D4t4 Solutions plc
Annual Financial Report 2021
Fulfilling
our mission
To be on the forefront of
powering digital transformation
and fulfil the marketplace need
for customer-centricity in a
real-time, fully compliant manner.
Strategic Report
01 Headlines
02 Statement by the Chairman
04 Statement by the Chief Executive Officer
08 Chief Financial Officer Report
10 Key performance indicators (KPIs)
12 Customer centricity in a post-pandemic economy
13 The core opportunity for D4t4
18 Vision and strategy
20 Customer success story
22 Tactical plans to manage challenges
24 Principal risks and uncertainties
26 Corporate responsibility
28 Section 172 statement
Corporate governance
31 Chairman’s introduction to governance
32 Board of Directors
34 Statement of corporate governance
44 Audit Committee report
45 Nomination Committee report
46 Remuneration Committee report
47 Directors’ Remuneration report
52 Directors’ report
55 Statement of Directors’ responsibilities
Financial statements
56 Independent auditor’s report
61 Consolidated income statement
62 Consolidated statement of changes in equity
63 Consolidated statement of financial position
64 Consolidated cash flow statement
65 Company statement of changes in equity
66 Company statement of financial position
67 Company cash flow statement
68 Notes to the financial statements
96 Corporate information
Headlines
Revenue
£22.8m
+4.6%
2021
2020
2019
ARR
£10.6m
+11.0%
2021
2020
2019
£22.8m
£21.8m
£25.2m
Revenue from sales made to all customers (excluding intra-group
sales which are eliminated on consolidation). Reflecting transition to
recurring revenue business model
Annual recurring revenue
£10.6m
£9.55m
£7.57m
Adjusted profit before tax
Gross profit margin
£4.5m
2021
2020
2019
62.4%
2021
2020
2019
£4.5m
£5.1m
£6.0m
62.4%
60.8%
56.6%
Profit before amortisation of intangibles, share based payment charges,
foreign exchange gain/(loss) and restructuring costs (see KPIs)
Gross profit (being less all direct third-party cost of sales) as a
percentage of revenue
Adjusted diluted EPS
9.54p
Cash balance
£14.2m
+10.9%
2021
2020
2019
9.54p
11.19p
13.89p
2021
2020
2019
£14.2m
£12.8m
£11.0m
Adjusted diluted EPS as per note 13
Cash and cash equivalents. The Group has no debt
Key Performance Indicators page 10
1
Statement by the Chairman
Peter Simmonds
Non-Executive
Chairman
Despite the unprecedented and
challenging circumstances of the last
year, I am pleased to report that D4t4
Solutions has continued to deliver on
its strategic objectives - increasing
revenues from our Celebrus family
of software products and continuing
the transition to an Annual Recurring
Revenue model (ARR). This has led
to increased revenue visibility and
better-quality earnings.
to empower clients to maximise the value
Although the addressable market for
gained from their customer data, with the
the Celebrus FDP is incremental with
objective of delivering major uplifts in terms
client spend often controlled by a
of their revenue and profitability.
Our position
different budget holder to the rest of
the Celebrus offering, its core focus is
Financial Services where we already
During the year, global events have
have strong customer references and a
increased the speed at which companies
resilient following. This, combined with the
have transitioned their businesses online
underlying similarities in code with the
and the volume of data that is now being
already successful Celebrus CDP product,
produced. Enterprises are increasingly
gives me a high level of confidence that
focused on improving and differentiating
the FDP opportunity represents a high
their customer experience in a crowded
value, low risk business opportunity
marketplace. The expectations and
worthy of significant investment to build a
sophistication of successful businesses is
parallel and highly complementary Annual
creating increased demands for products
which capture customer experience in real
time across a wide variety of platforms.
This is resulting in a real opportunity, as
our products provide that real time data to
enable and improve these experiences in a
relevant, compliant and personalised way.
Recurring Revenue stream.
Geographic expansion has also been
an important driver. During the year we
opened a new APAC office in Sydney,
Australia and have added to our
operations in Cary, US and Chennai, India.
We have continued to invest in our existing
This unique real time capability, along with
Global pandemic
Celebrus Customer Data Platform (CDP)
and following positive market soundings
invested in the development of the
Celebrus Fraud Data Platform (FDP) which
has been launched in June 2021.
Our geographic expansion has continued,
and we have expanded and deepened our
partner relationships in existing and different
verticals. I am very pleased with the
progress made and can confidently confirm
the year has been a strong one for D4t4,
building the foundations for further growth.
D4t4’s financial performance in the year
was ahead of our expectations, reflecting
the strength of our product offering and
partner relationships, as well as the
fundamental shift of businesses online
and the essential part we play in that
digital transformation. However, the global
pandemic situation inevitably forced some
customers to focus on internal challenges,
resulting in some client projects and new
initiatives being paused or slowed. This
had a modest impact on top line growth
in 2020/21.
We enter the new financial year with
positive market tailwinds and continue to
proactively develop our product offering so
global digital transformation is helping us
On behalf of the Board, I would like to
to drive our reach into new sectors and
say how grateful I am to our leadership
verticals. Customers and partners are
finding that our capabilities can provide
vital functionality beyond our traditional
core focus of financial services and into
the retail, automotive, telecoms and
healthcare sectors.
It is our strong partner relationships and
customer-led approach that have driven
our innovation in R&D. New releases of
team and staff across the world for their
commitment to the business and the way
they have responded to the challenges of
the pandemic.
Despite having to close our offices at
short notice, our staff have been able
to work from home with little interruption
and have maintained the highest levels
Celebrus CDP have provided key solutions
of customer service. Following the
for clients such as seamless integration
lockdowns across the world, the Board
with other software, natural language
reviewed the impact on all roles across
and machine learning capabilities and
the business. Although a few roles were
reductions in data storage costs.
Research into other markets where real
time, highly granular client interaction
would be value enhancing has led us
to invest in a new fraud detection and
identity verification tool. This product has
been launched, post period end. Known
as Celebrus FDP, this product is built on
the foundations of the Celebrus CDP and
represents a completely new vertical for
not required during the office closures,
the Group did not use taxpayer funded
furlough schemes in any geographies.
Whilst we are a technology driven
company, we are also a people led
business and innovation is driven from
personal interaction across the firm and
with customers, so we look forward to
returning to a more hybrid working model.
us. This product has a huge addressable
We envisage this as a combination of
market and is the result of nearly two
home and office working, whilst optimising
years of design, development and testing.
2
opportunities for creative interaction,
an international digital media, analytics
before tax and cash generation metrics,
communication and efficient working.
and intelligence business will be of great
though always subject to the constant
benefit to D4t4 as it moves into the next
assessment of the impact of the global
phase of its development.
pandemic on the Group.
Board changes
In January 2021, John Lythall announced
his intention to retire as a Non-Executive
Director at the end of March 2021.
Formerly CEO of D4t4 until he stepped
down in 2016, John co-founded the
business along with Peter Kear and
has been instrumental in the Group’s
development. We wish him the very best
for his retirement.
Additionally, we are intending to create a
new Group Operations Board below the
main D4t4 Board which will consist of Jim
Dodkins (CTO), Mark Boxall (COO) and a
number of our existing senior managers;
accordingly, Jim and Mark both stepped
down from the D4t4 Board on the 30th
of June 2021 to lead the formation of the
Group Operations Board. This will enable
In February 2021, Charles Irvine, CFO,
them to focus entirely on the execution
announced his decision to leave the Group
and delivery of Group strategy.
to pursue another opportunity outside
of the public markets. Charles has been
replaced by interim CFO Nitil Patel and the
search for a permanent CFO is ongoing.
I would personally like to take this
opportunity to thank Jim and Mark for all
their hard work and support and I know
that they will ensure the success of the
After the period end, in April 2021, Peter
new management structure.
Outlook
Despite the obvious challenges of the
pandemic the business has continued to
thrive over the last year as evidenced by
our financial and operational performance,
proving that our robust strategy continues
to deliver. Our high level of customer
retention, excellent customer references
and increasing recurring revenue visibility
position the Group well.
We enter FY22 in a solid financial position,
with high profit margins, a strong cash
position with no debt and a well proven
business model. Trading during the new
financial year has been in line with the
Board’s expectations with strong levels of
Kear, CEO, announced his plans to retire
by June 2022. Peter’s energy, leadership
skills and strength of personality have
been critical to the success of D4t4 since
he co-founded the Group back in 1985
and became CEO in 2016. On behalf
of the entire Board, I would like to thank
Peter for all his contributions to the
business and would like to say a personal
thank you for the professional manner in
which he has handled the process and
contributed pro- actively to the search for
his successor.
Following an extensive search process
led by Monika Biddulph, Chair of the
Nominations Committee, I am delighted
that Peter will be replaced by Bill Bruno,
previously Vice President of D4t4’s US
business. I am confident that following
a well-managed handover the business
will continue to thrive and develop a host
of new global opportunities under Bill’s
leadership.
This gives the opportunity to streamline
both existing and new client activity.
the main D4t4 Board to allow increased
focus on corporate governance, group
strategy formulation as well as investor
and wider stakeholder relations. From
the 1st of July 2021 the Board of D4t4
will consist of the Chief Executive Officer,
the Non-Executive Chairman, two Non-
Executive Directors and (upon making
a permanent appointment) the Chief
Financial Officer.
Dividend
The Board is excited about the growth
opportunity represented by the new
FDP product and has now launched a
comprehensive program to market the
product and build the associated team to
ensure a successful global launch during
FY22. Whilst FDP is only expected to drive
modest initial recurring revenues this year
customer and partner interest levels are
already encouraging, with several currently
using and evaluating the technology.
Notwithstanding the global pandemic, the
The Board remains highly confident in the
Board has maintained dividend payments
Group’s strategy; our underlying business
during FY21 reflecting the financial strength
is delivering against our key KPI’s and
of the Group, its significant liquidity position
performing well, and D4t4 is well positioned
and the Board’s longer term confidence in
in its key markets. The current revenue
the performance of the business.
visibility, order book and pipeline of
The Board recognises the importance of
returns to shareholders so we are delighted
today to be recommending the payment
of a final dividend, subject to shareholder
opportunities all bode well for the future.
Prior to joining D4t4 in 2018, Bill was
approval at the 2021 AGM, of 2.0p per
CEO of Stratigent between 2009-2013
share (2020: 1.9p). The final dividend is
until it was acquired by Ebiquity. He then
expected to be paid on 17 September 2021
served as Ebiquity’s CEO (North America)
to shareholders on the register as at the
until 2018. Bill’s wealth of industry
close of business on 13 August 2021.
Peter Simmonds
Chairman
28 July 2021
knowledge and excellent track record in
the digital data market and in growing
The Board expects to maintain a dividend
payment in line with adjusted profit
3
Annual Report & Accounts 2021Strategic report Statement by the Chief Executive Officer
This demand resulted in a healthy sales
With customers extending the use of
pipeline, with new contract wins in
our products into additional territories,
the healthcare and telecoms sectors
our software is now used in 27 countries
broadening our customer base beyond our
around the globe.
Peter Kear
Chief Executive
Officer
The year to 31 March 2021 was one
of good progress for D4t4, despite
the impact of the global pandemic.
After a slightly slower start to the year
while customers got used to the “new
normal” way of conducting business
remotely, our customers accelerated
their efforts to affect their digital
business transformations, with an
industry report (Dynatrace) suggesting
digital transformation accelerated by
89% in the last 12 months, with further
momentum expected.
The Group delivered revenue and adjusted
traditional financial and consumer markets.
Constantly innovating, we have continued
to invest in the development of our
products and were proud to launch both
Celebrus CDP 9.2 and 9.3 versions during
the year. These included newly embedded
machine learning and natural language
processing capabilities as well as cloud
connectivity, reducing data storage costs
for clients.
This drive for innovation and the current
emphasis on the importance of identity,
privacy and data protection has led to the
development of our new Celebrus Fraud
Data Platform (FDP) which was launched
post period-end, taking D4t4 into an
exciting new area of fraud prevention and
security, along with its associated verticals.
Sales overview
During the year, we saw new international
sales wins from customers across Europe,
the US, Asia and the Middle East.
These were not only in our core areas of
financial services, but also included the
automotive, online retail, healthcare and
telecoms sectors. The majority of these
contracts are on an ARR basis, helping to
drive our ARR transition. Existing clients
were also key customers over the year,
often adding geographical expansions and
additional capabilities to current contracts.
Revenue for the year grew by 4.6%
to £22.8 million (2020: £21.8 million)
with adjusted profit before tax of £4.5
million (2020: £5.0 million). Sales of
our Celebrus product family of software
and services now make up 81% of total
profit before tax of £22.8 million and £4.5
Strategy and position
million respectively, ahead of the Board’s
We have delivered real progress on our
company revenue (2020: 80%). As a
prior expectations and with significant
progress on our strategy of migrating
aim to transition towards a predominantly
result of the improved quality of revenues,
ARR model which has had a positive
gross margins also improved to 62.4%
towards an ARR model. ARR increased by
impact on the visibility and stability of
(2020: 60.7%).
11% year on year to £10.6 million (2020:
our revenue. The shift is being driven by
£9.55 million), providing more revenue
visibility and better quality earnings.
new product innovations and uptake,
although the pace is ultimately driven by
Statutory profit before tax was £3.0 million
customer requirements.
which was in line with expectations.
We closed the year with £14.2 million in
cash up 11% on last year’s £12.8 million,
and due to the successful fourth quarter,
we ended the year with £10.2 million in
We are progressing on our strategy of
debtors, which is expected to unwind by
We are proud to have achieved this
growing product revenues within our
the next reporting date.
without any assistance from government
Celebrus family of products. This has
schemes, with no staff furloughed and
been enabled by broadening our offering
whilst continuing to pay all relevant taxes.
to target additional verticals such as
With the emphasis on businesses’ online
offerings growing hugely due to the global
pandemic, we saw strong demand for our
Celebrus family of products. Being able to
optimise a customer’s online experience
and harness the data generated in real
time have become ever more important
as our clients seek to differentiate
themselves and their digital offering in a
crowded marketplace.
healthcare, retail, telecoms, automotive
and travel, as well as developing
innovative capabilities in new versions of
our Celebrus CDP software.
Global Reach
We have focused on international
expansion during the year, establishing
a presence in APAC, as well as investing
in our operations in the US and India,
which will all be key drivers going forward.
As we invest behind our newly launched
Celebrus FDP fraud product, we expect an
increase in operating expenditure as we
recruit specialists in this new sector and
increase our marketing spend for our new
product family.
Partnerships
Our strategic industry partnerships
continue to be a focus for future growth
and providing geographical reach and
business diversity beyond our own core
verticals and territories. During the year
4
we have strengthened relationships
with key partners including Teradata,
Pegasystems, SAS and Dell, working
together to innovate and to ensure
seamless product integration.
This resulted in the development and
launch of a joint innovation with Teradata
in April 2020. Celebrus CDP’s real
time capabilities were integrated with
Teradata’s Vantage CX software, enabling
it to provide customer behaviour data
instantly from across all digital channels
to create personalised and optimised
customer experiences, at scale.
Post period-end, D4t4 also launched
a key joint update with Pegasystems
to its Pega Customer Profile Designer
platform, integrating Celebrus CDP
to generate complete, compliant,
individual-level digital behaviour data,
enabling enterprises to create relevant,
contextualised offers and messaging in
real-time, for every customer.
Channel partner sales contribute a major
proportion of our revenues, so working
closely with our partner base to provide
solutions driven by customer need is a
priority. Further collaborations with our
strategic partners are underway and are
expected to continue to provide valuable
product innovations and updates in the
short to medium term.
Markets and opportunities
The benefits of this partner focus are
demonstrated by the new opportunities
that arise - we are being introduced to
different user groups within partners and
customers which want to use the depth
and quality of our data in new ways. One
particular area has been in risk and fraud,
which has driven both the development
of our new Celebrus FDP software
and the requirement for new strategic
partnerships to exploit the use of our
software and data in those areas.
“
D4t4 Solutions has been a great partner to Pega
and our clients. Their data collection solutions
are a valuable complement to Pega's decisioning
solutions, and they have been central to our
winning a number of strategic new business
opportunities
HAYDEN STAFFORD
President Global Client Engagement
PEGASYSTEMS
“
We have a long-standing mutually beneficial
partnership with D4t4 Solutions and their Celebrus
product set, and together we have helped some
of the world's largest banks, including three
of the top ten retail banks, plus global airlines,
telecommunications companies, healthcare
providers, and insurers, generate significant
incremental revenue and deliver outstanding
Customer Experience for our joint clients
STEVE MCMILLAN
President and Chief Executive Officer
TERADATA
5
5
Annual Report & Accounts 2021Strategic report Customer Data Platform (CDP)
Celebrus CDP uses machine learning to deliver Automated
Marketing Signals. These enable enterprises to better
understand customer interest, life events, subscriptions
and customer experience in real time. These preconfigured
signals reveal new revenue generating opportunities and
dramatically limit customer churn.
Celebrus CDP’s new natural language processing
functionality provides enterprises with a valuable and
immediate insight into customer sentiment across all digital
channels including online chatbots, complaints feedback
and product review forums. Speed is significant because
it allows clients to make meaningful interventions ‘in the
moment’ to safeguard customer relationships and reinforce
their brand values.
Our solutions give our customers confidence in the depth
and quality of their data, safe in the knowledge that they
can collect all relevant data from every customer interaction
across all digital channels in real time.
The launch of CDP version 9.3 in January 2021, also helps
enterprises to substantially reduce their storage costs. As
more and more customers engage with businesses through
online channels, enterprises are seeing a huge rise in data
volumes. Celebrus CDP now includes seamless Cloud
connectivity which significantly reduces data storage costs.
Customer Data Management (CDM)
Our Celebrus customer data management (CDM)
technology, previously known as Hybrid Cloud, ensures
that digital channel data can be easily combined and
managed with any other customer data that exists –
thereby enabling customer analytics, optimised customer
experiences and more accurate targeted marketing, or for
risk and fraud applications all in real time.
Our data migration, data management and data monitoring
software is used in many organisations where combining
and managing very large historical data sets at scale is the
challenge.
We recently launched a new product in this area which
enables the detection of unintentional mass data deletions.
The mass deletion alert module has been successfully
deployed with one major global banking group and has
proved invaluable to them immediately.
6
6
Notable wins for Celebrus CDP
during the year included:
z A new business win with a European b2b
e-commerce provider
z A multi-year contract extension with an existing
global automotive manufacturing customer
z A significant contract expansion with a
major US financial services organisation
z An extension of a contract with a major UK bank
z A new business win with a top five Taiwanese
insurance provider
z A significant multi-year, fully managed, contract
extension with an existing UK top five online
retail customer
z A new multi-year contract with a top five middle
eastern telecommunications company
CUSTOMER DATA PLATFORM
With companies continually demanding more from their data
our CDM software offerings are in greater demand than ever
before.
Notable wins for Celebrus CDM
during the year included:
z A significant multi-year contract extension with a
major US financial services organisation
z A significant multi-year, fully managed, contract
extension with an existing UK top five online
retail customer
CUSTOMER DATA MANAGEMENT
We are expanding geographically and
are working to develop new partner
relationships in different verticals.
As demonstrated by the number of
new product launches alongside digital
transformation tailwinds, we have entered
the current financial year with strong
momentum. With the launch of our new
fraud offering, and with our improved
revenue visibility, order book and pipeline,
we are optimistic about the year ahead.
Peter Kear
Chief Executive Officer
28 July 2021
Technology platform leadership
New Board structure
The evolution of our Celebrus CDP
As previously announced, I will be retiring
software has continued during the year
by the end of June 2022 with Bill Bruno
and we are proud that it remains the
(currently Deputy CEO) assuming the CEO
leading real time, multi-channel digital
role in due course. Bill and I are currently
data collection platform, used by many of
working closely together to ensure an
the world’s largest financial services and
orderly transition over the coming months,
consumer organisations.
and I will continue to support him after the
This drive for excellence and innovation
formal handover through to 30 June 2022.
has resulted in the launch of our
Additionally, we are intending to create a
completely new capability, the Celebrus
new Group Operations Board below the
Fraud Data Platform (FDP).
main D4t4 Board which will consist of Jim
Using automated behavioural biometrics
to eliminate fraud around the three core
fraud use cases of Account Opening,
Account Takeover and Payment
Processing, FDP is able to identify
potentially fraudulent signals in real-time
so as to pre-empt occurrence, enabling
enterprises to improve their fraud
Dodkins (CTO), Mark Boxall (COO) and a
number of our existing senior managers;
accordingly, Jim and Mark both stepped
down from the D4t4 Board on the 30th
of June 2021 to lead the formation of the
Group Operations Board. This will enable
them to focus entirely on the execution
and delivery of Group strategy.
management processes, avoid losses,
I would personally like to take this
reduce reputational damage and help with
opportunity to thank Jim and Mark for all
identification of fraudsters even before a
their hard work and support during the
fraud has taken place.
last six years while I have been CEO and I
FDP helps businesses protect their
customers through:
z Behavioural biometrics and analytics
which provide seamless detail about
users as they navigate digital channels;
z Insights that signal unusual online
interactions in real-time to identify
fraud across the customer journey;
z Integration to existing fraud detection
and investigation systems to identify
and prevent multiple fraud types;
z Complete control to quickly adapt to
evolving threats.
know that they will ensure the success of
the new management structure.
This gives the opportunity to streamline
the main D4t4 Board to allow increased
focus on corporate governance, group
strategy formulation as well as investor
and wider stakeholder relations. From
the 1st of July 2021 the Board of D4t4
will consist of the Chief Executive Officer,
the Non-Executive Chairman, two Non-
Executive Directors and (upon making
a permanent appointment) the Chief
Financial Officer.
The launch will incur additional
Looking forward
expenditure in the current financial year
as the new product will be supported
by a new specialist fraud team which
is being recruited and we will also
be supplementing our installed base
customer success team with a number of
new hires around the globe.
D4t4 has performed well during a
challenging year. Our strategic focus
continues to pay off with good growth
in the business and significant progress
in the transition to ARR. We continue to
lead in our technology segment, through
innovation and through customer and
partner led development.
7
Annual Report & Accounts 2021Strategic report
Chief Financial Officer Report
Annual Recurring Revenues (ARR) of 11.0%
The addition of new staff and the
Income statement
Revenue
The Group achieved continuing operations
revenue growth of 4.6% despite the
impact of the global pandemic to working
practices. Revenue was £22.8 million
(2020: £21.8 million). The quality of the
revenue growth is evidenced by increased
to £10.6 million (2020: £9.55 million).
The Group maintained its international
growth with non-UK revenues accounting
for 87% of the total revenue for the year
(2020: 81%).
As the Group continues the migration
to ARR, emphasis on CDP and CDM
continues. As the new Celebrus Fraud Data
Platform (FDP) product gains traction we
expect it to achieve the same prominence,
especially to new clients and/or partners.
Sales of the Celebrus product family of
software and services now make up 81%
of total Group revenue (2020: 80%).
Gross margin
The gross margin for continuing
operations was 62.4% (2020: 60.7%). The
increase in gross margin comes from the
growth in revenue from CDP sales. The
Group continues to see value in both the
direct and indirect models of selling and
hence will continue to invest in building
long term ARR.
Operating expenses
Adjusted operating profit before tax from
continuing operations decreased by 11.8%
from £5.1 million to £4.5 million. Operating
expenses as a percentage of revenues
moved from 38% to 49%. The main cost
categories were increased employment
costs, share based payments and foreign
exchange expenses in the year.
The administration expenses increase
relates to additional staff, salaries,
bonuses and one-off FDP associated
expenses (£1.2 million), foreign exchange
8
charge in the year (£0.7 million) plus a
exchange expense and tax on these
comparative year on year movement from
adjustments as set out in note 13 below.
a foreign exchange credit of £0.4 million,
share based payments (£0.2 million),
director remuneration (£0.2m) and other
costs (£0.2 million). This has resulted in an
increase of £2.9m to £11.2 million for the
year (2020: £8.3 million).
retention, motivation and reward for
success of our existing employees are
critical for the Group and these additional
expenses reflect these aims and the
current employment environment. This
Dividend Policy
The Board is today proposing a final
dividend, subject to shareholder approval
at the 2021 AGM, of 2.0p per share (2020:
1.9p). The final dividend is expected
to be paid on 17 September 2021 to
shareholders on the register as at the
close of business on 13 August 2021.
