D4T4.L Regulatory News (D4T4)

D4t4 Solutions Plc

(the "group", "D4t4" or "company")

'ALL ABOUT THE DATA'

Final results for the year ended 31 March 2019

and

Notice of Annual General Meeting

  London: Tuesday 25 June 2019: D4t4 Solutions Plc (AIM: D4T4) publishes the group's audited Annual report and financial statements for the year ended 31 March 2019 and Notice of AGM which are available to view and download at www.d4t4solutions.com. A summary is provided below:

Performance summary:

· Another strong year of profitable growth for the group culminating in the signing of a number of major contracts.

· Continued focus on evolving the business into the data and analytics market space with emphasis on growing the Celebrus software customer base and the group's hybrid cloud data platform services.

· Notable sales success in both North America, following the continued investment in the region, and in Europe where we won our largest Celebrus contract to date.

· Continued evolution of the sales mix of sales:

· Further growth in term licence sales of the Celebrus product is continuing to benefit the visibility of future revenue and quality of earnings, impacting in the short term on perpetual licence revenues.

· Increase in demand for our hybrid cloud data platform services, particularly in the North American market.

*before amortisation of intangibles, share-based payments charges and foreign exchange gains

** Includes an IFRS 15 adjustment of £1.67m

*** Includes an IFRS 15 adjustment of £1.08m

Peter Kear, D4t4's CEO commented:

"I am delighted to report a 37% increase in organic top-line growth with total revenues for the group rising to £25.24m. Importantly, we have been able to maintain our gross profit margins through a combination of own IP product sales, hybrid cloud data platform services  and our recurring revenue business. All of this has contributed to a 48% growth in underlying profitability yielding an adjusted pre-tax profit of £6.02m, enabling the board to lift the final dividend by 23%."

"Our strategy continues to deliver and is reflected in the strong growth reported today. We continue to innovate our product, grow geographically and deepen our relationships with our strategic partners. The business enters the new financial year in robust shape after closing a number of significant contracts in the second half of the year benefitting 2018-19 and subsequent years. The Board is greatly encouraged by the opportunities and outlook for the business."

The following information is a summary taken from the group's audited Annual report and financial statements for the year ended 31 March 2019, which is available to view and download at www.d4t4solutions.com

D4t4 Solutions Plc

'ALL ABOUT THE DATA'

Quote from Chairman's statement

"Our focus over the year on the financial services industry, higher levels of brand awareness from industry analysts and demonstrable return on investment by organisations with high levels of data maturity have all contributed to a very successful year with revenue growth of 37% compared to last year."

Peter Simonds

Non-executive Chairman

Extracts from the Chairman's letter to shareholders:

Overview

It has been another excellent year for D4t4 with strong growth in revenues and profitability, delivering overall results slightly ahead of market expectations and with very good progress achieved against the key areas of strategic focus for the future.

It was pleasing to see the phasing of revenues return to a more normal distribution between H1 and H2 and the nature of the product and services revenue has given the Board greater visibility of order pipeline throughout the year.

Products

Our data collection product, Celebrus, continues to evolve and now provides one of the best real time omnichannel customer data platforms ("CDPs").

People

At 31 March 2019 the Group employed a total of 125 staff in its operations located in India, EMEA and the USA. Our people are vital to our success and we will continue to build upon our Company culture with its high levels of staff engagement with a focus on people development, retention and recruitment of the highest calibre people.

Outlook and current trading

The new financial year is trading in line with the Board's expectations which together with a healthy level of new business opportunities in our pipeline, leads us to be confident for the year ahead.

Looking forward there are many opportunities to continue our growth in our core markets where we expect to develop our business with existing and new customers, increase our share of current markets and continue to expand internationally.

D4t4 Solutions Plc

25th June 2019

Quote from CEO statement

"As a business we have successfully grown our top line revenue and profits over the previous year. It is pleasing to report that the Group has achieved notable sales success for both our Celebrus software product (with both Perpetual Licence and Annual Recurring Revenue licence sales) and in our hybrid cloud data platform service business, which provides a scalable platform to allow our clients to focus on understanding their customers' behaviour better, calculate risk and ensure regulatory compliance".

Peter Kear

Chief Executive Officer

Extracts from the CEO's report to shareholders:

Overview

D4t4 has made great progress with continued investment in its international regions. Headcount additions have been made in key functions such as project management, consultancy and client support, whilst further investment has been made in strengthening relationships with strategic partners.

We have continued to build on our previously stated strategic objectives of empowering our clients to gain significant value from their customer data and through this to deliver major uplifts in terms of their revenues and profitability.

As a result, I am delighted to report a 37% (2018 restated: 4%) increase in top-line growth with total revenues for the Group rising to £25.24m (2018 restated: £18.43m).

