DODS.L Regulatory News (DODS)

 Dods (Group) PLC

PRELIMINARY RESULTS

for the 12 months to 31 March 2014

Financial Highlights

· Revenue of £19.8 million (2013 15 months: £18.8 million)

· Like for like revenue, excluding the effect of acquisitions, increased by £2.5 million (17%)

· Gross profit margin at 29%, up from 25%

· Adjusted EBITDA at £1.1 million (2013 15 months: £0.4 million) *

· Like for like Adjusted EBITDA increased by £0.4 million (51%)

· Reported loss before tax £1.5 million (loss £10.6 million in the 15 months to 31 March 2013)

· Net cash of £5.3 million at 31 March 2014 (at 31 March 2013: net cash of £7.0 million)

· Cash generated from operations in the year was £0.4 million; investment in technology - software and hardware - amounted to £1.6 million; settlement of deferred consideration of £0.6 million.

· During the year costs associated with consultancy and people restructuring costs amounted to £0.5 million

*EBITDA is calculated as earnings before interest, tax, depreciation, amortisation of intangible assets acquired through business combinations, share based payments and non-trading items as disclosed in Schedule A.

Martin Beck, Chief Executive Officer of Dods, commented:

"Our investments in technology will be instrumental in enabling us to reduce discretionary and intermittent spend and increase more reliable, high retention, higher margin subscription based revenue streams. We are reviewing and transforming our publishing and events operations which we expect to improve profitability. We are committed to creating a customer focussed culture in which all work collaboratively. All of this, however, must be achieved whilst operating efficiently and cost effectively.

The year ahead will be one of change as we both exploit the benefits of our investment in technology and enable more of our customers to get benefit from the compelling content we create. Our employees deserve to be part of a business that is not only regarded for its content but also its financial performance.

The current year has started satisfactorily, showing progress on last year"

For further information, please contact:

Dods

Michael Higgins, Non-Executive Chairman 020 7593 5500

Martin Beck, Chief Executive Officer

Cenkos (NOMAD)

Nicholas Wells 020 7397 8922

Note to editors:

Dods (Group) PLC is a public limited company listed on the Alternative Investment Market (ticker DODS.L)

Chairman's Statement

As this is my first Chairman's statement I would like to record my thanks for the warm welcome I have received from everybody at Dods. I am excited about both the opportunity and the challenge of working with the Board and management team to deliver value to shareholders from the array of businesses within the group.

During the twelve months to 31 March 2014 there has been a combination of both commercial progress, which is in part reflected in the financial performance, and changes in the leadership of the group which inevitably meant some disruption to the progress that could have been made.

However it is important to emphasise a number of points. Dods creates, within its range of business activities, compelling, accessible and insightful content. At the heart of creating value for shareholders is the ability to ensure that relevant content is delivered concisely, cost effectively and on a timely basis to our existing and new customers. This will enable us to receive an appropriate reward from our customers by enabling them to make better informed decisions. This actionable intelligence, be it delivered in traditional form or digitally, when recognised by our customers creates competitive advantage and greater returns.

The initial reorganisation that was implemented and the ongoing investment in technology already means that we can begin to create a more rewarding balance between the use of traditional and more efficient modern communication.

Results

With revenue of £19.8 million in the year reflecting not only an increase arising from small acquisitions but more importantly an underlying year on year, like for like increase of 17%, progress has been made. Adjusted EBITDA of £1.1 million also shows an increase of 51% year on year.

The external consultant's work has provided greater insight and understanding of the opportunities for the Dods Business. The management team are now focussed on making the changes necessary to enable these opportunities to be taken.

The Strategic Report gives more details on the financial performance.

Andrew Wilson

It is also my particularly sad duty to report that Andy Wilson passed away in May of this year. Andy was Interim Chairman until my appointment and had been the representative of our largest shareholder on the Board since the end of 2010. His contribution to Dods was profound and wide reaching. Not only did he provide wise counsel and support but he had a passion for the business. He also contributed content, ranging from the politics of Glastonbury to a critique of the US democratic National Convention in 2012. His contributions will be missed by all and our sympathies are with his family for their loss.

