to overall growth during the financial year
ending March 2018.
During the last twelve months we have seen a shift in the mix of sales within the Group, with a growth in
higher margin licence software sales making a major contribution to the overall profitability of D4t4. Licence
new sales have increased due to expansion of our salesforce and continued growth in partners. This,
combined with the continued development of our business to the more profitable Analytics projects and
associated Recurring revenues has assisted in delivering the overall strong Group profit growth.
Financials
Revenue
Licence sales
Projects
Recurring income
Gross profit
GP margin
Profit before tax
Adjusted profit before tax*
Basic EPS
Diluted EPS
Adjusted diluted EPS
Dividend for the period
Strong cash generation - gross cash position
Year on year
2017
2016
growth
£3.71m
£9.47m
£4.49m
£17.67m
£2.97m
£10.67m
£4.97m
£18.61m
£9.86m
£9.21m
55.82%
£4.24m
£4.22m
10.49p
10.02p
9.97p
2.25p
£6.29m
49.52%
£3.22m
£3.50m
8.17p
7.64p
8.24p
2.00p
£5.01m
+24.9%
-11.2%
-9.7%
-5.0%
+7.1%
+6.3%
+31.7%
+20.6%
+28.4%
+31.2%
+21.0%
+12.5%
+25.8%
* before amortisation of intangibles, share based payments charges and foreign exchange gains as per note
13 on page 50.
Gross profit in the period was £9.86 million (2016: £9.21m) whilst profit before tax was £4.24m against
£3.22m in 2016. Administration costs were £1.83m (2016: £1.99m). Therefore, reported profit from
operations is £4.29m (2016: £3.29m) and profit for the year is £3.90m (2016: £2.94m) after tax. This includes
a foreign exchange gain for the year of £0.36m (2016: £0.09m)
Debtors grew from £2.76m to £4.27m due to timing of contracts. Inventories held at client premises totalled
£0.34m (2016: £nil) to provide reduction in leadtime and faster provision of service.
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D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
Statement by the Chairman (Continued)
Cash and cash equivalents at 31st March 2017 stood at £6.29m (2016: £5.01m), the increase is due to
conversion of current year profits. Total net assets at the end of the year were £17.55m compared to
£14.65m in March 2016. The company also has an overdraft facility of £0.25m renewable in July 2017.
Adjusted fully diluted earnings per share grew 21.0% to 9.97 pence (2016: 8.24p), unadjusted diluted EPS
was 10.02 pence (2016: 7.64 pence) up some 31.2%.
Dividend
The Board is recommending a final dividend of 1.7p. Subject to Shareholder approval at the Annual General
Meeting which is to be held on 27th July 2017, the final dividend will be paid on 18th August 2017 to
Shareholders on the Register at the close of business on 14th July 2017. The Ordinary shares become
ex-dividend on 13th July 2017.
As we have previously indicated 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 performance, with appropriate cover in the range of 3-4 times.
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.
Board changes
In September 2016 we welcomed Mark Boxall to the Main Board. Mark joined D4t4 in November 2015.
Mark has over 20 years of experience of the IT industry. He has considerable operational, sales and financial
experience having been both board director and senior manager at technology consultancies and product
based technology companies such as rbase, Morse, PTC and Siemens. Mark has had a major impact on the
business with his work on the successful integration of Celebrus into D4t4.
In December 2016 we welcomed Matthew Tod to the Main Board. Matthew joined D4t4 in April 2016,
to head up our new Data Insight practice. He has over 25 years experience in digital technologies,
focused on customer analytics; prior to joining us he helped build PwC’s analytics and digital
transformation strategy capabilities within retail and consumer sectors. Matthew is already making
a contribution to the business and
with our analytics practice which
is successfully working with clients
to enable them to gain tangible
competitive advantage from their
data assets.
At the last AGM Peter English and
Michael Tinling retired from the Board
both having been involved with the
company since its formation. On
behalf of all stakeholders, the Board
thanks Peter and Michael for their
contribution and wise counsel over the
years and wishes them many years of
happy retirement.
6
Matthew Tod
Chief Data Officer
Mark Boxall
Chief Operating Officer
People
During the year the Group employed 124 staff in its operations located in India, EMEA and the USA.
The Board would like to welcome all new colleagues to the business and to thank everyone for their
contribution to another successful year in a working environment that has undergone major transformation and
change. Throughout this time our colleagues have demonstrated outstanding efforts and commitment to ensure
that we continue to deliver a high level of customer satisfaction for both our Product and Service offerings.
As we move on, I look forward to witnessing their ongoing development and contribution as we strive to
deliver the ambitions of our “All about the Data” message across the globe.
Current trading and outlook
There will always be macroeconomic factors that no business can fully mitigate against including currency
volatility and more recently the possible wider potential implications of BREXIT.
We remain confident in the Group’s strategy; our underlying business is performing well and delivering
against our key KPIs. In addition, the investment and growth in our Indian development and support facility
has continued apace; this together with the expansion of our US office and the renewed confidence from
our US client base provides us with a platform for further growth and we are well-positioned to exploit
opportunities in our key markets and sectors.
In conclusion, delivery against our Group’s strategy remains on course and, this combined with the current
revenue visibility, order book and pipeline of opportunities all bode well for the future. As a result the Board
remains confident in achieving the current market expectations for the financial year 2017/2018 and in the
long-term prospects for the Group.
We hope to see you at the AGM in July; and in addition we will keep you abreast of our developments
throughout the year.
Peter Simmonds
Chairman
26 June 2017
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D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements Statement by the Chief Executive Officer
We are confident in our ability to deliver
quality Data Management and Data
Analytics related solutions to our clients
whilst we remain very enthusiastic about the
opportunity to become recognised as the
leader in the Data collection marketplace
The geographical reach and business diversity that our partners bring to us is key to our
future growth.
We are confident in our ability to deliver sustained profitable growth for the Group and
long-term value for shareholders.
Dear Shareholder
At the beginning of the year being reported upon I took over the role of CEO. At that time I presented to you
our “All about the Data” and “Data Solutions for all” messages, I also explained our business refocus and
the rebranding of the company.
Jump forward 12 months and I am delighted to once again report a further year of very positive progress
aligned with the strategic plan set out by the Board and the rebranding implementation programme
launched in April 2016.
In 2016, we stepped up our investment in both business development and product development, and at the
same time improved gross margins and earnings.
The Group has also added notable clients across its markets both locally and internationally including eight
banks/financial institutions, a telecoms provider, two international retailers and two business airlines.
All about the data
Our “All about the Data” message has been well received by our staff, our clients and business partners.
This concept has clearly assisted in the marketing of our services, delivering what is recognised as a much
clearer defined message about what we do well as a Company.
We are happy and fortunate that so many of our new (and long serving) clients are agreeable to give
testament to our key strengths, services and technical capabilities in that they are willing to either talk one
on one with prospective clients or stand up in front of audiences at industry events and explain the benefits
of using D4t4’s technology and services.
Objectives and strategy
As stated last year we have been in the process of extending our Celebrus software products in terms of
functionality and by doing so this has enabled the software to be used in other industry verticals.
We continue to deliver on our strategy 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.
We are very encouraged to see more and more opportunities to combine our Products and Service offerings
to create innovative ways for our clients who require solutions to deal with their data mountains and show
them how to modernise and monetise that data.
8
We also offer a low risk service to clients who do not necessarily want to use a public cloud offering and
who require public / private and hybrid cloud alternatives and more recently we have seen an increase in
demand for our remote managed, on premise, appliance based versions or “data centre in a box”.
We provide Data Migration services as an integral part of our Service offering and continually find this to be a
differentiator from other software companies.
Notably all our services are governed by our ISO27001/2013 compliant data security platform and where
required our Payment Card Industry (PCI DSS) compliant security platform.
We continue to extend our reach via our existing and new business partnerships and more recently we were
pleased to welcome the likes of Microsoft and Corios into our partner programme. We strongly support
the view that the geographical reach and business diversity that our partners bring to us is key to our future
growth.
Outlook and opportunities
Over the last year we have made tremendous strides and achieved so much across the business. Our
rebranding has given us a fillip and our strategy is delivering and on track. Furthermore we have ambitious
plans to address this fast-growing market we operate within through delivering exciting and innovative
product and services that meet customer demand and returns for the business.
We are confident in our ability to deliver quality Data Management and Data Analytics related solutions to
our clients whilst we remain very enthusiastic about the opportunity to become recognised as the leader
in the Data collection marketplace through our valuable asset of Celebrus Technologies which has afforded
many new opportunities since acquiring it back in 2015.
With our current activities and pipeline of opportunity mixed with the return in business confidence within
our North American customer base post the US elections we are confident in our ability to deliver sustained
profitable growth for the Group and long-term value for shareholders.
I hope that you enjoy reading about our progress in this Annual Report and I look forward to keeping you
updated on our business throughout the rest of this year.
Peter Kear
Chief Executive Officer
26 June 2017
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D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
Board of Directors
Peter Kear
Chief Executive Officer
Peter co-founded the company in 1985 and became CEO in 2016, having
been responsible until then for both the sales and business development
aspects of the company. His position as CEO involves overall responsibility
for the management of the Group’s activities and he works closely with the
other executive directors on the determination of the Group’s overall strategy.
Carmel Warren
Chief Financial Officer
Following the acquisition of Celebrus in 2015, Carmel became CFO.
Carmel is a fellow of the Institute of Chartered Accountants in England and
Wales. She has held senior positions at EY, ExxonMobil and Brightside
Group Plc prior to joining Celebrus in 2007 as a board director.
Jim Dodkins
Chief Technical Officer
Jim is responsible for the Company’s strategic direction in technology,
specialising in solution architecture for D4t4 Solutions and its clients.
Prior to joining D4t4 Solutions he worked for Logica plc in various roles,
where he gained wide industry experience and later managed the division
responsible for projects in the Broadcast and Media sector.
Mark Boxall
Chief Operating Officer
Mark has considerable operational, sales and financial experience having
been both board director and senior manager at technology consultancies
and product based technology companies such as rbase, Morse, PTC and
Siemens, and most recently Dell EMC.
Matthew Tod
Chief Data Officer
Prior to joining D4t4 Solutions, Matthew had established himself as a
digital data expert within the key sectors of retail, e-commerce, mail-
order, media, consumer goods and insurance. His company, Logan Tod &
Co. was aquired by PwC in 2012 and he became a partner within PwC’s
Customer Consulting Group.
Peter Simmonds
Non-executive Chairman
John Lythall
Non-executive Director
Roger McDowell
Non-executive Director
Peter was CEO of dotDigital Group
plc for eight years and a major
contributor to their success prior to
stepping down into the role of non-
executive director.
John co-founded the company in
1985 and was Managing Director
of D4t4 Solutions from 1985 to
2016 before moving to a non-
executive director position.
Widely experienced Chairman,
Non-executive Director and
board committee member.
Roger holds directorships in a
number of companies.
10
Strategic report
Our marketplace
D4t4 Solutions operates within the fast-growing
data and analytics market.
This market encompasses ‘big data’, artificial
intelligence, machine learning and business
intelligence and has been estimated to be worth
US$130 billion by the independent analyst IDC,
with a projected growth of 11.7% annually until
2020 when the market is projected to be worth
US$203 billion.
The specific area of focus for D4t4 is data and
analytics related to consumers; the collection
of data on how consumers interact with digital
channels, the management and analysis of the
data and the implementation of cost effective
solutions to assist companies get real value from
their data assets.
D4t4 Solutions is a small company within the
context of this rapidly evolving marketplace,
however the niche the company occupies is a very
viable area for strong growth from a small base.
Four key trends
Open source technology, in the form of tools
like Hadoop and Apache Spark, have even
greater momentum than in prior years.
However, in almost every case a core open
source technology solution is complemented
with paid for technology.
D4t4 Solutions is fully aware of these key trends
and takes them into account when devising
strategy and tactics to deliver growth. All these
developments are being harnessed by the business
on a day to day basis to drive growth.
Our Company vision, values & objectives
D4t4 aims to become the leading independent
technology company in the field of customer
data collection and related solutions, delivering
annual profit growth and capital appreciation to
shareholders.
These objectives will be achieved through our
core values of innovation, trust, collaboration
and security and by enhancing the required core
capabilities of data collection, data management,
data analysis and delivering data solutions.