Financial Position
Intangibles
and the additional costs associated with
Goodwill of £8.7 million (2020: £8.7 million)
the development of our new FDP platform
results from the acquisition of Celebrus
contributed to the extra administration
(Speed- Trap) in 2015 with the net balance
expenses. Further, the foreign exchange
of £0.87 million (2020: £0.96 million) of
expense is a consequence of the rapid
other intangibles representing purchased
appreciation of the pound against dollar
IPR, trade name and capitalised
denominated contracts, which the Group
development costs. The Group expenses
will look to manage going forward, utilising
the majority of its R&D costs and
forward foreign exchange contracts.
capitalised £0.2 million in the year (2020:
Taxation
£0.2 million).
Profitability in the year was lower than
Right of use Assets
last year and as a consequence the tax
The Group has applied IFRS 16 Leases for
liability decreased to £0.3 million (2020:
the year commencing 1 April 2020 as it was
£0.5 million). With an effective tax rate of
immaterial for the previous financial year.
9%, the Group continues to utilise R&D
and Patent Box tax credits. In addition,
the Group benefited from the tax impact of
share options being exercised in the year.
Earnings per share
Basic EPS for the year was 6.88p (2020:
11.12p) and diluted basic EPS was
6.75p (2020: 11.04p). The basic figure
has been calculated using the weighted
average number of shares in issue being
40,235,856 (2020: 39,976,957) and the
diluted figure using 41,007,252 (2020:
40,276,951).
The Group has applied the modified
approach from 1 April 2020 but has not
restated comparatives for the year ended
31 March 2020 as permitted under the
specific transitional provisions in the
standard. The net asset value at year end
was £0.26 million (2020: £nil).
Cashflow and working capital
The Group had strong cash management
in the year with net cash generated from
continuing operations of £3.3 million
(2020: £2.4 million) an increase of 37.5%.
The cash balance at the year end was
Adjusted basic EPS was 9.72p (2020:
£14.2 million (2020: £12.8 million).
11.28p) and adjusted diluted EPS
was 9.52p (2020: 11.19p) following
adjustments for amortisation, share based
payments, exceptional items, foreign
The Group continues to be debt free
and maintains a robust financial position
following a full year of the global pandemic
and with no recourse to any government
support schemes. Financing activities
increased in the year from £0.2 million
to £1.7 million reflecting cash outflow on
dividends paid and net purchase of own
shares in the year.
Trade receivables have grown by 27.5%
in the year to £10.2 million (2020: £8.0
million), reflecting revenue growth and
timing differences at year end in relation to
an outstanding debt received after the year
end. Overall receivables have grown 31.9%
due to the increases mentioned earlier and
accrued income of £2.6 million (2020: £1.5
million). Inventories fell significantly to £0.1
million (2020: £1.3 million) as the Group
delivered goods before the year end.
Trade payables and accruals decreased in
the year to £4.1 million (2020: £4.8 million)
as the Group continues to pay its suppliers
on due dates. Deferred income increased
significantly by 53.6% to £6.3 million (2020:
£4.1 million) reflecting growth in ARR.
Purchase of own shares
During the year, the Group increased
shares held in Treasury to 191,498
(2020: 159,133).
Equity
The principal increase in the year was
retained earnings growing by £1.7 million
to £20 million (2020: £18.3 million). As
at 31 March 2021 the Group had £30.9
million (2020: £29.3 million) attributable to
the shareholders of the company.
Total Assets
The Group ended the year with total
assets of £41.9 million (2020: £38.9
million) an increase of £3 million.
Nitil Patel
Interim Chief Financial Officer
28 July 2021
“
D4t4 has performed strongly during the year,
despite the difficult circumstances, growing
revenues by 4.6% whilst also making significant
progress in the transition to more visible and
better quality earnings, with our key ARR metric
advancing 11% in the year.
Throughout FY21 we have continued to
innovate; the recent addition of the Fraud Data
Platform to the Celebrus product family provides
access to a growing $18 billion risk and fraud
market and demonstrates the strength of our
creative and technical talent. We have also
grown geographically, deepened our existing
relationships with strategic partners and developed
a robust pipeline of new business as demand for
enterprises' digital transformation increases.
We have entered the new financial year in a strong
position after a record second half and are well
positioned for continued delivery in the year ahead.
PETER KEAR
Chief Executive Officer
D4t4 Solutions plc
9
9
Annual Report & Accounts 2021Strategic report Key Performance Indicators
Revenue
4.6%
2021
2020
Gross profit margin
2.6%
2021
2020
£22.8m
£21.8m
62.4%
60.8%
Revenue from sales made to all customers
(excluding intra-group sales which are eliminated
on consolidation). Reflecting transition to recurring
revenue business model
Gross profit (being less all direct third-party cost of
sales) as a percentage of revenue
Adjusted profit before tax
Adjusted diluted EPS
£4.5m
2021
2020
9.5p
2021
2020
£4.5m
£5.1m
9.5p
11.2p
Profit before amortisation of intangibles, share based
payment charges, foreign exchange gain/(loss) and
restructuring costs
Gross profit (being less all direct third-party cost of
sales) as a percentage of revenue
10
Cash and equivalents
10.9%
2021
2020
ARR
11.0%
£14.2m
£12.8m
2021
2020
£10.6m
£9.6m
Strong cash position with no external borrowings
allowing for further strategic investment
ARR expected to continue to grow
Total assets
7.7%
2021
2020
Net cash generated from
operations consolidated
37.5%
£41.9m
£38.9m
2021
2020
£3.3m
£2.4m
Strong financial position with no external borrowings
Continued net cash generation from operations
strengthens the Group’s overall financial position
11
Annual Report & Accounts 2021Strategic report
Customer centricity
in a post-pandemic economy
2020 was a year of global transformation, and one
of the major changes accelerated by the global
pandemic was digital transformation.
At the core of this transformation is anticipating the customer need in a
digital-first world. Many organisations were forced to adapt to the new
normal of digital interaction as the primary, and in many cases only,
interaction with an individual consumer.
The complexity of the digital landscape, combined with this acceleration,
also led to many new approaches to protecting the consumer and the
data created and captured about them. Following in the footsteps of
GDPR, D4t4 continues to see enhanced legislation around the globe
as well as at state-level in the United States. In addition, web browsers
and technology organisations continue to crack down on third-party
solutions that exist outside of the corporate firewall.
While consumers demand a personalised experience, and expect brands
to anticipate their needs, they also expect that their data will be used in a
100% compliant manner. This presents an additional challenge to brands
who are attempting to move at the speed of light with data but need to have
the confidence that the data being acted on is both ethical and compliant.
This consumer demand, however, must be fulfilled instantly as the
patience for slower or less personalised experiences across both channel
and device is waning. To deliver that, organisations need to be able to
scale and respond in milliseconds, not minutes. However, there are often a
whole raft of challenges when it comes to executing at this scale.
89%
of CIOs say
their digital
transformation has
accelerated in the
last 12 months
58%
of CIOs say their
digital transformation
will continue to
speed up
Source: Dynatrace 2020 CIO Study
Enterprises lack the automation they need to execute at scale
“Do you agree with the following statement”
Anticipate need
Don’t anticipate needs
Base: 260 digital business executives
We automatically update all the data
in our custom profiles in real time
9%
33%
“Which, if any, of the following technology challenges does your firm face in implementing your full vision for
notifications or mobile messaging. Select all that apply.”
Anticipate need
Don’t anticipate needs
We don’t have enough automation
- everything is manual today
We don’t have the back-end automation we need to act upon
consumer responses (e.g. confirming an appointment)
Our data ecosystem and ETL processes don’t provide timely
enough data to deliver relevant real-time experiences
22%
20%
18%
51%
48%
38%
We don’t have any technology challenges related to
implementing our full vision for mobile messaging
1%
14%
Source: “Anticipatory Experiences: The Challenges” by Julie Ask January 20, 2021 (Forrester)
12
The core opportunity for D4t4
There are four core themes arising as key opportunities for growth which align with D4t4’s differentiators in the
marketplace as well as with its innovation focus:
Identity
Privacy &
Compliance
Activation
Fraud
Identity
Customer-centricity requires organisations to identify who someone is as they traverse the journey from anonymous to known and
everything in between, across both channel and device. To be truly real-time, this identity must exist in the moment and must be able
to be stitched together instantly without any delay as new information presents itself. The concept of an Identity Graph is paramount
to this discussion and is a core feature of the latest Celebrus CDP version 9.4, launched post-period end in May 2021. Without identity
management, the impact of digital transformation for a business can be severely limited.
Recent industry developments, such as Apple’s Intelligent Tracking Prevention (ITP) and app-level privacy enforcement as well as browser
changes and the blocking of third-party cookies continue to make identity a key issue. It is particularly problematic for traditional tag-based
data capture platforms as well as “assembly” CDPs who rely on those solutions to manage customer identity for them before the data lands in
their systems.
This presents an opportunity for Celebrus CDP as it is truly first party and is not impacted by the industry changes in any way. Celebrus CDP
can quickly and securely identify a customer, in a completely compliant way, leveraging its industry-first true first party identity graph, which is
owned and controlled internally by the Group’s client within its deployment.
Identity
Marketing attribution
Visitor retargeting
Offers
Consent & Compliance
Decisioning
Fraud detection
Cross-device analytics
Channel Orchestration
Identity graphs
CX
Audience segments
Machine learning models
Marketing mix models
© D4t4 Solutions plc
A/B or multivariate tests
13
Annual Report & Accounts 2021Strategic report
Privacy & Compliance
The core of D4t4’s Celebrus product offerings is compliance. D4t4 is referred to by many customers, including Chief Privacy Officers, as the
first data solution company to lead with privacy & compliance at the forefront of its platforms.
D4t4’s offerings exist behind the firewall in a true, first party manner, which not only ensures that its customers fully own and control any
and all data captured about consumers but also that its systems are able to bring this information together in a meaningful, instant manner
from other first party systems of record.
In addition, D4t4 provides Celebrus Control as a module that ultimately ensures that any of its data capture capabilities in the marketplace
today adhere to the preferences of a consumer with regards to opt-in and opt-out.
Compliance
1st Party data control
Apps
Web
Internet of Things
Subset of data
3rd Party
Solutions
External 3rd party
Internal 1st party
Full data model
Data Warehouse (Single
Source of Truth)
Subset of data
Other 1st Party Systems
Celebrus Data Model
Profiles
© D4t4 Solutions plc
14
14
Activation
Forrester refers to creating “Moments” for a consumer as the basis of “table stakes” in today’s economy.
These moments need to be focused on the individual (e.g., 1:1 personalisation) and should be predictive in nature as a result of prior and
current context about that individual and the full history of all interactions and profile data available.
Engagement
breadth
Moments
Context
Cross-channel
• Individual
• Real time
• Predictive
• Microtargeting
• Triggered
• Reactive
• Segments
• Campaigns
• Outbound
Engagement granularity
Source: Forrester ‘Future of Enterprise Marketing Technology
To do that, the definition of “real time” comes to the forefront. For many of the other CDPs and traditional data capture solutions available,
real time means minutes or hours. For Celebrus this is milliseconds.
The bedrock of creating these moments and surfacing the contextual data about an individual is the core Machine Learning (ML) and
Natural Language Processing (NLP) capabilities built into Celebrus products that can identify a customer’s intent via modules such as
Automated Marketing Signals.
D4t4’s industry-leading partners in the decisioning and personalisation sector (including Pegasystems, Teradata, SAS, Adobe) benefit
from having Celebrus data available to deliver upon these moments for customers. Continued global growth with these partners is key to
mutual success.
15
15
Annual Report & Accounts 2021Strategic report Fraud
Whilst Celebrus has traditionally been focused on business and marketing use, many customers have found ways to use its platform
data to identify fraudulent activity. Furthermore, Celebrus CDM has focused on building risk and regulatory environments for Financial
Institutions for many years.
New research from the Ponemon Institute and sponsored by PayPal looks to understand the current fraud landscape,
barriers and challenges organisations face in mitigating the risk of online fraud and the resulting financial losses.
The Real Cost of Online Fraud
$4.5
million
51%
11%
decline
81%
The average amount
organisations are losing per
year due to online
fraudulent transactions
Say their organisations are
prioritising protecting online
financial transactions
In effectiveness in reducing
online fraud due to COVID-19
(45% to 34%)
Say their organisations are
more vulnerable as a result of
digital transformation
This research was conducted by the Ponemon Institute and commissioned by PayPal. It examines
survey data from 632 individuals from December 22, 2020 to January 8, 2021.
With the above in mind, D4t4 has identified a market opportunity to launch a new platform within the Celebrus portfolio: Celebrus Fraud
Data Platform (FDP).
The new digital-first economy, combined with the enhanced sophistication of fraudsters, has put organisations in need of identifying the
fraudster before the fraud. Celebrus FDP is focused upon providing instant, contextualised data for the purposes of doing just that. This is a
completely new market opportunity for D4t4 and the Group will continue to invest in the growth of this new revenue stream with a clear set
of differentiators and a battle-tested platform that is market ready today.
16
16
Industry Sectors
In the past year, D4t4 has seen new wins in both the US Healthcare market and the global Telecoms market. The Group’s core focus
remains the Financial Services and Insurance sectors, but also with enterprise customers across these new verticals as well as Travel &
Hospitality and Retail.
The customer-centricity desire, and the expedited digital transformation investments, are prevalent in every vertical. While the Group
continues to expand its core base in the Financial Services industry, it will continue to market its platform more broadly with focused, use-
case driven solutions built upon its Celebrus portfolio of products.
Geographic Focus
D4t4 can provide 24/7 support for its customers, partners and end users due to its geographical presence and its talented staff. The Group
continues to identify opportunities in each market while also ensuring it balances the right breakdown of skills and capabilities to respond
to key industry trends.
The Group’s largest growth market continues to be the US, but it also expects to create new global revenue streams with the launch of
Celebrus FDP. With the opening of its new office in Sydney, Australia, D4t4 is investing in exploring the APAC market as well as ensuring it
continues to review opportunities across Europe and South America.
17
17
Annual Report & Accounts 2021Strategic report Vision and strategy
01
Mission
02
Vision
03
Strategy
To be on the forefront of powering
digital transformation and fulfil the
marketplace need for customer-
centricity in a real-time, fully
compliant manner.
D4t4’s Celebrus CDM, CDP, and FDP
products are uniquely positioned to
make this mission a reality in how the
Group engages and deploys across
its customer base.
To continually innovate and build a
steadily growing business that earns
high margins and recurring revenues
by partnering with clients to drive
maturity in their usage of data along
their transformative journey.
D4t4 intends to lead on digital
disruption by powering artificial
intelligence, machine learning,
advanced analytics, compliance,
fraud, risk, marketing, and customer
experience with the Group’s CDM,
CDP, and FDP products.
To deliver the vision, D4t4’s strategy
is to continue to focus its activity on
three complimentary areas for growth:
i. Increasing ARR (Annual Recurring
Revenues) derived from Celebrus
CDP by leveraging recent
innovations in Identity, Compliance
and Activation to deliver the most
high-value solutions for customers.
ii. To launch and grow ARR for our
new Celebrus FDP in the fraud
sector and build strategic
partnerships that can perform
efficiently and better as a result
of our instant, contextualised data,
combined with machine learning
and artificial intelligence.
iii. Generating recurring income
through developing, deploying,
and managing hybrid cloud
platforms that combine the
intellectual property, services,
software, and hardware needed
to help clients evolve their digital
transformation. Continue to offer
the flexibility and scalability of
D4t4’s environments to support a
hybrid cloud or multi cloud
approach.
18
18
04
Tactics
05
Core offerings
This strategy will be executed
by continuing to live the Group’s
core values of innovation, trust,
collaboration, and security.
D4t4 will continue to enhance and
grow capabilities across the three
main pillars of the business: CDM,
CDP, and FDP.
The Group has depth of expertise
and wide connections within the
financial services and consumer
sectors, and will continue to further
apply its learnings to other verticals
and partnerships as it strategically
grows its business around the globe.
and hardware needed to help clients
evolve their digital transformation.
Continue to offer the flexibility and
scalability of D4t4’s environments to
support a hybrid cloud or multi cloud
approach.
To be the best at capturing, unifying, and activating Customer Data, we created
the Celebrus Suite of products.
Our Celebrus Suite provides data-driven businesses with a competitive
advantage that allows them to unlock the right data at the right time and to
activate it to make smarter business decisions.
The suite comprises:
CUSTOMER DATA PLATFORM
Allowing businesses to connect instantly with their customers, as if
they are face-to-face in real-time.
FRAUD DATA PLATFORM
Allowing businesses to protect their customers from online fraud and
financial crimes in real-time.
CUSTOMER DATA MANAGEMENT
Allowing businesses to turn their raw data into actionable insights
with automated ingestion, integration, transformation and delivery.
1919
Annual Report & Accounts 2021Strategic report
TOXBASE - The UK National Poisons Information Service
A customer success story
Everyday thousands of people around the world present to medical specialists seeking urgent help
following exposure to a chemical or a drug. Whether this is because of an accident, deliberate misuse
of a drug or substance abuse in the context of self-harm, speed of response is of the essence and
determines outcomes. Medical teams need instant access to high quality, evidence-based and up
to date information about the many thousands of different substances that might be involved, the
potential side effects of exposure and the appropriate remedial action to be taken by clinical teams.
The Challenge
between the medical and IT worlds is
Celebrus CDP
The National Poisons Information Service
a success story both organisations are
In 2012 NPIS were looking for a reliable
(NPIS) saw an opportunity to leverage
rightfully proud of. Ms Lindsay Gordon,
way to see specific types of accesses to
new technologies to improve access to
Knowledge & Information Manager at
the TOXBASE platform in real-time. The
their service, for all their UK NHS users.
NPIS, remarked that “We have always
Celebrus Customer Data Platform (formerly
They wanted to create a solution that
valued D4t4’s knowledge, flexibility and
known as Speedtrap) was deployed to
was instantly and equally accessible to all
approachability. As an organisation of
handle their digital data capture on the
healthcare professionals at the point of care
medics and scientists with limited IT
web. The Celebrus Customer Data Platform
24hours a day, 7 days a week and 365 days
expertise, we love the empathy and care
(CDP) now provides them with insight into
a year, regardless of their location.
shown by the D4t4 team who always make
both aggregated usage data and individual
Enter TOXBASE. In 1999, NPIS Edinburgh
(formerly known as the Scottish Poisons
Information Bureau) set about solving
this challenge and commissioned D4t4
Solutions plc D4t4 are data solutions
experts with a strong reputation for
creating innovative data platforms and
these IT related matters easy for us to
user journey data in real time. It is envisaged
understand and manage. And importantly
that the Celebrus CDP will also be deployed
they have innovated and reliably maintained
on the mobile app to give a complete
the platform for us ensuring the highest
picture of all their users which will enable
customer satisfaction levels”.
Web and Mobile App
deeper understanding and optimisation of
the user experience provided over time.
Use Cases and Outcomes
secure solutions for an impressive range
The TOXBASE solution is available online
of global clients spanning 26 countries.
via web, with hospital departments being
While the major workload of the NPIS is to
D4t4 designed, tested and in 1999 together
the top users of the service accounting
advise hospital emergency departments,
with NPIS led the launch of migrating
for more 60 % of TOXBASE accesses;
NHS telephone advice services and primary
the TOXBASE solution to the Internet to
and via a convenient mobile app where
care services when accidental or intentional
expand its availability for users and improve
paramedics and emergency departments
poisonings occur, real time data insights can
speed of access to vital information. It has
account for >65% of their subscribers.
deliver value for other use cases.
no fewer than 17,000 + individual entries
which are systematically peer reviewed and
meticulously maintained, and over 2 million
individual page accesses a year.
In December 2019, D4t4 undertook a
For example, it can uncover trends in
significant redesign of the app to improve
exposures in a region which can give early
usability and to create a more seamless
warning of an impending public health issue
user experience for web and app users.
enabling both public health authorities and
The app is available for both iOS and
law enforcement to make early interventions
The Solution
been Android.
D4t4 Solutions designed and built the data
platform for the National Poisons Information
Service and has been responsible for
the support, maintenance and hosting of
this clinical toxicology database for more
than 30 years without interruption. They
have become the trusted outsourced IT
department of NPIS underpinning the
production and delivery of the TOXBASE
platform. This collaboration of disciplines
20
Access to TOXBASE remains free to UK
NHS staff but can also be purchased by
other interested healthcare professionals,
private healthcare providers and
international poisons centres. The
to preserve life and valuable resources.
(A monograph is a predetermined page
providing data on active ingredients, doses,
formulations, toxicity, expected features in
poisoning, and management advice.)
Having a real time alerting system allows
availability of the mobile app has enabled
NPIS to see user accesses to specific
this valuable platform to be more widely
monographs and can alert them to serious
used by toxicologists, clinicians, and front-
poisonings and incidents. They are then
line medical teams the world over. So far it
able to contact users to offer additional
has been deployed in >95 countries.
At a glance
1980s
Expert resource launched
1999
Application taken online
2015
Mobile App launched
TOXBASE is a wholly
owned and managed
solution of
The UK National
Poisons Information
Service
Over
7,000
UK Health
Departments
supported
Approaching
20,000
UK and International
TOXBASE Mobile App
subscribers
225,000
Mobile App accesses
(+47.4% increase 2019-20)
>2m
page views from
686,000 user sessions
(www.toxbase.org)
More than
17,000
unique substance
entries held on
TOXBASE
Circa
40,000
telephone enquiries
(down 5.6% 2019-20)
Available in
>95
countries and growing
“
We are fortunate to have enjoyed decades of
reliable service from D4t4. We look forward to
continuing to innovate and expand the access
to TOXBASE with their support
Dr GILL JACKSON
Information Services Manager
TOXBASE
“
Being their partner of choice to deliver this
critical healthcare resource which is responsible
for saving lives is something that I am immensely
proud of and we look forward to continuing and
deepening our partnership
PETER KEAR
Chief Executive Officer
D4t4 Solutions plc
21
21
expert advice during management of their
patients which can significantly improve
patient outcome.
D4t4 Value
There is a very close working partnership
between the team at NPIS and D4t4
Solutions which has endured and thrived
for over 30 years. Dr Gill Jackson,
Information Services Manager commented
“NPIS have no IT qualified staff or
infrastructure in-house, and we rely on
D4t4’s support, technical expertise and
guidance to run our TOXBASE platform,
which is a critical healthcare resource
and front-line NHS service. Therefore, it is
crucial for us to work with a partner who
can guarantee, 24/7 availability of our
platform, immediate response to contacts
and adherence to the highest security
standards as lives are at stake. We are
fortunate to have enjoyed decades of
reliable service from D4t4. We look forward
to continuing to innovate and expand the
access to TOXBASE with their support”.
Peter Kear, CEO and co-founder of D4t4
Solutions said “Working with the talented
team at NPIS to create the TOXBASE
solution has been a privilege for our
team. Their trust in D4t4’s expertise
and willingness to innovate how they
democratise access to vital poisons
information and treatment information is
hugely motivating. Being their partner of
choice to deliver this critical healthcare
resource which is responsible for saving
lives is something that I am immensely
proud of and we look forward to continuing
and deepening our partnership”
Annual Report & Accounts 2021Strategic report Tactical plans to manage challenges
Like most technology and innovation companies, D4t4 has several inherent challenges that it must overcome in order
to execute its strategy successfully. The table below sets out some of the tactics and actions taken to ensure the Group
continues to deliver successful outcomes for its stakeholders.
1. Addressing the global pandemic impact
The global pandemic has had a major impact on many
businesses across the world. The way in which D4t4 does
business is constantly changing and as a result of the
pandemic, some of these changes will be felt for a long
Management actions
z All staff set-up for home-working and able to fulfil
duties remotely
z Board meetings and weekly Executive meetings held via
time. Whilst the market in which D4t4 operates should not be
video conference
overly impacted in the long term, there are clearly challenges
z Stress-testing of forecast scenarios to confirm no cashflow issues
nonetheless, least of all a reluctance on the part of some
businesses to commit to large investment plans in the current
environment. Similarly, ensuring the health and safety of all the
Group’s staff and that products are able to function for all
clients at a time when many offices are closed and travel
restrictions remain in place, is a priority.
z Working with our Partners and end-user clients to ensure no
interruption to service levels
z Continued focus on sales pipeline, supported by ability to
offer variety of contracts to suit e.g. SaaS, PaaS, term or
perpetual licences
2. Creating the right products
Development resources are allocated based upon financial
performance targets and consequently management prioritises
Management actions
z Frequent client and partner engagement to understand
product development carefully. The challenge is to understand the
evolving requirements
market and make the right investment decisions which will deliver a
z Interaction with industry analysts to understand current and
return on investment for all stakeholders as well as add value to
future trends
D4t4’s clients.
3. Sales cycle management
The sales cycle for D4t4’s products and services is generally
greater than one year due to the cutting-edge nature of the
Group’s products. Also, there are multiple stakeholders within
the client that have to be addressed and due to the size of
projects, internal budgets have to be planned far in advance.
The challenge is to manage the sales pipeline so that investor
expectations for steady, predictable growth can be met.
22
z Attendance at industry events and seminars to widen knowledge
z Growing the development team, especially in areas such as
mobile and AI
z Structured product planning meetings involving all stakeholders
z Exploration of Client Advisory Boards to generate more input
from the Group’s install base for its Product Planning team
Management actions
z Fortnightly sales reviews
z Monthly Board review of the sales pipeline
z Regular review of account plans for every major client
z Relationship mapping for major clients
z Flexible pilot projects offerings to engage the client early
in the process
z Renewed focus on Partner education and activation in
the marketplace
4. Expanding the relationship base
To increase the breadth and depth of D4t4’s revenue streams,
the Group needs to expand both the number of partners
through which sales are made and the number of direct
client relationships it has. To achieve D4t4’s stated financial
performance targets, resources need to be carefully allocated
between sales, marketing and partnering activities
5. Developing the right talent
As the Group has evolved into a data-focused technology
and innovation company, retaining, developing and motivating
existing and new staff is even more essential. As always, the
challenge is to create a balanced, flexible, diverse and highly
talented global team
Management actions
z Additional strategic sales & marketing investment
z Growing partner base
z Mix of direct and indirect commercial relationships
z Deeper understanding of client needs
Management actions
z Effective upskilling
z Flexible working
z Redeployment where possible and cost effective
z Increased communication
z Remuneration, including share options and other benefits,
reviewed annually
23
23
Annual Report & Accounts 2021Strategic report
Principal risks and uncertainties
D4t4 faces the standard economic, commercial and political
risks facing a global technology business with employees,
customers and suppliers spread across the world. Whilst in the
short term the extraordinary circumstances created by the global
pandemic have not negatively impacted the business, clearly the
uncertainty this crisis continues to create impacts the risk profile
of the Group.
The risk level of a number of the principal risks and uncertainties
mentioned below have remained unchanged since the last Annual
Report and the Group remains well-placed to mitigate these.
The structure, remit and reporting of the Group’s Risk Committee
is explained on page 38 of this Annual Report.
h
g
H
i
Y
T
I
L
I
B
A
B
O
R
P
w
o
L
2
5
3
6
1
4
7
Low
IMPACT
High
Execution timing
People risks
Market and regulatory
changes
Client or partner loss
Foreign currency
management
Competition
Data loss and
reputational risk
RISK TREND
Increasing
No change
Decreasing
RISK
RISK LEVEL
MITIGATION
Risk remains mitigated with ongoing
improvement to standardised
delivery processes, though the global
pandemic has inevitably increased the
risk of delays in execution.
D4t4’s clients are typically engaged on
multiyear programmes, so the Group
invests significantly in sales, marketing and
partner activities to ensure it can plan and
predict the associated growth and revenue
targets. Collaboration tools are being used
whilst working from home to maintain
regular and effective communication with
partners and clients.
Increased risk that employees may be
lost on a temporary basis at least, due
to the global pandemic.
Key individuals are identified, succession
plans put in place and actions taken to
spread the risk between more individuals.
The global pandemic risks are mitigated by
existing and robust business continuity plans.
1
Execution timing
A key aspect of D4t4’s strategy
is the delivery of product,
services and projects in line
with its business plan. Failure
to deliver on our services within
the constraints of customers and
the Group’s fiscal periods would
impact its overall objectives.
2
People risks
A loss or failure to attract key
personnel could impact the
ability of the Group to execute
on its strategy, causing adverse
reputational and operational
challenges.
24
RISK
RISK LEVEL
MITIGATION
3
Market and regulatory changes
The Risk Committee have carefully
considered this and deem there to
be no change in risk.
The Group is exposed to the
risks of changing regulations for
the collection of consumer data.
Some of these changes could
impact D4t4’s performance and
outlook, positively or negatively.
4
Client or partner loss
The loss of a key client or
significant sales partner would
impact the ability of the Group to
meet its key business objectives.
The global pandemic has made it
more likely that a client or partner
could be lost, though this risk is
well mitigated.
5
Foreign currency management
D4t4 closely monitors the markets in which
it operates with enhanced collaboration with
clients, suppliers and partners. It then plans
product, project or operational changes
to ensure it is minimising the impact of
changes. The Group follows proposed
regulatory changes closely and where
necessary adapts processes and policies.
The business has specific relationship
management plans in place for both clients
and partners. The status of the relationships
is reviewed by management on a regular
basis and actions are in place to reduce the
risk of loss. The increased risk is mitigated
by the market sector in which the majority of
the Group’s clients operate, a move to a
higher recurring revenue model with
improved visibility of future revenues and
broadening of sales partners.
Significant changes in foreign
exchange rates can result in
reduced profitability due to cash
collection values not matching
transaction values and an increased
potential for currency losses in the
income statement.
6
Competition
New competitors or changes to
existing competitors’ products
can significantly alter the market
dynamics, which in turn risks
the position and standing that
D4t4’s own Intellectual Property
has in the financial and consumer
marketplace.
As the global pandemic continues,
the currency markets are
particularly volatile and much
uncertainty remains.
Foreign currency fluctuation risks are
mitigated via the use of vanilla financial
instruments, mainly utilising forward foreign
exchange contracts. As a consequence,
there is no change in the risk profile.
The Risk Committee carefully
and constantly reviews this and
considers the Group is ready for any
opportunities as they arise.
The Group 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, that cannot be easily disrupted,
and which can be protected by patents.
7
Data loss and reputational risk
A significant IP, data loss, or
security breach could impact the
brand and reputation of the Group.
The Risk Committee have
considered this with respect to the
global pandemic and conclude this
is mitigated via existing information
security controls.
D4t4 is certified to ISO 27001 and operates
an information security process that controls
and minimises the risks. This process is
externally assessed yearly. These risks
are mitigated via existing and established
information security controls.
25
Annual Report & Accounts 2021Strategic report Corporate responsibility
The global events of 2020 have highlighted more than ever the need for businesses to operate in a socially
responsible and environmentally sustainable way and to look after their staff by providing a safe operating
environment. D4t4 conduct its activities to the highest ethical standards and expect clients and suppliers to
embrace these same principles.
As the Group expands, it has formalised
its efforts in Environmental, Social and
Governance (ESG), and has established
an ESG Committee, with nine diverse
colleagues from across the Group including
a Non-Executive and Executive member.
z encouraging efficient use of energy,
utilities and natural resources.
z continually strives to improve
environmental performance.
z communicating its environmental
commitment to clients and suppliers
The Committee has focussed on key
and encouraging their support.
emissions offset options for the Group as a
whole, as well as recycling initiatives.
Energy Consumption and Waste
Following its refurbishment in 2018, the
electricity supply at D4t4’s Head Office is
based entirely on 100% renewable energy
sources. The data below is for the calendar
years 2018, 2019 and 2020, and for the
Head Office only. During FY22, the ESG
committee will aim to begin reporting on
and setting targets to reduce emissions for
all operations worldwide. It should be noted
that the 2020 data is heavily skewed by the
global pandemic which significantly reduced
energy and waste consumption in the office
due to the majority of staff working from
Carbon emissions
The Group’s recent Head Office
refurbishment was conducted with a
strong environmental ethos at its core,
focusing on delivering the latest standards
in insulation, lighting, heating and energy
waste reduction.
The electricity supply at D4t4’s Head Office
is based entirely on renewable energy
sources. In addition, an electric vehicle car
home for most of the year.
charging facility has been installed.
The rollout of improved office collaboration
software is facilitating a more dynamic and
flexible workforce whilst further reducing
travel and associated environmental impacts.
Further, the ESG Committee has agreed that
over the coming year, the Group will increase
its focus on energy minimisation, the use of
renewable energy, considerations of carbon
Total energy (KWh)
Total waste (kg)
-53%
Electricity -48%
Gas -91%
-18%
Recycling -32%
General waste -14%
environmental aspects and, in light of the
global pandemic, charitable activities.
Environment
Policy statement
D4t4 cares about the environment and
fully supports, and is committed to, the
principles of promoting good environmental
practice and sustainability in the conduct
of its activities. The Group wants to ensure
that any adverse effects on the environment
are kept to a minimum.
It aims to do this by:
z wholly supporting the requirements
of accepted international standards
and current EU environmental
legislation and codes of practice.
z minimising consumption through
the reduction, reuse or recycling of
materials as much as possible.
2020
177,533
3,692
181,224
623
3,158
3,781
16%
2019
342,783
39,673
382,456
922
3,664
4,585
20%
2018
Variance
275,041
99,227
374,268
1,521
963
2,484
61%
-165,250
-35,981
-201,232
-299
-506
-804
-4%
%
-48%
-91%
-53%
-32%
-14%
-18%
-18%
Electricity (KWh)
Gas (KWh)
Total energy (KWh)
Recycling (kg)
General waste (kg)
Total waste (kg)
% recycling
26
Charitable activity
D4t4 will uphold all laws relevant to
Health & safety
Although D4t4 has always informally
countering bribery and corruption in all the
supported charitable activities for many
jurisdictions in which it operates.
D4t4 is committed to maintaining high
standards of health and safety.
years, the impact of the global pandemic
has prompted a refresh and reassessment of
the Group’s activities. To better understand
its global colleagues, and as part of the
initiatives started by the ESG committee, the
and abroad.
As a UK plc, the Group remains bound by
The Group’s response to the global
the laws of the UK, including the Bribery Act
pandemic has clearly been a priority and
2010, in respect of its conduct both at home
it has been and remains committed to
ensuring the safety of all colleagues both
now and in the future. All colleagues are set
up for home working and able to fulfil duties
remotely. Office layouts and guidelines
have been introduced for colleagues
working in the office, and for any visitors to
the Group’s offices in line with government
Group is now launching a survey to assess
Modern slavery
what colleagues care most about and would
D4t4 has a zero-tolerance approach to
like to support going forward. D4t4 will look to
modern slavery and will act ethically and
implement a range of initiatives and activities
with integrity in all its business dealings and
during 2021.
Colleagues
D4t4’s key asset is its staff. The Group values
teamwork, taking personal responsibility,
positive attitudes and working hard to deliver
beneficial outcomes for clients, staff and
shareholders alike. The Group encourages
personal learning and development to
create a more sustainable workforce and is
very proud of its low attrition rates with the
average length of tenure being over 9 years.
relationships. The Group’s approach is also
underlined by its recognition and support
recommended procedures.
for the UDHR and UN Global Compact.
Supplier engagement includes a check on
approach to modern slavery and a record
is noted with respect to their statement on
modern slavery.
Diversity and Inclusion
Creating a diverse, inclusive and great
place for colleagues to work is a core
focus for the Group. It also fosters an
environment that enhances innovation,
The ESG committee will be looking at ways
creativity and productivity.
to continue to improve employee wellbeing,
teamworking and communication in the
coming months.
Ethical Business Practices
Human rights
D4t4 Solutions fully recognises and
supports the protection of Human Rights,
the UN Universal Declaration of Human
Rights (UDHR) and the ten principles of the
UN Global Compact.
Anti-corruption and bribery
In order to provide equal employment
and advancement opportunities to all
individuals, employment decisions at
D4t4 are based on merit, qualifications
and abilities.
Except where required by law, employment
practices will not be influenced or affected
by an applicant’s or employee’s race, colour,
religion, gender, national origin, political
affiliation, marital status, sexual orientation,
age or any other characteristic protected
by law.
It is the Group’s policy to conduct all its
This policy governs all aspects of
business in an honest and ethical manner. It
employment, including selection, job
takes a zero-tolerance approach to bribery
assignment, compensation, discipline,
and corruption and is committed to acting
termination, and access to benefits
professionally, fairly and with integrity in all its
and training.
business dealings and relationships wherever
it operates - implementing and enforcing
effective systems to counter bribery.
27
Annual Report & Accounts 2021Strategic report Section 172 statement – our stakeholders
The Board recognises the importance of setting high standards of corporate governance and complying with all legal requirements. In particular,
the Directors are required to act in accordance with a set of general duties as detailed within section 172 of the UK Companies Act 2006. These
duties are summarised as follows;
A Director of a Company must act in a way they consider, in good faith, would be most likely to promote the success of the company for the
benefit of its shareholders as a whole and, in doing so, have regard (amongst other matters) to:
z The likely consequences of any decisions in the long-term
z The interests of the Group’s employees
z The need to foster the Group’s business relationships with suppliers, customers and others
z The impact of the Group’s operations on the community and environment
z The desirability of the Group to maintain a reputation for high standards of business conduct; and
z The need to act fairly as between shareholders of the Company.
Our stakeholders
The Board during its discussions, deliberations and decision-making, acknowledges its duty to consider the needs and concerns of the
Group’s key stakeholders. How this has been discharged under section 172 of the Companies Act 2006 is further available in the rest of this
Strategic Report on pages 4 to 29 and Corporate Governance Report on pages 31 to 55.
Employees
Employee briefings
Suppliers
Trusted pertnerships
Quarterly briefing sessions are held with the Board to enable
The Board is committed to building
colleagues to ask questions, raise issues and to be provided with
trusted partnerships with the Group’s suppliers, which are
updates on the business.
Performance updates
crucial to delivering many of our commitments.
Engagement and communication
Key performance information such as trading updates and financial
We have in place a programme which ensures regular
results are always promptly communicated to the Group.
engagement and communication with all key strategic partners
Surveys
Confidential surveys are performed in the Group and action plans
and suppliers.
Partner portal
are developed in response.
Partner portal re-launch has better enabled our partners around
Share schemes
The Group has in place Share Option Plans to enable employees to
become personally invested as shareholders of the Group.
the globe for our Celebrus family of products.
28
Customers
Shareholders
Customer Advisory Board (CAB)
Annual General Meeting (“AGM”)
Creation of a CAB with a global remit to ensure proper flow of
The AGM is a key opportunity for engagement between the
information from our key customers to our engineering teams.
Board and shareholders.
This is also used to vet and adjust upcoming product roadmaps
to ensure we are solving for the key issues in the marketplace.
Analysts and investor meetings
Customer and Partner portal
The Executive Board hold analyst and investor roadshows
meetings throughout the year, particularly following the release
Redevelopment and launch of our Customer and Partner portal
of the Group’s interim and full year results and feedback from
to allow for better sharing of information and more engagement
those meetings is shared with the Board.
with all parties.
Customer success meetings
Annual Report and Accounts
The Group’s Annual Report and Accounts is made available to
Ongoing Customer Success meetings and development of
all shareholders both online and in hard copy where requested.
strategic plans for existing customers on an annual basis.
Group website
Service reviews
Presentations and announcements and other key shareholder
Regular service reviews with customers
information is available on the investor section of the Group’s
to ensure we continue to add value across our customer base.
website.
Key resources
Investment in key resources around the globe to continue to
support our growth and existing customers.
Marketing and messaging
Various marketing and messaging to not only ensure awareness
of new features but to also support our customer onboarding
into the newer platforms of Celebrus.
Case studies
Inclusion of key customer case studies as part of our PR
campaign to raise awareness of the value of the Celebrus family
of products.
This strategic report was approved by the Board on 28 July 2021 and signed on its behalf by:
Peter Kear
Chief Executive Officer
29
Annual Report & Accounts 2021Strategic report
Corporate Governance
Contents
31 Chairman’s introduction to governance
32 Board of Directors
34 Statement of corporate governance
44 Audit Committee report
45 Nomination Committee report
46 Remuneration Committee report
47 Directors’ Remuneration report
52 Directors’ report
55 Statement of Directors’ responsibilities
30
Chairman’s introduction to governance
Dear Shareholder
The incidence of the global pandemic this calendar year has
I am pleased to report on the corporate governance procedures
resulted in unprecedented times. Noting that uncertainty is
undertaken by D4t4 for the financial year 2021.
commonplace in the world both economically and societally, the
The Board recognises the importance of high standards of
corporate governance for delivering long-term success to the
Group and acknowledges its role in setting the culture, values and
ethics of the Group (as outlined in Principle 8) and communicating
these to all the Group’s stakeholders.
This requirement is set out formally on the following page. The
Board meets regularly to discuss the monitoring and promotion
of a healthy corporate culture. The Chairman has ultimate
responsibility for corporate governance matters and has overseen
the preparation of this governance statement accordingly.
Board of D4t4 continues to recognise that now more than ever
there is a need for strong leadership. Since March 2020 the Board
has embarked on holding additional meetings to coordinate the
operations of the business, whilst ensuring the safety and welfare
of its employees.
As mentioned in my statement on page 3 various Board changes
have occurred during the financial year and after the year end.
These changes give the opportunity to streamline the main D4t4
Board to allow increased focus on corporate governance, group
strategy formulation as well as investor and wider stakeholder
relations. From the 1st of July 2021 the Board of D4t4 will consist
AIM Rule 26 was amended to require all AIM companies to
of the Chief Executive Officer, the Non-Executive Chairman,
disclose details of a recognised corporate governance code
two Non-Executive Directors and (upon making a permanent
that its Board of Directors has decided to apply, how the Group
appointment) the Chief Financial Officer.
complies with that code and, where it departs from its chosen
corporate governance code, an explanation of the reasons for
doing so.
Finally, the Board continues to engage with shareholders and
welcomes ongoing dialogue throughout the year. Due to the
pandemic, this year’s AGM will be a closed meeting but I welcome
The Board believes the Quoted Companies Alliance Corporate
your participation in the accompanying online investor meeting
Governance Code 2018 (“QCA Code”) is the most applicable set
immediately afterwards.
of principles for governance considering the size, resource and
current development stage the Company is in. Board discussions
are conducted openly and transparently, which creates an
environment for sustainable and robust debate. In the year, the
Board has constructively and proactively challenged management
on Group strategies, proposals, operating performance and key
A statement of the Directors’ responsibilities in respect of the
accounts is set out on page 55 of the 2021 Annual Report.
decisions, as part of its ongoing work to assess and safeguard the
By order of the Board
position and prospects of the Group.
Key risks and uncertainties affecting the business are regularly
assessed and updated. The Board challenges management to
ensure appropriate risk mitigation measures are in place. The
Board has completed a full, specific review of the Group’s key risks
and uncertainties (pages 24-25 of the 2021 Annual Report), in light
of the new and emerging risks or uncertainties arising from the
Group’s strategic growth plans and the wider economic, political
and market conditions. As part of a critical review of the Group’s
procedures, a rolling risk review process has been developed
which seeks to ensure that risks are constantly monitored,
assessed and quantified, so that action may be prioritised by the
Board accordingly.
Peter Simmonds
Non-Executive Chairman
28 July 2021
31
Annual Report & Accounts 2021Corporate Governance Board of Directors
Peter Simmonds
Non-Executive
Chairman
Peter Kear
Chief Executive
Officer
Jim Dodkins
Chief Technical
Officer
Peter was appointed to the Board
Peter co-founded D4t4 Solutions in
Jim is responsible for the Group’s
as Chairman in April 2015. He was
1985. Prior to this he was a divisional
strategic direction in technology,
CEO of dotDigital Group plc for eight
director for Hawke Electronics, then
specialising in solution architecture
years and a major contributor to their
a subsidiary of Lex Service plc. He
for D4t4 Solutions and its clients, and
success prior to stepping down. He is
became CEO in 2016, having been
is a member of the Risk Committee.
also Chairman of Cloudcall Group plc
responsible until then for both the
Prior to joining D4t4 Solutions he
and is a Board member of the Quoted
sales and business development
worked for Logica plc in various
Company Alliance.
aspects of the Company. His position
roles, where he gained wide industry
COMMITTEES
A
N
Re
as CEO involves overall responsibility
experience and later managed the
for the management of the Group’s
division responsible for projects in the
activities and he works closely with
broadcast and media sector.
the other Executive Directors on
the determination of the Group’s
overall strategy.
COMMITTEES
N
COMMITTEES
Ri
32
Mark Boxall
Chief Operating
Officer
Monika Biddulph
Non-Executive
Director
Peter Whiting
Non-Executive
Director
Mark brings a wealth of knowledge
Monika has a wide range of
Over a 30-year career, Peter has
and experience in the areas of sales,
experience in both the commercial
gained extensive financial and
delivery, operations and finance
and technical aspects of an
commercial experience. His core
having been both board director
international technology business. In
skills are centred around the financial
and senior manager at technology
over twenty years at ARM, Monika
services and technology industries;
consultancies and product based
held various General Manager, IP
he has the proven ability to quickly
technology companies such as rbase,
licensing and technical roles in the
understand complex technologies
Morse, PTC and Siemens, and most
business. Currently Monika is also a
and their applications and at the
recently Dell EMC.
Non-Executive Director on the board
same time successfully developed
of Ilika plc. She was previously NED
strong interpersonal and management
at Linaro Limited, and holds a PhD in
skills which have enabled him to build
High Energy Particle Physics from the
a technology-led NED portfolio. He
ETH Zurich. She was appointed to
is currently a Non-Executive Director
the Board in December 2019.
of Aptitude Software Group plc, FDM
Group plc and Keystone Law plc.
COMMITTEES
A
N Re
COMMITTEES
A
N Re
BOARD OF DIRECTORS KEY
EXECUTIVE
NON-EXECUTIVE
COMMITTEE MEMBERSHIP
A
N
Re
Ri
Audit Committee
Nomination Committee
Remuneration Committee
Risk sub-Committee
Chair of Committee
33
Annual Report & Accounts 2021Corporate Governance Statement of corporate governance
The likely consequences of any decisions in
Please refer to Principle 1 – “Establish a strategy and business model which promote
the long-term
long-term value for shareholders” on page 35 and Principle 9 – “Maintain governance
structures and processes that are fit for purpose and support good decision-making by
the Board” on page 42.
The interests of the Group’s employees
Please refer to Principle 3 – “Take into account wider stakeholder and social responsibilities
and their implications for long-term success” on page 36. Particular attention is drawn to
the section on staff.
The need to foster the Group’s business
Please refer to Principle 3 – “Take into account wider stakeholder and social
relationships with suppliers, customers
responsibilities and their implications for long-term success” on page 36. Particular
and others
attention is drawn to the sections on clients, suppliers and industry bodies.
The impact of the Group’s operations on
Please refer to Principle 3 – “Take into account wider stakeholder and social
the community and environment
responsibilities and their implications for long-term success” on page 36. Particular
attention is drawn to the sections on communities and the environment.
The desirability of the Group to maintain a
Please refer to Principle 8 – “Promote a corporate culture that is based on ethical values
reputation for high standards of business
and behaviours” on page 41.
conduct
The need to act fairly as between the
Please refer to Principle 1 – “Establish a strategy and business model which promote
shareholders of the Group
long-term value for shareholders” on page 35 and Principle 2 – “Seek to understand and
meet shareholder needs and expectations”, also on page 35.
This statement explains how D4t4 Solutions plc has applied the main and supporting principles of corporate governance and describes the
Group’s compliance with the provisions of the QCA Corporate Governance Code (2018).
For the purposes of clarity and candour, the description of how the Group complies with the ten key principles of the QCA Code begins
with a summary of the two areas where the Group does not yet fully comply, followed by a review of each of the principles in turn.
No significant corporate governance matters arose during the period covered by the 2021 Annual Report nor subsequently to the date of
this statement on which it was considered necessary for the Board or any of its Committees to seek external advice.
The Board consults with its Nominated Adviser and other professional advisers on routine matters arising in the ordinary course of its business.
Exceptions to the application of the QCA Code
The following table summarises the specific areas within one of the principles where the Board considers that the Group does not fully
comply, or may be perceived as not fully complying, with the QCA Code.
Principle 5
(Maintain the Board as a well-functioning,
balanced team led by the Chair)
Exceptions and explanations
Application: The Board should
During the 2020/21 financial year, the Board consisted of 8 members, 4 Executive and 4
have an appropriate balance
Non-Executive of whom 3 were considered independent. On 31 March 2021 and
between Executive and
Non-Executive Directors.
34
28 April 2021 respectively, J Lythall and C Irvine resigned from the Board. On 30 June
2021 J Dodkins and M Boxall resigned from the Board. This means that as at 28 July
2021, the Board comprises one Executive and three Non-Executive members, all of
whom are considered independent. The general expectation that at least half of a Board
should be independent Non-Executives has been satisfied since year-end.
Principle 6
(Ensure that between them the Directors
have the necessary up-to-date experience,
skills and capabilities)
Exceptions and explanations
Application: The Board should contain the
The male to female ratio on the Board is presently 3:1 and there are currently no female
necessary mix of experience, skills, personal
Executive Directors. We believe that this reflects a strong gender bias in the technology
qualities (including gender balance) and
industry as a whole, and the Board remains confident both that the opportunities in the
capabilities to deliver the Group’s strategy
Group are not excluded or limited by any diversity issues (including gender) and that the
over the medium to long term.
Board nevertheless contains the necessary mix of experience, skills and other personal
qualities and capabilities necessary to deliver its strategy.
The Principles of the QCA Code
Principle 1 - Establish a strategy and business model which promote long-term value for shareholders
The Board’s shared view of the Group’s purpose, business model, opportunities and strategy, and the values underpinning them, are
detailed in the Strategic Report within pages 12 to 19 of the 2021 Annual Report as follows:
z “What we do” (pages 12 to 17) explains what D4t4 Solutions’ services and products are.
z “Vision and strategy” (pages 18 to 19) considers how D4t4 Solutions seeks to realise its’ vision of earning high-margin, recurring revenues.
z “Business model and opportunities” (pages 12 to 19) reviews D4t4 Solutions’ key strengths, capabilities and values. This is further
illustrated with a case study (pages 20 to 21).
The Group’s approach to delivering long-term value for shareholders is addressed in the Statement of the Chief Executive Officer on pages
4 to 7. Pages 18 to 19 set out the Group’s Vision and Strategy and pages 24 to 25 (“Principal risks and uncertainties”) detail the key risks
faced by the business and how these continue to be addressed.
Principle 2 – Seek to understand and meet shareholder needs and expectations
Relations with shareholders and dialogue with institutional shareholders
The Board as a whole is responsible for ensuring that a dialogue is maintained with shareholders based on the mutual understanding
of objectives.
Members of the Board meet with major shareholders on a regular basis, including presentations after the Group’s announcement of the
year-end results and at the half year.
In addition to regulatory news announcements the Directors have published the annual report and accounts, the annual results
presentation, the half year results and announcements on new contract wins as they arise.
In the period from 1 April 2020 to the date of this corporate governance statement, the following activities and events with stakeholders
have been arranged with the view to:
z Communicating the Group’s business model, strategy and values,
z Provide financial updates and explanations sought by shareholders, and
z Engage with shareholders to fully understand their needs and expectations.
35
Annual Report & Accounts 2021Corporate Governance
Date
Description of engagement
Group participants
Notes
June 2020
Preliminary results roadshow
P Kear, C Irvine
August 2020
AGM
Directors
Shareholders invited to attend online Q&A
session due to the global pandemic
November 2020
Interim results roadshow
P Kear, C Irvine
June 2021
Preliminary results roadshow
P Kear, G (Bill) Bruno,
N Patel
August 2021
AGM (scheduled 26 August)
Directors
Shareholders invited to attend with Q&A session
(TBC due to the global pandemic)
Various
Shareholder/potential
P Kear, G (Bill) Bruno,
shareholder meetings
N Patel
The Board is kept informed of the views of shareholders and other stakeholders at each monthly Board meeting through a report from the
Chief Executive Officer together with formal feedback on shareholders’ views gathered and supplied by the Group’s advisers. The views of
private and smaller shareholders, typically arising from the AGM or from direct contact with the Group, are also communicated to the Board
on a regular basis.
P Simmonds is available to shareholders if they have concerns where contact through the normal channel of Chief Executive Officer has
failed to resolve or for which such contact is inappropriate. P Simmonds can be contacted through the UK head office contact information
shown on our website.
Constructive use of the AGM
The Board uses the AGM to communicate with private and institutional investors and welcomes their participation.
All members of the Board usually attend the AGM but due to the global pandemic this was not possible last year. Instead, the AGM was a
closed meeting but all shareholders were invited to attend an online presentation and Q&A session immediately afterwards.
At all investor meetings, shareholders are asked to confirm that their questions have been successfully answered. At the year end
and interim presentations to shareholders, the Group’s Nominated Advisor consults with attendees for feedback to ensure that future
presentations encapsulate their requirements where possible.
Principle 3 – Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Board is fully aware that the long term success of the Group relies upon maintaining successful relationships with a range of different
stakeholders, both internal and external. The table below identifies who the key stakeholders are and how we engage with them.
Stakeholders
Reason for engagement
How we engage
Staff
Our ability to provide an industry
We have identified our internal values in order to recruit and maintain talented
leading software and services
and motivated staff. These values form the basis of all communications which
business is dependent upon
are sought through internal appraisals and regular cross-functional meetings.
good communications within our
There are also regular opportunities for the staff to engage with other parts
organisation.
of the organisation and recognise the successes of others. Examples include
fortnightly staff breakfasts and quarterly Group-wide “Town Hall” meetings,
which are held to provide staff with an operational and sales update on what
is happening within the business and ask any questions they may have of any
of the Executive Team.
36
Stakeholders
Reason for engagement
How we engage
Clients &
Partners
Understanding current and
We have account managers and account directors whose primary
emerging requirements of clients
responsibility is to engage with our clients and partners to understand and
enables us to develop new and
develop our products and services so that we can work with them to exceed
enhanced services, together with
their requirements.
software to support the fulfilment
of those services.
In relation to our own IP products we seek formal and informal feedback on
product roadmap and enhancements via our support offering and annual user
group meetings.
Suppliers
Our relationships with our
We treat all suppliers as individuals, build long term collaborative relationships
suppliers are key to the core
and where possible work within the local community. Our partnership and
success of our business.
purchasing teams seek to build ongoing communication with our suppliers
so that feedback can be received and acted upon. We seek to ensure that
supplier invoices are processed and paid promptly.
Shareholders
As a public company it is vital that
This is achieved in several ways:
we build relationships with our
shareholders so that we can both
inform them of our successes and
listen to their guidance.
z Regulatory news releases
z Investor relations section of the Group’s website
z Annual and half-year reports and presentations
z AGM
z Capital Markets day and Technology demo events
Our intention is to engage with our shareholders to inform them of our
successes and to listen to the question and comments. This feedback is
usually received at the AGM and the investor presentations.
Industry bodies
Information security is fundamental
We have an established information security management system which
to our business, clients, partners,
encompasses independently audited ISO27001 and PCI DSS controls,
suppliers and associated data
industry best practices, as well as latest regulatory requirements including
subjects and so we ensure that our
General Data Protection Regulations (GDPR) and the UK Data Protection
policies and procedures provide
Act (2018). Our experienced Information Security Committee ensure that
a cohesive approach to this
governance, risk and compliance is actively managed and that our policies
important area.
and procedures evolve to meet ongoing requirements.
Communities
We consider that it is important
We look to recruit locally experienced staff and through the local universities,
to be a business that makes a
both in the UK and India. We employ local suppliers where possible and
positive contribution to local
throughout the year, we encourage staff to identify charities that they have an
economies and is attractive as an
affiliation with for the Group as a whole to support.
employer and partner.
37
Annual Report & Accounts 2021Corporate Governance Stakeholders
Reason for engagement
How we engage
Environment
Irrespective of our status as
We endeavour to use technology wherever possible such that meetings with
a public company, it is part of
both internal and external stakeholders can be held online, thus reducing the
our ethos to conduct business
need for travel.
operations that minimise any
adverse impact on the climate
these may have.
This further extends to allowing employees to work at home, further reducing
commuting costs on both economic and environmental grounds.
In addition, our HQ at Sunbury was recently refurbished using the latest
standards in insulation, lighting, heating and energy waste reduction and is
now fully powered using renewable resources.
Principle 4 – Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Board’s risk management controls and mitigation strategies are described in the 2021 Annual Report at pages 24 to 25 (“Principal risks
and uncertainties”) and pages 41 to 42 outline the control environment the Board has put in place – as per Principles 8 and 9 of the QCA
Code – to promote a corporate culture based on ethical values and behaviours and to maintain governance structures and processes that
are fit for purpose and support good decision-making by the Board.
The Directors and management have a clear responsibility for identifying risks facing each of the businesses and for putting in place
procedures to mitigate and monitor risks. To this end the Company has a Risk sub-Committee appointed by, and reporting directly to, the
Board. It currently consists of the Chief Technology Officer, the interim Chief Financial Officer, the Director of Finance and the Information
Security and Process Manager; other members of the Company are seconded to the Committee as required.
The remit of the Committee is to examine the vulnerability of the Group to all types of risk, the mitigation of such risks, maintain the
risk register to properly reflect this and to report back to the Board with any changes in, or new areas of, vulnerability to risks and
recommendations for mitigation.
This is done at three levels:
z A review of the risk register is included in the monthly Board pack
z A quarterly report provided to the Board
z A formal assessment of risks during the annual budget process
The Risk Committee meets every two months, or more often as required, and on each occasion reviews two areas of the corporate risk
register in detail to assess the vulnerability of the Group to risks under consideration and how to mitigate such risks. Employees from with
the relevant areas of the business are invited to help provide a more informed opinion of which risks are key and how they can be managed.
The Committee report back to the Board with any changes in, or new areas of, vulnerability to risks and recommendations for mitigation.
The global pandemic is an example of an occasion when the Risk Committee has convened more frequently in order to review the register
for any changes to the level of risk due to the pandemic and the emergence of any new issues which may require mitigation.
Principle 5 – Maintain the Board as a well-functioning, balanced team led by the Chair
Composition
Directors’ biographies are shown both in the 2021 Annual Report on pages 32 to 33 and on the Group’s website.
The Board is currently comprised of the Non-Executive Chairman, one Executive Director and a further two Non-Executive Directors. From
the 1st of July 2021 the Board of D4t4 consists of the Chief Executive Officer, the Non-Executive Chairman, two Non-Executive Directors
and (upon making a permanent appointment) the Chief Financial Officer. At the date of this corporate governance statement, all of the Non-
38
Executive Directors are considered to be independent. The Board does not consider it necessary to appoint an independent Director to a
formal “Senior Independent Director” role.
All Directors are subject to election by shareholders at the first AGM immediately following their appointment and thereafter are subject to
re-election at intervals of no more than three years. All Non-Executive Directors are appointed for fixed terms in line with corporate governance
requirements, although any Non-Executive Director whose independence may be called into question is subject to re-election annually.
All of the Executive Directors are full-time employees of D4t4 Solutions plc.
Operation of the Board
The Board is responsible to shareholders for the proper management of the Group. A statement of the Directors’ responsibilities in respect
of the financial statements is set out on page 55 and a statement of going concern is given on page 52.
The Board meets at least once a month, more often as required for example during the global pandemic. The formal schedule of matters
specifically reserved to it for decision was reviewed and adopted by the Board on 27 May 2021 and is reviewed annually (see Group’s website).
Other matters are delegated to the Executive Directors, supported by policies for reporting to the Board. Presentations are made to the
main Board at each monthly meeting by the Executive Directors and also on regular occasions by operational management.
The Company Secretary is responsible for ensuring that Board procedures are followed, and that applicable rules and regulations are complied
with and for advising on corporate governance matters. The Group maintains appropriate insurance cover in respect of any legal action against
the Group’s Directors and the Company Secretary, but no cover exists if a Director is found to have acted fraudulently or dishonestly.
The Non-Executive Chairman and Non-Executive Directors are able to meet without Executives present prior to each Board meeting. The
agenda and relevant briefing papers are distributed in advance of each Board meeting.
When Directors have concerns which cannot be resolved about the running of the Group or a proposed action, these concerns are
recorded in Board minutes. Upon resignation, a Non-Executive Director is asked to provide a written statement to the Chairman for
circulation to the Board if there are any such concerns.
Commitment
All Directors are expected to attend the monthly meeting of the full Board, or to make themselves available to join the meeting by telephone
or online, and to attend all meetings of any Committee(s) of which they are members. In addition, the Directors are expected to attend
strategy and business planning meetings each year. The Non-Executive Directors are expected to make themselves available at all
reasonable times for consultation by other members of the Board.
Prior to each monthly Board meeting the Directors receive a detailed pack which includes:
z Board meeting agenda
z Minutes from previous Board meeting
z Board pack which includes financial summary, update on each part of the business, strategy execution update and risk assessment update
z Papers as required for additional items requiring Board attention
39
Annual Report & Accounts 2021Corporate Governance Meetings and attendance
The following table summarises the number of Board, Audit Committee, Nomination Committee and Remuneration Committee meetings
held during the period covered by the 2021 Annual Report and the attendance record of individual Directors at those meetings:
MG Boxall (resigned 30 June 2021)
M Biddulph
JL Dodkins (resigned 30 June 2021)
CC Irvine (resigned 28 April 2021)
PJ Kear
J Lythall (resigned 31 March 2021)
PA Simmonds
PF Whiting
Non-statutory director attendance
CC Irvine
GL (Bill) Bruno
N Patel (appointed interim CFO 2 March 2021)
Board
15/15
15/15
15/15
15/15
15/15
15/15
15/15
15/15
2/2
1/1
1/1
Audit
Remuneration
Nomination
-
3/3
-
3/3
3/3
-
3/3
3/3
-
-
-
-
3/3
-
-
3/3
3/3
3/3
3/3
-
-
-
-
9/9
-
-
9/9
-
9/9
9/9
-
-
-
The Board met monthly as in prior years but also had additional ad-hoc meetings to discuss, amongst other matters, the global pandemic
and consider what actions the business should take to ensure its employees were as protected as possible whilst continuing to execute the
business strategy.
Principle 6 – Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities
The 2021 Annual Report includes, at pages 32 to 33, particulars of the current Board of Directors.
It is Board policy that Executive Directors receive suitable ongoing training for their position, which is considered as part of the appraisal
process. All Directors are expected to keep their skills up to date, for example the CFO attends a number of seminars through the year to
keep abreast of the latest accounting and tax regulations.
The Chairman ensures that all Directors update their skills and knowledge required to fulfil their roles on the Board and Committees.
Ongoing training is provided as necessary and includes updates from the Company Secretary and Nominated Adviser on changes to the AIM
rules, requirements under the Companies Act and other regulatory matters. Directors may consult with the Company Secretary or Nominated
Adviser at any time on matters related to their role on the Board. More detail on the experience and capability of the Directors is included in
their biographies on pages 32 to 33 of the 2021 Annual Report and also on the Group’s website.
External Advice
No significant matters of a corporate governance nature arose during the period covered by the 2021 Annual Report nor subsequently to the
date of this statement on which it was considered necessary for the Board or any of its committees to seek external advice. That said, the
Board consults with its Nominated Adviser and other professional advisers on routine matters arising in the ordinary course of its business,
for example a remuneration consultancy was engaged to advice on the implementation of the executive LTIP scheme.
40
Principle 7 – Evaluate Board performance based on clear and
relevant objectives, seeking continuous improvement
Principle 8 – Promote a corporate culture that is based on ethical
values and behaviours
The Board annually reviews the effectiveness of itself, its
Our long-term growth strategy incorporates our objectives and the
Committees and the individual Directors in the following manner:
business model set out in the strategic report. It is also underpinned
(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 Nomination Committee.
In addition, a formal Board effectiveness evaluation process is
conducted biannually. The process involves all Directors completing
a detailed individual evaluation of Board performance, which covers
effectiveness in several areas including Board composition, Board
information, Board process, internal control and risk management,
Board accountability, CEO/Senior management and Standards of
conduct.
The results of these biennial evaluations are interpreted by an
independent Non-Executive Director, with support from the
Chairman, and outputs plus any associated recommendations are
by our core values, which were redefined following a staff consultation
process and are split between client and internal values.
Values
Innovation
D4t4 Solutions is dedicated to the development of innovative
technology that provides insight into your business, drives value
from your data and pragmatically addresses your challenges.
Security
D4t4 Solutions’ advanced technology collects, manages and
enables analysis of your data, supporting it with the utmost care for
its security.
Trust
D4t4 Solutions takes pride in its relationships with clients, working
hard to understand your business needs and developing trust
through professional and responsive service provision.
Collaboration
D4t4 Solutions augments its own technology by collaborating with
industry partners that provide further opportunities for engendering
the long-term success of your operation.
Pride
D4t4 Solutions will be a Group in which we can be proud of our
reviewed by the Board as a whole, with progress on any actions
achievements, delivering the highest standards of quality and being
arising monitored at the monthly Board meetings.
confident in our ability to satisfy our clients’ needs.
The results of the last evaluation, carried out during early 2020,
were interpreted by M Biddulph and presented to the Board at the
meeting held in April 2020. Improvements in a number of areas
were noted, for example board composition and size, and risk
management. Areas were identified for action or closer monitoring,
with a focus on succession planning and long-term strategy.
Recognition
D4t4 Solutions will acknowledge the value of all employees and
recognise their contribution to the Group’s ongoing success.
Teamwork
D4t4 Solutions will create an environment of innovation in which
we work together as a team to develop pioneering technology that
As the business expands and as part of succession planning, the
solves our clients’ challenges.
Executive Directors have been challenged to identify potential
internal candidates who could potentially occupy Board positions
and set out development plans for these individuals and these are in
progress.
Engagement
D4t4 Solutions will be a workplace in which all employees are
engaged with our business and are empowered to get involved with
our communications and decision- making processes.
41
Annual Report & Accounts 2021Corporate Governance
The culture of the Group is characterised by these values which are
Non-Executive Directors constructively challenge and assist in
communicated regularly to staff through internal communications
the development of strategy. They scrutinise the performance of
and forums. These core values are also communicated to
management in meeting agreed goals and objectives and monitor
prospective employees in the Group’s recruitment programmes and
the reporting of performance.
are further embedded within the induction process.
The Board has not appointed a Senior Independent Non-Executive
The Board believes that a culture that is based on the core values
Director.
is a competitive advantage and consistent with fulfilment of the
Group’s mission and execution of its strategy.
The Company Secretary is J Thorne, a solicitor of over 25 years
standing, who was appointed to the role on 27 July 2017. He is not
The Board has a high proportion of Executive Director
a Director of the Group.
representation which means communication and feedback between
the business and the Board is very well established. Recognition
and respect of appropriately ethical values and behaviours within
the organisation is therefore both well monitored and promoted.
Engagement between the Board and the organisation via these
To deal with specific aspects of the Group’s affairs, the Board has
formed certain Committees. Each of these Committees is governed
by terms of reference available upon request from the Company
Secretary.
Executive Directors is therefore deemed to be all-inclusive.
Details of the membership, roles, responsibilities and activities of
Ethical business practices
the Audit, Remuneration and Nomination Committees are described
in more detail in the individual Committee reports commencing on
The Group is committed to corporate sustainability and to applying
page 44 of the 2021 Annual Report. The Chair of each Committee
the highest standards of ethical conduct and integrity to its
reports to the Board on the activities of that Committee.
business activities in the UK and overseas. The Group does not
tolerate any form of bribery: the Directors and senior management
are committed to implementing and enforcing effective systems
throughout the organisation to prevent bribery in accordance with its
obligations under the Bribery Act 2010.
Principle 9 – Maintain governance structures and processes that are
fit for purpose and support good decision-making by the Board
Roles and Responsibilities of Directors
The 2021 Annual Report includes, at pages 32 to 33, descriptions
of the individual roles and responsibilities of the Chairman, Chief
Executive Officer and other Directors.
The Board and its Committees composition
The Board is currently comprised of the Non-Executive Chairman,
one Executive Director and a further two Non-Executive Directors.
From the 1st of July 2021 the Board of D4t4 will consist of the Chief
Executive Officer, the Non-Executive Chairman, two Non-Executive
Directors and (upon making a permanent appointment) the Chief
Financial Officer.
The terms of reference for each of the Audit, Remuneration,
Nomination can be found in the Annual Report on pages 44 to 46
and on the Group’s website.
Evolution of governance framework
In March 2018 the QCA Code was formally selected as the
appropriate recognised corporate governance code to be applied for
the purposes of AIM Rule 26. The Board monitors the requirements
of this code on an annual basis and revise its governance framework
as appropriate as the Group evolves.
As part of ongoing governance efforts, the Group decided this
year that an additional sub-committee should be formed to focus
on ESG (environmental, social & governance). This committee is
comprised mainly of staff members who volunteered for the role
due to a particular interest in driving the Group’s ESG agenda. In
March 2021, the first sitting of this ESG Committee took place.
The Committee was predominantly formed to focus on the Group’s
environmental and social initiatives, as governance is clearly a focus
of the whole Board and all committees.
The roles of Chairman and Chief Executive Officer are distinct, set
out in writing and agreed by the Board. The Chairman is responsible
for the effectiveness of the Board and ensuring communication with
shareholders, and the Chief Executive Officer is accountable for the
management of the Group.
As the Group continues to grow the Board fully recognises both the
importance and the need of the governance framework to continue
to evolve. This has been evidenced over the last two years by the
formation of the Risk and ESG sub-committees and the external
advice sought regarding the new executive LTIP scheme.
42
Principle 10 – Communicate how the Group is governed and is performing by maintaining a dialogue with shareholders and other relevant
stakeholders
A range of forums exist at which the functioning of the Group is critically appraised and where opportunities exist for stakeholders to
challenge management and hold them to account for the Group’s performance.
Board Committees
A description of the work of the Board’s Committees in the financial year to 31 March 2021, including a report from each of the Audit,
Remuneration and Nomination Committees, is set out at pages 44 to 46 of the 2021 Annual Report.
The work of the Nomination Committee resulted in the appointment on 4 March 2021 of Nitil Patel as interim CFO.
Votes at General Meetings
All resolutions put to the AGM held on 6 August 2020 were passed by majorities of not less than 90% of the votes cast.
The most recent results for the Group, together with Annual Reports for the preceding years and notices of all General Meetings, can be
found on the Group’s website.
43
Annual Report & Accounts 2021Corporate Governance Audit Committee report
The two main issues that the Audit Committee are concerned with
are in relation to revenue recognition and the carrying value of
goodwill. The Committee review the Group’s revenue recognition
policies to ensure they are compliant with current accounting
standards. In addition, the Committee monitors the intangible
carrying value in the Group for any indications of impairment.
Auditor Independence
To ensure auditor independence, consideration is given to their
integrity and the objective approach of the audit process. The
use of non-audit services is not considered to be significant and
amounts paid in respect of these are disclosed in note 6.
I am satisfied that the Committee has satisfactorily discharged its
duties in the year in accordance with its terms of reference, which
are reviewed annually.
Peter Simmonds
Chair of the Audit Committee
28 July 2021
Audit Committee membership
z Peter Simmonds (Chair)
z Monica Biddulph
z Peter Whiting
Dear Shareholder
I am pleased to present the report of the Audit Committee for the
year ended 31 March 2021.
The Audit Committee comprises three Non-Executive Directors
of the Company, all of whom served for the entirety of the year.
The Committee is chaired by myself and met thrice 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.
44
Nomination Committee report
Nomination Committee membership
z Monika Biddulph (Chair)
z Peter Kear (CEO)
z Peter Simmonds
z Peter Whiting
Dear Shareholder
I am pleased to present the report of the Nomination Committee
for the year ended 31 March 2021.
The Nomination Committee comprises four Directors: three Non-
Executives Directors (myself, Peter Simmonds and Peter Whiting)
and one Executive Director, Peter Kear. In the performance of its
duties, the Committee held nine meetings in the year. The principal
activity of the Nomination Committee in the year was succession
months will ensure a smooth transition and give Bill the best
possible launchpad into the role.
In addition to the CEO succession, the Nomination Committee also
took an active role in the appointment of the interim CFO, following
Charles Irvine’s decision to leave the Group to pursue another
opportunity outside of the public markets, and in the appointment
of the CFO.
I would also like to thank John Lythall, who decided to step
down from the Board at the end of March 2021 to retire, for his
dedication and significant contributions to the success of the
company over many years.
Following on from John’s retirement as a Non-Executive
Director, the Nomination Committee will further consider the
Board composition and the balance between Non-Executive
and Executive Directors as well as the mix of skills amongst the
independent Non-Executive Directors and decide on appropriate
actions to be taken.
planning, and the appointment of a CEO successor.
The Board’s policy is to ensure that all appointments are merit-
In 2020 Peter Kear informed the Board that he would like to
plan his retirement with a view of stepping down as CEO in a 1 to
2 year timeframe. The Nomination Committee set out a plan and
timeline to appoint a successor to the CEO.
based and based on clear and objective criteria, giving due regard
to equality of opportunity, and to promote inclusion and diversity.
The Board notes that achieving diversity in the technology sector is
challenging, having regard to the available pool of individuals with
the right skills, experience and talent. Given the size of the Board
After thorough discussions with a number of executive search
and the Group, the Nomination Committee does not currently set
agencies, a specialist recruiter was selected to work with D4t4 on
any measurable objectives for implementing a diversity policy, but it
the CEO search. A detailed job specification together with a list of
acknowledges the role of the Board in promoting diversity, including
key criteria helped generate a diverse long list, from which a short
gender diversity, throughout the Group. Currently there is one female
list of candidates was selected. The process included a merit-
member of the Board, representing 25% of Board membership.
based assessment based on objective criteria, having regard to
the Group’s current and future requirements.
In relation to succession planning, the Nomination Committee
keeps under review, and takes appropriate action to ensure,
Following a thorough interview process and deliberations, the
orderly succession for appointments to the Board and to senior
Nomination Committee recommended to the Board, and the Board
management, thereby maintaining an appropriate balance of skills
decided, to appoint Bill Bruno as CEO-designate/Deputy CEO. Bill
and experience within the Group and on the Board. With regards
will work alongside Peter during the next six to twelve months,
to Non-Executive Directors, the Committee considers, amongst
then planning to transition to the role of CEO.
other factors, their other significant outside commitments prior to
Myself, the Nomination Committee and the Board are very
pleased with the outcome and look forward to working with Bill
in the future. Bill brings passion, insight and a wealth of industry
making recommendations. This is designed to ensure that they
have sufficient time to meet what is expected of them and keeps
any changes to these commitments under review.
knowledge, he is well known in our industry and has a big
I am satisfied that the Nomination Committee has satisfactorily
following amongst clients and staff. I am confident that under Bill’s
discharged its duties in the year in accordance with its terms of
leadership the business will continue to thrive and develop a host
reference, which are reviewed on an annual basis.
of new global opportunities.
I would like to thank Peter Kear for his proactive involvement in
finding his successor. Peter is a hard act to follow, and I have
every confidence that his support and mentoring over the coming
Monika Biddulph
Chair of the Nomination Committee
28 July 2021
45
Annual Report & Accounts 2021Corporate Governance
Remuneration Committee report
Remuneration Committee membership
z Peter Whiting (Chair)
z Monica Biddulph
z Peter Simmonds
on performance, designed to align executive pay with shareholder
interests. In this respect, the Committee has assessed the
performance of Executive Directors for the year reported against
the targets set a year ago, set performance targets for the
following financial year and made recommendations to the Board
on the overall packages for the Executive Directors.
Following the shareholder approval granted at our 2019 AGM, we
made our first grants under the Long Term Incentive Plan (LTIP) in
August 2020. Providing further alignment with wider shareholder
experience, these will vest three years after grant, subject to the
satisfaction of performance criteria based on Total Shareholder
Dear Shareholder
I am pleased to introduce the Directors’ Remuneration Report for
Return (TSR) and growth in EPS over that period.
the year ended 31 March 2021.
I am satisfied that the Committee has appropriately discharged
The Committee has consisted throughout the entire year of four
its duties in the year in accordance with its responsibilities and
Non-Executive Directors; Peter Simmonds, John Lythall, Monika
encourage you to read the Directors Remuneration Report on the
Biddulph and me as Chair. John stepped down from both the
following pages.
Board and the Remuneration Committee on 31 March 2021.
Peter Whiting
Chair of the Remuneration Committee
28 July 2021
The Committee’s terms of reference require it to meet not less than
once each year. The Committee met three times in the year ended
31 March 2021. 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 Group 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 any part in any
discussion about his or her own remuneration.
For 2020/2021, the Remuneration Committee has continued to
operate a simple remuneration structure made up of basic salary,
pensions and benefits, annual performance-related bonuses,
and share options. As in prior years, a significant proportion of
executive remuneration has been based
46
Directors’ Remuneration report
This report complies with the requirements of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations
2008 as amended in 2013, the provisions of the QCA Corporate Governance Code 2018 and the Listing Rules.
The report is in two sections:
z The Directors remuneration policy which sets out the Group’s current policy on remuneration for Executive and Non-Executive
Directors; and
z The Directors’ Remuneration Report. This section sets out details of how the remuneration policy was implemented for the year ended
31 March 2021.
Directors’ 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 determined by the Board within limits set out in the Articles of
Association.
The Company’s policy is that a substantial proportion of the potential remuneration of the Executive Directors should be performance
related. The performance criteria set should motivate the Executive Directors to create value for the shareholders.
There are five main elements of the remuneration package for Executive Directors and senior management:
Element of remuneration
Link to Group strategy
Operation
Framework
Base salary
Ensures that the Company
Base salary is paid monthly
An Executive Director’s salary is determined by
can recruit and retain
and reviewed annually, with
the Remuneration Committee in March of each
high-quality Executives to
any increases applying from
year and when an individual changes position
deliver on the Company
1 April.
or responsibility. In deciding appropriate levels,
strategy in the interest of
the shareholders.
the Remuneration Committee considers the
Company as a whole and relies on objective
research which gives up to date information on a
comparable group of companies.
Benefits
Ensures that the Company
Benefits principally
In relation to health care and death in service
can recruit and retain
comprise private healthcare
benefits, premiums are paid by the Company
high-quality Executives to
and death in service
to an external broker to arrange cover, in line
deliver on the Company
insurance. In addition, one
with other Group employees. These benefits are
strategy in the interest of
Executive Directors receive
standard for all Group employees.
the shareholders.
company car.
The Company offers company cars / car
allowances to a number of employees across the
organisation.
Annual bonus
Rewards and incentivises
The Committee sets annual
The Remuneration Committee sets bonus plans
the Executive Directors
performance targets, linked
for Executive Directors based upon achieving a
for achievement of
to strategic objectives
number of pre-defined growth targets including
strategic objectives.
and risk management.
revenue and EPS.
Bonus payments in respect
of a year are made in June,
or later if any element is
deferred.
47
Annual Report & Accounts 2021Corporate Governance
Element of remuneration
Link to Group strategy
Operation
Framework
Share option plan
Aligns the interests of the
The Remuneration
The share option plans are subject to rules
Executive Directors with
Committee has discretion
and limits approved by shareholders in general
the interest of the long
to make option grants
meeting. Options are granted at an exercise
term shareholders as the
to Executive Directors
price based on the mid-market price of ordinary
options only deliver value if
and other staff, subject
shares on the day prior to the date of grant. Any
the share price rises.
to the scheme rules, and
exercise is subject to satisfaction of the specified
to determine appropriate
performance conditions defined.
performance conditions.
Pension
Ensures that the Company
Pension contributions are
Executive Directors are members of the
can recruit and retain
made by the Company to a
Company Money Purchase pension scheme.
high-quality Executives
defined contribution scheme
to deliver on the Group
operated by third party
strategy in the interest of
providers.
the shareholders.
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 their salary by way of salary sacrifice.
There are no unfunded pension promises or
similar arrangements for Directors. There were 4
Directors in the scheme in 2021 (2020: 3).
Chairman and Non-
Ensures that the Group
Fees for Non-Executive
A basic fee is set for normal duties,
Executive Director fees
can recruit and retain a
Directors are set by the
commensurate with fees paid for similar roles
high-quality Chairman and
Board (excluding Non-
in other similar companies, taking account of
Non-Executive Directors
Executive Directors). Fees
the time commitment, responsibilities, and
to deliver on the Group
are paid monthly or quarterly.
committee position(s). Supplementary fees
strategy in the interest of
the shareholders.
are paid for any additional duties at fixed day
rates. Non-Executive Directors are not eligible
for pensions, incentives, bonus or any similar
payments other than normal out-of-pocket
expenses incurred on behalf of the business.
Compensation for loss of office is not payable to
Non-Executive Directors.
Remuneration policy considerations
Recruitment
The Company’s Nomination Committee is responsible for leading the process for Board appointments and making recommendations
to the Board. Refer to the report of the Nomination Committee for details.
Loss of office payments
In the event of early termination, all of the Directors contracts provide for compensation up to a maximum of basic salary plus benefits
for the notice period.
Wider staff employment conditions
The Remuneration Committee considers pay and employment conditions for other senior Executives and staff members of the Group
when designing and setting Executive remuneration. Underpinning all pay is an intention to be fair to all staff of the Group, taking into
account the individual’s seniority and local market practices.
48
Consultation with shareholders
The Remuneration Committee is committed to an ongoing dialogue with shareholders and seeks the views of significant shareholders
when any major changes are being made to remuneration arrangements. The Committee takes into account the views of significant
shareholders when formulating and implementing the policy.
Consultation with employees
The Board and the Remuneration Committee did not consult with employees when formulating and implementing the policy.
Service contracts and letters of appointment
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
P Kear and J Dodkins have Directors’ service agreements which can be terminated on twelve months’ notice. These agreements were
dated 29 August 1997. M Boxall has a service agreement which can be terminated on 3 months’ notice dated 1 November 2015.
Non-Executive Directors
P Simmonds, P Whiting and M Biddulph each have an agreement for 12 months. The fees of the Non-Executive Directors are
determined and confirmed by the full Board excluding (in each case) the Non-Executive Director concerned.
Policy on Director shareholdings
The Company has no policy on Director shareholdings.
Outside appointments
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.
Aggregate Directors’ remuneration
The total amounts for Directors’ remuneration were as follows:
Emoluments (Fees / basic salary, benefits and annual bonus)
Money purchase pension contributions
IFRS 2 share-based payment charge
Employer’s National Insurance
Total
2021
£000
1,352
39
194
1,585
183
1,768
2020
£000
1,207
38
66
1,311
157
1,468
One director (2020: three) exercised 166,667 options during the year (2020: 766,667) with gains on exercise of share options during the year
totalling £227k (2020: £1,184k).
49
Annual Report & Accounts 2021Corporate Governance
Single figure for the total remuneration (audited)
Fees/basic
salary
£000
Benefits
Bonus
Sub total
Pension
£000
£000
£000
£000
31 March 2021
Executives
P Kear
J Dodkins (resigned 30 June 2021)
M Boxall (resigned 30 June 2021)
C Irvine (resigned 28 April 2021)
C Warren (resigned 4 July 2019)
M Tod (resigned 30 Sept 2019)
Non-Executives
P Simmonds
J Lythall (resigned 31 March 2021)
P Whiting
M Biddulph
Total
214
163
184
129
-
-
50
20
45
40
845
27
14
3
9
-
-
-
5
-
-
171
131
147
-
-
-
-
-
-
-
412
308
334
138
-
-
50
25
45
40
10
10
11
8
-
-
-
-
-
-
Total
2021
£000
422
318
345
146
-
-
50
25
45
40
Total
2020
£000
385
279
284
-
68
94
50
27
45
13
58
449
1,352
39
1,391
1,245
Remuneration of highest paid Director
Remuneration
Company contributions to money purchase pension schemes
2021
412
10
422
2020
375
10
385
Emoluments for the highest paid Director for the year ended 31 March 2021 and 31 March 2020 are included in the table above.
The highest paid Director exercised no share options during the year (2020: nil options exercised).
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 at
Number at
P Kear
J Dodkins
M Boxall
31 March 2020
31 March 2021
Option price
Expiry date
Exercisable from
-
-
-
166,667
166,666
138,591
105,593
118,792
-
166,666
2.0p
2.0p
2.0p
149.0p
149.0p
10 Aug 2030
10 Aug 2030
10 Aug 2030
13 Aug 2028
13 Aug 2028
10 Aug 2023
10 Aug 2023
10 Aug 2023
1 Jul 2020
1 Jul 2021
P Simmonds, C Irvine, J Lythall, P Whiting and M Biddulph did not hold any share options during the year.
All reductions in options held by Directors between 31 March 2020 and 31 March 2021 have arisen due to the exercising of options held at
31 March 2020 and were all exercised whilst in office. No options lapsed.
50
One director (2020: three) exercised 166,667 options during the year (2020: 766,667) with gains on exercise of share options during the year
totalling £227k (2020: £1,184k).
The market price of the shares at 31 March 2021 was 302.5p (140.0p at 31 March 2020) and the range in the period under review was
131.0p to 320.0p.
There have been no variations to the terms and conditions or performance criteria for share options during the financial year. As the share
options have been issued on different dates, they have different performance criteria attached. However, these performance criteria are in
line with increasing Earnings Per Share.
Directors shareholdings and dividends paid to Directors are disclosed in the Directors’ Report on page 53.
Advisers
The Committee receives independent advice from FIT Remuneration Consultants LLP when required.
Performance graphs
Company share price
600
400
200
2014
2015
2016
2017
2018
2019
2020
(INDEX) D4t4 Solutions plc - Price
(INDEX) FTSE AIM - Price
(INDEX) FTSE Small Cap - Price
The graph below shows the Company’s share price performance compared with the performance of the FTSE AIM All-Share and FTSE
SmallCap Index (GTBP) for the last six years. The FTSE Aim All-Share and FTSE SmallCap Index (GBP) have been selected for this
comparison because it is the Board opinion that they give a true comparison to its peers.
Peter Whiting
Chair of the Remuneration Committee
28 July 2021
51
Annual Report & Accounts 2021Corporate Governance Directors’ report
The Directors present their annual report and the audited financial
There are a number of agreements that take effect, alter or
statements for the year ended 31 March 2021, which should be
terminate upon a change of control of the Company such as
read in conjunction with the Strategic Report on pages 12 to 21.
commercial contracts, bank loan agreements, property lease
The Corporate Governance Statement set out on pages 31 to 43
arrangements and employees’ share plans.
forms part of this report.
Incorporation
D4t4 Solutions Plc is a company incorporated in the United
Kingdom under the Companies Act 1985.
Dividends
The Directors recommend a final dividend of 2.0p (2020: 1.9p) per
ordinary share to be paid this year.
Future outlook
The Group’s future outlook and opportunities are referred to in the
Chief Executive Officer report on page 4.
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
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. The Group
and Company has sufficient financial resources to cover budgeted
future cash-flows and has contracts in place with 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.
of ordinary shares which carry no right to fixed income. Each share
Having reviewed the future plans and projections for the business,
(other than own shares held in treasury) carries the right to one
the Directors believe that the Group and Company and its
vote at general meetings of the Company.
subsidiary undertakings have adequate resources to continue in
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.
operational existence for the foreseeable future. For this reason,
they continue to adopt the going concern basis in preparing the
financial statements.
The Directors are not aware of any agreements between holders of
In accordance with the Companies Act s414 c(11) information in
the Company’s shares that may result in restrictions on the transfer
relation to the business and risks is shown in the Strategic Report.
Supplier Payment Policy
It is Company 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 2021 the Company had
83 days (2020: 93 days) of outstanding liabilities to creditors.
of securities or on voting rights.
Details of employee share schemes are set out in note 27.
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 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 34.
Under its Articles of Association, the Company has authority to
issue 50,000,000 ordinary shares.
52
Directors and Directors’ Interests
The Directors who held office during the year and to the date of signing, unless otherwise stated, were as follows:
P J Kear
J L Dodkins (resigned 30 June 2021)
M G Boxall (resigned 30 June 2021)
C C Irvine (resigned 28 Apr 2021)
P A Simmonds
J Lythall (resigned 31 March 2021)
P Whiting
M Biddulph
At the AGM, P Whiting will offer himself 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:
P J Kear
J L Dodkins
M G Boxall
C C Irvine
P A Simmonds
J Lythall
P Whiting
M Biddulph
* or date of appointment if later
Interest at
Interest at
31 March 2021
31 March 2020*
1,665,752
690,266
71,115
Nil
346,500
1,000,000
22,000
Nil
1,665,752
690,266
35,000
Nil
346,500
1,000,000
22,000
Nil
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 50.
Substantial holdings
As far as the Directors are aware, as at 31 May 2021, the only holdings of 3% or more of the Company’s issued share capital were the following:
Canaccord Genuity Wealth Management
Ennismore Fund Management
Herald Investment Management
Chelverton Asset Management
P Kear Esq
Otus Capital Management
Number of
ordinary shares
7,362,500
3,192,043
2,974,800
2,125,000
1,665,752
1,544,278
%
18.30
7.94
7.40
5.28
4.14
3.84
53
Annual Report & Accounts 2021Corporate Governance
Acquisition of the Company’s own shares
Research and Development
At the end of the year, the Directors had authority, under the
The Group has continued to attach a high priority to research and
shareholders’ resolution of 6 August 2020, to purchase through the
development throughout the year aimed at the development of
market up to 4,023,342 of the Company’s shares at a maximum
new products and maintaining the technological excellence of
price of 105% of the average middle market price for the five
existing products.
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 26 August 2021. 335,208 shares were purchased
and 302,667 shares were sold in the year ending 31 March 2021.
Financial instruments
The Group’s financial risk management objectives and policies are
discussed on page 92 within note 32 to the accounts.
Own shares are ordinary 2p shares purchased in order to satisfy
Branch operations
outstanding option obligations. Sales from own shares are the
The Group has branch operations located in Chennai, India.
shares issued to option holders on exercise of their options. The
maximum number of own shares held in the year was 199,113
(2020: 488,880), which represents 0.49% (2020: 1.21%) of the
issued share capital.
Directors’ indemnities and liability insurance
Political and Charitable contributions
The Group made no political contributions or charitable donations
during the year (2020: nil).
Insurance
As permitted by the Articles of Association, the Directors have the
The Group holds Directors and Officers Liability insurance.
benefit of an indemnity which is a qualifying third-party indemnity
Disclosure of information to the Auditor
provision as defined by section 234 of the Companies Act 2006. The
In the case of each of the persons who are Directors of the
indemnity was in force throughout FY21 and is currently in force. The
Company at the date when this report was approved:
Company also purchased and maintained Directors’ and Officers’
liability insurance throughout the financial year in respect of itself and
its Directors.
Employees
The Group has a policy of offering equal opportunities to employees
z 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
z 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
at all levels in respect of the conditions of work. Throughout the
the Company’s auditor is aware of that information.
Group it is the Board’s intention to provide employment opportunities
This confirmation is given and should be interpreted in accordance
and training for disabled people and to care for employees who
with the provisions of s418 of the Companies Act 2006.
become disabled having regard to aptitude and abilities.
Auditor
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.
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.
The Company operates share option Schemes which are open to
all employees. The two current Schemes are the D4t4 Solutions
Employee Share Options ‘A’ Scheme and the D4t4 Solutions EMI
Share Options Scheme. Details of the share options are laid out on
page 89 within note 27 to the accounts.
Treasury policy
The Group’s operations are funded by cash reserves. 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.
54
By order of the Board
Peter Kear
Chief Executive Officer
Windmill House, 91-93 Windmill Road, Sunbury-on-Thames, TW16 7EF
28 July 2021
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Strategic Report, 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 have elected
under company law and the AIM Rules of the London Stock Exchange to prepare the group financial statements in accordance with
international accounting standards in conformity with the requirements of the Companies Act 2006 and to prepare the company financial
statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and
applicable law.
The group and company financial statements are required by law and international accounting standards in conformity with the
requirements of the Companies Act 2006 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 each of 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 international accounting standards in conformity with the requirements of
the Companies Act 2006;
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 requirements of 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 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 plc 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
28 July 2021
55
Annual Report & Accounts 2021Corporate Governance
Independent auditor’s report
to the members of D4t4 Solutions plc
Opinion
We have audited the financial statements of D4t4 Solutions Plc (the ‘Parent Company’) and its subsidiaries (together, the ‘Group’) for
the year ended 31 March 2021 which comprise the consolidated income statement, consolidated statement of comprehensive income,
consolidated and Parent Company statements of changes in equity, consolidated and Parent Company statements of financial position,
consolidated and Parent Company cash flow statements and notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and International Accounting Standards in
conformity with the requirements of the Companies Act 2006 and, as regards the Parent Company financial statements, as applied in
accordance with the provisions of the Companies Act 2006.
In our opinion:
z 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 2021
and of the Group’s profit for the year then ended;
z the Group financial statements have been properly prepared in accordance with International Accounting Standards in conformity with
the requirements of the Companies Act 2006;
z the Parent Company financial statements have been properly prepared in accordance with International Accounting Standards in
conformity with the requirements of the Companies Act 2006 and as applied in accordance with the Companies Act 2006; and
z the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We
are independent of the Group and Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to listed entities and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of
the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group’s and Parent Company’s ability to continue
to adopt the going concern basis of accounting included reviewing and evaluating management’s forecasts from 31 March 2021 covering
a period of over 12 months from approval of the financial statements, including review of assumptions used in the forecasts and sensitivity
analysis, taking into account in particular the Group’s net cash position at 31 March 2021.
Based on the work we have performed we have not identified any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group’s or the Parent Company’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Summary of our audit approach
Key audit matters
Materiality
Group
z Revenue recognition
Group
z Overall materiality: £155,000 (2020: £247,000)
z Performance materiality: £116,000 (2020: £185,000)
Parent Company
z Overall materiality: £147,000 (2020: £247,000)
z Performance materiality: £110,000 (2020: £185,000)
Scope
Our audit procedures covered, on a sample basis, 100% of revenue, 100% of total assets and 100%
of profit before tax.
56
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Group and Parent
Company financial statements of the current period and include the most significant assessed risks of material misstatement (whether or
not due to fraud) we identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources in the
audit and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the Group and Parent
Company financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Revenue recognition
Key audit matter description
The Group has revenue streams under product-own IP, product-3rd party, delivery services and
support and maintenance segments - refer to notes 2, 3, 4 and 5 to the financial statements for
further details.
How the matter was
addressed in the audit
The product segments include revenue of one or more elements of hardware and software and are in
some cases included in the same contract as delivery services and support and maintenance. These
elements of the contracts are in some cases individually significant to the results of the Group and
involve an element of judgement in allocating the transaction price between different performance
obligations within a contract. The different elements of the contracts also often have different
recognition periods. We also consider there to be a significant risk of misstatement of the financial
statements arising from transactions occurring close to the balance sheet date, as transactions
could be recorded in the wrong financial period. As such we have determined revenue recognition to
be a key audit matter.
In order to address the risk of material misstatement related to revenue recognition we have:
z considered whether the Group’s revenue recognition policy complies with IFRS 15 Revenue from
contracts with customers including in respect of the allocation of the transaction price to the
various performance obligations in the contracts;
z considered whether the revenue recognition policy applied is in line with the Group’s policy;
z performed detailed testing, focusing in particular on new/major contracts ongoing at the balance
sheet date;
z tested balances recognised in the Group’s statement of financial position and tested individual
transactions occurring immediately before and after the balance sheet date.
Our tests of detail focused on the impact of contracts and transactions occurring within proximity of the
year end across the product segments, obtaining evidence to support the appropriate timing of revenue
recognition, based on terms and conditions set out in sales contracts and delivery documents.
We performed tests of details on accrued and deferred revenue, deferred revenue recognised at
31 March 2021. We reviewed disclosure in the financial statements of the revenue recognition
policies and key estimates and judgements in respect of revenue recognition.
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing and extent of our audit
procedures. When evaluating whether the effects of misstatements, both individually and on the financial statements as a whole, could
reasonably influence the economic decisions of the users we take into account the qualitative nature and the size of the misstatements.
Based on our professional judgement, we determined materiality as follows:
57
Annual Report & Accounts 2021Financial Statements Overall materiality
£155,000 (2020: £247,000)
£147,000 (2020: £247,000)
Basis for determining overall
5% of profit before tax
5% of profit before tax
Group
Parent Company
materiality
Rationale for benchmark applied
Profit measure used for the trading activities
The Parent Company is the Group’s main
of the group; the key measure used both
trading component; therefore the same
internally by the Board and, we believe,
rationale has been applied to the selection
to analysts, externally by shareholders in
of the Parent Company materiality basis;
evaluating the performance of the group.
capped for the purposes of calculating an
appropriate component materiality.
Performance materiality
£116,000 (2020: £185,000)
£110,000 (2020: £185,000)
Basis for determining
performance materiality
75% of overall materiality
75% of overall materiality
Reporting of misstatements to
Misstatements in excess of £7,750 and
Misstatements in excess of £7,350 and
the Audit Committee
misstatements below that threshold that,
misstatements below that threshold that,
in our view, warranted reporting on
in our view, warranted reporting on
qualitative grounds.
qualitative grounds.
An overview of the scope of our audit
The Group consists of two non-dormant components, located in the United Kingdom and the United States of America.
A full scope audit was performed on the component in the United Kingdom and on the component in the United States of America,
achieving 100% coverage via our audit procedures.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report
thereon. The Directors are responsible for the other information contained within the annual report. Our opinion on the financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify
such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
z 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
z 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 the Parent Company and their environment obtained in the course of the
audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.
58
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in
our opinion:
z 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
z the Parent Company financial statements are not in agreement with the accounting records and returns; or
z certain disclosures of Directors’ remuneration specified by law are not made; or
z we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement set out on page 55, the Directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities are instances of non-compliance with laws and regulations. The objectives of our audit are to obtain sufficient appropriate
audit evidence regarding compliance with laws and regulations that have a direct effect on the determination of material amounts and
disclosures in the financial statements, to perform audit procedures to help identify instances of non-compliance with other laws and
regulations that may have a material effect on the financial statements, and to respond appropriately to identified or suspected non-
compliance with laws and regulations identified during the audit.
In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the financial statements due to
fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud through designing
and implementing appropriate responses and to respond appropriately to fraud or suspected fraud identified during the audit.
