REG - FD Technologies PLC - Full Year Results 2023/24
21/05/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240521:nRSU1893Pa&default-theme=true
RNS Number : 1893P FD Technologies PLC 21 May 2024
21 May 2024
FD Technologies plc
("FD Technologies" or the "Group")
Results for the year ended 29 February 2024
FD Technologies (AIM: FDP.L, Euronext Growth: FDP.I) announces its results for
the year ended 29 February 2024.
Business highlights
Strategic progress despite short-term challenges, led by KX advancing its
position in core markets and developing its AI opportunity
KX:
· Delivered constant currency annual recurring revenue (ARR) growth of 12% to
£73m; recurring revenue increased by 19% and now represents 86% of KX revenue
(FY23: 81%)
· Performance was impacted by lower pipeline conversion rates and lengthened
sales cycles, resulting from a combination of having fewer repeatable use
cases in newer markets and macroeconomic headwinds
· Annual contract value added of £14m, of which more than 80% was derived from
repeatable use cases in our core markets of financial services and aerospace
and defence; 19 new logos signed (FY23: 16)
· Launched KDB.AI, our vector database for real-time contextual AI, with initial
sales during the period and a number of key technical wins with major existing
and potential customers demonstrating its ability to drive growth
· Launch of kdb Insights offerings with Microsoft, AWS, GCP, Databricks and
Snowflake providing reduced time to value and cost to operate, as well as
signing partnerships with leading industry partners including McLaren Applied
and SRC
· Release of kdb+ 4.1, which has redefined the high-performance analytical
database landscape, marking a major step forward in our core technology and
the first major release in four years
· Completed the KX leadership team with senior appointments including a Chief
Revenue Officer, Chief Marketing Officer and Chief Product & Engineering
Officer to drive the next growth phase of KX
First Derivative:
· Revenue declined by 8% to £170m due to increased spending caution among
customers, with measures taken to control costs and improve efficiency,
enabling adjusted EBITDA margin to be maintained
· Areas of demand for our domain and technology skills mitigating lower spending
on general technology skills within our customer base and leaving us well
positioned when demand improves
· Improvement in bookings in Q4 FY24 but market remains cautious.
Group structure review
In October 2023 the Board announced a review of the optimal organisational
structure and allocation of capital to best position the Group to drive value
for shareholders. In March 2024 the Board announced that it had unanimously
concluded that the separation of its three businesses was in the best
interests of all shareholders.
As a first step, it was also announced in March 2024 that the Group had agreed
an all-share merger of MRP with CONTENTgine, a provider of B2B technology
buyer insights and lead generation. FD Technologies owns 49% of the merged
entity, which is reported as discontinued operations in FY24 and will be
reported as an associate investment in future years. FY23 has been restated to
remove MRP to enable year-on-year comparison in performance.
The final step in the process is the separation of KX and First Derivative,
with a measured and thoughtful process under way to ensure that any
transaction reflects the value of First Derivative. Advisers on the process
have been appointed and further updates will be provided as appropriate.
Seamus Keating, CEO of FD Technologies, commented: "FY24 presented challenges
within our businesses but we made significant strategic progress and we enter
FY25 with clarity and focus on the exciting opportunities ahead. While KX's
ARR growth was below our expectations for the year, we have addressed the
operational challenges and are well placed to execute on the enormous
addressable market in the industries we are targeting. First Derivative
managed its cost base to ensure that despite the caution in its customer
spending, it maintained margins. In the early months of FY25, the market has
remained subdued but with stable activity levels.
Looking to FY25, the conclusion of the structure review provides a clear path
to value creation for shareholders while the operational improvements, focus
on repeatable use cases and growing opportunity in AI provide confidence that
KX will deliver stronger, sustainable growth."
Financial summary
Year ended February 2024 2023* Change
Revenue £248.9m £254.6m (2%)
Gross profit £105.7m £105.3m 0%
Loss before tax from continuing operations (£7.7m) £(0.4)m N/A
Reported diluted LPS (145.2p) (14.4p) N/A
Net debt** (£14.4m) (£3.7m) N/A
Adjusted performance measures
Adjusted EBITDA*** £23.1m £33.3m (31%)
Adjusted diluted (LPS)/EPS (0.7p) 36.3p N/A
* FY23 has been restated excluding discontinued operations (MRP)
** Excluding lease obligations
*** Adjusted for share based payments and restructure and non-operational costs
Financial highlights
· Group revenue down 2% to £249m (FY23: £255m), with gross profit flat as
gross margins increased in KX due to increased software revenue, offsetting a
decline in First Derivative gross margin from lower utilisation
· KX revenue growth of 12% to £79m (FY23: £71m), led by recurring revenue up
19% to represent 86% of total KX revenue (FY23: 81%) Note that £9m of
services revenue has been restated from KX to First Derivative in the year,
with FY23 restated by £9m to enable a like-for-like comparison. Further
details are provided in the Financial review
· First Derivative revenue of £170m, down 8% (FY23: £184m), driven by
continued customer caution resulting from lower investment banking revenues
· Adjusted EBITDA down 31% to £23m (FY23: £33m) as a result of accelerated
investment in KX and lower revenue in First Derivative
· Net debt £14.4m (FY23: £3.7m)
Current trading and outlook
KX is expected to achieve annual contract value (ACV) added in the range of
£16m to £18m in FY25, resulting in gross ARR growth of 20-25%. This ACV
added is expected to be delivered from our pipeline of repeatable use cases in
capital markets, aerospace and defence and high-tech manufacturing. The churn
rate is expected to be similar to FY24 at approximately 8-10%, driven by the
renewal rate of solutions sold in prior years, before returning to normal
range of 5-7% from FY26. This provides an ARR growth range for FY25 of 11-15%
at constant currency.
KX cash EBITDA for the year is expected to be in line with FY24, with an
expectation that KX will generate positive cash EBITDA for FY27. H1 FY25 has
started positively and supports the Board's expectation of ACV added in the
period in the range of £6m to £8m in H1 and £16m to £18m for the full
year. From FY26 to FY28 we anticipate ARR CAGR in excess of 25%.
We expect First Derivative revenue in the range of £160m to £170m, at
maintained EBITDA margins, based on continued caution on consultancy spending
at our capital markets customers.
For further information, please contact:
FD Technologies plc +44(0)28 3025 2242
Seamus Keating, Chief Executive Officer www.fdtechnologies.com (http://www.firstderivatives.com)
Ryan Preston, Chief Financial Officer
Ian Mitchell, Head of Investor Relations
Investec Bank plc +44 (0)20 7597 5970
(Nominated Adviser and Broker)
Carlton Nelson
Virginia Bull
Goodbody (Euronext Growth Adviser and Broker) +353 1 667 0420
Tom Nicholson
Don Harrington
Jason Molins
J.P. Morgan Cazenove (Broker) +44 (0)20 3493 8000
James A. Kelly
Mose Adigun
FTI Consulting +44 (0)20 3727 1000
Matt Dixon
Dwight Burden
Victoria Caton
Kirstie-Anne Woodman
About FD Technologies
FD Technologies is a group of data-driven businesses that unlock the value of
insight, hindsight and foresight to drive organisations forward. The Group
comprises KX, which provides software to accelerate AI-driven innovation and
First Derivative, providing consulting services which drive digital
transformation in financial services and capital markets. FD Technologies
operates from 13 locations across Europe, North America and Asia Pacific, and
employs more than 2,400 people worldwide.
For further information, please visit www.fdtechnologies.com
(http://www.fdtechnologies.com) and www.kx.com (http://www.kx.com)
Results presentation
A presentation for analysts will be held at FTI Consulting at 9.30am today,
following which a recording of the presentation will be available on the
Group's website.
Business Review
FD Technologies comprises KX, software to accelerate AI-driven innovation; and
First Derivative, providing consulting services which drive digital
transformation in financial services and capital markets.
KX - the high-performance analytics database engine for AI-driven innovation
KX's mission is to accelerate data and AI-driven innovation with high
performance analytics database solutions, enabling our customers to transform
into AI-first enterprises. KX is trusted by the world's top investment banks
and hedge funds, aerospace and defence, life and health sciences,
semiconductor, telecommunications and advanced manufacturing companies.
Time series and vector data analytics and management are at the heart of our
products, independently benchmarked as the fastest on the market. They help
our customers process data at unmatched speed and scale and empower
line-of-business leaders, developers, data scientists, and data engineers to
build high-performance data-driven applications and turbocharge their
favourite analytics tools in the cloud, on premise or at the edge.
In FY24 KX achieved significant technological milestones including:
· The introduction of KDB.AI, expanding our product suite with a vector
database that offers unmatched analytical capabilities
· The launch of a kdb Insights Enterprise offering with Microsoft and kdb
Insights offerings with AWS, Databricks, GCP and Snowflake, each presenting a
compelling value proposition, greatly reduced time to value and reduced cost
to operate
· The launch of kdb+ 4.1, providing significant updates in performance,
security and usability and empowering developers to turbo charge workloads
· Expanded features and capabilities of our language interfaces and tooling
including Python, SQL and also Visual Studio Code. For example, our native
Python-first interface, 'PyKX', now has more than 150,000 downloads and is
central to our sales pipeline and ability to win new logos
Industry forecasts by Gartner highlight significant annual investments across
non-relational databases ($54bn), analytics and business intelligence
platforms ($26bn), and data science and AI platforms ($24bn), with growth
rates ranging from 20 to 25% annually.
Commercial progress
During FY24, the KX business added £14m of annual contract value and ARR grew
by 12% (at constant currency). The lower than expected growth in ARR bookings
was primarily as a result of lower than expected pipeline conversation rates,
particularly with respect to new offerings and new channels. Furthermore, in
the current macroeconomic environment customers are scrutinising their IT and
cloud spend with renewed focus on operating costs. This resulted in
lengthening sales cycles for larger purchases.
As a demonstration of strategic progress and return on recent investments,
over 40% of new bookings in FY24 came from industry segments outside of
capital markets; 25% of our new bookings were in Aerospace & Defence and
10% in semi-conductor manufacturing, working with our OEM and systems
integration industry partners. Furthermore, approximately 90% of our new
bookings are from strategic products as opposed to solutions.
During FY24 we made additional investment to underpin our generative AI
product offering and in FY25 we will optimise our cost base to focus our
investment on the areas of highest return.
Leadership
During the year we made multiple key hires within the KX executive team,
including a Chief Revenue Officer, Clint Maddox, who has a track record of
sales leadership success in enterprise technology and channel distribution; a
Chief Marketing Officer, Peter Finter, who has experience building marketing
strategies at hyper-growth technology companies; and a Chief Product &
Engineering Officer, Michael Gilfix, who has a track record building scalable
global software product businesses for the enterprise market. We continue to
invest in sales and marketing, strengthening and evolving our go-to-market
team at all levels.
Opportunity for KX in the AI era
During FY24 we reinforced the position of kdb+ as the go-to database and query
language for high-performance data analysis and model development. The rise of
AI and the vast Python ecosystem present exciting opportunities that are
seamlessly bridged by PyKX, our Python-first interface, and the collaborative
environments of kdb Insights and Insights Enterprise. Now, KDB.AI further
enriches this landscape, providing powerful tools specifically tailored for
AI-driven applications and data platforms such as the AI Factory concept.
At the heart of the AI Factory, KX delivers a high-performance, scalable, and
efficient analytics engine tailored for processing time-sensitive data. Our
mission is to empower enterprises across various sectors to leverage the
immense power of their data for insightful discovery, operational efficiency,
and effective risk management. Aligning with the expansive market potential
identified by industry experts, KX focuses on driving innovation and value,
sidestepping the granular market size specifics for individual verticals.