The market for data technologies and services is
evolving very rapidly with many changes. There are
Our strategy
four key trends in the market that D4t4 Solutions is
To deliver the vision, our strategy will be to
monitoring closely:
Increasing focus on gaining competitive
advantage from data is being seen in every
industrial sector. There are now more examples
of organisations getting real advantage from
data and this is stimulating the market.
Artificial intelligence has advanced and is
accelerate growth of our own software revenues,
currently primarily derived from our data collection
software product Celebrus which operates in fast-
growing competitive market segments; increasing
Celebrus revenues creates high margin sales in
the short term as well as building a longer-term
recurring revenue stream.
entering the mainstream of business use.
We will seek to balance software revenues with
This trend fuels the need for high quality data
income generated from developing and deploying
and data solutions that aggregate disparate
complementary ‘big data’ solutions that combine
sources of data.
the services, software and hardware needed to
Cloud growth continues at pace, and more
help our clients get strategic advantage from their
enterprises, in more countries, are trusting the
data. This business, whilst less predictable, is
cloud with their data. This trend means that
profitable, can help facilitate the sales of software
software vendors working with consumer data
and also generate significant recurring revenues
need to be able to offer both on-premises and
from the ongoing management of solutions.
cloud based solutions.
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D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
OUR BUSINESS MODEL
r o p e r t y P
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Partne r s
Intellectu al p
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12
D4t4 Solutions business model is based upon five
interdependent elements:
People
Partners
People are at the heart of the business; they
Our route to market, to sell our software and
understand the markets we operate in, create
solutions, is through partnerships with third party
innovative solutions, write product code, drive
organisations, including SAS Institute, Dell EMC,
sales and deliver solutions. D4t4 Solutions seeks
Teradata, Microsoft and Adobe. The solutions we
to attract and retain the best talent in our market in
deliver primarily contain components from SAS
order to continue to drive the business forward.
Institute and Dell EMC and now our own software,
Intellectual property
To deliver the strategy the business will continue
to invest in developing intellectual property.
Competitive advantage is maintained through
Celebrus. We do joint sales and marketing
activities with our partners to generate the majority
of our sales.
Security
this continual investment in the core capabilities of
Data security is vitally important to our clients.
our software product, developing solution
Regulations, such as the European General Data
‘know-how’, applying for additional legal protection
Protection Regulation, and the nature of the
for our intellectual property and the development of
customer data D4t4 Solutions handles means
a network of partners who rely on the technology
secure process and facilities that enable ISO27001
and PCI (Payment Card Industry) compliance are
needed. Our software also must be tested to the
highest levels to ensure it is secure.
for their own business.
Core capabilities
Our people and intellectual property combine to
create four core capabilities that underpin the
success of the business:
i.
Data Collection software (Celebrus)
and skills
ii. Data Management facilities and skills
iii. Data Analytics capabilities and solutions
iv. Data Solutions that are on premise
or in the cloud and combine
hardware, software and services
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D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
Strategic report (Continued)
Our business in action
Our data
collection software
running on in excess of
25,000
websites
In excess of
1 billion
user sessions
collected every month
Clients in
21countries
EXAMPLE CLIENT
5 Petabytes of data stored
(approx 11.5 million files)
23 Terabytes (TB) of RAM
120 TB of cache storage
500 processor cores
14
Risks and uncertainties
Apart from the normal economic, commercial and political risks facing any UK based business the major
risks and uncertainties to the Group are:
Loss of a major client or sales partner
Loss of a relationship with a major supplier
The development of new technologies which may adversely impact the Company’s proprietary software
Loss of key people
Breach of the systems security
Exchange rate fluctuations
Regulation on the collection of data that reduces the size of the market or creates an adverse trend
To mitigate these risks and uncertainties:
The business has specific relationship management systems in place for both clients and partners.
The Company continually scans the market for potential technology threats and has a development
process in place to ensure its own technology continues to evolve to meet client needs
Key individuals are identified and succession plans put in place.
The Group undertakes research and development into various technologies on an ongoing basis with
various suppliers
A comprehensive set of controls such as identified in our Information Managememt Security System
(ISMS) which is compliant with ISO27001 and subject to regular external audit and certification has
been implemented
As the Group undertakes an increasing amount of business outside the UK (usually priced in US$) it
becomes more exposed to exchange rate fluctuations. This led to a review of pricing policies and
closer monitoring of credit terms for external businesses in the early part of last year.
The Board manages the Group’s capital, reserves, borrowings and cash to ensure that the business
continues to operate as a profitable going concern. There are no externally imposed capital requirements.
Our Key Performance Indicators (KPIs)
The Group’s financial KPIs are revenue, cash, gross profit margin, profit before tax and earnings per share
and growth in software sales.
Revenue
Cash
Gross profit margin
Profit before tax
Earnings per share adjusted diluted
Earnings per share diluted
Earnings per share basic
Celebrus year-on-year growth
2017
£17.67m
£6.29m
55.82%
£4.24m
9.97p
10.02p
10.49p
48.80%
2016
£18.61m
£5.01m
49.52%
£3.22m
8.24p
7.64p
8.17p
-
In 2016/17, five of the six KPIs recorded improvement, with the sixth reflecting revenue which, as previously
reported, was adversely affected by a lengthening of data solutions sales cycle: this was due primarily to the
unexpected election result in North America which caused a number of client initiatives to be put on hold for
a few months. These initiatives are now back underway, and they are expected to bear fruit in the first six
months of the financial year ending March 2018.
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D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
Strategic report (Continued)
Business review
The performance of the business has been covered in the Chairman’s statement (Page 4) and the Chief
Executive Officer’s statement (Page 8).
Outlook
The evolution of our business over the last two years has been significant, however there remains more to
be done to complete the transformation of D4t4’s business model and to further enhance the Celebrus
software offering.
We have acquired a strong balance of skills and experience across the management team to lead and drive
the business to the next stage in its development. Based on our new focus the Company is well positioned
to achieve solid growth powered by its own technology that is aligned to fast growing markets.
Therefore, the Board remain confident in its strategy, our future prospects and expectations for the Group’s
full year performance.
Peter Kear
Chief Executive Officer
26 June 2017
16
CORPORATE
GOVERNANCE
18 Corporate governance
21 Directors’ report
26 Directors’ remuneration report
31 Statement of Directors’ responsibilities
32 Independent Auditor’s report
Audit Committee
The Audit Committee comprises three non-
executive Directors of the Company, Peter
Simmonds, Roger McDowell and John Lythall
(effective 1 April 2016). The committee is chaired
by Peter Simmonds and met twice during the year
under review. It operates under formal terms of
reference, which are available on request from the
Company Secretary or at the AGM. The committee
provides a forum for reporting by the Group’s
auditors. By invitation, the meetings are also
attended by the CEO and CFO of the Company.
The Audit Committee is responsible for reviewing a
wide range of financial matters including ensuring
that the financial performance of the Group is
adequately measured and controlled, correctly
represented, reported to and understood by the
Board. The Audit Committee advises the Board on
the appointment of external auditors and on their
remuneration, both for audit and non-audit work,
and discusses the nature and scope of their audit.
The Audit Committee meets the auditors at least
once a year without any executive Directors present.
The Audit Committee includes one financially
qualified member as recognised by the Consultative
Committee of Accountancy Bodies. All Audit
Committee members are expected to be financially
literate. Following the above, the Audit Committee
has recommended to the Board that RSM UK Audit
LLP is re-appointed.
Corporate governance
The Directors recognise and value the importance
of high standards of corporate governance
and observe the requirements of the Quoted
Companies Alliance Guidelines to the extent that
they are considered reasonably practicable in the
light of the Company’s size, stage of development
and resources. The Board also ensures that proper
procedures are adhered to with regard to the
preparation and approval of the Company’s annual
and half yearly financial statements.
For the year under review the Board considered
that the Company is not of sufficient size to warrant
a Risk Management Committee.
A statement of the Directors’ responsibilities
in respect of the accounts is set out on page
31. Below is a brief description of the role of
the Board and its committees, followed by a
statement regarding the Group’s system of internal
controls and procedures, Board reviews, auditor
independence, risk management, investor relations
and financial reporting.
The Board
The Board comprises three non-executive
Directors and five executive Directors and is
responsible to shareholders for the proper
management of the Group. The non-executive
directors are Peter Simmonds (who is chairman
of the Board and senior independent director),
John Lythall, and Roger McDowell. The terms
and conditions of engagement of the three non-
executive Directors are available on request from
the Company Secretary or at the AGM.
The Board met 12 times in the year under
review, reviewing trading performance, setting
and monitoring strategy, and examining major
capital expenditure and acquisition opportunities.
A procedures manual for Directors and senior
managers has been adopted which reserves
decisions on specific matters to the Board,
which include strategic matters and approval of
annual plans or variations there to. All Directors
have access to the advice and services of the
Company Secretary.
18
Remuneration Committee
The remuneration Committee comprises three
non-executive Directors, Peter Simmonds, Roger
McDowell and John Lythall (effective 21 April
2016) and is chaired by Peter Simmonds. The
Committee met two times in the year under review
and operates under formal terms of reference,
which are available on request from the Company
Secretary or at the AGM. It is responsible for
reviewing and determining the policy of the
Group on executive remuneration including
specific remuneration packages for each of the
executive members of the Board, pension rights
and compensation payments. The Committee is
also responsible for monitoring compliance with
the implementation by the Company of the legal
requirements and, so far as is reasonably practical,
recommendations and guidelines relating to
Directors’ remuneration.
The Board’s report to shareholders on how
Directors are remunerated together with details of
the individual Directors’ remuneration packages is
to be found on pages 26-30.
Nominations Committee
The nominations Committee comprises two non-
executive Directors, Peter Simmonds and Roger
McDowell and Peter Kear, CEO and is chaired by
Peter Simmonds. The Committee met once in the
year under review.
Under its terms of reference the Committee will be
responsible for regularly reviewing the structure,
size and composition of the Board; giving full
consideration to succession planning for directors
and senior executives and keeping under review
the leadership needs of the organisation. The
Committee will identify and nominate, for approval
by the Board, candidates to fill vacancies as
and when they arise. As part of this process the
Committee will be responsible for overseeing
an open and transparent process for identifying
suitable candidates.
Internal controls
The Directors are responsible for the Group’s
system of internal control and for reviewing its
effectiveness which, by its nature, can only provide
reasonable and not absolute assurance against
material misstatement or loss regarding:
i.
ii.
the safeguarding of assets against
unauthorised use or disposition; and
the maintenance of proper accounting records
and the reliability of financial information used
with the business or for publication.
The Board has reviewed the effectiveness of the
Group’s internal control systems from the period 1
April 2016 to the date of approval of these financial
statements. The Board reviews the effectiveness of
its control assessment system on a regular basis.
Given the current size of the Group, the Directors
consider that an internal audit function would not
be appropriate. However this matter is kept under
review.
The Board has established procedures which are
designed to provide effective internal control for
the Group and these include:
Control Environment and Procedure
The Directors have in place an organisational
structure with clearly defined levels of responsibility
and delegation of authority. Group policies and
procedures are set out in formal procedure
manuals which are held by all operating
companies. These include annual budgets, detailed
review and appraisal procedures, designated
levels of authority and levels for board approval.
In particular, there are clearly defined guidelines
for the review and approval of capital expenditure
projects and, where appropriate, due diligence
work will be carried out when a business is to
be acquired.
19
D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
Corporate governance (Continued)
It is Board policy that executive Directors receive
suitable training for their position, which is
considered as part of the appraisal process.
worthiness of clients and, although the Company
has a strong balance sheet, on cash flow.
Investor Relations
Investor relations are managed mainly through
the Annual General Meeting of the Company
and on an ad hoc basis through enquiry from
investors of the Directors of the Company. The
Company encourages two-way communications
with both its institutional and private shareholders
and responds quickly to all queries received. The
executive Directors hold regular meetings with
major shareholders, and provide feedback of these
meetings to the rest of the Board, including non-
executive Directors, to inform them of the views of
the major shareholders.
Financial Reporting
The Group has a comprehensive system of
financial reporting. There is a detailed budgeting
system in place which includes the plan of the
operating Company being approved by the
executive Directors whilst the Board approves
the overall Group budget. On a monthly basis,
actual results are reported against budget and
any significant adverse variances examined and
remedial action taken.