Importantly, we have been able to maintain gross profit margin levels through a combination of our own intellectual property sales, our hybrid cloud data platform, our delivery services business and our recurring revenue business, which has resulted in a 48% growth in underlying profitability yielding an adjusted pre-tax profit for the Group of £6.02m (2018 restated: £4.07m).

During the year in review we implemented IFRS15 which had a one-time effect on our 2017/18 and 2018/19 results; further detail is set out in the financial tables below.

Summary review of the year ended 31 March 2019

D4t4 has had another highly successful financial year. Our business delivered revenues of £25.24m (2018 restated: £18.43m) producing an adjusted profit before tax of £6.02m (2018 restated: £4.07m), with a statutory profit before tax of £6.34m (2018 restated: £3.33m). The Group remains strongly cash generative; year end cash reserves were £11.00m (2018: £3.85m) and the Group had no borrowings. Trade debtors at the year-end had returned to more normal levels at £4.06m (2018 restated: £19.53m).

The last twelve months have seen an acceleration of the evolution of our business into the data platform software and services market space with continued focus on growing both our Celebrus software Customer Data Platform base and our hybrid cloud data platform services sales, which in turn contribute to our own IP, recurring and delivery services revenues.

We have invested in our partner, sales and pre-sales teams, particularly in North America, the outcome of which we are pleased to report is the winning of several significant contracts with both new and existing clients. We have also invested in our partner-based sales strategy and in 2019/20 we will continue to scale up these relationships which will reap rewards in both this coming year and in the future.

During the last 12 months we have seen a shift in the mix of sales within the Group, firstly, through the growth in the demand for term or recurring licence sales of our Celebrus product set which had an impact on the perpetual licence sales that we have enjoyed in the past. This has had the beneficial effect of increasing our visibility on future revenues. Celebrus sales now represent 24.53% (2018 restated: 21.72%) of Group revenue.

Secondly, we have seen an increase in demand for our hybrid cloud data platform services which have developed well in the year, particularly in the North American market. As with our Celebrus sales we are beginning to see customer demand for the provision of our cloud data platform to be delivered as a "Platform as a Service" (PaaS), recurring revenue styled service.

Our own IP product revenues have increased in the year under review to £9.20m (2018 restated: £6.81m) driven by the increase in sales of both our Celebrus customer data platform and our hybrid cloud data platform.

Our 3rd party product revenues also increased as a result of the increase in sales from our hybrid cloud data platform business and finished the year at £7.35m (2018 restated: £3.92m).

Delivery services revenues enjoyed good growth and are underpinned by the increase in sales of our own intellectual property products which resulted in revenues of £3.13m (2018 restated: £2.93m).

Recurring revenues from our managed service and software licence support and maintenance service enjoyed strong growth and delivered income of £5.56m (2018 restated: £4.78m). This marks a return to double digit growth as a result of completing the transition from our old Systems Integration business model to our newer data and analytics business model. As mentioned above this steady growth in performance was due in part to the increase in our Celebrus software revenues and hybrid cloud data platform sales during the year.

Gross profit in the year was £14.31m (2018 restated: £10.44m) whilst statutory profit before tax for the period was £6.34m (2018 restated: £3.33m). Administration costs were £8.02m (2018 restated: £7.15m) due in part to staff cost increases resulting in reported profit from operations of £6.34m (2018 restated: £3.36m) and adjusted pre-tax profits of £6.02m (2018 restated: £4.07m). This includes a foreign exchange gain for the year of £0.73m (2018: £0.40m loss), the gain was due primarily to the significant shift in the US Dollar exchange rate early in the year.

Cash and cash equivalents at 31 March 2019 stood at £11.00m (2018: £4.63m). Total net assets at the end of the year were £24.84m (2018 restated: £20.11m).

Adjusted fully diluted earnings per share grew 57.48% to 13.89 pence (2018: 8.82 pence), diluted earnings per share were 14.53 pence (2018: 7.30 pence) which was up 99.04%. This was attributable not only to the underlying growth in the business but also the IFRS 15 adjustment and the low effective tax rate for this year.

Dividend

As stakeholders are aware, the Company remains committed to a progressive dividend policy whilst balancing its investments for future growth. It is the Board's intention to declare future dividends based on the overall Company performance.

The Board is recommending a final dividend of 2.3p (2018 restated: 1.875p) which, if approved by shareholders at the Annual General Meeting, which is to be held on the 22 August 2019, will be paid on 13 September 2019 to Members on the Register at the close of business on 9 August 2019. The Ordinary shares will become ex-dividend on 8 August 2019.

