TIDMFDP
RNS Number : 8036O
First Derivatives PLC
22 May 2018
22 May 2018
First Derivatives plc
("FD", the "Company" or the "Group")
Preliminary results for the year ended 28 February 2018
FD (AIM:FDP.L, ESM:FDP.I) today announces its results for the
year ended 28 February 2018.
Financial Highlights
Revenue GBP186.0m (2017: GBP151.7m) +23%
Adjusted EBITDA* GBP34.1m (2017: GBP28.8m) +19%
Profit before tax GBP12.1m (2017: GBP12.5m) -3%
Adjusted** profit after tax GBP19.5m
(2017: GBP16.1m) +21%
Adjusted** fully diluted EPS 72.2p
(2017: 61.3p) +18%
Full year dividend 24.0p per share
(2017: 20.0p) +20%
Net debt GBP16.2m (2017: GBP13.5m)
*Adjusted for share-based payments and acquisition costs
**Adjusted for amortisation of acquired intangibles, share-based
payments, acquisition costs, foreign currency translation effect,
share of loss of associate and exceptional taxation
Business Highlights
- Strong growth in software revenue, up 27% as a result of new
contract wins and continued penetration of the existing customer
base
- Strategic progression in our managed services and consulting
activities resulting in revenue growth of 17%
- The implementation and ongoing support of a third-party system
for a New York-based bank, representing one of the largest
contracts in our history
- FinTech revenue up 22% to GBP142.9m (2017: GBP117.4m), driven
by growth in recurring software revenue and an expansion of
services provided to clients
- MarTech revenue up 24% to GBP38.2m (2017: GBP30.7m), driven by
growth in subscriptions for our Marketing Cloud platform, powered
by our Kx technology
- High-profile client wins including a Fortune 500 manufacturing
company, a FTSE 100 gaming company and Aston Martin-Red Bull
Racing, leading to inbound interest across a range of markets
- Continued investment across the Group, including machine
learning and AI initiatives, to further penetrate our addressable
market in software
- Boosted capabilities in telco, a key target market, through the acquisition of Telconomics
- Positive start to the current financial year, with a healthy
pipeline of new business opportunities.
Seamus Keating, Chairman of FD, commented: "This has been
another year where we have combined organic growth with selective
investment in the business to realise the enormous market
opportunity available to First Derivatives. Prompted by strong
demand from our clients, we have continued to penetrate our markets
enabling us to deliver our 21(st) consecutive year of double-digit
revenue growth.
Our ability to capitalise on the investments we have made and
the scale of our addressable software market provides us the
potential for continued strong growth in future years. While we
will continue to invest to stay at the forefront of our field, much
has already been done to support our ambitious plans and our
current structure is sufficient to achieve significant growth.
Recognising that success always requires focus and effort, we
nevertheless look to the future with confidence."
For further information, please contact:
First Derivatives plc +44(0)28 3025 2242
Brian Conlon, Chief Executive Officer www.firstderivatives.com
Graham Ferguson, Chief Financial Officer
Ian Mitchell, Head of Investor Relations
Investec Bank plc
(Nominated Adviser and Broker)
Andrew Pinder
Carlton Nelson
Sebastian Lawrence +44 (0)20 7597 5970
Goodbody (ESM Adviser and Broker)
Linda Hickey
Finbarr Griffin +353 (0)1 667 0420
FTI Consulting
Matt Dixon
Dwight Burden
Darius Alexander
Niamh Fogarty +44 (0)20 3727 1000
About FD
FD is a global technology provider with 20 years of experience
working with some of the world's largest finance, technology,
retail, pharma, manufacturing and energy institutions. The Group's
Kx technology, incorporating the kdb+ time-series database, is a
leader in high-performance, in-memory computing, streaming
analytics and operational intelligence. Kx delivers the best
possible performance and flexibility for high-volume,
data-intensive analytics and applications across multiple
industries. FD operates from 14 offices across Europe, North
America and Asia Pacific, including its headquarters in Newry, and
employs more than 2,200 people worldwide.
For further information, please visit www.firstderivatives.com
and www.kx.com
Chief Executive's Review
This year has seen exciting progress in our ambitious growth
plans, with important new contract wins across all our markets, the
strengthening of our technology lead and an expansion of our routes
to market. Revenue increased by 23% to GBP186.0m and, following our
investment to target new opportunities, adjusted EBITDA increased
by 19% to GBP34.1m.
Our software revenue grew by 27% with the highlight being our
continued progress in penetrating our vast addressable market. In
FinTech, revenue was up 22% as our strong market presence
translated into further market share gains. In MarTech, increasing
awareness of the high return on investment that our solutions
deliver, combined with the release of additional functionality,
drove revenue growth of 24%. In other markets we remain in 'launch
mode' with revenue growth of 41% representing a scratch on the
surface of the market opportunity.