Revised forecasts for the year are prepared each
quarter. Rolling quarterly cash forecasts are
prepared on a monthly basis.
On behalf of the Board
Michael Tinling LLb, Company Secretary
26 June 2017
The Directors and operating Company
management meet on a regular basis to
communicate the Group’s commitment to
professionalism and competence.
A formal whistle-blowing policy is in place
and is communicated to employees via an
employee manual.
Board Review
The Board annually reviews the effectiveness of
itself, its committees and the individual Directors in
the following manner:
(i)
The Role of the committees is considered by
the executive Directors without the presence of
the non-executive Directors.
(ii) The Chairman and CEO examine the
contribution and effectiveness of the individual
Directors with regard to their line role
and contribution at Board meetings.
(iii) The whole Board examines its purpose
and effectiveness with regard to identified
key areas.
(iv) The whole Board considers its structure,
size and composition with particular regard to
the skills, knowledge and experience
of its members and otherwise as advised by
the Nominations Committee.
Auditor Independence
The Board has considered the issue of external
auditor independence and is satisfied that
independence has been maintained. Audit
Committee approval is required before the external
auditor may perform any non-audit work.
Risk Management
The Directors and operating Company management
have a clear responsibility for identifying risks facing
each of the businesses and for putting in place
procedures to mitigate and monitor risks. Risks
are formally assessed during the annual budget
process, which is monitored by the Board, and the
ongoing Group strategy process. There has been
(and continues to be) particular focus on credit
20
Directors’ report
The Directors present their annual report and the
audited financial statements for the year ended 31
March 2017, which should be read in conjunction
with the Strategic Report on pages 11 to 16. The
Corporate Governance Statement set out on pages
18 to 20 forms part of this report.
related legislation. The Articles themselves may be
amended by special resolution of the shareholders.
The powers of Directors are described in the
Main Board Terms of Reference, copies of which
are available on request, and the Corporate
Governance Statement on page 18.
Incorporation
D4t4 Solutions Plc is a company incorporated
in the United Kingdom under the Companies
Act 1985. The company changed its name from
I S Solutions plc to its current name by special
resolution passed on 20th July 2016.
Dividends
The Directors recommend a final dividend of 1.7p
(2016: 1.5p) per ordinary share to be paid on
18 August 2017 to ordinary shareholders on the
register on 14 July 2017.
Future outlook
The Groups future outlook and opportunities are
referred to in the Chief Executive Officer report on
page 9.
Capital structure
Details of the authorised and issued share capital,
together with details of the movements in the
Company’s issued share capital during the year
are shown in note 22. The Company has one class
of ordinary shares which carry no right to fixed
income. Each share (other than shares held in
treasury) carries the right to one vote at general
meetings of the Company.
There are no specific restrictions on the size of a
holding nor on the transfer of shares, which are
both governed by the general provisions of the
Articles of Association and prevailing legislation.
The Directors are not aware of any agreements
between holders of the Company’s shares that may
result in restrictions on the transfer of securities or
on voting rights.
Details of employee share schemes are set out in
note 26.
No person has any special rights of control over
the Company’s share capital and all issued shares
are fully paid.
With regard to the appointment and replacement
of Directors, the Company is governed by its
Articles of Association, the Companies Acts and
Under its Articles of Association, the Company has
authority to issue 50,000,000 ordinary shares.
There are a number of agreements that take
effect, alter or terminate upon a change of control
of the Company following such as commercial
contracts, bank loan agreements, property lease
arrangements and employees’ share plans. None
of these are considered to be significant in terms
of their likely impact on the business of the Group
as a whole. Furthermore, the Directors are not
aware of any agreements between the Company
and its Directors or employees that provide for
compensation for loss of office or employment that
occurs because of a takeover bid.
Going Concern
The Group’s business activities, together with
the factors likely to affect its future development,
performance and position are set out above
and the risks and uncertainties summarised
below. The Group and Company has sufficient
financial resources to cover budgeted future
cash-flows and also has contracts in place with
a number of customers and suppliers across
different geographic areas and industries. As
a consequence of these factors, the Directors
believe that the Group is well placed to manage its
business risks successfully.
Having reviewed the future plans and projections
for the business, the Directors believe that
the Group and Company and its subsidiary
undertakings 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.
In accordance with the Companies Act s414c(11)
information in relation to the business and risks is
shown in the Strategic Report.
Financials risks and policies
Refer to note 28.
21
D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements Directors’ report (Continued)
Supplier Payment Policy
It is the Company’s policy to pay all claims from suppliers according to agreed terms of payment upon receipt
of a valid invoice which is materially correct. The Company does not follow a code on standard payment
practice. At 31 March 2017 the Company had 65 days (2016: 67 days) of outstanding liabilities to creditors.
Directors and Directors’ Interests
The Directors who held office during the year and to the date of signing, unless otherwise stated, were as
follows:
PJ Kear
JL Dodkins
CE Warren
MG Boxall (appointed 26 September 2016)
ML Tod (appointed 21 December 2016)
PA Simmonds
J Lythall
RS McDowell
MLS Tinling (retired 20 July 2016)
PD English (retired 20 July 2016)
At the AGM, MG Boxall (appointed as director by the Board of Directors on 26th September 2016) and ML
Tod (appointed as director by the Board of Directors on 21st December 2016) will offer themselves for re-
appointment in accordance with the Articles.
The Directors who held office at the end of the financial year had the following interests in the ordinary
shares of the Company as recorded in the register of Directors’ share and debenture interests.
PJ Kear
JL Dodkins
CE Warren
Class of shares
Interest at Interest at
31 March 2017
1 April 2016 *
Ordinary 2p
Ordinary 2p
Ordinary 2p
1,340,752 1,340,752
490,266 455,266
129,275 nil
MG Boxall (appointed 26 Sept 2016) Ordinary 2p
10,000 10,000
ML Tod (appointed 21 Dec 2016)
Ordinary 2p
nil nil
PA Simmonds
J Lythall
RS McDowell
Ordinary 2p
Ordinary 2p
Ordinary 2p
251,500 141,500
1,848,960 2,278,960
1,350,000 2,350,000
* or date of appointment if later
22
During the year the Directors received dividends on their shares at the same rate as any other shareholder.
Details of share options can be found on page 30.
During 2015 the directors made loans to the company to facilitate the acquisition of SpeedTrap Holdings ltd.
These have now been repaid except for the J Lythall loan £119,360 (2016: £119,360) which is in the name of
his spouse, Mrs P Lythall. The loan continues to earn interest at the rate of 3% above Base (and cannot be
repaid without HSBC bank’s permission).
Substantial Holdings
As far as the Directors are aware, as at 20 June 2017, the only holdings of 3% or more of the Company’s
issued share capital are the following:
Hargreave Hale, Stockbrokers
River & Mercantile Asset Management
Hargreaves Lansdown, Stockbrokers
Beaufort Securities
J Lythall Esq
Herald Investment Management
Number of
ordinary shares %
6,032,440 15.89
2,417,313 6.37
1,837,936 4.84
1,700,400 4.48
1,610,000 4.24
1,395,000 3.68
HALB Nominees Limited (including 1,350,000 held by RS McDowell Esq) 1,395,000 3.68
P Kear Esq
M Ward Esq
BarclayShare Nominees Limited
1,340,752 3.53
1,283,532 3.38
1,245,065 3.28
Acquisition of the company’s own shares
At the end of the year, the Directors had authority, under the shareholders’ resolution of 20 July 2016, to
purchase through the market up to 3,656,840 of the Company’s shares at a maximum price of 105% of the
average middle market price for the five business days immediately preceding the date of purchase and a
minimum price of 2p per share. This authority expires at the AGM to be held on 27th July 2017. 140,450
shares were purchased in the year ending 31 March 2017.
Own shares are ordinary 2p shares purchased in order to satisfy outstanding option obligations. Sales from
own shares are the shares issued to option holders on exercise of their options. The maximun number of
own shares held in the year was 125,063 (2016: 266,584).
23
D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
Directors’ report (Continued)
The following purchases and sales of own shares (shares held in treasury) have been made:
Share price
at point of
transaction
in pence
Number of
own shares
% Share
capital
Balance of own shares (shares held in treasury) at 1 April 2015
137,452
Sale of own shares (20/04/15)
Sale of own shares (20/04/15)
Purchase of own shares (4/12/15)
Sale of own shares (7/12/15)
Purchase of own shares (18/12/15)
Purchase of own shares (7/1/16)
Purchase of own shares (14/3/16)
Sale of own shares (24/3/16)
Sale of own shares (24/3/16)
Balance of own shares (shares held in treasury) at 31 March 2016
Purchase of own shares (27/6/16)
Purchase of own shares (9/9/16)
Sale of own shares (15/9/16)
Purchase of own shares (23/9/16)
Sale of own shares (26/9/16)
Sale of own shares (7/12/16)
Purchase of own shares (17/1/17)
Sale of own shares (22/3/17)
Balance of own shares (shares held in treasury) at 31 March 2017
(30,000)
(11,786)
110,000
(105,000)
73,772
22,146
70,000
(248,638)
(3,333)
14,613
85,450
25,000
(73,258)
20,000
(70,000)
(1,000)
10,000
(7,406)
3,399
56.00
56.00
100.00
106.50
101.50
97.92
120.00
136.00
122.00
116.59
123.50
137.00
136.87
136.50
180.00
172.00
156.70
0.39%
0.08%
0.03%
0.30%
0.03%
0.20%
0.06%
0.19%
0.68%
0.01%
0.04%
0.23%
0.07%
0.20%
0.05%
0.19%
0.00%
0.03%
0.02%
0.01%
Employees
The Group has a policy of offering equal opportunities to employees at all levels in respect of the conditions
of work. Throughout the Group it is the Board’s intention to provide employment opportunities and training
for disabled people and to care for employees who become disabled having regard to aptitude and abilities.
Regular consultation and meetings, formal or otherwise, are held with all levels of employees to discuss
problems and opportunities. Information on matters of concern to employees is presented in house.
The company operates share option schemes which are open to all employees. The three current Schemes
are the IS Solutions Employee Share Options ‘A’ Scheme, the IS Solutions Employee Share Options ‘B’
Scheme and the IS Solutions EMI Share Options Scheme.
Treasury Policy
The Group’s operations are funded by cash reserves. The Group has taken a mortgage to fund the purchase
of its land and building. The policy of the Group is to ensure that all cash balances earn a market rate of
interest. Bank relationships are maintained to ensure that sufficient cash and unutilised facilities are available
to the Group.
24
Research and Development
The group has continued to attach a high priority to research and development throughout the year aimed at
the development of new products and maintaining the technological excellence of existing products.
Financial Instruments
The Group’s financial risk management objectives and policies are discussued on page 57 within note 28 to
the accounts.
Branch operations
The group has branch operations located in Chennai, India.
Political and Charitable Contributions
The Group made no political contributions or charitable donations during the year (2016: £nil).
The Company holds Directors and Officers Liability insurance.
Disclosure of Information to the Auditor
In the case of each of the persons who are Directors of the Company at the date when this report was
approved:
so far as each of the Directors are aware, there is no relevant audit information (as defined in the
Companies Act 2006) of which the Company’s auditor is unaware; and
each of the Directors has taken all the steps that he/she ought to have taken as a Director to
make himself/herself aware of any relevant audit information (as defined) and to establish
that the Company’s auditor is aware of that information
This confirmation is given and should be interpreted in accordance with the provisions of s418 of the
Companies Act 2006.
Auditor
In accordance with Section 489 of the Companies Act 2006, a resolution for the re-appointment of RSM UK
Audit LLP as the auditor of the Company is to be proposed at the forthcoming Annual General Meeting.
By order of the Board
PJ Kear
Director
Windmill House, 91-93 Windmill Road,
Sunbury-on-Thames, TW16 7EF
26 June 2017
25
D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
determined by the Board within limits set out in the
Articles of Association.
There are four main elements of the
remuneration package for executive directors and
senior management:
Basic annual salary (including directors’ fees)
and benefits;
Annual bonus payments;
Share option incentives; and
Pension arrangements.
The Company’s policy is that a substantial
proportion of the potential remuneration of the
executive directors should be performance related.
Executive directors are entitled to accept
appointments outside the Company providing that
the Chairman’s permission is sought and fees in
excess of £20,000 from all such appointments are
accounted for to the Company.