Outlook

The Group remains strongly cash generative and net cash reserves were at £11.00m at the year end. This has enabled us to increase our level of activity to search out potential value enhancing acquisitions with particular emphasis on opportunities to accelerate international expansion and add adjacent or complimentary products.

As documented in our trading update released in April, during the last quarter of the year under review we signed a number of significant contracts some of which were recognised during the year in review whilst others will be recognised during 2019/20 and beyond.

This gives us an excellent start to the current year and when combined with a growing opportunity pipeline the Board remains confident in the future of the business and believes that it has a clear strategy in place to develop the opportunities that will deliver sustainable growth and enable us to achieve our plans for the year ahead.

D4t4 Solutions Plc

25th June 2019

D4t4 Solutions Plc

Summary of Financial Statements

for the year ended 31 March 2019

Consolidated income statement for the year ended 31 March 2019

Consolidated statement of comprehensive income for the year ended 31 March 2019

Consolidated statement of changes in equity attributable to Equity Holders of the Parent for the year ended 31 March 2019

GENERAL INFORMATION

D4t4 Solutions Plc is a public limited company incorporated and domiciled in England and Wales and quoted on the AIM Market, hence there is no one, ultimate controlling party. The address of its registered office, registered number and principal place of business is disclosed on the inside cover of the financial statements.

The financial statements of D4t4 Solutions Plc and its subsidiaries (the group) for the year ended 31 March 2019 were authorised and issued by the Board of Directors on 24 June 2019 and the Consolidated statement of financial position was signed on the Board's behalf by Peter Kear.

The statutory accounts for the year ended 31 March 2019 will be delivered to the Registrar of Companies following the group's Annual General Meeting and can be obtained from the investor section of the group's website at www.d4t4solutions.com. Statutory accounts for the year ended 31 March 2018 have been filed with the Registrar of Companies. The auditor's report for the year ended 31 March 2019 was unqualified, did not include a reference to any matter to which the auditor drew attention by way of emphasis without qualifying their report and did not contain any statement under section 498(2) or (3) of the Companies Act 2006.

BASIS OF PREPARATION

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) adopted by the European Union and the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention, with the exception of land and buildings which is held at valuation. The presentation and functional currency of the financial statements is British Pounds and amounts are rounded to the nearest thousand pounds.

The preliminary financial information does not constitute full statutory accounts within the meaning of section 434 of the Companies Act 2006 but is derived from statutory accounts for the periods ended 31 March 2019 and 31 March 2018, both of which are audited. The preliminary announcement is prepared on the same basis as set out in the statutory accounts for the year ended 31 March 2019. While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS), as adopted by the European Union (EU), this announcement does not itself contain sufficient information to comply with IFRSs.

The group and company's business activities, together with the factors likely to affect its future development, performance and position and the risks and uncertainties are presented in the Strategic Report within the Annual Report. The group and company have sufficient financial resources to cover budgeted future cashflows, together with contracts with a number of customers and suppliers across different geographic areas and industries. As a consequence, the Directors believe that the group and company are well placed to manage their business risks successfully. Having reviewed the future plans and projections for the business, the Directors believe that the group and company have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

Standards, amendments and interpretations effective in the period to 31 March 2019 (all effective 1 January 2018, not early adopted last year):

· IFRS 9 (New Standard) Financial Instruments

· IFRS 15 (New Standard) Revenue from Contracts with Customers

· IFRIC 22 (Amendment) Foreign Currency Transactions and Advance Consideration

· IFRS 2 (Interpretation) Share Based Payments

· IAS 40 (Interpretation) Investment Property

IFRS 9 and IFRS 15 are discussed below separately. No significant impact is foreseen by the Group in respect of all other amendments and interpretations.

IFRS 9 is effective for the year ending 31 March 2019 onwards. IFRS 9 introduces:

· New requirements for the classification and measurement of financial assets and financial instruments;

· A new model for recognising provisions based on expected credit losses; and

· Simplified hedge accounting by aligning hedge accounting more closely with an entity's risk management methodology.

Following a review and further impact assessment, it was concluded that the Group's use of financial instruments is limited to short term trading balances such as receivables and payables. The Group has no financial borrowings and does not have complex financial instruments in place. Furthermore, there have also been no material changes arising from the adoption of the expected losses impairment model or loss allowance provisions made in respect of trade receivables and amounts due from Group Companies. On this basis the Group have concluded that adoption does not have a material impact on either the Income Statement or Statement of Financial Position of the Group or Company.

IFRS 15 is also effective for the year ended 31 March 2019 onward. The Group applied the standard for the first time in the half year report ending 30 September 2018 retrospectively under a full restatement approach, which has resulted in a restatement of the year end 31 March 2018 results (see Note 30 for full details). IFRS 15 replaces existing accounting standards used to determine the measurement and timing of revenue recognition and requires an entity to align the recognition of revenue to the transfer of goods and services at an amount that the entity expects to be entitled to in exchange for those goods and services.

