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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Fd Technologies Public Limited Company | LSE:FDP | London | Ordinary Share | GB0031477770 | ORD 0.5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 14.00 | 1.06% | 1,338.00 | 1,328.00 | 1,340.00 | 1,336.00 | 1,308.00 | 1,334.00 | 145,475 | 16:35:25 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Cmp Processing,data Prep Svc | 296.04M | -4.01M | -0.1429 | -93.35 | 374.7M |
From May 2021 to May 2024
TIDMFDP
RNS Number : 9090Y
First Derivatives PLC
18 May 2021
18 May 2021
First Derivatives plc
("FD", the "Company" or the "Group")
Full year results for the year ended 28 February 2021
FD (AIM: FDP.L, Euronext Growth: FDP.I) today announces its results for the year ended 28 February 2021.
Financial Highlights
Hot Features
Premium
Year to end February 2021 2020 Change
Revenue GBP237.9m GBP237.8m -
---------- ---------- -------
Gross profit GBP101.0m GBP101.1m -
---------- ---------- -------
Profit before tax GBP11.1m GBP18.3m (39%)
---------- ---------- -------
Reported diluted EPS 32.0p 54.2p (41%)
---------- ---------- -------
Dividend per share 0.0 8.5p (100%)
---------- ---------- -------
Net debt* GBP9.9m GBP49.4m (80%)
---------- ---------- -------
Key performance measures
---------- ---------- -------
Adjusted EBITDA** GBP40.5m GBP45.5m (11%)
---------- ---------- -------
Adjusted diluted EPS 59.0p 77.4p (24%)
---------- ---------- -------
* Excluding lease obligations
** Adjusted for share-based payments and acquisition and non-operational
costs
Business Highlights
-- Delivered robust performance despite impact of COVID-19, in line with
market expectations, underpinned by the strength of our customer propositions
and enabled by high levels of customer retention
-- Continued to invest in technology, product and people, reflecting
our confidence in our business and the market opportunity
-- Strengthened the leadership team across the business, providing the
capability to scale the business and capitalise on growing market
opportunities
-- Momentum increased towards the end of the financial year and continued
into FY22 with contract wins across the Group and substantially strengthened
pipeline
-- Launched KX Insights for cloud-native streaming analytics, generating
positive customer reaction and early commercial traction, with major
sales campaigns planned during current year
-- Multiple new contracts won in key target markets, with examples across
automotive (Williams Racing), energy (major US gas and electricity
utility), manufacturing (semiconductor manufacturer), telecoms (leading
North American telco) and FinTech (MUFG).
Acceleration of growth strategy and change in Group structure
-- New Group structure and focus: Proposed renaming of the Group as
FD Technologies plc, comprising three businesses - KX, First Derivative
and MRP - to enable each brand to communicate its distinct value
proposition for its respective market and maximise its growth opportunity
-- Accelerated growth strategy based on growing demand for real-time
continuous intelligence and increased ability to deliver following
advances in our technology, leadership and commercialisation capabilities
-- KX at the heart of our propositions: KX will be the focus of investment
and our goal is to enable KX to become the market-leading technology
for real-time streaming analytics, which represents a $39bn addressable
market by 2025 growing at 30% per annum
-- Targeting growth in KX exit annual recurring revenue (ARR)*
of at least 25% for the current financial year
-- Greater focus in First Derivative: First Derivative, which comprises
our managed services and consulting business plus elements of our
software services revenue, will benefit from sharper focus on target
markets where it has the greatest in-depth expertise, and which are
areas of key focus for our clients
-- Targeting 10% revenue growth for the current financial year
-- Driving returns in MRP: MRP will seek to consolidate its position
as a market leading digital platform in Account Based Marketing offering
the only enterprise class, predictive ABM solution
-- Targeting 20% growth in platform revenue for the current financial
year
-- Strategic investment: Increased investment in the coming years focused
on KX, funded through internally generated cash, to accelerate our
technology development, increase sales and marketing spend and scale
the Group
-- Rationale: This evolution of the Group strategy will maximise the
potential opportunity addressed by each division and significantly
accelerate our growth potential over the medium term, targeting a
doubling of revenue by FY25 with a significant bias in growth to
recurring software revenue.
Current trading and outlook
-- The Board is providing guidance for the current financial year which
reflects the improved momentum across the Group's business units,
as well as the cost impact of the investment to accelerate growth
-- The Board anticipates that revenue for the year will be in the range
of GBP255m to GBP260m, with adjusted EBITDA in the range of GBP31m
- GBP33m.
Donna Troy, Chairman of FD, commented: "Following a detailed review by the Board, informed by growing market opportunities resulting from the increasing capabilities of our technology, we have concluded that now is the time for targeted investment that will accelerate our growth and establish KX as a world-leading horizontal technology for real-time streaming analytics. We are excited to announce this acceleration of our strategy and look forward to delivering enhanced value for our customers and shareholders."
Seamus Keating, CEO of FD, commented: "Using streaming analytics to inform and automate operational decisions is one of the most important growth areas in technology today, and KX enables this for our customers. During the past year we have positioned the business to scale rapidly to address this opportunity, by accelerating our technology roadmap, strengthening our leadership, developing our commercial strategy and putting in place enhanced systems and processes to scale the Group. By increasing our investment in the business we unlock the potential for rapid growth and for KX to become a key part of tomorrow's technology ecosystem."
* Exit annual recurring revenue (ARR) is the value at the end of the accounting
period of the software and subscription recurring revenue to be recognised
over the proceeding twelve months
For further information, please contact:
First Derivatives plc +44(0)28 3025 2242 Seamus Keating, Chief Executive Officer www.firstderivatives.com Ryan Preston, 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 (Euronext Growth Adviser and Broker) David Kearney Don Harrington Finbarr Griffin +353 1 667 0420 FTI Consulting Matt Dixon Dwight Burden Darius Alexander Elena Kalinskaya +44 (0)20 3727 1000
About FD
FD is a group of data-driven businesses that unlock the value of insight, hindsight and foresight to drive organisations forward. The Group comprises KX, the leading technology for real-time continuous intelligence; First Derivative, a provider of technology-led services in capital markets; and MRP, the only enterprise-class, predictive Accounts Based Marketing solution. FD operates from 15 offices across Europe, North America and Asia Pacific, and employs more than 2,500 people worldwide.
For further information, please visit www.firstderivatives.com and www.kx.com
Results presentation
FD will publish a pre-recorded presentation today at 07.05 BST on its website at https://firstderivatives.com/investor-relations/presentations/. The Group will also host a live results Q&A session for analysts at 09.30 BST today. Further details can be obtained by contacting FTI Consulting.
Business Review
FD comprises three businesses - KX, First Derivative and MRP - that unlock the value of data to drive organisations forward. During the year, the Group delivered a robust financial performance, responding effectively to the challenges resulting from COVID-19. Revenue was flat at GBP237.9m and, after continuing to invest in line with our growth strategy, adjusted EBITDA of GBP40.5m was achieved, down 11%. The Board has decided not to recommend a final dividend in light of the investment announced today.