Board changes

During the year there were a number of changes to the Board.

Kevin Hand, having stood down as Chairman at last year's AGM, retired from the Board in January 2014. The Board would like to thank Kevin Hand for his stewardship of the Group for a period of six years. He steered the Group through a number of changes in its structure and did so largely during a period of challenging economic circumstances.

Alastair Gornall, who was appointed to the Board on 3 September 2013, became Chairman later that month. He resigned from the Board on 25 November 2013. From 1 October 2013 Alastair took primary responsibility for the strategic direction and operation of the whole business. As a consequence of personal circumstances that were unforeseen when he first joined the Company, Alastair decided that he was not the appropriate person to carry forward the reorganisation that he had recommended and which the Board had approved.

On 1 October 2013 the Board took the decision to separate the role of Chief Executive and Chief Financial Officer. Keith Sadler, who held the combined role, took on the role of Chief Financial Officer.

In November 2013, Martin Beck was appointed interim Chief Executive following the resignation of Alastair Gornall and Andy Wilson took on the role of Interim Chairman. Martin was confirmed as the Chief Executive in March 2014. Martin joined Dods in 2003 as Digital Sales Director, becoming Managing Director of the European business in 2007. In 2012 Dods consolidated its UK and European information businesses under his direction.

I am delighted to be working with Martin and Keith during a period of such opportunity for the business.

Since the year end I am delighted to report that Cheryl Jones has joined the Board as a non-executive director. Cheryl brings a wealth of business experience that will be of great value to the Board and the management as they address the changes necessary to take the business through the year ahead.

Employees

I must on behalf of the current board and senior management and previous directors acknowledge the vital contribution that the employees of Dods make to the performance of the group. We rely on their commitment and application to the business. We must ensure that as we move the business forward to address the opportunities we have that this commitment is rewarded with stimulating opportunities for our employees to develop and enjoy working in an exciting segment of a dynamic industry sector.

Outlook

This current year must be viewed as transitional. The investment in technology is a core element of this as is the need to evolve the business operations to ensure we use this investment to deliver our products and services more efficiently.

Michael Higgins

Non-Executive Chairman

8 July 2014

Strategic report

The directors present their strategic report on the group for the year ended 31 March 2014.

Objectives

The Group has two main objectives. The first is to be universally recognised by the communities we serve as the most authoritative commercial source of content, information and insight. Through this we expect to create long term sustainable shareholder value underpinned by strong customer relationships generating recurring revenue.

Business Model

The Group's business model is based on serving communities who seek to make, understand, influence or implement public sector policy. From a revenue perspective we group those who have an interest in the creation of policy into a 'Political' community, with those who have an interest in the implementation of policy into a 'Public Sector' community. Our communities include MPs, civil servants, MEPs and think tanks as well as our paying customers such as public affairs agencies, public affairs departments within corporates, trade associations, charities, those seeking to sell to the public sector and various public sector bodies. These communities often concentrate in geographical locations specialising in their areas of responsibility such as Westminster, Whitehall, Brussels, Paris and Holyrood. Increasingly these communities overlap in their areas of interest.

In our interim results to 30 September 2013, we announced an initial reorganisation. In broad terms, our Information, Europe and Engagement business units were combined into the Political unit and our Government and Political Knowledge units were combined into the Public Sector unit. Services provided by the Political unit include our market leading monitoring and data services, our research business, publishing, and events, including party conference events aimed at the Political community. Services provided by our Public Sector unit include training, events and publishing.

Our aim is to provide compelling content and events which enable high client retention and repeat attendance at events, all delivered cost effectively and efficiently.

Business Review

Highlights

Revenue for the year ended 31 March 2014 was £19.8 million up from the £18.8 million reported for the 15 months to 31 March 2013. Excluding the acquisitions made during the 15 month period, like for like revenues for the 12 months were up £2.5 million or 17% on the comparable period. We saw our gross profit margin increase to 29% from 27% reflecting the increasing proportion of our higher margin information business.

The Group's Adjusted EBITDA was £1.1 million up from £0.4 million in the prior 15 month period. Progress at the EBITDA level was driven by an improved performance across a broad range of the Dods portfolio.

Our reported loss before tax of £1.5 million is after charging amortisation and depreciation of £2.1 million (£1.1 million of acquired business amortisation; £0.8 million of intangible amortisation; and £0.2 million of depreciation) and non-trading costs of £0.5 million.

Capital expenditure in the year was £1.5 million. Our cash balance of £5.3 million was down £1.7 million from £7.0 million at March 2013.

Cash generated by operations in the year was £0.4 million and cash investment in technology, software and hardware, amounted to £1.6 million with a further £0.6 million being the settlement of deferred consideration.

During the year non-trading costs, comprising consultancy fees and people restructuring costs, amounted to £0.5 million.

Significant improvement was registered within our monitoring services both in London and Brussels, across the breadth of the old 'Political Knowledge' business, but especially in training, the Parliament Magazine, Westminster focussed events and our research business.

Simplification and culture change

During the 12 months the business has been reorganised from five, independent and sometimes competing stand-alone units, into two business units. As outlined above these units are 'Political' and 'Public Sector'. The focus is now on making the changes necessary to ensure these two units work together and deliver high quality content to our customers and deliver better services through sharing skills and resources.

Part of this simplification process saw the senior management team reduced to four executives. This smaller team has committed to an on-going review of peripheral and non-performing areas of the business. Overall the aim is to deliver a greater proportion of our content digitally and to move our revenue away from discretionary and intermittent spend to more reliable, high retention, higher margin subscription based revenue streams. These now account for 37% of all revenues.

IT systems and technology

In recent years we have invested significantly in our IT infrastructure which holds and allows access to our information base. We are now starting to make this available to clients through the monitoring desktop. This product will underpin our core information and data services for both Westminster and Brussels. At the end of the financial year 11% of our UK customers had been migrated to the new system. We expect this migration will be completed later in this financial year.

We continue to invest in a new 'Content Management System'. This system supports the externally facing websites that are used by our digital publishing titles as well as our events. It was delivered in the fourth quarter and will support our digital publishing transformation. Previously Dods had been using five different systems so this change reduces both complexity and cost. The roll-out of new publishing hubs began in March.

Internally, we have begun the implementation of a new CRM system. This will lead to better understanding of our customer needs and increased cross-selling and improved account management.

Political unit

Dods is emerging as a business rich in information and data. We serve our customers with daily, essential information on political and policy developments (monitoring) and the people involved (via Dods People). We lead the market both in Westminster and in Brussels. The highlights of our information and data services include:

· Information and data revenue up 17% to £5,980,000

· UK monitoring revenue increased by 14% to £3,049,000

· EU monitoring revenue increased by 27% to £1,973,000

· Total monitoring customer numbers across all markets reached over 750

· UK monitoring passed the 500 customer mark

· We won our first 23 customers for existing EU services to businesses in the US, Berlin and Paris.

· Parliament magazine recovered with revenues up 9% to £0.9 million on a lower cost base

Public Sector unit

The Public Sector unit is a training, events and publishing business. Its main areas of activity include civil service training which is run through a framework contract (Civil Service Learning) managed by Capita, Westminster Briefing, which is a policy briefing business for non-civil service clients, and government events including Civil Service Live. These products and services often use the valued brand of a fortnightly newspaper Civil Service World.

The highlights of this business include:

· Total revenues up 39% to £6,221,000

· Revenues from the Capita/Civil Service Learning contract more than doubled

· New revenues from selling our training expertise overseas

· Revenues for Westminster Briefing up 39% to £1,550,000

· Revenues for Civil Service Live up 14%

· Other event revenues up 9% to £1,156,000

· Print revenues down 8% to £243,000

Civil Service Live is in the process of being reinvigorated and run as a conference rather than a trade show. Our event, The Future of Health, won 'best event' at the British Media Awards.

Acquisitions

In recent years Dods has made a number of acquisitions. In 2012 we acquired Politics Home, Total Politics and Holyrood Communications and in 2013 three websites from Sift Media. To a greater or lesser extent all these businesses are impacted by the investment we are making in technology. Politics Home has led our digital publishing initiative and has become an integral part of our offering.

Total Politics and The House magazine compete and, although trading of The House has stabilised, the financial performance of Total Politics has been disappointing.

The Holyrood Magazine is an award winning publication which has enabled the business to build a significant events business in Scotland. Revenue year on year was slightly down but we are now working on exploiting greater synergies between Holyrood and the rest of Dods.

Outlook

Our investments in technology will be instrumental in enabling us to reduce discretionary and intermittent spend and increase more reliable, high retention, higher margin subscription based revenue streams. We are reviewing and transforming our publishing and events operations which we expect to improve profitability. We are committed to creating a customer focussed culture in which all work collaboratively. All of this, however, must be achieved whilst operating efficiently and cost effectively.

The year ahead will be one of change as we both exploit the benefits of our investment in technology and enable more of our customers to get benefit from the compelling content we create. Our employees deserve to be part of a business that is not only regarded for its content but also its financial performance.

The current year has started satisfactorily, showing progress on last year.

Financial Review

Revenue and Operating Results

The results for the 12 months show revenue of £19.8 million compared to the 15 month period of £18.8 million, and Adjusted EBITDA was £1.1 million compared to £0.4 million for the 15 months to 31 March 2013. On a pro forma 12 month basis revenue was £17.6 million for the year to 31 March 2013 reflecting a 12.1% increase in revenue. At the Adjusted EBITDA the pro forma for the 12 months to 31 March 2013 was £0.3 million against the Adjusted EBITDA for the year ended 31 March 2014 of £1.1 million. Amortisation of intangible assets acquired through business combinations totalled £1.0 million (2013: 15 months £1.2 million) and the amortisation of software was £0.8 million (2013:15 months £0.8 million).

On a like for like basis, taking account of the full year effect of the acquisitions in the prior year, revenue increased by £2.5 million or 17% and the adjusted EBITDA increased by £0.4 million or 51%.

Net administration costs have increased year on year, primarily, due the full year effect of the acquisitions of Holyrood Communications and Total Politics. The full year increase due to the acquisitions saw the administration cost line increase by £0.9 million.

The statutory loss before tax for the year was £1.5 million compared to the loss for the 15 months ended 31 March 2013 of £10.6 million.

Non-trading items

As disclosed in note 2, non-trading items for the year totalled £0.5 million (15 months ended 31 March 2013: £1.7 million). The majority of these expenses related to people costs incurred in internal re-organisation of the business. £152,000 was incurred in a strategic review carried out by external media consultants.

Taxation

The utilisation of tax losses has led to a low tax payment in the year and a net income tax credit of £0.2 million (15 months ended 31 March 2013: tax credit of £0.4 million) in the year. Whilst the Group continues to seek to optimise its tax position going forward, it is expected that the effective tax rate will increase.

Earnings per Share

Normalised earnings per share (before non-trading items, discontinued operations, share based payments credits and amortisation of intangible assets acquired through business combinations) was 0.07 pence (2013: loss 2.76 pence per share). Basic loss per share was 0.38 pence (2013: 3.75 pence per share).

Dividends

The Directors do not propose to pay a dividend.

Liquidity and Capital Resources

Interest and finance costs payable during the 12 months amounted to £12,000 (15 months 2013: £0.1 million).

During the period, underlying cash conversion was in line with expectations. The Group generated £0.4 million (15 months 2013: expended £1.5 million) of cash from its operating activities. The Group used £2.1 million in investing activities. £1.6 million of which was investment in software and hardware for our technology platforms and £0.5 million on the settlement of the deferred consideration for the purchase of Politics Home, our news aggregation and stakeholder site.

At the year-end, the Group had net cash of £5.3 million (2013: £7.0 million). This reflects the ongoing investment in our technology platforms

Derivatives and Other Instruments

Dods' financial instruments comprised bank loans, cash deposits and other items such as normal trade receivables and payables. The main purpose of these financial instruments is to finance the Group's day-to-day operations.

The Group's policy is that no speculative trading in derivatives is permitted.

8 July 2014

Dods PLC

2014 PRELIMINARY RESULTS

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 March 2014

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 31 March 2014

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the 12 months ended 31 March 2014

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31 March 2014

Notes to the preliminary announcement

For the year ended 31 March 2014

1 Basis of Preparation

The Group financial statements consolidate those of Dods (Group) PLC and its subsidiaries (together referred to as the "Group"). The financial statements have been prepared on the basis of the accounting policies set out on pages 23 to 29 of the Dods (Group) PLC Report for 2013 which have been consistently applied.

The financial information set out above does not constitute the Group's statutory accounts for the periods ended 31 March 2014 or 31 March 2013. The financial information for 2013 is derived from the statutory accounts for 2013 which have been delivered to the registrar of companies. The auditor has reported on the 2013 accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditor 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. The statutory accounts for the 12 months ended 31 March 2014 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the registrar of companies in due course.

As required by EU law (IAS regulation EC 1606/2002) the Group's accounts have been prepared in accordance with International Financial Reporting Standards endorsed by the International Accounting Standards Board (IASB) as adopted by the EU ("Adopted IFRS").

2 Non-trading items

Abortive deal costs include legal and financial due diligence costs in respect of the aborted De Havilland acquisition. The Company decided not to pursue the acquisition of the De Havilland Political Intelligence division of EMAP Limited following the referral to the Competition Commission by the Office of Fair Trading.

Payments in lieu of notice, compensation for loss of office and associated legal fees in respect of a former Chief Executive.

Redundancy and people related costs represent the effect of a Group initiative to reduce costs.

Dilapidations are in respect of office space held by EPIC PLC, a company the Group disposed of during 2008.

Acquisition expenses include legal and financial due diligence costs associated with the acquisition of Total Politics Limited (formerly known as Biteback Media Limited) and Holyrood Communications Limited.

3 Taxation

The effect of non-trading items charged during the year is to decrease the tax charge by £nil (2013: decrease of £217,000).  

The credit to the income statement in respect of deferred tax of £213,000 (2013: £517,000) is stated after recording a deferred tax asset of £nil (2013: £nil) in respect of tax losses.

The tax charge for the period differs from the standard rate of corporation tax in the UK of 23% (2013: 24.4%).

The differences are explained below:

4 (Loss)/earnings per share

Since the Group is loss making, there is no dilutive impact of the share options.

5 Interest bearing loans and borrowings

The Group has no borrowings.

In connection with the Group's banking and borrowing facilities with the Bank of Scotland, the Company and its UK subsidiary undertakings have entered into a cross guarantee, which gives a fixed and floating charge over the assets of the UK trading companies of the Group.

The Group estimates the fair value of its loans to be the same as the carrying amount.

6 Reconciliation of net cash

Cautionary statement

This press release may contain forward-looking statements based on current expectations or beliefs, as well as assumptions about future events. In that regard, such statements are:

· inherently predictive and speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future; and

· not a guarantee of future performance and are subject to factors that could cause the actual results to differ materially from those expressed or implied.

The name Dods is a trademark of Dods (Group) PLC. All other trademarks mentioned herein are the property of Dods' respective subsidiary companies. All rights reserved.

The Dods (Group) PLC 2014 Report and Financial Statements are being posted to shareholders on or before 25 August 2014 and will be available to the public upon request at the Company's registered office: 21 Dartmouth Street, London, SW1H 9BP.

Copies of recent announcements, including this Preliminary Results announcement, and additional information on Dods, can be found at www.Dodsgroupplc.com.

Schedule A (Unaudited)

Reconciliation between operating profit and non-statutory performance measure

The following tables reconcile operating profit as stated in the income statement to EBITDA, a non-statutory measure which the Directors believe is a useful measure in assessing the performance of the Group.

EBITDA is defined by the Directors as being earnings before interest, tax, depreciation, amortisation of assets acquired through business combinations, and non-trading items.

*including amortisation of software shown within intangibles.

** including share based payments charges/(credits) and profit on disposal of subsidiary undertaking.