Standards, amendments and interpretations to existing standards that have not been early adopted by the Group (all effective 1 January 2019):

· IFRS 16 Leases

· Various Annual Improvements to IFRSs 2015 - 2017 Cycle

· IFRIC 23 Uncertainty over Income Tax Treatments

· IAS 28 Investments in Associates and Joint Ventures

· IAS19 Employee Benefits (Plan Amendment, Curtailment or Settlement)

IFRS 16 will be effective for the year ending 31 March 2020. On the adoption of IFRS 16, lease arrangements will give rise to a right-of-use asset and a lease liability for future lease payables. The asset will be depreciated on a straight line basis over the life of the lease. Interest will be recognised on the lease liability, resulting in a higher interest expense in the earlier years of the lease term. The total expenses recognised in the Income Statement over the life of the lease will be unaffected by the new standard. However, IFRS 16 will result in the timing of lease expenses recognition being accelerated for leases which would be currently accounted for as operating leases. The Group has one leased property in India and the Directors are currently reviewing the requirements of the new standard to determine its impact.

The Directors anticipate that the adoption of IFRS16 will not have a material impact on the financial statements of the Group.

The Directors do not expect the adoption of the other standards, interpretations and amendments in future periods to have any material impact on the financial statements of the Group.

BUSINESS AND GEOGRAPHICAL SEGMENTS

IFRS 8 Operating Segments requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker to allocate resources to the segments and assess their performance.

During the year, there has been a change in the way information is presented to the Board. In the past, information has been reported to the Board on the basis of:

· Licence sales

· Project work

· Recurring revenues

 The Group has now identified four tightly integrated service lines that are offered to clients. These service lines combine one or more of 4 types of revenue to deliver on our core services. Information is now presented to the Board on the revenue analysis below:

· Product - Own IP

· Product - 3rd party

· Delivery services

· Support and maintenance

 All revenue streams are recognised on a point in time basis apart from Support and maintenance which is recognised over time.

No allocation of other income and costs to these categories is made because the Directors consider that any such allocation would be arbitrary and contract sensitive, as would be any allocation of assets and liabilities.

The segment reporting set out below is consistent with that provided to the Board of Directors and has been prepared under both the original segmental reporting analysis and now the current segmental reporting analysis.

 IFRS 15 REVENUE FROM CONTRACTS WITH CUSTOMERS

An analysis of the key changes that IFRS 15 has on the Group's revenue streams, taking into account the move from the recognition of revenue on the transfer of risks and rewards to the transfer of control are summarised below:

The effect of implementing IFRS 15 is as follows:

· 12 months to 31 March 2019

 Prepared on an IFRS 15 basis

· 12 months to 31 March 2018

Restatement has been required as a result of moving from IAS 18 to IFRS 15.

The adoption of IFRS 15 has resulted in a reduction in FY 31 March 2018 revenue and profit before tax of £1.67m and £1.08m respectively. In addition, opening reserves at 1 April 2018 are £0.87m lower than the amount reported in the 31 March 2018 financial statements. These amounts are based on the Group applying the retrospective method in transitioning to IFRS 15.

The reductions of £1.67m and £1.08m arose on contracts spanning the prior year end where under IAS 18 it was permissible to recognise the software, despite the hardware not being delivered. Under IFRS 15 this would have constituted one performance obligation, therefore the software revenue invoiced pre 31 March 2018 has been deferred. The cost of sales impact is the derecognition of the associated cost of sales with the software sales derecognised.

There are no such similar contracts spanning the year end at 31 March 2019 and as such no disclosure has been given for revenue recognised in the year ended 31 March 2019 with different treatments under IFRS 15 and IAS 18.

The table below shows the effect of IFRS 15 on the restated Consolidated Statement of Consolidated Income as at 31 March 2018:

The effect of adopting IFRS 15 primarily impacts on the following areas:

Technology revenues/margins recognised under contracts with customers, which include both the supply of software and hardware, representing one performance obligation under IFRS 15 result in revenue recognition at a point in time, which is different to the previous treatment whereby the supply of software and hardware were treated as separate sale arrangements.

The adoption of IFRS 15 has not altered the total contract value or timing of cash flows.

The Group has taken advantage of the practical expedient when applying IFRS 15 retrospectively in that for completed contracts, the Group is not required to restate contracts that begin and end within the same annual reporting period.

The table below shows the effect of IFRS 15 on the restated Consolidated Statement of Financial Position as at 31 March 2018:

The table below shows the impact on Consolidated Statement of Cash Flows of IFRS 15 for the year ended 31 March 2018: