Delivering
on strategy
Annual Report 2023
Delivering on strategy
This has been a year of marked acceleration across the
business, both in the financial performance of KX and
First Derivative and the execution of strategy.
The decisions taken by the Board and executed by senior
management in recent years have positioned KX as the
high-performance engine for real-time analytics, just as
a range of industries are beginning to understand the
value they can generate from these insights.
Donna Troy
Chair
Our purpose
FD Technologies solves business-critical problems to unlock business value.
Who we are
What we do
We are a group of data and AI-driven
businesses that unlock the value of insight,
hindsight and foresight to drive
organisations forward.
We give every business the ability
to realise the true value of their
data to achieve their potential.
Strategic report
Highlights
Financial highlights
Revenue
£296.0m
Adjusted EBITDA
£34.8m
2023
2022
2021
£296.0m
2023
£263.5m
£237.9m
2022
2021
£34.8m
£31.0m
£40.5m
Business unit KPIs
KX growth in Annual Recurring
Revenue (ARR):
39%
First Derivative revenue growth:
MRP revenue decline:
18%
19%
Operational highlights
• KX exceeded its targets with annual recurring revenue (ARR) up
39% to £65.3m (FY22: £47.0m) and net revenue retention of 119%
(FY22: 106%); incremental annual contract value (ACV) increased
by 93% to £18.7m (FY22: £9.7m)
• Launched the industry’s first Data Timehouse, positioning
KX as the engine for real-time analytics in the cloud and
delivering up to 100x the performance at 1/10th of the
cost of alternative solutions*
• Significant progress with a range of existing and potential partners,
• Momentum set to continue in the current year, benefiting from
growing demand for real-time analytics as the foundation for
AI-driven business innovation, the strengthening of KX leadership
and growing market recognition for the return on investment that
KX delivers
• First Derivative delivered revenue growth of 18%, also
ahead of target, benefiting from multi-year strategic growth
drivers, particularly relating to regulatory compliance and
digital transformation
including the general availability of kdb Insights Enterprise on Microsoft
Azure and an agreement to partner with AWS
• Weaker demand environment continued at MRP, with revenue down
by 19%; cost base aligned to protect EBITDA in the current year
• Continued our drive to accelerate time to value for customers,
as well as making our technology easier to adopt and use; our
progress is reflected in continued growth in industry, which
accounted for more than 30% of ACV
* From independent benchmarking exercises and customer feedback.
In this report
Strategic report
1 Highlights
2 Business overview
4 Chair’s review
6 Business model
8 Strategy
25 Principal risks and uncertainties
30 Corporate responsibility
and sustainability
Corporate governance
40 Board of Directors
42 Chair’s governance statement
Financial statements
62 Independent auditor’s report
70 Consolidated statement of
comprehensive income
72 Consolidated balance sheet
73 Company balance sheet
9 Key performance indicators
44 Governance framework
10
Engaging and working with
our stakeholders
12 Business review
14 Business unit review: KX
17 Business unit review:
First Derivative
19 Business unit review: MRP
20 Financial review
46 Report of the Audit and Risk Committee
49 Report of the Nomination and
ESG Committee
74 Consolidated statement of changes in equity
76 Company statement of changes in equity
78 Consolidated cash flow statement
79 Company cash flow statement
52 Report of the Remuneration and
80 Notes
Talent Committee
58 Directors’ report
60 Statement of Directors’ responsibilities
126 Global directory
IBC Directors and advisers
FD Technologies plc Annual Report 2023 | 1
Business overview
Delivering impact
We are a group of data and AI-driven businesses that unlock the value
of insight, hindsight and foresight to drive organisations forward.
KX
Software to accelerate AI-driven innovation
First Derivative
First Derivative – Consulting services
which drive digital transformation in
financial services and capital markets
FY23 revenue:
£80m
ARR growth:
39%
FY23 revenue:
Revenue growth:
£174m
18%
First Derivative is a specialist consulting firm operating in areas
where expert knowledge is critical to success, whether it’s in
the realm of business, technical, or both. With deep vertical
expertise in capital markets, banking operations and asset
servicing – it has one of the largest fully dedicated capital
markets consulting teams in the world – First Derivative’s
commitment to training and continuous improvement is the
bedrock of its reputation of being able to solve the toughest
of operational, data and technology challenges.
Offering one of the world’s largest dedicated capital
markets consulting teams, First Derivative operates from
centres of excellence in the UK, Ireland, Canada, the US
and mainland Europe.
See page 17
KX’s mission is to accelerate the speed of AI-driven business
innovation, enabling customers to transform into real-time,
intelligent enterprises. Built for the most demanding data
environments, at the intersection of big and fast temporal
data, its Data Timehouse platform is trusted by the world’s top
investment banks and hedge funds and leading companies
in the life and health sciences, semiconductor,
telecommunications, and manufacturing industries.
At the heart of its technology is the kdb+ time-series database
and real-time analytics engine, independently benchmarked
as the fastest on the market. It can process and analyse
time-series and historical data at unmatched speed and scale,
empowering developers, data scientists, and data engineers
to build high-performance data-driven applications and
turbo-charge their favourite analytics and AI tools in the
cloud, on-premise, or at the edge.
Ultimately, its technology enables the discovery of richer,
actionable insights for faster decision making which drives
competitive advantage and transformative growth for customers.
See page 14
2 | FD Technologies plc Annual Report 2023
Strategic report
Our global reach for scale and growth*
Americas
3939+
39%
UK
P3535+
35%
EMEA
P1919+
19%
Asia Pacific
P77+
7%
14
locations
3,000
people
4
continents
*
Based on split of revenue.
MRP
Technology-enabled services
for enterprise demand generation
FY23 revenue:
Revenue decline:
£41m
19%
Servicing more than 1,000 clients across the world, MRP
focuses on the needs and challenges of enterprise sales and
marketing teams. MRP Prelytix®, the only enterprise-class,
account-based marketing (ABM) platform, is purpose-built
to simplify the complexity of clients’ operating environments,
enabling account-based programmes that are coordinated
with existing marketing programmes, across all global
marketing initiatives. Ultimately MRP delivers growth to its
customers through the highest quality, most innovative
products and services in the ABM space.
See page 19
FD Technologies plc Annual Report 2023 | 3
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61
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P
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65
65
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P
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81
81
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93
93
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P
Chair’s review
Powering ahead
on our growth journey
This has been a year of marked acceleration across the business,
both in the financial performance of KX and First Derivative and
the execution of strategy. The decisions taken by the Board and
executed by senior management in recent years have positioned
KX as the high-performance engine for real-time analytics, just as
a range of industries are beginning to understand the value they
can generate from these insights.
KX’s ability to deliver up to 100x the performance at 1/10th of the
cost* is truly resonating across the modern data landscape
and represents a major proof point for our technology. Our
competitive advantage is such that every participant in the
industry should explore the business impact KX can have,
either as a customer or partner.
Our technology is also ideally suited to accelerate AI workloads and
this is a key driver of the growth in our total addressable market,
which, according to Gartner’s report ‘Measuring the opportunity in
the AI software market’, now stands at $135bn. The Board is mindful
of the need to ensure that KX sustains the higher growth rates we
have seen this year while also taking the steps needed to deliver
a meaningful share of this enormous opportunity.
As part of that process, the Board approved the recruitment of
a number of senior executives during the year, including a CEO
for KX, Ashok Reddy, and we have been pleased with the
progress that has been achieved.
In addition to exceeding all the financial targets set for the year,
KX delivered important operational and commercial milestones,
including the general availability of kdb Insights Enterprise on
Azure, further progress on key partnerships with Microsoft and
others, important advances in our technology to make it easier
to adopt and use and the signing of landmark customer contracts
across industries. These developments provide a solid foundation
for KX to deliver its mission to accelerate the speed of AI-driven
innovation across all enterprises.
The growth at KX has been enabled by the accelerated growth
strategy introduced in May 2021, as part of which the Board
decided to change the structure of the Group into three
business units. Alongside KX, First Derivative and MRP are
both benefiting from these changes.
First Derivative achieved another strong year of progress, also
delivering growth ahead of our guidance, as it used its strong
brand identity and market reputation to capitalise on the
structural growth drivers in its business, namely regulatory
change, digital transformation and the need for clients to drive
value from their investment in technology. We expect First
Derivative to continue to take market share and also to drive
improvement in its margin over the next three years.
“ KX’s ability to deliver up to 100x
the performance at 1/10th of the
cost truly resonates across the
modern data landscape and
represents a major proof point
for our technology. Our
competitive advantage is such
that every participant in the
industry should explore the
business impact KX can have,
either as a customer or partner.”
Donna Troy
Chair
4 | FD Technologies plc Annual Report 2023
Strategic report MRP’s performance during the year was below our expectations,
driven by macroeconomic weakness in its markets. The creation of
MRP as a separate business unit enabled us to identify these trends
and to take corrective action to align the cost base as the year
progressed. We expect this action to lead to improved
profitability at MRP in the current year and will continue
to monitor its progress closely.
Governance
The Board comprises highly skilled individuals with expertise
and experience in scaling world-leading technology companies,
which was one of the factors that gave us confidence to
implement the accelerated growth strategy in 2021. Board
composition was unchanged during the year, which provided
stability and depth of understanding to our discussions.
This Annual Report provides details of the Board’s work in areas
such as risk management and corporate responsibility. Of
particular note was the implementation of our enterprise
resource planning system, which is assisting the Board in its
monitoring role by providing additional insight into the Group’s
operations. In addition, the Board has focused on bringing in the
talent to scale our business units and accelerate our growth.
Summary and outlook
The past year has seen the delivery of accelerated growth rates
in KX and a positive performance in First Derivative, enabled by
the strategy adopted by the Board. Given the structural growth
drivers and competitive advantages we enjoy in both these
businesses, we are confident we have a platform for another
year of strong progress.
It is now just two years since we set out our accelerated growth
strategy. Much has been achieved, but equally there is a great
deal of potential still to be unlocked and we are laser-focused
on how to achieve that. We will continue to evaluate and evolve
our strategy and I look forward to updating on our progress.
On behalf of the Board, I would like to thank all of our
colleagues for their efforts to help our customers succeed and
our communities thrive. We have a clear purpose, great talent
and a positive culture that will enable us to continue to deliver
sustainable growth for all our stakeholders.
Donna Troy
Chair
22 May 2023
* From independent benchmarking exercises and customer feedback.
All modern companies must build a diverse, equitable
and inclusive workforce, and I am proud to take an active
role in driving programmes that achieve that. By ensuring
that FD Technologies is representative of the world that it
operates in, we help to secure the future of the business,
through the attraction and retention of new and existing
customers and employees.
Ensuring that every single employee feels that they can
achieve the absolute best for themselves is a Board priority.
I am proud to say that the Group has several long-running
initiatives focused on improving the representation and
professional development of women in the Group as well as
colleagues from minority and underrepresented backgrounds.
While being interviewed at one of the Group’s Women’s
Network meetings last year, I was reminded of the wealth
of female talent we have in the business. We can and will
do more to reduce our gender pay gap and ensure there is
greater representation of women in senior roles. I look forward
to continuing to champion the work being done across the
Group to deliver on our promise of building a business where
everyone can thrive both professionally and personally.
FD Technologies plc Annual Report 2023 | 5
Business model
Enabling our business units to
deliver sustainable value creation
Our business model is founded on our strategic purpose and enshrined by our values
to create a business that generates sustainable returns for our stakeholders. We use our
skills and strategies to ensure our business units have the resources they need to deliver
products and services that delight our customers, while generating earnings for
shareholders, tax receipts for society and a positive impact on the local communities
in which we are based.
Inputs
People
Our people are at the core of our success, providing a vibrant
culture centred around customer success and excellence.
We recruit heavily from universities around the world, as
well as experienced talent, and provide our employees with
exciting careers that challenge and stimulate them to solve
problems for our clients that are at the forefront of
technology. Working on-site or based in one of our 14
locations around the world, we have a diverse and inclusive
culture with a shared work ethos that drives our success.
Training
Our training programmes and commitment to learning and
development throughout their careers equip our employees
to excel. New graduate employees benefit from class-based
and online training programmes aligned to their chosen
career path and supported by an assigned People Manager,
while the training needs of more experienced employees are
met by multi-faceted programmes that encompass industry
and external accreditation and are matched to their career
needs and aspirations. Our investment in our employees’
careers enables us to deliver the highest standards of
customer satisfaction.
R&D
Our world-leading technology uses data to unlock the value
of insight, hindsight and foresight. In recent years this
commitment has been evidenced by substantial increases
in our development, making our technology easier to use
and integrate with other technologies. We are committed
to our investment in research and development, expanding
our teams of data scientists that are passionate about
pushing the boundaries.
Partnerships
Our partners help us in our mission to solve business-critical
problems that haven’t yet been solved. They are leaders in their
field and by working together we can make it easier to deliver
solutions that accelerate the time to value for our customers
and generate a high return on their investment in our technology.
6 | FD Technologies plc Annual Report 2023
What sets us apart
Focused
We are focused on large and fast-growing
addressable markets driven by data
Differentiated
We deliver differentiated technology products
and solutions for extreme volume, complexity
and latency data requirements
Deep expertise
We provide deep expertise and
exceptional strength
Business units
Software to
accelerate
AI-driven
innovation.
Consulting services
which drive digital
transformation in
financial services
and capital
markets.
Technology-
enabled services
for enterprise
demand
generation.
Strategic report Creating value
Strategy
Our strategy, set by the Board, is
to enable our key business units to
communicate their distinct value
proposition and maximise their growth
opportunity. Our Board has a breadth
and depth of experience in developing
and implementing growth strategies
within technology markets and is
supported in its implementation by
a highly experienced executive team
with clear lines of responsibility
and reporting.
Read more on page 8
Financial
The Group has developed a culture
of financial discipline, together with
a strong governance and risk
management focus. These values
engendered confidence in achieving
our business unit strategy and
financial targets and executing
against this strategy has provided
an exciting range of opportunities
available to scale our businesses,
in particular KX, as detailed in the
Business review.
Read more on page 12
Outputs
Returns for shareholders
Five-year view
Revenue compound annual growth rate
(CAGR)
10%
Total cash generated from operations
£165.7m
Returns for the Group
Positive culture
82%
sustainable engagement*
Profits to reinvest for growth
*
See page 31
Returns for society
Taxes paid
Financial year 2023
£1.5m
Last five years
£9.5m
Benefits for local communities
928
new jobs last year
3,454
over last five years
£35,000
donated by the Group to charity in past
year, with a further
£40,000
raised by employees for a range of local,
national and international charities
FD Technologies plc Annual Report 2023 | 7
Strategic report
Strategy
Analysing our performance
The Group’s structure is designed to enable its business units to communicate
their distinct value proposition and maximise their growth opportunity. Our growth
strategy is founded on growing demand for time-series data analytics and our
increased ability to deliver, following advances in our technology, leadership and
commercialisation capabilities. Our strategy is defined below, with appropriate
KPIs also provided.
1
2
3
Driving growth in KX
Growing market share at
First Derivative
Group performance
What this means
We are focused on accelerating
our growth and investing to achieve
our mission to use our performance
and scale advantages to accelerate the
speed of data and AI-driven innovation
across all enterprises.
What this means
Developing a sharper focus on target
markets where First Derivative has the
greatest in-depth expertise, and which
are key for our clients, to drive greater
revenue and margin growth from our
technology and domain expertise.
What this means
The Board monitors the performance
of the Group to assess overall growth,
as a measure of the resources available to
it and the value delivered to shareholders.
How we do it
• Provide products and platforms that
enable enterprises to innovate at the
speed of thought.
• Work with our strategic partners to
provide broad access to our technology,
horizontally across industries.
• Scale our operations to deliver the
growth envisaged by the Board.
How we do it
• Continue to enhance our engagement
How we do it
• Assess revenue growth to measure the
model to deliver propositions that
focus on helping our customers meet
their challenges.
• Focus on areas of emerging demand
such as data engineering to help
broaden our revenue base.
•
Invest in sales and marketing to
maximise our growth.
commercial performance of the products
and services of the business units.
• Track adjusted EBITDA* as a key metric
for operational performance and a proxy
for operational cash generation.
• Monitor net cash/debt as an indicator
of the level of capital available to allocate.
Progress
• Significant progress across all areas
as detailed in the Business Review.
Progress
• Continued strong revenue growth
representing an increasing share
of our customers’ spend.
Progress
• All three measures tracked well against
the Board’s expectation and in line with
its strategy.
* As defined in accounting policies note 1(r).
8 | FD Technologies plc Annual Report 2023
Strategic report Key performance indicators
The Board uses the following KPIs to measure sustainable and
profitable growth as we aim to create value for all stakeholders.
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.
2021
2022
2023
2021
2022
2023
2021
2022
2023
Group revenue
Measures the total of all revenue streams
generated by the Group.
As a key growth metric communicated
to investors, the Board monitors revenue and
revenue growth to measure its effectiveness
at customer wins, retention and expansion.
Group adjusted EBITDA*
Measures EBITDA adjusted for costs deemed
non-operational and is the headline performance
measure for the Group.
Group net cash/(debt)
Measured as the amount of debt
(excluding lease obligations) less cash
and cash equivalents.
Adjusted EBITDA is considered the headline
measure of operating performance, ability to
generate cashflow and to enable the Board
and investors to most easily determine the
impact of the Group’s strategy on performance.
*
See reconciliation of adjusted EBITDA to
reported profit before tax in the Financial Review.
The Board monitors its net cash/(debt) position
to assess its working capital performance as well
as to ensure it has sufficient capacity within its
facilities to continue deliver its strategy.
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8
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7
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6
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3
5
6
£
.
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0
7
4
£
2021
2022
2023
2021
2022
2023
KX annual contract value (ACV)
The sum of the value of each KX customer
contract signed during the period divided by
the number of years in each contract.
This KPI is new and is included to provide the
annual contract value of contracts signed in
the year. ACV grew by 93%, highlighting the
significant sales successes in the year.
KX annual recurring revenue (ARR)
The value at the period end of KX recurring
software revenue to be recognised in the next
twelve months, formerly defined as “exit annual
recurring revenue”.
KX Annual Recurring Revenue measures the
growth of valuable recurring revenues, which
grew by 39% in the year.
.
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4
9
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3
4
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0
8
4
1
£
%
9
%
9
%
0
1
2021
2022
2023
2021
2022
2023
First Derivative revenue
Measures First Derivative revenue which is an
indicator of the business’ size and progress of
strategic initiatives.
First Derivative’s revenue is derived from capital
markets, principally from providing services
requiring deep domain skills to large investment
banks. The strategy, to focus on key areas where
it has the greatest expertise, has delivered
growth of 18% in the year.
First Derivative adjusted
EBITDA margin
Margin from First Derivative EBITDA adjusted for
costs that are deemed to be non-operational
in nature.
First Derivative EBITDA margin measures
underlying performance and the ability to deliver
on operating leverage. The three-year target is
to achieve an adjusted EBITDA margin of 15%.
Note: The Board has identified that the opportunities
in both KX and First Derivative represent significantly
greater opportunities to realise shareholder value
and has therefore removed MRP from the KPIs.
FD Technologies plc Annual Report 2023 | 9
Engaging and working with our stakeholders
Strengthening our
stakeholder relationships
This section provides insight into how the Board engages with our stakeholders to
understand what matters to them. The findings from this engagement have been
considered in board discussions and decision-making.
Our stakeholders include our shareholders,
employees, customers, suppliers, the environment
and the communities we operate in. The Board
recognises that engaging with stakeholders is
essential to enable the Group to take balanced
strategic decisions and build a successful
business that creates long-term value for all
our stakeholders.
This was particularly important this year as the
Group implemented a significant amount of
operational change, including the introduction of
a new ERP system that provides additional levels
of monitoring, insight and control. Employee
involvement was key in designing the system and
it benefits them by automating the management
of benefits and personnel administration, with
numerous self-service options. It is intended that
suppliers will benefit from more streamlined
payment processing procedures, which is a key
area of focus within our supplier
management policy.
The Directors give careful consideration to the
views of stakeholders when discharging their
duties and are supported by a range of means,
including regular reports and presentations from
members of the executive team throughout the
year, the presence of a designated workforce
representative on the Board, and specific
briefings on the impact on stakeholders where
the Board believes they would be impacted by
a decision under consideration.
Employees
Reason why we engage
As detailed in the Corporate responsibility and
sustainability section of this report, our people
are vital to the success of our business and the
recruitment and retention of top-level talent is
a Board priority. Our culture is central to this and
we actively promote diversion and inclusivity at all
levels. We have also created a culture of learning
and development to continually strengthen the
talents and capabilities of our employees.
Through these initiatives, we seek to deliver
products and services that delight our customers
and enable the Group to achieve its strategy.
Customers
Reason why we engage
Achieving the Group’s growth strategy requires
cross and upselling to existing customers as
well as attracting new customers to each of its
business units. Our engagement with customers
and potential customers helps to shape our
development strategy and allocation of
resources and capital and feedback is reported
regularly to the Board.
10 | FD Technologies plc Annual Report 2023
Key developments during the year
The results of our latest employee engagement
survey point to an engaged, enabled and
energised workforce and across our business.
However, we accept that there is still work to do,
particularly around enhancing reward and
benefits. The Group has a Survey Actions
Working Group that analyses the results and
implements change designed to make
improvements on the issues that matter most to
our employees. For the coming year, our
priorities will be focused on enhancing employee
experience across every aspect of our business.
This is a multi-year programme which is focusing
on improving every interaction we have with
each employee from recruitment and
onboarding through to continuous feedback,
learning and development, inclusion and
supporting employee health and wellbeing.
Key developments during the year
To further facilitate direct customer feedback into
our strategy we committed during the year to
creating a customer advisory board comprising
representatives from a number of key clients.
We also decided during the year to reinstate our
annual customer summit, which was disrupted
due to COVID, which facilitates discussion with
and feedback from our customers.
Method of engagement
A workforce engagement Director, Virginia
Gambale, is responsible for representing the
interests of employees and ensuring that their
interests are taken into account by the Board. A
key input into our employee engagement strategy
is an annual employee engagement survey,
facilitated by an independent organisation, which
is analysed and shapes our agenda on employee
engagement for the subsequent year. Now in its
fourth year, the results of our latest survey are
detailed in the Corporate responsibility and
sustainability section. In addition, we encourage
direct interaction between employees and the
Board at dedicated “Meet the Board” events
which are typically held across our locations to
encourage direct dialogue between employees
and Directors. During the pandemic, it was not
possible to hold these events and instead we
shared interviews with every Board member to
introduce them to employees and enable them to
understand the diversity, expertise and experience
they bring to the Group. These events resumed
during the year under review and make an
important contribution to dialogue and
understanding between the Board and employees.
Method of engagement
The Board is briefed regularly on engagement
with customers by the CEO and senior members
of the executive team, as well as receiving
regular reports on such matters. The Group
holds regular customer events, which Directors
are able to attend and engage directly with
existing and potential customers to understand
their concerns. In particular, the technology
sub-committee meets with and considers the
needs of customers and seeks to ensure that
our technology development strategy takes
their requirements into account. KX also has a
customer success team dedicated to ensuring
that our technology delivers the expected
benefits and that lessons learned from working
with a particular customer are applied across
the customer base.
Strategic report Partners
Reason why we engage
Partners are key to promoting the adoption and
use of KX across industries, helping to deliver
our growth strategy. KX partners with market
leaders and invests in creating deep integration
to deliver high-performance data-driven solutions.
Method of engagement
Given the commercial importance of partner
relationships, KX has a dedicated team working
to recruit and develop target partners. This team
handles the formal accreditation and
commercial agreements between KX and the
partner and manages the working relationship,
working closely with the sales and development
teams within KX. We operate a tiered partner
programme (Registered, Plus and Premier) with
benefits aligned to each tier.
Key developments during the year
During the year KX worked closely with its
strategic partner Microsoft to release the
industry’s first Data Timehouse, kdb Insights
Enterprise on Microsoft Azure. KX also expanded
its partner team in response to opportunities to
work with other hyperscale cloud providers and
data analytics independent software vendors.
Partnerships are a key strategic channel to
achieve our goal of KX being the horizontal
platform for time-series analytics and we will
continue to resource these efforts appropriately.
Shareholders
Reason why we engage
As owners of the Group, the support of
shareholders for our strategic plans is crucial.
The Group engages regularly with its shareholders
to provide updates on its progress and future
plans and to understand the views of shareholders
so that the Board can take them into account
during its decision-making processes.
Method of engagement
During the past year the Group has
communicated regularly with the investment
community through regulatory announcements
and updates to our website. Additionally, the
CEO, the CFO, the Board and executive team
members have taken part in one-to-one
meetings with investors and potential investors
to communicate the Group’s investment case
and strategy. While these meetings are regularly
scheduled following the publication of interim
and full year results, the Group has an investor
communication programme that also involves
ad hoc meetings and appearances at investor
conferences, as well as engaging directly with
existing and potential investors.
Key developments during the year
The Group has further increased its shareholder
dialogue over the past year, particularly in the US,
where an adviser was engaged to help target
potential shareholders. We also invited and
received feedback from our larger shareholders
on our long-term incentive arrangements.
A priority for the year ahead is to hold an investor
event which will provide existing and prospective
investors with a deeper understanding of the
opportunities available to KX.
Communities
Reason why we engage
The Group has a strong focus on how it
does business and how we interact with our
stakeholders and in particular how we interact
with the communities where we live and work.
Whilst we operate internationally all of our
people remain rooted in the communities
where they live and work and helping those less
fortunate has been at our very core for more
than 20 years. We recognise our responsibility
to act as an effective corporate citizen and to
provide suitable environments for the wellbeing
of employees. We support employee initiatives
designed to benefit and support their communities
and also provide direct assistance where we
believe it appropriate.
Method of engagement
The Group engages with local communities by
supporting initiatives to train and develop talent.
It provides educational and career support aimed
at assisting individuals in local communities to
enter the technology industry, often through
partnership with community groups and
organisations; for example, we have a senior
leadership partnership with Queen’s University
Belfast to drive joint initiatives. We also provide
placements and higher level apprenticeships for
school leavers as an alternative to attending
university full time, enabling them to undertake
an undergraduate degree whilst working and
gaining experience across the Group. In addition,
many of our staff volunteer to support local
organisations in their community across a range
of charitable pursuits, whether directly in terms
of contributing their time and skills or indirectly
through fundraising activities.
Key developments during the year
To coordinate our charity activities, we established
a charity policy with the aim of being a good
neighbour in the communities in which we
operate and to use the energies and talents
of our employees in charitable fundraising
activities. A team comprising representation
from across the Group was formed to
coordinate these activities. We focused our
support during the year towards fundraising
efforts for Ukraine, and our employees directly
donated £35,000 which was matched by the
Group so that a total of £70,000 was donated
to charities on the ground in Ukraine.
Other stakeholders
The Group recognises that it plays an important
role in relation to many other stakeholders,
including suppliers, governmental agencies
and the wider public, which benefit directly
or indirectly from its products and services.
As one of the largest private sector enterprises
headquartered in Northern Ireland, it is
particularly aware of its responsibilities to
maintain high standards in all aspects of its
business. The Group regularly interacts with
these stakeholders to understand their views
and communicate its strategy and policies.
FD Technologies plc Annual Report 2023 | 11
FD Technologies plc Annual Report 2023 | 11
Business review
Execution of strategy
is delivering momentum
KX in particular has made strong commercial and strategic
progress. Our price to performance advantage is particularly
compelling for the hyperscale cloud providers, as evidenced by
our partnerships with market leaders Microsoft and AWS. We
have a range of initiatives that we are progressing with these
and other partners that provide confidence in our outlook.
First Derivative also performed strongly in FY23, delivering
impressive revenue growth of 18% for the period. We continue to
see multi-year strategic growth drivers that underpin demand for
our services. MRP, our smallest business unit, suffered from a weak
demand environment for demand generation and we have aligned
its cost base to enable a return to growth in EBITDA in FY24.
We have set ourselves ambitious but sustainable growth targets
for the years ahead which will ensure we are focused on driving
high-quality recurring revenue growth from an expanding list of
customers across a wide range of industries, while generating
long term value for shareholders.
“ We are pleased with a year
of strong execution on our
strategy, with KX and First
Derivative beating our
expectations for FY23.”
Seamus Keating
Chief Executive Officer
Our values
No problem
No limits
No better
When others could say no, we say
no problem. By working together
to develop our skills, strategies
and solutions we can deliver what
has never been done before
– and can solve problems that
haven’t yet been solved.
Excel collectively. Grow
individually. Belong globally.
We are honest and to be true
to ourselves, we share a
responsibility to be the best we
can be and to always do the right
thing. To exceed limits, empower
each other, and achieve great
things together.
It is our belief that there is no
smarter, kinder or better Company
you could partner with – or be a
part of. We understand the
importance of balancing our
professional and personal worlds
– and in both we give our best,
take time to give back and never
give in.
12 | FD Technologies plc Annual Report 2023
Strategic report People
The Group currently employs c. 3,000 people, similar to the
number employed at the same time last year. Our employee
policies are designed to enable us to attract and retain top
talent and during the year we implemented a number of
initiatives to assist these goals.
We continued to pay particular attention to learning and
development, with a strong focus on leadership, as well as
the Group’s culture. We introduced our Aspiring Leadership
Programme, which offers a structured and practical path to fast
track high-potential individuals into leadership roles, while we
also appointed leaders to run our talent and people initiatives.
We also evaluated and benchmarked every employee across
the Group to ensure everyone is paid competitively.
We continue to evolve the ways in which our people connect
and collaborate, with our latest annual engagement survey
showing an increase in the number of our employees that feel
engaged to 82%. During the year we completed the
implementation of an Oracle Cloud Fusion ERP system that
includes a Human Resources Information System, enabling
us to work more strategically.
Outlook
KX and First Derivative both delivered strong growth in their
KPIs for the year and are well placed to deliver on their potential
following a year of execution of strategy. In KX the growing
importance of time-series analytics and our ability to accelerate
AI workloads, combined with our product and commercial
strategies, are establishing us as a key component of modern
data architecture. First Derivative continues to evolve its service
offerings to assist customers with their strategic objectives and
we expect this to enable growth ahead of its market. MRP’s
performance is expected to improve following the alignment
of its cost base, with growth expected to return when demand
for demand generation increases.
“ We continue to evolve the ways
in which our people connect
and collaborate, with our latest
annual engagement survey
showing an increase in the
number of our employees
that feel engaged to 82%.”
FD Technologies plc Annual Report 2023 | 13
Business unit review: KX
Accelerating the
speed of AI-driven
business innovation
Data Timehouse – where cloud data lakehouse
and AI meet temporal data
Persistent and effective execution has been the hallmark of KX over
the last financial year, in which the Company achieved or exceeded
all key performance indicators outlined to the market. We
committed to double-digit growth and delivered ahead of market
expectations. The proportion of new bookings from our initiatives
with the hyperscale cloud vendors, strategic products and/or OEM
channel partners also met market expectations. This level of
performance is encouraging given the backdrop of challenging
macroeconomic conditions, and confirms we are making real
progress to achieve the growth strategy outlined in FY22.
Our mission is to accelerate the speed of AI-driven business
innovation across all enterprises by helping them build a Data
Timehouse. As per Gartner analyst Daryl Plummer in his keynote
address, “The New Economics of Technology and Data”,
enterprises should stop “force fitting” time into traditional data
warehouses. A Data Timehouse is a new class of data and AI
management platform designed for temporal data generated
by digital transformation. It enriches traditional data warehouse
and lakehouse stores for a more complete, real-time view of
the business to enable better decision making at the speed of
thought. With a Data Timehouse, developers, data scientists and
engineers can deliver rich, informed insights from their data and
applications – faster than ever before. Our results show
momentum is clearly with us. However, there is still work to be
done on our go-to-market strategy if we are to realise the rapid,
transformative growth that we believe is achievable.
Cloud computing is central to expanded use of data, but cloud
costs are spinning out of control. Price to performance is where
KX excels. From independent benchmarking exercises and
customer feedback, we can deliver up to 100x the performance
at 1/10th of the cost of alternative solutions, enabling businesses
to spend less time wrangling with complex data pipelines
and sprawling data architectures and more time driving
mission-critical data science and application development
activities for transformative results.
“ Our mission is to accelerate
the speed of AI-driven
business innovation across all
enterprises by helping them
build a Data Timehouse.”
Ashok Reddy
Chief Executive Officer of KX
Discover more at kx.com
14 | FD Technologies plc Annual Report 2023
Strategic report Strategic objectives and addressable market
Our products address a sizeable portion of the big data, streaming
analytics and data science and machine learning (DSML) markets,
as well as the bulk of the time-series database market. Additionally,
kdb+ vector based time-series analytics is a foundational
technology for rapidly growing market segments including
generative AI, with knowledge management, recommendation
systems and similarity search use cases. According to PitchBook,
investment in generative AI has increased considerably, seeing a
425% jump from 2020, with $2.1bn invested in 2022 alone, while
leading analyst firm Gartner cites adaptive AI systems as one of its
top ten strategic trends of 2023. According to the Gartner report
‘Measuring the Opportunity in the AI Software Market’, the total
market opportunity for the AI software market alone is expected to
be $134.8bn in 2025 with a four-year compound annual growth
rate (2022-2025 CAGR) of 29.2%. Of this total addressable market,
we estimate that our current serviceable market opportunity is
approximately $34bn by 2025, taking into account the industries
and geographic markets we are targeting.
While this is a crowded and complex competitive landscape, our
strategy is to focus our product development and go-to-market
efforts on solving a persistent and critical business problem that
few, if any, of our competitors can address - namely, the
intersection of fast data with big data volumes, involving time-
series data analytics and AI based on temporal data. By launching
the industry’s first Data Timehouse, a new class of data and AI
management platform designed to handle big fast data with a
temporal component, we see a significant market opportunity to
seize, define and own this segment of the data science market.
We believe that the business is incredibly well placed to achieve
this goal, targeting at least 35% year-on-year ARR growth.
The strategy for the year ahead therefore is to position KX,
and specifically our kdb Insights family of products and Data
Timehouse platform, as the high-performance data and
AI management platform designed for temporal data and
real-time analytics within the hyperscale cloud platforms, and
also on premise and at the edge. We will focus on application
developers, data engineers, data scientists and business users,
opening up our technology and widening our user base
through free trials, enhanced developer communities, and
deeper interoperability with popular programming languages
such as SQL and Python.
In summary, I’m extremely pleased with how the business performed
over the last financial year. While we have set ourselves ambitious
growth targets for the year ahead, our goal to make KX the engine
for time-series data and real-time analytics in the cloud, will
ensure we stay focused on driving repeatable, recurring revenue
from an ever-expanding base of users across a wide range
of industries.
Delivering the industry’s first Data Timehouse
on Microsoft Azure
Our success to date rests on serving the needs of the most data
and performance-intensive applications. Our pervasive adoption
in financial services and other realms such as manufacturing, life
sciences, and telecommunications is based on the power of kdb
not only to process time-series data, but also to collect and
integrate huge amounts of related information. This enables the
traders to ask the quant team: “What new trading strategies may
work given what the market is doing?” Unlike other approaches,
the quants can provide an answer in hours, not days or weeks,
because of the powerful arsenal of data engineering and data
science capabilities kdb supports.
Now almost all enterprises, regardless of sector or size, are
struggling with ever expanding volumes of data, much of it machine
generated and time-stamped. Trends such as observability are
awakening a huge number of companies to the fact that they too
can benefit from applications that allow the equivalent of new
trading strategies to be discovered and implemented.
The traditional data lake and data warehouse architectures are
struggling to deliver on this opportunity as they prioritise data
storage over modelling, intelligence, and insight. Enter the Data
Timehouse, a game-changing new data management platform,
developed by KX and championed by the major hyperscale
cloud vendors and forward-thinking enterprises across all
major industry sectors.
A new class of data and AI management platform designed for
temporal data generated by digital transformation, the Data
Timehouse provides data scientists and application developers
with precision access to temporal data on real-time and massive
historical data sets enabling faster and more accurate analysis
for enhanced business outcomes. And because it’s built
specifically for time-series data, it delivers up to 100x the
performance of alternative solutions at 1/10th of the cost. KX is at
the forefront of this technology, offering modern enterprises a
powerful solution to overcome the challenges of managing and
extracting value from their time-series data.
FD Technologies plc Annual Report 2023 | 15
Business unit review: KX continued
KX in action
Revolutionising clinical trials with
Syneos Health
Syneos Health is a global contract research organisation that offers a range
of services to help pharmaceutical and biotechnology companies develop
and commercialise new drugs and medical devices.
KX transformed the Company’s data infrastructure, building a low-latency, highly
performant Data Timehouse running on Azure capable of running 100,000
simultaneous simulations of clinical trials across 1 billion patients. KX also enabled
Syneos Health to reduce its data science stack, avoiding multiple data silos and
redundant data engineering, while at same time providing a single source of truth for
clinical trial study data, delivering 100x the performance at 1/10th of the cost compared
to alternative solutions.
With time-series database and real-time analytics engine kdb at its core, KX
was able to simplify and make sense of a sprawling and complex data landscape
consisting of nearly 300 billion patient records for better, data-informed decision
making. The result was that Syneos Health was able to cut millions of dollars in costs
and years of delays and inefficiencies in its drug development and clinical trial
process, which creates a defensible competitive advantage.
This use case has important lessons for any organisation struggling to organise
and manage huge heterogeneous data landscapes, apply data science, and build
applications at scale.
“ Our collaboration with KX and Azure has
been instrumental in helping further
advance our technology and data
capabilities with the goal of accelerating
development of new therapies for patients.
Together, we are working to use the power
of data analytics and AI to unblock data
access and compute challenges, to
compress both timeframes and costs.
We are thrilled to take our work to the next
level and deliver even stronger results for
customers with kdb Insights Enterprise
on Azure.”
Larry Pickett
Chief Information and Digital Officer, Syneos Health
16 | FD Technologies plc Annual Report 2023
KX in action
Driving business
transformation for
a tier 1 investment
bank
When a multi-national tier 1 investment
bank needed a partner to design and
execute a large-scale cloud migration
project for its trading and quant data,
it trusted KX thanks to its market-leading
technology and unbeatable price
versus performance.
Delivering the fastest cloud migration
Delivering the fastest cloud migration
project in the bank’s history – taking just
four months from design to completion
– KX matched the performance of the
previous on-premise solution at a fraction
of the cost. With no disruption in service,
users were switched over seamlessly to
the new cloud based system with
between 85% and 90% savings on
storage and infrastructure costs.
Moreover, the system has enabled the
bank’s data science and quant teams to
streamline operations, spending more
time focusing on business outcomes
as opposed to data management.
This value-focused approach has already
led to the bank being able to run new
analysis patterns, unavailable on the
previous solution. Running on the
AWS platform, the solution also offers
improved resilience which allows for
greater levels of innovation from
business users across the trading
and quantitative functions.
With migration to the cloud a top strategic
priority for financial services firms, this use
case demonstrates the extreme suitability
and performance of KX’s technology to
deliver transformative results.
Strategic report Business unit review: First Derivative
People augmented with
data powered by technology
Our ability to identify problems and get
things done with a deeper impact sets
us apart from larger consultancies and
positions us for continued success.
I’m extremely proud to reflect on the financial performance of
First Derivative over the past year. Although market conditions
became less favourable as the year progressed, the business
rose to the challenge, delivering a strong set of results across
all business lines. Revenue growth in the year was ahead of
expectations, reflecting a solid demand environment and
improvements to our delivery model. Digital transformation in
the financial services sector continues at a pace. The move to
the cloud is becoming a catalyst for change as clients look to
completely rebuild their core software infrastructure and
architectures. This is leading to increased demand for
redevelopment, new capabilities, and the application of true
DevOps practices. Additionally, the way data is being used and
managed within organisations is changing dramatically, creating
opportunities for more effective data management and analysis.
Looked at as a whole, the market environment is enabling us to
achieve greater value for our expertise and domain knowledge,
which in FY23 resulted in improved margins despite the impact
of wage inflation and attrition during the year.
All of this speaks directly to the core strengths of First
Derivative’s offering, namely smart people, with deep domain
expertise augmented by technology. Nowhere has this been
more apparent than in our software engineering practice which
saw impressive growth. Increased demand for our expertise
allowed the business to expand operations, including bringing
our office in Poland fully onstream. By integrating our engineering
teams into our sales and delivery processes, we not only grew
business with existing clients but have built a strong pipeline
for the coming year.
FD Technologies plc Annual Report 2023 | 17
David Collins
Chief Executive Officer of First Derivative
Discover more at firstderivative.com
Business unit review: First Derivative continued
It’s important to note that, despite the uncertain market
conditions, we saw strong demand for services from our core
practice areas including our Know Your Customer (KYC) and
banking operations teams. There will always be a need from banks
for help in their core operational areas, such as integrating
systems or migrating to a new platform. Again, our deep domain
expertise and experience, position us favourably to clients.
We also completely revamped our regulatory reporting
team which is generating some market-leading capabilities
in regulatory compliance and reporting and, again, we expect
to see strong growth in this are over the coming year.
Underpinning our continued growth and success is our ongoing
focus on restructuring how our teams are built and deployed,
giving clients an end-to-end set of capabilities that not only
ensure excellence in delivery but open up new business
opportunities. A good example is our work in compliance
functions such as surveillance, which are effectively turning into
wider business intelligence functions because they are pulling
huge quantities of live data from across an organisation. With
the right people and the right technologies, we can build
analytics engines in stream, delivering critical insights and
driving value across an organisation. It’s this holistic approach
that is paying real dividends and building strong momentum
and pipeline for the new financial year.
Overall, we have a great deal to be confident about in the
current year. I believe that First Derivative is well positioned to
continue to win business, both with existing clients and new
customers. The complex nature of capital markets businesses,
with a deep network of interlinked applications, requires not only
technological expertise but also a deep understanding of the
underlying business. Our ability to identify problems and get
things done with a deeper impact sets us apart from larger
consultancies and positions us for continued success.
Strategic objectives and addressable market
First Derivative is a specialist consulting firm operating in areas
where expert knowledge is critical to success, whether it’s in
the realm of business, technical, or both. With deep vertical
expertise in capital markets, banking operations, and asset
servicing, we offer specialised horizontal expertise in real-time
data. Our team is equally at home with tick data, IoT, or any
time-series data sets. At First Derivative, we bring together
technical expertise and domain knowledge to deliver industry-
leading solutions for complex business and technical challenges.
In managed services and consulting, Gartner estimates the total
spend on IT services in banking will reach an estimated $761bn
by 2025, of which we estimate more than $200bn is addressable
by First Derivative. In addition, Forbes Magazine believes demand
for technology, specifically cloud computing and Artificial
Intelligence/ Machine learning, will continue to strengthen
across the sector as more and more financial services
organisations seek the agility and scalability required to
adapt quickly to changing customer and regulatory needs.
18 | FD Technologies plc Annual Report 2023
First Derivative in action
Streamlining deleverage
programmes for banks
First Derivative was tasked with executing a multi-year,
multi-discipline deleverage and disposal programme for a
UK banking client. The goal was to significantly reduce off
balance sheets exposures including Non-Performing Loans
(NPLS), Third Party Administrators (TPAs) and risk-weighted
assets (RWAs), to free up tied capital.
Over a four-year period (one year ahead of schedule), we
delivered exceptional results and during the period the
client saw the following reductions: TPAs by 85% (£258bn
to £38bn), RWAs by 75% (£171bn to £42bn), and staff
numbers by 92% (32,771 to 2,592). This was achieved
through a combination of disposals, run-off,
and impairments.
Following this success, we expanded our services to
Irish banking clients, where we have since partnered
with numerous banks to sell over 25 performing and
non-performing loan portfolios. In total, these portfolios
amounted to nearly €50bn in outstanding balances.
Our most recent project involved leading the exit of
a long-standing client from the Irish market after 160 years.
These complex programmes demand expertise
across various functions, including PMO, data analytics,
customer documentation, legal due diligence, customer
communications and outreach, asset valuation, compliance
and regulation, data migration, account closing, and
records management. Throughout the process, we ensured
compliance with all legal and regulatory requirements while
keeping the rights and needs of customers at the core
of our work.
The successful completion of this project clearly
demonstrates the ability of First Derivative to deliver
value-driven, efficient deleverage and disposal programmes
for banking clients, emphasising both legal compliance and
customer centricity.
Strategic report Business unit review: MRP
Driving demand, scaling
engagement and accelerating
revenue for our customers
An award-winning, analyst-recognised B2B marketing technology
and tech-enabled services leader, MRP’s solutions help sophisticated
organisations identify, prioritise, and target prospective buyers
through a coordinated delivery of personalised digital and non-
digital engagement and manage these interactions throughout
the buyer’s journey.
Ultimately, MRP gives its clients the power to reach and
connect to the right buying groups and decision makers across
all key marketing channels at the right time, increasing revenue
while cost effectively driving engagement globally and at scale.
FY23 financial performance was significantly below expectation, as
customer budgets continue to remain under pressure due to the
macroeconomic environment. Our revenue run rate has started to
stabilise and, along with the steps that were taken to align the cost
base, we expect the business to deliver an improved EBITDA
performance for the current year. Given our long-term relationships
with clients, we believe MRP has the opportunity to deliver revenue
growth when B2B marketing budgets improve.
Strategic objectives and addressable market
The addressable market for MRP’s products and services is
considerable, with the Company serving six core vertical sectors:
ABM, sales intelligence, data management, display advertising,
content syndication and direct mail. We estimate, based on market
sizing from multiple sources including Gartner, KBV Research and
MarketsandMarkets, that this presents a total addressable market
of some $25bn when considering CAGR growth for each sector.
The strategy, therefore, is to continue to develop the power and
functionality of the MRP Prelytix® ABM platform, consolidate
offerings in established sectors such as display advertising and direct
mail and take advantage of rapid growth in content syndication, sales
intelligence and data management. Moreover, the omnichannel
capabilities of MRP mean that clients can benefit from end-to-end
campaigns running across all of the above sectors and the firm’s
go-to-market strategy will be sharply focused on providing clients
with fully integrated solutions.
FD Technologies plc Annual Report 2023 | 19
MRP enables enterprise B2B sales and
marketing leaders to accelerate engagement,
demand, and pipeline revenue using a unique
and powerful combination of technology,
tech-enabled services, and robust
orchestration capabilities.
Discover more at mrpfd.com
Financial review
Strong growth in
key business units
“ The Group delivered
double-digit increases
in both revenue and
adjusted EBITDA.”
Ryan Preston
Chief Financial Officer
Revenue and margins
The table below shows the breakdown of Group performance by business unit for each of KX, First Derivative and MRP.
FY23
First
Derivative
£m
KX
£m
80.2
(22.3 )
58.0
72%
(23.0 )
19.0
(4.0 )
(26.3 )
(11.1 )
16.6
21%
174.3
(127.0 )
47.3
27%
(0.4 )
0.4
—
(15.3 )
(15.4 )
16.7
10%
Group
£m
296.0
(173.7 )
122.3
41%
(27.1 )
23.1
(4.0 )
(50.9 )
(32.7 )
34.8
12%
MRP
£m
41.5
(24.4 )
17.0
41%
(3.7 )
3.7
—
(9.4 )
(6.2 )
1.4
3%
Group
£m
263.5
(157.3 )
106.1
40%
(21.1 )
18.6
(2.6 )
(47.4 )
(25.2 )
31.0
12%
FY22
First
Derivative
£m
KX
£m
64.4
(19.9 )
44.5
69%
(18.6 )
16.1
(2.6 )
(23.6 )
(8.6 )
9.8
15%
148.0
(108.6 )
39.4
27%
(0.2 )
0.2
—
(14.5 )
(10.9 )
14.0
9%
MRP
£m
51.1
(28.8 )
22.2
44%
(2.3 )
2.3
—
(9.3 )
(5.7 )
7.3
14%
Group
change
12%
10%
15%
28%
25%
54%
8%
30%
12%
Revenue
Cost of sales
Gross profit
Gross margin
R&D expenditure
R&D capitalised
Net R&D
Sales and marketing costs
Adjusted admin expenses
Adjusted EBITDA
Adjusted EBITDA margin
The Group delivered double-digit increases in both revenue and adjusted EBITDA. Revenue growth was driven by strong growth
in recurring revenue at KX and strong growth by First Derivative offset by a revenue decline in MRP as a result of difficult market
conditions. This drove 15% growth in gross profit to £122.3m (FY22: £106.1m), with increasing scale and growth in higher margin
revenues resulting in gross margin of 41% (FY22: 40%). We continue to invest in line with our strategic objectives, including
investments in systems and people. In addition, inflationary cost pressures which increased admin expenses and the impact
of MRP, resulted in adjusted EBITDA margin remaining at 12%.
Revenue growth was boosted during the period by the strength of the dollar against sterling, our reporting currency, with constant
currency revenue growth of 6%. Due to the natural hedge of our operations in the US the impact on profitability was marginal.
20 | FD Technologies plc Annual Report 2023
Strategic report
KX
Revenue
Recurring
Perpetual
Total software
Services
Gross profit
Adjusted EBITDA
KX total
Financial services
Industry
FY23
£m
80.2
57.6
1.6
59.1
21.1
58.0
16.6
FY22
£m
64.4
39.2
3.6
42.8
21.6
44.5
9.8
Change
25%
47%
(57% )
38%
(2% )
30%
70%
FY23
£m
67.9
50.2
0.2
50.4
17.5
FY22
£m
55.4
35.5
1.8
37.4
18.0
Change
23%
41%
(88% )
35%
(3% )
FY23
£m
12.4
7.4
1.3
8.7
3.6
FY22
£m
9.1
3.7
1.8
5.4
3.6
Change
37%
102%
(24% )
61%
0%
KX delivered a strong performance in the year, with 25% revenue growth driven by 47% growth in recurring revenue to £57.6m, balanced
by a 2% reduction in services to £21.1m. The growth was enabled by a near doubling of incremental annual contract value added to £18.7,
resulting in 39% growth in ARR to £65.3m. Services revenue, related to the implementation of our software, declined marginally to £21.1m
as we enabled our customers to achieve time to value more quickly, reducing the cost and complexity of adopting KX and increasing the
return on investment for our customers. Revenue from perpetual license sales continues to decline following our decision in 2021 to focus
exclusively on subscription sales for new customers, and now represents just 2% of KX revenue.
Financial services revenue grew by 23% to £67.9m, with recurring revenue up 41%. We continue to benefit from adoption of kdb
Insights by existing and new customers, attracted by its performance, ease of use and rapid time to value, as well as native integration
with important developer languages such as Python and SQL.
Industry revenue grew by 37% to £12.4m with recurring revenue growing by 102% to £7.4m. Growth was led by subscription contracts
across the healthcare, energy and manufacturing markets with both new and existing customers.
Alongside the growth in ARR our go-to-market team was also engaged with partners, particularly Microsoft and AWS, on joint go-to-
market initiatives to support general availability of kdb Insights Enterprise on Microsoft Azure and kdb Insights on AWS FinSpace.
Performance metrics
Annual recurring revenue (ARR) £m
Net revenue retention (NRR)
Gross margin
R&D expenditure as % of revenue
Sales and marketing spend as % of revenue
Adjusted EBITDA margin
Change
39%
FY23
65.3
119%
72%
29%
33%
21%
FY22
47.0
106%
69%
29%
37%
15%
The annual contract value signed in the period was £18.7m, up 93% on the prior year (FY22: £9.7m) and driven by the growth in new
subscription deals in the period and our work with partners. This resulted in ARR increasing by 39% to £65.3m. NRR of 119% is ahead
of the 106% in FY22 and in line with our mid-term target of 120%, with customer churn remaining at low levels.
First Derivative
Revenue
Gross profit
Adjusted EBITDA
FY23
£m
174.3
47.3
16.7
FY22
£m
148.0
39.4
14.0
Change
18%
20%
20%
Revenue for the period was £174.3m, with growth of 18% ahead of our target for the year of 15%. We saw the strongest growth in
supporting our customers in their near shore operations, which are expanding as they pull offshore delivery work into centres such as
Dublin. We believe our services are well aligned with our customers’ strategic priorities, with regulatory change, digital transformation
and cost efficiency consistent themes.
Attrition and wage inflation rates were challenges across the industry during the year, which we managed effectively, although they
did limit scope for margin improvement. We see an easing of these pressures in the year ahead in response to some caution from
customers, as discussed in the Business Review. This is reflected in our guidance for lower revenue growth during the year, although
reduced recruitment and onboarding costs and our growing scale should enable EBITDA margin progress.
FD Technologies plc Annual Report 2023 | 21
Financial review continued
First Derivative continued
Performance metrics
Gross profit margin
Adjusted EBITDA margin
FY23
27%
10%
FY22
27%
9%
Gross margin was maintained at 27% for the year. Underlying this were increased costs in recruiting, training and deploying new consultants
in response to industry-wide attrition pressures, mitigated by our ability to pass through wage inflation and the impact of delivering
greater value from our expertise and domain knowledge.
MRP
Revenue
Gross profit
Adjusted EBITDA
FY23
£m
41.5
17.0
1.4
FY22
£m
51.1
22.2
7.3
Change
(19%)
(23%)
(80%)
MRP derives revenue by combining cutting-edge predictive analytics with a full suite of account-based sales and marketing solutions.
Throughout the year, concerns over the business outlook caused many of our customers to pause or reduce their demand generation
activity, leading to a decline in revenue at MRP.
While we took action to align costs during the year, adjusted EBITDA decreased to £1.4m (FY22: £7.3m). In response, MRP has implemented
cost savings that have reduced annualised operating costs by c. £6.0m and as a result we expect an improved performance in adjusted
EBITDA in FY24.
Performance metrics
Gross margin
Adjusted EBITDA margin
FY23
41%
3%
FY22
44%
14%
Gross margin declined slightly to 41% (FY22: 44%) as a result of lower services utilisation balanced by cost efficiencies in third-
party costs incurred in our display marketing offering. Admin expenses increased as we invested in upgrading cybersecurity
protection, improved legal capability and incurred wage inflation.
Group performance
Adjusted EBITDA
The reconciliation of operating (loss)/profit to adjusted EBITDA is provided below:
Operating (loss)/profit
Restructure and non-operational costs
Non-operational other income
Non-operational IT expenses*
Share based payment and related costs
Depreciation and amortisation
Adjusted EBITDA
FY23
£m
(1.5)
8.7
—
5.6
0.4
21.6
34.8
FY22
£m
6.4
3.1
(2.5)
2.3
1.7
20.1
31.0
* Non-operational IT expenses represents ERP implementation costs that are required to be expensed under accounting standards.
Profit before tax
Adjusted profit before tax increased to £12.1m, with the increase in adjusted EBITDA partially offset by higher depreciation and software
amortisation charges. Financing costs increased by £0.9m, reflecting a combination of higher interest rates partially offset as we
continue to pay down debt.
The Group reported a loss before tax of £1.2m for the year, compared to a profit of £9.0m in FY22. The major factors were
restructuring costs, particularly at MRP, the cost of implementing the Group’s new Oracle ERP system and one-off costs to
address legacy employee tax liabilities while on assignment.
22 | FD Technologies plc Annual Report 2023
Strategic report
The reconciliation of adjusted EBITDA to reported profit before tax is provided below.
Adjusted EBITDA
Adjustments for:
Depreciation
Amortisation of software development costs
Net financing costs
Adjusted profit before tax
Adjustments for:
Amortisation of acquired intangibles
Share based payment and related costs
Restructure and non-operational costs
Non-operational other income
Non-operational IT expenses
Profit/(loss) on foreign currency translation
Share of profit of associate
Profit on disposal of associate
Net financing costs
Reported (loss)/profit before tax
FY23
£m
34.8
(7.3)
(11.5)
(3.9)
12.1
(2.8)
(0.4)
(8.7)
—
(5.6)
2.1
—
3.0
(0.9)
(1.2)
FY22
£m
31.0
(6.8)
(10.2)
(3.0)
11.0
(3.1)
(1.7)
(3.1)
2.5
(2.3)
(1.8)
0.3
7.0
0.2
9.0
(Loss)/earnings per share
The Group reported a loss after tax of £4.0m for the year, compared to a profit after tax of £6.4m in FY22. Adjusted profit after tax
was £9.9m, an 8% increase on the prior year, resulting in a 9% increase in adjusted diluted earnings per share for the period to 35.3p.
The calculation of adjusted profit after tax is detailed below:
Reported (loss)/profit before tax
Tax
Reported (loss)/profit after tax
Adjustments from (loss)/profit before tax (as per the table above)
Tax effect of adjustments
Discrete tax items
Adjusted profit after tax
Weighted average number of ordinary shares (diluted)
Reported (LPS)/EPS (diluted)
Adjusted EPS (diluted)
FY23
£m
(1.2)
(2.8)
(4.0)
13.3
(2.4)
3.0
9.9
FY22
£m
9.0
(2.6)
6.4
2.1
(1.3)
1.9
9.1
28.0m
(14.4p)
35.3p
28.0m
22.9p
32.3p
FD Technologies plc Annual Report 2023 | 23
Financial review continued
Group performance continued
Cash generation and net cash (excluding lease liabilities)
The Group generated £33.5m of cash from operating activities before the exceptional Oracle ERP implementation cash outlay
incurred during the year of £5.1m, representing a 96% conversion of adjusted EBITDA. We continued to focus on cash collection
and working capital improvements and the target for the full year from operating activities’ cash conversion was in the range
of 80-85% of adjusted EBITDA.
At the year end we had a net cash position of £0.4m, broadly unchanged from the prior year. The factors impacting the movement
in net cash (excluding lease liabilities) are summarised in the table below:
Opening net cash/(debt) (excluding lease liabilities)
Cash generated from operating activities before non-operational IT expenses
Non-operational IT expenses
Cash generated from operating activities
Taxes paid
Capital expenditure: property, plant and equipment
Proceeds from sale of property, plant and equipment
Capital expenditure: intangible assets
Sale of other investments and associates
Investments
Issue of new shares
Interest, foreign exchange and other
Closing net cash (excluding lease liabilities)
FY23
£m
0.3
33.5
(5.1)
28.5
(1.5)
(2.9)
—
(23.4)
0.1
8.1
3.1
(11.9)
0.4
FY22
£m
(9.9)
29.9
(1.0)
28.9
(0.4)
(2.8)
0.9
(18.9)
11.0
0.1
0.8
(9.3)
0.3
The drivers of cash performance in FY23 were the increasing spend on research and development, of which £23.1m was capitalised,
and the sale of our investment in Quantile Technologies, following the completion of its sale to LSEG during the year.
After the year end we refinanced our banking facilities, which had been due to expire in June 2024, on improved terms. The total
facility remains at £130m and is entirely comprised of a revolving credit facility, replacing a £65m term loan and £65m revolving credit
facility. The interest rate payable is SONIA/SOFR plus a fixed margin that depends on the level of debt relative to adjusted EBITDA.
The margin on the new revolving credit facility is equal to 1.85% to 2.85%, this compares favourably to the previous margin of 2%
to 3%. The lead arranger for the facility remains Bank of Ireland, with continued participation from Barclays and AIB and new
participation from HSBC.
Definition of terms
The Group uses the following definitions for its key metrics:
• Annual recurring revenue (ARR): the value at the end of the accounting period of recurring software revenue to be recognised
in the next twelve months, formerly defined as “exit annual recurring revenue”.
• Annual contract value (ACV): the sum of the value of each customer contract signed during the year divided by the number of years
in each contract.
• Net revenue retention rate (NRR): is based on the actual revenues in the quarter annualised forward to twelve months and
compared to the annualised revenue from the four quarters prior. The customer cohort is comprised of customers in the quarter
that have generated revenue in the prior four quarters.
• Adjusted admin expenses: is a measure used in internal management reporting which comprises administrative expenses per
the statement of comprehensive income of £66.6m (FY22: £51.9m) adjusted for depreciation and amortisation of £21.6m
(FY22: £20.1m), share based payments and related costs of £0.4m (FY22: £1.7m), restructure and non-operational costs of £8.7m
(FY22: £3.1m), IT systems implementation costs expensed £5.6m (FY22: £2.3m) and other income £(2.4)m (FY22: £(0.5)m).
24 | FD Technologies plc Annual Report 2023
Strategic report Principal risks and uncertainties
Delivering value
through risk management
Effective risk management is core to our
management practices that help deliver
our strategy and our commitments to our
customers. We are focused on conducting
our business responsibly, safely, and legally,
while making risk-informed decisions when
responding to opportunities or threats that
present themselves. With the leadership of
the Board and guided by our risk appetite,
we understand, prioritise, and manage our
risks. Our risk management framework,
which we have further enhanced this year,
enables us to undertake this exercise with
structure and rigour.
Risk management framework (RMF)
The primary objective of risk management is to ensure that the
outcomes of risk taking activities are consistent with the Group’s
strategic objectives, operating plans and risk appetite, and that
there is an appropriate balance between risk and return. The
RMF enables the Group to identify, assess, manage and monitor
our risks.
Risk identification and assessment
We identify and assess risks at the Group and business unit
level, along with horizon scanning for emerging risks. To enable
better assessment, the identified risks are categorised into one
or more of the following risk types: strategic, operational,
financial or regulatory.
Management assesses risks on a continuous basis. The Group
adopts a qualitative and quantitative approach to measuring
and scoring risks using the Group risk matrix. A risk probability
and impact matrix are applied to arrive at the inherent risk score.
The risk assessment is then repeated with the application of
controls, taking into account the overall effectiveness of the
controls in arriving at the residual risk score.
Risk management and controls
Risk management strategies have been developed and
implemented for all significant risks. These strategies include
robust controls, policies and procedures and financial reserves.
Risk monitoring
A plan is agreed with the Audit and Risk Committee to ensure
key controls are tested regularly and any incidents reported
result in a reassessment of the risks and controls. The Group
maintains up-to-date information on its main risks and controls
which the Board and the Audit and Risk Committee review and
agree on a regular basis. Appropriate reporting procedures and
feedback loops ensure that risk management is actively
monitored and managed by all relevant personnel, the Executive
Committee, the Audit and Risk Committee and the Board.
Risk appetite
The purpose of the Risk Appetite Statement (RAS) is to
express the level and nature of risk the Group is willing to accept
in achieving its strategic objectives. The RAS is used to guide
strategy execution, decision making and planning processes.
The RAS is reviewed and approved at least annually by the
Board, on the recommendation of the Audit and Risk
Committee, with periodic review of the RAS occurring in the
event of changes to the Group’s activities or operating environment.
FD Technologies plc Annual Report 2023 | 25
Principal risks and uncertainties continued
FD Technologies employs a three lines model to manage risk
Board, Audit and Risk Committee, Executive Committee
First line
Identify
Manage
Own
Business units
Second line
Advise
Support
Challenge
Legal functions
Finance functions
Infosec functions
HR functions
Third line
Independent
Objective
Assurance
Internal audit
Appointed external advisers
The Group uses the “three lines of defence” model to structure roles, responsibilities
and accountabilities for risk and control activity, including risk governance and risk
based decision making. The model distinguishes between:
Oversight
First line
The Board and the Audit and Risk Committee are the primary
stakeholders served by the “three lines of defence” model.
Responsible for identifying, managing and owning risks.
First line refers to all of the business functions which carry
out the day-to-day operations of the Group and whose
activities require personnel to operate in accordance with
and adhere to the required risk policies and frameworks.
Second line (“central functions”)
Third line (“independent advisers”)
Develops, maintains and ensures implementation of control
policies and frameworks across the Group along with
monitoring, advising, challenging and supporting front line
business units (i.e. the First line). Includes functions such
as legal, finance and infosec.
Provides the Board and management with independent,
objective assurance that the policies and frameworks in
place are appropriate, proportionate and adequately
adhered to across the Group in the First and Second lines.
Includes internal audit and appointed external advisers.
26 | FD Technologies plc Annual Report 2023
Strategic report Risk factors
Risk
Potential impact
Mitigation
Attracting and retaining talent
As a software and consultancy provider, the
Group is dependent on the skill, experience
and commitment of its employees, which
places huge importance on the recruitment,
development and retention of key staff. It is
also important to align the current and
future resourcing levels and capabilities with
the changing needs of the Group and our
customers. The success of the Group is built
upon effective teams that consistently
deliver superior performance. If the Group
cannot attract, retain or develop suitably
qualified, experienced and motivated
employees, this could have an impact
on business performance.
The long-term performance of the
Group would be adversely affected if
we fail to attract, develop and retain
staff in a highly competitive labour
environment and if the required
staffing levels of sufficient calibre
are not achieved and sustained.
There is the potential to impact the
achievement of the Group’s strategic
objectives in the event that the
current and future resourcing levels
and capabilities are not aligned with
the needs of our customers. There
is also the potential for short-term
revenue impact if staffing levels fall
below the level required to service
customer demand.
Change over prior year
Increased
Cybersecurity
The Group is at risk of financial loss and/or
reputational damage relating to breaches of
IT security policies and controls, including
unauthorised access to confidential data or
technology disruption to our Group or client
IT systems and platforms.
Change over prior year
Unchanged
The risk has implications which
include operational disruption to
critical IT systems and platforms,
client exposure through cyber-attacks
and significant data leakage.
This could lead to potential litigation
and regulatory actions as well as
commercial implications including loss
of customer confidence, reputational
damage, contractual impact and
negative publicity.
Competition and markets
External factors, outside the direct influence
of the Group, including economic cycles,
inflation and market trends, could
significantly impact on performance in
a competitive and cyclical market
environment. These factors could also
impact the suitability of our products,
services and solutions to meet current and
future client requirements. This makes it
more difficult to forecast future demand
from clients.
The Group’s resourcing decisions
could lead to excess staff levels
reducing profitability in the short term,
or underinvestment in our products,
services and solutions, leading to
missed commercial opportunities
and/or client dissatisfaction. This may
result in a weakening of our market
position. Demand for our services
could decrease and, consequently,
revenues decline in the event of
a global economic downturn or
political unrest.
Change over prior year
Unchanged
The Group maintains a constant focus on this area
with competitive remuneration packages and a
strong commitment to training and career
development. The Group has structured succession
plans in place. Our policies and procedures are
reviewed and regularly updated by Group Human
Resources, divisional leaders and the executive
team. The Group also has systems in place to
accurately forecast demand requirements including
the level of recruitment and the types of skills/
expertise required to meet client requirements.
Should a mismatch occur, the Group has
contingency plans in place that would cover the
period until sufficiently skilled additional staff can
be recruited and trained.
As a provider of software to leading financial
services organisations around the world, the
Group is required to operate stringent IT and
cybersecurity practices. The Group has
extensive documented policies to mitigate risk
in these domains. To provide assurance on the
effectiveness of these policies, the Group has,
in certain cases, adopted SSAE 18 SOC1,
a standard from the American Institute of
Certified Public Accountants, on the effectiveness
of the IT security controls. The Group recently
renewed its Cyber Essentials Plus accreditation.
Material investment has been undertaken in
upgrading the security infrastructure of the
Group as detailed in the Report of the Audit
and Risk Committee.
The Group addresses the impact of these
external factors through a focus on strong
financial management, a broad spread of
products and customers across the divisions,
regular reviews of our products and services,
and careful geographic expansion. In addition,
the Group’s careful and select expansion into
new industries reduces our exposure to
sector-specific impacts.
FD Technologies plc Annual Report 2023 | 27
Principal risks and uncertainties continued
Risk
Potential impact
Mitigation
This risk has implications in terms
of potential litigation and regulatory
actions as well as commercial
implications resulting from loss
of customer confidence and
negative publicity.
Intellectual property infringement
The Group’s intellectual property (IP) is
centred around the software and services
it develops for customers. The Group has to
manage the risk of infringing a third party’s
intellectual property rights in the development
of its software and services. If this risk is
not managed effectively, it could result
in a violation or breach of protected
intellectual property.
Change over prior year
Reduced
Technology
Technological advancements in the
software industry, which are constantly
evolving and ever changing, could result
in increased competition or potential
obsolescence of our current products.
Change over prior year
Unchanged
In order to remain competitive, it is
essential that the Group’s products,
services, technology and solutions are
up to date and our development plans
are flexible. This risk has implications
in terms of the ability of our products,
services, technology and solutions
to address current and future
customer requirements.
Political, regulatory and compliance
Long-term changes in the global political
environment and societal expectations
are leading to greater regulation of
businesses and potential penalties.
Further, the war in Ukraine has increased
political complexities.
Change over prior year
Unchanged
Failure to comply with legal and other
requirements in an increasingly
regulated and complex political
environment results in fines, criminal
penalties, consequential litigation, and
an adverse impact on our reputation,
financial results, and/or our ability to
do business.
Failure to address and monitor these
risks could impact the financial
performance of the Group.
The Group has policies and procedures in
place to protect against the risk of intellectual
property infringement. These policies and
procedures are reviewed on a periodic basis
by senior management. The Group enters
into formal non-disclosure agreements with
employees, independent contractors and third
parties in the ordinary course of its business.
Staff are made aware of the importance of client
confidentiality and the requirements in this
area. Employment and consultancy contracts
have clauses to protect intellectual property
rights and these are regularly reviewed with
external counsel to ensure that they are suitable.
The Group actively monitors the use of
third-party software in its product offerings. The
choice of third-party components is subject to
technical review and assessment at design stage.
The Group makes significant ongoing
investments in technological research and
development to proactively develop new and
enhanced capabilities within our software
offerings. This allows for the identification of,
and adaptation to, any technological changes
that occur externally, thereby ensuring that the
Group’s products continue to meet our clients’
requirements and our technology and
information systems meet our requirements.
Our product teams meet with actual and
prospective clients to consider product
roadmap developments whilst the KX user
community provides similar feedback.
In addition to our central research and
development team, the Group constantly
evaluates technology trends and new
software product opportunities. A technology
sub-committee, comprised of Non-Executive
Directors and executive management, exists to
address this risk, as well as assessing emerging
opportunities to ensure our technology
maintains its leadership position.
The Group has policies and procedures in place
to constantly monitor international relations,
macroeconomics, geopolitical events and global
trends in all of the jurisdictions in which it
operates. The Group is confident that it has the
foresight and flexibility in its operations and
legal team to mitigate the material impact of
any potentially negative consequences
stemming from international operations. The
impact of the war in Ukraine is being carefully
monitored for its impact on our clients, suppliers
and employees and appropriate diligence is
being undertaken to ensure compliance with
sanctions as they apply.
28 | FD Technologies plc Annual Report 2023
Strategic report
Risk
Potential impact
Mitigation
If the correct level of investment in
people and technology is not maintained
it is possible that the quality of the
Group’s service offering will drop and/
or cost control and operational
effectiveness will deteriorate.
The Group has a programme of continual
investment in all aspects of the business
(operational, financial and management controls,
reporting systems and procedures and training
programmes). This is constantly reviewed and
monitored to ensure that the Group can continue
to maintain the high standards of customer
service. As a result of the constant focus, the
Group can ensure that the level of investment is
relative to the growth of the Group and that
optimum operational efficiency is achieved.
Delivery models have been evolved to provide
greater resourcing flexibility in the provision of
growing services to our clients.
The consequences of failure to
update controls and processes for
changes in the business mean that it
is possible that key risks will not be
appropriately mitigated. There is also
a potential for inaccurate reporting
and fraudulent events to occur which
could damage the Group’s reputation.
The Group has processes and procedures in
place which act as controls to mitigate risk. The
Group has completed the implementation of its
new enterprise resource planning (ERP) system
which further enhances internal controls. The
ERP implementation has introduced streamlined
and enhanced business processes with process
documentation updated accordingly.
An internal audit function has been established
with an agreed twelve month work plan.
Management of growth
As the Group continues to experience
strong growth, there is a risk that if this
growth accelerates exponentially (without
being controlled and managed effectively),
the Group may not be in a position to maintain
the high standards of customer service that
our customers are accustomed to.
Change over prior year
Unchanged
Internal controls
The Group’s resources and finances must
be managed in accordance with rigorous
standards and stringent controls. A failure
to meet those standards and implement
appropriate controls may result in the
Group’s resources being improperly utilised
or its financial statements being inaccurate
or misleading. There is also a risk that the
Group could suffer financial loss owing to
fraudulent activity or unauthorised access
to or misuse of Group bank accounts and/or
other resources leading to the loss of funds.
Change over prior year
Unchanged
Data privacy
We hold customer and colleague personal
data. Although the threat landscape has
been ever changing, the risk remains
unchanged. We continue to monitor and
manage the risk closely, through robust
governance and oversight mechanisms.
Change over prior year
Unchanged
Failure to comply with legal or
regulatory requirements relating
to data privacy in the course of
our business activities results in
reputational damage, fines, or other
adverse consequences. These can
include criminal penalties and
consequential litigation which may
result in adverse impacts on our
financial performance or unfavourable
impacts on our ability to do business.
Our data privacy policies and processes
(including privacy notices, records of
processing, impact assessments and data
governance) establish how we protect and
appropriately use personal data. We recognise
the importance of ongoing training and
communication to raise awareness of good
data handling practices, and to help prevent
personal data incidents. We carry out regular
induction, awareness, and refresher training
for our colleagues.
Failure to address this risk could result
in key processes and systems being
unavailable in the event of a significant
incident affecting their availability.
The Group has resiliency built into its critical IT
systems/processes and maintains backup and
recovery capabilities as well as testing to ensure
availability is not interrupted or adversely
affected. Key IT systems including the ERP and
CRM are cloud based with resilience established
which helps to mitigate loss of service risk.
Business continuity
The Group is exposed to risks that, should
they materialise, may give rise to the
interruption of critical business processes
that could adversely impact the Group and/
or its customers. There is also a risk that the
IT systems and infrastructure may be affected
by loss of service or system availability
which impacts the provision of services
to customers.
Change over prior year
Unchanged
Emerging risks
Our emerging risks are reported to the Audit and Risk Committee alongside our principal risks. We conduct horizon scanning to
enable a medium and longer-term view of emerging risks to our business including feedback from customers, reviewing external
publications and discussions with our advisers. We are currently tracking several emerging risk themes including technological,
political, and economic. We continue to monitor the risk indicators on a periodic basis for these emerging risks.
FD Technologies plc Annual Report 2023 | 29
Corporate responsibility and sustainability
We are a people
front and centre business
We take pride in being a people-first business. Whether it is servicing our customers,
engaging our colleagues or supporting our local communities, a people-centric
approach is at the core of our sustainability approach.
Our priorities
Our sustainability focus continues to be centred on those areas that have the greatest impact
on our strategy. We believe that acting responsibly is the key to delivering long-term success
and goes right to the heart of our values and culture as an organisation. We have identified our
core pillars of sustainability as being Our People, Our Environment and Our Communities, as
outlined below with references to the applicable UN Sustainable Development Goals. We are
committed to building on the efforts outlined below to ensure that we continue to adopt best
practices across the entire spectrum of the Group’s activities.
Our People
Our Environment
Our Communities
We have always had a strong focus
on our people, recognising that they
provide the key to our success.
We take our environmental
responsibilities seriously and we
continuously strive to embed these
in our operating model. We aspire
to apply sustainability management
standards equal to the Group’s
business ambitions.
Giving back goes to the core of
our Group. We strive to make a
difference in the communities we
operate in globally with a particular
focus on giving back to charities
and collaborating with local
educational initiatives.
30 | FD Technologies plc Annual Report 2023
Strategic report Our People – creating the world’s most
rewarding employee experience
Evaluated and benchmarked every
employee across the business to make sure
everyone is being paid competitively and
fairly for the critical work that they do
Successful implementation of our new
Human Resources Information System
(HRIS), Oracle Cloud Fusion, to help us
work more strategically
Over
81,600
hours of accredited learning undertaken
Sustainable engagement at
82%
showing that our employees are engaged,
enabled and energised
Attracting top talent
During the year, we embarked on a people brand awareness
programme to promote the employee experience across the
Group. With an ongoing “war on talent” globally, attracting the
right people remains critical to our ongoing success. We have
invested heavily in our talent acquisition team to ensure we
continue to remain strategically aligned to the Group’s goals.
We continue to attract a high number of applications with
12,500 in FY23 (FY22: 12,000) and we hired 928 people during
the year (FY22: 1,118). Several of these hires were for key strategic
roles across the Group. In order to ensure our approach to talent
acquisition is sustainable we have greatly reduced our use of
recruitment agencies and directed our investment into our
global talent acquisition team.
Creating a culture of learning and development
We strive to continuously create a culture of learning and
development for all of our people. By creating an inspirational
place to work we empower our people to fulfil individual career
ambitions whilst simultaneously increasing the rate of growth in
our business. Our focus is on the continued development of our
people with high levels of engagement in our learning and
development offerings. We continued to enhance both our
internal and external training offerings to ensure the training
needs of both our business and our people were met.
This has been a transformative year for us with a clearer
strategic focus on employee development. Last year we
introduced our People Management model, enhanced our
continuous ongoing review programme and introduced a route
to self-promotion. We shifted the focus to empower our people
to fuel their own growth and development and we see this as
key to our longer-term success.
People Manager model
Performance
Leadership programmes Development tools
Last year we introduced the
People Manager model and
this year we developed this
by rolling out professional
and personal development
training to equip 500 + People
Managers to support their
teams and colleagues across
the business. The model
seeks to establish consistent
engagement and people
management practices across
our business and ensures that
every colleague is allocated
a People Manager.
We shifted our focus from a
traditional annual review to
delivering continuous, regular
on-the-pulse feedback.
We have also enhanced our
promotion process across
the Group and for the first
time introduced the ability for
our people to self-nominate
for promotion.
We have designed two
bespoke programmes to
offer structured and practical
training for both our high-
potential leaders (Aspiring
Leadership Programme)
and our Senior leaders
(Leadership Excellence
Programme). By constantly
upskilling our People we are
ensuring we have a pipeline
of talent primed to take on
leadership roles in the future.
and recognition
This year we introduced a richly
integrated performance
management tool which
facilitates the ongoing
engagement with people
and allows for 360-degree
feedback and also recognition
on a timely basis.
FD Technologies plc Annual Report 2023 | 31
Corporate responsibility and sustainability continued
Neurodiversity
As a Group we appreciate that neurodiversity is an essential
form of human diversity. To the Group, the idea that there is one
“normal” or “healthy” type of brain or mind or one “right” style
of neurocognitive functioning is no more valid than the idea that
there is one “normal” or “right” gender, race or culture. This year
we put neurodiversity on our agenda for the first time and took
key steps to start the process of embedding this awareness
across the Group, including Neurodiversity training to all of our
senior managers and ‘Just A Minute’ training to over 800 of our
people. This training allows people with a learning difficulty,
autism or a communication barrier to tell others they need ‘Just
a Minute’ discreetly and easily. We have also partnered with the
NOW Group, a social enterprise supporting people with learning
difficulties and autism into jobs with a future.
Empowering employee voice — employee engagement
We are now in the fourth year of running our annual engagement
survey. There are many positives to take from the Group results
including sustainable engagement being at 82%, showing us that
our employees are engaged, enabled and energised. However, we
accept that there is still work to do around enhancing reward and
benefits. The investments made in learning and development
together with people development initiatives are all aimed at
empowering our colleagues to progress their careers and achieve
their own personal development goals. We strive to ensure our
people are engaged and we believe that open and interactive
communications are key in cultivating an engaged workforce.
Our approach to employee engagement is all encompassing
from regular town-halls to people recognition awards.
Our People continued
Reward and recognition
The post-pandemic climate saw a “war on talent” and in order to
remain competitive and appealing we continued to prioritise our
reward and recognition strategy. As part of this we evaluated
and benchmarked all roles across the business to make sure our
people were being paid competitively and fairly for the important
work that they do. We value effort and excellence and recognise
that we have an exceptionally talented and diligent team, which
cares passionately about the work it does and the service it
provides to clients.
Cultivating a culture of wellbeing
To ensure our people are fully supported we commit to a People-
Care approach. We have an all -encompassing approach to
wellbeing to ensure we are addressing the five pillars of wellbeing
(financial, physical, mental, emotional and environmental). From
global wellbeing seminars to issuing mental health first aid training
to all managers we have introduced a raft of measures to ensure
that the wellbeing of our people is a priority.
Actively promoting inclusion and diversity at all levels
This year we were honoured to be awarded the Silver accreditation
from Diversity Mark NI. The Diversity Mark accreditation is a
“Mark of Progress” that recognises our progress with inclusion
and diversity across the Group. We pride ourselves on the
diverse, inclusive and vibrant team that we have built and to
ensure they remain at the very heart of what we do we will
continue to embed networks and support initiatives across
the Group to support multiple diverse groups.
Our diversity efforts
Gender diversity remains a challenge within the wider industry,
where just approximately 19% of roles are undertaken by women
(Tech Nation, 2022). During the year, the proportion of women in
the Group increased to 30% (FY22: 29%). We remain committed
to improving the proportion of women in the Group with focused
talent acquisition campaigns alongside the delivery of key initiatives
such as our internal Strive Mentorship programme and our
corporate partnership with the Lean-In Foundation, which is
an initiative designed to get small groups of women together
regularly for peer mentorship. We also ensure our Women’s
Network continues to embed with the appointment of an
executive sponsor.
In addition to our efforts to increase our gender diversity we also
have two further established networks — FD Pride, representing
our LGBTQIA+ community, and FD Multicultural, representing
our ethnic diversities across the Group. We have executive
sponsorship of these networks and we have also embedded
representation from all parts of the Group with the nomination
of network representatives. We continue to drive engagement
in these networks with a calendar of events to mark key celebrations
including Pride and Diwali. We recognise that developing our
allies across the Group will be key to the furtherance of our
diversity objectives. Subsequently, we have issued mandatory
diversity and inclusion training together with unconscious basis
training to all of our people.
32 | FD Technologies plc Annual Report 2023
Strategic report Our Environment — committed
to a sustainable future
All of our people have access
to hybrid working
Focus on location strategy to reduce
travel-related carbon emissions
24%
reduction in energy usage emissions
Commitment to provide environmental
awareness training to all of our people
As a provider of technology and professional services, the
Group’s direct operations have a minimal impact on the environment.
Nonetheless, as the technology sector is forecasted to continually
grow, its ability to contribute to global emissions will naturally
increase. Therefore, we are committed to reducing our
environmental impact. This is central to our relationship with
our shareholders, our people, our clients and our communities.
The Group recognises that the business community has a
responsibility to act to preserve our environment and we are
committed to play our part, by minimising the impact our
operations have on the environment.
Our approach to the Task Force on Climate-related
Financial Disclosures (TCFD)
We understand that climate change is an increasingly significant
issue for our regulators, investors and clients, and the Task Force
on Climate-related Financial Disclosures (TCFD) recommendations
provide an important framework for recognising, evaluating and
disclosing the associated risks and opportunities. We commit
to publishing annual climate disclosures commencing in 2024.
We will adopt an effective TCFD aligned climate disclosure to ensure
that we comply with the UK Government’s mandate that listed
companies should disclose according to TCFD recommendations.
Hybrid working — the future of work
To us, hybrid working is about merging remote and office based
working, giving our people greater flexibility to work in the
location that best suits them, taking into consideration the
needs of their role, their work, their team members, and our
clients. Aside from supporting our people to work effectively
in a more flexible manner, hybrid working also provides us with
a unique prospect to considerably decrease our environmental
impact especially with regards to business travel and employee
commuting, which are significant contributors to our environmental
impact. Our entire workforce has the opportunity for hybrid
working and this has had a positive impact on the environment.
Location strategy
Following the onset of the Covid-19 pandemic we significantly
reviewed our location strategy. Our focus was to localise our
employees in region following a short-term deployment, driven
by our motivation to help streamline our operational processes
across the Group together with reducing the impact that
short-term secondments have on the Group’s carbon footprint.
Reducing our energy usage
Ahead of any detailed emissions analysis that the Group may
make in the future, it is required to report its energy use and
impact under the Streamlined Energy and Carbon Reporting
(SECR) regulations.
During the year, we focused our efforts on ensuring the environmental
efficiency of our corporate real estate, particularly during the
refurbishment and upgrade of our Newry office completed in
June 2022, in which we upgraded insulation and ensured the
use of energy efficient lighting. Further, due to our hybrid
working model we were able to consolidate our Belfast office
by one floor meaning that our energy usage naturally decreased.
During FY23 we implemented the enhancement of our data
collection processes so we can publish a more comprehensive
data set in relation to our environmental impact, whilst
completing ESOS phase 2. In 2023, we will further be setting out
a clear and robust environmental strategy, including the targets
by which our progress will be measured, whilst working towards
ESOS phase 3 compliance. Working with our internal
sustainability team to implement an Environmental Management
System, the plan will involve a detailed audit of our material
impacts and a way forward that reflects our growing business.
FD Technologies plc Annual Report 2023 | 33
Corporate responsibility and sustainability continued
Our Environment continued
Reducing our energy usage continued
For FY23 the UK energy used was 702,325 kWh (FY22: 927,986
kWh/FY21: 1,013,140 kWh) showing the impact of the efforts to
increase environmental efficiency. Using the UK Government’s
GHG Conversion Factors Guidance to calculate the quantity of
emissions provides scope 2 emissions of 148 (FY22: 195/FY21:
257) tonnes of carbon dioxide equivalent, representing a 24%
reduction in emissions over the prior year. The SECR regulations
require a statement of relevant intensity ratios, which are
an expression of the quantity of emissions in relation to a
quantifiable factor of the business activity. The Group has
identified two such intensity ratios, set out below.
Intensity ratios for the year to 28 February 2023 (tonnes of CO2e per unit)
Total revenue
Employees
0.00 (FY23)
0.00 (FY22)
0.00 (FY21)
0.05 (FY23)
0.07 (FY22)
0.10 (FY21)
Environmental benefits
of KX technology
Our customers across industries typically use KX as an analytics
platform to enable them to reduce waste and improve yield
and for predictive maintenance. Not only is KX an enabler
of environmentally friendly operations, in addition we have
benchmarked ourselves as up to 100x more efficient than
competing streaming analytics technologies and have seen
reductions in our customers’ electricity, cooling, space and
hardware requirements in the range of 80–90% against our
competitors. We are rightly proud of the undoubted
environmental benefits that KX delivers through its energy and
environmental efficiency and we have continued to focus efforts
on ensuring KX remains the most efficient streaming analytics
technology available.
34 | FD Technologies plc Annual Report 2023
Strategic report
Our Communities — creating
a culture of partnership
£35,000
donated by the Group to our three
chosen charities in support of Ukraine
Over
£40,000
donated to a range of charities
by employees during the year
Social committees in each region
to support charity initiatives in all
of our offices
We have developed several key
partnerships across social,
charitable and educational sectors
Whilst our business operates internationally, all of our people remain
rooted in the communities where they live and work and helping
those less fortunate has been at our core for more than 20 years.
Charity
To coordinate our charity activities, we have established a charity
policy with the aim of being a good neighbour in the communities
in which we operate and to use the energies and talents of our
people in charitable fundraising activities.
A team comprising representation from across the Group has been
formed to coordinate these activities. We focused our support
in FY23 towards fundraising efforts for Ukraine; our employees
directly donated £35,000 and this sum was matched by the Group
so that an overall sum of £70,000 was donated to charities on the
ground in Ukraine. Furthermore, our people have also participated
in a variety of volunteering activities. The Group remains committed
to investing in youth development, and we continue to promote
and support our people in providing mentorship and career
advice via several partnerships within our communities.
In addition to fundraising events, the Group also encourages our
people to contribute to charities of their choice through a payroll
giving scheme under which donations are taken tax free from
their monthly salary.
Community involvement
The Group also engages with its local communities by supporting
initiatives to train and develop talent. Examples include support
at both school and university level to assist with developing
business and technology skills and to shape the curriculum to
ensure they are relevant to modern business requirements. We
have also developed several partnerships in connection with our
communities, particularly with a number of universities across the
UK and Ireland. We have also partnered with several education
based initiatives such as Young Enterprise and Business in
the Community.
Responsible operations — our approach to governance
The Group takes seriously its responsibilities to operate ethically
and responsibly, and this commitment is demonstrated through
a range of policies, with supporting governance in place.
The Group is committed to the highest standards of security
and privacy and is conscious that these matters are of great
importance to our stakeholders, such as people, customers
and partners. We regard the development and maintenance
of privacy and security infrastructure as critical to promoting the
sustainable development of the industrialised world because it
helps to promote individual wellbeing, supports equality, avoids
discrimination and empowers all genders through confidentiality
of their information. Privacy and security are also essential to
successful partnerships, which can then progress towards
sustainable development through cooperation with confidence
that shared information is managed safely.
Security business practices
We work with, support and engage with many large organisations
from a multitude of sectors who manage sensitive and confidential
data. As such, our adherence to high levels of IT and information
security is imperative. To ensure compliance with best practices
we continue to certify to the UK Government-backed cybersecurity
frameworks Cyber Essentials and Cyber Essentials Plus, testing
our controls, standardisation, and procedures. Our controls,
policies and procedures take a defence-in-depth and risk based
approach to secure — access controls, endpoint and network
protection, environmental controls, IT system architecture,
remote access policies, multifactor authentication, single
sign-on, password protection policies, back-up policies, quality
assurance, supply chain governance, change controls and
system support. All of our people undergo stringent pre-
employment screening to ensure secure user onboarding and
must then routinely complete IT security and awareness training
to highlight the risks of a modern security climate.
FD Technologies plc Annual Report 2023 | 35
Corporate responsibility and sustainability continued
Our Communities continued
Security business practices continued
This informs users of the potential impact a cyber-attack could
have, and the steps required to reduce the risk of cyber-crime
infiltration and data exfiltration. Regular phishing campaigns
are undertaken to understand user risk and subsequent
failure training, while incident response exercises, alongside
penetration and vulnerability testing of environments,
ensure we remediate any platform, process, or system risks.
Training
Delivering robust and regular training is essential to ensure our
workforce understands our policies and regulations that apply
to them. In addition to cybersecurity training, it is mandatory for
each employee to complete the following courses: Anti-Money
Laundering and Counter-Terrorist Financing, Anti-Bribery and
Anti-Corruption, Discrimination and Harassment, General Data
Protection Regulation (GDPR) and Global Code of Conduct.
We maintain a quarterly schedule of mandatory training for
both new starters and existing employees with training
completion rates tracked, followed up and reported to
the Executive Committee.
Privacy business practices
The Group has privacy policies and practices in place designed
to deliver compliance with privacy and data protection law,
including GDPR, to protect the personal information held by
the Group relating to stakeholders including clients, partners,
prospective people and digital/mobile visitors. Our privacy
policy can be found on the Group website here:
https://fdtechnologies.com/privacy-policy.
Anti-slavery policy
While we believe the Group’s risk of encountering human
trafficking and modern slavery may be low in the industry we
operate in relative to other industries, we are committed to
acting ethically and with integrity in all our business relationships
and to having processes to reduce the risk of slavery and human
trafficking in our organisation and supply chain. We choose
suppliers and contractors which we believe share our commitment.
The Board receives an update on the approach to modern
slavery and approves the modern slavery statement.
Anti-bribery and anti-corruption policy
The Group has policies and procedures in place to identify
and protect against anti-bribery and anti-corruption risks in
its business activities both internally and with third parties. All
employees must participate in mandatory training courses in
this area. The Group employs a mix of risk assessments, due
diligence questionnaires and screening. Our continuous
improvement has involved strengthening our use of independent
screening tools to assess counterparty risk leading to better
customer due diligence. Governance and risk assessment of
third-party suppliers has also been strengthened during the year
with the addition of an experienced Vice President of Procurement
and a review of our third-party management policy and procedures.
In the event that any concerns are raised of inappropriate
business practice related to bribery and corruption, there
is an escalation process to senior management.
Delegated authority process
The Board delegates sustainability authority as follows:
• Board sets strategy and policy for sustainability;
• Board delegates oversight to the Nomination Committee;
• Board delegates management responsibility to the ExCo; and
• ExCo delegates oversight to the Sustainability Management
Committee, which comprises a group of senior executives
representing key functions across the Group.
Whistleblowing policy
The Group has a whistleblowing policy that enables all employees
to confidentially report matters of concern to an independent
third party. No such matters arose during the year in question.
The details of any such reports, should they arise, will be
communicated to the Audit and Risk Committee.
Board
Corporate Governance Committees
NCG
Nomination and
ESG Committee
Audit
Audit and Risk Committee
Remuneration
Remuneration and Talent
Committee
Executive Committee (ExCo)
ExCo Management Committees
Key
Delegation
Recommendation
Sustainability
Sustainability Management Committee
36 | FD Technologies plc Annual Report 2023
Strategic report Our corporate
responsibility principles
Here we provide a high-level summary of the principles that guide our policies on corporate responsibility.
UN GC Principles FD Technologies’ business practices
FD Technologies is a business based on people and, therefore, we place significant emphasis on all aspects
of the welfare and wellbeing of our employees.
A foundation of Group policies is the rights of employees and the upholding and enforcement of relevant
laws for the many jurisdictions in which we operate.
Human rights
Additionally, the Group seeks to promote the same respect and consideration for rights across its supply
chain and endeavours through third-party due diligence assessment to only conduct business with parties
that uphold the rights of their employees.
FD Technologies is committed to the elimination of all forms of forced and compulsory labour, the effective
abolition of child labour and the elimination of discrimination in respect of employment and occupation.
Labour
Statement on modern slavery
Our statement on modern slavery is available on the Group website here: https://fdtechnologies.com/modern-slavery/.
FD Technologies is committed to minimising the impact of its operations on the environment and understands
the importance of reporting on that impact through recognised corporate responsibility standards.
Environmental impact
As a provider of software and professional services, the Group’s direct operations have minimal impact on
the environment, broadly limited to its own energy use. The Group does not manufacture or mine and does
not transport goods and so consequently its operations have no impact in terms of land, water or air
emissions. The Group does not provide Company vehicles to employees or Directors and does not operate its
own data centres.
Environment
Nonetheless, the Group does seek to minimise the limited impact its operations have on the environment
through a range of policies focused on environmental, corporate social responsibility and ethical and
sustainable business.
FD Technologies is committed to working against corruption in all its forms, including extortion and bribery.
Anti-corruption
Anti-bribery and corruption policy
As well as meeting its obligations under the Bribery Act 2010, the Group operates an Ethics Code of Conduct
which includes, inter alia, requirements relating to anti-bribery and corruption.
FD Technologies plc Annual Report 2023 | 37
Corporate
governance
In this section
40 Board of Directors
42 Chair’s governance statement
44 Governance framework
46 Report of the Audit and Risk Committee
49 Report of the Nomination and ESG Committee
52 Report of the Remuneration and Talent Committee
58 Directors’ report
60
Statement of Directors’ responsibilities
38 | FD Technologies plc Annual Report 2023
Corporate governance “ The past year has increased our
ability to execute our strategy,
through improvements in
enterprise systems, increased
senior management capability
and engagement throughout
the organisation.
The Board has confidence that
the Group’s strategy is working
and our progress over the past
year supports its effective
implementation.”
Donna Troy
Chair
FD Technologies plc Annual Report 2023 | 39
Board of Directors
Key:
A Audit and Risk Committee
Donna Troy
Chair (Independent)
Seamus Keating
Chief Executive Officer
Ryan Preston
Chief Financial Officer
N Nomination and
ESG Committee
R Remuneration and
Talent Committee
Chair
Committee membership
N R
Committee membership
None.
Committee membership
None.
Ryan joined the Board of First
Derivatives in January 2021
and has responsibility for the
Group’s financial operations.
Ryan was formerly chief
financial officer of
Independent News & Media
plc and at OVO Energy Retail,
having spent the early part of
his career at Tesco plc where
he was European CFO.
Other appointments
None.
Skills matrix
Technology industry, strategy,
listed company executive,
international expertise,
accounting qualifications.
Seamus was appointed as CEO
in January 2020. He was first
appointed to the Board as an
independent Non-Executive
Director in December 2012 and
was appointed Non-Executive
Chair in July 2013. He has over
20 years’ experience in the
global technology sector in
finance and operational roles
and has held a number of
non-executive roles since 2012.
He was chief financial officer
of Logica plc from 2002 until
2010 when he became chief
operating officer and head of
its Benelux operations. Prior
to his role at Logica plc, he
worked for the Olivetti Group
in senior finance roles in the
UK and Italy.
Other appointments
Seamus is currently a non-
executive director of Compare
the Market (CTM) Limited.
Skills matrix
Technology industry, finance
industry, strategy, listed
company executive,
accounting qualifications,
international experience.
Donna joined the Board of
First Derivatives in January
2018 as a Non-Executive
Director and was appointed
Non-Executive Chair
in January 2020. She has
extensive experience in both
senior executive and non-
executive roles within
multi-national technology
companies. She is based in
Austin, Texas.
Donna has held CEO, division
general management and sales
leadership roles in organisations
including IBM, Partnerware,
McAfee, SAP, Dell and Epicor,
delivering revenue and margin
growth while implementing
global go-to-market strategies
in businesses from start-up to
$8bn in revenue.
Donna holds a Bachelor of
Science degree, summa cum
laude, in Computer Science
from North Carolina State
University and in 2017 was
inducted into the North
Carolina State University
Computer Science Alumni
Hall of Fame.
Other appointments
Donna is currently on the
board of directors of Aptean.
Skills matrix
Technology industry, strategy,
listed company executive,
international experience.
40 | FD Technologies plc Annual Report 2023
Corporate governance Virginia Gambale
Senior Independent
Director, Designated
Workforce Engagement
Director (Independent)
Committee membership
N A
Virginia joined the Board of
First Derivatives in March 2015.
A US citizen, she is managing
partner of Azimuth Partners
LLC, which assists its clients in
the development of strategies
for growth, innovation and
international expansion.
Prior to forming Azimuth,
Virginia was a partner at
Deutsche Bank Capital
Partners and has also held
senior management positions
such as CIO at Merrill Lynch,
Bankers Trust, Deutsche Bank
and Marsh & McLennan
Companies, Inc.
Other appointments
Virginia is currently lead director
of Nutanix, and board director
of 10x Banking, Avellino,
Consumer Edge, JAMF, Virtu
Financial and Regis Corporation.
Skills matrix
Finance industry,
strategy, technology,
international experience.
Ayman Sayed
Non-Executive Director
(Independent)
Thomas Seifert
Non-Executive Director
(Independent)
Usama Fayyad
Non-Executive Director
(Independent)
Committee membership
R N
Ayman joined the Board of
First Derivatives in July 2020.
He brings to the Group
extensive experience in
enterprise technology and
a track record of driving
business success through
growth strategies focused
on product innovation. He is
currently president and
CEO of BMC Software Inc.,
a global enterprise software
company headquartered in
Houston, Texas.
Prior to his current role he was
president and chief product
officer of CA Technologies Inc.,
a Fortune 500 company
acquired by Broadcom Inc.,
where he was responsible
for the vision, strategy,
development and success
of the company’s portfolio of
products and solutions. Ayman
holds a Bachelor’s degree in
Electrical Engineering from
Cairo University.
Other appointments
In addition to his role at
BMC Software, Ayman is
also a director of Elisity Inc.
Skills matrix
Strategy, international
experience, technology
industry, listed
company executive.
Committee membership
A R
Committee membership
A
Thomas joined the Board in July
2020. Thomas is chief financial
officer of Cloudflare Inc., where
he is also responsible for the
company’s business data
analytics and data science. He
provides a wealth of expertise
across the cloud, SaaS and
data analytics, which is highly
relevant to the Group’s growth
ambitions. In addition, Thomas
has extensive operating
experience growing and
scaling technology companies
across cybersecurity, software
and semiconductors.
Prior to his current role Thomas
was chief financial officer of
Symantec Corp, a leading
cybersecurity company, where
he was responsible for the
implementation of
transformation and M&A
strategies. He was also CFO
at Advanced Micro Devices,
where he held an interim
CEO position.
Other appointments
None.
Skills matrix
Strategy, international
experience, technology
industry, listed company
executive, accounting
qualifications.
Usama joined the Board in
January 2022. Usama is the
inaugural executive director
of the Institute for Experiential
AI at Northeastern University
in Boston and is also the
founder and chair of Open
Insights, a company focused
on helping enterprises
drive full value from their
data assets.
He started his career at
NASA’s Jet Propulsion Lab
and after leadership roles
at Microsoft Research and
Microsoft SQL Server, he
became Yahoo’s first chief
data officer. From there,
Usama became global chief
data officer at Barclays in
London where he led digital
transformation projects that
reduced costs and helped
create new data products.
Other appointments
Usama is also a director of
Postprocess Technologies,
Inc., Open Insights Group
and Open Insights
Technology Corporation.
Skills matrix
Finance industry, strategy,
international experience,
technology industry.
FD Technologies plc Annual Report 2023 | 41
Chair’s governance statement
Delivering on strategy
The Board received updates from the CEO on business unit
performance at every Board meeting and the divisional leaders
have all attended Board meetings during the year to provide
detailed updates on business unit performance to enable the
Board to assess progress and provide direction if needed.
Venues for Board meetings rotate through the year to enable
the Board to visit the Group’s operations, facilitating dialogue
with employees at all levels in each location.
The right talent is the cornerstone of our growth and we
have continued to strengthen our senior management team
to ensure we can deliver on our strategic priorities. Accountability in
behaviour and results is core to the structure of our remuneration
strategy, linking compensation to achieving the value creation
we have laid out in our short and long-term goals. Key to this
was the work of the Remuneration and Talent Committee,
particularly around the Long Term Incentive Plan awards
which are crucial to our recruitment and retention efforts.
We review our succession planning process annually and have
action plans in place to continue to develop potential leaders and
increase our pipeline depth across the organisation. Two bespoke
programmes were introduced this year to offer structured and
practical training for both our high-potential leaders (Aspiring
Leadership Programme) and our senior leaders (Leadership
Excellence Programme). Constantly upskilling our people will
ensure we have a pipeline of talent primed to take on leadership
roles in the future.
Employee engagement is a key metric that we review to ensure
we have the right culture, skills, and strategic alignment to
accomplish our mission. I am pleased with the level of
engagement from employees, as reflected in our annual
employee survey. This demonstrates that in important categories
such as sustainable engagement we have an engaged, enabled
and energised workforce.
A diverse and inclusive workforce is critical to running a
sustainable and successful business. Our work on diversity,
inclusion and belonging continued this year resulting in
achievement of the Silver accreditation from Diversity Mark NI.
We continue to drive clear focused initiatives that are outcome
based ensuring we are making measurable progress.
Last year I noted that much work had been done to strengthen
enterprise risk management and enterprise reporting systems.
I am pleased that a new enterprise reporting system is now in place
supporting the business and its decision-making processes by
providing increased control and better insights. The work of the
“ We have a highly talented
and experienced Board and
I am confident these skills will
serve us well as we accelerate
our growth.”
Donna Troy
Chair
On behalf of the Board, I am pleased to
present the Group’s Corporate Governance
Report for the year ended 28 February 2023.
As I outlined in my review earlier in this report, this year has
been characterised by marked acceleration in the financial
performance of KX and First Derivative. The Board’s priority has
been to support the transformation of the Group with a focus
on executing our strategy for the benefit of our stakeholders.
I consider that achieving our goals requires the highest
standards of governance and culture. As Chair I seek to
demonstrate objective judgement and promote constructive
discussions between Board members, while ensuring that
Directors continue to receive accurate, timely and clear
information that enables them to perform their roles effectively.
42 | FD Technologies plc Annual Report 2023
Corporate governance l
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Skills matrix
100% Technology industry
57% Finance industry
100% Strategy
71%
Listed company executive
43% Accounting qualifications
100% International experience
1–3 years: 57%
4–6 years: 14%
7–9 years: 14%
9 years+: 14%
Male: 71%
Female: 29%
Board composition
Length of tenure
Gender diversity
58+
71+
29+
Balance of Executive/Non-Executive
Executive: 29%
Non-Executive/
Independent: 71%
Audit and Risk Committee continued to expand during the year,
as outlined in detail in the Committee’s report, and will contribute
greatly to our performance in the years ahead by ensuring that our
financial reporting processes are robust and our risk management
framework reflects the Board’s appetite for risk.
Since my last report, there have been no changes to Board
composition. This stability and continuity of leadership have
strengthened the Board’s ability to focus on executing our
strategy. We have a highly talented and experienced Board and I am
confident these skills will serve us well as we accelerate our growth.
We review the composition of our Board on an annual basis and
have a well-defined process and skills matrix that is updated to
support our strategic goals.
A review of Board effectiveness was undertaken during the year
using an independent, externally facilitated questionnaire which
asked questions in all key governance areas and covered the Board
and its Committees. The Board reviewed the output following the
evaluation and agreed the key actions shown on page 50.
• review, evaluate and make recommendations to the Board
regarding the Company’s major product and technology plans,
strategies and intellectual property, including its research and
development activities, the technical and market risks
associated with product development and investment,
and the protection of the Company’s intellectual property;
• review, evaluate and make recommendations regarding talent
and skills of the Company’s workforce supporting its product,
technology, and research and development activities needed
to be successful now and in the future;
• monitor the performance of the Company’s technology
development in support of its overall business strategy;
• monitor and evaluate existing and future trends in technology
that may affect the Company’s strategic plans, including
monitoring of overall industry trends; and
• assess the Company’s risk mitigation policies and procedures
relating to products based on new technology or significant
innovations to existing technology.
In summary, the past year has increased our ability to execute
our strategy, through improvements in enterprise systems, and
increased senior management capability and engagement
throughout the organisation. The Board has confidence that the
Group’s strategy is working and our progress over the past year
reflects this.
Compliance with the UK Corporate Governance Code
The Company is listed on AIM and Euronext Growth Dublin and
is committed to ensuring the operation of high standards of
corporate governance. It has adopted the 2018 UK Corporate
Governance Code (the “Code”) as its governance framework
and has put in place procedures and policies to comply.
Technology and Product Committee
In FY21 the Board established a technology sub-committee to
steer the development of our technology, and address emerging
opportunities and risks to ensure we retain our leadership position
and are on course to meet our strategic goals. Given the importance
of these activities to our strategy, the Board has decided that with
effect from 1 March 2023 the sub-committee will become a full
Board Committee. Known as the Technology and Product
Committee, it is chaired by Non-Executive Director Usama Fayyad
with Non-Executive Director Ayman Sayed as the other Committee
member and meets at least quarterly. Its terms of reference are:
During the year, the Company has complied with all of the
provisions of the Code.
Donna Troy
Chair
22 May 2023
FD Technologies plc Annual Report 2023 | 43
29
+
N
71
+
N
14
+
14
+
14
+
N
Governance framework
The Board
Led by the Chair, the Board’s principal responsibilities are:
• to establish the vision, mission and values of the Group;
• to set strategic objectives and provide the leadership to
put them into effect;
• to monitor and assess financial performance;
• to embed a framework of controls which allow for the
identification, assessment and management of risk; and
• to ensure the Group fulfils its obligations to shareholders,
employees, clients and other stakeholders.
The effective discharge of these responsibilities is intended to
achieve high standards of governance within the Group. The
Board is acutely aware that good governance is a prerequisite to
successful execution of Group strategy on a sustained basis and
constantly strives to ensure that its policies and practices in this
area are regularly reviewed and, where necessary, updated to
reflect the evolution of the Group’s operations. This has been
particularly important in recent years as the pace of transformation
has increased, resulting in accelerated product and services
development, a broadening of the range of customers we
serve and the increasing scale of our operations.
Matters reserved for a decision of the Board include approval of
the Group’s commercial strategy, annual operating and capital
expenditure budgets, business plans, acquisitions, oversight of
the recruitment of key executives, significant contracts, Annual
Reports and interim statements and any substantial funding and
capital expenditure plans.
The Board meets regularly to discuss and agree on the various
matters brought before it, including trading results, key
personnel matters and significant investments. FD Technologies
has a highly experienced Board with a depth of skills and
expertise relevant to the effective running of the Group,
supported by the senior management team.
In addition to the Board meetings, there is regular
communication between Executive and Non-Executive Directors
to update the Non-Executive Directors on matters requiring
attention prior to the next Board meeting. In addition, the Chair
meets separately with the Non-Executive Directors.
Responsibilities of the Chair and
Chief Executive Officer
The Chair is responsible for the leadership of the Board,
ensuring the efficient discharge of its principal responsibilities
described above. The CEO is responsible for implementing the
Group’s strategy and for the financial performance, risk
management, people development and other key components
of ongoing operations.
Composition of the Board
The Code requires that the Board should contain a balance of
skills, experience, independence and knowledge of the Company.
It should also include an appropriate combination of Executive
and Non-Executive Directors and there should be a formal,
rigorous and transparent procedure when appointing new
Directors to the Board.
44 | FD Technologies plc Annual Report 2023
These matters are discussed more fully in the Report of the
Nomination and ESG Committee, which details the changes
to Board composition during the year. Board composition is
regularly reviewed to ensure the requisite mix of skills and
business experience is maintained and to ensure the proper
functioning of the Board.
When a new appointment to the Board is proposed, consideration
is given to the capabilities, knowledge and experience that
a potential new member could add to the existing Board
composition. Before the appointment of a Non-Executive Director
is confirmed, the Chair establishes that the prospective Director
can commit the time and effort necessary to fulfil their duties, in
terms of availability both to prepare for and attend meetings and
to discuss matters at other times.
Role of the Senior Independent Director
The Senior Independent Director:
• provides support to the Chair on governance issues;
• works with the Chair and other Directors to resolve significant
issues should they arise, particularly where stakeholders have
concerns that are not being addressed by the Chair or Chief
Executive; and
• takes the lead in evaluating the performance of the Chair and
serves as an intermediary and sounding board for Directors.
Board information and development
Both at its periodic meetings and in separate briefing sessions
between Non-Executive Directors and senior management
(including Executive Directors), the Board is kept fully apprised
of all material commercial and technological developments likely
to affect the Group’s performance and prospects.
Updates dealing with changes in legislation and regulation
relevant to the Group’s business are provided to the Board by
the Company Secretary/Chief Financial Officer and through
the Board Committees. The Company’s nominated adviser also
attended a Board meeting to provide refresher training on
AIM rules and regulations. The Board rotates the venue for its
meetings between the major operating centres of the Group
to encourage two-way communication between the Board
and employees across its operations.
The Board recognises its overall responsibility for the Group’s
system of internal control and for monitoring its effectiveness.
All activity is organised within a defined structure with formal
lines of responsibility and delegation of authority. The Group
produces information packs on a weekly and monthly basis
detailing key financial and marketplace information. The Group
also produces regular information packs which are distributed
to Directors to enable the Board to monitor operational
performance and the cash position and as a result allocate
the Group’s resources.
Adherence to high standards in the areas of health and safety
and corporate social responsibility is also monitored by the
Board on a regular basis.
Re-election
Under the Code, Directors should offer themselves for re-
election at regular intervals. The Board has decided that all
Directors will offer themselves for re-election annually.
Corporate governance Board Committees
The Group has an Audit and Risk Committee, a Remuneration
and Talent Committee and a Nomination and ESG Committee.
These Committees consist of Non-Executive Directors and have
written constitutions and terms of reference which can be found
on the Group’s website.
The Audit and Risk Committee’s role is to assist the Board with the
discharge of its responsibilities in relation to internal controls and
external audits particularly with respect to the integrity, reliability
and transparency of published financial information. The
Committee has formal meetings prior to the publication of the
interim and final results and additional meetings on an ad hoc
basis as and when required. The auditor attends the Committee
as and when required including the audit plan meeting and the
meeting prior to the publication of the final results.
The Remuneration and Talent Committee meets periodically to
determine the remuneration of the Board and senior executives.
Remuneration levels are set in order to attract and retain the
talent needed to run the Company based on objective
comparable market data. In addition, the Remuneration
Committee provides guidance and direction into all major
compensation-related policy decisions by the Group.
The Nomination and ESG Committee ensures that there is an
appropriate balance of skills, experience, diversity, independence
and knowledge on the Board and its Committees, reviews the
size and composition of the Board and makes recommendations
to the Board. The Committee receives reports from and provides
input on the CEO’s plans for executive succession and development.
The Committee also considers and agrees: (i) appointments to
and removals from the Executive Committee and changes in
other executive direct reports to the CEO; and (ii) proposals
to restructure the Executive Committee, should the need arise.
The Committee also oversees and monitors the Group’s
governance framework and endorses governance policies
and makes recommendations to the Board.
Conflicts of interest
In order to identify and manage conflicts of interest, all members
of the Board are required to promptly notify the Chair and
Company Secretary in advance of any matters where there is
a reasonable likelihood that such matter could give rise to an
actual or perceived conflict of interest. This would include, but
is not limited to, other executive roles and directorships, or
material shareholdings in companies that may compete with FD
Technologies or which may have a customer or supplier relationship
with the Group or which may benefit from investment by the
Group. In such circumstances, Board members would withdraw
from any consideration of the matter by the Board and, in the
event that the matter related to competition, may be required
to resign from the Board. No conflicts of interest arose during
the year.
Internal control
The Board has overall responsibility to ensure that the Group’s
internal control system is comprehensive, coherent and responsive
to the evolving environment in which the Group operates. The
Board is also responsible for maintaining a sound system of risk
management and internal control that is sufficient to meet its
business objectives whilst effectively reducing risks to an
acceptable level.
The Group has built a robust framework of internal control
around risk identification, impact assessment, probability of
occurrence and mitigation strategies, which has been in place
for the year under review and up to the date of approval of the
Annual Report and Accounts. It is reviewed annually by the Board
and is in accordance with the guidance included in the FRC’s
“Guidance on Risk Management, Internal Control and Related
Financial and Business Reporting”. Further information can be
found in the Principal Risks and Uncertainties Report.
The internal control framework was monitored and reviewed
by Internal Audit with findings presented to the Audit and Risk
Committee and the Board. Any controls which did not pass had
agreed action plans in place to remediate. The Board confirms
that it is not aware of any significant failings or weaknesses in
the Group’s system of internal controls.
Board effectiveness review
In order to evaluate its effectiveness, the Board developed a
series of criteria based on the Code and generally accepted
views of the role and responsibilities of a board, assessed
its behaviour and performance against these criteria and
implemented changes based on these findings. This is an
iterative process that will be developed further in the future.
Meeting attendance
S Keating
D Troy
U Fayyad
V Gambale
R Preston
A Sayed
T Seifert
Number of meetings
Board
Audit and Risk
Committee
Remuneration
and Talent
Committee
Nomination and
ESG Committee
7/7
7/7
6/7
6/7
7/7
6/7
5/7
7
—
—
6/6
4/6
—
—
6/6
6
—
7/7
—
—
—
7/7
7/7
7
—
4/4
—
4/4
—
4/4
—
4
Total
7
18
12
14
7
17
18
24
FD Technologies plc Annual Report 2023 | 45
Report of the Audit and Risk Committee
Enabling continued growth
“ The Committee plays an
important role in ensuring the
integrity of financial reporting,
monitoring the effectiveness
of the internal control
environment and the risk
management framework
which underpin the Group’s
ability to deliver continued
growth effectively.”
Thomas Seifert
Non-Executive Director
Principal activities
Governance of the ERP implementation
The Committee governed the implementation of the
enterprise resource planning (ERP) system to ensure there
was no risk to the Group reporting of the full year results
and to the delivery of the strategy.
Cybersecurity
The Committee ensured that information under Group control
is protected from loss or malicious amendment; that systems
and applications are protected from attack and disruption;
and that the evolving cyber threat landscape is monitored,
and controls are implemented to mitigate the risks.
Evolution of the risk management framework
The Committee led a review of the Group risk management
framework, building on the work from the prior year, which
included enhancements to the three lines of defence, a key
enabler of risk management. The Committee, along with
the Board, approved the Risk Appetite Statement which
expresses the level of risk the Board is willing to accept in
achieving strategic objectives.
Dear shareholders
I am pleased to present the report of the Audit and Risk Committee
(the “Committee”) for the year ended 28 February 2023. This report
provides insight into the work carried out by the Committee and
outlines the key areas of focus of the Committee during the past year.