We made good operational progress:
Technology - we prioritised interoperability, ease of use and cloud native capabilities as we seek to build our base of recurring revenue. Most notably, we recently released KX Insights, a cloud-first platform that fully leverages the benefits of cloud architecture natively to deliver fast, scalable real-time data insights without the added burden of infrastructure, complicated upgrades or the need to optimise for different cloud environments. KX Insights has been certified to run natively on all major hyperscale cloud providers including AWS, Azure and Google Cloud. Our roadmap goes beyond this, as we plan to package streaming data analytics workloads into cloud native microservices. Existing customers who move to this new subscription will benefit from faster migrations to the cloud by integrating these new components into their applications.
Furthermore, these components will be combined to create a cloud native horizontal platform, applicable to a wide range of use cases and industries and appealing to a broad community of users. New subscription customers will consume the whole KX Insights platform as an end-to-end application that will seamlessly unify streaming data with the universe of stored data. Key roadmap goals are to reduce deployment times to accelerate 'time to value' and to appeal to as wide a developer community as possible, which will be achieved by abstracting our proprietary programming language away from the end user.
This platform will also support advanced analytics and SQL querying, opening up more use cases to KX and further promoting adoption and ease of use.
Commercial - we made progress with cross-selling and up-selling to existing customers, adding a number of new customers and signing several new partnership agreements across our target markets. In capital markets, we signed deals with major financial institutions including a European bank and a stock exchange in South America for the use of KX; in other target markets notable deals included a major utility in the US for use cases built on the analysis of streaming meter data, an electronics manufacturer for anomaly detection and predictive alerts for yield management and a major telco for revenue assurance and usage querying. We formalised our partner agreements with the hyperscale cloud providers to enable seamless scaling of KX and recently signed an agreement with Databricks for the use of KX as a high-performance solution for its customers.
Scaling the Group - to support our growth plans we invested in our leadership capabilities and systems. At the Group level we added three new Non-Executive Directors, each bringing expertise and experience in scaling world-leading technology companies, and new executive appointments in a Chief Operating Officer and Chief Marketing Officer. At our business units we appointed a Chief Technology Officer and Chief Revenue Officer for KX; in MRP and First Derivative we appointed new leaders.
Progress across these key strategic priorities was a key determining factor in the Board's decision to accelerate its growth strategy.
Investment in growth strategy
During the year the Board conducted a review of the opportunities arising from the evolution of the market for streaming analytics and the market-leading performance capabilities of KX. It was concluded from independent market analysis, as well as our discussions with strategic partners and existing and potential customers, that demand for continuous intelligence was increasing and that KX has a key role to play in enabling performant access to the data that decisions are based on.
During the past year we have seen increasing focus from leading industry analysts such as Gartner and Forrester on the use of real-time streaming analytics to improve business operations and increase efficiency. This coincides with growing demand post COVID-19 for greater automated decision-making based on real-time data as part of digital transformation initiatives. Gartner forecasts that by 2022 most business systems will feature real-time data capabilities and this, together with rapidly growing streaming data volumes, underpins the requirement for performant access to the data through technologies such as KX.
To deliver on this opportunity, the Board has approved additional investment of GBP16m in the current year, of which GBP11m represents operating cost. This investment is focused on KX, and will:
-- Accelerate the KX technology road map: focused on enabling KX to operate
natively on the cloud, and further increasing its ease of use and interoperability.
-- Greatly increase the go-to-market capability of the business: by increasing
our sales team depth and industry / geographical coverage, growing our
contribution from strategic partners and investing in brand marketing.
-- Further increase our ability to scale rapidly to deliver the growth
envisaged by the Board.
Together with this investment the Board has approved a new structure for the Group with three business units, KX, First Derivative and MRP, each with its own distinct commercial proposition, go-to-market strategy, addressable market and target growth rate. Subject to shareholder approval at the forthcoming Annual General Meeting, the Group will be renamed FD Technologies plc. These changes enable clearer commercial focus on the opportunities for each business while our financial reporting will also provide greater insight for stakeholders.
KX - the leading technology for real-time continuous intelligence
Its ultra-high-performance analytics capability enables KX to be the technology that powers continuous intelligence. Our goal is to see widespread adoption of our technology across industries, with complete deployment freedom spanning down to the device level, installed within the customer's operations or operating seamlessly across cloud infrastructures. This power and flexibility, together with the cost of ownership and return on investment benefits, provide the opportunity for KX to become the market-leading technology for real-time streaming analytics.
This opportunity is forecast to be valued at $39bn per annum by 2025, growing at 30% per annum, according to Adroit Market Research, which resonates with our own assessment of the opportunities in our target markets.
To position KX to benefit fully from this growth opportunity, in the current financial year an additional GBP16m will be invested, comprising:
-- An additional GBP7m in sales and marketing to build out our sales
capabilities and strengthen our brand and market awareness
-- A further GBP5m in R&D to accelerate the cloud capabilities of KX
and its interoperability and ease-of-use
-- Infrastructure investment of GBP4m in FY22, including new ERP and
CRM systems, to support the delivery of growth.
As part of this reorganisation, all KX services other than pre-sales, implementation and support services revenue will be delivered by and reported within First Derivative. We will also phase out sales of our technology on a perpetual license basis. As a result, KX revenue will predominantly comprise high-margin recurring license revenue which, if we achieve our plans for KX, will be growing at market-leading rates. To enable stakeholders to assess our performance against our targets, we will provide additional non-statutory metrics, including annual recurring revenue and net revenue retention rates.
KX is targeting growth in exit ARR of at least 25% per annum through FY25 and a gross margin of at least 80% by FY25.
First Derivative - technology-led services in capital markets
First Derivative is formed by merging FD's former managed services and consulting business with the KX services capability to form a technology and data services provider in our primary market of FinTech. It has three key offerings:
-- Vendor services: implementation, support and managed services for
third-party vendor systems including Calypso and Murex
-- Business services: regulation and compliance, client services and
automation
-- Data services: Data preparation, data management, data science,
KX services and cloud migration support
While not requiring significant further investment, First Derivative will benefit from sharper focus on its target markets where it has the greatest in-depth expertise, and which are areas of key focus for our clients. This approach has already returned the business to growth in H2 2021, despite the impact of COVID-19, and we believe it can return to double digit revenue growth during the current year.
MRP - the only enterprise-class, predictive ABM solution
MRP is at the forefront of Account Based Marketing (ABM), with its Prelytix platform enabling sales and marketing organisations to grow new business by identifying and engaging the most likely buyers of our clients' products and services. Powered by KX to provide deep and timely insights into customer and potential customer behaviour, Prelytix provides a high return on investment and is rated among the leaders in its space by industry analysts such as Forrester and Ovum. Prelytix subscribers are supported by MRP through the provision of engagement services that together drive industry-leading return on investment for our clients.
Our assessment of the current addressable market for MRP is $12 billion per annum in 2022, growing at a rate in excess of 20% per annum.
The Board expects MRP will benefit from recovery in its end markets, which were impacted by COVID-19, and as a result of planned product launches. MRP is targeting growth in platform revenue of at least 20% per annum through FY25 and a 70% gross margin by FY25.