However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the entity’s
operations are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the Group audit engagement team:
z obtained an understanding of the nature of the industry and sector, including the legal and regulatory framework that the Group and
Parent Company operate in and how the group and parent company are complying with the legal and regulatory framework;
z inquired of management, and those charged with governance, about their own identification and assessment of the risks of
irregularities, including any known actual, suspected or alleged instances of fraud;
z discussed matters about non-compliance with laws and regulations and how fraud might occur including assessment of how and
where the financial statements may be susceptible to fraud.
All relevant laws and regulations identified at a Group level and areas susceptible to fraud that could have a material effect on the financial
statements were communicated to component auditors. Any instances of non-compliance with laws and regulations identified and
communicated by a component auditor were considered in our audit approach.
59
Annual Report & Accounts 2021Financial Statements
The most significant laws and regulations were determined as follows:
Legislation / Regulation
Additional audit procedures performed by the Group audit engagement team included:
International Accounting
Review of financial statement disclosures and testing to supporting documentation;
Standards and Companies
Act 2006
Completion of disclosure checklists to identify areas of non-compliance.
Tax compliance regulations
Consideration of whether any matters identified during the audit required reporting to an appropriate
authority outside the entity.
General Data Protection
We have inquired of management and where appropriate, inspected legal and regulatory
Regulation
correspondence.
The areas that we identified as being susceptible to material misstatement due to fraud were:
Risk
Audit procedures performed by the audit engagement team:
Revenue recognition
Audit procedures performed in relation to revenue recognition included assessment of the revenue
recognition policies in place and their application, the performance of substantive testing including
consideration of existence, and review of the cut-off treatment of significant contracts around the
year-end.
Management override of
Testing the appropriateness of accounting journal entries and other adjustments;
internal controls
Assessing whether the judgements made in making accounting estimates are indicative of a
potential bias; and
Evaluating the business rationale of any significant transactions that are unusual or outside of the
normal course of business.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website
at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
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.
William Farren FCA
Senior Statutory Auditor
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
25 Farringdon Street
London EC4A 4AB
28 July 2021
60
Consolidated income statement
for the year ended 31 March 2021
Continuing operations
Revenue
Cost of sales
Gross profit
Administration expenses
Other operating income
Profit from operations
Finance income
Financing costs
Profit before tax
Tax
Attributable to equity holders of the parent
Earnings per share from continuing operations
attributable to the equity holders of the parent
Basic
Diluted
Notes
4,5
6
8
9
9
10
13
2021
£’000
22,792
(8,566)
14,226
(11,234)
58
3,050
25
(32)
3,043
(274)
2,769
6.88p
6.75p
Consolidated statement of comprehensive income
for the year ended 31 March 2021
Attributable to equity holders of the parent
Other comprehensive income:
Items that will not be reclassified to profit or loss
Gains on property revaluation
Exchange differences on translation of foreign operations
Total comprehensive income for the year attributable
to equity holders of the parent
2021
£’000
2,769
70
(11)
2,828
16
11
2020
£’000
21,748
(8,537)
13,211
(8,343)
58
4,926
43
-
4,969
(522)
4,447
11.12p
11.04p
2020
£’000
4,447
71
24
4,542
61
Annual Report & Accounts 2021Financial Statements
Consolidated statement of changes in equity
attributable to Equity Holders of the Parent
for the year ended 31 March 2021
Share
Share Merger Revaluation
Own
Equity
Retained
Notes
capital premium
reserve
reserve
shares
reserve
earnings
Total
£’000
Balance at 1 April 2019
794
2,624
5,977
1,099
(1,127)
10
15,463
24,840
Dividends paid
Purchase of own shares
Issue of new shares -
exercise of share options
Settlement of share-
based payments
Share-based payment charge
27
Deferred tax on outstanding
share options
11
Transactions with
equity holders
Profit for the year
Other comprehensive income
Total comprehensive income
12
23
22
-
-
-
-
14
741
-
-
-
-
-
-
14
741
-
-
-
-
-
-
-
-
-
4
-
-
4
-
-
-
-
-
-
-
-
-
-
-
71
71
-
(69)
-
856
-
-
-
-
-
(3)
-
(7)
(1,235)
(1,235)
-
-
(516)
97
(69)
755
341
97
-
(7)
787
(10)
(1,654)
(118)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,447
4,447
24
95
4,471
4,542
18,280
29,264
(1,090)
(1,090)
-
(868)
(262)
276
404
276
(1,076)
(1,278)
2,769
61
2,830
2,769
131
2,900
20,034
30,886
Balance at 1 April 2020
808
3,365
5,981
1,170
(340)
Dividends paid
Purchase of own shares
12
23
Settlement of share-
based payments
Share-based payment charge
27
Transactions with
equity holders
Profit for the year
Other comprehensive income
Total comprehensive income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
70
70
-
(868)
666
-
(202)
-
-
-
Balance at 31 March 2021
808
3,365
5,981
1,240
(542)
62
Consolidated statement of financial position
as at 31 March 2021
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Deferred tax assets
Current assets
Trade and other receivables
Tax receivables
Inventories
Cash and cash equivalents
Total assets
Equity
Share capital
Share premium account
Merger reserve
Revaluation reserve
Own shares
Retained earnings
Total equity
Current liabilities
Trade and other payables
Lease obligations
Non-current liabilities
Lease obligations
Deferred tax liabilities
Total liabilities
Total equity and liabilities
Notes
14
15
16
11
18
19
31
22
22
24
25
23
20
21
21
11
2021
£’000
8,696
872
4,141
-
13,709
13,362
414
129
14,241
28,146
41,855
808
3,365
5,981
1,240
(542)
20,034
30,886
10,691
83
10,774
194
1
195
10,969
41,855
These financial statements were approved by the Board of Directors and authorised for issue on 28 July 2021 and
were signed on its behalf by:
Peter Kear
Chief Executive Officer
Company registration number: 01892751 (England and Wales)
2020
£’000
8,696
956
4,099
283
14,034
10,137
649
1,266
12,772
24,824
38,858
808
3,365
5,981
1,170
(340)
18,280
29,264
9,377
-
9,377
-
217
217
9,594
38,858
63
Annual Report & Accounts 2021Financial Statements
Consolidated cash flow statement
for the year ended 31 March 2021
Cash generated from operations
Taxes received / (paid)
Net cash generated from operating activities
Investing activities
Interest received
Purchase of property, plant and equipment
Capitilisation of development costs
Net cash used in investing activities
Financing activities
Dividends paid
Lease repayments
Interest paid
Purchase of own shares
Exercise of share options
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
Notes
30
31
2021
£’000
3,258
80
3,338
25
(34)
(195)
(204)
(1,090)
(79)
(32)
(868)
404
(1,665)
1,469
12,772
14,241
2020
£’000
3,116
(738)
2,378
43
(249)
(188)
(394)
(1,235)
-
-
(69)
1,096
(208)
1,776
10,996
12,772
64
Company statement of changes in equity
attributable to Equity Holders of the Parent
for the year ended 31 March 2021
Share
Share Merger Revaluation
Own
Equity
Retained
Notes
capital premium
reserve
reserve
shares
reserve
earnings
Total
£’000
Balance at 1 April 2019
794
2,624
5,977
1,099
(1,127)
10
17,095
26,472
Dividends paid
Purchase of own shares
Issue of new shares -
exercise of share options
Settlement of share-
based payments
Share-based payment charge
27
Deferred tax on outstanding
share options
11
Transactions with
equity holders
Profit for the year
Other comprehensive income
Total comprehensive income
12
23
22
-
-
-
-
14
741
-
-
-
-
-
-
14
741
-
-
-
-
-
-
-
-
-
4
-
-
4
-
-
-
-
-
-
-
-
-
-
-
71
71
-
(69)
-
856
-
-
-
-
-
(3)
-
(7)
(1,235)
(1,235)
-
-
(516)
97
(69)
755
341
97
-
(7)
787
(10)
(1,654)
(118)
-
-
-
Balance at 1 April 2020
808
3,365
5,981
1,170
(340)
Dividends paid
Purchase of own shares
12
23
Settlement of share
based payments
Share-based payment charge
27
Transactions with
equity holders
Profit for the year
Other comprehensive income
Total comprehensive income
Foreign exchange and
other movements
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
70
70
-
-
(868)
666
-
(202)
-
-
-
-
Balance at 31 March 2021
808
3,365
5,981
1,240
(542)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,676
3,676
-
71
3,676
3,747
19,117
30,101
(1,090)
(1,090)
-
(868)
(262)
276
404
276
(1,076)
(1,278)
1,988
1,988
-
70
1,988
2,058
(17)
(17)
20,012
30,864
65
Annual Report & Accounts 2021Financial Statements
Company statement of financial position
as at 31 March 2021
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investment in subsidiaries
Deferred tax assets
Current assets
Trade and other receivables
Tax receivables
Inventories
Cash and cash equivalents
Total assets
Equity
Share capital
Share premium account
Merger reserve
Revaluation reserve
Own shares
Retained earnings
Total equity
Current liabilities
Trade and other payables
Lease obligations
Non-current liabilities
Lease obligations
Deferred tax liabilities
Total liabilities
Total equity and liabilities
Notes
14
15
16
17
11
18
19
31
22
22
24
25
23
20
21
21
11
2021
£’000
8,696
872
4,100
273
-
13,941
13,835
414
4
14,133
28,386
42,327
808
3,365
5,981
1,240
(542)
20,012
30,864
11,193
45
11,238
191
34
225
11,463
42,327
2020
£’000
8,696
956
4,099
273
10
14,034
11,211
649
7
12,694
24,561
38,595
808
3,365
5,981
1,170
(340)
19,117
30,101
8,277
-
8,277
-
217
217
8,494
38,595
The Company’s profit for the year was £2.0m (2020: £3.7m).
These financial statements were approved by the Board of Directors and authorised for issue on 28 July 2021 and
were signed on its behalf by:
Peter Kear
Chief Executive Officer
Company registration number: 01892751 (England and Wales)
66
Company cash flow statement
for the year ended 31 March 2021
Cash generated from operations
Income taxes received / (paid)
Net cash generated from operating activities
Investing activities
Interest received
Purchase of property, plant and equipment
Capitalisation of development costs
Net cash used in investing activities
Financing activities
Dividends paid
Lease repayments
Interest paid
Purchase of own shares
Exercise of share options
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
Notes
30
31
2021
£’000
3,125
80
3,205
91
(33)
(195)
(137)
(1,090)
(50)
(25)
(868)
404
(1,629)
1,439
12,694
14,133
2020
£’000
3,038
(738)
2,300
43
(249)
(188)
(394)
(1,235)
-
-
(69)
1,096
(208)
1,698
10,996
12,694
67
Annual Report & Accounts 2021Financial Statements
Notes to the financial statements
1. General information
Adoption of new and revised standards
D4t4 Solutions plc is a public limited company incorporated and
The Group has applied IFRS 16 Leases for the year commencing 1
domiciled in England and Wales and quoted on the AIM Market,
April 2020 as it was immaterial for the previous financial year.
hence there is no ultimate controlling party.
The Group has applied the modified retrospective approach from 1
Details of substantial shareholdings are shown in the Directors’
April 2020 but has not restated comparatives for the year ended 31
report on page 53.
The address of its registered office, registered number and
principal place of business is disclosed on the inside cover of the
financial statements.
The financial statements of D4t4 Solutions plc and its subsidiaries
(the Group) for the year ended 31 March 2021 were authorised
and issued by the Board of Directors on 28 July 2021 and the
Consolidated Statement of Financial Position was signed on the
Board’s behalf by Peter Kear.
2. Significant accounting policies
Basis of preparation
The financial statements have been prepared in accordance with
International Accounting Standards adopted by the Companies
Act 2006 applicable to companies reporting under International
Accounting Standards.
March 2020 as permitted under the specific transitional provisions
in the standard. The reclassifications and the adjustments arising
from the new leasing rules are therefore recognised in the opening
balance sheet on 1 April 2020.
On adoption of IFRS 16, the Group recognised lease liabilities
in relation to leases which had previously been classified as
‘operating leases’ under the principles of IAS 17 Leases. These
liabilities were measured at the present value of the remaining lease
payments, discounted using the lessee’s incremental borrowing
rate as of 1 April 2020.
The weighted average lessee’s incremental borrowing rate
applied to the lease liabilities on 1 April 2020 was 2.5% and 9.3%
depending on the jurisdiction of the lease.
The associated right-of-use assets for property leases and other
right-of-use assets were measured at the amount equal to the
lease liability, adjusted by the amount of any prepaid or accrued
lease payments relating to that lease recognised in the balance
The financial statements have been prepared under the historical
sheet as at 31 March 2021. There were no onerous lease contracts
cost convention, with the exception of land and buildings which is
that would have required an adjustment to the right-of-use assets
held at valuation.
at the date of initial application.
The presentation and functional currency of the financial
In applying IFRS 16 for the first time, the Group has used the
statements is British Pounds and amounts are rounded to the
following practical expedients permitted by the standard:
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 24 to 25. The Group and Company
have sufficient financial resources to cover budgeted future
cashflows, together with contracts with a number of customers
and suppliers across different geographic areas and industries. As
a consequence, the Directors believe that the Group and Company
are well placed to manage their business risks successfully.
Having reviewed the impact of the global pandemic on the
business, and stress-tested the Group’s future plans and cash
flow projections, the Directors are confident that the Group and
Company have adequate resources to continue in operational
existence for the foreseeable future. For this reason, they
continue to adopt the going concern basis in preparing the
financial statements.
z the use of a single discount rate to a portfolio of leases
with reasonably similar characteristics
z reliance on previous assessments on whether leases
are onerous
z the exclusion of initial direct costs for the measurement of the
right-of-use asset at the date of initial application, and
z the use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease.
Other Standards, amendments effective and applied in the
period to 31 March 2021:
Besides the application of IFRS 16 for the first time in the current
financial year as already outlined above, the Group has also
applied the following standards and amendments for the first time
for their annual reporting period commencing 1 April 2020:
z Definition of Material – amendments to IAS 1 and IAS 8
z Definition of a Business – amendments to IFRS 3
z Interest Rate Benchmark Reform – amendments to IFRS 9,
IAS 39 and IFRS 7
68
z Revised Conceptual Framework for Financial Reporting
z Covid -19 Related Rent Concessions – amendments to
IFRS 16 and Interest Rate Benchmark Reform
amendments to IFRS 7, IAS 39 and IFRS 9
approved financial statements. The profit of the parent is disclosed
at the foot of the Company Statement of Financial Position and
Statement of Changes in Equity for the year.
The amendments listed above did not have any impact on the
Property, plant and equipment
amounts recognised in prior periods and are not expected to
The carrying value of these assets is stated at cost or valuation,
significantly affect the current or future periods.
less accumulated depreciation and any impairment loss. Freehold
Standards, amendments and interpretations to existing
standards that have not been early adopted by the Group:
Certain new accounting standards and interpretations have been
published that are not mandatory for 31 March 2021 reporting
periods and have not been early adopted by the Group. These
standards – outlined below – are not expected to have a material
impact on the entity in the current or future reporting periods and
on foreseeable future transactions.
z Amendments to IFRS 3 Business Combinations; IAS 16
Property, Plant and Equipment; IAS 37 Provisions, Contingent
land is not depreciated. The estimated lives of assets are
reviewed annually by the Board, the lives and values are adjusted
as necessary, and any impairment loss is recognised in the
income statement. Freehold land and buildings were last valued
professionally at 31 March 2018 but are valued by the Directors on
an annual basis. The carrying values are reviewed for impairment
when events or changes in circumstances indicate that the carrying
value may not be recoverable.
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:
Liabilities and Contingent Assets; and Annual Improvements
Buildings
- up to 35 years
2018-2020 (all issued on 14 May 2020 and effective for years
commencing on or after 1 January 2022)
z Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
Interest Rate Benchmark Reform – Phase 2 (issued on 27
August 2020 and effective for years commencing on or after
from 1 January 2021
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and its subsidiaries made up to the
reporting date.
Leasehold improvements
- up to 10 years
Fixtures and equipment
- up to 4 years
Motor vehicles
- up to 5 years
Revaluation gains/losses are shown in the Statement of
Comprehensive Income and recognised in Other comprehensive
income. Where losses are greater than previously recognised
gains, these are taken to the income statement.
Acquisitions
On the acquisition of a business, net fair values are attributed to
Investees are classified as subsidiaries where the Company has
the identifiable assets and liabilities acquired. Where the cost of
control, which is achieved where the Company has the power to
acquisition exceeds this net fair value, the difference is treated
govern the financial and operating policies of an investee entity,
as purchased goodwill and capitalised in the Group Statement of
exposure to variable returns from the investee and the ability
Financial Position in the year of acquisition. If a subsidiary’s assets
to use its power to affect those variable returns. All intra-group
are subsequently hived up into the parent then the corresponding
transactions, balances, income and expenses are eliminated
amount of goodwill is capitalised in the Company Statement of
on consolidation.
Financial Position.
The consolidated financial statements incorporate the results
of business combinations using the acquisition method. In
Goodwill
the statement of financial position, the acquiree’s identifiable
Capitalised goodwill is shown in the Statement of Financial
assets and liabilities are initially recognised at their fair values at
Position. Its carrying value is subject to annual review and any
acquisition date. The results of acquired entities are included in the
impairment is recognised immediately as a loss which cannot
Consolidated Statement of Comprehensive Income from the date
subsequently be reversed. Goodwill arising on acquisitions
at which control is obtained and are deconsolidated from the date
made before the date of transition to IFRS has been retained at the
control ceases.
previous UK GAAP amount subject to being tested annually
In accordance with Section 408 of the Companies Act 2006 D4t4
for impairment.
Solutions plc is exempt from the requirement to present its own
Goodwill has arisen from the acquisition of businesses.
income statement and related notes that form a part of these
69
Annual Report & Accounts 2021Financial Statements
Notes to the financial statements
(continued)
Investments in subsidiaries
The intangible asset is recognised using the cost model and is
The carrying value of investments is stated at cost less any
carried at its cost less any accumulated amortisation and any
provision for impairment. This value is reviewed annually by the
accumulated impairment losses.
Board with respect to future cash flows in respect of revenue
streams related to the investment.
Other intangible assets
Intellectual Property Rights (IPR)
Foreign currencies
In line with IAS 21, transactions denoted in foreign currencies
are recorded at an approximation of the exchange rate ruling
on the date of the transaction. Monetary assets and liabilities
On the acquisition of a business, the fair value of IPR is estimated
denominated in foreign currencies are translated using the rate of
and capitalised taking into consideration the software development
exchange ruling at the balance sheet date and the gains or losses
cycle and the amount of effort involved between updated versions
on translation are included in the profit and loss account.
of the software. The fair value is amortised over the expected
development cycle which is estimated to be eight years.
Similarly, for translation of foreign operations, transactions are
recorded at an approximation of the exchange rate ruling in
Capitalised IPR is shown in the balance sheet. Its carrying value
the period of consolidation. Monetary assets and liabilities are
is subject to annual review and any impairment is recognised
immediately as a loss which cannot subsequently be reversed.
translated using the rate of exchange ruling at the balance sheet
date and the gains or losses on translation are included in Other
comprehensive income.
Trade names
On the acquisition of a business, the future value of the trade name
Profit from operations
of that business is estimated and capitalised. The fair value is
Profit from operations is stated before investment income,
amortised over ten years.
Impairment of intangibles is reviewed annually with reference to
future cash flows from the specific cash generating units to which
the intangible asset has been allocated.
Inventory
Inventories are stated at the lower of cost or net realisable value.
The valuation method for each item of inventory remains consistent
from one accounting period to the next.
Research and development costs
finance costs and other gains and losses. Other gains and losses
principally include movements in property valuation and are
included in Other comprehensive income.
Lease commitments
Leases
The Group has applied IFRS 16 using the modified retrospective
approach with effect from 1 April 2020 and therefore comparative
information has not been restated. Comparative information is
therefore still reported under IAS 17 and IFRIC 4.
Accounting policy applicable before 1 April 2020:
To assess whether research and development expenditure has
Rentals applicable to operating leases where substantially all of the
generated an intangible asset the Group classifies the expenditure
benefits and risks of ownership do not transfer to the lessee are
into two phases, the research phase and the development phase.
charged to the income statement on a straight line basis over the
Expenditure on the research phase is recognised as an expense
period of the lease.
when it is incurred.
Accounting policy applicable from 1 April 2020:
Expenditure on the development phase is recognised as an intangible
On adoption of IFRS 16, the Group recognised lease liabilities
asset if, and only if, each of the following can be demonstrated:
in relation to leases which had previously been classified as
(a) the technical feasibility of completing the asset;
‘operating leases’ under the principles of IAS 17 Leases. These
liabilities were measured at the present value of the remaining
(b) its intention to complete and use or sell the asset;
lease payments, discounted using the lessee’s incremental
(c) its ability to use or sell the asset;
borrowing rate as of 1 April 2020. The weighted average lessee’s
incremental borrowing rate applied to the lease liabilities on 1 April
(d) how the asset will generate future economic benefit;
2020 was 2.5%.
(e) the availability of sufficient resources to complete the
development and to use or sell the asset;
(f) the ability to measure reliably the expenditure incurred on the
asset during its development.
For leases previously classified as finance leases, the Group
recognised the carrying amount of the lease asset and lease
liability immediately before transition as the carrying amount of
the right-of-use asset and the lease liability at the date of initial
application. The measurement principles of IFRS 16 are only
70
applied after that date. These finance leases were not remeasured
date less any lease incentives received • any initial
at the date of initial application as they are considered immaterial.
The Group has also elected not to reassess whether a contract is,
direct costs, and
z restoration costs.
or contains, a lease at the date of initial application. Instead, for
Payments associated with short-term leases and leases of low-
contracts entered into before the transition date the Group relied
value assets are recognised on a straight-line basis as an expense
on its assessment made applying IAS 17 and IFRIC 4 Determining
in the income statement. Short-term leases are leases with a lease
whether an Arrangement contains a lease. The Group leases
term of 12 months or less.
various offices, equipment and cars. Rental contracts are typically
made for fixed periods of 1 to 10 years but may have extension
options as described below.
Dividends
Lease terms are negotiated on an individual basis and contain a
wide range of different terms and conditions. The lease agreements
do not impose any covenants, but leased assets may not be used
as security for borrowing purposes.
Until 31 March 2020, leases of property, plant and equipment
and cars were classified as either finance or operating leases.
Payments made under operating leases (net of any incentives
Final 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.
Interim and prior period dividends paid are included in the
Statement of Changes in Equity.
received from the lessor) were charged to the income statement on
Share-based payments
a straight-line basis over the period of the lease.
Periodically the Group offers share options (at the prevailing
From 1 April 2020, leases are recognised as a right-of-use asset
and a corresponding liability at the date at which the leased asset
is available for use by the Group. Each lease payment is allocated
between the liability and finance cost. The finance cost is charged
to the income statement over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of
the liability for each period. The right-of-use asset is depreciated
over the shorter of the asset’s useful life and the lease term on a
straight-line basis. Assets and liabilities arising from a lease are
initially measured on a present value basis. Lease liabilities include
the net present value of the following lease payments:
z fixed payments (including in-substance fixed payments), less
any lease incentives receivable
z variable lease payment that are based on an index or a rate
z amounts expected to be payable by the lessee under
residual value guarantees
z the exercise price of a purchase option if the lessee is
reasonably certain to exercise that option, and
market price) to employees. The Group has conformed with the
requirements of IFRS 2 “Share Based Payment” for share options
issued after 7 November 2002 and unvested at 31 March 2021.
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 and unless the Board, at its discretion, agrees
to settle in cash.
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.
Own shares
On the acquisition of a business, the accrual for the future value
z payments of penalties for terminating the lease, if the lease
of own shares contingent upon no warranty claims being made is
term reflects the lessee exercising that option.
classified as equity where there is a fixed value and hence fixed
The lease payments are discounted using the interest rate implicit
in the lease. If that rate cannot be determined, the lessee’s
incremental borrowing rate is used, being the rate that the lessee
would have to pay to borrow the funds necessary to obtain an
asset of similar value in a similar economic environment with
similar terms and conditions.
Right-of-use assets are measured at cost comprising the following:
z the amount of the initial measurement of lease liability
z any lease payments made at or before the commencement
number of the company’s shares to be issued. Where the value of
the contingent shares is not fixed at the point of acquisition, these
are treated as a financial liability under IAS 32.
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.
71
Annual Report & Accounts 2021Financial Statements
Notes to the financial statements
(continued)
Taxation
Products – 3rd Party
Current tax (UK and foreign) is calculated on the profit for the year
D4t4 services are focused on delivering data management using
(adjusted for appropriate tax reliefs, allowances, non-deductible
public and private cloud infrastructure that is securely designed to
expenses and timing differences) using the appropriate tax rates
ensure our clients can operationalise data within their organisation.
and laws that have been enacted or substantively enacted by the
In addition, we design and build performant platforms for critical
balance sheet date. Deferred tax is recognised in respect of all
business, analytics, compliance, risk, marketing and artificial
material temporary differences in the treatment of certain items
intelligence applications. Where these are on premise Customer
for taxation and accounting purposes which have arisen but have
Data Management platform solutions they will include both
not reversed by the balance sheet date. It is recognised at the
hardware and third party software. The revenue for each product
expected prevailing rate at the time of reversal, and is recognised
is recognised when the full performance obligation has been
as an asset only to the extent that it is probable that taxable profits
satisfied, typically this is when the hardware and associated third
will be available to utilise it. It is reviewed annually.
party software is delivered to the customers designated premises.
This is when control passes to the customer.
Revenue recognition
Revenue is measured at the transaction price received or receivable
Delivery Services
from the sale of goods and services in the ordinary course of the
For delivery services work, revenue is recognised over time
Group’s activities. Revenue is shown net of value added tax, rebates
by comparing how much of the project has been completed
and discounts and after the elimination of intercompany transactions
versus total expected time required and also with reference to
within the Group.
The Group recognises revenue as it satisfies its performance
obligations by transferring promised goods and services to its
the completion of specific milestones. This is because costs are
incurred in proportion to the Group’s progress as it satisfies its
performance obligations.
customers. The Group bases its estimates on historical results, taking
In relation to time-based projects, time on projects is recoverable
into consideration the type of customer, the type of transaction and
on a time and expenses basis at an agreed daily rate and is
the specifics of each arrangement.
In line with the requirements of IFRS 8 Operating Segments, which
requires the disclosure of segmental reporting information that is
being used internally by management, the following segmental
reporting is in use:
Products – Own IP
D4t4 create, author, market and sell a software product, Celebrus,
focused on the capture of customer data from
all digital channels. This data is then used in applications that
deliver artificial intelligence, customer insight and analytics,
personalisation, decisioning and customer relationship
management.
The Group has also created its own IP in order to create
architecture and deployments for high performance on premise or
cloud solutions that combine hardware, software and services.
Perpetual licence revenue is recognised upon delivery as the
company has no further obligations to the customer once the
non-refundable licences have been delivered. Any upgrade to
the software will be supplied as part of an ongoing maintenance
contract that the customer may make. This maintenance contract
is covered under the hosting and support services policy below.
Term licences are recognised upon delivery at the commencement
of the term.
invoiced to the customer in the month of performance and
an associated value is recognised. The Group has a right to
consideration from its customers in an amount that corresponds
directly with the value to the customer of the Group’s performance
completed on a daily basis.
Support and maintenance
Support and maintenance is typically of a recurring nature and
is made up of hosting, support services and maintenance. The
Group’s efforts are expended evenly throughout the performance
period therefore revenue is recognised on a straight-line basis over
the period of the contract, normally 12 months.
Bundled goods and services
Products (software and hardware), delivery services and support
and maintenance services are often bundled together in a contract.
The products and the services are considered to be separate
performance obligations on the basis that the products can be
delivered with or without the hosting and other services and
therefore the products and services are not interdependent or
interrelated with another good or service. Software and hardware
however require combined delivery to the customer to benefit
from them and are therefore considered to be interdependent and
interrelated and one performance obligation.
72
In allocating the consideration to the separate performance
contractual rights to receive the cash flows of the financial asset and
obligations, the standalone selling price is determined by reference
substantially all the risks and rewards of ownership are transferred
to an internal price book.
to another party.
When there is no reasonable expectation of recovering a financial
Partnerships with third party organisations
asset it is derecognised (‘written off’).
The Company sells both directly to the customer and through
partnerships.. The Company acts as principal in the sale to
the partner. The partner then uses the products and services
The gain or loss on derecognition of financial assets measured at
amortised cost is recognised in profit or loss.
purchased from the Company as part of their sale to their
A financial liability (or part thereof) is derecognised when the obligation
customer. The revenue will consist of a combination of licence,
specified in the contract is discharged, cancelled or expires.
project and recurring as defined in the revenue recognition policy
above, and hence is recognised as defined there.
Any difference between the carrying amount of a financial liability
(or part thereof) that is derecognised and the consideration paid is
Financial assets and financial liabilities are recognised when
recognised in profit or loss.
the Group becomes party to the contractual provisions of the
instrument.
Financial assets
Impairment of financial assets
An impairment loss is recognised for the expected credit losses
on financial assets when there is an increased probability that the
counterparty will be unable to settle an instrument’s contractual
Initial and subsequent measurement of financial assets
cash flows on the contractual due dates, a reduction in the
Cash and cash equivalents
amounts expected to be recovered, or both.
Cash and cash equivalents comprise cash at bank and in hand
The probability of default and expected amounts recoverable are
and other short-term deposits held by the Group with maturities of
assessed using reasonable and supportable past and forward-
less than three months.
Trade, Group and other receivables
Trade receivables are initially measured at their transaction price.
Group and other receivables are initially measured at fair value plus
transaction costs.
Receivables are held to collect the contractual cash flows which
are solely payments of principal and interest. Therefore, these
receivables are subsequently measured at amortised cost using
the effective interest rate method.
Financial liabilities and equity
looking information that is available without undue cost or effort.
The expected credit loss is a probability-weighted amount
determined from a range of outcomes and takes into account the
time value of money.
Trade and other receivables
For trade receivables, expected credit losses are measured by
applying an expected loss rate to the gross carrying amount.
The expected loss rate comprises the risk of a default occurring
and the expected cash flows on default based on the ageing of
the receivable. The Group has adopted a simplified approach to
Financial liabilities and equity instruments are classified according
calculating its expected credit loss provision. For intercompany
to the substance of the contractual arrangements entered into. An
loans that are repayable on demand, expected credit losses are
equity instrument is any contract that evidences a residual interest
in the assets of the company after deducting all of its liabilities.
based on the assumption that repayment of the loan is demanded
at the reporting date. If the subsidiary does not have sufficient
Initial and subsequent measurement of financial liabilities
Trade, Group and other payables
Trade, Group and other payables are initially measured at fair
accessible highly liquid assets in order to repay the loan if
demanded at the reporting date, the parent Company assesses the
expected manner of recovery.
value, net of direct transaction costs and subsequently measured
Borrowings
at amortised cost.
Equity instruments
Equity instruments issued by the Company are recorded at fair
value on initial recognition net of transaction costs.
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 charged to profit or loss over the period using the effective
interest rate method and are added to the carrying amount of the
Derecognition of financial assets (including write-offs) and financial
instrument to the extent that they are not settled in the period in
liabilities
which they arise.
A financial asset (or part thereof) is derecognised when the
contractual rights to cash flows expire or are settled, or when the
73
Annual Report & Accounts 2021Financial Statements Notes to the financial statements
(continued)
Borrowing costs
Valuation of goodwill and intangible assets
Borrowing costs are recognised as an expense in the period in
The ongoing valuation of goodwill for the purposes of determining
which they arise.
Related party transactions
These are disclosed in note 29 of the financial statements.
impairment requires the evaluation of future cash flows from the
cash generating unit to which the goodwill has been allocated.
This is disclosed in note 14.
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, estimates and
assumptions of the carrying values of assets and liabilities as at
the statement of financial position date and the amounts reported
for revenues and expenses during the year. However, the nature
of estimations means that actual outcomes could differ from
those estimates. These judgements are reviewed on an ongoing
basis, and recognise revisions to accounting estimates in the
period in which the Directors revise the estimate and in any future
periods affected. It is considered that all judgements have an
element of estimation.
a) Judgements
Capitalisation of development costs
Internal activities are continually undertaken to enhance and
maintain our products in a bid to stay ahead of our competition.
Whether this expenditure is an internally generated intangible
Lease accounting
Lease payments requires lease payments to be discounted
using the lessee’s incremental borrowing rate- the incremental
borrowing rate IFRS 16 “Leases”. The Group’s incremental
borrowing rate, as at the date of adoption of IFRS 16, has been
based on local commercial or bank loan rates. Therefore, specific
cost of borrowing has been applied to each lease as this reflects
the different economic conditions within each geography and is
therefore more representative of the funding facilities available in
those countries.
4. Business and geographical segments
IFRS 8 Operating Segments requires these to be identified on
the basis of internal reports about components of the Group that
are regularly reviewed by the chief operating decision maker to
allocate resources to the segments and assess their performance.
The Group has four tightly integrated service lines that are offered
to clients. These service lines combine one or more of four types
of revenue to deliver on our core services.
asset requires management to make judgements, especially
Information is presented to the Board on the revenue analysis
with respect to whether the asset created will generate future
below:
economic benefit.
This is a key judgement in this respect as the time between
development and any income can be considerable and often
the income-generating asset may have considerably evolved
from the asset originally created. As a result of this, the Group
z Product - Own IP
z Product - 3rd party
z Delivery services
z Support and maintenance
almost always expenses a significant percentage of research and
All revenue streams are recognised on a point in time basis apart
development in the period it is incurred.
from Support and maintenance which is recognised over time.
b) Estimates and assumptions
No allocation of other income and costs to these categories is
made because the Directors consider that any such allocation
The key assumptions concerning the future and other key sources
would be arbitrary and contract sensitive, as would be any
of estimation uncertainty at the statement of financial position date
allocation of assets and liabilities.
that have a significant risk of causing material adjustment to the
carrying amounts of assets and liabilities within the next financial
year are discussed below.
The segmental reporting set out below is consistent with that
provided to the Board of Directors.
The segmental reporting analysis is as follows:
Share-based compensation
Management believes that there will not be only one acceptable
choice for estimating the fair value of share based payment
arrangements. The judgements and estimates that management
apply in determination of the share-based compensation are
detailed further in note 27.
74
Continuing operations 2021
Group
Products - Own IP
Products - 3rd party
Delivery services
Support and maintenance
Revenue
Cost of sales
Gross profit
Other operating costs and income
Investing and financing activities
Profit before tax
2021
£’000
9,005
4,403
2,886
6,498
22,792
(8,566)
14,226
(11,176)
(7)
3,043
Major customers (partners) over 10% of revenue
2021
£’000
2021
£’000
2020
£’000
2020
£’000
7,658
4,362
3,629
6,099
21,748
(8,537)
13,211
(8,285)
43
4,969
2020
£’000
Products - Own IP
Products - 3rd party
Delivery services
Support & maintenance
Total Revenue
Customer 1
Customer 2
Customer 1
Customer 2
3,682
3,775
769
2,764
10,990
1,154
-
-
1,663
2,817
3,855
3,401
1,515
2,616
11,387
1,363
-
2
1,767
3,132
The accounting policies of the reportable segments are the same as the Group’s accounting policies described in note 2.
5. Revenue
Geographical information
United Kingdom
Rest of Europe
United States of America
Others
Group
2021
£’000
2,983
2,396
16,699
714
22,792
2020
£’000
4,158
3,162
13,327
1,101
21,748
The geographical revenue segment is determined by the domicile of the external customer.
Non-current assets, including Property, Plant and Equipment, Goodwill and Intangibles, are all located in the United Kingdom.
These are not reported to management on a segmented basis.
Analysis of revenue
Continuing operations
Sale of goods
Rendering of services
Group
2021
£’000
5,964
16,828
22,792
2020
£’000
4,472
17,276
21,748
75
Annual Report & Accounts 2021Financial Statements
Notes to the financial statements
(continued)
Timing of transfer
Goods and services transferred at a point in time
Products - Own IP
Products - 3rd party
Delivery services
Goods and services transferred over time
Support and maintenance
Contract balances
Receivables included within Trade and other receivables
Contract assets
Contract liabilities
Group
2021
£’000
9,005
4,403
2,886
2020
£’000
7,658
4,362
3,629
6,498
22,792
6,099
21,748
Group
2021
£’000
10,165
2,554
6,288
2020
£’000
7,970
1,534
4,057
Contract assets predominantly relate to fulfilled obligations in respect of Own IP and 3rd Party Products, Delivery services and Support and
maintenance which have not been invoiced.
At the point of invoice, the contract asset is derecognised and a corresponding trade receivable is recognised.
Contract liabilities relate to consideration received from customers in advance of work being completed.
6. Analysis of expenses by nature
The breakdown by nature of expenses is as follows:
Employee remuneration
(see note 7)
Intangible assets
Amortisation of intangible assets (see note 15)
Research and development costs expensed
Property, plant and equipment
Depreciation of property, plant and equipment (see note 16)
Gain on disposal of property, plant and equipment
Group
2021
£’000
2020
£’000
11,393
9,720
279
913
1,192
395
(8)
387
246
784
1,030
327
-
327
76
Auditor’s remuneration
- for audit services (Group and Company, the Company fee is not separately quantifiable)
- for other services
Impairment of trade receivables
Operating leases
Net foreign exchange loss / (gains)
Other expenses
Total cost of sales and administration expenses
7. Staff costs
The average number of employees (including Directors)
during the year was:
Production and support
Distribution
Administration
Their aggregate remuneration comprised:
Salaries
Social security costs
Defined contribution costs
Share-based payments: equity settled
Group
2021
£’000
2020
£’000
57
-
57
-
-
54
9
63
57
58
746
6,026
19,800
(362)
5,987
16,880
Group
Company
2021
2020
2021
Number
Number
Number
2020
Number
94
30
15
139
£’000
9,632
1,025
418
318
90
27
15
132
£’000
8,341
870
412
97
86
25
15
126
£’000
7,924
924
359
318
84
23
15
122
£’000
6,856
779
357
97
11,393
9,720
9,525
8,089
Key management personnel consist of the Board of Directors and their remuneration (included in the totals above) was as follows:
Emoluments
Social security costs
Defined contribution costs
Share-based payments: equity settled
Group and Company
2021
£’000
1,352
183
39
194
2020
£’000
1,287
167
42
66
1,768
1,562
Details of Directors remuneration required by the Companies Act are set out in the audited information included in the Directors
Remuneration report on pages 47 to 51.
Other related party transactions including loans and dividends, involving Directors are disclosed in the Directors report on pages 52 to 54.
77
Annual Report & Accounts 2021Financial Statements
Notes to the financial statements
(continued)
8. Other operating income
Analysis of other operating income
Operating lease receipts (see note 28)
9. Finance income and finance costs
Analysis of finance income
Bank interest received
Other
Analysis of finance costs
Lease interest
Other
10. Taxation
Current UK tax
Foreign tax
Less: double taxation relief
Over provision in prior year
Deferred tax
- change in rate
- temporary differences
- US tax charge / (credit)
Corporation tax
78
Group
2021
£’000
2020
£’000
58
58
58
58
Group
2021
£’000
2020
£’000
23
2
25
(24)
(8)
(32)
2021
£’000
101
109
(3)
-
207
22
(196)
241
67
274
43
-
43
-
-
-
2020
£’000
142
60
(1)
(245)
(44)
-
331
235
566
522
The charge for the year can be reconciled to the reported profit as follows:
Profit before tax
UK corporation tax at 19% (2020: 19%)
Research and development credit
Patent Box
Exercise of share options
Difference between writing-down allowances and depreciation
Other non-deductible expenses
Amortisation of intangibles - ineligible
Effect of different rates in other jurisdictions
Movement in US tax losses
Over provision in prior year
Effect of change in tax rates on deferred tax opening balance
Double tax relief brought forward - India
Tax charge as above
2021
£’000
3,043
578
(225)
(70)
(182)
24
(14)
(3)
109
38
-
22
(3)
274
11. Deferred tax
Group
Balance at 1 April 2019
Recognised within the
Statement of Changes
in Equity
(Charge) / credit to
Income Statement
Balance at 1 April 2020
(Charge) / credit to
Income Statement
Balance at 31 March 2021
Company
Balance at 1 April 2019
Recognised within the
Statement of Changes
in Equity
(Charge) / credit to
Income Statement
Balance at 1 April 2020
(Charge) / credit to
Income Statement
Balance at 31 March 2021
Other timing
Equity Share based
differences
reserve
payments
Tax losses
Intangibles
£’000
(43)
£’000
7
£’000
340
£’000
484
£’000
(173)
-
(12)
(55)
10
(45)
(7)
-
24
-
17
-
-
-
-
(330)
10
166
176
(235)
273
(240)
33
11
(162)
(3)
(165)
Other timing
Equity Share based
differences
reserve
payments
Intangibles
(43)
-
(12)
(55)
10
(45)
£’000
7
£’000
340
(7)
-
-
-
-
-
(330)
10
166
176
£’000
(173)
-
11
(162)
(3)
(165)
2020
£’000
4,969
944
(240)
(76)
34
17
10
-
33
45
(245)
-
-
522
Total
£’000
615
(566)
66
(67)
(1)
Total
£’000
131
(7)
(331)
(207)
173
(34)
79
Annual Report & Accounts 2021Financial Statements
Notes to the financial statements
(continued)
A deferred tax rate of 19% (2020: 19%) has been used.
The financial statements include a deferred tax asset of £33k (2020: £273k) in respect of trading losses in the Group’s US subsidiary. In
accordance with the requirement of IAS 12 Income Taxes, the Directors have considered the likely recovery of this deferred tax asset. The
Directors have taken into account expected future taxable profits and expect an improvement in profitability and profits in future periods
and that this will be sustained. Accordingly the Directors have satisfied themselves that it is appropriate to recognise the above deferred
tax asset.
The corporation tax rate in the UK for the year ended 31 March 2021 was 19.0% (2020: 19.0%) which has been applied by D4t4 Solutions
plc in calculating its income tax (see note 10). The increase in future UK corporation tax rate to 25.0% (to be effective 1 April 2023) was
substantively enacted in May 2021. The effect of this rate change if it was applied for the year ended 31 March 2021 would be an increase
in the deferred tax charge and net liability of £10k.
12. Dividends
Amounts recognised as distributions to equity holders:
Final dividend for the year ended 31 March 2020 of 1.9p
(for the year ended 31 March 2019: 2.3p) per share
Interim dividend for the year ended 31 March 2021 of 0.81p
(31 March 2020: 0.77p) per share
2021
£’000
2020
£’000
765
925
325
1,090
310
1,235
Proposed final dividend for the year ended 31 March 2021 of 2.0p per share
The proposed final dividend is subject to shareholders’ approval at the AGM and has not been included as a liability in these financial statements.
13. Earnings per share
The calculation of earnings per share is based on profit attributable to owners of the parent and the weighted average number of ordinary
shares in issue during the year.
The adjusted earnings per share figures have been calculated based on earnings before adjusted items. These have been presented to
provide shareholders with an additional measure of the Group’s year-on-year performance.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive
potential ordinary shares arising from share options granted to employees where the exercise price is less than market price of the
Company’s ordinary shares at the year end.
Details of the adjusted earnings per share are set out below:
Profit attributable to owners of the parent
Amortisation of intangible assets (see note 15)
Share-based payments (see note 27)
Net foreign exchange differences
Restructuring costs
Tax on the adjustments
Adjusted profit attributable to owners of the parent
80
2021
£’000
2,769
279
318
746
58
(260)
3,910
2020
£’000
4,447
246
97
(362)
96
(15)
4,509
Basic weighted average number of shares, excluding own shares, in issue
Dilutive effect of share options
Diluted weighted average number of shares, excluding own shares, in issue
Basic Earnings per share
Diluted Earnings per share
Adjusted Basic Earnings per share
Adjusted Diluted Earnings per share
14. Goodwill
Cost of goodwill
Balance at 1 April 2019, 31 March 2020 and 31 March 2021
Accumulated impairment charge
Balance at 1 April 2019, 31 March 2020 and 31 March 2021
Carrying amount at year end
Allocation of goodwill (Group and Company)
Balance at 1 April 2019 and 31 March 2020
Balance at 31 March 2021
2021
No.
2020
No.
40,235,856
39,976,957
771,396
299,994
41,007,252
40,276,951
2021
2020
Pence per
Pence per
share
6.88
6.75
9.72
9.54
share
11.12
11.04
11.28
11.19
Group
Company
£’000
10,952
£’000
10,608
2,256
8,696
1,912
8,696
Speed-Trap
8,696
8,696
Goodwill acquired in a business combination is allocated at acquisition to the cash-generating units (CGUs) that are expected to benefit
from that business combination.
Goodwill is not amortised but tested annually for impairment with the recoverable amount being determined from value in use calculations.
The key assumptions for the value in use calculations are those regarding the discount rate, growth rates, pre-tax cash flow and forecasts
of income and costs.
The Group assessed whether the carrying value of goodwill was supported by the discounted cash flow forecasts of the Group based on
financial forecasts approved by management covering a one-year period, taking into account both past performance and expectations for
future market developments.
Management estimates the discount rate using a pre-tax rate that reflects current market assessments of the time value of money and the
risks specific to each separate business unit if applicable. The impairment charge was £nil (2020: £nil). The recoverable amount of the CGU
is determined from value in use calculations.
Key assumptions used for the value-in-use calculations
Value in use was determined by discounting future cash flows generated from the continuing use of the titles and was based on the
following most sensitive assumptions:
z cash flows for 2021/22 were projected based on the forecast for 2021/22, using the budget as a base and sensitising in light of the
current environment;
z forecasts based on current customer contracts and gross margins being achieved;
81
Annual Report & Accounts 2021Financial Statements
Notes to the financial statements
(continued)
z cash flows for year ending 31 March 2022 were projected based on the Group forecast for that year based on the current economic
environment in respect of the global pandemic. For years ending 31 March 2023 onwards, cash flows were prepared using underlying
growth rates of 2% based on a conservative view;
z cash flows were discounted using the CGU’s pre-tax discount rate of 11.6% (2020: 15%).
Based on the above sensitivity assumptions the calculations disclosed headroom against the carrying value of goodwill for the CGU.
Management carried out several sensitivity scenarios on the data. These were based on best estimates under the current economic
environment created by the global pandemic.
Sensitivity to changes in assumptions
The margins achieved are based on actual margins, the forecast revenues are based on budget for the current year and an ongoing 2%
growth rate.
The discount rate is considered to be the variable with the maximum impact. Varying this by 20% would still allow the recoverable amount
to exceed the carrying value. Therefore management is confident in the assumptions used.
Management has considered the growth rates used in light of the global pandemic and remains confident that they are reasonable.
Management are satisfied that a reasonable change in the key assumptions used in assessing the recoverable amounts of the cash
generating unit would not give rise to the recoverable amount exceeding the carrying value.
15. Other intangible assets
Group & Company
Cost
Balance at 1 April 2019
Additions
Balance at 31 March 2020
Additions
Balance at 31 March 2021
Accumulated amortisation
Balance at 1 April 2019
Amortisation
Balance at 1 April 2020
Amortisation
Balance at 31 March 2021
Carrying amount
Balance at 1 April 2019
Balance at 31 March 2020
Balance at 31 March 2021
Development
Costs
Internally
generated IPR
Purchased
IPR
£’000
£’000
£’000
-
188
188
195
383
-
-
-
33
33
-
188
350
56
-
56
-
56
56
-
56
-
56
-
-
-
1,858
-
1,858
-
1,858
929
232
1,161
232
1,393
929
697
465
Trade
name
£’000
142
-
142
-
142
57
14
71
14
85
85
71
57
Total
£’000
2,056
188
2,244
195
2,439
1,042
246
1,288
279
1,567
1,014
956
872
The amortisation charge for the year is booked to administration expenses.
Development Costs are amortised over 8 years.
The remaining amortisation period for the Purchased IPR is 2 years (2020: 3 years) and for the Trade name is 4 years (2020: 5 years).
82
16. Property, plant and equipment
Group
Cost or valuation
Balance at 1 April 2019
Additions
Balance at 1 April 2020
Additions
Disposals
Land &
buildings
Fixtures &
equipment
Motor Right of Use
Asset
vehicles
Total
£’000
£’000
£’000
£’000
£’000
3,300
-
3,300
-
-
1,658
249
1,907
34
(1)
Balance at 31 March 2021
3,300
1,940
Depreciation
Balance at 1 April 2019
Depreciation charge
Revaluation
Balance at 1 April 2020
Depreciation charge
Revaluation
Eliminated on disposals
Balance at 31 March 2021
Carrying amount
Balance at 1 April 2019
Balance at 31 March 2020
Balance at 31 March 2021
-
71
(71)
-
70
(70)
-
-
3,300
3,300
3,300
899
230
-
1,129
241
-
-
1,370
759
778
570
111
-
111
-
(46)
65
64
26
-
90
10
-
(46)
54
47
21
11
-
-
-
334
-
334
-
-
-
74
-
74
-
-
260
5,069
249
5,318
368
(47)
5,639
963
327
(71)
1,219
395
(70)
(46)
1,498
4,106
4,099
4,141
83
Annual Report & Accounts 2021Financial Statements
Notes to the financial statements
(continued)
Land &
buildings
Fixtures &
equipment
Motor Right of Use
Asset
vehicles
Total
£’000
£’000
£’000
£’000
£’000
Company
Cost or valuation
Balance at 1 April 2019
Additions
Balance at 1 April 2020
Additions
Disposals
3,300
-
3,300
-
-
1,658
249
1,907
33
-
Balance at 31 March 2021
3,300
1,940
-
71
(71)
-
70
(70)
-
-
3,300
3,300
3,300
899
230
-
1,129
241
-
-
1,370
759
778
570
Depreciation
Balance at 1 April 2019
Depreciation charge
Revaluation
Balance at 1 April 2020
Depreciation charge
Revaluation
Eliminated on disposals
Balance at 31 March 2021
Carrying amount
Balance at 1 April 2019
Balance at 31 March 2020
Balance at 31 March 2021
Allocation of Group depreciation charge
Cost of sales
Administration expenses
Charge for year
Property, plant and equipment held at valuation
111
-
111
-
(46)
65
64
26
-
90
10
-
(46)
54
47
21
11
-
-
-
264
-
264
-
-
-
45
-
45
-
-
219
2021
£’000
51
344
395
5,069
249
5,318
297
(46)
5,569
963
327
(71)
1,219
366
(70)
(46)
1,469
4,106
4,099
4,100
2020
£’000
60
267
327
In respect of property, plant and equipment held at valuation, the comparable carrying amount that would have been recognised if the assets
had been carried under the historical cost model are as follows:
Group and Company
Land and buildings
2021
£’000
1,753
2020
£’000
1,753
Included in land & buildings (valued in 2018) is freehold land at £1,230,000 (2020: £1,230,000) which is not subject to depreciation. The land
and buildings original purchase cost was £2,224,000.
For detail on the fair value measurement of the freehold land and buildings see note 32.
84
17. Investment in subsidiaries
Cost of investment
Balance at 1 April 2020 and 31 March 2021
Accumulated provision for impairment
Balance at 1 April 2020 and 31 March 2021
Carrying amount at year end
IS Solutions Limited (formerly Celebrus Limited)†
Celebrus Technologies Limited*†
Chapter26 Limited†
D4t4 Solutions Inc§
D4t4 Solutions Pty Limited‡
Internet Service Solutions Limited†
Internet Systems Solutions Limited†
Internet Site Solutions Limited†
Magiq Limited*†
Speed-Trap Holdings Limited†
Company
2021
£’000
273
-
273
2020
£’000
273
-
273
Proportion of
ownership of
ordinary shares
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Country of
Incorporation
England & Wales
England & Wales
England & Wales
Nature of business
Dormant
Dormant
Dormant
USA
Software & services
Australia
Software & services
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales
Dormant
Dormant
Dormant
Dormant
Dormant
Registered address - Windmill House, 91-93 Windmill Road, Sunbury-on-Thames, TW16 7EF, UK
* Owned by Speed-Trap Holdings Limited
†
§ Registered address - 215 E Chatham Street, Suite 215, Cary, North Carolina 27511, USA
‡ Incorporated 12 January 2021. Registered address - Level 19, 207 Kent Street, Sydney, NSW 2000, Australia
All UK subsidiaries individually prepare and file their own financial statements.
The principal place of business is considered to be the registered address.
18. Trade and other receivables
Trade receivables
Amounts due from Group undertakings
Other debtors
Prepayments
Accrued income
Group
Company
2021
£’000
10,165
-
48
595
2,554
2020
£’000
7,970
-
66
567
1,534
13,362
10,137
2021
£’000
9,553
1,096
40
592
2,554
13,835
2020
£’000
7,241
1,811
61
564
1,534
11,211
85
Annual Report & Accounts 2021Financial Statements
Notes to the financial statements
(continued)
Trade receivables
Ageing of receivables:
Less than 30 days
31 to 60 days
61 to 90 days
91 to 120 days
Group
Company
2021
£’000
7,070
126
2,099
870
2020
£’000
6,629
155
386
800
10,165
7,970
2021
£’000
6,458
126
2,099
870
9,553
2020
£’000
5,981
74
386
800
7,241
The average credit period taken on sales of goods and services was 80 days (2020: 69 days).
In accordance with IFRS 9, the Group performed a year end impairment exercise to determine whether any write down in amounts
receivable was required, using an expected credit loss model. The expected loss rate for receivables less than 120 days old is 0%.
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.
Definition of default
The loss allowance on all financial assets is measured by considering the probability of default.
Receivables are considered to be in default when the principal or any interest is significantly more than the associated credit terms past
due, based on an assessment of past payment practices and the likelihood of such overdue amounts being recovered.
Determination of credit-impaired financial assets
The Group considers financial assets to be ‘credit-impaired’ when the following events, or combinations of several events, have occurred
before the year end:
z significant financial difficulty of the counterparty arising from significant downturns in operating results and/or significant unavoidable
cash requirements when the counterparty has insufficient finance from internal working capital resources, external funding and/or
group support;
z a breach of contract, including receipts being more than materially past due;
z it becoming probable that the counterparty will enter bankruptcy or liquidation.
Write-off policy
Receivables are written off by the Group when there is no reasonable expectation of recovery, such as when the counterparty is known to
be going bankrupt, or into liquidation or administration. During the year, no trade receivables were considered impaired (2020: one trade
receivable) and there was a charge of nil to the Income Statement as shown in note 6 (2020: £57k).
Additionally the recoverability of intercompany debts is considered. After review, the Directors believe that no further expected credit loss
provision is required. The policy of credit risk management is covered in note 32.
19. Inventories
Finished goods and goods for resale
There was no write down in the recognised value of inventories (2020: nil).
Group
Company
2021
£’000
129
2020
£’000
1,266
2021
£’000
4
2020
£’000
7
86
20. Trade and other payables
Trade payables
Amounts owed to Group undertakings
Other taxes and social security
Other creditors
Accruals
Deferred income
Group
Company
2021
£’000
1,450
-
274
36
2,643
6,288
10,691
2020
£’000
3,403
-
531
22
1,364
4,057
9,377
2021
£’000
588
1,932
242
36
2,216
6,179
11,193
2020
£’000
2,208
465
487
22
1,098
3,997
8,277
There is no material difference between the fair value of receivables and their carrying value.
Trade payables comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases
across the year is 40 days (2020: 46 days). Their carrying value approximates to their fair value.
21. Lease liabilities
Lease obligations
Leases
Balance at 1 April 2020
Arising in the year
Interest
Repaid during the year
Balance at 31 March 2021
Repayable within one year
Repayable within more than one year
Group
Company
2021
£’000
277
277
2020
£’000
-
-
2021
£’000
236
236
2020
£’000
-
-
2021
£’000
2020
£’000
2021
£’000
2020
£’000
-
333
23
(79)
277
83
194
-
-
-
-
-
-
-
-
264
22
(50)
236
45
191
At 31 March 2021 there were no undrawn facilities (2020: nil).
The Group has applied IFRS 16 Leases for the first time for the year commencing 1 April 2020.
The Group has applied the modified approach from 1 April 2020 but has not restated comparatives for the year ended 31 March 2020 as
permitted under the specific transitional provisions in the standard. The net asset value of at year end was £0.26m (2020: £nil).
-
-
-
-
-
-
-
87
Annual Report & Accounts 2021Financial Statements
Notes to the financial statements
(continued)
22. Share capital
Ordinary shares of 2p each
Authorised
Issued and fully paid up
Share
capital
£’000
2021
Share
premium
£’000
Share
capital
£’000
Shares
2020
Share
premium
£’000
Shares
50,000,000
1,000
50,000,000
1,000
Balance at 1 April 2020
40,417,556
Issued during year
-
Balance at 31 March 2021
40,417,556
808
-
808
3,365
39,700,889
-
716,667
3,365
40,417,556
794
14
808
2,624
741
3,365
The Company issued nil (2020: 716,667) Ordinary shares during the year to satisfy share option exercise requirements. In 2020, these were
issued in one tranche at a price of 105.47p. This increased the share premium account by nil (2020: £741k).
Costs associated with the issue of new shares were nil (2020: less than £1k) and are recognised in professional fees.
23. Own shares
At the year end the Company held 191,498 (2020: 159,133) ordinary shares in Treasury, with Fair Value of £579,281 (2020: £222,786).
Details of purchases and sales are shown below.
Number of
Share price at point
Total Consideration
own shares
of transaction in pence
paid £’000
Balance of own shares at 1 April 2019
Shares acquired into Treasury reserve
Shares sold out of Treasury reserve
478,880
45,208
(364,955)
125.00 - 230.00
202.50 - 259.00
Balance of own shares at 31 March 2020
159,133
Total consideration paid in year end 31 March 2020
Shares acquired into Treasury reserve
Shares sold out of Treasury reserve
335,032
(302,667)
219.27 - 285.00
230.00 - 285.00
Balance of own shares at 31 March 2021
191,498
Total consideration paid in year end 31 March 2021
69
69
868
868
In the Statement of Changes in Equity (page 62) the value of Treasury shares is calculated on a First-In-First-Out (FIFO) basis, while the Fair
Value represents the value based on the year end share price.
88
24. Merger reserve
The merger reserve arose on the acquisition of Speed-Trap Holdings Ltd (23 January 2015) and represents the excess consideration paid
by the issue of shares over the share capital nominal value. Additions to this reserve of nil (2020: £4k) are a result of the exercise of options
issued which have been held in the own shares and equity reserve accounts.
25. Revaluation reserve
This represents the gains on revaluation of the property in line with market valuations. The property was last professionally revalued as at
March 2018. The gain on revaluation was £70k (2020: £71k). This is a non-distributable reserve as it represents unrealised profits on the
revalued assets.
26. Equity reserve
This is in relation to the options issued following the Speed-Trap acquisition in 2015 and represents the fair value less the cash received to
exercise those options. As all options had been exercised by 31 March 2020, the fair value at the balance sheet date is nil (2020: nil). The
outstanding balance of these options is included in the balance at 1 April 2020 and 31 March 2021, as applicable, in note 27. There is no
deferred tax asset at the year end (2020: nil).
27. Share-based payments
The Company has share option schemes for various employees of the Group, a combination of both EMI and non-EMI schemes. Share
options vest in equal instalments over three years based on previously set EPS targets based upon 10% growth. In relation to the share
options shown below the Board forecast that the remaining share options will vest.
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 employees leave before their options vest then those options are forfeited.
Vested options are settled subsequently by a combination of equity shares in the parent company and cash at Board discretion.
Balance at 1 April
Granted during the year
Exercised during the year
Balance at 31 March
2021
Weighted
2020
Weighted
No. of share
av. exercise No. of share
av. exercise
options
price
options
price
733,833
134.01p
1,790,455
113.19p
595,176
2.00p
25,000
205.00p
(302,667)
133.34p
(1,081,622)
101.20p
1,026,342
57.65p
733,833
134.01p
Exercisable at year end
119,750
120.02p
106,500
120.95p
The weighted average share price at the exercise date of the exercised shares was £2.660 (2020: £2.562). The weighted average
contractual life of the outstanding options was 9 years (2020: 7 years), exercisable in the range 2.00p to 205.00p.
302,667 share options were exercised in the year, by issue of shares from Treasury.
A summary of the option price ranges are as follows:
2021
Exercisable
Number of
price range share options
2.00p
90.50p to 114.00p
149.00p to 205.00p
595,176
216,500
214,666
1,026,342
89
Annual Report & Accounts 2021Financial Statements
Notes to the financial statements
(continued)
The Group recognised £318k (2020: £97k) of expense related to equity-settled share-based payments in the year, £276k as share-based
payments and £42k as Er NI (2020: £97k as share-based payments, £nil as Er NI).
The fair value of options granted during the year is determined by applying the Monte Carlo 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.
On 10 August 2020 the Company granted the Executive Directors a Long Term Incentive Plan (“LTIP”). The awards have an exercise price of
two pence per Share and will vest three years after grant, subject to the terms of the LTIP, including continued employment and the satisfaction
of performance conditions, based on the Company’s relative total shareholder return and EPS.
The inputs into the Monte Carlo model in respect of options granted this year are as follows:
Date of Grant
Vesting date
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
10 Aug 2020
8 Jan 2021
8 Jan 2021
8 Jan 2021
25 Jan 2021
09 Aug 2023
15 Jul 2022
15 Jul 2023
15 Jul 2024 10 Aug 2023
362,976
302.50p
2.00p
10
0.79%
59,400
59,400
59,400
54,000
302.50p
302.50p
302.50p
302.50p
2.00p
10
0.79%
2.00p
10
0.79%
2.00p
10
0.79%
32.10%
32.10%
32.10%
32.10%
0.98%
0.98%
0.98%
0.98%
206.11p
303.30p
303.02p
312.49p
303.95p
2.00p
10
0.79%
38.50%
0.98%
The inputs into the Black Scholes model of options previously granted which have contributed to the share based payment arising this year are:
Date of Grant
Vesting date
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
15 Dec 2017 13 Aug 2018 13 Aug 2018
14 Jan 2020
14 Jan 2020
14 Jan 2020
01 Jul 2020
01 Jul 2020
01 Jul 2021
14 Jan 2021
14 Jan 2022
14 Jan 2022
141,500
114.00p
114.00p
10
166,667
149.00p
149.00p
2
166,666
149.00p
149.00p
8,334
8,333
205.00p
205.00p
205.00p
205.00p
8,333
205.00p
205.00p
3
10
10
10
3.10%
3.18%
3.18%
3.25%
3.25%
37.00%
40.90%
40.90%
38.50%
38.50%
1.75%
28.87p
2.11%
33.72p
2.11%
40.37p
1.17%
32.79p
1.17%
46.33p
3.25%
38.50%
1.17%
56.36p
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.
28. Operating lease arrangements (Group and Company)
As lessee
Lease payments recognised as an expense during the year
Lease payments for rental of premises in India
90
2021
£’000
-
2020
£’000
58
Total value of future minimum lease payments committed under non-cancellable operating leases:
Not later than one year
Later than one year and not later than five years
Later than five years
2021
£’000
-
-
-
2020
£’000
61
278
32
No lease payments are disclosed above for the year ended 31 March 2021 as the Directors have decided, with effect from 1 April 2020,
to implement IFRS 16 and recognise all significant leases (where the Group is the lessee) as Right of Use assets (see note 16). The
corresponding lease liability associated with these leases is disclosed within note 21 to these financial statements.
As lessor
Lease receipts recognised as income during the year
Lease receipts are for a fixed-term two year sub-let of parts of the parent Company’s premises
which was extended immediately after the year end and is subject to a three month notice period.
2021
£’000
58
2020
£’000
58
A reconciliation of total operating lease commitments disclosed at 31 March 2020 to the lease liability amount recognised on adoption of
IFRS 16 is as follows:
Lease commitments under non-cancellable operating lease @ 31 March 2020.
Variable lease payments not recognised
Minor adjustments due to commitment disclosures
Operating lease liabilities before discounting
Discounted using incremental borrowing rate
Lease liability recognised under IFRS 16 @ 1 April 2021
29. Related party transactions
During the year the parent Company undertook the following transactions with D4t4 Solutions Inc., a wholly owned US subsidiary:
Sales to D4t4 Solutions Inc.
Purchases from D4t4 Solutions Inc.
Management charge to cover services provided (from D4t4 Solutions plc to D4t4 Solutions Inc.)
Management charge to cover services provided (from D4t4 Solutions Inc. to D4t4 Solutions plc)
Interest charged on Intercompany loan (from D4t4 Solutions plc to D4t4 Solutions Inc.)
Payments made by D4t4 Solutions plc on behalf of D4t4 Solutions Inc.
2021
£’000
1
3,837
30
2,481
67
5,517
£’000
371
(13)
(57)
301
(58)
243
2020
£’000
1
2,905
35
2,261
-
4,008
Details of any intercompany balances outstanding are shown in Notes 18 and 20.
During the year, the Company entered into an arm’s length transaction with P. Kear, a director, relating to the disposal of a vehicle. The
Company had the asset independently valued at £8k and it was sold to P Kear for £8k. The Company had fully depreciated the asset to £nil
on the date of the transaction.
Other than the payment of remuneration and any dividend income from their disclosed shareholding in the Company, there have been no
related party transactions with the Directors.
91
Annual Report & Accounts 2021Financial Statements
Notes to the financial statements
(continued)
30. Group reconciliation of profit before corporation tax to cash generated from operations
Operating Activities
Profit before tax
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Currency movements
Finance income
Finance expense
Share-based payments
Settlement of share-based payments
Gain on sale of property, plant and equipment
Operating cash flows before movements in working capital
(Increase) in receivables
Decrease / (Increase) in inventories
Increase in payables
Cash generated from operations
31. Group cash and cash equivalents
Group
Company
2021
£’000
2020
£’000
2021
£’000
2020
£’000
3,043
4,969
1,973
3,962
395
279
-
(25)
32
276
42
(8)
4,034
(3,225)
1,137
1,312
3,258
327
246
-
(43)
-
97
-
-
5,596
(3,862)
(1,221)
2,603
3,116
366
279
(30)
(91)
25
276
42
(8)
2,832
(2,624)
3
2,914
3,125
327
246
-
(43)
-
97
-
-
4,589
(2,770)
6
1,213
3,038
The amounts disclosed in the statements of cash flow in respect of cash and cash equivalents are in respect of these statements of
financial position amounts:
As at 1 April 2019
As at 31 March 2020
As at 31 March 2021
Group
£’000
10,996
12,772
14,241
Company
£’000
10,996
12,694
14,133
32. Financial instruments and risk management
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 comprise issued share capital, reserves and borrowings, along with cash and cash equivalents.
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.
92
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, as defined above, is managed by the Board to ensure that the Group and Company continues
as a profitable going concern. There are no externally imposed capital requirements.
The Group has no net debt (2020: nil).
Cash and cash equivalents
Net cash
Categories of financial instruments
Financial Assets at Amortised Cost
Cash and bank balances
Trade and other receivables
Financial Liabilities at Amortised Cost
Trade and other payables
Group
Company
2021
£’000
14,241
14,241
2021
£’000
14,241
12,767
2020
£’000
12,772
12,772
2020
£’000
12,772
9,570
2021
£’000
14,133
14,133
2021
£’000
14,133
13,243
2020
£’000
12,694
12,694
2020
£’000
12,694
10,647
4,129
4,789
4,772
3,793
Foreign currency risk management
The Group’s foreign currency exposure arises from:
z Transactions (sales/purchases) denominated in foreign currencies; and
z 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. Natural hedging is employed, to the extent
possible, to minimise net exposures; however, where significant exposures arise it is Group policy to enter into formal hedging arrangements.
Carrying amounts of the Group’s financial assets and liabilities denominated in foreign currencies was as follows:
US Dollars
- cash
- receivables
- payables
Euros
- cash
- receivables
- payables
Liabilities
Assets
2021
£’000
2020
£’000
-
-
-
-
1,511
1,626
-
-
35
-
-
26
2021
£’000
530
8,903
-
178
36
-
2020
£’000
2,907
6,464
-
167
26
-
The following table shows the effect on the Group’s result for the year of the £ strengthening by 5% against debtor, creditor and cash
balances denominated in foreign currencies, with all other variables held constant. 5% represents management’s assessment of the
reasonably possible change in exchange rates.
93
Annual Report & Accounts 2021Financial Statements
Notes to the financial statements
(continued)
At 31 March 2021
Impact on profit / equity for the year
At 31 March 2020
Impact on profit / equity for the year
$
£’000
€
£’000
(377)
(367)
(9)
(8)
Total
£’000
(386)
(375)
The following table shows the effect on the Group’s result for the year of the £ weakening by 5% against debtor, creditor and cash balances
denominated in foreign currencies, with all other variables held constant. 5% represents management’s assessment of the reasonably
possible change in exchange rates.
At 31 March 2021
Impact on profit / equity for the year
At 31 March 2020
Impact on profit / equity for the year
$
£’000
417
411
€
£’000
9
9
Total
£’000
426
420
Credit risk management
The Group uses credit reference agencies to determine and monitor the credit limits of new and existing customers. At the end of the year
two partners owed a total of £9.020m (2020: two partners owed £5.851m) and no expected credit loss provision has been made in relation
to this balance. No other customers / partners owed more than 10% of the outstanding total. No expected credit loss provision has been
recognised for trade receivables at 31 March 2021 (2020: nil).
The Group’s customers primarily consist of banks, partners and other longstanding customers, primarily blue-chip companies that are
deemed to have a low credit risk. As a result, the credit quality of trade receivables that are neither past due nor impaired has been
assessed by the Directors to be relatively high, taking account of a low historic experience of bad debts and relatively good ageing profiles.
The Group controls its exposure to credit risk by setting limits on its exposure to individual customers, compliance is monitored by the
Credit Control Team. As part of the process of setting customer credit limits, different external credit reference agencies are used, according
to the country of the customer. The Group has a policy of dealing only with creditworthy counterparts.
The Group manages the credit risk and quality of cash balances by holding balances with reputable banks.
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.
Maturity analysis of financial liabilities
In less than one year:
Trade payables
Amounts owed to Group undertakings
Other creditors
Accruals
94
Group
Company
2021
£’000
2020
£’000
2021
£’000
1,450
3,403
2,055
-
36
2,598
4,084
-
22
1,364
4,789
465
36
2,171
4,727
2020
£’000
2,208
465
22
1,098
3,793
All of the financial liabilities above are recorded in the financial statements at amortised cost. The above maturity analysis amounts reflect
the contractual undiscounted cash flows, including future interest charges, which may differ from the carrying values of the liabilities at the
reporting date.
Interest rate risk management
The Group’s exposure to changes in interest rate risk is immaterial as the loan and mortgage were repaid during the year. 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 and there are no such financial liabilities at the year end.
Fair value measurement
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:
z Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
z 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
z 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 and buildings are observable at Level 2.
The Group’s freehold land and buildings are stated at their revalued amounts, being the fair value at the date of the revaluation at 31 March
2021. The fair value measurements of the Group’s freehold land and buildings as at 31 March 2018 were performed by De Souza & Co,
independent valuers not related to the Group. De Souza & Co are members of the Royal Institution of Chartered Surveyors, and they have
appropriate qualifications and recent experience in the fair value measurement of properties in the relevant location. The valuation was
prepared in accordance with the RICS Valuation - Global Standards 2017 and the International Valuation Standards and was based on
recent market transactions on arm’s length terms for similar properties.
The Directors have considered the impact of global pandemic and whether it has had any impact on the value of the land and buildings
of the Group. In their opinion, the property has not suffered any reduction in value on account of it’s accessibility, location and the internal
refurbishment works which commenced three years ago and which were not therefore not fully incorporated into the 2018 revaluation. The
building is also considered to be suitably arranged internally such that any modifications required to the workplace in order to allow for safe
working in light of the global pandemic can be readily implemented.
The fair value of the freehold land and buildings were determined based on the market comparable approach that reflects recent
transaction prices for similar properties. 10 similar properties with sales within the last two years, and within 10 miles were used as the
basis for comparison using both sales value and letting rates to determine the valuation.
In order to determine the apportionment of the fair value between land and buildings, firstly the value of industrial development land in the
broad area of the property was assessed, and secondly an allowance for age and obsolescence was applied to the likely rebuilding costs of
a modern equivalent.
The Directors are satisfied that the assumptions applied in the professional valuation at 31 March 2018 are still valid at 31 March 2021, and
as such have revalued the land and buildings in line with the 2018 valuation.
95
Annual Report & Accounts 2021Financial Statements
Corporate information
Registered office
Windmill House
91-93 Windmill Road
Sunbury-on-Thames
Surrey
TW16 7EF
Solicitor
Moore Barlow LLP
Concord House
Company registration number
01892751
Bank
HSBC Bank plc
54 Clarence Street
165 Church Street East
Kingston Upon Thames
Woking
Surrey
GU21 6HJ
Surrey
KT1 1NS
Nominated Adviser & Joint Broker
Joint Broker
finnCap
Canaccord Genuity Limited
One Bartholomew Close
88 Wood Street
London
EC2V 7QR
London
EC1A 7BL
Financial PR
Instinctif Partners
65 Gresham Street
London
EC2V 7NQ
Registrars
SLC Registrars
P.O. Box 5222
Lancing
West Sussex
BN99 3HH
Auditor
RSM UK Audit LLP
25 Farringdon Street
London
EC4A 4AB
96
“With the launch of
our new fraud offering,
and with our improved
revenue visibility, order
book and pipeline,
we are optimistic about
the year ahead”
PETER KEAR
Chief Executive Officer
D4t4 Solutions plc
Windmill House
91-93 Windmill Road
Sunbury-on-Thames
TW16 7EF
www.d4t4solutions.com
Company Registration Number 01892751