Basic salary
An executive director’s salary is determined by
the Committee in March of each year and when
an individual changes position or responsibility.
In deciding appropriate levels, the Committee
considers the Company as a whole and relies
on objective research which gives up-to-date
information on a comparable group of companies.
In addition to basic salary, the executive directors
receive certain benefits-in-kind, principally a car (or
car allowance) and private medical insurance.
Directors’ remuneration report
Introduction
This report has been reviewed by the Company’s
remuneration Committee and approved by
the Board.
Remuneration committee
The remuneration Committee comprises three
non-executive Directors, Peter Simmonds, Roger
McDowell and John Lythall (effective 21 April
2016) and is chaired by Peter Simmonds. The
Committee’s terms of reference also require it to
meet not less than once each year. It is responsible
for reviewing and determining the policy of the
Company on executive remuneration including
specific remuneration packages for each of the
executive members of the Board, pension rights
and compensation payments. The Committee is
also responsible for monitoring compliance with
the implementation by the Company, of the legal
requirements, and (so far as reasonably practical)
recommendations and guidelines relating to
Directors’ remuneration.
None of the Committee has any personal financial
interest (other than as shareholders or as noted in
the Directors’ Report), conflicts of interests arising
from cross-directorships or day-to-day involvement
in running the business. The Committee makes
recommendations to the board. No Director plays
a part in any discussion about his or her own
remuneration.
In determining the executive Directors’
remuneration for the year, the Committee consulted
Mr Peter Kear, CEO.
Remuneration policy
Executive remuneration packages are prudently
designed to attract, motivate and retain Directors
of the high calibre needed to maintain the
Company’s position as a market leader and to
reward them for enhancing value to shareholders.
The performance measurement of the executive
Directors and key members of senior management,
and the determination of their annual remuneration
package are undertaken by the Committee. The
remuneration of the non-executive Directors is
26
and conditions of any entitlement of an executive
Director to share options.
Pension arrangements
Executive Directors are members of the Company
pension scheme. The scheme is a Money Purchase
Scheme with a linked Life assurance scheme.
Other than basic salary, no payments to Directors
are pensionable.
To the extent that contributions to the Company
scheme are restricted by HMRC limits, the
Company contributes 6% of the Director’s salary
providing the Director contributes a minimum of
4% of his salary by way of salary sacrifice. There
are no unfunded pension promises or similar
arrangements for Directors. There were 5 Directors
in the scheme in 2017 (2016: 4).
Annual bonus payments
The Committee establishes the objectives that
must be met for each financial year if a cash bonus
is to be paid. In setting the general bonus pool
parameters, the Committee takes cognisance of
current economic factors and the performance of
the Company versus its peers. The bonus scheme
for 2017/2018 is set out below. Bonus payments
totalling £247,000 were provided for in 2017 (2016:
£689,000).
If the Company’s profit before tax and amortisation
of acquired intangible assets (‘pre-tax profits’)
for the current financial year (2017/2018) show
an increase of 15% over the pre-tax profits for
2016/2017, then the sum of £80,000 will be paid
into a directors’ bonus pool plus £3,000 for each
additional percentage point of such increase
achieved over 15% up to 25% and £4,500 for
each percentage point of such increase achieved
over 25% up to a maximum profit before tax of
£10.5m. Pre tax profits for each financial year are
calculated after deduction of bonus. The actual
distribution of the pool between the directors and
subsequent payment of these bonuses must be
signed off by the Committee and is subject to
amendment in the event of any material acquisitions
or disposals occurring during the year. Also, for
exceptional performance created by one off events
the committee may award one off payments in
recognition.
Share options
The executive Directors also have options granted
to them under the terms of the Company’s Share
Option Schemes which are open to all employees.
Information on these schemes can be found in the
Directors report under the ‘Employees’ section. The
Company’s policy is to grant options to executive
Directors at the discretion of the Committee taking
into account individual performance. It is the
Company’s policy to phase the granting of share
options rather than to award them in a single large
block to any individual.
The Company does not operate any long-term
incentive schemes other than the share option
schemes described above. No significant
amendments are proposed to be made to the terms
27
D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements Directors’ remuneration report (Continued)
D4t4 Share Price
FTSE AIM All-Share
FTSE SmalCap Index
200
150
100
50
0
1 April 12 - 31 March 13
1 April 13 - 31 March 14
1 April 14 - 31 March 15
1 April 15 - 31 March 16
1 April 16 - 31 March 17
Performance graph
The above graph shows the Company’s share price performance compared with the performance of
the FTSE AIM All-Share and FTSE SmallCap Index (GBP). The FTSE Aim All-Share and FTSE SmallCap
Index (GBP) have been selected for this comparison because it is the Board’s opinion that they give a true
comparison to its peers.
Directors’ contracts
It is the Company’s policy that executive Directors should have contracts with an indefinite term providing
for a maximum of one year’s notice.
Executive Directors
PJ Kear and JL Dodkins have Directors’ service agreements which can be terminated on twelve months’
notice. These agreements were dated 29 August 1997. CE Warren also has a service agreement which can
be terminated on 3 months’ notice dated 1 June 2007. MG Boxall and ML Tod have service agreements
which can be terminated on 4 weeks notice dated 1 November 2015 and 4 April 2016 respectively.
Non-executive Directors
PA Simmonds, R McDowell and J Lythall each have an agreement for 12 months which expire on 26 July
2018. The fees of the non-executive Directors are determined and confirmed by the full board excluding (in
each case) the non- executive Director concerned.
In the event of early termination, all the Directors’ contracts provide for compensation up to a maximum of
basic salary plus benefits for the notice period.
28
2016
£000
1,233
35
1,268
2017
£000
964
31
995
51
1,046
Aggregate Directors’ remuneration
The total amounts for Directors’ remuneration were as follows:
Emoluments (Fees / basic salary, benefits and annual bonus)
Money purchase pension contributions
Total excluding gains on share options
Share based payments
Total
Three (2016: one) directors exercised options during the year with gains on exercise of share options during
26
1,294
the year totalling £320k (2016: £93k)
Director emoluments (Audited)
The directors are considered key management personnel and their remuneration is as follows:
Fees/Basic
Pension
Benefits
salary Contributions
£000
£000
£000
Annual
bonus
£000
Total
2017
£000
Total
2016
£000
Executives
PJ Kear
JL Dodkins
CE Warren
MG Boxall (appointed 26/9/2016)
ML Tod (appointed 21/12/2016))
Non-Executives
PA Simmonds
J Lythall
RS McDowell
PD English (retired 20/7/2016)
MLS Tinling (retired 20/7/2016)
BA Clark (retired 30/7/2015)
139
116
96
57
33
30
78
15
5
5
-
GS Shingles (retired 23/01/16)
Total
-
574
8
7
11
3
2
-
-
-
-
-
-
-
31
15
13
2
4
1
-
8
-
-
-
-
-
43
44
35
33
95
40
-
-
-
-
-
-
-
247
206
171
142
159
76
30
86
15
5
5
-
-
895
368
348
87
-
-
29
373
15
15
15
5
13
1,268
Pension costs represent contributions made by the Company for 5 directors (2016: 4) to money purchase
pension schemes. No directors (2016: Nil) are covered by defined benefit schemes.
J Lythall retired as an executive director on 31 March 2016 and became a non executive director on 1 April
2016. His remuneration includes fees for consulting services to the company.
29
D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
Directors share options
Aggregate emoluments disclosed above do not include any amounts for the value of options to acquire
ordinary shares in the Company granted to or held by the Directors.
Details of options for directors who served during the year are as follows:
Number Lapsed Granted Exercised Number at Option
price
at 31.3.16 during year during year during year
31.3.17
Expiry Exercisable
date from
PJ Kear
35,000
400,000
JL Dodkins 400,000
35,000
CE Warren 64,637
*
*
*
*
*
10,773
17,955
17,955
17,955
53,864
150,000
MG Boxall 300,000
ML Tod
PA Simmonds **
-
-
J Lythall
70,000
400,000
RS McDowell **
PD English **
MLS Tinling **
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
250,000
-
-
-
-
-
-
-
-
-
35,000
18.5p 07/01/2020
07/01/2013
400,000
51.0p 31/07/2025
31/07/2018
400,000
51.0p 31/07/2025
31/07/2018
35,000
64,637
10,773
17,955
17,955
17,955
-
18.5p 07/01/2020
07/01/2013
- 27.85p 05/11/2017
24/06/2015
- 27.85p 02/07/2018
24/06/2015
- 27.85p 31/12/2018
24/06/2015
- 27.85p 26/11/2019
24/06/2015
- 27.85p 01/06/2020
24/06/2015
-
-
-
-
-
53,864 27.85p 24/05/2024
24/06/2015
150,000
90.5p 22/01/2026
22/01/2017
300,000
75.0p 02/11/2025
02/11/2016
250,000 113.0p 26/06/2026
26/06/2017
-
-
-
-
70,000
- 22.25p 11/11/2017
11/11/2010
-
-
-
-
400,000
51.0p 31/07/2025
31/07/2018
-
-
-
-
-
-
-
-
-
-
-
-
* During the year ended 31/3/2016, 183,139 EMI options were granted to CE Warren which replaced the options held in Speed-Trap
Holdings Ltd on its acquisition, on a pro rata basis.
** PA Simmonds, RS McDowell, PD English and MLS Tinling did not hold any share options during the year.
The market price of the shares at 31 March 2017 was 139.5p (155.0p at 31 March 2016) and the range in the
period under review was 113.0p to 195.0p.
There have been no variations to the terms and conditions or performance criteria for share options during the
financial year.
Approval
This report was approved by the Board of directors on 26 June 2017 and signed on its behalf by:
Peter Kear
Chief Executive Officer
30
Statement of Directors’ responsibilities
for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the group’s and the company’s transactions
and disclose with reasonable accuracy at any time
the financial position of the group and the company
and enable them to ensure that the financial
statements comply with the Companies Act 2006.
They are also responsible for safeguarding the
assets of the group and the company and hence
for taking reasonable steps for the prevention
responsible for safeguarding the assets of the
group and the company and hence for taking
reasonable steps for the prevention and detection
of fraud and other irregularities.
The directors are responsible for the maintenance
and integrity of the corporate and financial
information included on the D4t4 Solutions website.
Legislation in the United Kingdom governing
the preparation and dissemination of financial
statements may differ from legislation in other
jurisdictions.
By order of the Board
Peter Kear
Chief Executive Officer
26 June 2017
The directors are responsible for preparing the
Strategic Report and the Directors’ Report and the
financial statements in accordance with applicable
law and regulations.
Company law requires the directors to prepare
group and company financial statements for each
financial year. The directors are requied by the aim
rules of the London Stock Exchange to prepare
group financial statements in accordance with
International Financial Reporting Standards (“IFRS”)
as adopted by the European Union (“EU”) and
also elected under Company Law to prepare the
company financial statements in accordance with
IFRS as adopted by the EU.
The financial statements are required by law and
IFRS adopted by the EU to present fairly the
financial position of the group and the company
and the financial performance of the group. The
Companies Act 2006 provides in relation to such
financial statements that references in the relevant
part of that Act to financial statements giving a true
and fair view are references to their achieving a
fair presentation.
Under company law the directors must not approve
the financial statements unless they are satisfied
that they give a true and fair view of the state of
affairs of the group and the company and of the
profit or loss of the group for that period.
In preparing the group and company financial
statements, the directors are required to:
a.
select suitable accounting policies and then
apply them consistently;
b. make judgements and accounting estimates
that are reasonable and prudent;
c.
state whether they have been prepared in
accordance with IFRSs adopted by the EU;
d. prepare the financial statements on the going
concern basis unless it is inappropriate to
presume that the group and the company will
continue in business.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the group’s and the company’s transactions
and disclose with reasonable accuracy at any time
the financial position of the group and the company
and enable them to ensure that the financial
statements comply with the Companies Act 2006.
They are also responsible for safeguarding the
assets of the group and the company and hence
31
D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
Independent Auditor’s report to the members of D4t4 Solutions Plc
We have nothing to report in respect of the
following matters where the Companies Act 2006
requires us to report to you if, in our opinion:
adequate accounting records have not been
kept by the parent company, or returns
adequate for our audit have not been received
from branches not visited by us; or
the parent company financial statements are
not in agreement with the accounting records
and returns; or
certain disclosures of directors’ remuneration
specified by law are not made; or
we have not received all the information and
explanations we require for our audit.
Respective responsibilities of directors and auditor
As more fully explained in the Directors’
Responsibilities Statement set out on page 31, the
directors are responsible for the preparation of the
financial statements and for being satisfied that
they give a true and fair view. Our responsibility
is to audit and express an opinion on the financial
statements in accordance with applicable law
and International Standards on Auditing (UK and
Ireland). Those standards require us to comply
with the Auditing Practices Board’s (APB’s) Ethical
Standards for Auditors.
This report is made solely to the company’s
members, as a body, in accordance with Chapter
3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state
to the company’s members those matters we are
required to state to them in an auditor’s report
and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume
responsibility to anyone other than the company
and the company’s members as a body, for our
audit work, for this report, or for the opinions we
have formed.
David Clark (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
25 Farringdon Street
London, EC4A 4AB
26 June 2017
Opinion on financial statements
We have audited the group and parent company
financial statements (“the financial statements”) on
pages 34 to 60. The financial reporting framework
that has been applied in their preparation is
applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European
Union and, as regards the parent company financial
statements, as applied in accordance with the
provisions of the Companies Act 2006.
In our opinion
the financial statements give a true and fair
view of the state of the group’s and of the
parent company’s affairs as at 31 March
2017 and of the group’s profit for the year
then ended;
the group’s financial statements have been
properly prepared in accordance with IFRSs
as adopted by the European Union;
the parent company’s financial statements
have been properly prepared in accordance
with IFRSs as adopted by the European Union
and as applied in accordance with the
Companies Act 2006; and
the financial statements have been prepared
in accordance with the requirements of the
Companies Act 2006.
Scope of the audit of the financial statements
A description of the scope of an audit of financial
statements is provided on the Financial Reporting
Council’s website at http://www.frc.org.uk/
auditscopeukprivate
Opinion on other matter prescribed by the
Companies Act 2006
In our opinion the information given in the Strategic
Report and the Directors’ Report for the financial
year for which the financial statements are
prepared is consistent with the financial statements
and, based on the work undertaken in the course
of our audit, the Strategic report and the Directors’
Report have been prepared in accordance with
applicable legal requirements.
Matters on which we are required to report
by exception
In the light of the knowledge and understanding of
the group and parent company and its environment
obtained in the course of the audit, we have
not identified any material misstatements in the
Strategic Report or the Directors’ Report.
32
FINANCIAL
STATEMENTS
34 Consolidated statement of comprehensive income
35 Consolidated statement of changes in equity
36 Consolidated balance sheet
37 Consolidated cash flow statement
38 Company statement of changes in equity
39 Company balance sheet
40 Company cash flow statement
41 Notes (forming part of the accounts)
Consolidated statement of comprehensive income for the
year ended 31 March 2017
Continuing operations
Revenue
Cost of sales
Gross profit
Distribution costs
Administration expenses
Other operating income
Profit from operations
Investment income
Finance costs
Profit before tax
Tax
Profit for the year attributable to owners of the parent
Other comprehensive income:
Items that will not be reclassified to profit or loss
Gains on property revaluation
Total comprehensive income for the period
attributable to equity holders of the parent
Earnings per share
Notes
2017
£’000
4
17,670
5
6
6
10
(7,806)
9,864
(3,797)
(1,834)
55
4,288
1
(46)
4,243
(340)
3,903
47
3,950
Basic
Diluted
13
10.49p
10.02p
2016
£’000
18,609
(9,395)
9,214
(3,958)
(1,985)
22
3,293
1
(76)
3,218
(278)
2,940
48
2,988
8.17p
7.64p
34
Consolidated statement of changes in equity attributable to
Owners of the Parent for the year ended 31 March 2017
Notes
Balance at 1 April 2015
Dividends paid
Purchase of own shares
Sale of own shares
Issue of contingent shares
Share-based payments
Transaction with owners
Profit for the year
Other comprehensive income
Total comprehensive income
Deferred tax on outstanding
share options
Amortisation
Balance at 1 April 2016
Dividends paid
Purchase of own shares
Sale of own shares
Issue of contingent shares
Share-based payments
Transaction with owners
12
23
23
25
26
Profit for the year
Other comprehensive income
Total comprehensive income
Rate change on deferred tax
Deferred tax on outstanding
share options
Balance at 31 March 2017
11
Share
capital premium
6,570
Share Revaluation Own Equity Retained Total
reserve earnings £’000
3,057 11,863
reserve shares
(80)
1,380
228
708
-
-
-
24
-
24
-
-
-
-
-
-
-
548
-
548
-
-
-
-
-
732
-
7,118
1
-
10
16
-
27
-
-
-
-
20
-
205
384
-
609
-
-
-
-
-
759
-
7,727
-
-
-
-
-
-
-
48
48
-
-
276
-
-
-
-
-
-
-
47
47
-
-
323
-
(291)
348
-
-
57
-
-
-
-
-
(23)
-
(175)
192
-
-
17
-
-
-
-
-
-
(40)
(606)
-
(646)
-
-
-
206
-
940
6
-
(121)
(400)
-
(515)
-
-
-
(380)
-
(257)
-
38
(599)
(380)
(291)
51
(34)
38
(616)
2,940 2,940
-
48
2,940 2,988
155
361
49
49
5,602 14,645
(780)
-
(298)
-
86
(992)
(753)
(175)
(12)
-
86
(854)
3,903 3,903
-
47
3,903 3,950
(45)
30
(15)
-
(6)
(138)
242
(39)
(177)
8,504 17,549
35
D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
Consolidated balance sheet as at 31 March 2017
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Deferred tax assets
Current assets
Trade and other receivables
Inventories
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Borrowings
Non-current liabilities
Borrowings
Deferred tax liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium account
Revaluation reserve
Own shares
Equity reserve
Retained earnings
Attributable to equity holders of the parent
Notes
14
15
16
11
18
19
20
21
21
11
22
2017
£’000
8,696
1,507
2,595
230
13,028
4,269
341
6,290
10,900
23,928
(4,922)
(421)
(5,343)
(780)
(256)
(1,036)
(6,379)
17,549
759
7,727
323
(6)
242
8,504
17,549
2016
£’000
8,696
1,754
2,615
792
13,857
2,757
-
5,007
7,764
21,621
(5,045)
(397)
(5,442)
(1,183)
(351)
(1,534)
(6,976)
14,645
732
7,118
276
(23)
940
5,602
14,645
These financial statements of D4t4 Solutions Plc, registered number 01892751, were approved by the
Board of Directors and authorised for issue on 26 June 2017 and were signed on its behalf by
P Kear, Director
36
Consolidated cash flow statement for the year ended
31 March 2017
Operating activities
Profit for the year
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Finance income
Finance expense
Share-based payments
Gain on sale of property, plant and equipment
Exchange gains on cash and cash equivalents
Income tax expense
Operating cash flows before movements in working capital
(Increase) / Decrease in receivables
Increase in inventories
(Decrease) / Increase in payables
Cash derived from operations
Income taxes paid
Net cash from operating activities
Investing activities
Interest received
Purchase of property, plant and equipment
Net cash used in investing activities
Financing activities
Dividends paid
Repayment of borrowings
Interest paid
Payments to finance lease creditors
Purchase of own shares
Sale of own shares
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at start of year
Exchange gains on cash and cash equivalents
Cash and cash equivalents at end of year
2017
£’000
3,903
221
247
(1)
46
86
(1)
(305)
340
4,536
(1,512)
(341)
(123)
2,560
(26)
2,534
1
(162)
(161)
(753)
(403)
(46)
(8)
(400)
215
(1,395)
978
5,007
305
6,290
2016
£’000
2,940
178
260
(1)
76
38
-
-
278
3,769
2,032
-
618
6,419
(69)
6,350
1
(332)
(331)
(380)
(411)
(76)
-
(240)
-
(1,107)
4,912
95
-
5,007
37
D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
Company statement of changes in equity attributable to
Owners of the Parent for the year ended 31 March 2017
Share
capital premium
6,570
Share Revaluation Own Equity Retained Total
reserve earnings £’000
2,865 11,671
reserve shares
(80)
1,380
708
228
-
-
-
24
-
24
-
-
-
-
-
-
-
548
-
548
-
-
-
-
-
732
-
7,118
1
-
10
16
-
27
-
-
-
-
20
-
205
384
-
609
-
-
-
-
-
759
-
7,727
-
-
-
-
-
-
-
48
48
-
-
276
-
-
-
-
-
-
-
47
47
-
-
323
-
(291)
348
-
-
57
-
-
-
-
-
(23)
-
(175)
192
-
-
17
-
-
-
-
-
-
(40)
(606)
-
(646)
-
-
-
206
-
940
6
-
(121)
(400)
-
(515)
-
-
-
(380)
-
(257)
-
38
(599)
(380)
(291)
51
(34)
38
(616)
3,122 3,122
-
48
3,122 3,170
155
361
49
49
5,592 14,635
(780)
-
(297)
-
86
(991)
(753)
(175)
(11)
-
86
(853)
4,071 4,071
-
47
4,071 4,118
(45)
30
(15)
-
(6)
(138)
242
(39)
(177)
8,663 17,708
Notes
Balance at 1 April 2015
Dividends paid
Purchase of own shares
Sale of own shares
Issue of contingent shares
Share-based payments
Transactions with owners
Profit for the year
Other comprehensive income
Total comprehensive income
Deferred tax on outstanding
share options
Amortisation
Balance at 1 April 2016
Dividends paid
Purchase of own shares
Sale of own shares
Issue of contingent shares
Share-based payments
Transactions with owners
12
23
23
25
26
Profit for the year
Other comprehensive income
Total comprehensive income
Rate change on deferred tax
Deferred tax on outstanding
share options
Balance at 31 March 2017
11
38
Company balance sheet as at 31 March 2017
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investment in subsidiaries
Deferred tax assets
Current assets
Trade and other receivables
Inventories
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Borrowings
Non-current liabilities
Borrowings
Deferred tax liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium account
Revaluation reserve
Own shares
Equity reserve
Retained earnings
Attributable to the equity holders of the company
The Company’s profit for the year was £4.1m (2016: £3.1m)
Notes
14
15
16
17
11
18
19
20
21
21
11
22
2017
£’000
8,696
1,507
2,595
273
230
13,301
4,581
341
6,290
11,212
24,513
(5,348)
(421)
(5,769)
(780)
(256)
(1,036)
(6,805)
17,708
759
7,727
323
(6)
242
8,663
17,708
These financial statements of D4t4 Solutions Plc, registered number 01892751, were approved by the
Board of Directors and authorised for issue on 26 June 2017 and were signed on its behalf by
P Kear, Director
2016
£’000
8,696
1,754
2,615
273
792
14,130
2,939
-
5,007
7,946
22,076
(5,502)
(405)
(5,907)
(1,183)
(351)
(1,534)
(7,441)
14,635
732
7,118
276
(23)
940
5,592
14,645
39
D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
Company cash flow statement for the year ended
31 March 2017
Operating activities
Profit for the year
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Finance income
Finance expense
Share-based payments
Gain on sale of property, plant and equipment
Exchange gains on cash and cash equivalents
Income tax expense
Operating cash flows before movements in working capital
(Increase) / decrease in receivables
Increase in inventories
(Decrease) / increase in payables
Cash absorbed in operations
Income taxes paid
Net cash derived from operating activities
Investing activities
Interest received
Purchase of property, plant and equipment
Net cash used in investing activities
Financing activities
Dividends paid
Repayment of borrowings
Interest paid
Payments to finance lease credit ors
Purchase of own shares
Sale of own shares
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at start of year
Exchange gains on cash and cash equivalents
Cash and cash equivalents at end of year
2017
£’000
4,071
221
247
(1)
46
86
(1)
(305)
340
4,704
(1,641)
(341)
(162)
2,560
(26)
2,534
1
(162)
(161)
(753)
(403)
(46)
(8)
(400)
215
(1,395)
978
5,007
305
6,290
2016
£’000
3,122
178
260
(1)
76
38
-
-
278
3,951
1,850
-
618
6,419
(69)
6,350
1
(332)
(331)
(380)
(411)
(76)
-
(240)
-
(1,107)
4,912
95
-
5,007
40
Notes to the financial statements
1. General information
D4t4 Solutions Plc is a public company
incorporated and domiciled in England and Wales
and quoted on the AIM Market. The address of its
registered office, registered number and principal
place of business is disclosed on the inside cover of
the financial statements.