People
Strengthening leadership at the Group and business unit level to support our growth strategy was a key focus during the year. We appointed three Non-Executive Directors, each bringing expertise and experience in scaling world-leading technology companies - Ayman Sayed, CEO of BMC Software; Thomas Seifert, CFO of Cloudflare; and Steve Fisher, former CTO of eBay and who also held senior technology leadership roles at salesforce.com. We also made Group senior executive appointments, including Kathy Schneider, formerly of Sungard and Level 3, as Chief Marketing Officer.
We also made significant additions to the executive teams within our business units, with the recruitment of high calibre individuals including: within KX, Eric Raab, who has a wealth of CTO experience gained at high-growth technology companies including Information Builders and Yodle, as Chief Technology Officer and Alan Coad, formerly leading enterprise sales at Google Cloud and Pivotal, as Chief Revenue Officer; at MRP, Scott Matthews, who has a track record building successful SaaS companies including Crowdtwist, as Chief Executive Officer; and at First Derivative, David Collins, formerly of GFT and Capco, as Managing Director. All have previous experience in high growth enterprise technology companies.
We also appointed Ryan Preston as CFO in January 2021, succeeding Graham Ferguson who wished to devote more time to his other interests including supporting the development of Northern Ireland-based SMEs. Ryan was formerly the Group's Deputy CFO.
The Group employs more than 2,500 people, up from more than 2,400 at the same time last year. While we initially paused recruitment in response to COVID-19, we resumed hiring to keep pace with growing demand, and during the year added 424 new employees. Attrition rates were at the lower end of the typical range.
The past year has placed unprecedented demands on employees, who have demonstrated great commitment and flexibility to support our clients and each other. The Board thanks them for their efforts and continued engagement.
COVID-19
The pandemic was a significant factor throughout our financial year, impacting both our operations and the business environment. Operationally, our priorities were the safety and health of our employees and supporting the mission-critical activities of our clients. The effectiveness of our planning and the measures we introduced enabled us to transition seamlessly to the remote delivery of all the services we provide to clients. We put in place measures that supported our employees' physical and mental well-being and liaised closely with clients to meet their needs effectively and pre-empt any change in requirements.
To safeguard the business we put in place mitigating measures including suspending non-essential travel, deferring executive bonuses and suspending dividend payments. The Group did not utilise any Government financial assistance measures related to COVID-19 and nor did it furlough any employees during the year. To ensure liquidity, in March 2020 we drew down GBP34.2m from our available finance facility with the funds placed on deposit. Given the Group's strong cash generation in the first half of the year, this was repaid in the second half.
The business impact was felt predominantly in changes in customer behaviour, including a lengthening of sales cycles, particularly in the early months of the pandemic, which resulted in lower growth rates across our businesses and a reduction in adjusted EBITDA. As we emerge from the pandemic, we expect to see an acceleration of digital transformation in general, and continuous intelligence in particular, opening up many new opportunities for KX.
Current trading and outlook
The Board is providing guidance for the current financial year which reflects the improved momentum across our business units, as well as the cost impact of the accelerated growth detailed today.
The Board anticipates that revenue for the current financial year will be in the range GBP255m to GBP260m, with adjusted EBITDA in the range GBP31m - GBP33m. The factors affecting this guidance include:
-- KX: while the pipeline is considerably stronger than at the same point
in 2020 and we expect growth in exit ARR of at least 25%, growth in
recurring software revenue is expected to be offset by a planned reduction
in perpetual license revenue
-- First Derivative and MRP: we expect improved performance such that
adjusted EBITDA for each division will exceed pre-COVID-19, FY20 levels
-- Incremental increase in operating expenses of GBP11m as a result of
the additional investment to accelerate growth announced today, together
with an additional GBP5m of R&D cost, the majority of which is expected
to be capitalised.
The Board considers that the actions announced today position the Group to deliver on exciting growth opportunities in KX while driving profitability in First Derivative and MRP. It has set growth targets that, if achieved, should generate strong returns for investors driven by high levels of recurring software revenue as KX builds on its market-leading position within continuous intelligence.
Financial review
Revenue and Margins
The table below shows the movement in FY21 from the historical analysis of the Group's performance between software & services and managed services & consulting, to the new segmental analysis of KX, First Derivative and MRP. KX comprises the FinTech and Industry segments of software & services, including services revenue from pre-sales, implementation and support. First Derivative comprises the managed services and consulting segment, along with other KX services which represented GBP28.9m of revenue in FY21, as detailed in the first column in italics below. MarTech revenue, formerly included in software and services, is now reported under MRP, as detailed in the second column in italics. FY20 is reported on the same basis for KX, First Derivative and MRP. In addition we have provided performance metrics for each Business Unit which will further highlight how we are delivering growth.
2021 2020
---------------------------------------
Former reporting New segmental
reporting
Group Software Managed Software Software KX First MRP Group KX First MRP Group
& Services to First to Derivative Derivative change
Services & Derivative MRP
Consulting
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 237.9 147.4 90.5 28.9 44.2 74.3 119.4 44.2 237.8 71.2 119.3 47.3 0%
Cost of
sales (136.9) (66.1) (70.8) (19.5) (26.1) (20.5) (90.3) (26.1) (136.6) (22.4) (88.3) (26.0) 0%
Gross profit 101.0 81.3 19.7 9.5 18.0 53.8 29.1 18.0 101.1 48.8 31.0 21.3 (0%)
Gross margin 42% 72% 24% 41% 43% 68% 26% 45%
R&D
expenditure (15.9) (15.8) (0.1) 0.0 (1.9) (13.9) (0.1) (1.9) (13.1) (12.0) 0.0 (1.2) 21%
R&D
capitalised 13.4 13.3 0.1 0.0 1.8 11.5 0.1 1.8 10.4 10.4 0.0 0.0 28%
Net R&D (2.6) (2.6) 0.0 0.0 (0.1) (2.4) 0.0 (0.1) (2.7) (1.5) 0.0 (1.2) (6%)
Sales and
marketing
costs (39.3) (30.8) (8.5) (2.3) (7.9) (20.6) (10.8) (7.9) (35.4) (15.7) (10.8) (8.9) 11%
Adjusted
admin
expenses (18.7) (11.9) (6.8) (1.0) (4.3) (6.6) (7.8) (4.3) (17.5) (6.1) (7.6) (3.8) 6%
Adjusted
EBITDA 40.5 36.1 4.4 6.1 5.7 24.3 10.5 5.7 45.5 25.5 12.6 7.4 (11%)
Adj. EBITDA
margin 17% 33% 9% 13% 19% 36% 11% 16%
---------
Group revenue was unchanged at GBP237.9m (2020: GBP237.8m), driven by growth in KX balanced by lower revenue in MRP and a flat performance in First Derivative. Group gross profit was also unchanged at GBP101.0m, representing gross margin of 42%, down marginally from 43% in the prior period. Lower services utilisation in First Derivative and MRP was balanced by margin improvement in KX. As stated in our results and trading updates during the year, we continued to invest in R&D and sales and marketing which resulted in adjusted EBITDA declining by 11% to GBP40.5m.