We reported our 21(st) consecutive year of double-digit revenue
growth in managed services and consulting. This was achieved
despite a reallocation of some resource to deliver implementations
in our software division and underlines the strong demand for our
services, which was reflected in our decision to accelerate
graduate recruitment during the year, up by 94% to 390 people.
The combination of our technology lead and large addressable
market fuels our confidence in the outlook for FD and the
associated continuing investment to unlock this potential. While
the technology landscape continues to evolve rapidly, our core
strength of ultra-high performance data analytics is an important
enabler in areas such as machine learning, industrial IoT and
blockchain. Our technology is applicable all the way from the chip,
to the edge, to the Cloud and, as data volumes and velocity trend
higher and faster, we are excited by the potential to enable the
next generation of analytics.
Software
Our proprietary Kx technology leads the market in its ability to
capture and analyse vast quantities of data, both real-time and
historic. Kx comprises the kdb+ database, with its highly-efficient
500kb footprint, and an enterprise layer providing vital functions
such as control and visualisation. Together they provide a platform
that enables organisations to meet the most demanding data
challenges they face, with an efficient design ensuring it can run
on a fraction of the hardware required by competing solutions.
These core capabilities, along with the capacity to operate on the
chip, edge or cloud delivers a compelling solution for our clients.
This was evidenced in the year with our software being deployed for
edge computing to public environments such as AWS, Azure and the
Google cloud.
Our efficiency also extends to internal development. Since our
solutions are based on a common technology platform, we run single
R&D and support teams, providing significant economies of scale
and reduced development time for new products.
These technology and commercial advantages are being
increasingly recognised across industries and creating significant
opportunities for the Group. Clients have flexibility to develop
bespoke analytics for their particular requirements or can
implement applications developed by ourselves or a growing number
of OEM partners who use their own domain expertise to provide
solutions targeting a particular market.
The market opportunity for our platform and applications is
enormous. During the year, working with industry analysts Gartner,
we assessed its value, based on annual licenses alone, at least $63
billion in 2018 rising to $83 billion in 2020. The market for
professional services associated with these licenses was estimated
at a further $23bn for 2018.
We continued to expand our routes to market during the year, in
line with our strategy, to help address this opportunity. In
addition to direct sales, we offer our software through OEM
partners such as Thomson Reuters and via revenue share agreements
with companies that have specific domain expertise. We signed
agreements with companies such as Quantile, Cobalt, Rx Data Science
Inc., AuditComply and Brainwave Bank that entitle us to a share of
their revenue in return for the use of Kx to power their solutions.
We continue, in conjunction with our strategic financial partners
such as the Business Growth Fund (BGF), to identify and work with
companies that wish to use Kx to disrupt markets and have a
pipeline of exciting opportunities.
FinTech
Revenue from our most mature market, FinTech, increased by 22%
to GBP142.9m. A key driver of growth in FinTech is the imperative
for our clients, particularly investment banks, to maximise the
value of the data they generate. As a result of our technology's
ability to meet this challenge, we are increasingly involved in
strategic discussions in which our Kx platform is an enabling
technology to achieve desired benefits.
The platform not only provides world leading data analytics
capability, but also manages the ingestion, cleansing and
normalising of vast quantities of market, reference and client
data, removing manual effort and improving accuracy and data
accessibility.
Once implemented, we are able to provide a further range of
applications that use Kx to help our clients achieve regulatory
compliance and deliver operational efficiencies. An example is our
surveillance solution, which continues to win market share driven
by its cross-asset capabilities, out-of-the-box alerts, flexible
configuration and real-time operation. Regulation, including MiFID
II, continues to drive contract wins, with planning for the
Securities Financing Transactions Regulation (SFTR) and
Consolidated Audit Trail (CAT) requirements, among others, driving
demand for our applications.
Our liquidity management platform also delivered good growth
during the year and has a strong pipeline of opportunities, with
its comprehensive analytics capability complementing an efficient
trading platform.
Overall, we continue to develop our solutions within FinTech and
see strong growth potential from machine learning, with many of our
existing clients initiating discussions around the capability of
our technology to improve the efficiency of their business.
MarTech
Revenue from MarTech increased by 24% to GBP38.2m. In this
market we leverage the power of Kx to deliver a full B2B
account-based marketing platform, with an emphasis on predictive
analytics using intent data from internet search. In other words,
we help our clients predict and convert their next customer using a
range and depth of data that is so vast other technologies cannot
compete. The return on investment for our clients is compelling
and, despite its short history, we are seeing impressive growth in
the platform's subscription revenue.
We continue to develop this platform, branded as MRP Prelytix,
particularly to increase its intuitiveness and ability to integrate
into a wide range of our clients' systems. During the year we
launched an upgraded version of the platform, which has been well
received and resulted in an acceleration of growth in the second
half of our financial year with good momentum in the current
financial year.