On 20 July 2016 the company changed it’s name
from IS Solutions Plc to D4t4 Solutions Plc
2. Significant accounting policies
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 except for the revaluation of land
and buildings.
The presentation and functional currency of the
financial statements is British Pounds and amounts
are rounded to the nearest thousand pounds.
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 on pages 11-16. 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 despite the current
uncertain economic outlook.
Having reviewed the future plans and projections
for the business, the Directors believe that the
Company and its group undertakings 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 2016:
IAS 1
Presentation of financial statements
IAS 16 Disclosure initiative - Acceptable
& IAS 38 methods of depreciation and
amortisation
IAS 27 Separate financial statements -
Equity method
The adoption of these Standards has had no
material impact on the results for the year ended 31
March 2017.
Standards, amendments and interpretations to
existing standards that are not yet effective and
have not been adopted early by the Group:
IFRS 9
Financial Instruments
IFRS 15 Revenue from contracts with customers
IFRS 16 Leases
IAS 7
Disclosure initiative
IFRS 2 Share-based payment
IFRS 15 is based on the principle that revenue
is recognised when control of a good or service
transfers to a customer, so the notion of control
replaces the existing notion of risk and reward.
D4t4 Solutions is currently reviewing the revenue in
relation to its contracts with customers to determine
which, if any, will be impacted by IFRS 15. It is
not yet in a position to conclude whether the
implementation will have a material impact on its
revenues. The introduction of IFRS 15 is likely
to result in some internal process changes across
the Group.
The directors anticipate that the adoption of the
other Standards and Interpretations in future
periods will have no material impact on the financial
statements of the Group.
Basis of consolidation
The group accounts consolidate the accounts
of D4t4 Solutions Plc and all its subsidiary
undertakings using the acquisition method. These
accounts are made up to 31 March 2017.
In the company’s accounts, investments in subsidiary
undertakings are stated at cost less provisions
for impairment. All intra-group transactions and
balances are eliminated on consolidation.
In accordance with Section 408 of the Companies
Act 2006 D4t4 Solutions Plc is exempt from the
requirement to present its own income statement
and related notes that form a part of these
approved financial statements. The profit of the
parent is disclosed in the Company balance sheet
and statement of changes in equity for the year.
41
D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
Notes to the financial statements (Continued)
Property, plant and equipment
The carrying value of these assets is stated at cost
or valuation, less accumulated depreciation and any
impairment loss. Freehold land is not depreciated.
The estimated lives of assets are reviewed annually
by the Board and freehold land and buildings are
professionally valued periodically. The carrying
values are reviewed for impairment when events or
changes in circumstances indicate that the carrying
value may not be recoverable. If any such indication
exists and where the carrying values exceed the
estimated recoverable amount the lives and values
are adjusted as necessary.
future cash flows in respect of revenue streams
related to the investment.
Other intangible assets
IPR
On acquisition IPR has been capitalised based
upon an estimate of the costs involved in creation
of that IPR.
Trade name
On the acquisition of a business, the future value
of the trade name of that business is estimated and
capitalised. The fair value is amortised over
10 years.
The group makes provision for depreciation so that
the cost less estimated residual value of each asset
is written off by equal instalments over its estimated
useful economic life as follows
Impairment of intangibles is reviewed annually in
with reference to future cash flows from the specific
cash generating units to which the intangible has
been allocated.
Buildings
- up to 35 years
Inventory policy
Leasehold improvements
- up to 10 years
Fixtures and equipment
- up to 4 years
Motor vehicles
- up to 5 years
Acquisitions
On the acquisition of a business net fair values are
attributed to the identifiable assets and liabilities
acquired. Where the cost of acquisition exceeds
this net fair value, the difference is treated as
purchased goodwill and capitalised in the Group
balance sheet in the year of acquisition. If a
subsidiary’s assets are subsequently hived up
into the parent then the corresponding amount of
goodwill is capitalised in the Company balance
sheet too.
Inventories are stated at the lower of cost or market
value. The valuation method for each item of
inventory remains consistent from one accounting
period to the next.
Research and development costs
Expenditure on research is recognised as an
expense in the period in which it is incurred.
Development costs are capitalised only when
an internally-generated intangible asset can be
identified which will generate future revenue
streams and whose cost can be measured reliably.
These costs are written off on a straight line basis
over the expected life of the revenue stream.
Other development costs are recognised as an
expense in the period in which they are incurred.
Goodwill
Foreign currencies
Capitalised goodwill is shown in the balance sheet.
Its carrying value is subject to annual review and
any impairment is recognised immediately as a loss
which cannot subsequently be reversed. Goodwill
arising on acquisitions made before the date of
transition to IFRS has been retained at the previous
UK GAAP amount subject to being tested annually
for impairment.
Goodwill has arisen from the acquisition of businesses.
Investments in subsidiaries
The carrying value of investments is stated at cost
less any provision for impairment. This value is
reviewed annually by the Board with respect to
Transactions in foreign currencies are recorded
using the rate of exchange ruling at the date of the
transaction. Transactions of foreign operations
are translated using the average rate of exchange
for the year. Monetary assets and liabilities
denominated in foreign currencies are translated
using the rate of exchange ruling at the balance
sheet date and the gains or losses on translation
are included in the profit and loss account.
Profit from operations
Profit from operations is stated before investment
income, finance costs and other gains and losses.
42
Operating leases
Rentals payable under operating leases are
recognised as a cost on a straight line basis over
the life of the lease. Similarly rental income arising
from operating leases is credited to income on a
straight-line basis over the period of those leases.
Dividends
Dividend distribution to the Company’s shareholders
is recognised as a liability in the Group’s financial
statements in the period in which the dividends are
approved by the Company’s shareholders.
Share-based payments
Periodically the Group offers share options (at the
prevailing market price) to all employees. The Group
has conformed with the requirements of IFRS2
“Share Based Payment” for share options issued
after 7 November 2002 and unvested at 1 January
2012. Those options are measured at fair value (using
the Black-Scholes model and management’s best
estimates) and are expensed on a straight-line basis
over their vesting period. Options vest only when the
Remuneration committee is satisfied that the vesting
criteria have been met, and are settled subsequently
by equity shares in the parent company.
Treasury shares
From time to time the Company purchases its
own shares for the purpose of satisfying the future
exercising of outstanding share options. These
shares are held in treasury and are shown as a
reduction in the company’s reserves.
Pension costs
The group operates a defined contribution
pension scheme. The assets of the scheme are
held separately from those of the group in an
independently administered fund. The amount
charged against profits represents the
contributions payable to the scheme in respect of
the accounting period.
Taxation
Current tax (UK and foreign) is calculated on the
profit for the year (adjusted for appropriate reliefs,
allowances, non-deductible expenses and timing
differences) using the appropriate tax rates and
laws that have been enacted or substantively
enacted by the balance sheet date. Deferred tax
is recognised in respect of all material temporary
differences in the treatment of certain items for
taxation and accounting purposes which have
arisen but have not reversed by the balance sheet
date. It is recognised at the expected prevailing
rate at the time of reversal, and is recognised as
an asset only to the extent that it is probable that
taxable profits will be available to utilise it. It is
reviewed annually.
The impact of discounting is not considered material.
Revenue recognition
Revenue is measured at the fair value of the
consideration received or receivable from the sale
of goods and services in the ordinary course of the
Group’s activities. Revenue is shown net of value
added tax, rebates and discounts and after the
elimination of intercompany transactions within
the Group.
The Group recognises revenue when the amount of
revenue can be reliably measured and it is probable
that the future economic benefits will flow to the
entity. The Group bases its estimates on historical
results, taking into consideration the type of
customer, the type of transaction and the specifics
of each arrangement.
Revenue is classified as being derived from
Licence sales;
Project work; and
Recurring revenues
Products and licences revenues are recognised
upon delivery.
Services revenues are recognised as work
is completed.
Hosting and support revenues are recognised on a
time basis.
Financial Instruments
Financial assets and liabilities are recognised on
the balance sheet when the Group or Company
becomes a party to the contractual provisions of
the instrument.
Trade and other receivables do not carry interest
and are stated at their cost reduced by an
appropriate allowance for irrecoverable amounts.
A provision is made against a trade receivable only
when there is objective evidence that the Group
may not be able to recover the entire amount due
43
D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
Notes to the financial statements (Continued)
Critical judgements in applying the Group’s
accounting policies
Goodwill and other intangibles
The ongoing valuation of goodwill for the purposes
of determining impairment requires the evaluation
of future cash flows from the cash generating units
to which the goodwill has been allocated. Note 14
shows the carrying values of the components
of goodwill.
Revenue recognition
The management regularly reviews the application
of its policy on revenue recognition in line with the
accounting policies stated in Note 2.
Large Contracts
We have undertaken a number of significant
contracts during the year to 31 March 2017, which
included software, hardware, professional services
and ongoing maintenance and support. Revenue
recognition has been applied in line with IAS 18 and
the accounting policies stated in note 2.
under the original terms of the invoice. The carrying
amount of the receivable is reduced through the use
of a provisional for doubtful debts account. Impaired
debts are derecognised when they are assessed as
uncollectable.
Trade and other payables are not interest bearing
and are stated at cost.
Cash and cash equivalents comprise cash in hand
and deposits repayable in less than three months,
less overdrafts payable on demand.
Borrowings
Interest-bearing bank loans are recorded at the
proceeds received, net of direct issue costs.
Finance charges, including premiums payable on
settlement or redemption and direct issue costs,
are amortised over the period in the statement of
comprehensive income using the effective interest
rate method and are added to the carrying amount
of the instrument to the extent that they are not
settled in the period in which they arise.
Borrowing costs
Borrowing costs are recognised as an expense in the
period in which they arise.
Company accounts
The separate financial statements of the Company
are presented as required by the Companies Act
2006. As permitted by that act these have been
prepared in accordance with International Financial
Reporting Standards. The principal accounting
policies adopted are the same as those set out
above in respect of the Group. As permitted in
section 408 of that act the company has elected
not to present its own statement of comprehensive
income for the year.
3. Critical accounting judgements and key
sources of estimation uncertainty
In applying the accounting polices described in
note 2. the directors are required to make
judgements about, and estimates of the carrying
values of assets and liabilities where for reasons
of uncertainty these may differ from their book
values. These judgements are reviewed on an
ongoing basis.
44
4. Revenue
Analysis of revenue
Continuing operations
Sale of goods
Rendering of services
5. Other operating income
Analysis of other operating income
Operating lease receipts (see note 27)
6. Investment income and finance costs and other gains and losses
Analysis of investment income
Bank interest received
Analysis of finance costs
Mortgage interest paid
Loan interest
Directors Loan Interest
Other
Group
2017
£’000
3,716
13,954
17,670
2016
£’000
2,974
15,635
18,609
Group
2017
£’000
55
55
2016
£’000
22
22
Group
2017
£’000
2016
£’000
1
(9)
(29)
(7)
(1)
(46)
1
(12)
(40)
(14)
(10)
(76)
7. Business and geographical segments
The Group has adopted IFRS 8 Operating Segments with effect from 1 January 2009. IFRS 8 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.
The information presented to the Chief Executive for the purpose of resource allocation and assessment of
segment performance is focused on the type of product sold. The principal activity of the Group is split into
three categories of product and services sold:
- Licence sales
- Project work
- Recurring revenues.
45
D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
Notes to the financial statements (Continued)
No allocation of other income and costs to these categories is made because the Directors consider that any
such allocation would be arbitrary. Any allocation of assets and liabilities to these categories would also be
arbitrary. The reporting below is consistent with that provided to the Chief Executive.
Continuing operations 2017
Licence
Project
Recurring
Total
External sales
Adjustment for agency basis
Reported revenue
sales
£’000
3,716
-
3,716
work
£’000
9,467
-
9,467
revenues
£’000
4,825
(338)
4,487
Segment result (gross profit)
3,179
4,339
2,346
Other operating costs and income
Investing and financing activities
Profit before tax
Major customers (over 10% of revenue)
Customer 1
Customer 2
Continuing operations 2016
External sales
Adjustment for agency basis
Reported revenue
Segment result (gross profit)
Other operating costs and income
Investing and financing activities
Profit before tax
Major customers (over 10% of revenue)
-
7,935
1,144
-
1,867
700
Licence
sales
£’000
2,974
-
2,974
Project
work
£’000
10,666
-
10,666
Recurring
revenues
£’000
5,443
(474)
4,969
2,076
4,584
2,554
£’000
18,008
(338)
17,670
9,864
(5,576)
(45)
4,243
9,802
1,844
Total
£’000
19,083
(474)
18,609
9,214
(5,921)
(75)
3,218
Customer 1
-
7,935
1,867
9,802
The accounting policies of the reportable segments are the same as the Group’s accounting policies
described in note 2. Non-current assets are wholly attributable to the company’s country of domicile.
Geographical segments
United Kingdom
Europe
United States of America
Others
2017
£’000
2,012
4,021
10,947
690
17,670
2016
£’000
4,875
2,335
11,014
385
18,609
The geographical revenue segment is determined by the domicile of the external customer
Non-current assets are wholly attributable to the company’s country of domicile.
46
8. Profit from operations
Profit from operations has been arrived at after charging/(crediting):
Research and development costs
Net foreign exchange gain
Depreciation of property, plant & equipment
Loss on disposal of property, plant & equipment
Amortisation of intangible assets (see note 15)
Staff costs (see note 9)
Auditors’ remuneration for audit services (Group and
Company, the Company fee is not separately quantifiable)
Auditors’ remuneration for tax compliance
Auditors’ remuneration for tax advisory services
Auditors’ remuneration for other services
Operating lease payments
9. Staff costs
The average number of employees (including directors)
during the period was:
Production and support
Distribution
Administration
Their aggregate remuneration comprised:
Salaries
Social security costs
Pension costs
2017
£’000
469
(357)
221
1
247
2016
£’000
386
(95)
178
-
260
7,295
7,547
39
3
10
22
34
51
-
35
7
29
Group and company
2017
Number
2016
Number
88
27
9
124
£’000
6,358
679
344
7,381
81
23
9
113
£’000
6,508
689
350
7,547
Details of Directors’ remuneration required by the Companies Act are set out in the audited information
included in the Directors’ remuneration report on page 29. For the purposes of IAS 24 “Related Party
Disclosures” these figures also equate to the salary disclosures required of the key management personnel.
Other related party transactions involving directors, including dividends and director’s loans, are disclosed in
the Directors’ report on pages 21 and 25.
The company has taken the IAS24 exemption from disclosing transactions with wholly owned subsidiaries.
47
D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
Notes to the financial statements (Continued)
10. Tax
Current UK tax
Foreign tax
Less: double taxation relief
Deferred tax
Under provision in prior years
Corporation tax
The charge for the year can be reconciled to the reported profit as follows:
Profit before tax
UK corporation tax at 20% (2016: 20%)
Research and development credit
Relief for exercising of share options
Difference between writing-down allowances and depreciation
Amortisation of intangibles
Other non-deductible expenses
Effect of higher rates in other jurisdictions
Shared based payments
Under provision in prior years
Utilisation of tax losses
Tax charge as above
2017
£’000
-
65
(25)
40
300
-
340
4,243
849
(122)
(214)
-
42
14
40
17
-
(286)
340
2016
£’000
-
-
-
-
270
8
278
3,218
644
(100)
(85)
(20)
52
43
-
-
8
(264)
278
48
11. Deferred tax
Other timing
difference
Equity Share based
payments
reserve
Group
£’000
Balance at 1 April 2015
Recognised within the
Statement of Changes
in Equity
7
-
Charge to income statement 33
40
Balance at 1 April 2016
Change to opening balance
Recognised within the
Statement of Changes
in Equity
-
-
-
Change to income statement (34)
6
Balance at 31 March 2017
Company
Balance at 1 April 2015
Recognised within the
Statement of Changes
in Equity
7
-
Charge to income statement 33
40
Balance at 1 April 2016
Change to opening balance
Recognised within the
Statement of Changes
in Equity
-
-
-
Change to income statement (34)
6
Balance at 31 March 2017
£’000
91
£’000
-
206
-
297
(45)
(138)
(183)
-
114
155
-
155
(23)
(39)
(62)
17
110
Tax
losses
£’000
600
264
(564)
300
-
-
-
(300)
-
Intangibles
Total
£’000
(400)
£’000
298
49
-
(351)
53
-
53
42
(256)
674
(531)
441
(15)
(177)
(192)
(275)
(26)
91
-
600
(400)
298
206
-
297
(45)
(138)
(183)
-
114
155
-
155
(23)
(39)
(62)
17
110
264
(564)
300
-
-
-
(300)
-
49
-
(351)
53
-
53
42
(256)
674
(531)
441
(15)
(177)
(192)
(275)
(26)
12. Dividends
Amounts recognised as distributions to equity holders
Final dividend for the period ended 31 March 2016 of 1.50p (2015: 0.56p)
Interim dividend for the year ended 31 March 2017 of 0.55p (31 March 2016: 0.50p)
Proposed final dividend for the year ended 31 March 2017 of 1.7p
2017
£’000
574
206
780
2016
£’000
198
182
380
The proposed final dividend is subject to shareholders’ approval at the AGM and has not been included as a
liability in these financial statements.
49
D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
Notes to the financial statements (Continued)
13. Earnings per share
Basic
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by
the basic weighted average number of ordinary shares in issue during the year.
Profit attributable to equity holders of the Company
Pence per
share
10.49p
2017
£’000
Pence per
share
2016
£’000
3,903
8.17p
2,940
Diluted
Diluted earnings per share amounts are calculated by dividing the profit for the year attributable to equity
holders of the Company by the weighted average number of ordinary shares outstanding during the year plus
the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive
potential ordinary shares into ordinary shares.
2017
Number
37,193,118
1,767,183
38,960,301
2016
Number
35,993,206
2,512,249
38,505,455
Basic weighted average of shares in issue
Effect of dilutive share options
Weighted average for the purpose of diluted earnings per share
Adjusted
Adjusted diluted earnings per share is defined as profit for the year adjusted for amortisation, share based
payments and foreign exchange gains/losses divided by the diluted weighted average number of ordinary
shares of the Company.
2017
2016
Pence per
share
10.02
0.63
(0.92)
0.22
0.02
9.97
£’000
3,903
257
(357)
86
5
3,894
Pence per
share
7.64
0.64
0.00
0.10
(0.14)
8.24
£’000
2,940
246
-
38
(51)
3,173
Group
Company
2017
£’000
10,952
2016
£’000
10,952
2017
£’000
10,608
2,256
8,696
2,256
8,696
1,912
8,696
100
918
7,678
8,696
100
918
7,678
8,696
100
918
7,678
8,696
2016
£’000
10,608
1,912
8,696
100
918
7,678
8,696
Profit for the year
Amortisation
Foreign exchange gains/losses
Share based payments
Tax on non-statutory adjustments
Adjusted earnings
14. Goodwill
Cost of goodwill
Balance at 1 April and 31 March
Accumulated impairment charges
Balance at 1 April and 31 March
Carrying amount at year end
Allocation of goodwill
AXL customers
Chapter26 customers
Speed-Trap customers
Balance at 31 March
50
The carrying amount of goodwill represents the balance of the original cost of goodwill attached to the
subsidiary companies on acquisition. The Group is required to test this value at least annually for impairment.
The extant customers of the subsidiaries (all of whom are now customers of the parent company) continue to
form identifiable cash generating units (CGUs). For AXL and Chapter 26, all the CGUs are within the United
Kingdom, while for Speedtrap the CGUs are spread globally. The recoverable amounts of the cash generating
units are determined from the value in use calculations.
The Group prepares profit forecasts derived from the most recent budgets and forecasts approved by the
Board. Growth rates for Speed-Trap and Chapter 26 have been set at 10% and 14% respectively while no
growth is assumed within AXL. These rates have been used to extrapolate cash flow projections beyond the
most recent budgets for a period of five years. A discount rate of 10%, in line with the industry average has
been used to discount the forecast profits over the next five years. The calculation of value in use is most
sensitive to the discount rate and management’s assumption that the majority of these revenues are recurring
on an annual basis. Management believes that no reasonable potential change in any of the above key
assumptions would cause the carrying value to exceed its recoverable amount.
15. Other intangible assets
Group & company
Cost
Balance at 1 April 2015 and 31 March 2016
Balance at 1 April 2016 and 31 March 2017
Accumulated amortisation
Balance at 1 April 2015
Amortisation
Balance at 1 April 2016
Amortisation
Balance at 31 March 2017
Carrying amount
Balance at 1 April 2016
Balance at 31 March 2017
Internally
generated IPR
IPR
£’000
£’000
Trade
name
£’000
Total
£’000
56
56
42
14
56
-
56
-
-
1,858
142
2,056
1,858
142
2,056
-
232
232
233
445
-
14
14
14
28
42
260
302
247
549
1,626
1,393
128
114
1,754
1,507
The amortisation charge for the year is booked to administration expenses
The remaining amortisation period for the Purchased IPR is 6 years and the Trade name is 8 years. The
internally generated IPR has been fully amortised.
51
D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
Notes to the financial statements (Continued)
16. Property, plant & equipment
Group and Company
Cost or valuation
Balance at 1 April 2015
Additions
Balance at 1 April 2016
Additions
Disposals
Balance at 31 March 2017
Depreciation
Balance at 1 April 2015
Depreciation charge
Revaluation
Balance at 1 April 2016
Depreciation charge
Revaluation
Eliminated on disposals
Balance at 31 March 2017
Carrying amount
Balance at 31 March 2016
Balance at 31 March 2017
Allocation of depreciation charge
Cost of sales
Distribution costs
Administration expenses
Charge for period
Land &
buildings
Fixtures &
equipment
£’000
£’000
Motor
vehicles
£’000
2,200
-
2,200
-
-
2,200
-
47
(47)
-
48
(48)
-
-
2,200
2,200
516
287
803
120
-
923
338
108
-
446
148
-
-
594
357
329
55
45
100
42
(36)
106
19
23
-
42
25
-
(27)
40
58
66
2017
£’000
62
104
55
221
Total
£’000
2,771
332
3,103
162
(36)
3,229
357
178
(47)
488
221
(48)
(27)
634
2,615
2,595
2016
£’000
53
71
54
178
Included in land & buildings (valued in 2015 by Cook Steed Associates Ltd - independent valuer) is freehold
land at £800,000 (2016: £800,000) which is not subject to depreciation. The land and buildings original
purchase cost was £2,224,000.
Following the valuation in 2015, the Directors of the Group have revalued the land and buildings this year in
accordance with market conditions.
Freehold land and buildings with carrying values as noted above have been pledged to secure borrowings of
the Group (see the borrowings note 21).
52
17. Investment in subsidiaries
Cost of investment
Balance at 1 April and 31 March 2017
Accumulated provision for impairment
Balance at 1 April 2016 and 31 March 2017
Carrying amount at year / period end
Country of Incorporation
Trading Status
IS Solutions Ltd (formerly Celebrus Ltd)†
Celebrus Technologies Inc.*‡
Celebrus Technologies Ltd*†
Chapter26 Ltd†
D4t4 Solutions Inc.§
Internet Service Solutions Ltd†
Internet Systems Solutions Ltd†
Internet Site Solutions Ltd†
Magiq Ltd*†
Speed-Trap Holdings Ltd†
England & Wales
USA
England & Wales
England & Wales
USA
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales
Dormant
Trading
Dormant
Dormant
Trading
Dormant
Dormant
Dormant
Dormant
Dormant
Company
2017
£’000
273
2016
£’000
273
-
273
-
273
Proposition of
ownership of
ordinary shares
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
* Owned by Speed-Trap holdings
† Registered address - Windmill House, 91-93 Windmill Road, Sunbury-on-Thames, TW16 7EF, UK
‡ Registered address - 38 Kaybe Court, San Jose, California 95139, USA
§ Registered address - 327 Hillsborough Street, Raleigh, North Carolina 27603-1725, USA
The trading companies above engage in the same business as D4t4 Solutions Plc.
53
D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
Notes to the financial statements (Continued)
18. Trade and other receivables
Trade receivables
Other taxes receivable
Amounts due from Group undertakings
Other debtors
Prepayments and accrued income
Trade receivables
Ageing of past due but not impaired receivables
Overdue 1 month
Overdue 2 months
Overdue 3 months and more
Group
Company
2017
£’000
3,659
-
-
35
575
4,269
2017
£’000
159
174
22
355
2016
£’000
2,070
131
-
80
476
2,757
2016
£’000
580
187
274
1,041
2017
£’000
3,659
-
317
30
575
4,581
2017
£’000
159
174
22
355
2016
£’000
2,070
131
182
80
476
2,939
2016
£’000
580
187
274
1,041
The Board considers that the recoverable value of the trade receivables, after considering any credit risk, does
not differ materially from their carrying value. In particular those amounts past due are assessed to be fully
recoverable and are not considered to be impaired. The average credit period taken on sales of goods and
services was 67 days (2016: 61 days).
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. The concentration of
credit risk is limited due to the customer base being large and unrelated. Accordingly, the Directors believe
that no further credit provision is required.
19. Inventories
Finished goods and goods for resale
20. Trade and other payables
Trade payables
Loans from directors
Amounts owed to Group undertakings
Other taxes and social security
Other creditors
Accruals and deferred income
54
Group & Company
2017
£’000
341
341
2016
£’000
-
-
Group
Company
2017
£’000
999
119
-
294
127
3,383
4,922
2016
£’000
2,578
185
-
198
49
2,035
5,045
2017
£’000
538
119
1,042
292
72
3,285
5,348
2016
£’000
2,578
185
465
198
49
2,035
5,510
Trade payables comprise amounts outstanding for trade purchases and ongoing costs. The average credit
period taken for trade purchases is 65 days (2016: 67 days). Their carrying value approximates to their fair value.
21. Borrowings
Obligations under finance lease and hire
purchase agreements
Bank loans and mortgages (see Borrowings below)
Group
Company
2017
£’000
24
1,177
1,201
2016
£’000
32
1,580
1,612
2017
£’000
24
1,177
1,201
2016
£’000
32
1,580
1,612
Borrowings (Group and Company)
Finance Leases
Bank loans and mortgage
Balance at 1 April 2016
Taken out in period
Repaid during the period
Balance at 31 March 2017
Repayable within one year
Repayable within one to two years
Repayable within two to five years
2017
£’000
2016
£’000
32
-
(8)
24
8
16
-
-
40
(8)
32
8
24
-
2017
£’000
1,580
-
(403)
1,177
413
426
338
2016
£’000
1,991
-
(411)
1,580
397
413
770
The balance of £1,177k at the year end comprises of a loan of £876k (2016: £1,170k) and a mortgage of
£301k (2016: £410k), upon which there is no security.
The mortgage is attracting interest at the rate of 2.10% over base rate and the loan at 2.50% over base rate.
Both the mortgage and loan will be fully settled by 31 March 2020.
22. Share capital
Share
capital
Shares
£’000
2017
Share
premium
£’000
Share
2016
Share
capital premium
Shares
£’000
£’000
Ordinary shares of 2p each
Authorised
50,000,000
1,000
50,000,000
1,000
Issued and fully paid up
Balance at 1 April 2016
36,583,020
Issued during year
1,371,298
Balance at 31 March 2016 37,954,318
732
27
759
7,118
530
7,648
35,421,578
1,161,442
36,583,020
708
24
732
6,570
548
7,118
The Company issued 1,371,298 (2016: 1,161,442) Ordinary shares during the period at a price of 40.65p
(2016: 49.2p) increasing the share premium account by £609k (2016: £548k)
23 Own shares (shares held in treasury)
At the year end the company held 3,399 (2016: 14,613) ordinary shares in Treasury, with fair value of £4,742
(2016: £22,650). Details of purchases and sales are shown on page 24.
55
D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
Notes to the financial statements (Continued)
24. Revaluation reserve
This represents the gains on revaluation of the property in line with market valuations. The property was last
professionally revalued in 2015.
25. Contingent shares and equity reserve
The accrual for future transfer of own shares includes £Nil (2016: £400,000) worth of shares contingent
upon no warranty claims being made, plus £128,318 (2016: £246,000) which represents the fair value of the
current Speed Trap issued options per note 26 less the cash received to exercise those options. In addition
the deferred tax asset on these options totals £114,770 (2016: £297,000).
26. Share-based payments
The Company has a share option scheme for all employees of the Group. Options are granted at the closing
price on the previous day and have a vesting period of three years. If the options are not exercised within ten
years of the grant date, or if employee leaves before their options vest then those options are forfeited.
2017
Weighted
av. exercise
price
2016
Weighted
No. of share av. exercise
price
options
No. of share
options
Balance at 1 April
Granted during the year
3,688,117
49.42p
684,000
320,000
117.00p
2,130,851
Speed Trap issued during the year
-
-
1,355,579
Forfeited during the year
Exercised during the year
Balance at 31 March 2017
(72,000)
82.17p
-
(839,245)
3,096,872
27.40p
61.56p
(482,313)
3,688,117
28.67p
65.55p
27.85p
-
23.00p
49.42p
Exercisable at year / period end
1,396,305
45.73p
1,557,266
27.34p
The weighted average share price at the exercise date of the exercised shares was £1.57 (2016: £1.11). The
weighted average contractual life of the outstanding options was 7 years (2016: 7 years), exercisable in the
range 18.5p to 136.0p.
The Group recognised £86k of expense related to equity-settled share-based payments in the year (2016: £38k)
The fair value of options granted during the year is determined by applying the Black-Scholes model. The
expense is apportioned over the vesting period of the option and is based on the number which are expected
to vest and the fair value of those options at the date of grant.
The inputs into the Black-Scholes model are as follows:
26 June 16
250,000
113.00p
113.00p
3
0.10%
20.00%
10.00%
3.62p
5 Sept 16
17 Oct 16
40,000
124.00p
124.00p
3
0.50%
20.00%
10.30%
3.74p
30,000
136.00p
136.00p
3
0.26%
20.00%
10.30%
4.23p
Number of options granted
Share price at date of grant
Exercise price
Option life in years
Risk-free rate
Expected volatility
Expected dividend yield
Fair value of options
56
Expected volatility was determined by calculating the historical volatility of the Group’s share price for the
5 year period prior to the date of grant of the share option. The Expected life used in the model is based on
management’s best estimate.
The Group did not enter into any share-based payment transactions with parties other than employees during
the current or previous period.
27. Operating lease arrangements (Group and Company)
As lessee
There are no outstanding non-cancelled leases (2016: nil)
Lease payments recognised as an expense during the year
Lease payments are for rental of premises in India
As lessor
There are no outstanding non-cancelled leases (2016: nil)
2017
£’000
34
2016
£’000
29
Lease receipts recognised as income during the year
55
22
Lease receipts are for fixed-term sub-lets of parts of the parent company’s
premises bearing no contractual right of renewal or extension.
28. Financial instruments
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and
policies and, whilst retaining responsibility for them, it has delegated the authority for designing and operating
processes that ensure the effective implementation of the objectives and policies to the executive team.
The Board receives monthly reports from the executives through which it reviews the effectiveness of the
processes put in place and the appropriateness of the objectives and policies it sets.
Capital management policy
Management considers capital to be the carrying amount of equity. The Group manages its capital to ensure
it operations are adequately provided for, while maximising the return to shareholders through effective
management of its resources. The principal financial risks faced by the Group are liquidity risk, interest rate risk
and foreign exchange rate risk. The Directors review and agree policies for managing each of these risks. These
policies remain unchanged from previous years.
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern and
so provide returns for shareholders. The Group meets its objectives by aiming to achieve growth which will
generate regular and increasing returns to shareholders.
The Group manages the capital structure and makes changes in light of changes in economic conditions.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to
shareholders.
Capital risk management
The Group and Company’s capital structure comprises issued share capital, reserves and borrowings
as disclosed in notes 21 & 22, along with cash and cash equivalents. These are managed by the Board
to ensure that the Group and Company continues as a profitable going concern. There are no externally
imposted capital requirements.
57
D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
Notes to the financial statements (Continued)
Gearing ratio (at end of year)
Debt
Cash and cash equivalents
Net cash
Categories of financial instruments
Financial Assets at Amortised Cost
Cash and bank balances
Loans and receivables
Financial Liabilities at Amortised Cost
Trade and other payables
Borrowings
Foreign currency risk management
The Group’s foreign currency exposure arises from:
Group
Company
2017
£’000
(1,177)
6,290
5,113
2017
£’000
6,290
3,694
2,000
1,177
2016
£’000
(1,580)
5,007
3,427
2016
£’000
5,007
2,150
3,337
1,580
2017
£’000
(1,177)
6,290
5,113
2017
£’000
6,290
4,006
2,427
1,177
2016
£’000
(1,580)
5,007
3,427
2016
£’000
5,007
2,332
3,802
1,580
Transactions (sales/purchases) denominated in foreign currencies; and
Monetary items (mainly cash and receivables) denominated in foreign currencies
The exposure to transactional foreign exchange risk is monitored and managed at a Group level.
The carrying amounts of the Group’s assets and liabilities denominated in foreign currencies was as follows:
US Dollars
Euros
Liabilities
Assets
2017
£’000
353
98
2016
£’000
2,027
76
2017
£’000
4,041
156
2016
£’000
3,291
85
The following table shows the effect of £ strengthening by 5% against foreign currencies, with all other
variables held constant, on the Group’s result for the year. 5% represents management’s assessment of the
reasonably possible change in exchange rates.
At 31 March 2017
Impact on profit for the year
At 31 March 2016
Impact on profit for the year
$
£’000
€
£’000
(155)
(60)
(3)
-
Total
£’000
(158)
(60)
The following table shows the effect of £ weakening by 5% against foreign currencies, with all other variables
held constant, on the Group’s result for the year.
58
At 31 March 2017
Impact on profit for the year
At 31 March 2016
Impact on profit for the year
Credit risk management
$
£’000
€
£’000
171
67
3
-
Total
£’000
174
67
The Group uses credit reference agencies to determine and monitor the credit limits of new and existing
customers. At the end of the year one customer owed a total of £2,315,000 (2016: three customers owed
£1,242,000). No other customers owed more than 10% of the outstanding total. No provision for doubtful
debts has been made (2016: nil).
Liquidity risk management
The Board manages liquidity risk by maintaining adequate reserves of cash and banking facilities to cover
day-to-day trading. The Group’s policy is to pay creditors in full as and when they become due,which for all
practical purposes is at latest by the end of the month following the invoice date. The Board believes that
there is little liquidity risk since the Group has adequate cash balances to satisfy its creditors.
Long-term borrowings are secured by way of a mortgage on the freehold property and their repayment
schedule is shown in note 21.
Maturity analysis of financial liabilities
In less than one year:
Borrowings
Trade payables
Loans from directors
Amounts owed to Group undertakings
Other creditors
Accruals
In more than one year:
Borrowings
Interest rate risk management
Group
Company
2017
£’000
449
999
119
-
127
755
2,449
2016
£’000
449
2,578
185
-
49
526
3,787
2017
£’000
449
538
119
1,042
72
657
2,877
2016
£’000
449
2,578
185
465
49
526
4,252
798
798
1,255
1,255
798
798
1,225
1,225
The Group’s exposure to changes in interest rate risk primarily relates to interest bearing financial liabilities. The
loan bears interest at the rate of 2.50% over base rate and the mortgage at 2.10% over base rate. The Board of
Directors monitor movements in interest rates and have not prepared sensitivity analysis in relation to interest
rates as they do not believe that any reasonable variance would have a material impact on the Group.
59
D4t4 Solutions Plc Annual Report & Accounts 2017Strategic reportCorporate governanceFinancial statements
Notes to the financial statements (Continued)
Financial facilities
Secured bank overdraft facility (unused)
Fair value measurement
2017
£’000
250
2016
£’000
500
Financial instruments that are measured subsequent to initial recognition at fair value, are grouped into
Levels 1 to 3 based on the degree to which the fair value is observable:
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for
identical assets or liabilities;
Level 2 fair value measurements are those derived from inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived
from prices); and
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or
liability that are not based on observable market data (unobservable inputs).
The freehold land & buildings are observable at level 3.
60
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UK Registered Office (and principal place of business)
Windmill House
91-93 Windmill Road
Sunbury-on-Thames
Middlesex
TW16 7EF
Tel: +44 (0) 1932 893333
Fax: +44 (0) 1932 893433
E-Mail: moreinfo@d4t4solutions.com
Web: www.d4t4solutions.com