KX
KX total FinTech Industry
--------------------- ---------------------
2021 2020 Change 2021 2020 Change 2021 2020 Change
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 74.3 71.2 4% 65.3 59.5 10% 9.0 11.7 (23%)
Perpetual 10.7 11.9 (10%) 7.9 7.8 2% 2.8 4.0 (32%)
Recurring 37.7 34.2 10% 35.0 31.4 12% 2.7 2.8 (4%)
Total licenses 48.4 46.0 5% 43.0 39.2 10% 5.4 6.8 (21%)
----- ----- ----- ----- ----- -----
Services 25.9 25.2 3% 22.3 20.3 9% 3.6 4.9 (26%)
Gross profit 53.8 48.8 10%
Adjusted
EBITDA 24.3 25.5 (5%)
KX revenue increased by 4% to GBP74.3m, driven by growth in recurring license revenue of 10% to GBP37.7m, with recurring license revenue representing 51% of total revenue (2020: 48%). Pre-sales, implementation and support services revenue increased by 3% to GBP25.9m, despite investment in our customer success team which resulted in some senior staff being removed from short-term revenue-generating roles to focus on pre-and post-sales engagement with customers. Perpetual license revenue decreased by 10% as we started the transition to focus on recurring revenue, to further increase revenue predictability.
Growth was strongest in our core FinTech market, where recurring revenue increased by 12%. We won a number of new contracts, including a major European bank which made a significant commitment to use KX within its capital markets trading operation and a major Japanese bank which consolidated all its on-premise data into KX on AWS to enable real-time monitoring and alerts. Industry revenue declined by 23% to GBP9.0m, reflecting a lengthening of sales cycles as potential customers focused on transitioning their existing operations to remote working rather than transformational projects.
Gross profit increased by 10% as a result of the increase in software license revenue in the revenue mix, while adjusted EBITDA fell by 5% principally due to a 31% increase in sales and marketing costs.
Performance metrics 2021 2020
-----
Exit annual recurring revenue
(ARR) GBPm 37.6 37.5
Net revenue retention (NRR) 99% 105%
Gross profit margin 72% 68%
R&D expenditure as % of revenue 19% 17%
Sales and marketing spend
as % of revenue 28% 22%
Adjusted EBITDA margin 33% 36%
We increased our spend on R&D and sales and marketing as a proportion of revenue as we continue to invest to benefit from the growing opportunities for streaming analytics and continuous intelligence.
First Derivative
The table below shows the performance of First Derivative, which incorporates the revenue shown as managed services and consulting with KX services revenue other than pre-sales, implementation and support services revenue, which remains within KX. The KX services revenue within First Derivative principally consists of development work for clients and associated services.
2021 2020 Change
GBPm GBPm
Revenue 119.4 119.3 0%
Managed services 21.3 20.9 2%
Other services 98.1 98.4 (0%)
Gross profit 29.1 31.0 (6%)
Adjusted EBITDA 10.5 12.6 (17%)
Despite the impact of COVID-19, First Derivative revenue was unchanged from the prior year at GBP119.4m, reflecting the long-term and mission-critical nature of the services we provide and the strength of client relationships. We transitioned quickly to remote working to deliver our services and, while the pandemic impacted levels of new project work in the short term, we saw a strengthening of demand towards the end of the period, continuing into the current year. The lockdown in December 2020 led to onboarding delays for a number of projects, without which we would have reported growth for the year - these projects are now running and provide confidence that First Derivative will deliver growth in the current year.
To drive predictable growth, First Derivative is seeking to increase the number of managed service contracts it signs, under which it takes responsibility for the delivery of a service typically on a multi-year contract. Recent examples of such deals include a multi-year application support and development contract signed with a major Japanese bank. Across its practices, First Derivative is seeking to take greater responsibility for the delivery of packages of work, which should provide increased value to our clients and translate to increased gross margins for First Derivative over time.
Performance metrics 2021 2020
-----
Gross profit margin 24% 26%
Adjusted EBITDA margin 9% 11%
Gross and EBITDA margins held up well as we managed the cost in First Derivative in response to COVID-19 and would have improved on the prior year but for delays to project onboarding towards the end of the financial year as a result of the lockdowns in Europe in late 2020 / early 2021.
MRP
The table below shows the performance of MRP, which previously was included within the Group's software revenue under MarTech.
2021 2020
GBPm GBPm Change
Revenue 44.2 47.3 (7%)
Platform 24.2 25.6 (5%)
Services 19.9 21.7 (8%)
Gross profit 18.0 21.3 (15%)
Adjusted EBITDA 5.7 7.4 (22%)
MRP provides global sales and marketing leaders with an enterprise class predictive Account Based Marketing (ABM) platform and supporting products and services to enable them to identify and engage potential customers earlier and more effectively, driving greater revenue and market share. MRP's Prelytix platform uses KX's data analytics capabilities to deliver predictive analytics derived from billions of data points, enabling clients to dynamically assess their marketplace and to activate a wide range of sales and marketing tactics informed by real-time insights. Our focus is on growing recurring software revenue, which is derived from a combination of subscriptions to MRP's Prelytix platform and data-driven engagement between our clients and their prospects using Prelytix. We also provide marketing products and services to enable clients to engage with prospective customers and to progress them through their sales funnel.
COVID-19 impacted the entire year and all of the geographies in which MRP operates. In H1, some existing clients paused subscription renewals and services spend as a result of macroeconomic uncertainty and their desire to focus on serving existing customers rather than driving new sales. In H2, while customer spending in Europe and the Asia Pacific region improved, North America was weaker than expected, partly driven by cuts in marketing budgets and also by the ongoing impact of COVID-19. Against this backdrop for the year, software revenue held up well, while services revenue experienced a 10% reduction.
Towards the period end and in early FY22 we have seen an encouraging rebound in spending, particularly in North America, with both new customer wins representing significant multi-year commitments and existing customers increasing their spend with MRP. Our development roadmap for MRP includes ongoing upgrades to the Prelytix platform, along with new and enhanced products that provide the potential to accelerate growth and help us achieve our target growth rate in software revenue through to FY25.
Performance metrics 2021 2020
-----
Platform revenue GBPm 24.2 25.6
Gross profit margin 41% 45%
Adjusted EBITDA margin 13% 16%
Software revenue held up well despite the impact of COVID-19, declining by 4% for the reasons discussed above. Gross and adjusted EBITDA margins declined as we continued to invest to support MRP's growth opportunity.
Adjusted EBITDA
The reconciliation of operating profit to adjusted EBITDA is provided below:
2021 2020
GBPm GBPm
Operating Profit 17.0 21.7
Acquisition and non-operational costs 1.3 2.0
Share based payment and related costs 2.4 3.1
Depreciation and amortisation 19.8 18.7
--------------- --------------
Adjusted EBITDA 40.5 45.5
Profit before tax
Adjusted profit before tax decreased by 22% to GBP20.2m (2020: GBP25.9m) held back by higher depreciation and software amortisation charges due to the impact of increased R&D in recent years. This was balanced by increased finance income related to the sale of the Group's stake in Quantile Technologies, which is excluded from adjusted profit before tax. Reported profit before tax decreased by 39% to GBP11.1m (2020: GBP18.3m) with a major non-operational factor being exchange rate differences which represented a GBP3.2m charge for the period compared with a GBP1.0m benefit in the prior year. This was driven by a higher than typical level of dollar balances held, due to lower investments / acquisitions and improved cash collection in the US.
The reconciliation of adjusted EBITDA to reported profit before tax is provided below.
2021 2020
GBPm GBPm
Adjusted EBITDA 40.5 45.5
Adjustments for:
Depreciation (6.9) (6.3)
Amortisation of software development costs (9.3) (8.7)
Financing costs (4.2) (4.6)
Adjusted profit before tax 20.2 25.9
Adjustments for:
Amortisation of acquired intangibles (3.6) (3.7)
Share based payment and related costs (2.4) (3.1)
Acquisition and non-operational costs, associate
disposal costs and changes in deferred consideration (1.3) (2.0)
Profit / (loss) on foreign currency translation (3.2) 1.0
Share of profit of associate (0.1) 0.1
Finance income 1.6 -
Reported profit before tax 11.1 18.3
Earnings per share
Reported profit after tax decreased by 40% to GBP9.0m (2020: GBP14.9m) and reported diluted earnings per share decreased by 41% to 32.0p per share (2020: 54.2p). Exchange rate differences accounted for a major part of this decline.
The adjusted profit after tax for the period of GBP16.6m (2020: GBP21.3m) represented a decrease of 22%. The calculation of adjusted profit after tax is detailed below:
2021 2020
GBPm GBPm
Reported profit after tax 9.0 14.9
Adjustments from profit before tax 9.0 7.6
Tax effect of adjustments (1.4) (1.3)
Adjusted profit after tax 16.6 21.3
Weighted average number of ordinary shares (diluted) 28.1m 27.5m
Adjusted EPS (fully diluted) 59.0p 77.4p
Balance sheet
Total assets increased by GBP14.2m with cash and cash equivalents increasing by more than 100% to GBP55.2m (2020: GBP26.1m). Loans and borrowings fell to GBP92.8m (2020: GBP105.2m) of which GBP65.1m related to bank loans (2020: GBP75.5m) and the remainder to lease liabilities.
Cash generation and net debt
The Group generated GBP46.7m of cash from operating activities before taxes paid (2020: GBP34.4m) representing 115% conversion of adjusted EBITDA (2020: 75%). The performance during the period benefited from lower growth rates which improved working capital as well as an increased focus on cash collection, while there was an also a benefit from revenue recognised in 2020 where the cash was collected in early 2021. We continue to expect cash generated from operating activities to represent 80-85% of adjusted EBITDA in a year where growth reaches our target levels.
The Group also benefitted from an GBP11.3m inflow from investments, of which GBP11.0m represents an inflow from the partial sale of our holding in Quantile Technologies. The investment occurred as part of FD's strategy of assisting companies that were adopting KX in new and innovative ways. This programme has been de-emphasised in recent years and the Group has instead focused its efforts on signing partnership agreements with OEMs, systems integrators and hyperscale cloud providers.
At the period end, net debt was GBP9.9m (2020: GBP49.4m). The factors impacting the movement in net debt are summarised in the table below:
2021 2020
GBPm GBPm
Opening net debt (excluding lease liabilities) ( 49.4 ) (16.5)
Cash generated from operating activities 46.7 34.4
Taxes paid (1.3) (3.0)
Dividends paid - (7.4)
Capital expenditure: property, plant and equipment (1.5) (2.3)
Capital expenditure: intangible assets (13.8) (11.0)
Acquisition of subsidiaries - (42.9)
Investments 11.3 (1.6)
Issue of new shares 8.3 10.1
Interest, foreign exchange and other (10.3 ) (9.2)
Closing net debt (excluding lease liabilities) ( 9.9 ) (49.4)
Dividend
The Board did not declare an interim dividend due to uncertainty regarding COVID-19. In light of the decision to increase investment in KX, the Board has decided not to recommend the payment of a final dividend for the full year.
Definition of terms
The Group uses the following definitions for its key metrics:
Exit annual recurring revenue (ARR) is the value at the end of the accounting period of the software and subscription recurring revenue to be recognised over the proceeding twelve months.
Net retention rate (NRR) : is based on the actual revenues in the quarter annualised forward to 12 months and compared to the annualised revenue from the four quarters prior. The customer cohort is comprised of customers in the quarter that have generated revenue in the prior four quarters.
Adjusted admin expenses is a measure used in internal management reporting which comprises administrative expenses per the statement of comprehensive income of GBP42.0m (2020: GBP41.8m) adjusted for depreciation and amortisation of GBP19.8m (2020: GBP18.7m), share based payments and related costs of GBP2.4m (2020: GBP3.1m), acquisition and non-operational costs of GBP1.3m (2020: GBP2.0m) and net of impairment (loss)/gain on trade and other receivables of GBP0.2m (2020: gain of GBP0.3m) and other income of GBP0.1m (2020: GBP0.2m).
Consolidated statement of comprehensive income
Year ended 28 February 2021
2021 2020
Note GBP'000 GBP'000
------------------------------------------------------- ----- ---------- ----------
Revenue
Software licenses and services 2 147,365 148,401
Managed services and consulting 2 90,502 89,389
------------------------------------------------------- ----- ---------- ----------
Total revenue 237,867 237,790
Cost of sales
Software licenses and services 2 (66,062) (67,184)
Managed services and consulting 2 (70,826) (69,458)
------------------------------------------------------- ----- ---------- ----------
Total cost of sales (136,888) (136,642)
------------------------------------------------------- ----- ---------- ----------
Gross profit 100,979 101,148
------------------------------------------------------- ----- ---------- ----------
Operating costs
Research and development costs (15,948) (13,132)
- Of which capitalised 13,398 10,431
Sales and marketing costs (39,252) (35,399)
Administrative expenses (42,036) (41,818)
Impairment (loss)/gain on trade and other receivables (215) 336
Other income 96 179
------------------------------------------------------- ----- ---------- ----------
Total operating costs (83,957) (79,403)
------------------------------------------------------- ----- ---------- ----------
Operating profit 17,022 21,745
------------------------------------------------------- ----- ---------- ----------
Finance income 1,606 26
Finance expense (4,183) (4,666)
(Loss)/gain on foreign currency translation (3,240) 1,019
------------------------------------------------------- ----- ---------- ----------
Net finance costs (5,817) (3,621)
Share of (loss)/gain of associate, net of tax (58) 126
------------------------------------------------------- ----- ---------- ----------
Profit before taxation 11,147 18,250
Income tax expense (2,150) (3,357)
------------------------------------------------------- ----- ---------- ----------
Profit for the year 8,997 14,893
------------------------------------------------------- ----- ---------- ----------
2021 2020
GBP'000 GBP'000
-------------------------------------------------------- ----- --------- --------
Profit for the year 8,997 14,893
Other comprehensive income
Items that will not be reclassified subsequently
to profit or loss
Equity investments at FVOCI - net change in 2,349 -
fair value
Net gain on sale of FVOCI holding 4,746 -
Items that will or may be reclassified subsequently
to profit or loss
Net exchange (loss)/gain on net investment
in foreign subsidiaries (10,657) 1,394
Net gain/(loss) on hedge of net investment
in foreign subsidiaries 2, 611 (2,920)
Other comprehensive income for the period,
net of tax (951) (1,526)
-------------------------------------------------------- ----- --------- --------
Total comprehensive income for the period attributable
to owners of the parent 8,046 13,367
-------------------------------------------------------- ----- --------- --------
Note Pence Pence
-------------------------------------------------------- ----- --------- --------
Earnings per share
Basic 4a 32.7 55.9
Diluted 4a 32.0 54.2
-------------------------------------------------------- ----- --------- --------
All profits are attributable to the owners of the Company and relate to continuing activities.
Consolidated balance sheet
As at 28 February 2021
2021 2020
Note GBP'000 GBP'000
---------------------------------------------- ----- -------- --------
Assets
Property, plant and equipment 5 33,541 37,143
Intangible assets and goodwill 6 147,513 154,416
Equity accounted investee 2,649 2,937
Other financial assets 14,760 15,750
Trade and other receivables 3,312 5,000
Deferred tax assets 14,719 14,982
---------------------------------------------- ----- -------- --------
Non-current assets 216,494 230,228
---------------------------------------------- ----- -------- --------
Trade and other receivables 75,102 76,330
Current tax receivable 3,208 3,142
Cash and cash equivalents 55,198 26,068
---------------------------------------------- ----- -------- --------
Current assets 133,508 105,540
---------------------------------------------- ----- -------- --------
Total assets 350,002 335,768
---------------------------------------------- ----- -------- --------
Equity
Share capital 139 136
Share premium 99,396 91,002
Merger reserve 8,118 8,118
Share option reserve 16,790 13,775
Fair value reserve 10,682 3,587
Currency translation adjustment reserve (5,628) 2,418
Retained earnings 53,177 44,125
---------------------------------------------- ----- -------- --------
Equity attributable to owners of the Company 182,674 163,161
---------------------------------------------- ----- -------- --------
Liabilities
Loans and borrowings 83,596 94,311
Trade and other payables 2,431 2,610
Deferred tax liabilities 11,428 10,585
---------------------------------------------- ----- -------- --------
Non-current liabilities 97,455 107,506
---------------------------------------------- ----- -------- --------
Loans and borrowings 7 9,244 10,868
Trade and other payables 53,591 47,719
Current tax payable 269 312
Employee benefits 6,769 6,202
Current liabilities 69,873 65,101
---------------------------------------------- ----- -------- --------
Total liabilities 167,328 172,607
---------------------------------------------- ----- -------- --------
Total equity and liabilities 350,002 335,768
---------------------------------------------- ----- -------- --------
Consolidated statement of changes in equity
Year ended 28 February 2021
Share Fair Currency
Share Share Merger option value translation Retained Total
capital premium reserve reserve reserve adjustment earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------- --------- --------- --------- --------- ------------- ---------- ---------
Balance at 1 March
2020 136 91,002 8,118 13,775 3,587 2,418 44,125 163,161
--------------------- --------- --------- --------- --------- --------- ------------- ---------- ---------
Total comprehensive
income for the year
Profit for the year - - - - - - 8,997 8,997
Other comprehensive
income
Net exchange loss on
net investment in
foreign
subsidiaries - - - - - (10,657) - (10,657)
Net exchange gain on
hedge of net
investment
in foreign
subsidiaries - - - - - 2,611 - 2,611
Net change in fair
value of equity
investments
at FVOCI - - - - 2,349 - - 2,349
Net Gain on sale of
FVOCI holding - - - - 4,746 - - 4,746
Total comprehensive
income for the year - - - - 7,095 (8,046) 8,997 8,046
Transactions with
owners of the
Company
Tax relating to
share options - - - 820 - - - 820
Exercise of share
options 3 8,281 - - - - - 8,284
Issue of shares - 113 - - - - - 113
Share based payment
charge - - - 2,250 - - - 2,250
Transfer on forfeit
of share options - - - (55) - - 55 -
Balance at 28
February
2021 139 99,396 8,118 16,790 10,682 (5,628) 53,177 182,674
--------------------- --------- --------- --------- --------- --------- ------------- ---------- ---------
Consolidated statement of changes in equity
Year ended 29 February 2020
Share Fair Currency
Share Share Merger option value translation Retained Total
capital premium reserve reserve reserve adjustment earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- --------- --------- --------- --------- --------- ------------- ---------- --------
Balance at 1 March
2019 131 79,726 8,118 10,744 3,587 3,944 36,560 142,810
Total comprehensive
income for the year
Profit for the year - - - - - - 14,893 14,893
Other comprehensive
income
Net exchange gain on
net investment in
foreign
subsidiaries - - - - - 1,394 - 1,394
Net exchange loss on
hedge of net
investment
in foreign
subsidiaries - - - - - (2,920) - (2,920)
Total comprehensive
income for the year - - - - - (1,526) 14,893 13,367
Transactions with
owners of the Company
Tax relating to
share options - - - 1,411 - - - 1,411
Exercise of share
options 4 10,123 - - - - - 10,127
Issue of shares - 58 - - - - - 58
Issue of shares
as contingent
deferred
consideration 1 1,095 - - - - - 1,096
Share based payment
charge - - - 1,645 - - - 1,645
Transfer on forfeit
of share options - - - (25) - - 25 -
Dividends to owners
of the Company - - - - - - (7,353) (7,353)
Balance at 29
February
2020 136 91,002 8,118 13,775 3,587 2,418 44,125 163,161
---------------------- --------- --------- --------- --------- --------- ------------- ---------- --------
Consolidated cash flow statement
Year ended 28 February 2021
2021 2020
GBP'000 GBP'000
------------------------------------------------- --------- ---------
Cash flows from operating activities
Profit for the year 8,997 14,893
Adjustments for:
Net finance costs 5,818 3,621
Depreciation of property, plant and equipment 6,876 6,291
Amortisation of intangible assets 12,889 12,377
Equity-settled share based payment transactions 2,250 1,645
Grant income (49) (179)
Share of loss of associate 58 (126)
Tax expense 2,150 3,357
------------------------------------------------- --------- ---------
38,989 41,879
Changes in:
Trade and other receivables 1,707 (18,869)
Trade and other payables 5,972 11,340
------------------------------------------------- --------- ---------
Cash generated from operating activities 46,668 34,350
Taxes paid (1,253) (2,957)
------------------------------------------------- --------- ---------
Net cash from operating activities 45,415 31,393
Cash flows from investing activities
Interest received 40 26
(increase) in loans to other investments (122) -
Decrease in loans to other investments 992 (604)
Settlement of NCI forward - (42,874)
Acquisition of other investments and associates (510) (1,044)
Sale of other investments 10,987 -
Acquisition of property, plant and equipment (1,502) (2,295)
Acquisition of intangible assets (13,775) (10,972)
Net cash used in investing activities (3,890) (57,763)
Cash flows from financing activities
Proceeds from issue of share capital 8,284 10,127
Drawdown of loans and borrowings 34,208 76,933
Repayment of borrowings (38,350) (36,751)
Payment of lease liabilities (4,554) (4,531)
Interest paid (4,564) (3,482)
Dividends paid - (7,397)
------------------------------------------------- --------- ---------
Net cash generated from financing activities (4,976) 34,899
Net increase in cash and cash equivalents 36,549 8,529
Cash and cash equivalents at 1 March 26,068 18,798
Effects of exchange rate changes on cash held (7,419) (1,259)
------------------------------------------------- --------- ---------
Cash and cash equivalents at 28/29 February 55,198 26,068
------------------------------------------------- --------- ---------
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 2021 nor 29 February 2020 but is derived from those accounts. Statutory accounts for 2020 have been delivered to the Registrar of Companies and those for 2021 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 ("IFRSs").
No changes in accounting policies
2. Operating and business segments
Information about reportable segments
Managed services
and consulting Software Total
-------------------- --------------------- ----------------------
2021 2020 2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------- --------- ---------- --------- ---------- ----------
Revenue by industry
Revenue 90,502 89,389 147,365 148,401 237,867 237,790
Cost of sales (70,826) (69,458) ( 66,062) (67,184) (136,888) (136,642)
--------------------- --------- --------- ---------- --------- ---------- ----------
Gross profit 19,676 19,931 81,303 81,217 100,979 101,148
--------------------- --------- --------- ---------- --------- ---------- ----------
Geographical location analysis
Revenues Non-current assets
------------------ ---------------------
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------- -------- ---------- ---------
UK 68,718 66,878 59,837 56,485
Rest of Europe 39,371 42,862 16,561 15,218
America 103,401 100,596 122,313 142,476
Australasia 26,377 27,454 3,064 1,067
---------------- -------- -------- ---------- ---------
Total 237,867 237,790 201,775 215,246
---------------- -------- -------- ---------- ---------
Disaggregation of revenue
Managed services
and consulting Software Total
------------------- ------------------ ------------------
2021 2020 2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- --------- -------- -------- -------- -------- --------
Revenue by industry
FinTech 90,502 89,389 94,162 89,398 184,664 178,787
MarTech - - 44,161 47,299 44,161 47,299
Other - - 9,042 11,704 9,042 11,704
------------------------------- --------- -------- -------- -------- -------- --------
90,502 89,389 147,365 148,401 237,867 237,790
------------------------------- --------- -------- -------- -------- -------- --------
Type of good or service
Sale of goods - perpetual - - 10,595 11,856 10,595 11,856
Sale of goods - recurring - - 61,951 59,789 61,951 59,789
Rendering of services 90,502 89,389 74,819 76,756 165,321 166,145
------------------------------- --------- -------- -------- -------- -------- --------
90,502 89,389 147,365 148,401 237,867 237,790
------------------------------- --------- -------- -------- -------- -------- --------
Timing of revenue recognition
At a point in time - - 10,595 11,856 10,595 11,856
Over time 90,502 89,389 136,770 136,545 227,272 225,934
------------------------------- --------- -------- -------- -------- -------- --------
90,502 89,389 147,365 148,401 237,867 237,790
------------------------------- --------- -------- -------- -------- -------- --------
3. Dividends
2021 2020
GBP'000 GBP'000
-------------------------------------------- --------- --------
Dividends paid to the owners of the parent
Final dividend relating to the prior year - 5,084
Interim dividend paid - 2,269
-------------------------------------------- --------- --------
- 7,353
------------------------------------------------------ --------
The dividends recorded in each financial year represent the final dividend of the preceding financial year and the interim dividend of the current financial year.
No final dividend was declared in relation to the comparative period and no interim dividend was declared or paid relating to the current year. In the prior year the 2019 final dividend of 19.30p per share and the 2020 interim dividend of 8.50p per share were paid. The cumulative dividend paid during the year amounted to nil (previous year: 27.80p) 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.
2021 2020
GBP'000 GBP'000
----------------------------------- -------- --------
Nil per ordinary share (2020: Nil) - -
----------------------------------- -------- --------
4. a) Earnings per ordinary share
Basic
The calculation of basic earnings per share at 28 February 2021 was based on the profit attributable to ordinary shareholders of GBP8,997k (2020: GBP14,893k), and a weighted average number of ordinary shares in issue of 27,505k (2020: 26,628k).
2021 2020
Pence Pence
per share per share
-------------------------- ----------- -----------
Basic earnings per share 32.7 55.9
-------------------------- ----------- -----------
Weighted average number of ordinary shares
2021 2020
Number Number
'000 '000
------------------------------------------------------ ------- -------
Issued ordinary shares at 1 March 27,150 26,162
Effect of share options exercised 352 437
Effect of shares issued as purchase consideration - 27
Effect of shares issued as remuneration 3 2
------------------------------------------------------ ------- -------
Weighted average number of ordinary shares at 28/ 29
February 27,505 26,628
------------------------------------------------------ ------- -------
Diluted
The calculation of diluted earnings per share at 28 February 2021 was based on the profit attributable to ordinary shareholders of GBP8,997k (2020: GBP14,893k ) and a weighted average number of ordinary shares after adjustment for the effects of all dilutive potential ordinary shares of 28,126k (2020: 27,502k).
2021 2020
Pence Pence
per share per share
---------------------------- ----------- -----------
Diluted earnings per share 32.0 54.2
---------------------------- ----------- -----------
Weighted average number of ordinary shares (diluted)
2021 2020
Number Number
'000 '000
------------------------------------------------------ ------- -------
Weighted average number of ordinary shares (basic) 27,505 26,628
Effect of dilutive share options in issue 621 874
------------------------------------------------------ ------- -------
Weighted average number of ordinary shares (diluted)
at 29 February 28,126 27,502
------------------------------------------------------ ------- -------
At 28 February 2021 120,058 shares (2020: 18,885) were excluded from the diluted weighted average number of ordinary shares calculation as their effect would have been anti-dilutive. The average market value of the Group's shares for the purposes of calculating the dilutive effect of share options was based on quoted market prices for the year during which the options were outstanding.
4. b) Earnings before tax per ordinary share
Earnings before tax per share are based on profit before taxation of GBP11,147k (2020: GBP18,250). The number of shares used in this calculation is consistent with note 4(a) above.
2021 2020
Pence Pence
per share per share
------------------------------------------------ ----------- -----------
Basic earnings before tax per ordinary share 40.5 68.5
Diluted earnings before tax per ordinary share 39.6 66.4
------------------------------------------------ ----------- -----------
Reconciliation from earnings per ordinary share to earnings before tax per ordinary share:
2021 2020
Pence Pence
per share per share
--------------------------------------- ----------- -----------
Basic earnings per share 32.7 55.9
Impact of taxation charge 7.8 12.6
--------------------------------------- ----------- -----------
Basic earnings before tax per share 40.5 68.5
--------------------------------------- ----------- -----------
Diluted earnings per share 32.0 54.2
Impact of taxation charge 7.6 12.2
--------------------------------------- ----------- -----------
Diluted earnings before tax per share 39.6 66.4
--------------------------------------- ----------- -----------
Earnings before tax per share is 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 is based on an adjusted profit after taxation of GBP16,602k (2020: GBP21,283k). The adjusted profit after tax has been calculated by adjusting the Profit after tax GBP8,997k (2020: GBP14,894k) for the amortisation of acquired intangibles after tax effect of GBP3,184k (2020: GBP3,155k), share based payment and related charges after tax effect of GBP1,911k (2020: GBP2,526k), acquisition costs after tax effect of GBP1,102k (2020: GBP1,635k), share of loss of associate after tax effect of GBP58k (2020: profit GBP126k), the loss on foreign currency translation after tax effect of GBP2,613k (2020: profit GBP802k), and finance income from sale of investment after tax effect of GBP1,263k (2020:nil). The number of shares used in this calculation is consistent with note 4(a) above.
2021 2020
Pence Pence
per share per share
-------------------------------------------------------- ----------- -----------
Adjusted basic earnings after tax per ordinary share 60.4 79.9
Adjusted diluted earnings after tax per ordinary share 59.0 77.4
-------------------------------------------------------- ----------- -----------
5. Property, plant and equipment
Group
Right-
Leasehold Plant and Office of-use
improvements equipment furniture assets Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- --------------- ------------ ------------ --------- ---------
Cost
At 1 March 2020 5,958 17,163 1,763 30,914 55,798
Additions 371 1,090 42 2,975 4,478
Disposals (60) (6,169) (450) (379) (7,058)
Exchange adjustments (45) (198) (6) (920) (1,169)
---------------------- --------------- ------------ ------------ --------- ---------
At 28 February 2021 6,224 11,886 1,349 32,590 52,049
---------------------- --------------- ------------ ------------ --------- ---------
Depreciation
At 1 March 2020 2,851 11,228 1,096 3,480 18,655
Charge for the year 624 1,790 249 4,214 6,877
Disposals (60) (6,169) (450) - (6,679)
Exchange adjustments (94) (4) (1) (246) (345)
---------------------- --------------- ------------ ------------ --------- ---------
At 28 February 2021 3,321 6,845 894 7,448 18,508
---------------------- --------------- ------------ ------------ --------- ---------
Right-
Leasehold Plant and Office of-use
improvements equipment furniture assets Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- --------------- ------------ ------------ --------- ---------
Cost
At 1 March 2019 5,092 16,151 1,201 - 22,444
Recognition of right-of-use
asset on initial application
of IFRS 16 - - - 24,964 24,964
Additions 124 1,767 404 5,612 7,907
Exchange adjustments 742 (755) 158 338 483
------------------------------- --------------- ------------ ------------ --------- ---------
At 29 February 2020 5,958 17,163 1,763 30,914 55,798
------------------------------- --------------- ------------ ------------ --------- ---------
Depreciation
At 1 March 2019 2,099 9,425 758 - 12,282
Charge for the year 657 1,848 288 3,498 6,291
Exchange adjustments 95 (45) 50 (18) 82
------------------------------- --------------- ------------ ------------ --------- ---------
At 29 February 2020 2,851 11,228 1,096 3,480 18,655 ------------------------------- --------------- ------------ ------------ --------- --------- Carrying amounts At 1 March 2019 2,993 6,726 443 - 10,162 ------------------------------- --------------- ------------ ------------ --------- --------- At 29 February 2020 3,107 5,935 667 27,434 37,143 ------------------------------- --------------- ------------ ------------ --------- --------- At 28 February 2021 2,903 5,041 455 25,142 33,541 ------------------------------- --------------- ------------ ------------ --------- --------- 6. Intangible assets and goodwill
Group
Internally
Customer Acquired Brand developed
Goodwill lists software name software Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- --------- ---------- --------- ----------- ---------
Cost
Balance at 1 March 2020 110,639 13,259 29,908 769 70,280 224,855
Development costs 13,398 13,398
Additions - - 377 - - 377
Exchange adjustments (7,112) (792) (1,750) (36) (147) (9,837)
------------------------- --------- --------- ---------- --------- ----------- ---------
At 28 February 2021 103,527 12,467 28,535 733 83,531 228,793
------------------------- --------- --------- ---------- --------- ----------- ---------
Amortisation
Balance at 1 March 2020 - 9,848 21,556 633 38,402 70,439
Amortisation for the
year - 1,235 2,332 50 9,272 12,889
Exchange adjustment - (657) (1,269) (31) (91) (2,048)
------------------------- --------- --------- ---------- --------- ----------- ---------
At 28 February 2021 - 10,426 22,619 652 47,583 81,280
------------------------- --------- --------- ---------- --------- ----------- ---------
Internally
Customer Acquired Brand developed
Goodwill lists software name software Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- --------- ---------- --------- ----------- ---------
Cost
Balance at 1 March 2019 107,390 12,897 28,668 751 59,559 209,265
Development costs - - 541 - 10,431 10,972
Additions - - - - - -
Exchange adjustments 3,249 362 699 18 290 4,618
------------------------- --------- --------- ---------- --------- ----------- ---------
At 29 February 2020 110,639 13,259 29,908 769 70,280 224,855
------------------------- --------- --------- ---------- --------- ----------- ---------
Amortisation
Balance at 1 March 2019 - 8,303 18,818 566 29,613 57,300
Amortisation for the
year - 1,315 2,315 54 8,693 12,377
Exchange adjustment - 230 423 13 96 762
------------------------- --------- --------- ---------- --------- ----------- ---------
At 29 February 2020 - 9,848 21,556 633 38,402 70,439
------------------------- --------- --------- ---------- --------- ----------- ---------
Carrying amounts
At 1 March 2019 107,390 4,594 9,850 185 29,946 151,965
------------------------- --------- --------- ---------- --------- ----------- ---------
At 29 February 2020 110,639 3,411 8,352 136 31,878 154,416
------------------------- --------- --------- ---------- --------- ----------- ---------
At 28 February 2021 103,527 2,041 5,916 81 35,948 147,513
------------------------- --------- --------- ---------- --------- ----------- ---------
7. Loans and borrowings
Group Company
------------------ ------------------
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------- -------- -------- --------
Current liabilities
Secured bank loans 5,492 6,337 5,492 6,337
Lease liabilities 3,752 4,531 1,398 1,814
------------------------- -------- -------- -------- --------
9,244 10,868 6,890 8,151
------------------------- -------- -------- -------- --------
Non-current liabilities
Secured bank loans 59,622 69,156 59,622 69,156
Lease liabilities 23,974 25,155 11,442 11,098
------------------------- -------- -------- -------- --------
83,596 94,311 71,064 80,254
------------------------- -------- -------- -------- --------
8. Report and accounts
Copies of the Annual Report will be available as of 8 June 2021 on the Group's website, www.firstderivatives.com and from the Group's headquarters at 3 Canal Quay, Newry, BT35 6BP.
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