While to date the majority of our MarTech clients have been
technology companies, MRP Prelytix is applicable to a wide range of
industries and we are actively promoting it into new areas. For
example, we have signed significant deals with companies operating
in the banking, financial services, healthcare, food services and
industrial markets.
Looking forward we aim to increase both the functionality and
ease of use of our platform to increase its applicability to
businesses of all sizes and industries. We believe the macro trends
in marketing are playing to our strengths, particularly the desire
among organisations to roll out systems across their operations,
which our global footprint enables us to achieve. MarTech
represents a large addressable market in which we are clearly
differentiated.
Other Markets
While FinTech and MarTech are the markets in which we have
achieved the greatest commercial progress to date, a key element of
our strategy is to establish Kx in other markets which are
challenged by data volumes and velocity. During the year, revenue
from these other markets increased by 41% to GBP5.0m, representing
encouraging initial traction across a range of high-value
opportunities. In particular:
-- Sensor analytics - we secured an important contract win with
a Fortune 500 engineering solutions company for the use of Kx as
the high-performance data historian and analytics engine in the
client's fault detection product range. Initial implementations,
which started after the year-end and have progressed well, should
contribute to our growth in the current year. This is a high-value
contract where Kx's superior analytics performance, handling
millions of sensor readings per second, enabled us to displace the
incumbent solution.
-- Automotive - we announced that Aston Martin-Red Bull Racing
had selected Kx for analytics on data from its Formula 1 cars. This
reinforces the cutting-edge performance of Kx for sensor analytics
within automotive, where a wider opportunity to provide analytics
for mass produced cars represents a target for the Group.
-- Gaming - we announced a contract win with a FTSE 100 gaming
company for the use of Kx to provide data analytics for its
operations.
These contract wins with high profile companies are helping to
establish our presence in these new target markets. Each of them
has led to further inbound interest in our capabilities, helping to
boost our pipeline and giving us confidence in the outlook for our
software business in these markets.
A further key target market is telco, where we consider Kx to be
ideally suited to providing operational intelligence. To boost our
presence in this market we acquired Telconomics in December 2017,
which provides several software products in areas including network
development strategy, network planning and network
optimisation.
We are also exploring a number of cutting-edge technology themes
that have the potential to produce significant commercial returns.
These include blockchain, where Kx is embedded in solutions
provided by Cobalt DL as it seeks to reduce post-trade risk and
cost for financial market participants; dynamic pricing, where Kx
can analyse multiple variables in real-time to maximise revenue for
gaming companies; and machine learning, where we are involved in a
number of projects where Kx is being evaluated as a core element of
potential solutions.
Research and development
We have made significant progress in both the performance and
the capabilities of our technology stack over the past year,
protecting our technology lead and expanding the use of our
platform. In particular we:
-- Released new versions of our kdb+ database and enterprise
platform, which set new benchmarks as measured by the Securities
Technology Analysis Center, an independent body. We currently hold
34 of the 41 STAC benchmarks, reinforcing our credentials as the
world's best performing time-series database.
-- Announced a range of measures to put machine learning
capabilities at the heart of our platform, in response to customer
demand, including improving access to the power of kdb+ for Python
programmers.
-- Released, after the year end, an on-demand service for our
software for use on-premises as well as in the Cloud. We also
announced that the latest version of Kx supports rapid access to
unstructured data, broadening our addressable market.
In addition to technical enhancements we have developed our
platform to ensure it is optimised for certain use cases such as
sensor data analytics and developed analytics which are applicable
to a number of the new markets we are targeting. This development
work represents a significant element of our ongoing investment to
target opportunities in new markets.
Managed Services and Consulting
Our managed services and consulting activities delivered another
solid performance, with growth accelerating through the year as a
result of our increased recruitment and training efforts. Our
activities focus on the support of mission-critical systems within
banks, ranging from those developed by our clients in-house to
those supplied by a range of third parties such as Murex and
Calypso. We have more than 20 years of experience working with
these systems, which has enabled us to gain deep insights into our
clients' systems and respond rapidly to changing themes and
priorities.
Revenue increased by 17% to GBP74.1m, driven by growth in the
U.S. and Europe as our clients sought our assistance with digital
transformation projects, complementing our core support activities.
Our increasing scale enables us to present teams of diverse
experience levels across the landscape of business and technology
and to widen the range of services we provide. In particular, over
the past year we have successfully introduced proprietary
methodologies for testing and migration, which are key areas for
banks as they seek to modernise their IT architecture.
A key focus for the Group in recent years has been assisting our
clients with their regulatory compliance initiatives. This has now
broadened into wider conversations about data governance, involving
systems spanning operations, legal and compliance within banks. FD
is able to assist through both consulting and software solutions
around data quality, streamlined processing and global
standardisation of processes.
The quality of our relationships with major banks and the
increasingly strategic nature of our engagements is encouraging for
future growth prospects. We continue to grow the proportion of our
revenues that are performed remotely, from our near-shore centres
and particularly our headquarters in Newry.
A selection of our new contract wins during the year
included:
-- The implementation and support of a third-party system for a
New York-based bank, representing one of the largest contracts in
our history.
-- A major upgrade to a third-party system deployed in the U.S.
by a European financial institution.
-- The development, implementation and support of robotic
process automation (RPA) software for a major client, delivering
significant operational efficiencies through the elimination of
manual processes.
Our reputation for delivery and client satisfaction, coupled
with the repeat nature of the majority of our support engagements
with clients, provides a solid revenue base in managed services and
consulting. Our growth is driven by our increasing scale and the
growing breadth of our capabilities, as referenced in the contract
wins above.
Management and Personnel
The Group now employs more than 2,200 people, up from over 1,750
at the same time last year. FD is a dynamic organisation, providing
high quality training and development and offering opportunities
for rapid career development in some of the most exciting
technology markets in the world. As a result, roles within the
Group are in high demand and we enjoy strong retention rates.
Our record growth in graduate recruitment is a statement of
confidence both in the talent we are able to attract and our growth
prospects. We operate a comprehensive training programme for our
graduates spanning data science and capital markets, which
differentiates us from our competitors and provides the flexibility
to direct our people to those areas where they can generate the
most value for the Group.
During the year we won two awards, namely Company of the Year at
the UK Tech Awards and FinTech Company of the Year at the QCA
Awards. In large part this was recognition of the efforts of our
staff and I would like to thank all FD employees for the
contribution they have made to our success through their hard work,
talent and flexibility.
Current Trading and Outlook
The new financial year has started well, with a healthy pipeline
of new business opportunities and strong demand generated by our
increasing strategic importance to clients. In particular, we
continue to capitalise on the investments we have made in recent
years in R&D, sales and marketing and expanding our channels to
market. The scale of our addressable markets in FinTech, MarTech
and elsewhere for our Kx technology provides the potential for the
Group to continue growing strongly.
Our solid base of repeat and recurring revenue coupled with the
strength of our pipeline provides confidence in our outlook and we
remain confident that we are on track to deliver further for
shareholders.
Brian Conlon 21 May 2018
Chief Executive Officer
Financial Review
Group revenue increased by 23% to GBP186.0m (2017: GBP151.7m),
which was predominantly organic. An analysis of revenue is provided
in the table below.
2018 2017 Increase
GBP'000 GBP'000
Group Revenue 186,042 151,697 23%
FinTech 142,857 117,449 22%
Managed services and
consulting 74,130 63,495 17%
Software: Recurring 24,660 20,492 20%
Perpetual licenses 7,016 7,187 -2%
Implementation and support 37,051 26,275 41%
MarTech 38,154 30,668 24%
Software: Recurring 15,454 10,178 52%
Services 22,700 20,490 11%
Other Markets 5,031 3,580 41%
Software: Recurring 1,088 855 27%
Perpetual licenses 270 - -
Implementation and support 3,673 2,725 35%
Managed services and consulting revenue increased by 17% to
GBP74.1m and represents 40% of Group revenue (2017: 42%). Software
revenue increased by 27% to GBP111.9m, with recurring software
revenue increasing by 31% to GBP41.2m.
Adjusted EBITDA increased by 19% to GBP34.1m (2017: GBP28.8m),
with an adjusted EBITDA margin of 18% for the period (2017: 19%), a
strong performance given the ongoing investment to deliver future
growth. We have continued to grow our sales and marketing
capability across the Group, in addition to adding domain expertise
to assist our move into new markets, building out our software
solutions delivery teams and investing in recruitment and
training.
The Group continued to invest in R&D to maintain its
technology lead, albeit with a greater proportion of spend
amortised such that the net benefit to the profit and loss fell
during the period, as detailed in the table below.
2018 2017
GBP'000 GBP'000
Capitalisation of R&D
costs 7,486 7,085
Amortisation of R&D (6,214) (4,944)
Net capitalisation 1,272 2,141
Proportion of software
revenue 1% 2%
The adjusted profit after tax for the year of GBP19.5m (2017:
GBP16.1m) represented growth of 21%. The Group's effective tax rate
was 16% (2017: 28%), the reduction being predominantly attributable
to a tax credit of GBP1,431k as a result of the revaluation of our
U.S. deferred tax balances following the U.S. tax reforms. The
adjusted tax rate was 20% (2017: 23%) with the decrease resulting
from the reduction in the U.K. main rate of corporation tax and an
increase in expenses deductible in the U.S. for tax purposes.
The fully diluted average number of shares in issue increased to
27.0m (2017: 26.2m). This resulted in adjusted fully diluted
earnings per share of 72.2p, representing growth of 18% for the
year (2017: 61.3p).
The calculation of adjusted profit after tax is detailed
below.
2018 2017
GBP'000 GBP'000
Reported profit after tax 10,208 9,012
Adjustments for:
Amortisation of acquired intangibles 4,684 4,759
Share-based payment and related costs 2,710 2,056
Acquisition costs and changes in contingent
purchase consideration 3,570 2,953
Loss/(gain) on foreign currency translation 1,386 (1,475)
Share of loss of associate 70 24
Tax effect of the above and U.S. tax reform (3,123) (1,252)
Adjusted profit after tax 19,505 16,077
Weighted average number of ordinary shares
(diluted) 27.0m 26.2m
Adjusted EPS (fully diluted) 72.2p 61.3p
The Group generated GBP25.3m of cash from operating activities
before taxation payments (2017: GBP30.3m), representing a 74%
conversion of adjusted EBITDA (2017: 105%). The factors affecting
conversion include the impact of strong trade debtor conversion at
the end of the prior year and increased working capital absorption
in line with the strong revenue growth in the second half of the
year.
The Board has recommended payment of a final dividend of 17.00p
per share (2017: 14.00p per share) which, together with the interim
dividend of 7.00p per share paid in December 2017, gives a total
dividend for the year of 24.00p per share, an increase of 20%
compared to the prior year. The final dividend, if approved at the
AGM on 27 June 2018, will be paid on 20 July 2018 to those
shareholders on the register on 22 June 2018.
Total assets at 28 February 2018 were GBP254.6m compared to
GBP253.2m at 28 February 2017.
Consolidated statement of comprehensive income
Year ended 28 February 2018
2018 2017
Note GBP'000 GBP'000
Revenue 2 186,042 151,697
Cost of sales (134,402) (110,121)
---------- ----------
Gross profit 51,640 41,576
Other income 1,382 2,148
Administrative expenses (38,320) (31,485)
---------- ----------
Operating profit 14,702 12,239
Acquisition costs and changes in
contingent purchase consideration 3,570 2,953
Share-based payment and related
costs 2,710 2,056
Depreciation and amortisation 5 & 6 8,460 6,750
Amortisation of acquired intangible
assets 6 4,684 4,759
---------- ----------
Adjusted EBITDA 34,126 28,757
------------------------------------- ------ ---------- ----------
Finance income 1 1
Finance expense (1,150) (1,193)
(Loss)/gain on foreign currency
translation (1,386) 1,475
---------- ----------
Net finance (costs)/income (2,535) 283
Share of loss of associate using
the equity method, net of tax (70) (24)
---------- ----------
Profit before taxation 12,097 12,498
Income tax expense (1,889) (3,486)
---------- ----------
Profit for the year 10,208 9,012
========== ==========
2018 2017
Note GBP'000 GBP'000
Profit for the year 10,208 9,012
Other comprehensive income
Items that will or may be reclassified
subsequently to profit or loss
Net exchange (loss)/gain on net
investment in foreign subsidiaries (16,779) 10,836
Net gain/(loss) on hedge of net
investment in foreign subsidiaries 1,570 (2,871)
---------- ---------
Other comprehensive income for the
period, net of tax (15,209) 7,965
---------- ---------
Total comprehensive income for the
period attributable to owners of
the parent (5,001) 16,977
========== =========
Earnings per share Pence Pence
Basic 4a 40.4 36.7
Diluted 4a 37.8 34.4
========== =========
All profits are attributable to the owners of the Company and
relate to continuing activities.
Consolidated balance sheet
As at 28 February 2018
2018 2017
Note GBP'000 GBP'000
Assets
Property, plant and equipment 5 7,714 6,628
Intangible assets and goodwill 6 149,744 163,391
Trade and other receivables 6,594 3,630
Investments in equity - associated
investees 2,631 1,548
Other financial assets 3,433 3,121
Deferred tax asset 18,353 14,859
-------- --------
Non-current assets 188,469 193,177
-------- --------
Trade and other receivables 53,718 43,738
Cash and cash equivalents 12,365 16,250
-------- --------
Current assets 66,083 59,988
-------- --------
Total assets 254,552 253,165
======== ========
Equity
Share capital 128 124
Share premium 81,286 72,275
Share option reserve 14,341 10,225
Currency translation adjustment
reserve (6,874) 8,335
Retained earnings 49,218 40,772
-------- --------
Equity attributable to owners of
the Company 138,099 131,731
======== ========
Liabilities
Loans and borrowings 25,205 26,357
Trade and other payables 32,127 35,114
Deferred tax liabilities 9,811 12,932
Contingent deferred consideration - 3,169
Non-current liabilities 67,143 77,572
Loans and borrowings 3,346 3,404
Trade and other payables 34,070 33,681
Current tax payable 1,195 426
Employee benefits 5,011 5,492
Contingent deferred consideration 5,688 859
-------- --------
Current liabilities 49,310 43,862
-------- --------
Total liabilities 116,453 121,434
-------- --------
Total equity and liabilities 254,552 253,165
======== ========
Consolidated statement of changes in equity
Year ended 28 February 2018
Share capital Share premium Share option Currency Retained Total equity
reserve translation earnings
GBP'000 adjustment
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 March 2017 124 72,275 10,225 8,335 40,772 131,731
------------- ------------- ------------ ------------ --------- ------------
Total comprehensive income
for the year
Profit for the year - - - - 10,208 10,208
Other comprehensive income
Net exchange loss on net
investment in foreign subsidiaries - - - (16,779) - (16,779)
Net exchange gain on hedge
of net investment in foreign
subsidiaries - - - 1,570 - 1,570
Total comprehensive income
for the year - - - (15,209) 10,208 (5,001)
Transactions with owners
of the Company
Income tax relating to share
options - - 3,910 - - 3,910
Exercise of share options 4 8,542 (1,427) - - 7,119
Change in fair value of NCI
put - - - - 3,557 3,557
Issue of shares - 28 - - - 28
Issue of shares as purchase
consideration - 441 - - - 441
Share based payment charge - - 1,586 - - 1,586
Transfer on forfeit of share
options - - 47 - (47) -
Dividends - - - - (5,272) (5,272)
------------- ------------- ------------ ------------ --------- ------------
Balance at 28 February 2018 128 81,286 14,341 (6,874) 49,218 138,099
============= ============= ============ ============ ========= ============
Consolidated statement of changes in equity
Year ended 28 February 2017
Share capital Share premium Share option Currency Retained Total equity
reserve translation earnings
GBP'000 adjustment
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 March 2016 120 65,903 7,217 370 39,654 113,264
------------- ------------- ------------ ------------ --------- ------------
Total comprehensive income
for the year
Profit for the year - - - - 9,012 9,012
Other comprehensive income
Net exchange gain on net
investment in foreign subsidiaries - - - 10,836 - 10,836
Net exchange loss on hedge
of net investment in foreign
subsidiaries - - - (2,871) - (2,871)
Total comprehensive income
for the year - - - 7,965 9,012 16,977
Transactions with owners
of the Company
Income tax relating to share
options - - 2,561 - - 2,561
Exercise of share options 4 5,190 (877) - - 4,317
Change in fair value of NCI
put - - - - (3,504) (3,504)
Issue of shares - 57 - - - 57
Issue of shares as purchase
consideration - 1,125 - - - 1,125
Share based payment charge - - 1,334 - - 1,334
Transfer on forfeit of share
options - - (10) - 10 -
Dividends - - - - (4,400) (4,400)
------------- ------------- ------------ ------------ --------- ------------
Balance at 28 February 2017 124 72,275 10,225 8,335 40,772 131,731
============= ============= ============ ============ ========= ============
Consolidated cash flow statement
Year ended 28 February 2018
2018 2017
GBP'000 GBP'000
Cash flows from operating activities
Profit for the year 10,208 9,012
Adjustments for:
Net finance costs/(income) 2,535 (283)
Depreciation of property, plant and equipment 2,246 1,806
Amortisation of intangible assets 10,898 9,703
Increase in deferred consideration 2,980 2,125
Equity settled share-based payment transactions 1,586 1,100
Grant income (1,382) (2,148)
Share of loss of associate 70 24
Tax expense 1,889 3,486
31,030 24,825
Changes in:
Trade and other receivables (8,711) (2,536)
Trade and other payables 2,992 7,970
--------- ---------
Cash generated from operating activities 25,311 30,259
Taxes paid (5,733) (6,592)
--------- ---------
Net cash from operating activities 19,578 23,667
Cash flows from investing activities
Interest received 1 1
Net increase in loans to other investments (5,805) -
Acquisition of subsidiaries, net of cash (114) -
acquired
Acquisition of other investments and associates (1,865) (4,269)
Acquisition of property, plant and equipment (3,443) (1,800)
Acquisition of intangible assets (8,246) (7,656)
Deferred consideration paid (897) (1,275)
Net cash used in investing activities (20,369) (14,999)
Cash flows from financing activities
Proceeds from issue of share capital 7,119 4,317
Drawdown of new facility 5,300 -
Repayment of borrowings (3,750) (3,585)
Payment of finance lease liabilities (62) (58)
Interest paid (1,143) (1,216)
Dividends paid (8,310) (7,253)
--------- ---------
Net cash used in financing activities (846) (7,795)
Net (decrease)/increase in cash and cash
equivalents (1,637) 873
Cash and cash equivalents at 1 March 16,250 15,100
Effects of exchange rate changes on cash
held (2,248) 277
--------- ---------
Cash and cash equivalents at 28 February 12,365 16,250
========= =========
Notes
1 Basis of preparation
The consolidated financial statements consolidate those of the
Company and its subsidiaries (together referred to as the
"Group").
The financial information included in this preliminary
announcement does not constitute statutory accounts of the Group
for the years ended 28 February 2018 or 28 February 2017, but is
derived from those accounts. Statutory accounts for 2017 have been
delivered to the Registrar of Companies and those for 2018 will be
delivered following the Company's Annual General Meeting. The
auditors have reported on those accounts; their reports were (i)
unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement
under section 498(2) or (3) of the Companies Act 2006.
Both the consolidated financial statements and the Company
financial statements have been prepared and approved by the
directors in accordance with International Financial Reporting
Standards as adopted by the EU ("IFRSs").
2 Operating segments
Business segments
The group has disclosed below certain information on its revenue
by geographical location. Details of total revenue can be found in
the statement of comprehensive income.
The Group's two revenue streams are separated as follows:
-- Consulting activities involves providing services to Capital Markets; and
-- Software activities which includes the licence of intellectual property and related services.
Revenue by division
2018 2017
GBP'000 GBP'000
Managed services and consulting 74,130 63,495
Software 111,912 88,202
Total 186,042 151,697
Geographical location analysis
Revenues Non-current assets
2018 2017 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000
UK 58,054 55,821 34,783 32,155
Rest of Europe 29,824 23,413 13,340 16,620
North America 79,673 60,578 120,529 127,958
Australasia 18,491 11,885 1,464 1,585
Total 186,042 151,697 170,116 178,318
Revenue by industry
2018 2017
GBP'000 GBP'000
FinTech 142,857 117,449
MarTech 38,154 30,668
Other 5,031 3,580
Total 186,042 151,697
3 Dividends
2018 2017
GBP'000 GBP'000
Final dividend relating to the prior year 3,499 2,918
Interim dividend paid 1,773 1,482
5,272 4,400
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.
The final dividend relating to the prior year amounted to 14.00
(previous year: 12.00) pence per share and the interim dividend
paid during the year amounted to 7.00 (previous year: 6.00) pence
per share. The cumulative dividend paid during the year amounted to
21.00 (previous year: 18.00) pence 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.
2018 2017
GBP'000 GBP'000
17.00 pence per ordinary share (2017: 14.00
pence) 4,359 3,482
4 (a) Earnings per ordinary share
Basic
The calculation of basic earnings per share at 28 February 2018
was based on the profit attributable to ordinary shareholders of
GBP10,208k (2017: GBP9,012k), and a weighted average number of
ordinary shares in issue of 25,239k (2017: 24,542k).
2018 2017
Pence per Pence per
share share
Basic earnings per share 40.4 36.7
Weighted average number of ordinary shares
2018 2017
Number '000 Number '000
Issued ordinary shares at 1 March 24,868 24,009
Effect of share options exercised 367 513
Effect of shares issued as purchase consideration 3 19
Effect of shares issued as remuneration 1 1
Weighted average number of ordinary shares
at 28 February 25,239 24,542
Diluted
The calculation of diluted earnings per share at 28 February
2018 was based on the profit attributable to ordinary shareholders
of GBP10,208k (2017: GBP9,012k) and a weighted average number of
ordinary shares after adjustment for the effects of all dilutive
potential ordinary shares of 27,017k (2017: 26,212k).
2018 2017
Pence Pence
per share per share
Diluted earnings per share 37.8 34.4
Weighted average number of ordinary shares (diluted)
2018 2017
Number '000 Number '000
Weighted average number of ordinary shares
(basic) 25,239 24,542
Effect of dilutive share options in issue 1,778 1,670
Weighted average number of ordinary shares
(diluted) at 28 February 27,017 26,212
=========== ===========
At 28 February 2018 no options (2017: 90,000) were excluded from
the diluted weighted average number of ordinary shares calculation
as their effect would have been anti-dilutive and 200,000 (2017:
250,000) were excluded as the related conditions had not been
satisfied. 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.
4 (b) Earnings before tax per ordinary share
Earnings before tax per share are based on profit before
taxation of GBP12,097k (2017: GBP12,498k). The number of shares
used in this calculation is consistent with note 4(a) above.
2018 2017
Pence per Pence per
share share
Basic earnings before tax per ordinary
share 47.9 50.9
Diluted earnings before tax per ordinary
share 44.8 47.7
Reconciliation from earnings per ordinary share to earnings
before tax per ordinary share.
2018 2017
Pence per Pence per
share share
Basic earnings per share 40.4 36.7
Impact of taxation charge 7.5 14.2
Basic earnings before tax per share 47.9 50.9
Diluted earnings per share 37.8 34.4
Impact of taxation charge 7.0 13.3
Diluted earnings before tax per share 44.8 47.7
Earnings before tax per share has been presented to facilitate
pre-tax comparison returns on comparable investments.
4 (c) Adjusted earnings after tax per ordinary share
Adjusted earnings after tax per share are based on an adjusted
profit after taxation of GBP19,505k (2017: GBP16,077k). The
adjusted profit after tax has been calculated by adjusting for the
amortisation of acquired intangibles after tax effect GBP4,266k
(2017: GBP3,955k), share based payment and related charges after
tax effect GBP2,430k (2017: GBP1,853k), acquisition costs after tax
effect GBP2,852k (2017: GBP2,412k), share of loss of associate
after tax effect GBP70k (2017: GBP24k), and for the loss on foreign
currency translation after tax effect GBP1,110k (2017: gain of
GBP1,179k) and the deferred tax credit following the US Tax Reform
of GBP1,431k. The number of shares used in this calculation is
consistent with note 4(a) above.
2018 2017
Pence per Pence per
share share
Adjusted basic earnings after tax per ordinary
share 77.3 65.5
Adjusted diluted earnings after tax per
ordinary share 72.2 61.3
5 Property, plant and equipment
Leasehold Plant and Office Total
improvements equipment furniture
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 March 2017 2,893 10,582 676 14,151
Additions 819 2,426 198 3,443
Acquired in business combinations - 6 - 6
Exchange adjustments (90) (174) (5) (269)
-------------- ----------------- ----------------- -------------
At 28 February 2018 3,622 12,840 869 17,331
-------------- ----------------- ----------------- -------------
Depreciation
At 1 March 2017 1,239 5,862 422 7,523
Charge for the year 516 1,585 145 2,246
Exchange adjustments (59) (90) (3) (152)
-------------- ----------------- ----------------- -------------
At 28 February 2018 1,696 7,357 564 9,617
-------------- ----------------- ----------------- -------------
Leasehold Plant and Total
improvements equipment Office furniture
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 March 2016 2,757 8,288 543 11,588
Additions 19 1,666 115 1,800
Exchange adjustments 117 628 18 763
-------------- ----------------- ----------------------- -------------
At 28 February 2017 2,893 10,582 676 14,151
-------------- ----------------- ----------------------- -------------
Depreciation
At 1 March 2016 868 4,099 320 5,287
Charge for the year 299 1,418 89 1,806
Exchange adjustments 72 345 13 430
-------------- ----------------- ----------------------- -------------
At 28 February 2017 1,239 5,862 422 7,523
-------------- ----------------- ----------------------- -------------
Carrying amounts
At 1 March 2016 1,889 4,189 223 6,301
============== ================= ======================= =============
At 28 February 2017 1,654 4,720 254 6,628
============== ================= ======================= =============
At 28 February 2018 1,926 5,483 305 7,714
============== ================= ======================= =============
6 Intangible assets and goodwill
Goodwill Customer Acquired Brand Internally Total
lists software name developed
software
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
Balance at 1
March
2017 113,436 13,613 28,567 777 43,578 199,971
Development
costs - - - - 7,486 7,486
Additions - - 760 - - 760
Acquired in
business
combinations 480 44 182 8 - 714
Exchange
adjustments (10,013) (1,118) (2,134) (47) 229 (13,083)
--------------- --------------- --------------- -------------- ----------------- ---------------
At 28 February
2018 103,903 12,539 27,375 738 51,293 195,848
--------------- --------------- --------------- -------------- ----------------- ---------------
Amortisation
Balance at 1
March
2017 - 6,008 13,829 463 16,280 36,580
Amortisation
for
the year - 1,344 3,269 71 6,214 10,898
Exchange
adjustment - (569) (912) (29) 136 (1,374)
--------------- --------------- --------------- -------------- ----------------- ---------------
At 28 February
2018 - 6,783 16,186 505 22,630 46,104
=============== =============== =============== ============== ================= ===============
Goodwill Customer Acquired Brand Internally Total
lists Software name developed
software
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
Balance at 1
March
2016 102,603 12,364 24,878 708 35,665 176,218
Development
costs - - - - 7,085 7,085
Additions - - 863 - - 863
Exchange
adjustments 10,833 1,249 2,826 69 828 15,805
At 28 February
2017 113,436 13,613 28,567 777 43,578 199,971
--------------- --------------- --------------- -------------- ----------------- ---------------
Amortisation
Balance at 1
March
2016 - 4,051 9,435 345 11,049 24,880
Amortisation
for
the year - 1,475 3,203 81 4,944 9,703
Exchange
adjustment - 482 1,191 37 287 1,997
--------------- --------------- --------------- -------------- ----------------- ---------------
At 28 February
2017 - 6,008 13,829 463 16,280 36,580
=============== =============== =============== ============== ================= ===============
Carrying amounts
At 1 March 2016 102,603 8,313 15,443 363 24,616 151,338
=========== ========= ========== ======= ========== ===========
At 28 February
2017 113,436 7,605 14,738 314 27,298 163,391
=========== ========= ========== ======= ========== ===========
At 28 February
2018 103,903 5,756 11,189 233 28,663 149,744
=========== ========= ========== ======= ========== ===========
7 Report and accounts
Copies of the Annual Report will be available as of 12 June 2018
on the Group's website, www.firstderivatives.com and from the
Group's headquarters at 3 Canal Quay, Newry, BT35 6BP.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR MMGZKKZKGRZG
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