Focus in FY23
• Governance of the ERP implementation
• Oversight of cybersecurity
• Evolution of the risk management framework
Priorities for FY24
• Governance of debt refinancing
• Oversight of cybersecurity
• Financial statements and reporting
Membership
Thomas Seifert (Chair)
Virginia Gambale
Usama Fayyad
Meeting attendance
Thomas Seifert (Chair)
Virginia Gambale
Usama Fayyad
46 | FD Technologies plc Annual Report 2023
Corporate governance
Role of the Committee
The Committee has been charged by the Board with the task of
providing governance and oversight over the integrity of accounting
and financial reporting, reviewing the risk management framework
of the Group and managing the relationship with the external
auditor. The Committee’s agenda includes items such as
governance of the ERP implementation, Cybersecurity, the risk
management framework, whistleblowing, fraud and policy updates.
As detailed below, the Committee also considers the going concern
and longer-term viability of the Group. The Committee meets
regularly to consider the matters under its remit, including meetings
prior to the release of both the interim and full year financial reports.
Composition
The Audit and Risk Committee is chaired by Thomas Seifert, who
is currently chief financial officer of NYSE-listed Cloudflare Inc.
and who has held CFO roles at global, public technology companies
including Symantec and Advanced Micro Devices. The other
Committee members are Virginia Gambale, who is a director
of other listed companies and was a CIO at Deutsche Bank
and Merrill Lynch; and Usama Fayyad, who has held senior
technology positions at multi-national technology organisations
including Yahoo, Microsoft and Barclays. The members of the
Committee have significant experience of financial matters
developed during their past and current business careers.
Governance
The Committee sets its own agenda in line with best practice.
Only Committee members have the right to attend Committee
meetings. Regular attendees include the Chief Executive Officer,
Chief Financial Officer and employees from a variety of departments
to aid their understanding of the business and to assist in discharging
their duties. The external auditor, Deloitte, also attends Committee
meetings and has direct access to the Chair of the Committee.
Standing agenda items
Issues considered by the Committee during the year included items
that are a standing part of its remit as well as a number of areas
which the Committee considered required a deeper focus.
Accounting and financial reporting
The Committee ensures that the financial results are accurate,
timely and in line with accounting standards and provide support
on key judgements. During the year, the Committee considered
and recommended the approval of the interim financial results,
preliminary results and the Annual Report.
The Committee carefully addressed the key issues that faced the
Company within the financial statements, including ERP data
migration. The Committee also assessed all areas of key reporting
estimates and judgements which principally comprise revenue
recognition, accounting for equity investments, goodwill
impairment, employee taxes, deferred tax and capitalisation of
internally developed software and concluded that all judgements
were reasonable and appropriate. The outcome of the Committee’s
findings were discussed with the External Auditor. We are satisfied
that the judgements and estimates applied in the financial
statements satisfy the requisite standards both in terms of
accounting treatment and disclosure.
The Committee ensures compliance with relevant regulations
for financial reporting.
Going concern
The Committee reviewed and challenged management’s financial
forecasts including cashflow projections, borrowing projections,
sensitivity analysis on revenue and expenditure plans and the
potential impact that the conflict in Ukraine could have on the
business. The Committee and the Board concluded that the
Company and the Group are going concerns and the financial
statements are prepared on that basis. This treatment reflects the
reasonable expectation that the Group has adequate resources to
continue in business for the foreseeable future taking into
account the various risks set out in this Annual Report.
Viability statement
In accordance with the UK Corporate Governance Code, the
Board has considered the Group’s current financial position
and future prospects and have a reasonable expectation that
the Group will be able to continue in operation and meet its
liabilities as they fall due over the period of the assessment.
In reaching this conclusion, considerations that impact this
assessment include the Group’s current financial position and
available financial resources, the Group’s business model as
outlined in this Annual Report and management’s forecasts
presented to both the Committee and the Board.
The Annual Operating Plan involves input from all relevant
business leads and the impact of strategic initiatives, together
with consideration of key risks. This results in a detailed
twelve-month outlook which includes cash flow projections
and capital expenditure requirements. The Annual Operating
Plan is reviewed and approved by the Board and performance
against the plan is reviewed throughout the year. In addition
to the detailed Annual Operating Plan, a three-year forecast
is prepared using assumptions of future growth and the costs
required to support the Group’s strategy during the period.
Given the technology based nature of the Group’s business, the
Board considers that three years is an appropriate period over
which to provide a viability statement and believes this provides
the readers of the Annual Report with a reasonable degree of
confidence. The Board has no reason to believe that the Group
will not be viable over a longer period.
Enterprise risk management
The Committee is responsible to the Board for ensuring the
Company has appropriate systems and procedures for the
identification, assessment, management and monitoring of risk.
The Committee reviewed the Group’s risk register, principal and
emerging risks and mitigation strategies, with particular
discussion around the principal risks. Further details are
provided in the Principal Risks and Uncertainties Report.
Where risks are insurable, the Committee reviews the cover in place
and makes recommendations in line with the Group’s Risk Appetite
Statement. The Group Risk Appetite Statement is reviewed and
approved annually by the Board. The Committee reviews the
procedures in place to identify emerging risks within its business
units and at the Group level on an annual basis. Emerging risks,
after review and where appropriate, are added to the Group’s risk
register, enabling them to be monitored along with the efforts
taken to mitigate them.
FD Technologies plc Annual Report 2023 | 47
Report of the Audit and Risk Committee continued
Principal activities
Implementing the ERP system
Issue: Governing the implementation of the ERP system
to ensure there is no risk to the Group reporting results
and ongoing management of the system.
How the Committee addressed the issue
The Group went live with its new SaaS enterprise resource
planning system in December 2022. The system - encompassing
functionality including procurement, human resources, finance
and project activities - introduced new, integrated processes and
controls that were configured in support of the business
operation. Plans, progress, risks and the change management
approach were reviewed with and agreed by the Committee
throughout the implementation phase. A review of post go live
activities and further configurations are discussed and agreed
with the Committee.
Cybersecurity
Issue: Ensuring that Group and third-party information under
Group control is protected from loss or malicious amendment;
that systems and applications are protected from attack and
disruption; and that the evolving cyber threat landscape is
monitored and controls are implemented to mitigate the risks.
How the Committee addressed the issue
An independent third-party consultant, NCC Group, was
commissioned to assess the Group’s maturity against the
National Institute of Standards and Technology (NIST)
cybersecurity framework. Its report, with recommendations,
was carefully considered by the Committee, which
recommended actions that focused on areas such as:
• embedding a single governance structure for technology
and information security;
• reinforcing our cultural focus on security across the Group
through focused training and awareness;
Compliance and whistleblowing
The Committee monitors the Group’s compliance with the UK
Corporate Governance Code and AIM and Euronext Growth
Listing Rules for Companies as well as ensuring the processes
and arrangements that enable employees to raise concerns in
confidence. No matters of significance arose during the period
in question. The Committee reviewed and approved the
arrangements for whistleblowing during the year.
External audit
At the 2019 AGM, Deloitte was appointed auditor for the financial
year ended 29 February 2020 and continues to act as external
auditor. Our lead audit engagement partner is Richard Howard.
The Committee reviews and makes recommendations regarding
the appointment of the external auditor. In making these
recommendations the Committee reviews the performance,
effectiveness and independence of the external auditor as well as
longevity of service. In conducting its annual assessment of external
auditor independence, the Committee reviews the External
Auditor’s own policies and procedures for safeguarding its
objectivity and independence. The Committee’s primary means of
assessing the effectiveness of the external audit is by monitoring
performance against the agreed audit plan. The audit plan was
presented by Deloitte in March 2023. The Committee holds regular
meetings with the external auditor to review matters of interest
including interim and year-end reports, the audit plan, management
letter observations and updates on ongoing audit work.
48 | FD Technologies plc Annual Report 2023
• aligning with a cybersecurity framework (NIST CSF)
and securing accreditations;
• deploying new cybersecurity services and technologies
to enhance our security posture; and
• refreshing and enhancing our information security policies,
processes, capabilities and incident management.
The updated cybersecurity policy and strategy that resulted
from this exercise formalised the Group’s cyber risk appetite,
aligning it with the Group risk framework, and covers areas such
as system and access controls, security awareness and training,
governance and reporting. The Committee continues to monitor
progress on implementation of these recommendations.
Recognising that cybersecurity is a constantly evolving topic,
the Committee reviews cyber risks and the evolving controls
implemented to mitigate them.
Risk management framework
Issue: Ensuring risks are identified, assessed, managed
and monitored across the Group.
How the Committee addressed the issue
The Group has an established risk management process
which ensures that the outcomes of risk-taking activities
are consistent with the Group’s strategic objectives.
The Committee reviewed and approved the Risk Appetite
Statement across four risk categories, strategic, operational,
financial and regulatory. The Committee reviewed the risk
registers and risk dashboards for each business unit and
assessed the appropriateness and effectiveness of controls
in place. Risks that were identified as outside of appetite
have action plans and timelines in place and progress will be
monitored by the Committee and reported to the Board. The
Committee concluded that the action plans were appropriate.
To maintain independence the external auditor is not invited
to provide any non-audit services where it is felt that this could
conflict with its independence or objectivity. In all cases the
provision of non-audit services is carefully monitored by
and subject to, prior approval of the Committee.
Internal audit function
The internal audit function reports directly to the Committee
with a remit to provide independent and objective assurance
to the risk management framework. The Internal Audit Charter
is reviewed annually by the Committee.
The FY23 Internal Audit Plan was presented to the Committee,
reviewed and approved.
Other agenda items
Other specific items addressed by the Committee during the
year include reviewing the Group’s insurance policies, ensuring
the cover is sufficient to realise the Group’s strategy, approving
updated policies and reviewing the Group’s borrowing facilities.
Annual evaluation of performance
The Board conducted an evaluation of its own performance
and that of its Committees, Committee Chairs, and individual
Directors. The conclusion from the process was that the
performance of the Audit and Risk Committee and of the Chair
of the Committee was satisfactory. The Committee will focus
on agreed actions arising from the evaluation process.
Corporate governance Report of the Nomination and ESG Committee
Promoting effectiveness
Key activity during the year
This year the Committee focused on increasing the
effectiveness of the Board, its Committees, members
and processes. In order to facilitate the Board effectiveness
review the Committee engaged Independent Audit Limited,
a leading independent board evaluation partner, to assist
with an externally facilitated review using an in-depth
questionnaire based approach. The primary purpose of the
evaluation is to direct the Board’s attention to areas where
there might be opportunities to improve its performance.
Dear shareholders
The Nomination and ESG Committee is responsible for effective
succession planning, maintaining a pipeline of strong candidates
for potential nomination to the Board, while simultaneously
ensuring robust succession planning and talent strategy for
the Executive Committee. Our role is to ensure there is an
appropriate balance of skills, experience, diversity, independence
and knowledge on the Board and its Committees, review the size
and composition of the Board and make recommendations on
these matters to the Board. The Committee also ensures that
the Group’s environmental, social and governance policies and
priorities are aligned to the overall strategy of the Group.
Business during the year
Issues considered by the Committee during the year included items
that are a standing part of its remit as well as a number of areas
which the Committee considered to require a deeper focus. During
the year, to complement the work already being undertaken by the
Board, the Committee focused on the following matters:
• evaluation of the effectiveness of the Board and its Committees;
• monitoring progress against ESG priorities;
• succession planning;
• gender pay gap reporting;
• board engagement initiative with employees;
• employee engagement survey; and
• reviewed Board training and development and Board
attendance policy.
Appointments
Appointing the right people to the Board and the leadership
team is fundamental to the success of the Group. The
Committee has a robust strategy and process to ensure the
recruitment of individuals with the most appropriate
competencies and experience to complement those that
already exist. The Committee is committed to achieving diversity
in its broadest sense in the composition of the Board and senior
management. Our approach to diversity and inclusion on the
Board is set out in the Company’s Diversity and Inclusion Policy
which is reviewed annually by the Committee. The Policy sets out
the Group’s commitment to having a diverse workforce and
pipeline of talent, through recruitment and employment
practices and actively supporting inclusion through its
succession planning process as well as its open culture and
FD Technologies plc Annual Report 2023 | 49
Focus in FY23
• Board effectiveness
• Monitoring progress against ESG priorities
• Succession planning
Priorities for FY24
• Board development
• ESG compliance and reporting
Membership
Virginia Gambale
(Chair)
Ayman Sayed
Donna Troy
Meeting attendance
Virginia Gambale (Chair)
Donna Troy
Ayman Sayed
“ The review highlighted
the Board’s strengths and
weaknesses which enabled
us to set our developmental
focus for the year.”
Virginia Gambale
Non-Executive Director
Report of the Nomination and ESG Committee continued
Appointments continued
support for employee networks that foster diversity and
inclusion. Prior to embarking on the selection process for
any senior appointment, our approach, policy and ethos
are embedded and reflected in the process.
Board effectiveness review
This year the Committee oversaw a review of the effectiveness of
the Board and its Committees. Working with Independent Audit
Limited, which has no connection with the Group or individual
directors, and powered by its Thinking Board self-assessment tool,
an in-depth questionnaire was completed by members of the
Board and the Committees. The Committee Chair spent time with
the evaluator to ensure that the questionnaires were augmented
where necessary with any additional questions or areas that the
Board and the Committees wished to cover and the Chair also
reviewed and provided input to the questions. Following completion
of the questionnaires by the directors, the report was provided
to the Committee Chair and then circulated to all directors.
The evaluator attended a board meeting to present and discuss the
findings in the report and to give all of the directors an opportunity
to ask questions. The Board and the Committees have discussed
the findings of the report in their meetings and decided upon
actions This review provided the Board with insightful and
comprehensive feedback. The insights gained into how the
Board is working will enable it to continually develop.
The summary findings of the review are as follows:
The Board feels it has the right mix of relevant skills and
experience and:
• relationships are constructive and open. There is also a clear
sense of common purpose, coupled with a determination to
ensure the business continues to thrive, grow and deliver value
for its shareholders. In addition, there is a strong emphasis on
establishing the right culture and values across the organisation.
Good consideration is given to issues linked to ESG matters and
care is taken to ensure employees are treated fairly;
• it is also considered that risk is controlled well, and that the
reporting environment is sound. A recent decision to expand
and develop the internal audit function is indicative of the
importance the Board attaches to this area of activity; and
• it is generally felt that the Board and its Committees benefit
from being led by strong and capable Chairs. Agendas are
managed well, and a good level of discussion and debate
takes place at meetings. Most feel that NEDs provide firm
but constructive challenge to managers.
A number of areas of improvement were identified by the review
for particular consideration as follows:
• the quality of papers presented to the Board and its Committees;
• increasing the amount of contact NEDs have with managers
and the business;
• how much risk the organisation should be taking; how customer
needs are changing and what competitors are doing; the skills
and experience which will be needed to execute the strategy; and
reviewing progress towards achieving strategic objectives; and
• ensuring the Board has sufficient strategic oversight
of succession planning and talent management.
The review concludes that the Board has achieved a great deal
over the last few years and has worked hard to put in place a
strategy to ensure the business continues to evolve and grow
within the highly dynamic markets in which it operates.
The results of the review have been used to create actions in
the above areas and will be used to update the annual rolling
agendas of the Board and its Committees, will shape the
training and development programme for Directors and will
continue to inform the Committee over the coming year. No
changes to Board composition have been identified as a result
of the review although composition and skills are continually
kept under review by the Committee.
Monitoring of our ESG progress against priorities
As a global business we recognise the importance our
environmental, social and governance policies have on all of our
stakeholders. The Nomination and ESG Committee established the
Board’s oversight role on ESG and determines the Committee
structure. The Committee also aligns ESG with the Group’s
corporate purpose and vision and the Committee seeks to integrate
sustainability into the Group’s overall strategy. Further, the
Committee ensures accountability for ESG strategy implementation.
This year, we defined our ESG priorities as being Our People,
Our Environment and Our Communities. We realise the
importance of each of these pillars of ESG and seek to ensure
the Board establishes the tone from the top with respect to our
objectives. Further, we ensure that our Board composition has
the necessary expertise and skills to oversee both the Group’s
ESG risks and opportunities. As we look forward to the year
ahead the Committee is dedicated to ensuring that the Board
keeps its ESG priorities at the heart of the Group’s strategy.
Succession planning
A key area of focus for the Committee is nurturing the Group’s
leadership and talent pipeline. The Committee’s focus this year
has been on effective succession planning throughout the Group,
particularly at the executive level.
The Committee is fully engaged with the end-to-end talent
management and senior succession planning approach that is
utilised by the Group. In addition, the Committee manages Board
and senior management succession under a structured approach
with clear and agreed selection priorities. In terms of Non-
Executive Director succession, the Committee is committed to
continuing to follow the strategic composition of the Board as
discussed in our inclusion and diversity section below. With regards
to senior management succession planning the Committee has
mapped out principles to guide its approach as follows:
1.
a clear and proactive approach to identifying and developing
succession candidates;
2. a focus on the long-term nature of succession planning; and
3. advancing progress on all types of diversity.
This year, the Committee undertook an in-depth look across the
Group at succession planning and ensured that each business
unit has succession planning on its agenda to ensure that the
talent pipeline is reviewed in line with the business outlook.
To ensure that our internal talent is being developed to meet
strategic needs, several talent development mechanisms were
introduced such as our Aspiring Leadership Programme and
Senior Leadership Programme. These programmes are geared
at developing our leaders of the future.
Our focus also remains on bolstering our recruitment efforts
at both the graduate and experienced hire level to develop
our talent pipeline. The Committee recognises the benefits in
attracting external talent to bring further diversity of thought
and processes to key roles.
50 | FD Technologies plc Annual Report 2023
Corporate governance Whilst we continue to invest in recruiting new talent, our priority
is also to look after and develop our existing team, as employee
retention is an increasingly important element in our approach
to talent management and succession planning.
Evaluation and accountability
The Committee’s focus continued to be on accountability and pay
for performance. The CEO and executive leadership evaluation
process includes a mix of self-evaluation, 360-degree feedback
and peer and Board review. Each leader, including the CEO, was
tasked with reviewing performance against objectives and bonus
metrics and reflecting on performance over the last year. For
the CEO, the Board provided feedback in relation to a range of
competencies including leadership, strategic planning, financial
results, succession planning, human resources and diversity,
communication, transformation and investor relations.
Quantitative and qualitative evidence was sought in reaching
evaluation conclusions regarding performance.
Board diversity priorities
Although the Committee monitors the Group’s organisational
inclusion and diversity strategies and initiatives it also holds itself
accountable for the Board’s own inclusion and diversity. The Board
and the Committee is dedicated to diversity, including ensuring
an open and fair recruitment and selection process for all Board
appointments. The Committee ensures that its approach
to diversity is under regular review, including ensuring the
development of a diverse Board. The Board has 29% female
representation and has met its target on ethnic diversity and
intends to improve its current levels of both gender and ethnic
diversity. The Committee will continue to review the diversity of
skills and experience on the Board and the need for gender
diversity remains a priority. Recognising the benefits of wider
experience, Non-Executive Director candidates from a wide variety
of backgrounds have been considered when making Non-
Executive Director appointments. The recruitment and selection
process for Non-Executive Directors ensures that longlists of
potential candidates comprise at least 50% female candidates.
Going forward the Nomination and ESG Committee and the Board
will continue to promote the Group’s Board diversity policy and will
also review advances in best practice. Prior to embarking on the
selection process for any new non-Executive director, the
Committee proactively ensures that the search process is
sufficiently inclusive to encourage applications from diverse
candidates with relevant skills, experience, and knowledge, and that
the selection process is fair and transparent. The FRC’s guidance
on board effectiveness recognises a breadth of diversity that goes
beyond just gender and race, and includes personal attributes
including intellect, judgement, courage, honesty and tact; and the
ability to listen and forge relationships and develop trust.
This ensures that a board is not closely comprised of like-minded
individuals. The Committee agrees that diversity is vital when
reviewing the composition of the Board and possible new
appointees. Appointing the right people to the Board and the
executive leadership team with the appropriate balance of skills,
knowledge, experience and culture is fundamental to the ongoing
success of the Company. The Committee continues to recommend
the appointment of the best people with the right skills and potential.
Standing agenda items
Inclusion and diversity
The Board believes that its perspective and approach can
be greatly enhanced through diversity of gender and ethnic
backgrounds, cognitive and personal strengths, tenure and relevant
experience. We recognise that the delivery of our strategy requires
the promotion of a high-performing culture, characterised by
a diverse and inclusive workforce. The Board is committed to
advancing diversity and to instilling a culture that is inclusive to all.
This is founded on inclusion being a critical behaviour to ensure
diversity, in its broadest sense, is truly embraced and encouraged;
bringing broader debate, better decision making and ultimately
better results for all stakeholders. As a global business FD
Technologies recognises the importance of reflecting the diversity
of the customers we serve and the markets we operate in. The
Group is proud of its track record on diversity, including gender,
ethnicity, nationality, skills and experience, which has resulted in the
formation of a diverse, inclusive and vibrant team. Our approach to
inclusion and diversity on the Board is set out in the Board’s
diversity policy which is reviewed annually by the Committee. This
year, the Group was awarded a Silver Diversity Mark, from Diversity
Mark NI, in recognition of the Group’s achievements with regards to
inclusion and diversity. Diversity Mark NI provides an accreditation
framework and process which is designed to assist the Group set
realistic targets and the independent assessment panel provides
expert annual feedback to continually support the Group on its
inclusion and diversity journey. The Committee seeks to ensure that
inclusion and diversity efforts continue to be a focus for our Board.
Gender pay gap
As a Group our mission remains to build a diverse workforce with
an equally inclusive workplace. In terms of our senior managers,
76% of our leadership was male versus 24% female. The data shows
that there is still much work to be done in this area, particularly in
increasing opportunities for women to move into senior roles. The
Board remains committed to supporting the efforts of the executive
team on these matters. This will be an important area of ongoing
focus for the Company and will be monitored by the Committee
in the coming year, in line with the Board diversity policy.
The Committee recognises that being transparent about where
we are and what our forward focus is on is the key to continuing
to make progress with regards to the gender pay gap. Our gender
pay gap continued to be significantly lower than the industries in
which we operate. More information on the gender pay gap analysis
results is available on our website. The Committee’s role was to
review the results and review the strategies underway to improve
the representation of women throughout our business with the
aim of narrowing the gender pay gap. The Committee recognises
that there is still much work to do around the pay gap with senior
roles across the Group and we commit to ensuring this gap is
reduced year on year.
Director induction
Following Board appointment, Directors receive a
comprehensive induction tailored to their individual needs.
This includes meetings with senior management to enable
them to build up a detailed understanding of the business,
the strategy, and the key risks and issues that the Group faces.
Governance and composition
The Committee sets its own agenda and while only the members
of the Committee have the right to attend its meetings, the
Committee may from time to time invite third parties to attend.
For matters to do with the succession of the chairmanship of
the Board, the Committee is chaired by the Senior Independent
Director. The composition of the Committee is reviewed on an
annual basis. There have been no changes to the composition
of the Committee, which is chaired by Virginia Gambale, and
the other members are Ayman Sayed and Donna Troy.
Other matters considered
The Committee dealt with a range of other matters during the
year, including a review of the annual employee engagement
survey and the follow-up action plan and a review of the Board
attendance policy and relevant training and development for
the Board.
FD Technologies plc Annual Report 2023 | 51
Report of the Remuneration and Talent Committee
Incentivising for growth
“ During the year, the Committee
invested considerable time in
ensuring that our long-term
incentive arrangements
continue to attract and retain
key talent to deliver on the
Group’s strategy.”
Ayman Sayed
Non-Executive Director
Key activity during the year
Long-term incentive planning
The focus of the Committee this year was on introducing a
new long-term incentives arrangement as well as evaluating
the performance of the executive leadership team,
including the CEO and CFO. We have worked closely with
independent compensation consultants Insightory on a new
Long Term Incentive Plan (LTIP), ensuring our ability to retain
and attract talent. Over the coming year, we will continue to
monitor changes in UK corporate governance best practice
and ensure that our remuneration policy and practices
remain appropriate to attract and retain key talent. Ongoing
engagement with shareholders remains a priority.
Focus in FY23
• Long-term incentive planning
• Executive benchmarking
• CEO and executive leadership evaluation
Priorities for FY24
• Revising our remuneration policy
• Prioritising pay for performance
Membership
Ayman Sayed (Chair)
Donna Troy
Thomas Seifert
Dear shareholders
Meeting attendance
Ayman Sayed (Chair)
Donna Troy
Thomas Seifert
The Remuneration and Talent Committee seeks to align reward
with the Company’s strategy, culture, and delivery of long-term
shareholder value. This report is intended to provide insight
into the roles and responsibilities of the Committee and to
demonstrate how it has carried out this work. The Committee
is constituted by the Board to assist it in meeting its responsibilities
regarding the determination and implementation of the Group’s
remuneration policy, including the remuneration of the Chair,
Executive Directors and senior management, as well as overseeing
the arrangements for the wider workforce. Our remuneration
policies, practices and reporting are designed to reflect best
practice in corporate governance.
52 | FD Technologies plc Annual Report 2023
Corporate governance
Committee membership
All members of the Committee are independent Non-Executive
Directors. None of the Committee members has day-to-day
involvement with the business and nor do they have any
personal financial interest, except as shareholders, in the
matters to be recommended. The number of formal meetings
held and the attendance by each member is shown in the table
above. The Committee also held informal discussions as
required. The Group HR Director acts as Secretary to the
Committee and is available to assist the members of the
Committee as required, ensuring that timely and accurate
information is distributed accordingly. The CEO and other
members of the management team may be invited to attend
Committee meetings to provide business context and
performance updates. However, no member of management
is present when their own remuneration is determined.
Role and activities of the Committee
The Committee reviewed the structures in place for our people
with the objective to incentivise, motivate and retain talent and
support the delivery of the Group’s long-term strategy. We aim
to promote long-term sustainable success by appropriately
incentivising relevant performance, and this report provides
context for the decisions made by the Committee during the
year. It also details the proposed approach to implementing the
policy in the upcoming year and summarises the remuneration
outcomes for Executive Directors.
S Keating
R Preston
Total
During the past financial year, the focus of the Committee has been:
• long-term incentive planning;
• executive benchmarking; and
• CEO and executive leadership evaluation.
Long Term Incentive Plan (LTIP)
During the year the Committee worked with independent
compensation specialists Insightory, which has no connection
with the Group or individual directors, to deliver an LTIP that
appropriately aligns the interests of employees and shareholders
by rewarding performance that results in significant accretion in
the value of the Group and also ensures that we are positioned
to attract new talent and incentivise the senior executive
leadership team — on whose talents and efforts we are reliant
to build substantial shareholder value over the next three years
and beyond. The LTIP’s performance targets are designed to be
stretching yet feasible, based on the Group’s own track record
and the performance of aspirational peer companies, based
primarily in the US. The focus on long-term performance based
incentives is consistent with both our remuneration policy and
the pre-existing dilution authority granted by shareholders.
As in prior years we invited feedback from our larger
shareholders in relation to the new LTIP. We are committed
to continuing this positive dialogue with shareholders.
Since the year end, the rules of the LTIP have been formally
adopted and awards have been granted. Long-term incentive
awards to the Executive Directors are through Performance
Share Units (PSUs) only.
Position
CEO
CFO
PSUs
143,514
38,270
181,784
The PSUs for the CEO and CFO will vest on the achievement of performance metrics linked to the performance of the Group’s
business units over the three years to 28 February 2026; such metrics are designed to be challenging and to reward value creation.
Executive remuneration is aligned to Group purpose and values, and be clearly linked to the successful delivery of the Group’s
long-term strategy.
The PSUs for the CFO and two-thirds of the PSUs for the CEO will vest based on:
Metric
Weighting
Threshold
25% vesting
On target
50% vesting
Maximum
100% vesting
KX
Combined ARR
growth and
adjusted EBITDA*
First Derivative
Adjusted EBITDA
MRP
Adjusted EBITDA
65%
25%
10%
88% of target
84% of target
83% of target
Target
Target
Target
125% of target
115% of target
117% of target
*
KX ARR and adjusted EBITDA (excluding capitalised development costs) metrics are linked to eliminate the impact of any investment decisions taken during
the period, such that overperformance in one metric will reduce the target in the other.
FD Technologies plc Annual Report 2023 | 53
Report of the Remuneration and Talent Committee continued
Long Term Incentive Plan (LTIP) continued
The remaining third of the PSUs for the CEO will vest based on
total shareholder return (TSR) over the three-year period with
vesting starting at 25% for 25% TSR appreciation and increasing
on a straight-line basis up to a maximum of 100%. By tracking to
the overall Company share price, this portion of the CEO’s award
is consistent with the ultimate value received by our shareholders.
LTIP awards will, in line with UK market norms, be subject to malus and
clawback provisions; a total vesting and holding period of five years
applies for Executive directors; the awards include the right to receive
dividend equivalents; and early vesting for good leaver scenarios.
Our LTIP offers exciting upside to attract, retain and motivate
this crucial talent. In conjunction with the potential rewards,
the incentives depend upon achieving challenging performance
targets so that participants only benefit if shareholders are also
rewarded. These PSUs will vest on the achievement of three-
year performance metrics linked to the performance of the
Group’s three business units, which are designed to be
challenging and to reward value creation as overleaf.
In addition to the award to Directors, a total of 109,672 PSUs
have been awarded to other senior leaders in the business units
and in the Group’s central operations again subject to three-year
cliff vesting and performance metrics relevant to their part
of the Group. A total of 58,186 Restricted Stock Units (RSUs)
typically vesting annually over the next three years have also
been awarded to senior employees. Based on a share price of
£17.42, these awards amount to, in aggregate, 349,642 shares
(on the assumption that all vest), representing 1.34% of the
Group’s currently issued and outstanding shares.
It is envisaged that new shares will be issued to satisfy awards
under the LTIP.
Summary
We believe the Long Term Incentive Plan strikes a fair balance
between the need to attract, motivate and retain the key
generators of value within our business while ensuring that
rewards are only achieved through creation of significant
shareholder value over an appropriate period. We also believe it
will be a key motivator in helping us to attract and retain the
talent required to achieve our growth ambitions.
Remuneration policy
The Group’s remuneration policy is outlined below and is unchanged
from the prior year. The remuneration policy is designed to provide
levels of remuneration to attract, retain and motivate Directors and
employees. A clear procedure for developing policy on executive
remuneration and determining director and senior management
remuneration has been put in place. Further Remuneration policies
and practices within the Group have been designed to support
strategy and promote long-term sustainable success.
The remuneration policy for other employees is based on broadly
consistent principles as that for Executive Directors. Annual salary
reviews take into account personal performance, divisional
performance, local pay and market conditions, and salary levels for
similar roles in comparable companies. Some employees below
executive level are eligible to participate in annual bonus schemes;
opportunities and performance measures vary by organisational
level and an individual’s role. Senior leaders within the divisions
invited into the LTIP (PSU and RSU) participate on broadly similar
terms to the Executive Directors (with vesting conditions linked to
divisional performance), although award opportunities are lower
54 | FD Technologies plc Annual Report 2023
and vary by organisational level. These awards are structured to
reward performance, encourage retention and deliver the
strategic objectives of the Group over the longer term.
Remuneration packages are designed to be competitive in value to
those offered at similarly sized public companies in related sectors.
Executive remuneration is aligned to Group purpose and values
and is clearly linked to the successful delivery of the Group’s
long-term strategy.
The components of the Executive Directors’ remuneration
packages are basic salary, bonus, money purchase pension
contributions and other benefits including participation in the
Long-Term Incentive Plan as described overleaf. No director
was involved in deciding their own remuneration outcome. The
Non-Executive Directors’ remuneration packages do not include
bonus, pension, or awards under Group incentive share plans.
During 2023, the Committee will consider whether any changes
are required to the policy. Any material changes will be the
subject of prior consultation with our major shareholders.
Executive Directors
Basic salary
Basic salary is set by the Committee and reviewed annually.
Salary levels, which are benchmarked to market rates for roles
of similar scope in comparable listed companies, take into
account a range of factors which include the Director’s role
and responsibilities; their skills, experience and performance;
and pay and conditions elsewhere in the Group.
Pension and other benefits
The Group operates a defined contribution scheme for
Executive Directors and provides private healthcare insurance
and life assurance which are treated as benefits in kind, in line
with those offered to the workforce generally. The CFO receives
a Company pension contribution equal to 10% of his base salary,
this is generally in line with employees in the same region. The
CEO does not receive a Company pension contribution.
Cash bonus
Bonus awards, which are not pensionable, are made to the
Executive Directors based on achieving performance criteria set
out by the Committee. The bonus plan for the Executive Directors
includes an on-target bonus of 70% of basic salary with a maximum
of up to 100% being achievable. Performance targets are calibrated
to be challenging and the criteria are reviewed annually and
aligned to the key financial and strategic objectives of the Group.
The Committee has discretion to amend the pay-out should any
formulaic outcome not reflect its assessment of overall
performance; however, the exercise of any such discretion shall
not result in a bonus payment in excess of 100% of basic salary.
Non-Executive Directors
The Board, based on a recommendation by the Chair of the
Remuneration and Talent Committee or, in the case of the Chair,
the remainder of the Board, determines the remuneration of the
Non-Executive Directors. The Non-Executive Directors are not eligible
to join the Group’s pension scheme nor do they receive share options
or cash bonuses. Non-Executive Directors may elect to receive
payment in their home currency if based outside the UK. Their
remuneration comprises a cash payment (67%), with the remainder
in FD Technologies shares. The number of shares to be issued is
based on the average closing mid-market share price over the 90
business days prior to the release of the Group’s full year results.
Corporate governance Benchmarking senior leadership
During the year a benchmarking exercise was undertaken
around all senior leadership roles.
During the year we appointed a number of new executive
leaders across the FD Technologies Group and independent
advisers Pearl Meyer provided support around reward
benchmarking for these appointments. Every senior leader’s
reward is set on a pay-for-performance basis, with objectives
around financial performance and achievement of strategic
objectives. The Committee was closely involved in the approval
of these newly introduced reward metrics which align all of the
senior leadership to the Group’s overall strategy.
Following the benchmarking exercise, it was determined that the
CFO’s remuneration will increase to £300,000 per annum from
1 March 2023.
Remuneration Report
Executive remuneration
Seamus Keating’s base salary is unchanged and remains at
£450,000 which was determined following a CEO benchmarking
exercise carried out by independent external advisers Pearl
Meyer, with participation in the Group healthcare and life
assurance plans. Upon appointment the CEO elected not to
participate in the Group pension scheme. The remuneration
table in this report contains accruals for Executive Director
bonuses relating to the year to 28 February 2023.
The CEO was not awarded any options during the year.
Non-Executive Director remuneration
No changes to Non-Executive Director reward were made during
the year. The Chair’s total annual reward is £200,000 per annum
while Non-Executive Directors receive £150,000, and this has
been unchanged since 1 September 2019. These remuneration
levels are deemed sufficient to attract high-calibre new Board
members and the Committee, having reviewed them, resolved
not to make any recommendation to the Board during the year
to vary them.
Senior executive remuneration
The Committee also examined compensation levels of members
of the existing senior executive team, particularly those who
received promotions and took on additional roles and responsibilities,
together with new senior hires recruited during the year.
The Committee discussed and set levels of remuneration
considered necessary to attract, retain and reward.
Alignment of remuneration and performance
The Committee believes the historical growth performance of
the business is reflective of the Group’s effective remuneration
policy. The Committee is committed to an open and transparent
dialogue with shareholders and where appropriate will engage
with shareholders and their representative bodies, seeking views
which it may take into account when setting remuneration policy.
Remuneration at a glance
Details of each Director’s remuneration is set out in the table
below (audited).
Salary
and fees
£’000
Benefits
£’000
Annual
bonus
£’000
Share based
payment
£’000
Pension
£’000
Total
remuneration
£’000
Executive Directors
S Keating
R Preston
Non-Executive Directors
K MacDonald1
D Troy
V Gambale
A Sayed
T Seifert
S Fisher2
U Fayyad3
Total
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
450
450
275
263
—
36
133
133
100
100
100
100
100
100
—
96
100
13
1,258
1,291
1
1
1
1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2
2
1 Resigned 8 July 2021.
2 Resigned 31 January 2022.
3 Appointed 19 January 2022.
236
205
140
125
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
18
67
67
50
50
50
50
50
50
—
46
50
6
—
—
28
24
—
—
—
—
—
—
—
—
—
—
—
—
—
—
687
656
444
413
—
54
200
200
150
150
150
150
150
150
—
142
150
19
376
330
267
287
28
24
1,931
1,934
FD Technologies plc Annual Report 2023 | 55
Report of the Remuneration and Talent Committee continued
Remuneration Report continued
Service contracts
The Executive Directors have entered into service contracts with the Group that are terminable by either party on not less than twelve
months’ prior notice.
Directors’ interests in shares (audited)
The interests held in shares of the Company by the Directors who held office at the end of the financial year, all of which
are beneficial holdings, were as follows:
S Keating
R Preston
D Troy
V Gambale
A Sayed
T Seifert
U Fayyad
Number of ordinary shares
28 February
2023
28 February
2022
38,518
2,415
9,201
9,952
3,885
3,823
306
31,014
1,140
5,576
7,233
1,166
1,104
—
Share options
The awards currently outstanding to Directors are as follows:
S Keating
R Preston
1 March
2022
250,000
115,000
Granted
during
the year
—
—
Vested
during
the year
—
10,000
Lapsed
during
the year
Exercised
during
the year
—
—
—
—
28 February
2023
250,000
115,000
There were no share options granted to the Directors during the year (FY22: 65,000). There were no share options exercised by
the Directors during the year (FY22: nil).
Transactions with Directors
Outside of remuneration noted above, there were no other direct transactions with Directors.
Performance graph
The chart below shows the Group’s TSR performance over the past ten years compared to the AIM 100, an index of which the Group
is a constituent.
0
0
1
o
t
d
e
x
e
d
n
i
n
r
u
t
e
r
l
r
e
d
o
h
e
r
a
h
s
l
a
t
o
T
900
800
700
600
500
400
300
200
100
0
Feb ‘13
Feb ‘14
Feb ‘15
Feb ‘16
Feb ‘17
Feb ‘18
Feb ‘19
Feb ‘20
Feb ‘21
Feb ‘22
Feb ‘23
FD Technologies
AIM 100
56 | FD Technologies plc Annual Report 2023
Corporate governance
CEO remuneration
The table below shows the total remuneration and annual bonus for the Chief Executive Officer over the past ten years. During
this period the CEO has not received any long-term incentive remuneration.
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total remuneration (£’000)
Annual bonus as a % of maximum opportunity
Long-term incentives as a % of maximum opportunity
276
63%
n/a
165
311
657
542
— 97% 100% 100% 53%
n/a
n/a
693
n/a
n/a
n/a
435
—
n/a
451
656
687
— 46% 53%
n/a
n/a
n/a
The Group is also required to report on its CEO pay gap ratio, which is detailed in the table below.
Financial year
Method
25th percentile pay ratio
Median pay ratio
75th percentile pay ratio
2023 CEO total remuneration
Option A
2022
2023 CEO base salary
Option A
2022
8.8
9.2
6.2
6.6
15.0
16.2
10.3
11.7
22.6
23.6
15.5
17.0
Option A was selected as the basis for the calculations above as it was considered to be the most accurate. The total remuneration
for all of the Company’s UK employees was calculated, and those employees were then ranked from high to low, based on their total
remuneration, with the employees whose remuneration places them at the 25th, 50th and 75th percentile points identified. The date
by which these calculations were made was 28 February 2023 and no component of pay has been omitted from the calculations.
FD Technologies plc Annual Report 2023 | 57
Directors’ report
The Directors have pleasure in submitting to the shareholders their
Annual Report and the audited financial statements of the Group
and Company for the year ended 28 February 2023.
Results and dividend
The Group’s loss after taxation attributable to shareholders for
the year to 28 February 2023 was £4,360k (FY22: profit £6,427k).
The Directors do not propose the payment of a final dividend
for the year. As a result, the total distribution relating to the
year is £nil (FY22: £nil) per share.
The price of the Company’s shares at close of business on
28 February 2023 was £18.68 (FY22: £15.18) and the high and
low share prices during the year were £24.50 (FY22: £29.40)
and £12.30 (FY22: £13.78) respectively. The average share price
during the year was £17.68 (FY22: £16.28).
Directors
The Directors who held office during the year were as follows:
U Fayyad
V Gambale
S Keating
R Preston
A Sayed
T Seifert
D Troy
Directors and their interests
The interests of the Directors in shares during the year are set out
in the Report of the Remuneration and Talent Committee and the
information is incorporated into the Directors’ Report by reference.
Substantial shareholdings
At 22 May 2023, the Group had received notification of interests
in 3% or more of the ordinary share capital from Juliana Conlon
(14.3%), Baillie Gifford & Co (13.1%), Octopus Investments (10.9%),
Columbia Threadneedle Investments (9.8%), Liontrust Asset
Management (5.9%), T Rowe Price (4.9%), Canaccord Genuity
(4.8%) and Invesco (4.4%).
Research and development
The Group’s policy is to invest in product innovation and engage
in research and development activities geared towards the
enhancement of its software products. During the year costs of
£23,138k (FY22: £18,553k) were capitalised in respect of activities
which were deemed to be development activities in accordance
with the Group’s accounting policies. Research and development
costs of £3,974k (FY22: £2,572k) were expensed during the year.
AIM Rule Compliance Report
FD Technologies plc is quoted on AIM and as a result the Company
has complied with AIM Rule 31 which requires the following:
• have in place sufficient procedures, resources and controls
to enable its compliance with the AIM Rules;
• seek advice from its nominated adviser regarding its
compliance with the Rules whenever appropriate and take
that advice into account;
58 | FD Technologies plc Annual Report 2023
• provide its nominated adviser with any information it
reasonably requests in order for the nominated adviser
to carry out its responsibilities under the AIM Rules for
Nominated Advisers, including any proposed changes to
the Board of Directors and provision of draft notifications
in advance of publication;
• ensure that each of the Company’s Directors accept full
responsibility, collectively and individually, for compliance
with the AIM Rules; and
• ensure that each Director discloses without delay all information
which the Company needs in order to comply with AIM Rule 17
(Disclosure of Miscellaneous Information) insofar as that
information is known to the Director or could with reasonable
diligence be ascertained by the Director.
In addition, the Company maintains compliance with AIM Rule 26,
which lists a range of information that the Company is required to
make available. AIM Rule 26 also requires the Company to adopt
a corporate governance code and it has chosen the UK Corporate
Governance Code 2018, against which the Directors are
responsible for reporting the Company’s compliance.
Section 172 compliance statement
The Directors have acted in good faith to promote the success
of the Company for the benefit of its members as a whole. In
doing so, they have given regard, amongst other matters, to
the following matters set out in Section 172(1)(a) to (f) of the
Companies Act 2006:
a) the likely consequences of any decision in the long term;
b) the interests of the Company’s employees;
c) the need to foster the Company’s business relationships
with suppliers, customers and others;
d) the impact of the Company’s operations on the community
and the environment;
e) the desirability of the Company maintaining a reputation
for high standards of business conduct; and
f) the need to act fairly as between members of the Company.
An explanation of how the views of stakeholders have been taken
into account in the Board’s decision making during the year is
provided in the Stakeholder Engagement section of this report
on pages 10 and 11.
Fair, balanced, understandable
The Board of Directors has combined the knowledge and
experience derived by each of them from other board positions
with a review of the annual reports of other similar enterprises in
order to satisfy themselves that the Annual Report and Financial
Statements, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to
assess the Group’s position and performance, business model
and strategy.
Corporate governance Employee engagement
The Group’s policy on employees remains to adopt a very open
management style, keeping employees informed of all matters
affecting them as employees including key financial and economic
factors affecting the Group’s performance. This is achieved
through meetings and informal consultation at all levels. An
annual Group-wide employee satisfaction review is conducted
by an independent third-party organisation, as detailed in the
Corporate responsibility section, with the results being utilised
to inform the Group’s push to make it an employer of choice in
the sector.
Page 10 provides details of how the Board takes into account the
effect of its decisions on employees and how that has impacted
decisions taken during the year, while also detailing the ways in
which Directors have engaged with employees.
Employee opportunities
It is the Group’s policy to ensure that equal opportunity is
given for the employment, training and career development
of disabled persons, including persons who become disabled
whilst in the Group’s employment.
Business relationships
The Directors are mindful of the need to foster and maintain
strong working relationships with customers, suppliers and
others. Further information on how the Directors take into
account this requirement in its decision making is provided
on page 10.
Financial instruments
The Group’s financial risk management objective is broadly to
seek to make neither a profit nor loss from exposure to currency
or interest rate risk. The policy is to finance working capital and
the acquisitions of property, plant and equipment through
retained earnings and through borrowings at prevailing market
interest rates.
The Group does not use derivatives to manage its financial risks.
The main cash flow, credit and liquidity risks are those
associated with selling on credit. However, the vast majority of
the Group’s clients are substantial enterprises which reduces the
risk of default. The Group is also exposed to the impact of
fluctuations in exchange rates as it generates income and incurs
expenses in currencies other than sterling (GBP). The Group’s
main exposure is to the US dollar (USD), euro (EUR) and Canadian
dollar (CAD). However, because it has both income and expenses
denominated in foreign currency, its net exposures are
substantially lower than the gross balances.
In addition, the Group has financial risk exposure as a result
of debt financing for asset purchases, trade receivables and
activities carried on by subsidiary undertakings, as well as
exposure to movements in fair value of equity investments and
convertible loans. The Group’s financial position is structured to
take advantage of a natural foreign currency hedge using excess
cash generated from operations to repay the associated capital
and interest on US dollar borrowings. Furthermore, by funding in
US dollars the acquisitions of Market Resource Partners LLC
(MRP), Reference Data Factory LLC (RDF), Prelytix Inc. and Kx
Systems, the Group achieves a net investment hedge against
a significant portion of its translation exposure on the net assets
of its foreign operations.
Political donations
The Group and Company made no political donations during
the year (FY22: nil).
Annual General Meeting voting
At the AGM held on 7 July 2022, resolution 4 (to reappoint Virginia
Gambale) was passed with the necessary majority but with less
than 80% in favour. In response to the AGM voting the Board
engaged with the Group’s major shareholders, particularly those
identified as dissenting, to understand and discuss their concerns
with respect to the resolution. The discussions with institutional
shareholders with regard to this resolution centred on concerns
regarding overboarding. The Company believes that Virginia
Gambale has demonstrated her ability to contribute most
effectively in her role, evidenced throughout her more than seven
years of service as a Director. The Company also notes that major
shareholder governance bodies such as ISS recommended voting
for her reappointment. However, under the governance policies of
certain of our institutional shareholders she was considered to be
overboarded and they voted against her reappointment on that
basis. Following this dialogue, the Board does not propose to
make any changes to its composition and confirms its
commitment to active dialogue with its shareholders.
Future developments
As highlighted in the Chair’s Review and the Business Review, the
Group focuses on the sale of software and consulting services. It
remains the key strategy of the Group to increase its share in its
expanding range of target market segments through a
combination of organic growth and selective acquisitions.
Disclosure of information to auditor
The Directors who held office at the date of approval of this
Directors’ Report confirm that, so far as they are each aware,
there is no relevant audit information of which the Company’s
auditor is unaware; and each Director has taken all the steps that
they ought to have taken as a Director to become aware of any
relevant audit information and to establish that the Company’s
auditor is aware of that information.
Auditor
The Board has recommended the reappointment of Deloitte (NI)
Limited and a resolution to that effect will be proposed at the
forthcoming Annual General Meeting.
Other information
The other information required under Section 414C (ii) of the
Companies Act 2006 to be disclosed in respect of the review
of the Group’s business is given in the Chair’s Review,
the Business Review and the Financial Review.
By order of the Board
J Kearns
Secretary
22 May 2023
FD Technologies plc Annual Report 2023 | 59
Statement of Directors’ responsibilities in respect of the Strategic Report,
the Directors’ Report and the financial statements
The Directors are responsible for preparing the Annual Report
and the Group and parent Company financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and parent
Company financial statements for each financial year. Under the
AIM Rules of the London Stock Exchange they are required to
prepare the Group financial statements in accordance with
International Financial Reporting Standards as issued by the
International Accounting Standards Board and UK-adopted
International Accounting Standards. This reporting framework is
also consistent with the requirements of Euronext Growth Dublin
market, where the Company’s shares are also listed.
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 parent Company
and of the Group profit or loss for that period. In preparing
each of the Group and parent Company financial statements,
the Directors are required to:
• select suitable accounting policies and then apply
them consistently;
• make judgements and estimates that are reasonable,
relevant and reliable;
• state whether they have been prepared in accordance with
International Financial Reporting Standards as issued by the
International Accounting Standards Board and UK-adopted
International Accounting Standards;
• assess the Group and parent Company’s ability to continue
as a going concern, disclosing, as applicable, matters related
to going concern; and
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the parent
Company’s transactions and disclose with reasonable accuracy
at any time the financial position of the parent Company and
enable them to ensure that its financial statements comply with
the Companies Act 2006. They are responsible for such internal
control as they determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error, and have general responsibility for
taking such steps as are reasonably open to them to safeguard
the assets of the Group and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report and a Directors’
Report that comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company’s website. Legislation in the UK governing the
preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
We consider the Annual Report and financial statements, taken
as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the
Group’s position and performance, business model and strategy.
On behalf of the Board
• use the going concern basis of accounting unless they either
intend to liquidate the Group or the parent Company or to
cease operations or have no realistic alternative but to do so.
J Kearns
Secretary
22 May 2023
60 | FD Technologies plc Annual Report 2023
Corporate governance Financial statements
Financial
statements
In this section
62
Independent auditor’s report
70
Consolidated statement of comprehensive income
72 Consolidated balance sheet
73 Company balance sheet
74 Consolidated statement of changes in equity
76 Company statement of changes in equity
78 Consolidated cash flow statement
79 Company cash flow statement
80 Notes
126 Global directory
IBC Directors and advisers
FD Technologies plc Annual Report 2023 | 61
Independent auditor’s report
to the members of FD Technologies plc
Report on the audit of the financial statements
1. Opinion
In our opinion:
• the financial statements of FD Technologies plc (the ‘company’) and its subsidiaries (the ‘group’) give a true and fair view of
the state of the group’s and of the company’s affairs as at 28 February 2023 and of the group’s loss for the year then ended;
• the group financial statements have been properly prepared in accordance with United Kingdom adopted international
accounting standards;
• the company financial statements have been properly prepared in accordance with United Kingdom adopted
international accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
• the consolidated statement of comprehensive income;
• the consolidated and company balance sheets;
• the consolidated and company statements of changes in equity;
• the consolidated and company cash flow statements; and
• the related notes 1 to 34.
The financial reporting framework that has been applied in their preparation is applicable law, and United Kingdom adopted
international accounting standards and, as regards the company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
2. 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 the company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the Financial Reporting Council’s (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.
62 | FD Technologies plc Annual Report 2023
Financial statements 3. Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current year were:
• Revenue recognition relating to accrued income; and
• Capitalisation of internally developed software costs.
Within this report, key audit matters are identified as follows:
!
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality
The materiality that we used for the group financial statements was £1,200k which was determined
on the basis of approximately 0.4% of revenue.
The materiality that we used for the company financial statements was £1,080k, which was determined
based on approximately 0.5% of revenue.
Scoping
We determined the scope of our group audit by obtaining an understanding of the group and its environment
and assessing the risks of material misstatement at the group level.
Our full scope and specified audit procedures covered 99% (2022: 98%) of total group revenue; 93%
(2022: 89% group profit before tax) of group loss before tax and 98% (2022: 99%) of total group assets.
Significant changes
in our approach
There have been no significant changes in our approach from the prior year audit.
4. 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 company’s ability to continue to adopt the going concern basis
of accounting included:
• obtaining an understanding of the group’s and company’s business model, objectives, strategies and related business risks,
how the group and company is structured and financed and the measurement and review of the group’s and company’s
financial performance, including the FY24 budget, future cash flows and management’s budgeting processes;
• challenging and assessing the forecasts prepared by management including an assessment of the assumptions used in the
forecast, including assumptions around profitability levels, and a challenge to the assumptions based on a retrospective review
of forecasts prepared by management and amount of headroom in the forecasts;
• evaluating the relevance and reliability of the underlying data management used to make the assessments noted in the above
procedure; and
• reviewing the adequacy of the disclosures included in the financial statements on going concern and, through our audit
procedures, assessing whether they are appropriate.
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 and 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.
In relation to the reporting on how the group has applied the UK Corporate Governance Code, we have nothing material to add
or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report.
FD Technologies plc Annual Report 2023 | 63
Independent auditor’s report continued
to the members of FD Technologies plc
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due
to fraud) that we identified. These matters included 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 financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
5.1. Revenue recognition relating to accrued income
Key audit matter
description
The group had £8.3m (2022: £8.5m) of accrued income at 28 February 2023 with £296m of revenue
recognised in the year (2022: £263.5m).
The delivery of licensing or service revenue may occur over multiple accounting periods which due to either
fraud or error could result in revenue being misstated at the balance sheet date due to incorrect recognition
of accrued income.
Revenue accrued at the balance sheet date could be misstated where the correct revenue recognition
policies may not have been applied to contracts primarily due to the following factors:
• Revenue from contracts may not have been correctly recognised over the installation period for software
installations or over the appropriate service period for service contracts which can be time or performance based.
• Accrued income balances recorded at year end may not reflect the appropriate level of revenue to be recognised
at the balance sheet date.
The timing of revenue recognition has been disclosed as an area where critical judgement has been applied
in accounting policies in note 1 and in the report of the Audit and Risk Committee (page 47). Accrued income
is disclosed in note 4 and note 19.
In order to address the key audit matter, our procedures included the following:
• obtained an understanding of the process and relevant controls for ensuring appropriate recognition of accrued
income and evaluated the design and determined the implementation of the relevant controls relating to accrued
income and tested their operating effectiveness;
• carried out a review of the appropriateness of revenue recognition policies adopted under United Kingdom
adopted international accounting standards including disclosures in the financial statements;
• tested a sample of contracts including performing a recalculation of revenue to be recognised based on the
contract terms and comparing this to actual accrued income to assess for possible management bias; and
• challenged the appropriateness of accrued income as at the balance sheet date; this work included reviewing
supporting documentation on a sample basis to determine whether the performance obligations had been met.
How the scope of
our audit responded
to the key audit
matter
Key observations
We have no observations that impact on our audit in respect of the revenue recognition relating to accrued income.
5.2. Capitalisation of internally developed software costs
Key audit matter
description
At 28 February 2023, the group held internally developed software costs with a net book value of £56.3m
(2022: £44.4m). Costs in relation to internally generated intangible assets are capitalised when all of the
criteria as set out in IAS 38 “Intangible Assets” are met.
How the scope of
our audit responded
to the key audit
matter
There is a risk that additions are made to internally developed software costs before all the required
capitalisation criteria are met, whether through fraud or error. Expenditure is capitalised from the date when
the intangible asset first meets the recognition criteria and, in determining the amount to be capitalised,
management make judgements regarding expected future cash generation of the asset.
The capitalisation of internally developed software costs has been disclosed as an area where critical judgement
has been applied in accounting policies in note 1 and in the report of the Audit and Risk Committee (page 47).
Internally developed software capitalised in the year is disclosed in note 16.
In order to address the key audit matter, our procedures included the following:
• obtained an understanding of the process and related controls for ensuring appropriate capitalisation of internally
developed software costs;
• evaluated the design and determined the implementation of the relevant controls in place to separately identify
when development activities meet recognition criteria;
• reviewed the capitalised project register and completed procedures to determine whether the internally
developed software costs were recorded accurately and whether the costs met the required capitalisation criteria
in accordance with IAS 38; and
• agreed the amount of internally developed software costs capitalised to underlying documentation detailing cost
per project, including timesheet and salary data.
Key observations
We have no observations that impact on our audit in respect of the capitalisation of internally developed
software costs.
64 | FD Technologies plc Annual Report 2023
Financial statements
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope
of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Materiality
Basis for
determining
materiality
Rationale for the
benchmark applied
Group financial statements
£1,200k (2022: £1,054k)
Approximately 0.4% of revenue.
Revenue is a key performance measure for
management, investors and the analyst community.
This metric is important to the users of the financial
statements (investors and analysts being the key
users for a listed entity) because it portrays the
performance and growth of the business, particularly
as the group seeks to grow through the increased
investment in the business and hence its ability
to pay a return on investment to the investors.
Company financial statements
£1,080k (2022: £936k)
Company materiality equates to approximately 0.5%
of revenue and is capped at 90% of group materiality.
Revenue was considered to be the most appropriate
measure for the company given it is a key performance
measure for management and the analyst community
as a trading company. As this was higher than group
materiality, we capped company materiality at 90%
of group materiality.
Revenue £296,042k
98
Revenue
Group materiality
Group materiality: £1,200k
Component materiality range £17k to £1,080k
Audit Committee reporting threshold: £60k
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected
and undetected misstatements exceed the materiality for the financial statements as a whole.
Performance
materiality
Basis and rationale
for determining
performance
materiality
Group financial statements
80% of group materiality
Company financial statements
90% of company materiality
We deemed the performance materiality level
to be appropriate based on:
We deemed the performance materiality level
to be appropriate based on:
• Our risk assessment, including our assessment of
the group’s overall control environment and that
we consider it appropriate to rely on controls over
a number of business processes;
• Our risk assessment, including our assessment of
the company’s overall control environment and that
we consider it appropriate to rely on controls over
a number of business processes;
• our understanding of the entity and its
• our understanding of the entity and its
environment, and the nature of the entity
being listed; and
environment; and
• the level of corrected and uncorrected
• the level of corrected and uncorrected
misstatements recorded in the prior year audit.
misstatements recorded in the prior year audit.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £60.0k (2022: £52.5k),
as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit
Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.
FD Technologies plc Annual Report 2023 | 65
+
2
+
N
Independent auditor’s report continued
to the members of FD Technologies plc
7. An overview of the scope of our audit
7.1. Identification and scoping of components
The group operates in 14 locations across 4 continents with the largest footprint being in North America and Europe. We determined
the scope of our group audit by obtaining an understanding of the group and its environment, including group-wide controls, and
assessing the risks of material misstatement at the group and component level. Based on that assessment, we focused our group
audit scope on the audit work at the Newry location, where the group entities finance functions are centrally managed.
There were no separate component audit teams, with the entire audit including the testing of the consolidation being conducted
by one central audit team.
Of the group’s 36 components, we subjected 10 of the components to full audit scope, specified audit procedures were undertaken
on a further 5 components and analytical procedures were performed on a further 5 components. The other 16 components
represent non-trading or very small entities. Our full scope and specified audit procedures covered 99% (2022: 98%) of total group
revenue; 93% (2022: 89% group profit before tax) of group loss before tax and 98% (2022: 99%) of total group assets.
These components were selected based on the level of coverage achieved and to provide an appropriate basis for undertaking audit
work to address the risks of material misstatement identified above. Our audit work for all components was executed at levels of
materiality applicable to each individual unit which were lower than group materiality and ranged from £17k to £1,080k.
At the group level, we also tested the consolidation process and carried out analytical procedures to confirm our conclusion that
there were no significant risks of material misstatement of the aggregated financial information of the remaining components not
subject to a full audit.
Revenue
98+
Full audit scope: 98%
Loss before tax
89+
Full audit scope: 89%
Group assets
97+
Full audit scope: 97%
Specified audit procedures: 1%
Specified audit procedures: 4%
Specified audit procedures: 1%
Review at group level: 1%
Review at group level: 2%
Out of scope: 5%
Review at group level: 1%
Out of scope: 1%
8. 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.
66 | FD Technologies plc Annual Report 2023
Financial statements1
+
1
+
N
4
+
2
+
5
+
N
1
+
1
+
1
+
N
9. Responsibilities of directors
As explained more fully in the Statement of Directors’ responsibilities, 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 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 company or to cease operations, or have no realistic alternative but to do so.
10. 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.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud is detailed below.
Identifying and assessing potential risks related to irregularities
11.1.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with
laws and regulations, we considered the following:
• the nature of the industry and sector, control environment and business performance including the design of the group’s
and company’s remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;
• results of our enquiries of management, internal audit, the directors and the audit committee about their own identification
and assessment of the risks of irregularities, including those that are specific to the group’s sector;
• any matters we identified having obtained and reviewed the group’s and company’s documentation of their policies and procedures
relating to:
- identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance
including legacy employee tax liabilities as set out in note 6;
- detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
- the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
• the matters discussed among the audit engagement team and relevant internal specialists, including tax and valuations specialists
regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and
identified the greatest potential for fraud in the following areas: ‘Revenue recognition relating to accrued income’ and ‘Capitalisation
of internally developed software costs’. In common with all audits under ISAs (UK), we are also required to perform specific
procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the group and company operates in, focusing on
provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the
financial statements. The key laws and regulations we considered in this context included the relevant accounting framework,
Companies Act 2006 and relevant tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but
compliance with which may be fundamental to the group’s and company’s ability to operate or to avoid a material penalty. These
include the EU General Data Protection Regulation (GDPR) and possible inadvertent software patent infringements under governing
laws including the UK Patent Act 1977 and the European Patent Convention.
FD Technologies plc Annual Report 2023 | 67
Independent auditor’s report continued
to the members of FD Technologies plc
11.2. Audit response to risks identified
As a result of performing the above, we identified ‘Revenue recognition relating to accrued income’ and ‘Capitalisation of internally
developed software costs’ as key audit matters related to the potential risk of fraud. The key audit matters section of our report
explains the matters in more detail and also describes the specific procedures we performed in response to those key audit matters.
In addition to the above, our procedures to respond to risks identified included the following:
• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions
of relevant laws and regulations described as having a direct effect on the financial statements;
• enquiring of management, the audit committee and in-house legal counsel concerning actual and potential litigation and claims;
• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material
misstatement due to fraud;
• reading minutes of meetings of those charged with governance; and
• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other
adjustments; 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 the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including
internal specialists, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• 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
• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the company and their environment obtained in the course
of the audit, we have not identified any material misstatements in the strategic report or the directors’ report.
13. Corporate Governance Statement
As you have chosen to voluntarily comply with the UK Corporate Governance Code, we are required to review the directors’
statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating
to the group’s compliance with the provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements and our knowledge obtained during the audit:
• the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and
any material uncertainties identified, set out on page 47;
• the directors’ explanation as to its assessment of the group’s and company’s prospects, the period this assessment covers
and why the period is appropriate, set out on page 47;
• the directors’ statement on fair, balanced and understandable, set out on page 58;
• the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks, set out on page 45;
• the section of the annual report that describes the review of effectiveness of risk management and internal control systems,
set out on page 45; and
• the section describing the work of the audit committee, set out on page 48.
68 | FD Technologies plc Annual Report 2023
Financial statements 14.
Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received
from branches not visited by us; or
• the company financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration have
not been made.
We have nothing to report in respect of this matter.
15. 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.
Richard Howard FCA (Senior statutory auditor)
For and on behalf of Deloitte (NI) Limited
Statutory Auditor
Belfast, United Kingdom
22 May 2023
FD Technologies plc Annual Report 2023 | 69
Consolidated statement of comprehensive income
Year ended 28 February 2023
Revenue
Cost of sales
Gross profit
Operating costs
Research and development costs
– of which capitalised
Sales and marketing costs
Administrative expenses
Impairment loss on trade and other receivables
Total operating costs
Other income
Operating (loss)/profit
Finance income
Finance expense
Gain/(loss) on foreign currency translation
Net finance costs
Share of gain of associate, net of tax
Profit on disposal of associate
(Loss)/profit before taxation
Income tax expense
(Loss)/profit for the year
Note
3 & 4
2023
£’000
2022
£’000
296,042
263,463
(173,701)
(157,327)
3
122,341
106,136
(27,112)
(21,125)
23,138
(50,927)
(66,592)
(2,645)
18,553
(47,355)
(51,949)
(695)
(124,138)
(102,571)
249
(1,548)
24
(4,777)
2,107
(2,646)
—
3,017
(1,177)
(2,836)
(4,013)
2,816
6,381
262
(3,015)
(1,834)
(4,587)
262
6,943
8,999
(2,572)
6,427
31
6
5
10
10
10
17
17
11
70 | FD Technologies plc Annual Report 2023
Financial statements
(Loss)/profit for the year
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Equity investments at FVOCI – net change in fair value
Net gain on sale of FVOCI holding
Items that will or may be reclassified subsequently to profit or loss
Net exchange gain on net investment in foreign subsidiaries
Net loss on hedge of net investment in foreign subsidiaries
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to owners of the parent
(Loss)/earnings per share
Basic
Diluted
All profits are attributable to the owners of the Company and relate to continuing activities.
2023
£’000
(4,013)
2022
£’000
6,427
(522)
—
12,052
(3,124)
8,406
4,393
(1,408)
150
3,237
(1,183)
796
7,223
Note
Pence
Pence
14a
14a
(14.4)
(14.4)
23.1
22.9
FD Technologies plc Annual Report 2023 | 71
Note
2023
£’000
2022
£’000
15
16
18
19
24
19
25
20
25,593
28,343
175,660
155,607
9,356
2,548
21,313
19,676
3,745
17,998
234,470
225,369
96,749
6,114
36,905
74,029
4,172
48,564
139,768
126,765
374,238
352,134
21
140
139
103,789
100,424
18,974
18,404
3,002
5,354
9,755
(3,574)
69,609
67,391
200,868
192,539
22
23
24
22
23
4
25
26
17,026
3,681
15,758
36,465
39,911
41,466
48,407
682
6,439
62,504
3,190
15,307
81,001
9,054
33,606
26,990
382
8,562
136,905
78,594
173,370
159,595
374,238
352,134
Consolidated balance sheet
As at 28 February 2023
Registered Company number: NI 30731
Assets
Property, plant and equipment
Intangible assets and goodwill
Other financial assets
Trade and other receivables
Deferred tax assets
Non-current assets
Trade and other receivables
Current tax receivable
Cash and cash equivalents
Current assets
Total assets
Equity
Share capital
Share premium
Share option reserve
Fair value reserve
Currency translation adjustment reserve
Retained earnings
Equity attributable to owners of the Company
Liabilities
Loans and borrowings
Trade and other payables
Deferred tax liabilities
Non-current liabilities
Loans and borrowings
Trade and other payables
Deferred income
Current tax payable
Employee benefits
Current liabilities
Total liabilities
Total equity and liabilities
These financial statements were approved by the Board of Directors on 22 May 2023.
Seamus Keating
Chief Executive Officer
Ryan Preston
Chief Financial Officer
72 | FD Technologies plc Annual Report 2023
Financial statements
Company balance sheet
As at 28 February 2023
Registered Company number: NI 30731
Assets
Property, plant and equipment
Intangible assets and goodwill
Investment in subsidiaries
Other financial assets
Trade and other receivables
Deferred tax assets
Non-current assets
Trade and other receivables
Current tax receivable
Cash and cash equivalents
Current assets
Total assets
Equity
Share capital
Share premium
Share option reserve
Fair value reserve
Retained earnings
Equity attributable to shareholders
Liabilities
Loans and borrowings
Trade and other payables
Deferred tax liabilities
Non-current liabilities
Loans and borrowings
Trade and other payables
Deferred income
Employee benefits
Current liabilities
Total liabilities
Total equity and liabilities
Note
2023
£’000
2022
£’000
15
16
17
18
19
24
19
25
20
12,195
43,833
13,111
35,587
130,978
132,435
956
56,163
17,143
3,485
56,877
11,953
261,268
253,448
64,398
5,176
18,958
84,245
3,969
16,236
88,532
104,450
349,800
357,898
21
140
139
103,789
100,424
19,285
(1,014)
21,686
18,624
1,547
43,949
143,886
164,683
7,522
2,972
8,042
51,475
2,579
7,306
18,536
61,360
37,506
6,756
118,479
105,806
27,552
3,841
13,063
6,230
187,378
131,855
205,914
193,215
349,800
357,898
22
23
24
22
23
4
26
The Company’s loss for the year ended 28 February 2023 was £22,263k (2022: profit £9,236k).
These financial statements were approved by the Board of Directors on 22 May 2023.
Seamus Keating
Chief Executive Officer
Ryan Preston
Chief Financial Officer
FD Technologies plc Annual Report 2023 | 73
Consolidated statement of changes in equity
Year ended 28 February 2023
Share
capital
£’000
Share
premium
£’000
Merger
reserve
£’000
Share
option
reserve
£’000
Fair value
reserve
£’000
Currency
translation
adjustment
£’000
Retained
earnings
£’000
Total
equity
£’000
Balance at 1 March 2022
139
100,424
—
18,404
9,755
(3,574)
67,391
192,539
Total comprehensive income
for the year
Loss for the year
Other comprehensive income
Net exchange gain on net
investment in foreign subsidiaries
Net exchange loss on hedge of net
investment in foreign subsidiaries
Transfer of reserve of sale of
equity investment
Net change in fair value of equity
investments at FVOCI
Total comprehensive income
for the year
Transactions with owners
of the Company
Tax relating to share options
Exercise of share options
Issue of shares
Share based payment charge
—
—
—
—
—
—
—
1
—
—
—
—
—
—
—
—
—
3,079
286
—
Balance at 28 February 2023
140 103,789
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
245
—
—
325
—
—
—
—
(4,013)
(4,013)
12,052
(3,124)
—
—
12,052
(3,124)
(6,231)
(522)
—
—
6,231
—
—
(522)
(6,753)
8,928
2,218
4,393
—
—
—
—
—
—
—
—
—
—
—
—
245
3,080
286
325
18,974
3,002
5,354
69,609 200,868
74 | FD Technologies plc Annual Report 2023
Financial statements
Share
capital
£’000
Share
premium
£’000
Merger
reserve
£’000
Share
option
reserve
£’000
Fair value
reserve
£’000
Currency
translation
adjustment
£’000
Retained
earnings
£’000
Total
equity
£’000
Balance at 1 March 2021
139
99,396
8,118
16,790
10,682
(5,628)
53,177
182,674
Total comprehensive income
for the year
Profit for the year
Other comprehensive income
Net exchange gain on net
investment in foreign subsidiaries
Net exchange loss on hedge of net
investment in foreign subsidiaries
Net change in fair value of equity
investments at FVOCI
Net gain/(loss) on sale of FVOCI
holding
Total comprehensive income
for the year
Transactions with owners
of the Company
Tax relating to share options
Exercise of share options
Issue of shares
Share based payment charge
Transfer (see note 21)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
773
255
—
—
—
—
—
—
—
—
—
—
—
—
(8,118)
—
—
—
—
—
—
—
—
—
(1,408)
481
—
6,427
6,427
3,237
(1,183)
—
—
—
—
—
3,237
(1,183)
(1,408)
(331)
150
(927)
2,054
6,096
7,223
80
—
—
1,534
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
8,118
80
773
255
1,534
—
Balance at 28 February 2022
139
100,424
—
18,404
9,755
(3,574)
67,391
192,539
FD Technologies plc Annual Report 2023 | 75
Company statement of changes in equity
Year ended 28 February 2023
Balance at 1 March 2022
Total comprehensive income for the year
Loss for the year
Other comprehensive income
Net change in fair value of equity investments
at FVOCI
Total comprehensive income for the year
Transactions with owners of the Company
Tax relating to share options
Exercise of share options
Issue of shares
Share based payment charge
Share
capital
£’000
Share
premium
£’000
139
100,424
—
—
—
—
1
—
—
—
—
—
—
3,079
286
—
Balance at 28 February 2023
140 103,789
Merger
reserve
£’000
Share
option
reserve
£’000
Fair value
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
—
—
—
—
—
—
—
—
—
—
18,624
1,547
43,949
164,683
—
—
—
336
—
—
325
—
(22,263)
(22,263)
(2,561)
—
(2,561)
(2,561)
(22,263)
(24,824)
—
—
—
—
—
—
—
—
336
3,080
286
325
19,285
(1,014)
21,686 143,886
76 | FD Technologies plc Annual Report 2023
Financial statements
Share
capital
£’000
Share
premium
£’000
Merger
reserve
£’000
Share
option
reserve
£’000
Fair value
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
Balance at 1 March 2021
139
99,396
8,118
16,985
3,986
26,595
155,219
Total comprehensive income for the year
Profit for the year
Other comprehensive income
Net change in fair value of equity investments
at FVOCI
Total comprehensive income for the year
Transactions with owners of the Company
Tax relating to share options
Exercise of share options
Issue of shares
Share based payment charge
Transfer (see note 21)
—
—
—
—
—
—
—
—
—
—
—
—
773
255
—
—
—
—
—
—
—
—
—
(8,118)
—
—
—
105
—
—
1,534
—
—
9,236
9,236
(2,439)
—
(2,439)
(2,439)
9,236
6,797
—
—
—
—
—
—
—
—
—
8,118
105
773
255
1,534
—
Balance at 28 February 2022
139
100,424
—
18,624
1,547
43,949
164,683
FD Technologies plc Annual Report 2023 | 77
Consolidated cash flow statement
Year ended 28 February 2023
Cash flows from operating activities
(Loss)/profit for the year
Adjustments for:
Net finance costs
Depreciation of property, plant and equipment
Amortisation of intangible assets
Equity-settled share based payment transactions
Profit on disposal of associate
Loss/(profit) on disposal of fixed assets
Other income
Grant income
Share of profit of associate
Tax expense
Changes in:
Trade and other receivables
Trade and other payables and deferred income
Cash generated from operating activities
Taxes paid
Net cash from operating activities
Cash flows from investing activities
Interest received
Acquisition of subsidiaries
Acquisition of other investments
Sale of associate
Sale of other investments
Acquisition of property, plant and equipment
Proceeds from sale of property, plant and equipment
Acquisition of intangible assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Repayment of borrowings
Payment of lease liabilities
Interest paid
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at 1 March
Effects of exchange rate changes on cash held
Cash and cash equivalents at 28 February
78 | FD Technologies plc Annual Report 2023
2023
£’000
2022
£’000
(4,013)
6,427
2,646
7,265
4,587
6,308
14,331
13,817
325
(3,017)
5
(9)
(240)
—
2,836
1,534
(6,943)
(222)
(2,499)
(317)
(262)
2,572
20,129
25,002
(14,604)
22,970
28,495
(1,467)
(1,585)
5,473
28,890
(407)
27,028
28,483
24
—
—
19
(118)
(95)
100
11,001
8,139
(2,940)
67
175
(2,777)
920
(23,468)
(18,931)
(18,078)
(9,806)
3,080
773
(17,823)
(19,141)
(4,000)
(3,666)
(3,598)
(2,932)
(22,409)
(24,898)
(13,459)
48,564
1,800
(6,221)
55,198
(413)
36,905
48,564
Financial statements
Company cash flow statement
Year ended 28 February 2023
Cash flows from operating activities
(Loss)/profit for the year
Adjustments for:
Net finance costs
Depreciation of property, plant and equipment
Amortisation of intangible assets
Dividends from subsidiary
Disposal of subsidiary
Loss/(profit) on disposal of fixed asset
Equity-settled share based payment transactions
Other income
Grant income
Impairment of investment
Tax credit
Changes in:
Trade and other receivables
Trade and other payables and deferred income
Cash generated from operating activities
Tax refund
Net cash from operating activities
Cash flows from investing activities
Interest received
Acquisition of subsidiaries
Sale/(acquisition) of other investments
Acquisition of property, plant and equipment
Proceeds from sale of property, plant and equipment
Acquisition of intangible assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Repayment of borrowings
Payment of lease liabilities
Interest paid
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 March
Effects of exchange rate changes on cash held
Cash and cash equivalents at 28 February
2023
£’000
2022
£’000
(22,264)
9,236
7,920
2,926
9,171
—
—
5
325
(257)
(240)
7,546
(4,582)
6,144
2,325
7,661
(18,670)
1,137
(222)
1,534
(2,499)
(317)
—
(245)
550
6,084
14,217
24,494
39,261
1,134
(1,615)
5,488
9,957
469
40,395
10,426
24
(6)
9
19
(118)
(11)
(1,839)
(1,662)
67
920
(17,417)
(14,239)
(19,162)
(15,091)
3,080
773
(17,823)
(19,141)
(1,466)
(3,071)
(1,242)
(2,049)
(19,280)
(21,659)
1,953
16,236
769
(26,324)
43,095
(535)
18,958
16,236
FD Technologies plc Annual Report 2023 | 79
Notes
1. Significant accounting policies
FD Technologies plc (FTP or the ‘‘Company’’) is a public limited company incorporated and domiciled in Northern Ireland.
The Company’s registered office is 3 Canal Quay, Newry BT35 6BP. The consolidated financial statements consolidate those of
the Company and its subsidiaries (together referred to as the ‘‘Group’’) and equity accounts for the Group’s interest in its associate.
The Company financial statements present information about the Company as a separate entity and not about the Group.
The Group is primarily involved in the provision of a range of software and consulting services, particularly to finance, technology,
pharma, manufacturing and energy institutions.
The financial statements were authorised by the Board of Directors for issuance on 22 May 2023.
a) Basis of preparation
The consolidated financial statements and the Company financial statements have been prepared and approved by the Directors in
accordance with UK-adopted international accounting standards (IFRS) and with the Companies Act 2006. On publishing the Group
financial statements together with the Company financial statements, the Company is taking advantage of the exemption in Section
408 of the Companies Act 2006 not to present its individual income statement and related notes that form a part of those approved
financial statements.
The Group and Company financial statements are prepared on a historical cost basis except for share based payment arrangements
which are measured in accordance with IFRS 2 and derivative financial instruments and equity investments that are in the scope of
IFRS 9 which are measured at fair value.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these
consolidated financial statements and have been applied consistently by the Group and Company in changes in accounting policies.
Changes in accounting policies
The following standards, amendments and interpretations were effective for accounting periods beginning on or after 1 March 2022
and these have been adopted in the Group and Company financial statements where relevant:
• Amendments to IFRS 3 (May 2020)
• Amendments to IFRS 9, and IFRS 7 – Interest Rate Benchmark Reform
• Amendments to IAS 16 Property, Plant and Equipment – Proceeds before Intended Use
• Amendments IAS 37 – Onerous Contracts – Cost of Fulfilling a Contract
• Annual Improvements to IFRS Accounting Standards 2018-2020 (May 2020)
The changes listed above did not result in material changes to the Group and Company financial statements.
IFRSs not yet effective
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 March
2022 and have not been applied in preparing these financial statements. The relevant standards and interpretations not adopted are
outlined below and will be applied when mandatory:
Amendments to IAS 1
Amendments to IAS 1 and IFRS Practice Statement 2 – Disclosure of Accounting Policies
Amendments to IAS 8
Amendments to IAS 12 Income Taxes
Amendments to IFRS 17
1 January 2023
1 January 2023
1 January 2023
1 January 2023
1 January 2023
There are no other IFRS standards or interpretations that are not yet effective that would be expected to have a material impact on
the Group. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.
Functional and presentational currency
The financial statements are presented in GBP, rounded to the nearest thousand, which is also the Company’s functional currency
as its cost base is predominantly in this currency.
80 | FD Technologies plc Annual Report 2023
Financial statements 1. Significant accounting policies continued
a) Basis of preparation continued
Going concern
The financial statements are prepared on a going concern basis. The Directors consider the Group to have a resilient business model
and to have considerable financial resources. It meets its day-to-day working capital requirements through cash generated from its
trading activities and has long-term loan facilities in place. The Group’s forecasts and projections show that the Group will continue
to be cash generative and will be able to meet all obligations as they fall due with significant headroom.
The Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational
existence for the foreseeable future. Whilst the Group and Company are showing a net current liability position at the balance sheet
date, this is reflective of the prevailing loan facility at this date which was renegotiated on 19 May 2023 and is disclosed as a post
balance sheet event. Further information regarding the Group and Company’s loan facilities are discussed in note 22. In addition,
the Company has sufficient cash resources available to it through its subsidiary undertakings, accordingly, the Directors continue
to adopt the going concern basis in preparing the Annual Report and financial statements.
Note 2 to the financial statements includes the Group and Company’s objectives, policies and processes for managing its capital,
financial risk management objectives and exposure to credit risk and liquidity risk. Note 31 details financial instruments and their
impact on credit risk and liquidity.
Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual
results may differ from these estimates.
Estimates and underlying assumptions are reviewed and revised on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and in any future periods affected.
Information about critical judgements in applying accounting policies that have the most significant impact on the amounts
recognised in the financial statements are as follows:
• In determining Capitalised Internally Developed Software Costs, management will need to apply judgement and evaluate the
technical and commercial feasibility of each product, and the ability to yield future economic benefits, and assess likelihood of
success, and ability of the Group to complete each product. Judgements are used in determining what costs meet the requirement
for capitalisation under IAS 38.
• Management applies judgement in the recognition of revenue, determining when performance obligations are satisfied and control
transferred. For software products provided as an annual license, including the right to regular upgrades, judgement is required when
assessing whether the annual license is a separate performance obligation from the provision of upgrades to the customer. Management
has assessed that the ongoing updates and upgrades to the software are fundamental to the value of the software and that without these
updates the value of the software will substantially deteriorate over time. Therefore, the annual license and the updates and upgrades are
combined as one performance obligation and revenue is recognised over the life of the license as the service is delivered.
• The Group and Company have incurred sales and marketing costs and software development costs in developing the KX business.
As a result, the Group and Company have significant tax losses being carried forward which contribute to the Group and Company’s
deferred tax asset balances. Management have forecasted that the Company and Group will generate future taxable profits from
the KX trade against which these deferred tax assets will be utilised.
The estimates that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below:
• Under IFRS, goodwill on acquisitions is not amortised but is tested for impairment on an annual basis. Management has assessed goodwill
for impairment based on the projected profitability of the individual cash-generating unit to which the goodwill relates. A number of key
assumptions including discount rates, terminal growth rate and forecast cash flows are determined. Note 16 outlines the critical estimates
applied in the value-in-use calculations that are most sensitive to changes in key assumptions and the sensitivity of these critical estimates.
• Management has estimated the fair value of equity investments and convertible loans. Management has reviewed recent market
activity and has applied a discounted cash flow valuation technique to assess the fair value of the assets as at year end considering
the forecast revenue and EBITDA, together with forecast exit value applying market multiples, discounted using a risk-adjusted
discount rate. Details of the key assumptions used are included in note 31(b).
Management has assessed that there are no other estimates or judgements that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities recognised in the financial statements.
Measurement of fair values
A number of the Group’s and Company’s accounting policies and disclosures require the measurement at fair value of assets and liabilities.
Management has established a control framework with respect to the measurement of fair values and regularly reviews significant
unobservable inputs and valuation adjustments. If third-party information is used to measure fair values, then management assesses
the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of IFRS, including
the level in the fair value hierarchy in which such valuations should be classified.
FD Technologies plc Annual Report 2023 | 81
1. Significant accounting policies continued
a) Basis of preparation continued
Measurement of fair values continued
When measuring the fair value of an asset or a liability, the Group and Company use market observable data as far as possible.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices)
or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability are categorised in different levels of the fair value hierarchy, then
the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is
significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change
has occurred.
Further information about the assumptions made in measuring fair values is included in note 31 Financial instruments.
b) Basis of consolidation
i) Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control
is transferred to the Group. The Group measures goodwill at the acquisition date as:
• the fair value of the consideration transferred; plus
• the recognised amount of any non-controlling interests in the acquiree; plus
• if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less
• the net recognised amount of the identifiable assets acquired and liabilities assumed. Identifiable intangibles are those which
can be sold separately or which arise from contractual or legal rights regardless of whether those rights are separable.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
The consideration transferred does not include amounts related to the settlement of a pre-existing relationship. Such amounts
are generally recognised in profit or loss.
Transaction costs other than those associated with the issue of debt or equity securities that the Group incurs in connection
with a business combination are expensed as incurred.
The fair value of customer relationships acquired in a business combination is determined using the multi-period excess earnings
method, whereby the subject asset is valued after deducting a fair return of all other assets that are part of creating the related cash
flows. The fair value of other intangible assets acquired in a business combination is based on the discounted cash flows expected to
be derived from the use and eventual sale of the assets.
ii) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of
subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which
control ceases. In the Company’s financial statements, investments in subsidiaries are carried at cost less any provision made for impairment.
iii) Non-controlling interests (NCI)
All subsidiaries are 100% owned with no non-controlling interests.
iv) Investments in associates (equity accounted investees)
Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies.
Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity.
Associates are accounted for using the equity method (equity accounted investees) and are initially recognised at cost. This includes
goodwill identified on acquisition and fair value of intangibles (these amounts are not recognised separately in the consolidated
financial statements but included in the Group’s net investment in the associate). The consolidated financial statements include the
Group’s share of the profit or loss and other comprehensive income, after adjustments to align the accounting policies with those of
the Group, from the date that significant influence commences until the date that significant influence ceases net of any impairment
on the investment. In the Company’s financial statements, investments in associates are carried at cost less any provision made for
impairment. Profit or loss on disposal of associates is recognised in profit or loss as other gains/(losses).
v) Transactions eliminated on consolidation
Intra-group balances and transactions and any unrealised income and expenses arising from intra-group transactions are eliminated
in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity-accounted investees are
eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same
way as unrealised gains, but only to the extent that there is no evidence of impairment.
82 | FD Technologies plc Annual Report 2023
Financial statementsNotes continued 1. Significant accounting policies continued
c) Foreign currency
i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currency of the Group entities at the exchange rate ruling
at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated
to the functional currency at the exchange rate at that date. Monetary liabilities designated as a hedge of net investments are treated
as set out in note 1(c) (iii). Non-monetary assets and liabilities denominated in foreign currencies that are measured at historical cost
are translated using the exchange rate ruling at the date of the transaction. Non-monetary assets and liabilities denominated in foreign
currencies that are measured at fair value are translated to the functional currency at the exchange rate ruling at the date the fair value
was determined. Foreign exchange differences arising on retranslation are generally recognised in profit or loss, except for:
• differences arising on the retranslation of a financial liability designated as a hedge of the net investment in a foreign operation
to the extent that the hedge is effective, which is recognised in other comprehensive income (OCI) in the Group’s financial
statements; and
• differences arising from the retranslation of an interest in equity securities designated at FVOCI which are recognised in OCI.
ii) Foreign operations
The assets and liabilities of foreign subsidiaries, including goodwill and fair value adjustments arising on consolidation, are translated
to GBP at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated
to GBP at the foreign exchange rates ruling at the dates of the transactions. Foreign currency differences are recognised in other
comprehensive income and presented in the currency translation adjustment reserve in equity.
When a foreign operation is disposed of, such that control or significant influence is lost, the cumulative amount in the translation reserve
related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part
of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is
reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate that includes a foreign
operation while retaining significant influence, the relevant proportion of the cumulative amount is reclassified to profit or loss.
Certain exchange differences arising from monetary items receivable from or payable to a foreign operation, the settlement of
which is neither planned nor likely in the foreseeable future, are considered to form part of a net investment in a foreign operation
and are recognised in other comprehensive income and presented in the currency translation adjustment reserve in equity.
iii) Hedge of net investment in foreign operation
Foreign currency differences arising on the retranslation of foreign currency loans designated as a hedge of net investments in
a foreign operation are recognised in other comprehensive income to the extent the hedge is effective and are presented in the
currency translation adjustment reserve. To the extent that the hedge is ineffective, such differences are recognised in profit or
loss. When the hedged part of a net investment is disposed of, the associated cumulative amount in equity is transferred to profit
or loss as an adjustment to the profit or loss on disposal.
d) Property, plant and equipment
i) Owned assets
Property, plant and equipment is reported at cost less accumulated depreciation and accumulated impairment losses. Cost includes
expenditure that is directly attributable to the acquisition of the asset. When parts of an item of property, plant and equipment have
different useful lives, those components are accounted for as separate items of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal
with the carrying amount of the property, plant and equipment and is recognised in the profit or loss.
ii) Subsequent costs
The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item
when that cost is incurred if it is probable that the future economic benefits embodied within the item will flow to the Group and the
cost of the item can be measured reliably. All other costs are recognised in profit or loss as an expense as incurred.
iii) Depreciation
Depreciation is calculated to write down the costs of parts of items to their estimated residual values and is charged to profit or loss
on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Leased assets are
depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain
ownership by the end of the lease term. Depreciation is calculated using the following annual rates:
Office furniture
— 25%
Plant and equipment
— 25–50%
Leasehold improvements — 2–20%
Right-of-use assets
— 6–50%
Items of property, plant and equipment are depreciated from the date that the asset is completed and ready for use.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
FD Technologies plc Annual Report 2023 | 83
1. Significant accounting policies continued
e) Intangible assets and goodwill
i) Goodwill
Goodwill that arises on the acquisition of subsidiaries is presented with intangible assets on the balance sheet. For the measurement
of goodwill at initial recognition see note 1(b).
Goodwill is measured at cost less any accumulated impairment losses. Goodwill arising on acquisitions is not amortised. Goodwill
is allocated to cash-generating units and is tested annually for impairment. In respect of equity accounted investees, the carrying
amount of goodwill is included in the carrying amount of the investment in the investee.
Negative goodwill arising on an acquisition is recognised immediately in profit or loss.
ii) Research and development
Intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and impairment losses.
Expenditure on research activities undertaken with the prospect of gaining new technical knowledge and understanding
is recognised in profit or loss as an expense as incurred.
Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or
substantially improved products and processes, is capitalised only if development costs can be measured reliably, the product or
process is technically and commercially feasible, future economic benefits are probable and the Group intends to and has sufficient
resources to complete development and to use or sell the asset.
The expenditure capitalised in respect of software assets includes the cost of materials, direct labour and an appropriate proportion
of overheads that are directly attributable to preparing the asset for its intended use. Other development expenditure is recognised
through profit and loss as an expense as incurred. Capitalised development expenditure is measured at cost less accumulated
amortisation and impairment losses.
Tax credits for research and development are recognised based on amounts recoverable from the tax authorities in current and
future years. A credit is recognised in the income statement against the related expense or recognised in the period in which
the expenditure is amortised where the related expenditure is capitalised.
iii) Other intangible assets
Intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and impairment losses.
iv) Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied
in the specific asset to which it relates. All other expenditure is recognised in profit or loss as incurred.
v) Amortisation
Except for goodwill, intangible assets are amortised based on the cost of an asset less its residual value. Amortisation is charged
to the income statement on a straight-line basis over the estimated useful lives of intangible assets, from the date that the asset
is available for use as follows:
Customer lists
Acquired software
Brand name
— 12.5%
— 12.5%
— 12.5%
Internally developed software
— 12.5%–20.0%
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
f) Financial instruments
Financial assets and financial liabilities are recognised in the Group’s statement of financial position when the Group becomes a party
to the contractual provisions of the instrument.
On initial recognition a financial asset is classified as measured at: amortised cost; fair value through other comprehensive income
(FVOCI); or fair value through profit and loss (FVPL). The classification is based on the business model for managing the financial
assets and the contractual terms of the cash flows. Only when the business model for managing the assets changes is
reclassification required. The Group derecognises a financial asset when the contractual rights to the cash flows from the financial
asset expire or are transferred to a third party. The Group also derecognises a financial asset when its terms are substantially
modified. This is determined by a quantitative analysis to determine that the cash flows of the modified asset are substantially
different and a qualitative assessment to identify substantial differences in terms that by their nature are not captured by the
quantitative assessment. Where a substantial modification has been determined, a new financial asset based on the modified
terms is recognised at fair value and the original financial asset is derecognised; the difference in the respective carrying amounts
is recognised in profit or loss. If the modification is not substantial, the difference between: (1) the carrying amount of the asset
before the modification; and (2) the present value of the cash flows after the modification is recognised in profit or loss as the
modification gain or loss within other gains and losses.
84 | FD Technologies plc Annual Report 2023
Financial statementsNotes continued
1. Significant accounting policies continued
f) Financial instruments continued
Financial liabilities are classified as measured at amortised cost or FVPL. The Group derecognises a financial liability when its
contractual obligations are discharged or cancelled or expire. The Group also derecognises a financial liability when its terms are
modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the
modified terms is recognised at fair value. On derecognition of a financial liability, the difference between the carrying amount
extinguished and the consideration paid is recognised in profit or loss. If the modification is not substantial, the difference between:
(1) the carrying amount of the liability before the modification; and (2) the present value of the cash flows after modification is
recognised in profit or loss as the modification gain or loss within other gains and losses.
Trade and other receivables
Trade and other receivables in a held to collect business model are initially measured at transaction price where there is no significant
financing component, otherwise they are recognised at fair value. Trade and other receivables are subsequently stated at amortised
cost less expected credit losses.
Trade and other receivables not measured at amortised cost, as described above, are measured at FVPL. This includes convertible loans.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of one month or less and are measured
at amortised cost.
Equity investments
Equity investments are recognised initially at fair value plus attributable transaction costs. On initial recognition of an equity
investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’s fair value
in OCI and accumulated in the fair value reserve. This election is made on an investment-by-investment basis. When an investment
is sold, the cumulative gain or loss in equity is transferred to retained earnings. Dividends from equity investments are recognised
in profit or loss when the Group’s right to receive payment is established.
Derivative financial instruments
Derivatives are initially measured at fair value with any directly attributable transaction costs being recognised immediately in profit
or loss. Subsequent to initial recognition, derivatives are measured at fair value and changes therein are recognised in profit or loss.
Trade and other payables
Trade and other payables are initially measured at fair value less any directly attributable transaction costs. Trade and other payables
are subsequently measured at amortised cost.
Loans and borrowings
Loans and borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, loans
and borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in profit or
loss over the period of the borrowings on an effective interest basis. Bank overdrafts are included under borrowings in the statement
of financial position.
g) Classification of financial instruments issued by the Group
Financial instruments issued by the Group are treated as equity only to the extent that they meet the following two conditions:
a) they include no contractual obligations upon the Company (or Group as the case may be) to deliver cash or other financial assets
or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the
Company (or Group); and
b) where the instrument will or may be settled in the Company’s own equity instruments, it is either a non-derivative that includes
no obligation to deliver a variable number of the Company’s own equity instruments or is a derivative that will be settled by the
Company exchanging a fixed amount of cash or other financial asset for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified
takes the legal form of the Company’s own shares, the amounts presented in these financial statements for called-up share capital and
share premium account exclude amounts in relation to those shares.
h) Impairment
i) Financial assets
The Group recognises loss allowances for expected credit losses (ECLs) on financial assets measured at amortised cost.
The Group measures loss allowances on a forward-looking basis, at an amount equal to lifetime ECLs. The Group uses an allowance
matrix to measure the ECLs of trade receivables and contract assets (accrued income). Loss rates are calculated using a roll rate
method based on the probability of a receivable progressing through successive stages of delinquency to write-off. Roll rates are
calculated separately for exposures in different business units based on the Group’s historical credit loss experience, adjusted for
factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast
direction of conditions at the reporting date, including time value of money where appropriate.
FD Technologies plc Annual Report 2023 | 85
1. Significant accounting policies continued
h) Impairment continued
i) Financial assets continued
For all other financial instruments, the Group recognises lifetime ECL when there has been a significant increase in credit risk since
initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the
Group measures the loss allowance for that financial instrument at an amount equal to twelve-month ECL. Lifetime ECL represents
the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast,
twelve-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that
are possible within twelve months after the reporting date.
The Group allocates each exposure to a credit risk grade based on data that is determined to be predictive of the risk of loss
(including but not limited to external ratings, audited financial statements, management accounts and cash flow projections
and available press information) and applying experienced credit judgement. Credit risk grades are defined using qualitative
and quantitative factors that are indicative of the risk of default and are aligned to external credit rating definitions for agencies
(Standard & Poor’s). Exposures within each credit risk grade are segmented by industry classification. An ECL rate is calculated
for each segment based on delinquency status and actual credit loss experience.
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.
The gross carrying amount of a financial asset is written off when the Group has no reasonable expectation of recovering a financial
asset in its entirety or a portion thereof. The Group individually makes an assessment with respect to the timing and amount of
write-off based on whether this is a reasonable expectation of recovery.
ii) Non-financial assets
The carrying amounts of the Group’s non-financial assets, other than deferred tax assets, are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
For goodwill and assets that are not yet available for use, the recoverable amount is estimated at each reporting date. An impairment loss
is recognised if the carrying amount of an asset or its related cash-generating unit (CGU) exceeds its estimated recoverable amount.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets are
grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the
cash inflows of other assets or CGUs. Goodwill acquired in a business combination is allocated to the legal entity or business that has
been acquired in a business combination, which reflects the lowest level at which goodwill is monitored for internal reporting purposes.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce
the carrying amount of any goodwill allocated to the CGU and then to reduce the carrying amount of the other assets in the CGU
on a pro-rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods
are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed
if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the
extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation
or amortisation, if no impairment loss had been recognised.
i) Employee benefits
i) Defined contribution plans
The Group operates a defined contribution (pension) plan for employees. A defined contribution plan is a post-employment benefit
plan under which the Group pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay
further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense through profit
or loss as incurred.
ii) Share based payment transactions
The grant date fair value of equity-settled share based payment arrangements granted to employees is generally recognised as an
expense with a corresponding increase in equity over the vesting period. The fair value of the options granted is measured using an
adjusted Black-Scholes or Monte Carlo model, taking into account the terms and conditions upon which the options were granted.
Measurement inputs include the share price on the measurement date, the exercise price of the instrument, expected volatility
(based on an evaluation of the Company’s historical volatility, particularly over the historical period commensurate with the expected
term and adjusted for recent volatility changes), expected term of the instruments (based on historical experience and general
option holder behaviour), expected dividends and the risk-free interest rate (based on government bonds). Service and non-market
performance conditions attached to the transactions are not taken into account in determining fair value. The amount recognised as
an expense is adjusted to reflect the actual number of share options that vest. On the lapse of share options on the vesting date, the
amount recognised in the share option reserve is transferred to retained earnings. Modifications are assessed at the date of
modification and any incremental charges are charged to the income statement.
86 | FD Technologies plc Annual Report 2023
Financial statementsNotes continued 1. Significant accounting policies continued
i) Employee benefits continued
iii) Short-term benefits
Liabilities for employee benefits for wages, salaries and annual leave entitlements represent present obligations resulting from
employees’ services provided up to the reporting date and are calculated at undiscounted amounts based on remuneration
wage and salary rates that the Group expects to pay as at the reporting date.
A liability is recognised for the amount expected to be paid under short-term cash bonus plans if the Group has a present legal or
constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
j) Revenue
i) Products and services rendered
Revenue is measured based on the transaction price allocated to the performance obligation from the sale of goods or provision
of services. Revenue is recognised either when the performance obligation in the contract has been performed (“point in time”
recognition) or “over time” as control of the performance obligation is transferred to the customer.
Revenue in respect of each product or service is as follows:
• Revenue from perpetual software licensing is recognised at the point in time when control is transferred upon delivery to the customer
where there are no significant vendor obligations remaining following delivery, the client has accepted the software and the collection
of the resulting receivable is considered probable.
• Revenue from annual licensing is usually recognised on a straight-line basis over the period to which the service is provided to the
customer. When the value of the satisfied performance obligations is in excess of the payment due, the Group recognises a contract
asset (accrued income). When the amount of unconditional consideration is in excess of the value of satisfied performance obligations,
the Group recognises a contract liability (deferred income). Once a right to receive consideration is unconditional, that amount is
recognised as a receivable. Further detail on revenue recognition is provided in the critical accounting estimates and judgement section
of this note.
• Revenue from consulting services is recognised in the period in which the consultants perform the work at the contracted rates for
each consultant. Revenue is based on timesheets from our consultants which are authorised by the Group’s customers detailing the
hours and service provided.
• Maintenance and support revenue is recognised based over the term of the support arrangement. Under the standardised maintenance
and support services, the Group’s performance obligation is to provide product support and unspecified updates, upgrades and
enhancements on a when-and-if available basis. The customers simultaneously receive and consume the benefits of these services.
• The Group undertakes the provision of software-related services for specialised business operations. Such services will be contracted
on either a “fixed fee” or “time and materials” basis.
Fixed fee contracts
Where the provision of software-related services has been contracted on a fixed price basis, the associated revenue is recognised
based on the stage of completion of the contract. The Directors have assessed that the stage of completion, determined as the
delivered proportion of the total scope expected for the project, is an appropriate measure of progress towards complete satisfaction
of the performance conditions under IFRS 15. Any such assessments are reviewed on a regular basis. Such contracts will contain
a pre-agreed billing model and payments will be made by the client in accordance with the conditions within the contract.
Time and materials contracts
• Where the provision of software-related services has been contracted on a time and materials basis, the customer is bound to pay
for services in line with contractually pre-agreed daily rates. The revenue associated with such services is recognised on a monthly
basis, in line with any chargeable time and materials delivered against a given project. Typically, time and material billing will occur
on a monthly basis and clients are required to settle any payments due in line with contractually pre-agreed payment terms.
• Revenue from other services, including data management hosting, other hosting and transactional activities, is recognised over
the period to which the contract relates or the transaction occurs which gives rise to the receivable. In instances where a non-
refundable fee is paid by the customer, a contract liability (deferred income) is recognised and the fair value of any significant
obligations is deferred and recognised over the life of the contract; the remaining balance is recognised when control is transferred
following delivery and when the resulting receivable is considered probable.
The Group recognises a contract asset (accrued income) when the value of satisfied performance obligations is in excess of the payment
due to the Group or a contract liability (deferred income) when the amount of unconditional consideration is in excess of the value of
satisfied performance obligations. Once a right to receive consideration is unconditional, that amount is presented as a receivable.
Costs incurred on the commission paid to employees relating to software sales are capitalised as contract costs within prepayments and
recognised as an expense consistent with the transfer of the related goods or services to the customer and amortised over the life of the
initial term of the contract. The Group applies the practical expedient of IFRS 15 and recognises the incremental costs of obtaining
contracts as an expense when incurred if the amortisation period of the assets that the Group otherwise would have recognised is
one year or less.
FD Technologies plc Annual Report 2023 | 87
1. Significant accounting policies continued
j) Revenue continued
ii) Government grants
An unconditional government grant is recognised as other operating income when the grant becomes receivable. Other government
grants are initially recognised in the balance sheet as deferred income if there is reasonable assurance that they will be received and
that the Group has complied with the conditions attaching to it; they are released to the income statement as other income on
a systematic basis over the performance condition period. Grants that compensate the Group for expenses incurred are recognised
as other operating income through profit or loss on a systematic basis in the same periods in which the expenses are incurred.
Grants that compensate the Group for the cost of an asset are recognised in the income statement as other operating income
on a systematic basis over the useful life of the asset.
k) Leases
At inception of an arrangement, the Group determines whether such an arrangement is or contains a lease. A lease conveys a right
to control the use of an identified asset for a period of time in exchange for consideration. At inception or upon reassessment of the
arrangement, the Group allocates the consideration for lease and non-lease components on the basis of their relative fair values.
However, for certain leases of properties the Group has elected not to separate non-lease components and instead accounts for
the lease and non-lease components as a single arrangement. The Group recognises a right-of-use asset and a corresponding lease
liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease
term of twelve months or less) and leases of low-value assets.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing
rate. Generally, the Group uses its incremental borrowing rate as the discount rate. The lease liability is subsequently measured by
increasing the carrying amount to reflect interest on the lease liability and by reducing the carrying amount to reflect the lease
payments made. It is remeasured, with a corresponding adjustment to the right-of-use asset, when there is a change in the future
lease payments. The lease liability is presented within loans and borrowings in the consolidated balance sheet.
The right-of-use asset is initially measured at cost, comprising the initial measurement of the corresponding lease liability, any
lease payments made at or before the commencement day and any initial direct costs. They are subsequently measured at cost less
accumulated depreciation and impairment losses. Right-of-use assets are depreciated on a straight-line basis over the shorter of the
lease term and useful life of the underlying asset. The depreciation starts at the commencement date of the lease. The right-of-use
asset is tested for impairment if there are any indicators of impairment. The right-of-use assets are presented within the same line
item as that within which the corresponding underlying assets would be presented if they were owned – for the Group this is
property, plant and equipment.
For short-term leases and leases of low-value assets, lease payments are recognised in profit or loss on a straight-line basis over the
term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the
leased assets are consumed. Low-value assets comprise IT equipment and small items of office furniture. This expense is presented
within other operating expenses in the consolidated statement of comprehensive income.
l) Finance income and expenses
Finance income comprises interest receivable on funds invested and dividend income. Interest income is recognised through profit
or loss as it accrues, using the effective interest method. Dividend income is recognised in profit or loss on the date on which the
Group’s right to receive payment is established. Finance expenses comprise interest payable on borrowings calculated using the
effective interest rate method, and foreign exchange gains and losses. The interest expense component of lease payments is
recognised through profit or loss using the effective interest rate method. Finance income and expenses included the foreign
currency gain or loss on financial assets and liabilities; the net gain or loss on financial assets at fair value through profit or loss;
the fair value loss on contingent consideration classified as a financial liability; and hedge ineffectiveness recognised in profit or loss.
The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life
of the financial instrument to the gross carrying amount of the financial asset or the amortised cost of the financial liability.
m) Taxation
Tax expense on the profit or loss for the period presented comprises current and deferred tax. Current and deferred tax is recognised
in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or in other
comprehensive income.
i) Current tax
Current tax is the expected tax payable or receivable on the taxable income for the year, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
A provision is recognised for those matters for which the tax determination is uncertain but it is considered probable that there will
be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become
payable. The assessment is based on the judgement of tax professionals within the Group supported by previous experience in
respect of such activities and in certain cases based on specialist independent tax advice.
88 | FD Technologies plc Annual Report 2023
Financial statementsNotes continued 1. Significant accounting policies continued
m) Taxation continued
ii) Deferred tax
Deferred tax is provided using the liability method, providing for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not
provided for: goodwill not deductible for tax purposes; those arising from the initial recognition of assets or liabilities acquired in
a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; and differences
relating to investments in subsidiaries to the extent that it is probable they will not reverse in the foreseeable future. The amount of
deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the reporting date.
The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors,
including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of
judgements about future events. New information may become available that causes the Company to change its judgement regarding the
adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the
asset can be utilised. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable
that the related tax benefit will be realised.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and they
relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to
settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
n) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised
as a deduction from equity, net of any tax effects. The nominal value of shares issued is recognised as share capital.
o) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of
the entity, on or before the end of the financial year but not distributed at the year end.
p) (Loss)/earnings per share
The Group presents basic and diluted (loss)/earnings per share ((LPS)/EPS) data for its ordinary shares. Basic (LPS)/EPS is calculated
by dividing the profit or loss attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares
outstanding during the period. Diluted (LPS)/EPS is determined by adjusting the profit or loss attributable to ordinary shareholders
and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which
comprise share options granted to employees, Executive Directors and as part of business combinations.
q) Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker
(CODM). The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating
segments, has been identified as the Chief Executive Officer and Chief Financial Officer jointly. A business segment is a group of
assets and operations engaged in providing products or services that are subject to risks and returns that are different from those
of other business segments.
r) Use of non-GAAP measures – Adjusted EBITDA
The Group believes that the consistent presentation of adjusted Earnings Before Interest, Tax, Depreciation and Amortisation
(EBITDA), adjusted effective tax rate, adjusted basic earnings per share and adjusted diluted earnings per share provides additional
useful information to shareholders on the underlying trends and comparable performance of the Group over time. Adjusted EBITDA
is defined as results from operating activities before restructure and non-operational costs, IT systems implementation costs
expensed, share based payments and related costs, depreciation of property, plant and equipment and amortisation of intangible
assets, and non-recurring dividend income from investments. Restructure and non-operational costs relate to items that are
considered significant in size and non-operational in nature and include one-off costs relating to restructuring and to address
legacy employee tax liabilities while on assignment and costs associated with the management of our equity investment portfolio.
The Group uses adjusted EBITDA as an underlying measure of its performance. A reconciliation between GAAP and underlying
measures is set out in note 7 (Adjusted EBITDA).
FD Technologies plc Annual Report 2023 | 89
2. Financial risk management
Overview
The Group’s activities expose it to a variety of financial risks: market risk (principally foreign exchange risk and interest rate risk),
credit risk and liquidity risk.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the
Group’s profit or loss, other comprehensive income or the value of its holdings of financial instruments. The objective of market risk
management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
The Group currently does not use derivative financial instruments to hedge its exposure to currency or interest rate risk. All loans
are currently variable rate in nature, with the terms being at prevailing market interest rates.
The level of trading and borrowings in foreign currency in respect of foreign subsidiaries produces a natural hedge of a large
proportion of the Group’s exposures to foreign currency movements on trading and investments. Certain borrowings in foreign
currencies are designated as net investment hedges of foreign operations.
The Group’s equity investments and convertible loans are being carried at their estimated fair value and the Group’s maximum
exposure to risks associated with these investments is represented by their carrying amounts. Further details on equity investments
and convertible loans are disclosed in note 31 to the financial statements.
Credit risk
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management
also considers the factors that may influence the credit risk of its customer base, including the default risk associated with the
industry and country in which customers operate.
Although the Group’s client base is predominantly large multinational corporations, management separately assesses each new
customer before the Group’s standard payment and delivery terms and conditions are offered. This assessment includes a review
of credit ratings, if available, financial statements, credit agency information and industry information.
Customer credit limits are managed by the Group’s credit control team and are impacted by the previous matters and the customer
historical credit characteristics. The credit control team makes regular contact with customers when debts are overdue with
follow-up procedures carried out as required. The Group establishes an allowance for impairment that represents its estimate
of expected credit losses in respect of trade and other receivables.
The Group does not require collateral in respect of trade and other receivables.
The quantitative information on trade receivables and other receivables including concentration of credit risk is detailed in note 31.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that
are settled by delivering cash or other financial assets. The Group’s approach to managing liquidity is to ensure, as far as possible,
that it will always have sufficient liquidity to meet its liabilities when due, under normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation.
The Group generates positive operating cash flows and is able to meet its liabilities as they fall due. In addition, the Group has lines
of credit identified in note 22 to the financial statements.
Capital management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the
return to shareholders through the optimisation of the debt and equity balance. The Group’s capital management overall strategy
remains unchanged from 2022. The capital structure of the Group consists of net cash (borrowings disclosed in note 22 after
deducting cash and bank balances in note 20) and equity of the Group (comprising issued capital, reserves, retained earnings).
The Group is not subject to external requirements in respect of its capital, with the exception of the need to comply with the level of
ordinary shares available for trading on the AIM and Euronext Growth Dublin, with which the Group has complied in the current year.
Additional shares in the Group are made available to staff by the use of share option schemes as disclosed in note 32 to the financial
statements and as purchase consideration in business combinations. The Board seeks to maintain a balance between the higher
returns that might be possible with higher level of borrowings and the advantages and security afforded by a strong capital position.
Please see capital structure per note 21.
90 | FD Technologies plc Annual Report 2023
Financial statementsNotes continued 3. Operating and business segments
Business segments
The Group is organised into three operating segments (as identified under IFRS 8 “Operating Segments”) and generates revenue
through the following activities:
• KX – Software to accelerate AI-driven innovation.
• First Derivative (FD) – Consulting services which drive digital transformation in financial services and capital markets.
• MRP – Technology-enabled services for enterprise demand generation.
The chief operating decision maker monitors the operating results of segments separately in order to allocate resources between
segments and to assess performance. Segment performance is predominantly evaluated based on operating profit before
restructure and non-operational costs, share based payment and related costs, depreciation and amortisation of intangible assets
(“adjusted EBITDA”). These costs are managed on a centralised basis and therefore these items are not allocated between operating
segments for the purpose of presenting information to the chief operating decision maker and accordingly are not included in the
detailed segmental analysis. Intersegment revenue is not material and thus not subject to separate disclosure.
Information about reportable segments
KX
2023
£’000
2022
£’000
FD
2023
£’000
MRP
Total
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
Revenue by segment
Revenue
Gross profit
80,239
64,418 174,329
147,988
41,474
51,057 296,042
263,463
57,971
44,520
47,345
39,376
17,025
22,240 122,341
106,136
Adjusted EBITDA
16,621
9,782
16,712
13,982
1,429
7,283
34,762
31,047
Restructure and non-operational costs
IT systems implementation
costs expensed
Non-operational other income
Share based payment and
related costs
Depreciation and amortisation
Amortisation of acquired intangibles
Operating (loss)/profit
Net finance costs
Profit on disposal of associate
Share of profit of associate,
net of tax
(Loss)/profit before taxation
(8,716)
(3,082)
(5,562)
(2,287)
—
2,499
(436)
(1,671)
(18,799)
(16,994)
(2,797)
(3,131)
(1,548)
6,381
(2,646)
(4,587)
3,017
6,943
—
262
(1,177)
8,999
The Group has disclosed overleaf certain information regarding its revenue and non-current assets by geographical location.
In presenting this information, segment revenue has been based on the geographic location of customers and segment assets
were based on the geographic location of the assets. Details regarding total revenues are presented in note 4.
FD Technologies plc Annual Report 2023 | 91
3. Operating and business segments continued
Geographical location analysis
UK
EMEA
The Americas
Asia Pacific
Total
Revenues
Non-current assets
2023
£’000
104,163
55,062
2022
£’000
79,355
46,463
2023
£’000
87,589
17,028
2022
£’000
87,448
16,826
114,848
110,697
106,317
118,576
21,969
26,948
2,223
2,952
296,042
263,463
213,157
225,802
Major customers
The Group has no key customers who generated more than 10% of Group revenue in 2023 or 2022.
4. Revenue
Disaggregation of revenue
Type of good or service
Sale of goods – perpetual
Sale of goods – recurring
Rendering of services
Timing of revenue recognition
At a point in time
Over time
KX
2023
£’000
1,556
58,326
20,357
2022
£’000
3,589
39,192
FD
2023
£’000
MRP
Total
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
—
—
—
—
—
—
1,556
3,589
22,446
27,015
80,772
66,207
21,637 174,329
147,988
19,028
24,042 213,714
193,667
80,239
64,418 174,329
147,988
41,474
51,057 296,042
263,463
1,556
3,589
—
—
—
—
1,556
3,589
78,683
60,829 174,329
147,988
41,474
51,057 294,486
259,874
80,239
64,418 174,329
147,988
41,474
51,057 296,042
263,463
The following table provides information about receivables, accrued income and deferred income from contracts with customers.
Receivables, accrued and deferred income
Net current trade receivables (see note 19)
Accrued income (see note 19)
Deferred income
Group
Company
2023
£’000
72,098
8,325
48,407
2022
£’000
53,862
8,529
26,990
2023
£’000
48,460
4,513
27,552
2022
£’000
32,852
2,661
13,063
Accrued income relates to the Group’s right to consideration for work completed and delivered but not invoiced as at year end and is
transferred to trade receivables when an invoice is issued to the customer. Customers are typically invoiced on a monthly basis and
consideration is payable in line with agreed commercial terms.
Deferred income relates to advance consideration received from customers, where revenue is recognised over time as the services
are provided/delivered to customers. Movements in the deferred income balance were driven by transactions entered into by the
Group within the normal course of business in the year.
92 | FD Technologies plc Annual Report 2023
Financial statementsNotes continued
5. Other income
Government grants
Dividends from equity investments held at FVOCI
2023
£’000
240
9
249
2022
£’000
317
2,499
2,816
In December 2018, the Group was awarded a government grant amounting to £1,268k under the Skills Growth Programme. The grant
is to be drawn down on the occurrence of approved training expenditure, for the period to February 2024. The income is recognised
as the costs are incurred.
In December 2020, the Group was awarded a government grant amounting to £192,202 under the ATI Programme, COREF
(COnnected REconfigurable Factory). The grant is to be drawn down quarterly on the occurrence of approved labour, overheads,
travel and other costs relating to COREF project expenditure, for the period to 31 December 2022, the income is recognised as
the costs are incurred. For the year ended 28 February 2023 £48k was recognised in the profit and loss account (2022: £117k).
6. Operating costs
Rent, rates and insurance
Telecommunications
Accountancy, audit and legal expenses
Payroll costs
– of which capitalised
Tax credit
Listing expenses
Travel and subsistence
IT expenses
Marketing expenses
Restructure and non-operational costs
IT systems implementation costs expensed
Depreciation and amortisation
Impairment loss on trade and other receivables
Other operating costs
2023
£’000
3,790
803
3,114
2022
£’000
2,479
602
2,972
84,913
74,464
(19,107)
(16,549)
(2,234)
(2,121)
640
1,968
4,118
3,227
8,135
5,562
549
1,415
4,181
3,912
3,082
2,287
21,596
20,125
2,645
4,968
695
4,478
124,138
102,571
Included in the restructure and non-operational costs above are one-off costs totalling £6,865k relating to restructuring costs,
particularly at MRP, and costs to address legacy employee tax liabilities while on assignment.
7. Adjusted EBITDA
Operating (loss)/profit
Restructure and non-operational costs
Non-operational other income (see note 5)
IT systems implementation costs expensed
Share based payment and related costs
Depreciation and amortisation
2023
£’000
(1,548)
8,716
—
5,562
436
21,596
34,762
2022
£’000
6,381
3,082
(2,499)
2,287
1,671
20,125
31,047
FD Technologies plc Annual Report 2023 | 93
8. Auditor’s remuneration
Included in profit/loss are the following:
Auditor’s remuneration
Audit of these financial statements
Amounts receivable by the auditor and its associates in respect of:
Audit of the subsidiary undertakings included in the consolidation
All other services
Taxation compliance services
Other assurance
Other tax advisory services
Expenses recharged
2023
£’000
2022
£’000
160
136
65
3
—
27
—
—
59
—
—
25
—
—
255
220
9. Personnel expenses and numbers
The average monthly number of persons (including Directors) employed by the Group during the year is set out below:
Administration
Sales
Technical
The aggregate payroll costs of these persons were as follows:
Group
Company
2023
Average no.
2022
Average no.
2023
Average no.
2022
Average no.
271
465
2,287
3,023
264
405
2,097
2,766
181
41
1,273
1,495
171
123
1,180
1,474
Wages and salaries
Social security costs
Other pension costs
Share based payments (see note 32)
Less capitalised development costs
Disclosed as:
Cost of sales
Operating costs (see note 6)
Group
2023
£’000
2022
£’000
206,387
173,122
18,281
15,584
7,213
325
6,578
1,534
(19,107)
(16,549)
213,099
180,269
147,293
122,354
65,806
57,915
213,099
180,269
The above analysis does not include costs relating to redundancy/severance and to address legacy employee tax liabilities while
on assignment, which are included as part of restructure and non-operational costs as outlined in note 6.
Wages and salaries
Social security costs
Other pension costs
Share based payments (see note 32)
Less capitalised development costs
94 | FD Technologies plc Annual Report 2023
Company
2023
£’000
97,161
10,263
3,710
325
2022
£’000
99,929
9,346
3,496
1,534
(13,763)
(12,267)
97,696
102,038
Financial statementsNotes continued
10. Finance income and expense
Bank interest income
Finance income
Gain/(loss) on foreign currency translation of assets
Gain/(loss) on foreign currency translation
Financial liabilities measured at amortised costs
– interest expense
– lease interest expense
Finance expense
Net finance expense recognised in profit or loss
2023
£’000
24
24
2,107
2,107
(3,795)
(982)
(4,777)
(2,646)
2022
£’000
262
262
(1,834)
(1,834)
(1,880)
(1,135)
(3,015)
(4,587)
Exchange gains and losses on net investments in foreign subsidiaries and related effective hedges are recognised in the foreign
currency translation reserve. Interest expense includes a one-off expense relating to interest provided for on legacy employee tax
liabilities while on assignment.
11. Tax expense
a) Income tax recognised in the income statement
Current tax expense
Current year
Adjustment for prior years
Deferred tax expense
Origination and reversal of temporary differences
Adjustment for prior years
Change in tax rate
Total tax expense
b) Amounts recognised in OCI
Items that will not be reclassified to profit
or loss
Equity investments at FVOCI – net change
in fair value
Items that are or may be reclassified
subsequently to profit or loss
Hedge of net investment
in foreign subsidiaries
2023
£’000
2022
£’000
4,175
(16)
4,159
(864)
(459)
—
(1,323)
2,836
3,366
(101)
3,265
(1,432)
(152)
891
(693)
2,572
2023
2022
Before tax
£’000
Tax impact
£’000
After tax
£’000
Before tax
£’000
Tax impact
£’000
After tax
£’000
1,811
(1,289)
522
109
1,299
1,408
4,165
5,976
(1,041)
(2,330)
3,124
3,646
1,577
1,686
(394)
905
1,183
2,591
FD Technologies plc Annual Report 2023 | 95
After tax
£’000
1,502
(1,517)
(65)
(80)
2022
£’000
8,999
1,710
(138)
(1,345)
95
(253)
(112)
(163)
449
891
973
—
—
—
465
2,572
1,502
(1,517)
(65)
(80)
2023
£’000
(1,177)
(224)
(658)
—
804
(475)
(89)
(803)
845
(591)
148
2,965
697
79
138
2,836
11. Tax expense continued
c) Amounts recognised in equity
Deferred tax on share based payments
Deferred tax on losses
Current tax on losses
2023
2022
Before tax
£’000
Tax impact
£’000
After tax
£’000
Before tax
£’000
Tax impact
£’000
—
—
—
—
(181)
24
(88)
(245)
(181)
24
(88)
(245)
—
—
—
—
Reconciliation of effective tax rate
(Loss)/profit excluding income tax
Income tax using the Company’s domestic tax rate of 19.0% (2022: 19.0%)
Tax exempt income
Tax exempt income on disposal of associate
Expenses not deductible for tax purposes
Adjustments for prior years
Other differences
Effect of foreign exchange on consolidation
Foreign tax rate differences
Impact of change in tax rates
Permanent adjustment on SBP
Deferred tax not recognised in respect of losses carried forward
Deferred tax not recognised in respect of current period
Losses recognised in equity
Unrelieved overseas taxes
Total tax expense
In the 2021 UK Budget, the Government announced several legislative changes to corporation tax including an increase in the rate
of corporation tax to 25% from 1 April 2023.
Deferred tax balances have to be measured using the tax rates that have been substantively enacted at the balance sheet date
and that are expected to apply to the period when the asset is realised or the liability is settled.
The Group’s overall effective tax rate in the period was impacted significantly by the derecognition of carried forward losses in the US.
The total tax charge, including discrete items is £2,836k (2022: £2,572k), which equates to an effective tax rate of (240.95%)
(2022: 28.58%).
The total tax credit, excluding discrete items is £129k (2022: tax charge £708k), which equates to an effective tax rate of 10.96%
(2022: 7.87%). The main factor driving the increased tax rate excluding discrete items is in relation to current period tax losses in
the US not being recognised in the period which resulted in a tax adjustment of £697k.
The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors,
including interpretations of tax law and prior experience.
96 | FD Technologies plc Annual Report 2023
Financial statementsNotes continued 12. Remuneration of Directors
The remuneration paid to the Directors was:
Aggregate emoluments (including benefits in kind)
Company pension contributions
Share based payment
2023
£’000
1,636
28
267
2022
£’000
1,623
24
287
1,931
1,934
During the year there was one Director accruing benefits under a defined contribution pension scheme (2022: one).
The aggregate emoluments and Company pension contributions of the highest paid Director (excluding fees paid for provision
of services) amounted to £687k and £nil respectively during the year (2022: £656k and £nil respectively).
The Directors are deemed to be the key management of the Group.
Disclosures in respect of Directors’ emoluments as required by AIM Rules, Directors’ interests in shares and Directors’ share options
are set out in the Report of the Remuneration Committee.
13. Dividends
Dividends paid to the owners of the parent
Final dividend relating to the prior year
Interim dividend paid
2023
£’000
2022
£’000
—
—
—
—
—
—
The dividends recorded in each financial year represent the final dividend of the preceding financial year and the interim dividend
of the current financial year.
No final dividend was declared in relation to the comparative period and no interim dividend was declared or paid relating to the
current or prior year. The cumulative dividend paid during the year amounted to £nil (2022: £nil) per share.
After the respective reporting dates, the following dividends were proposed by the Directors. The dividends have not been provided
for and there are no income tax consequences.
£Nil per ordinary share (2022: £nil)
2023
£’000
—
2022
£’000
—
14. a) (Loss)/earnings per ordinary share
Basic
The calculation of basic (loss)/earnings per share at 28 February 2023 was based on the loss attributable to ordinary shareholders
of £4,013k (2022: profit £6,427k), and a weighted average number of ordinary shares in issue of 27,962k (2022: 27,782k).
Basic (loss)/earnings per share
Weighted average number of ordinary shares
Issued ordinary shares at 1 March
Effect of share options exercised
Effect of shares issued as remuneration
Weighted average number of ordinary shares at 28 February
2023
Pence
per share
(14.4)
2022
Pence
per share
23.1
2023
Number
’000
2022
Number
’000
27,826
27,717
124
12
58
7
27,962
27,782
FD Technologies plc Annual Report 2023 | 97
14. a) (Loss)/earnings per ordinary share continued
Diluted
The calculation of diluted (loss)/earnings per share at 28 February 2023 was based on the loss attributable to ordinary shareholders
of £4,013k (2022: profit £6,427k) and a weighted average number of ordinary shares after adjustment for the effects of all dilutive
potential ordinary shares of 27,962k (2022: 28,036k).
Diluted (loss)/earnings per share
Weighted average number of ordinary shares (diluted)
Weighted average number of ordinary shares (basic)
Effect of dilutive share options in issue
Weighted average number of ordinary shares (diluted) at 28 February
2023
Pence
per share
(14.4)
2022
Pence
per share
22.9
2023
Number
’000
2022
Number
’000
27,962
27,782
—
254
27,962
28,036
At 28 February, in accordance with IAS 33, due to the loss in the financial period share options in issue are anti-dilutive meaning there is no
difference between basic and diluted earnings per share. In the prior year 518,137 shares were excluded from the diluted weighted average
calculation as their effect would have been anti-dilutive. The average market value of the Group’s shares for the purposes of calculating
the dilutive effect of share options was based on quoted market prices for the year during which the options were outstanding.
14. b) (Loss)/earnings before tax per ordinary share
(Loss)/earnings before tax per share are based on loss before taxation of £1,177k (2022: profit £8,999k). The number of shares used
in this calculation is consistent with note 14(a) above.
Basic (loss)/earnings before tax per ordinary share
Diluted (loss)/earnings before tax per ordinary share
Reconciliation from (loss)/earnings per ordinary share to (loss)/earnings before tax per ordinary share:
Basic (loss)/earnings per share
Impact of taxation charge
Basic (loss)/earnings before tax per share
Diluted (loss)/earnings per share
Impact of taxation charge
Diluted (loss)/earnings before tax per share
2023
Pence
per share
(4.3)
(4.3)
2022
Pence
per share
32.4
32.1
2023
Pence
per share
2022
Pence
per share
(14.4)
10.1
(4.3)
(14.4)
10.1
(4.3)
23.1
9.3
32.4
22.9
9.2
32.1
(Loss)/earnings before tax per share is presented to facilitate pre-tax comparison returns on comparable investments.
14. c) Adjusted earnings after tax per ordinary share
Adjusted earnings after tax per share is based on an adjusted profit after taxation of £9,864k (2022: £9,051k). The adjusted profit
after tax has been calculated by adjusting the loss after tax £4,013k (2022: profit £6,427k) for the amortisation of acquired intangibles
after tax effect of £2,565k (2022: £2,715k), share based payment and related charges after tax effect of £353k (2022: £1,353k),
restructure and non-operational costs after tax effect of £14,781k (2022: £4,473k), profit on disposal of associate after tax and share
of profit of associate after tax effect of £3,017k (2022: £7,206k), the profit on foreign currency translation after tax effect of £1,707k
(2022: loss £1,485k), finance costs after tax effect of £902k (2022: £nil) and finance income from sale of investment after tax effect
of £nil (2022: £197k). The number of shares used in this calculation is consistent with note 14(a) above.
Adjusted basic earnings after tax per ordinary share
Adjusted diluted earnings after tax per ordinary share
98 | FD Technologies plc Annual Report 2023
2023
Pence
per share
35.3
35.3
2022
Pence
per share
32.6
32.3
Financial statementsNotes continued 15. Property, plant and equipment
Group
Leasehold
improvements
£’000
Plant and
equipment
£’000
Office
furniture
£’000
Right-of-use
assets
£’000
Cost
At 1 March 2022
Additions
Disposals
Reclass
Exchange adjustments
At 28 February 2023
Depreciation
At 1 March 2022
Charge for the year
Disposals
Reclass
Exchange adjustments
At 28 February 2023
Cost
At 1 March 2021
Additions
Disposals
Exchange adjustments
At 28 February 2022
Depreciation
At 1 March 2021
Charge for the year
Disposals
Exchange adjustments
At 28 February 2022
Carrying amounts
At 1 March 2021
At 28 February 2022
At 28 February 2023
Total
£’000
51,353
3,975
(1,018)
—
2,386
5,444
441
(104)
1,468
230
7,479
3,544
671
(32)
(38)
116
14,372
2,362
(34)
(1,468)
624
1,366
137
—
—
89
30,171
1,035
(880)
—
1,443
15,856
1,592
31,769
56,696
8,544
2,257
—
(9)
539
1,116
171
—
47
28
9,806
4,166
(451)
—
628
23,010
7,265
(483)
—
1,311
4,261
11,331
1,362
14,149
31,103
Leasehold
improvements
£’000
Plant and
equipment
£’000
Office
furniture
£’000
Right-of-use
assets
£’000
Total
£’000
6,224
318
(1,144)
46
11,886
2,442
(10)
54
1,349
32,590
52,049
17
—
—
377
(3,131)
335
3,154
(4,285)
435
5,444
14,372
1,366
30,171
51,353
3,321
531
(337)
29
6,845
1,673
(10)
36
894
219
—
3
7,448
3,885
(1,636)
109
18,508
6,308
(1,983)
177
3,544
8,544
1,116
9,806
23,010
2,903
1,900
3,218
5,041
5,828
4,525
455
250
230
25,142
20,365
33,541
28,343
17,620
25,593
The basis by which depreciation is calculated is stated in note 1.
Property, plant and equipment includes right-of-use assets of £17,620k (2022: £20,365k), related to leased properties that do not
meet the definition of investment property.
Details of security provided for borrowing in respect of property, plant and equipment are disclosed in note 22.
FD Technologies plc Annual Report 2023 | 99
15. Property, plant and equipment continued
Company
Cost
At 1 March 2022
Reclass
Additions
Disposals
At 28 February 2023
Depreciation
At 1 March 2022
Charge for the year
Disposals
At 28 February 2023
Cost
At 1 March 2021
Additions
Disposals
At 28 February 2022
Depreciation
At 1 March 2021
Charge for the year
Disposals
At 28 February 2022
Carrying amounts
At 1 March 2021
At 28 February 2022
At 28 February 2023
Leasehold
improvements
£’000
Plant and
equipment
£’000
Office
furniture
£’000
Right-of-use
assets
£’000
Total
£’000
3,395
558
441
(105)
3,922
(558)
1,260
—
4,289
4,624
1,817
425
(32)
1,958
776
—
2,210
2,734
726
—
138
—
864
640
83
—
723
13,142
21,185
—
244
—
—
2,083
(105)
13,386
23,163
3,659
1,642
—
8,074
2,926
(32)
5,301
10,968
Leasehold
improvements
£’000
Plant and
equipment
£’000
Office
furniture
£’000
Right-of-use
assets
£’000
Total
£’000
4,221
318
(1,144)
3,395
1,843
311
(337)
1,817
2,378
1,578
2,079
2,578
1,344
—
3,922
1,596
362
—
1,958
982
1,964
1,890
726
15,621
23,146
—
—
—
(2,479)
1,662
(3,623)
726
13,142
21,185
517
123
—
640
209
86
141
3,114
1,529
(984)
3,659
12,507
9,483
8,085
7,070
2,325
(1,321)
8,074
16,076
13,111
12,195
The basis by which depreciation is calculated is stated in note 1.
Property, plant and equipment includes right-of-use assets of £8,085k (2022: £9,483k) related to leased properties that do not
meet the definition of investment property.
100 | FD Technologies plc Annual Report 2023
Financial statementsNotes continued
16. Intangible assets and goodwill
Group
Goodwill
£’000
Customer
lists
£’000
Acquired
software
£’000
Brand
name
£’000
Internally
developed
software
£’000
Total
£’000
Cost
Balance at 1 March 2022
106,501
12,834
29,769
743
101,540
251,387
Additions
Development costs
Exchange adjustments
At 28 February 2023
Amortisation
Balance at 1 March 2022
Amortisation for the year
Exchange adjustment
At 28 February 2023
Cost
Balance at 1 March 2021
Development costs
Additions
Exchange adjustments
At 28 February 2022
Amortisation
Balance at 1 March 2021
Amortisation for the year
Exchange adjustment
At 28 February 2022
Carrying amounts
At 1 March 2021
At 28 February 2022
At 28 February 2023
—
—
—
—
10,141
1,083
330
—
2,877
—
—
59
—
23,138
978
330
23,138
15,138
116,642
13,917
32,976
802
125,656
289,993
—
—
—
—
11,832
26,106
944
1,003
1,816
2,527
13,779
30,449
Goodwill
£’000
Customer
lists
£’000
Acquired
software
£’000
103,527
12,467
28,535
—
—
2,974
—
—
367
—
378
856
703
37
55
795
Brand
name
£’000
733
—
—
10
57,139
11,534
637
95,780
14,331
4,222
69,310
114,333
Internally
developed
software
£’000
Total
£’000
83,531
18,553
—
(544)
228,793
18,553
378
3,663
106,501
12,834
29,769
743
101,540
251,387
—
—
—
—
10,426
22,619
1,083
323
2,475
1,012
11,832
26,106
103,527
106,501
116,642
2,041
1,002
138
5,916
3,663
2,527
652
42
9
703
81
40
7
47,583
10,217
(661)
81,280
13,817
683
57,139
95,780
35,948
147,513
44,401
155,607
56,346
175,660
The basis by which amortisation is calculated is stated in note 1. Amortisation is recognised through profit or loss in administration expenses.
Included within development costs capitalised in the year is £19,107k (2022: £16,549k) of capitalised employee costs for the year.
Developed software includes £11,290k (2022: £6,922k) of software under development at 28 February 2023 not yet commissioned, which
relates largely to ongoing development of the KX software. This is included in the KX impairment assessment which is discussed overleaf.
FD Technologies plc Annual Report 2023 | 101
16. Intangible assets and goodwill continued
Group continued
Impairment testing of goodwill
The Group tests goodwill for impairment at each reporting date or more frequently if there are indications that goodwill might
be impaired. For the purposes of impairment testing, goodwill is allocated to segments which represent the lowest level within
the Group at which goodwill is monitored. The recoverable amount of goodwill has been determined based on a value-in-use
calculation using cash flows derived from financial projections covering a five-year period, with cash flows thereafter calculated
using a terminal value methodology, using a CGU specific, risk adjusted discount rate to calculate their net present value.
Goodwill and indefinite life intangible assets are allocated to the Group’s CGUs according to business segment. A segment-level
summary of the allocation of goodwill and indefinite useful life intangible assets is presented below:
Goodwill at 1 March 2022
Foreign currency translation adjustment
Amortisation of intangibles
Balance at 28 February 2023
KX
£’000
87,554
8,223
—
FD
£’000
MRP
£’000
Total
goodwill
£’000
1,899
17,048
106,501
—
—
1,918
10,141
—
—
95,777
1,899
18,966
116,642
Key assumptions
The calculation of value in use is most sensitive to the following assumptions:
(a) CGU specific operating assumptions
CGU specific operating assumptions are applicable to the forecasted cash flows for the years FY24 to FY26 and relate to revenue
forecasts and EBITDA margins in each of the operating CGUs. The values applied to these key assumptions are derived from
a combination of external and internal factors, based on past experience together with management’s future expectations
about business performance.
(b) Discount rate
Discount rates reflect the current market assessment of the risk specific to each CGU. The discount rate was estimated based on
past experience and industry average weighted average cost of capital adjusted to reflect the current market assessment of risks
specific to each CGU for which the cash flow projections have not been adjusted. The risk-adjusted discount rates used in each
business segment for impairment testing are as follows:
Risk-adjusted discount rate
(c) Long term growth rate
The long term growth rates used in each region for impairment testing are as follows:
Long term growth rate
KX
12.0%
FD
12.0%
MRP
13.0%
KX
2%
FD
2%
MRP
2%
Sensitivity analysis
There was no impairment charge for the year ended 28 February 2023 (2022: £nil). Management have reviewed changes to
assumptions which are based on best estimates in arriving at value-in-use, future growth rates and the discount rate applied to cash
flow projections and has identified that a reasonable possible change in two key assumptions could cause the carrying amounts to
equal the recoverable amount. The following table shows the amounts by which these two assumptions would need to change for
the estimated recoverable amount to be equal to the carrying amount, Management believe there to be no reasonably possible
changes that would result in an impairment charge being recognised in the FD CGU.
Risk-adjusted discount rate %
Budgeted EBITDA margin
KX
28%
10%
FD
n/a
n/a
MRP
27%
5%
102 | FD Technologies plc Annual Report 2023
Financial statementsNotes continued 16. Intangible assets and goodwill continued
Company
Cost
Balance at 1 March 2022
Development costs
Additions
Balance at 28 February 2023
Amortisation and impairment losses
Balance at 1 March 2022
Amortisation for the year
Balance at 28 February 2023
Cost
Balance at 1 March 2021
Development costs
Additions
Balance at 28 February 2022
Amortisation and impairment losses
Balance at 1 March 2021
Amortisation for the year
Balance at 28 February 2022
Carrying amounts
At 1 March 2021
At 28 February 2022
At 28 February 2023
Goodwill
£’000
1,947
—
—
Acquired
software
£’000
914
—
234
Internally
developed
software
£’000
74,083
17,183
—
Total
£’000
76,944
17,183
234
1,947
1,148
91,266
94,361
—
—
—
402
191
593
40,955
8,980
41,357
9,171
49,935
50,528
Goodwill
£’000
1,947
—
—
1,947
—
—
—
1,947
1,947
1,947
Acquired
software
£’000
731
—
183
914
331
71
402
400
512
555
Internally
developed
software
£’000
60,026
14,057
—
Total
£’000
62,704
14,057
183
74,083
76,944
33,365
7,590
40,955
26,661
33,128
33,696
7,661
41,357
29,008
35,587
41,331
43,833
The basis by which amortisation is calculated is stated in note 1. Amortisation is recognised through profit or loss in administration expenses.
Included within development costs capitalised in the year is £13,763k (2022: £12,267k) of capitalised employee costs. Developed
software includes £7,133k (2022: £3,547k) of software under development at 28 February 2023 not yet commissioned. Uncommissioned
development expenditure is assessed for impairment annually as part of the underlying CGU.
Impairment testing of goodwill
The Company tests goodwill for impairment at each reporting date, or more frequently if there are indications that goodwill might
be impaired. The recoverable amount of goodwill has been determined based on a value-in-use calculation using cash flows derived
from financial projections covering a five-year period, with cash flows thereafter calculated using a terminal value methodology.
There was no impairment charge for the year ended 28 February 2023 (2022: £nil).
FD Technologies plc Annual Report 2023 | 103
17. Investment in subsidiaries and associate
The subsidiaries of the Group and Company are detailed as follows:
Activate Clients Limited*
First Derivative Limited*
First Derivatives (Hong Kong) Limited*
First Derivatives (Ireland) Limited*
First Derivatives Canada Inc.*
First Derivatives Holdings Inc.*
First Derivatives Holdings Pty Limited*
First Derivatives I Limited*
First Derivatives Investments LLP
First Derivatives Japan Co. Limited*
First Derivative Poland Sp Z.o.o*
First Derivatives Pte Limited*
First Derivatives Pty Limited
First Derivatives Services Limited*
First Derivatives South Africa (Pty) Limited*
First Derivatives South Korea*
First Derivatives Sweden AB*
First Derivatives US Inc
FD Technologies (Spain) SLU
FDT One Limited*
KX Canada Inc.*
KX Group Ltd*
KX Systems Inc.*
KX Systems Ltd*
KX Systems Hungary*
Market Resource Partners (Ireland) Limited
Market Resource Partners Australia Pty
Market Resource Partners Canada Inc
Market Resource Partners Limited
Market Resource Partners LLC
MRP Holdings Limited*
MRPFD S.A DE C.V
Prelytix LLC
QuantumKDB Limited*
Redshift Horizons Limited*
Reference Data Factory LLC
* Owned directly by FD Technologies plc.
** Full address is shown at end of document.
Address of
registered office **
Class of
share held
Ireland
United Kingdom
Hong Kong
Ireland
Canada
United States
Australia
United Kingdom
United Kingdom
Japan
Poland
Singapore
Australia
United Kingdom
South Africa
South Korea
Sweden
United States
Spain
United Kingdom
Canada
United Kingdom
United States
United Kingdom
Hungary
Ireland
Australia
Canada
United Kingdom
United States
United Kingdom
Mexico
United States
United Kingdom
United Kingdom
United States
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ownership
2023
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2022
100%
n/a
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
n/a
n/a
100%
n/a
100%
n/a
n/a
n/a
100%
100%
n/a
100%
100%
100%
100%
100%
During the year the Company continued to expand its presence across the globe by establishing MRP Canada on 1 March 2022, MRP
Ireland on 3 March 2022, MRP Holdings Limited on 8 July 2022, KX Systems Ltd on 2 August 2022, MRP Australia on 17 October 2022,
First Derivative Limited and KX Group Ltd on 14 November 2022 and KX Canada Inc on 19 December 2022. During the year the
previously held 100% subsidiary Quantum KDB Limited Hong Kong was dissolved. Following the year end MRP Brazil Inc was
incorporated on 1 March 2023.
104 | FD Technologies plc Annual Report 2023
Financial statementsNotes continued 17. Investment in subsidiaries and associate continued
Subsidiaries
Unlisted investments in subsidiaries
Cost
At 1 March 2022
Additions
Impairment
Disposals
At 28 February 2023
Company
2023
£’000
2022
£’000
132,435
133,464
6,089
(7,546)
118
—
—
(1,147)
130,978
132,435
During the year, the Company commenced a restructure of its statutory structure and as a result of this, certain subsidiaries do
not expect to have future cashflows to underpin their carrying value and the following impairment of those subsidiaries has been
recognised: FD Technologies (Spain) SLU (formerly Telconomics09 S.L), £536k, ActivateClients, £2,167k and First Derivatives Holdings
Pty Limited, £2,002k. In addition, in preparation of the dissolution of Quantum KDB Limited, Redshift LLP and Redshift Horizons
Limited, impairments of £2,648k, £9k and £184k respectively were recognised.
Additions in the year relate to new subsidiaries £79k, and capital contributions of £6,010k to First Derivatives Canada Inc .
Associate
On 5 October 2021 First Derivatives I Limited, a company wholly owned by FD Technologies plc, executed an agreement for the
disposal of its holding in its associate RxDataScience Inc. A profit on disposal of £6,943k was recognised within the consolidated
statement of comprehensive income in FY22. During FY23 additional proceeds of £3,017k were recognised during the year based on
the delivery of earn-out arrangements included in the agreement for the disposal of the Group’s interest in this entity which were not
considered probable at the prior year end.
Revenue
Profit from continuing operations (100%)
Other comprehensive income (100%)
Total comprehensive income (100%)
Total comprehensive income (36.66%)
* 2022 results reflect the contribution for the seven months ended 5 October 2022 reflective of change in ownership.
2023
£’000
—
—
—
—
—
2022 *
£’000
4,185
715
—
715
262
18. Other financial assets
Non-current investments
Equity securities at FVOCI
Group
2023
£’000
2022
£’000
9,356
9,356
19,676
19,676
Company
2023
£’000
956
956
2022
£’000
3,485
3,485
Information about the Group and Company’s exposure to market risk and fair value measurement is disclosed in note 31(b).
Movements in the value of the equity securities held is also disclosed in note 31(b).
The Group designates the investments as equity securities at FVOCI because these equity securities represent investments that the
Group intends to hold for the long term for strategic purposes. The previously held largest single investment in Quantile Technologies
Ltd was disposed of in November 2022; no other investments is individually significant.
The Group and Company have recognised dividend income in the year from their FVOCI investment Seraphim Space LP
of £9k (2022: £2,499k).
FD Technologies plc Annual Report 2023 | 105
19. Trade and other receivables
Current assets
Trade receivables
Receivables from subsidiaries
Other receivables
Accrued income
Prepayments
Grant income receivable
Non-current assets
Receivables from subsidiaries1
Convertible loans
Other loans
Trade and other receivables
Grant income receivable
Group
2023
£’000
2022
£’000
Company
2023
£’000
72,098
53,862
48,460
—
7,299
8,325
8,436
591
—
1,511
8,529
9,461
666
3,495
1,110
4,513
6,495
325
2022
£’000
32,852
39,189
1,273
2,661
7,959
311
96,749
74,029
64,398
84,245
2023
£’000
—
283
104
1,410
751
2,548
2022
£’000
—
283
104
2,661
697
3,745
2023
£’000
2022
£’000
55,429
54,890
—
—
734
—
—
—
1,987
—
56,163
56,877
1 The repayment terms of the receivable from certain subsidiaries have been agreed as falling due after more than one year.
The Group’s accrued income (contract asset) balance solely relates to revenue from contracts with customers. Movements in the
accrued income balance were driven by transactions entered into by the Group within the normal course of business in the year.
Trade receivables, accrued income, non-current other receivables and non-convertible loans are shown net of an allowance for
expected credit loss; this is disclosed in note 31.
The Group’s and Company’s exposure to currency risks and impairment losses related to trade and other receivables is disclosed
in note 31.
20. Cash and cash equivalents
Group
2023
£’000
2022
£’000
Company
2023
£’000
2022
£’000
36,905
48,564
18,958
16,236
Ordinary shares
2023
Number
2022
Number
27,826,486 27,717,324
222,800
100,250
15,568
8,912
28,064,854 27,826,486
2023
Number
2023
£’000
2022
Number
2022
£’000
28,064,854
140 27,826,486
139
Bank balances
See note 31 for discussion of interest rate risk and sensitivity analysis.
21. Share capital
In issue at 1 March
Exercise of share options (see note 32)
Issued as remuneration
In issue at year end – fully paid
Equity shares
Issued, allotted and fully paid
Ordinary shares of £0.005 each
106 | FD Technologies plc Annual Report 2023
Financial statementsNotes continued 21. Share capital continued
Shares increased in the year due to the exercise of 222,800 share options (2022: 100,250) for cash consideration of £3,080k
(2022: £773k) and the issue of 15,568 shares (2022: 8,912) as remuneration of £286k (2022: £255k).
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share
at meetings of the Company.
Nature and purpose of reserves
Share option reserve – The share option reserve comprises the charge for unexercised share options granted to employees and
includes share options granted in consideration for the acquisition of business combinations net of deferred tax assets relating to
the tax deduction receivable when the options are exercised.
Currency translation adjustment reserve – The currency translation adjustment reserve comprises all foreign exchange differences
arising from the translation of the financial statements of foreign operations and intercompany loans that are determined to form
part of the net investment, as well as from the translation of liabilities that hedge the Group’s net investment in a foreign subsidiary.
Fair value reserve – The fair value reserve comprises the cumulative net change in the fair value of equity securities designated at fair
value through OCI. Additionally, the fair value reserve of the Company relates to the revaluation reserve which arose on revaluation
relating to Kx Systems Inc. prior to significant influence being obtained. The balance is continued to be retained as the Company
continues to retain this original investment.
Merger reserve – The merger reserve represents the fair value of the consideration given in excess of the nominal value of the ordinary
shares issued on the acquisition of subsidiaries (interest of at least 90%) on share for share exchanges. During the prior year it was
assessed that the benefits of merger were fully utilised and the balance of the merger reserve was transferred to retained earnings.
22. Loans and borrowings
This note provides information about the contractual terms of the Group and Company’s interest-bearing loans and borrowings,
which are measured at amortised cost. For more information about the Group and Company’s exposure to interest rate, foreign
currency and liquidity risk arising from these loans and borrowings (see note 31).
Current liabilities
Secured bank loans
Lease liabilities
Non-current liabilities
Secured bank loans
Lease liabilities
Group
2023
£’000
36,499
3,412
39,911
—
17,026
17,026
2022
£’000
5,311
3,743
9,054
42,925
19,579
62,504
Company
2023
£’000
36,499
1,007
37,506
—
7,522
7,522
2022
£’000
5,311
1,445
6,756
42,926
8,549
51,475
Terms and repayment schedule
After the year end, we refinanced our banking facilities, which had been due to expire in June 2024, on improved terms. The total
facility remains at £130m and is entirely comprised of a revolving credit facility, replacing a £65m term loan and £65m revolving
credit facility. The interest rate payable is SONIA/SOFR plus a fixed margin that depends on the level of debt relative to adjusted
EBITDA. The margin on the new revolving credit facility is equal to 1.85% to 2.85%, this compares favourably to the previous margin
of 2% to 3%. The lead arranger for the facility remains Bank of Ireland, with continued participation from Barclays and AIB and new
participation from HSBC.
FD Technologies plc Annual Report 2023 | 107
22. Loans and borrowings continued
Terms and repayment schedule continued
The terms and conditions of outstanding loans were as follows:
Term loan – USD
Term loan – GBP
Revolving loan
Lease liabilities
Total interest bearing
Currency
USD
GBP
Multi
Multi
2023
2022
Nominal
interest rate
2.0%+US Libor 1
2.0%+SONIA 1
2.0%+ 1
Year of
maturity
2024
2024
2024
Face value
£’000
35,064
1,622
—
Carrying
amount
£’000
34,885
1,614
—
3.78% 2022-2035
20,438
20,438
57,124
56,937
Face value
£’000
46,901
1,709
—
23,322
71,932
Carrying
amount
£’000
46,540
1,696
—
23,322
71,558
1
The nominal interest rate varies as the Group meets financial targets and these have been assessed as being closely linked to the underlying contract with
a minimum rate available of 2.0%+ SONIA/US LIBOR where applicable.
The term and revolving loans are secured by a fixed charge over certain subsidiaries of the Group and have interest charged at 2.0%
above relevant rates being SONIA and US LIBOR.
Reconciliation of movements of liabilities to cash flows arising from financing activities
Group
Secured bank loans
Lease liabilities
Total liabilities from financing activities
New/(disposed)
leases
£’000
2022
£’000
48,236
23,322
71,558
—
(50)
(50)
* The majority of non-cash movement relates to foreign exchange movements.
Group
Secured bank loans
Lease liabilities
Total liabilities from financing activities
New/(disposed)
leases
£’000
2021
£’000
—
(1,227)
65,114
27,726
92,840
(1,227)
(22,552)
* The majority of non-cash movement relates to foreign exchange movements.
Company
Secured bank loans
Lease liabilities
Total liabilities from financing activities
New/(disposed)
leases
£’000
2022
£’000
48,236
9,994
58,230
—
—
—
* The majority of non-cash movement relates to foreign exchange movements.
Company
Secured bank loans
Lease liabilities
Total liabilities from financing activities
New/(disposed)
leases
£’000
2021
£’000
—
(1,605)
65,114
12,840
77,954
(1,605)
(20,195)
Cash flow
on principal
£’000
(17,823)
(4,000)
(21,823)
Cash flow
on principal
£’000
(18,954)
(3,598)
Cash flow
on principal
£’000
(17,823)
(1,466)
(19,289)
Cash flow
on principal
£’000
(18,954)
(1,241)
Cash flow
on interest
£’000
Non-cash
movement
£’000
—
(982)
(982)
6,086 *
2,148
2023
£’000
36,499
20,438
8,234
56,937
Cash flow
on interest
£’000
Non-cash
movement
£’000
—
2,076 *
(1,135)
(1,135)
1,556
3,632
2022
£’000
48,236
23,322
71,558
Cash flow
on interest
£’000
Non-cash
movement
£’000
2023
£’000
—
(386)
(386)
6,086 *
36,499
387
8,529
6,473
45,028
Cash flow
on interest
£’000
Non-cash
movement
£’000
2022
£’000
—
(486)
(486)
2,076 *
48,236
486
9,994
2,562
58,230
* The majority of non-cash movement relates to foreign exchange movements.
108 | FD Technologies plc Annual Report 2023
Financial statementsNotes continued 23. Trade and other payables
Current liabilities
Trade payables
Other payables
Accruals
Government grants
Payables to subsidiaries
Non-current liabilities
Government grants
Group
Company
2023
£’000
11,291
15,745
13,460
970
—
2022
£’000
12,833
14,745
5,214
814
—
2023
£’000
6,852
10,234
5,457
790
2022
£’000
8,796
10,307
2,966
654
95,146
83,083
41,466
33,606
118,479
105,806
Group
Company
2023
£’000
3,681
3,681
2022
£’000
3,190
3,190
2023
£’000
2,972
2,972
2022
£’000
2,579
2,579
The Group and Company’s exposure to currency and liquidity risk related to trade and other payables is disclosed in note 31.
24. Deferred taxation
Group
Deferred tax assets and liabilities are attributable to the following:
Property, plant and equipment
Share based payments
Trading losses
Other financial assets at fair value
Intangible assets
Short-term temporary differences
Other*
Tax assets/(liabilities) before set-off
Set-off of tax
Net tax assets/(liabilities)
* This balance primarily relates to deferred future RDEC release to the profit or loss.
Assets
Liabilities
2023
£’000
1,979
428
2022
£’000
—
280
14,424
14,017
2023
£’000
(907)
—
—
2022
£’000
(252)
—
—
54
397
3,082
949
54
659
2,204
784
(1,358)
(2,661)
(13,493)
(12,394)
—
—
—
—
21,313
17,998
(15,758)
(15,307)
—
—
—
—
21,313
17,998
(15,758)
(15,307)
FD Technologies plc Annual Report 2023 | 109
24. Deferred taxation continued
Group continued
Movement in deferred tax balances differences during the year:
Property, plant
and equipment
Share based payments
Trading losses
Other financial assets
at fair value
Intangible assets
Short-term temporary
differences
Other
Property, plant
and equipment
Share based payments
Trading losses
Other financial assets
at fair value
Intangible assets
Short-term temporary
differences
Other
Balance at
1 March 2022
£’000
(252)
280
14,017
(2,607)
(11,735)
2,204
784
2,691
Balance at
1 March 2021
£’000
(505)
2,313
9,557
(1,308)
(9,006)
1,828
412
3,291
Impact of
change in
tax rate in
equity
£’000
Impact of
change in
tax rate in
profit
and loss
£’000
Recognised
in income
£’000
Recognised
in equity
£’000
Recognised
in OCI
£’000
Balance at
28 February
2023
£’000
—
—
—
—
—
—
—
—
Impact of
change in
tax rate in
equity
£’000
—
502
1,425
(446)
—
—
3
—
—
—
—
—
—
—
—
Impact of
change in
tax rate in
profit
and loss
£’000
89
198
332
—
(1,680)
26
144
1,411
—
189
—
(988)
591
120
193
(729)
2,532
—
(885)
274
199
—
181
(24)
(87)
(33)
242
1,072
428
14,424
1,289
14
(1,304)
(373)
(13,096)
287
45
95
3,082
949
5,555
1,323
1,446
Recognised
in income
£’000
Recognised
in equity
£’000
Recognised
in OCI
£’000
Balance at
28 February
2022
£’000
—
(2,004)
92
(29)
—
79
(252)
280
14,017
(853)
—
(2,607)
(164)
(11,735)
76
26
(12)
2,204
784
2,691
—
—
—
—
—
—
1,484
(891)
1,584
(2,765)
The basis by which taxation is calculated is stated in note 1.
As at 28 February 2023, the Group has losses carried forward generated in the United Kingdom, Ireland, Australia and Spain
which total £57,329k and have no expiration period.
The Group also has US federal and state income tax net operating loss (NOL) carry forwards of £32k which will expire, if not utilised, in the
tax years 2031–2042. At the end of each reporting period, management assess the recognition of these deferred tax assets to determine
the extent that it is probable that future taxable profit will allow the utilisation of the deferred tax asset. As a result of this assessment, the
Group has not recognised US federal and state income tax net operating loss (NOL) of £25,153k at the balance sheet date.
The Group has not recognised a deferred tax asset on the fair value movement on equity investments of £3,689k. The Group does
not recognise deferred tax where the fair value of equity investments is below cost, and it is not probable that the temporary
difference will reverse in the foreseeable future.
The Group has also not recognised a deferred tax asset on Corporate Interest Restriction carried forward of £1,031k.
110 | FD Technologies plc Annual Report 2023
Financial statementsNotes continued 24. Deferred taxation continued
Company
Deferred tax assets and liabilities are attributable to the following:
Property, plant and equipment and intangibles
Share based payments
Trading losses
Other financial assets at fair value
Other*
Tax assets/(liabilities) before set-off
Set-off of tax
Net tax assets/(liabilities)
Assets
2023
£’000
1,792
429
2022
£’000
378
255
13,786
10,231
—
1,136
92
997
Liabilities
2023
£’000
2022
£’000
(7,973)
(7,185)
—
—
(69)
—
—
—
(121)
—
17,143
11,953
(8,042)
(7,306)
—
—
—
—
17,143
11,953
(8,042)
(7,306)
* This balance primarily relates to our deferred future RDEC release to the profit and loss and short-term timing differences.
Movement in deferred tax balances during the year:
PPE and intangibles
Share based payments
Trading losses
Other financial assets at fair value
Other
PPE and intangibles
Share based payments
Trading losses
Other financial assets at fair value
Other
Impact of
change in
tax rate in
equity
£’000
Impact of
change in
tax rate in
profit
and loss
£’000
Recognised
in profit
and loss
£’000
Recognised
in equity
£’000
—
—
—
—
—
—
Impact of
change in
tax rate in
equity
£’000
—
503
1,386
(277)
24
1,636
—
—
—
—
—
—
Impact of
change in
tax rate in
profit
and loss
£’000
(1,384)
198
398
—
170
626
—
3,467
—
144
4,237
Recognised
in profit
and loss
£’000
(1,041)
(687)
2,629
—
188
(618)
1,089
—
174
88
(40)
(5)
217
Recognised
in equity
£’000
—
(1,979)
125
1,116
(18)
(756)
Balance at
28 February
2023
£’000
(6,181)
429
13,786
(69)
1,136
9,101
Balance at
28 February
2022
£’000
(6,807)
255
10,231
(29)
997
4,647
Balance at
1 March 2022
£’000
(6,807)
255
10,231
(29)
997
4,647
Balance at
1 March 2021
£’000
(4,382)
2,220
5,693
(868)
633
3,296
The basis by which taxation is calculated is stated in note 1. The Company has not recognised deferred tax asset on the fair value
movement of investments on equity investments of £420k. The Company has not recognised a deferred tax asset on Corporate
Interest Restriction carried forward of £1,031k.
25. Current tax
Current tax receivable
Current tax payable
Group
Company
2023
£’000
6,114
682
2022
£’000
4,172
382
2023
£’000
5,176
—
2022
£’000
3,969
—
FD Technologies plc Annual Report 2023 | 111
26. Employee benefits
Accrued holiday pay
Employee taxes
Group
Company
2023
£’000
2,547
3,892
6,439
2022
£’000
2,201
6,361
8,562
2023
£’000
1,211
2,630
3,841
2022
£’000
1,133
5,097
6,230
27. Leases
The Group leases office properties. The leases typically have an average remaining life of five years, with an option to renew the lease
after that date. Lease payments are renegotiated every five years to reflect market rentals. For certain leases, the Group is restricted
from entering into any sub-lease arrangements.
The Group leases IT equipment with contract terms of one to three years. These leases are short-term and/or leases of low-value
items. The Group has elected not to recognise right-of-use assets and lease liabilities for these leases.
Information about leases for which the Group is a lessee is presented below.
i. Right-of-use assets
Right-of-use assets related to leased properties that do not meet the definition of investment property are presented as right-of-use
assets (see note 15).
ii. Amounts recognised in profit or loss
– interest on lease liabilities
iii. Amounts recognised in statement of cash flows
– principal lease liability payments
Total cash outflow
28. Commitments
The maturity analysis of lease liabilities as at 28 February 2023 is as follows:
Group
2023
£’000
2022
£’000
Company
2023
£’000
982
1,135
387
4,000
4,982
3,598
4,733
1,466
1,853
Group
Company
Current lease liabilities
Non-current lease liabilities
Maturity analysis:
Year 1
Year 2
Year 3
Year 4
Year 5
Over 5 years
2023
£’000
3,412
17,026
20,438
2022
£’000
3,743
19,579
23,322
2023
£’000
1,007
7,522
8,529
Group
2023
£’000
3,412
3,426
3,578
2,885
1,853
5,284
2022
£’000
486
1,242
1,728
2022
£’000
1,445
8,549
9,994
2022
£’000
3,743
3,215
3,171
3,346
2,684
7,163
The Group and Company do not face a significant liquidity risk with regard to its lease liabilities. Lease liabilities are monitored within
the Group’s treasury function.
20,438
23,322
112 | FD Technologies plc Annual Report 2023
Financial statementsNotes continued 29. Pension contributions
The Group makes contributions to the personal pension schemes of certain employees. The pension charge for the year amounted
to £7,213k (2022: £6,578k). Contributions amounting to £1,751k (2022: £1,558k) were payable to the schemes at the year end and are
included in creditors.
30. Related party transactions
Parent and ultimate controlling party
There is no one party which is the ultimate controlling party of the Group and Company.
Group
Key management personnel compensation
Key management personnel have been deemed to be the Directors of the Company. The remuneration of the Directors is set out
in note 12.
During the financial year the Group generated revenues of £121k (2022: £228k) from Nutanix for which Virginia Gambale is the chair
of the Executive advisory board. All transactions were carried out at arm’s length. Also during the financial year, the Group generated
revenues of £345k from Virtu Financial (2022: £nil), and incurred costs of £7k from JAMF(2022: £nil), both of which Virginia Gambale
is a director. All transactions were carried out at arm’s length.
During the financial year the Group generated revenues of £nil (2022: £31k) and incurred costs of £128k (2022: £67k) from Cloudflare
for which Thomas Seifert is chief financial officer. All transactions were carried out at arm’s length.
The Group holds an interest in a number of investments as disclosed in note 18.
Company
Other related party transactions
Subsidiaries
Subsidiaries
Sales to subsidiaries
Costs charged by subsidiaries
2023
£’000
2022
£’000
2023
£’000
2022
£’000
25,554
22,389
95,826
59,005
Receivables outstanding
Payables outstanding
2023
£’000
2022
£’000
2023
£’000
2022
£’000
58,924
94,078
95,146
83,083
Interest is charged on intercompany loans at market rates.
There were no dividends paid by the Company to the Directors during the year (2022: £nil).
FD Technologies plc Annual Report 2023 | 113
31. Financial instruments
Fair values
a) Accounting classifications and fair values
Group
The following table shows the carrying amounts and fair values of financial assets and liabilities. The carrying amount of all financial
assets and liabilities not measured at fair value is considered to be a reasonable approximation of fair value, due to the short-term
nature of the balances.
Carrying value
Financial
assets at
amortised
cost
£’000
Other
financial
liabilities
£’000
FVPL
£’000
FVOCI
£’000
886
8,470
—
9,356
—
—
—
—
Total
£’000
Fair value
£’000
Level
886
8,470
283
9,639
—
8,470
283
8,753
1
3
3
—
—
—
—
—
—
—
—
—
—
—
—
—
90,578
36,905
127,483
90,578
36,905
127,483
—
—
—
(36,499)
(71,240)
(36,499)
(71,240)
(107,739)
(107,739)
1
1
1
1
28 February 2023
Financial assets measured
at fair value
Equity securities
Equity securities
Convertible loans
Financial assets not
measured at fair value
Trade and other receivables
Cash and cash equivalents
Financial liabilities not
measured at fair value
Secured bank loans
Trade and other payables
—
—
283
283
—
—
—
—
—
—
1 Fair value not disclosed as the carrying amounts are considered to be a reasonable approximation of fair value.
114 | FD Technologies plc Annual Report 2023
Financial statementsNotes continued
31. Financial instruments continued
Fair values continued
a) Accounting classifications and fair values continued
Group continued
28 February 2022
Financial assets measured
at fair value
Equity securities
Convertible loans
Financial assets not
measured at fair value
Trade and other receivables
Cash and cash equivalents
Financial liabilities not
measured at fair value
Secured bank loans
Trade and other payables
Carrying value
Financial
assets at
amortised
cost
£’000
Other
financial
liabilities
£’000
FVPL
£’000
FVOCI
£’000
—
283
283
19,676
—
19,676
—
—
—
Total
£’000
Fair value
£’000
19,676
19,676
283
283
19,959
19,959
Level
3
3
—
—
—
—
—
—
—
—
—
—
—
—
68,030
48,564
116,594
68,030
48,564
116,594
—
—
—
(48,236)
(50,386)
(48,236)
(50,386)
(98,622)
(98,622)
1
1
1
1
—
—
—
—
—
—
1 Fair value not disclosed as the carrying amounts are considered to be a reasonable approximation of fair value.
Company
The following table shows the carrying amounts and fair values of financial assets and liabilities. The carrying amount of all financial assets
and liabilities not measured at fair value is considered to be a reasonable approximation of fair value due to their short-term nature.
28 February 2023
Financial assets measured at
fair value
Equity securities
Equity securities
Convertible loans
Financial assets not
measured at fair value
Trade and other receivables
Cash and cash equivalents
Financial liabilities not
measured at fair value
Secured bank loans
Trade and other payables
Carrying value
Financial
assets at
amortised
cost
£’000
Other
financial
liabilities
£’000
FVPL
£’000
FVOCI
£’000
Total
£’000
Fair value
£’000
Level
1
3
3
—
—
—
—
—
—
—
—
—
—
886
70
—
956
—
—
—
—
—
—
—
—
—
114,066
18,958
133,024
—
—
—
—
—
—
886
70
—
956
114,066
18,958
133,024
—
—
—
(36,499)
(36,499)
(136,319)
(136,319)
(172,818
(172,818)
—
70
—
70
1
1
1
1
1 Fair value not disclosed as the carrying amounts are considered to be a reasonable approximation of fair value.
FD Technologies plc Annual Report 2023 | 115
31. Financial instruments continued
Fair values continued
a) Accounting classifications and fair values continued
Company continued
Carrying value
Financial
assets at
amortised
cost
£’000
Other
financial
liabilities
£’000
FVPL
£’000
FVOCI
£’000
3,485
—
3,485
—
—
—
Total
£’000
Fair value
£’000
3,485
—
3,485
3,485
—
3,485
Level
3
3
—
—
—
—
—
—
—
—
—
—
—
—
133,162
16,236
149,398
133,162
16,236
149,398
—
—
—
(48,236)
(48,236)
(111,067)
(111,067)
(159,303)
(159,303)
1
1
1
1
28 February 2022
Financial assets measured
at fair value
Equity securities
Convertible loans
Financial assets not
measured at fair value
Trade and other receivables
Cash and cash equivalents
Financial liabilities not
measured at fair value
Secured bank loans
Trade and other payables
—
—
—
—
—
—
—
—
—
1 Fair value not disclosed as the carrying amounts are considered to be a reasonable approximation of fair value.
b) Measurement of fair values
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
The Group and Company have no assets or liabilities measured under Level 2.
The following techniques have been applied in measuring Level 3 fair values, together with the significant unobservable inputs used.
Financial instruments at fair value
Equity investments and convertible loans – the Group and Company have invested in a number of investments in unlisted companies
and a venture capital fund. The Group and Company have applied a discounted cash flow valuation technique to assess the fair value
of the unlisted companies and convertible loans as at year end.
The valuation model calculates the equity value considering the forecast revenue and costs, together with forecast exit value after
applying market multiples and discounted using a risk-adjusted discount rate.
Significant inputs
2023
2022
2023
£’000
2022
£’000
Range in inputs
Change in input
Impact on fair value
Forecast annual revenues –
with adjustments applied to
Company forecasts
Risk-adjusted discount rate
Market multiple exit values –
revenue based valuation
0–90%
30–55%
0–60%
35–60%
+/(-)15%
-/(+)5%
1,649/(1,509)
1,440/(1,418)
1,554/(1,259)
1,544/(1,245)
2.5x–5.5x
1x–8x
+/(-)15%
984/(1,043)
991/(990)
116 | FD Technologies plc Annual Report 2023
Financial statementsNotes continued
31. Financial instruments continued
Fair values continued
b) Measurement of fair values continued
Reconciliation of Level 3 fair value
Group
Balance at 1 March 2022
Transfer to Level 1
Disposals
Adjustments to fair value
Transfers
Foreign exchange gain
Balance at 28 February 2023
Balance at 1 March 2021
Purchases
Disposals
Adjustments to fair value
Transfers
Foreign exchange gain
Balance at 28 February 2022
Company
Balance at 1 March 2022
Transfer to Level 1
Changes in fair value
Foreign exchange loss
Balance at 28 February 2023
Balance at 1 March 2021
Disposals/intercompany transfer
Changes in fair value
Foreign exchange loss
Balance at 28 February 2022
Convertible
loans
£’000
282
—
—
—
—
—
Unquoted
equities
£’000
19,676
(2,774)
(2,324)
(6,275)
—
167
282
8,470
Convertible
loans
£’000
3,122
—
(2,311)
—
(521)
(8)
282
Convertible
loans
£’000
—
—
—
—
—
Convertible
loans
£’000
74
(74)
—
—
—
Unquoted
equities
£’000
14,760
5,106
(699)
(95)
521
84
19,676
Unquoted
equities
£’000
3,485
(2,774)
(763)
122
70
Unquoted
equities
£’000
4,184
2,510
(3,277)
68
3,485
FD Technologies plc Annual Report 2023 | 117
31. Financial instruments continued
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the
reporting date:
Current assets
Non-current assets
Cash and cash equivalents
Group
Carrying amount
Company
Carrying amount
2023
£’000
96,749
2,548
36,905
2022
£’000
74,029
3,745
48,564
2023
£’000
64,398
56,163
18,958
2022
£’000
84,245
56,877
16,236
136,202
126,338
139,519
157,358
The maximum exposure to credit risk for trade and other receivables and convertible loans at the reporting date by geographical region:
Europe
North America
United Kingdom
Asia Pacific
Group
Company
2023
£’000
12,215
36,520
34,324
7,802
2022
£’000
12,028
29,842
21,746
4,697
2023
£’000
8,610
71,776
27,134
6,546
2022
£’000
9,365
91,700
29,511
2,586
90,861
68,313
114,066
133,162
The maximum exposure to credit risk for trade and other receivables and convertible loans at the reporting date by type of counterparty:
End-user customer
Convertible and other loans
Receivable from subsidiaries
Other*
Group
2023
£’000
2022
£’000
Company
2023
£’000
2022
£’000
80,424
63,644
52,972
36,766
387
—
10,050
387
—
4,282
—
58,925
2,169
—
94,078
2,318
90,861
68,313
114,066
133,162
* Other relates mainly to Sundry Debtors including property deposits and trade settlement agreements.
No receivable balance was in excess of 10% of the Group’s total trade and other receivables balance at the year end.
Impairment losses
Trade receivables and accrued income
Expected credit loss assessment
The expected credit loss allowance for trade receivables and accrued income at the reporting date was:
Group
Not past due
Past due 0–30 days
Past due 31–120 days
Past due 121–180 days
Past due 181–365 days
Past due 366 days +
Total
118 | FD Technologies plc Annual Report 2023
Weighted
average
loss rate
2023
%
0.06
0.51
0.57
2.49
9.54
65.2
Gross
carrying
amount
2023
£’000
55,257
5,729
11,028
3,859
4,003
3,301
83,177
Loss
allowance
2023
£’000
32
29
63
96
382
2,152
2,754
Financial statementsNotes continued 31. Financial instruments continued
Exposure to credit risk continued
Impairment losses continued
Trade receivables and accrued income continued
Expected credit loss assessment continued
Group
Not past due
Past due 0–30 days
Past due 31–120 days
Past due 121–180 days
Past due 181–365 days
Past due 366 days +
Total
Company
Not past due
Past due 0–30 days
Past due 31–120 days
Past due 121–180 days
Past due 181–365 days
Past due 366 days +
Total
Company
Not past due
Past due 0–30 days
Past due 31–120 days
Past due 121–180 days
Past due 181–365 days
Past due 366 days +
Total
Weighted
average
loss rate
2022
%
0.29
0.16
0.46
1.64
13.92
90.85
Weighted
average
loss rate
2023
%
0.09
0.60
1.00
1.34
6.26
44.98
Weighted
average
loss rate
2022
%
0.43
0.28
0.34
0.28
2.31
93.44
Gross
carrying
amount
2022
£’000
55,304
2,555
3,269
611
1,236
1,410
64,385
Gross
carrying
amount
2023
£’000
36,150
4,860
6,309
2,831
2,477
1,205
53,832
Gross
carrying
amount
2022
£’000
32,387
1,424
1,491
358
347
244
36,251
Loss
allowance
2022
£’000
162
4
15
10
172
1,281
1,644
Loss
allowance
2023
£’000
32
29
63
38
155
542
859
Loss
allowance
2022
£’000
139
4
5
1
8
228
385
The movement in the allowance for impairment in respect of trade receivables and accrued income during the year was as follows:
Balance at 1 March
Net remeasurement of loss allowance
Foreign exchange impact
Amounts written off
Closing balance
Group
Company
2023
£’000
1,644
2,645
67
(1,602)
2,754
2022
£’000
1,610
708
2
(676)
2023
£’000
385
1,741
—
(1,267)
1,644
859
2022
£’000
314
112
—
(41)
385
The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be
subject to enforcement activities.
Debtor days increased to 88 from 76 at 2022.
FD Technologies plc Annual Report 2023 | 119
31. Financial instruments continued
Exposure to credit risk continued
Non-convertible loans and other receivables
Expected credit loss assessment
The following table provides information about exposure to credit risks and ECLs for non-convertible loans and other receivables
at the reporting date:
Group
Convertible loans
Medium grade financial services
Non-convertible loans
Non-investment grade pharma
Total
Group
Convertible loans
Medium grade financial services
Non-convertible loans
Non-investment grade pharma
Total
Equivalent to
external credit
rating (S&P)
A+ to BBB-
BB+ to B-
Equivalent to
external credit
rating (S&P)
A+ to BBB-
BB+ to B-
Weighted
average
loss rate
2023
%
—
—
—
Weighted
average
loss rate
2022
%
—
—
—
Gross
carrying
amount
2023
£’000
283
104
387
Gross
carrying
amount
2022
£’000
283
104
387
Loss
allowance
2023
£’000
—
—
—
Loss
allowance
2022
£’000
—
—
—
None of the balances in respect of the Group and Company are credit impaired.
The Group and Company did not have any loans and other receivables that were past due at 28 February 2023 (2022: £nil).
The movement in the allowance for impairment in respect of non-convertible loans and other receivables during the year was
as follows:
Balance at 1 March
Net remeasurement of loss allowance
Closing balance
Group
2023
£’000
—
—
—
2022
£’000
47
(47)
—
Company
2023
£’000
—
—
—
2022
£’000
—
—
—
120 | FD Technologies plc Annual Report 2023
Financial statementsNotes continued 31. Financial instruments continued
Exposure to credit risk continued
Receivables from subsidiaries
Company
The Company has intercompany receivable balances totalling £58,924k at year end (2022: £94,076k). Management has assessed
that the estimated credit loss on such balances is low based on the cash-generating ability of the relevant subsidiaries and latest
forecasts. On this basis management determined that it is not to provide for an expected credit loss for this balance.
Government grants
At the year end £325k (2022: £311k) for the Group and £325k (2022: £311k) for the Company are receivable from Invest Northern
Ireland in respect of grants receivable and £1,016k (2022: £1,052k) for the Group is receivable from Irish Revenue Commissioners
in relation to R&D tax credit. Both are government agencies and based on historical payment history, with all amounts previously
recognised subsequently being received, no expected credit loss is recognised in relation to this balance.
Cash and cash equivalents
The Group and Company held cash and cash equivalents of £36,905k (2022: £48,564k) and £18,958k (2022: £16,236k) respectively
at 28 February 2023 which represents their maximum exposure on the assets. The cash and cash equivalents are held with bank and
institutional counterparties which are rated AA- to AA+ based on credit agency ratings.
Liquidity risk
Group
The following are contractual maturities of financial liabilities, including estimated interest payments.
28 February 2023
Secured bank loans
Lease liabilities
Deferred income
Trade and other payables
28 February 2022
Secured bank loans
Lease liabilities
Deferred income
Trade and other payables
Carrying
amount
£’000
(36,499)
(20,438)
(48,407)
(22,833)
Contractual
cash flows
£’000
(36,901)
(23,288)
(48,407)
(22,833)
6 months
or less
£’000
(3,066)
(2,164)
(48,407)
(22,833)
6–12 months
£’000
(3,066)
(2,016)
—
—
1–2 years
£’000
(30,769)
(4,039)
—
—
2–5 years
£’000
—
More than
5 years
£’000
—
(9,347)
(5,722)
—
—
—
—
(128,177)
(131,429)
(76,470)
(5,082)
(34,808)
(9,347)
(5,722)
Carrying
amount
£’000
(48,236)
(23,322)
(26,990)
(23,396)
Contractual
cash flows
£’000
(48,610)
(26,873)
(26,990)
(23,396)
6 months
or less
£’000
(2,840)
(2,379)
(26,990)
(23,396)
6–12 months
£’000
(2,840)
(2,274)
—
—
1–2 years
£’000
(5,680)
(3,940)
—
—
2–5 years
£’000
(37,250)
(10,551)
—
—
More than
5 years
£’000
—
(7,729)
—
—
(121,944)
(125,869)
(55,605)
(5,114)
(9,620)
(47,801)
(7,729)
The above contracted cash flows include interest on secured bank loans, the terms of which are set out in note 22.
FD Technologies plc Annual Report 2023 | 121
31. Financial instruments continued
Exposure to credit risk continued
Liquidity risk continued
Company
The following are contractual maturities of financial liabilities, including estimated interest payments.
28 February 2023
Secured bank loans
Lease liabilities
Deferred income
Carrying
amount
£’000
(36,499)
(8,529)
(27,552)
Contractual
cash flows
£’000
(36,686)
(10,010)
(27,552)
6 months
or less
£’000
(3,066)
(716)
(27,552)
Trade and other payables
(108,767)
(108,767)
(108,767)
6–12 months
£’000
1–2 years
£’000
(3,066)
(30,554)
2–5 years
£’000
—
More than
5 years
£’000
—
(600)
(1,362)
(3,220)
(4,112)
—
—
—
—
—
—
—
—
(181,347)
(183,015)
(140,101)
(3,666)
(31,916)
(3,220)
(4,112)
28 February 2022
Secured bank loans
Lease liabilities
Deferred income
Trade and other payables
Carrying
amount
£’000
(48,236)
(9,994)
(13,063)
(98,004)
Contractual
cash flows
£’000
(48,610)
(11,866)
(13,063)
(98,004)
6 months
or less
£’000
(2,840)
(935)
(13,063)
(98,004)
6–12 months
£’000
(2,840)
(893)
—
—
1–2 years
£’000
(5,680)
(1,316)
—
—
2–5 years
£’000
(37,250)
(3,676)
—
—
More than
5 years
£’000
—
(5,046)
—
—
(169,297)
(171,543)
(114,842)
(3,733)
(6,996)
(40,926)
(5,046)
The above contracted cash flows include interest on secured bank loans, the terms of which are set out in note 22.
Currency risk
Group
The Group’s exposure to currency risk was as follows:
Trade receivables
Trade and other payables
Net balance sheet exposure
28 February 2023
28 February 2022
CAD
£’000
245
(21)
224
EUR
£’000
5,440
(630)
USD
£’000
14,937
(4,030)
4,810
10,907
CAD
£’000
618
—
618
EUR
£’000
4,032
(1,382)
USD
£’000
13,620
(1,167)
2,650
12,453
The secure bank loan above excludes bank loans designated in a net investment hedge of £35,064k (2022: £46,901k).
Company
The Company’s exposure to currency risk was as follows:
Trade receivables
Secured bank loans
Trade and other payables
Net balance sheet exposure
28 February 2023
28 February 2022
CAD
£’000
245
—
(21)
224
EUR
£’000
USD
£’000
5,185
13,764
—
(35,064)
(608)
(4,006)
CAD
£’000
618
—
—
EUR
£’000
4,032
—
(1,360)
USD
£’000
13,197
(46,901)
(1,040)
4,577
(25,306)
618
2,672
(34,744)
The following significant exchange rates applied during the year:
USD 1
EUR 1
CAD 1
122 | FD Technologies plc Annual Report 2023
Average rate
Reporting date spot rate
2023
1.25
1.18
1.62
2022
1.37
1.17
1.72
2023
1.21
1.14
1.64
2022
1.34
1.19
1.71
Financial statementsNotes continued 31. Financial instruments continued
Exposure to credit risk continued
Currency risk continued
Sensitivity analysis
A 10% strengthening of sterling against the above currencies at the end of the year would decrease Group profit or increase Group
loss by £1,594k (2022: £1,827k). A 10% weakening of sterling against the above currencies at the end of the year would increase
Group profit or loss by £1,435k (2022: £1,644k). The movement on the net investment hedge would be offset by the movement
in the net investment. This analysis assumes that all other variables, in particular interest rates, remain constant.
A 10% strengthening of sterling against the above currencies at the end of the year would increase Company profit or decrease
Company loss by approximately £2,050k (2022: £3,279k). A 10% weakening of sterling against the above currencies at the end
of the year would increase Company profit or decrease Company loss by approximately £1,845k (2022: £2,951k). This analysis
assumes that all other variables, in particular interest rates, remain constant.
Interest rate risks
At the reporting date the interest profile of the Group’s and Company’s interest-bearing financial instruments was:
Variable rate instruments:
Financial assets
Financial liabilities
Fixed rate instruments:
Financial assets
Financial liabilities
Group
2023
£’000
2022
£’000
Company
2023
£’000
2022
£’000
36,905
48,564
18,958
16,236
(36,499)
(48,236)
(36,499)
(48,236)
406
328
(17,541)
(32,000)
283
283
—
(20,438)
(23,332)
(8,529)
(20,155)
(23,049)
(8,529)
—
(9,994)
(9,994)
A 10% reduction in interest rates at the end of the year would increase Group equity and profit or decrease loss by approximately
£298k (2022: £205k). A 10% increase in interest rates at the end of the year would decrease Group equity and profit or increase
Group loss by approximately £302k (2022: £195k). This analysis assumes that all other variables remain constant.
Hedge accounting
Hedge of net investment in a foreign operation
A foreign currency exposure arises from the translation of the Group’s net investments in its subsidiaries which have USD functional
currencies. The hedged risk is the risk of changes in the GBP/USD spot rates that will result in changes in the value of the Group’s net
investment in its USD assets when translated into GBP. The hedged items are a portion of the Group’s assets which are denominated in
USD. The hedging instruments are debt which mitigates an exposure to the effect of a weakening USD on the hedged item against GBP.
It is expected that the change in value of each of these items will mirror each other as there is a clear and direct economic
relationship between the hedging instrument and the hedged item in the hedge relationship.
Hedge ineffectiveness would arise if the value of the hedged items fell below the value of the hedging instruments, however, this is
unlikely as the value of the Group’s assets denominated in USD are significantly greater than the value of the hedging instruments.
The amounts at the reporting date relating to items designated as hedging instruments were as follows:
Foreign exchange risk
Foreign currency loan
2023
2022
Nominal
amount of the
hedging instrument
£’000
Carrying
amount of the
hedging instrument
£’000
Line item in
the statement of
financial position
where the hedging
instrument is located
Changes in
fair value used
for calculating hedge
ineffectiveness
for 2023
35,064
46,901
35,064 Loans and borrowings
46,901 Loans and borrowings
n/a
n/a
FD Technologies plc Annual Report 2023 | 123
32. Share based payments
Options have been granted as set out below under the Group’s equity-settled share option schemes which are open to all Executive
Directors and employees of the Group. Options that vest at annual intervals over a three or four-year period are deemed to consist
of three separate options for valuation purposes. Options with TSR conditions vesting at the end of a three-year period are deemed
to be a single option for valuation. Vested options are exercisable following the satisfaction of the service criteria for a period not
exceeding ten years from the date of grant.
Reconciliation of outstanding share options
The number and weighted average exercise prices of share options have been analysed into three exercise price ranges as follows:
Range of exercise price: £4.27–£9.00
Maximum options outstanding at beginning of year
Lapsed during the year
Exercised during the year
Granted during the year
Maximum options outstanding at end of year
Exercisable at end of year
Weighted
average
exercise
price (£)
2023
7.58
5.65
5.77
—
8.91
8.91
Number
of options
2023
160,000
(10,000)
(57,500)
—
92,500
92,500
Weighted
average
exercise
price (£)
2022
7.36
—
6.98
—
7.58
7.58
Number
of options
2022
252,000
—
(92,000)
—
160,000
160,000
The options outstanding at 28 February 2023 above have an exercise price in the range of £4.27 to £9.00 (2022: £4.27 to £9.00) and
a weighted average contractual life of 1.2 years (2022: 1.7 years).
Range of exercise price: £12.28–£22.35
Maximum options outstanding at beginning of year
Lapsed during the year
Exercised during the year
Granted during the year
Maximum options outstanding at end of year
Exercisable at end of year
Weighted
average
exercise
price (£)
2023
19.21
19.51
16.63
18.66
Number
of options
2023
801,416
(121,250)
(165,300)
495,500
19.93
1,010,366
19.64
486,499
Weighted
average
exercise
price (£)
2022
19.54
22.10
15.85
14.69
19.21
19.21
Number
of options
2022
907,866
(98,200)
(8,250)
—
801, 416
538,141
The options outstanding at 28 February 2023 above have an exercise price in the range of £12.28 to £22.35 (2022: £12.28 to £22.35)
and a weighted average contractual life of 6.7 years (2022: 5.2 years).
Range of exercise price: £23.80–£25.95
Maximum options outstanding at beginning of year
Lapsed during the year
Exercised during the year
Granted during the year
Maximum options outstanding at end of year
Exercisable at end of year
Weighted
average
exercise
price (£)
2023
Number
of options
2023
25.27
1,901,287
25.00
(257,005)
—
—
—
—
Weighted
average
exercise
price (£)
2022
25.95
25.78
—
Number
of options
2022
1,720,058
(451,771)
—
23.80
633,000
25.32
1,644,282
25.27
1,901,287
25.95
80,282
—
—
The options outstanding at 28 February 2023 above have an exercise price in the range of £23.80 to £25.95 (2022: £23.80 to £25.95)
and a weighted average contractual life of 7.7 years (2022: 8.7 years).
The weighted average share price at the date of exercise for share options exercised for the year ended 28 February 2023 was £15.95
per share (2022: £20.75).
124 | FD Technologies plc Annual Report 2023
Financial statementsNotes continued 32. Share based payments continued
Measurement of fair values
The fair value of services received in return for share options granted is based on the fair value of share options granted. The grants
are measured using an adjusted Black-Scholes or Monte-Carlo model where required (on the basis that a Monte-Carlo simulation
model is considered a better model to reflect the impact of vesting conditions such as EPS and TSR, it is used for valuing such
shares with the Black-Scholes model used for share options with no performance based vesting conditions), with the following inputs:
Grant of options during the year ended
28 February 2023
28 February 2022
Black-Scholes
Black-Scholes
Black-Scholes
Black-Scholes
Monte Carlo
– EPS
Monte Carlo
– TSR
Grant date
17/06/2022 09/08/2022 27/10/2022 01/02/2023 10/08/2021
10/08/2021
Fair value at grant date
Share price at grant date
Exercise price
Number of options
6.73
18.80
18.80
6.70
18.72
18.72
330,500
155,000
4.65
13.00
13.00
5,000
4.90
13.70
13.70
5,000
8.96
23.80
23.80
5.78
23.80
23.80
316,500
316,500
Expected volatility (weighted average
volatility)
Option life (expected weighted
average life)
49.00%
49.00%
49.00%
49.00%
36.00%
36.00%
3.0 years
3.0 years
3.0 years
3.0 years
4.0 years
4.0 years
Expected dividends
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
Risk-free interest rate (based on
government bonds)
3.00%
3.00%
3.00%
3.00%
0.47%
0.47%
The key assumption which may be subject to change is the attrition rate over the vesting period.
Employee expenses
Expense relating to:
Share options granted in 2016/17
Share options granted in 2017/18
Share options granted in 2018/19
Share options granted in 2019/20
Share options granted in 2020/21
Share options granted in 2021/22
Share options granted in 2022/23
Total amount recognised as share based payment charge
Total expense recognised as employee benefit expense
National Insurance contributions on employee benefit expense
Share based payment and related costs
33. Contingent liabilities
There are no contingent liabilities to report for the year end 28 February 2023.
2023
£’000
—
51
10
7
(972)
525
704
325
2023
£’000
325
111
436
2022
£’000
123
128
(114)
263
524
610
—
1,534
2022
£’000
1,534
137
1,671
34. Subsequent events
On 19 May 2023 the parent company FD Technologies plc renewed its banking facilities, which had been due to expire in June 2024.
Further details of the loan financing arrangement are included in note 22.
FD Technologies plc Annual Report 2023 | 125
Global directory
Europe, Middle East and Africa
Madrid
Avenida de la Industria, 32
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Madrid
Spain
Budapest
Baobab
14 Kemenes St
Budapest
Hungary
Łódź
REACT Building
ul. Piłsudskiego 24
90-368
Łódź
Poland
Head office
FD Technologies plc
Brian Conlon House
3 Canal Quay
Newry
Co. Down
N. Ireland
BT35 6BP
Telephone: +44 28 3025 2242
Fax: +44 28 3025 2060
London
Fifth Floor
Cannon Green Building
27 Bush Lane
London
EC4R 0AN
UK
Dublin
6th Floor
Block A
1 George’s Quay Plaza
Dublin 2
D02 Y098
Ireland
Philadelphia
1818 Market Street
37th Floor
Philadelphia
PA 19103
USA
Toronto
31 Lakeshore Road East
Suite 201
Mississauga
Ontario
L5G 4V5
Canada
Singapore
One Raffles Quay
North Tower
#30-03
Singapore
048583
Hong Kong
Level 66
Two Centre
99 Queens Road
Central
Hong Kong
Tokyo
20F Shin-Marunouchi
Center Building
1-6-2 Marunouchi
Chiyoda-ku
Tokyo
Japan 100-0005
USA and Canada
New York
45 Broadway
Twentieth Floor
New York
NY 10006
USA
Asia Pacific
Sydney
Suite 201
22 Pitt Street
Sydney
NSW 2000
Australia
Seoul
#113
8F WeWork Gangnam Station II
7 Teheran-ro 5-gil
Gangnam-ru
Seoul 06134
126 | FD Technologies plc Annual Report 2023
Financial statements Directors and advisers
Directors
D Troy
S Keating
R Preston
V Gambale
T Seifert
A Sayed
U Fayyad
–
–
–
–
–
–
–
Non-Executive Chair^+
Chief Executive Officer
Chief Financial Officer
Non-Executive Director*^
Non-Executive Director*+
Non-Executive Director^+
Non-Executive Director*
* Member of the Audit and Risk Committee.
^ Member of the Nomination and ESG Committee.
+ Member of the Remuneration and Talent Committee.
Secretary
J J Kearns
Registered office
3 Canal Quay
Newry
Co. Down
BT35 6BP
Auditor
Deloitte (NI) Limited
Lincoln Building
27-45 Great Victoria Street
Belfast
BT2 7SL
Solicitors
Mills Selig
21 Arthur Street
Belfast
BT1 4GA
Bankers
Bank of Ireland
Corporate Headquarters
1 Donegall Square South
Belfast
BT1 5LR
Nominated adviser/Euronext Growth adviser
and joint brokers
Investec Bank Plc
30 Gresham Street
London
EC2V 7QP
Goodbody Corporate Finance
Ballsbridge Park
Ballsbridge
Dublin 4
J.P. Morgan Cazenove
25 Bank Street
Canary Wharf
London
E14 5JP
Company registration number
NI 30731
Registrar and transfer office
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen
West Midlands
B62 8HD
FD Technologies plc’s commitment to environmental issues is reflected in this Annual Report,
which has been printed on Amadeus Silk, an FSC® certified material. This document was
printed by Pureprint Group using its environmental print technology, with 99% of dry waste
diverted from landfill, minimising the impact of printing on the environment. The printer is a
CarbonNeutral® company.
Both the printer and the paper mill are registered to ISO 14001.
Global Headquarters
3 Canal Quay
Newry, Co. Down
BT35 6BP
+44 (0) 28 3025 2242