Go-to-market priorities in FY25
The unique capabilities and differentiation of KX technology continue to be
consistently confirmed by our customers and partners. It is from this base
that we have built our growth plans. The key drivers of sustainable growth in
FY25 and beyond are:
· Disciplined focus on established, repeatable use cases in capital markets
leveraging standard configurations with options for cloud and on-premise
infrastructure
· Continued investment in aerospace and defence leveraging our partnerships with
Cloud Service Providers (CSPs) and specialist systems integrators
· Working with established OEM partners and channels to target customer wins in
semiconductor and high-tech manufacturing
· Continuing to work with the CSPs on joint market propositions in capital
markets as well as generative AI and as an OEM component within
sector-specific solutions
· Accelerating work with customers to validate differentiated use cases within
generative AI and generate market share
First Derivative - driving digital transformation in financial services and
capital markets
First Derivative is a capital markets focused consultancy that delivers a
combination of deep domain skills and expertise in relevant technologies to
enable its customers to meet their most demanding technology challenges. We
are a trusted partner of leading investment banks, putting business outcomes
at the centre of what we set out to achieve.
First Derivative delivered revenue of £170m for the year, down 8% from the
prior year as a result of the challenging conditions in its market. FY24
contained a number of challenges for the global consulting industry as
companies around the world reigned in spending. In particular, the failure of
Silicon Valley Bank in March 2023 started a chain reaction among a number of
US mid-tier banks. These events led most banks to halt spending on new
initiatives and even cut back their spending on existing contracted
engagements.
The timing of the downturn in customer spending coincided with the completion
of two major projects, resulting in a higher than typical bench that required
some rightsizing to return to normal levels.
Market conditions did not improve through the year, as recession and the
global political environment impacted customer confidence. Reduced income from
mergers and acquisitions and IPOs resulted in customer budgets, including for
technology, being cut further.
Later in FY24, some stability returned to customer spending with a growing
need for change within our customers. Spend on compliance also improved later
in the year given the regulatory change agenda over the next few years. These
factors provide optimism on customer spending when technology budgets improve.
Despite the challenging conditions of reduced customer spending there has been
an improvement in bookings in Q4 FY24.
While we are confident about the market fit of the services we provide, our
customer relationships and our abilities, we continue to take a conservative
view of near-term demand while positioning ourselves to benefit from a return
to growth as customers release their technology budgets.
People
The Group currently employs more than 2,400 people, down 18% from the same
time last year as a result of the merger of MRP with CONTENTgine and cost
optimisation in First Derivative. Our people policies are one of three key
pillars on which our corporate responsibility and sustainability are designed,
enabling us to attract and retain the talent needed to execute our growth
strategy.
During FY24, we focused on developing our leadership and continued to pay
particular attention to learning and development. Across our business and
particularly within KX we hired key talent to lead the execution of our
strategy, while identifying and developing our existing leadership talent
through internally developed programmes such as the Aspiring Leadership
Programme. This programme offers a structured and practical path to fast track
high-potential individuals into leadership roles. We also evaluated and
benchmarked every employee across the Group to ensure everyone is paid
competitively and continue to foster a culture of high performance and
feedback.
Despite the challenging market conditions in FY24 we adopted a focused
approach to talent acquisition to ensure that we were hiring the right people
for the right roles at the right time. Our focus for FY25 is to continue with
planned recruitment to serve our growth strategy while further developing our
training and development programmes to cultivate our talent.
Financial review
Revenue and Margins
The table below shows the breakdown of Group performance between KX and First
Derivative.
FY24 FY23*
Group KX First Group KX First Group change
Derivative Derivative
£m £m £m £m £m £m
Revenue 248.9 79.1 169.7 254.6 71.0 183.6 (2%)
Cost of sales (143.2) (17.2) (126.0) (149.3) (16.9) (132.3) (4%)
Gross profit 105.7 62.0 43.7 105.3 54.1 51.2 0%
Gross margin 42% 78% 26% 41% 76% 28%
R&D expenditure (31.1) (30.2) (0.9) (23.4) (23.0) (0.4) 33%
R&D capitalised 24.8 23.9 0.9 19.4 19.0 0.4 28%
Net R&D (6.3) (6.2) (0.1) (4.0) (4.0) (0.0) 58%
Sales and marketing costs (40.1) (31.8) (8.2) (41.6) (26.3) (15.3) (4%)
Adjusted admin expenses (36.3) (18.8) (17.5) (26.4) (11.0) (15.5) 37%
Adjusted EBITDA 23.1 5.1 18.0 33.3 12.8 20.5 (31%)
Adjusted EBITDA margin 9% 6% 11% 13% 18% 11%
* FY23 has been restated excluding discontinued operations (MRP)
The revenue performance was led by 12% growth in KX while First Derivative
declined by 8%, resulting in a 2% decline in Group revenue in the period.
There was no appreciable currency impact on results due to similar average
dollar FX rates this year compared to last year. Gross profit margin increased
to 42% (FY23: 41%), with performance led by KX. During the year we announced
we would accelerate investment in KX product development and go-to-market,
particularly to target opportunities in AI. As a result, KX R&D cost
increased by 31% and sales and marketing cost by 21%, supporting the launch of
KDB.AI and contributing to our go-to-market capability. In addition, we
continue to invest in people and systems to target the high growth markets in
which we operate. These investments, together with the revenue reduction at
First Derivative, resulted in adjusted EBITDA declining by 31% to £23.1m
(FY23: £33.3m).
Reclassification of KX service revenue to First Derivative
During the period we transferred professional services contracts relating to
post implementation consultancy and development from KX to First Derivative,
where it is better placed to be serviced and grow. The numbers stated above
reflect this change and the prior year results have also been restated to
enable like-for-like comparison. The impact in the period was to move £9.0m
of KX services revenue to First Derivative (FY23: £9.3m), along with £5.6m
cost of sales (FY23: £5.4m) resulting in an impact on gross profit of £3.4m
(FY23: £3.9m). A £0.1m movement in adjusted admin expenses (FY23: £0.1m)
resulted in a net movement in adjusted EBITDA of £3.3m from KX to FD for the
period (FY23: £3.8m).
KX
KX total Financial services Industry
FY24 FY23 Change FY24 FY23 Change FY24 FY23 Change
£m £m £m £m £m £m
Revenue 79.1 71.0 12% 62.5 59.7 5% 16.6 11.3 48%
Recurring 68.4 57.6 19% 56.4 50.2 13% 12.0 7.4 62%
Perpetual 2.3 1.6 45% 0.1 0.2 (76%) 2.2 1.3 64%
Total software 70.7 59.1 20% 56.5 50.4 12% 14.2 8.7 62%
Services 8.5 11.9 (29%) 6.0 9.3 (35%) 2.4 2.5 (4%)
Gross profit 62.0 54.1 15%
Adjusted EBITDA 5.1 12.8 (60%)
KX delivered 12% revenue growth in the period, driven by 19% growth in
recurring revenue to £68m, balanced by a 29% reduction in services to £8.5m.
The reduction in services reflects the increased ease of adoption of our
software and therefore lower level of implementation services required. Annual
contract value (ACV) added was £13.5m (FY23: £18.7m), with more than 80% of
ACV added coming from repeatable use cases in capital markets and aerospace
and defence. Revenue from perpetual license sales relates primarily to
continuing customer engagements entered into before our decision in FY22 to
focus exclusively on subscription sales for new customers.
Financial services revenue grew by 5% to £62.5m, with recurring revenue in
financial services up 13%. We continue to benefit from adoption of kdb
Insights by existing and new customers, attracted by its performance, ease of
use and rapid time to value, as well as native integration with important
developer languages such as Python and SQL. We had several new customer wins
in the period driven by the release of PyKX, our Python-first interface, which
now has more than 150,000 downloads.
Industry revenue grew by 48% to £16.6m with recurring revenue growing by 62%
to £12.0m. This growth was primarily attributable to aerospace and defence
and semiconductor manufacturing, where we have developed repeatable use cases
that represent large and growing market opportunities.
For target markets outside of those referenced above we will work primarily
through our partner networks of CSPs, OEMs and systems integrators to develop
use cases that provide compelling return on investment.
Performance metrics FY24 FY23 Change
Annual recurring revenue (ARR) £m 72.5 65.3 11%
Net revenue retention (NRR) 109% 119%
Gross margin 78% 76%
R&D expenditure as % of revenue 38% 32%
Sales and marketing spend as % of revenue 40% 37%
Adjusted EBITDA margin 6% 18%
ARR increased by 11% to £72.5m while NRR of 109% is lower than the 119%
achieved in FY23 principally due to the lower level of ACV added in the
period. We continue to invest across KX to develop products that will enable
us to gain market share in our target markets and to address the AI
opportunity, as well as the go to market capability and leadership to deliver
our growth strategy.
First Derivative
FY24 FY23 Change
£m £m
Revenue 169.7 183.6 (8%)
Gross profit 43.7 51.2 (15%)
Adjusted EBITDA 18.0 20.5 (12%)
Revenue for the period was £169.7m, a decline of 8% on FY23 as a result of
increased caution at our customers as a result of stress on banks following
the collapse of SVB, as well as lower IPO and M&A activity impacting the
income of our investment banking customers. Additional factors such as
geopolitical and recessionary pressure prolonged this caution, although late
in FY24 we saw stability in both revenue and bookings.
Performance in First Derivative was strongest in its technology services and
engineering services practices, which were both stable year on year, while the
business services practice decreased by 16%. We continue to focus resources
and sales effort in the areas of highest demand and where our domain expertise
provides differentiation from our competitors.
In response to lower activity levels we removed approximately £9.0m of
annualised operating costs, while simplifying the sales, delivery and practice
management of the business. This, together with an easing of the attrition and
wage inflation, has reduced the impact on margins as detailed below.
Performance metrics FY24 FY23
Gross margin 26% 28%
Adjusted EBITDA margin 11% 11%
Gross margin was 26%, a decline from 28% in the prior year, for the reasons
outlined above, while the impact of our efficiency measures enabled us to
maintain an adjusted EBITDA margin of 11%.
Group Performance
Adjusted EBITDA
The reconciliation of operating (loss)/profit to adjusted EBITDA is provided
below. The principal movement to note is the reduction in non-operational IT
expenses following the successful implementation of the Group's Oracle Cloud
Fusion ERP system.
FY24 FY23(1)
£m £m
Operating (loss)/profit (2.4) 1.0
Restructure and non-operational costs 3.8 7.0
Non-operational IT expenses(2) 1.1 5.6
Share based payment and related costs 1.4 0.4
Depreciation and amortisation 19.2 19.3
Adjusted EBITDA 23.1 33.3
(1)FY23 has been restated excluding discontinued operations (MRP)
(2) Non-operational IT expenses represents ERP implementation costs that are
required to be expensed under accounting standards
(Loss)/profit before tax
Adjusted profit before tax decreased to £0.6m (FY23: £13.1m), resulting from
the reduction in adjusted EBITDA and higher software amortisation costs
resulting from our investment in R&D.
The Group reported a loss before tax from continuing operations of £7.7m for
the period, compared to a loss of £0.4m in FY23 as restated.
The reconciliation of adjusted EBITDA to reported profit before tax is
provided below.
FY24 FY23(1)
£m £m
Adjusted EBITDA 23.1 33.3
Adjustments for:
Depreciation (5.2) (6.2)
Amortisation of software development costs (13.7) (10.5)
Net financing costs (3.6) (3.6)
Adjusted profit before tax 0.6 13.1
Adjustments for:
Amortisation of acquired intangibles (0.4) (2.7)
Share based payment and related costs (1.4) (0.4)
Restructure and non-operational costs (3.8) (7.0)
Non-operational IT expenses (1.1) (5.6)
Loss on foreign currency translation (1.6) 0.0
Profit on disposal of associate 0.1 3.0
Net financing costs (0.2) (0.9)
Reported loss before tax from continuing operations (7.7) (0.4)
(1)FY23 Reported loss before tax has been restated excluding loss before tax
from discontinuing operations of £0.8m
Discontinued operations - MRP
Following its all share merger with CONTENTgine, MRP is reported within
discontinued operations and FY23 has been restated for comparative purposes.
In FY24, MRP saw revenue decline following weaker customer demand, resulting
in revenue of £29.0m (FY23: £41.5m) and an EBITDA loss of £4.1m (FY23:
profit £1.4m). Accordingly, an impairment of goodwill and associated
intangible assets of £21.2m was recognised in the year. In total, a loss
before tax from discontinued operations relating to MRP has been recorded of
£30.3m (FY23: 0.8m) and a reported loss after tax of £27.4m (FY23: £3.1m).
(Loss)/earnings per share
The Group reported a loss after tax of £13.4m for the period from continuing
operations, compared to a loss after tax of £0.9m in FY23. Adjusted loss
after tax was £0.2m, compared to a £10.2m profit in FY23, resulting in
adjusted diluted loss per share for the period of 0.7p. The calculation of
adjusted (loss)/profit after tax is detailed below:
FY24 FY23
£m £m
Reported (loss)/profit before tax (7.7) 0.4
Tax (5.6) (0.5)
Loss from discontinued operations (27.4) (3.1)
Reported loss after tax (40.8) (4.0)
Adjustments from (loss)/profit before tax (as per the table above) 8.3 13.5
Tax effect of adjustments (1.2) (2.4)
Loss from discontinued operations 27.4 3.1
Discrete tax items 6.0 -
Adjusted (loss)/profit after tax (0.2) 10.2
Weighted average number of ordinary shares (diluted) 28.1m 28.0m
Reported LPS (diluted) (145.2p) (14.4p)
Adjusted (LPS)/EPS (diluted) (0.7p) 36.3p
Cash generation and net cash (excluding lease liabilities)
The Group generated £21.8m of cash from operating activities, representing a
94% conversion of adjusted EBITDA (FY23: 114%). At the period end we had a net
debt position from continuing operations of £14.4m, up from the FY23 position
of net debt of £3.7m. The factors impacting the movement are summarised in
the table below:
FY24 FY23(1)
£m £m
Opening net debt (excluding lease liabilities) (3.7) (18.3)
Cash generated from operating activities before non-operational IT expenses 22.9 43.2
Non-operational IT expenses (1.1) (5.1)
Cash generated from operating activities 21.8 38.1
Taxes paid (3.8) (1.5)
Capital expenditure: property, plant and equipment (0.6) (2.8)
Capital expenditure: intangible assets (24.8) (19.6)
Sale of other investments and associates 3.0 0.1
Investments (0.2) 8.1
Issue of new shares 0.1 3.1
Interest, foreign exchange and other (6.1) (11.0)
Closing net debt (excluding lease liabilities) from continuing operations (14.4) (3.7)
(1)FY23 Net cash as reported of £0.4m has been restated excluding cash held
by discontinued operations at 28 Feb 2023 of £4.1m
The drivers of cash performance in FY24 were increasing spend on research and
development, where of the total £31.1m spend £24.8m (80%) was capitalised,
lower capex costs following heavy investment in prior periods and an earnout
payment relating to the sale of our investment in RxDataScience Inc in FY24.
We refinanced our banking facility in early FY24 on improved terms and it
comprises a £130m revolving credit facility, with an interest rate payable of
SONIA/SOFR plus a margin range of 1.85% to 2.85%.
Definition of terms
The Group uses the following definitions for its key metrics:
Annual recurring revenue (ARR): the value at the end of the accounting period
of recurring software revenue to be recognised in the next twelve months.
Gross annual recurring revenue (Gross ARR): ARR excluding churn.
Annual contract value (ACV): the sum of the value of each customer contract
signed during the year divided by the number of years in each contract.
Net revenue retention rate (NRR): is based on the actual revenues in the
quarter annualised forward to twelve months and compared to the 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 £58.1m (FY23: £56.7m) adjusted for depreciation and amortisation
of £19.2m (FY23: £19.3m), share based payments and related costs of £1.4m
(FY23: £0.4m), restructure and non-operational costs of £3.8m (FY23:
£7.0m), IT systems implementation costs expensed £1.1m (FY23: £5.6m),
impairment loss on trade and other receivables £3.8m (FY23: £2.2m) and other
income £0.1m (FY23: £0.2m)
Consolidated statement of comprehensive income
Year ended 29 February 2024
2024 2023
restated*
Note £'000 £'000
Continuing operations 2 248,863 254,568
Revenue
Cost of sales (143,152) (149,252)
Gross profit 2 105,711 105,316
Operating costs
Research and development costs (31,094) (23,409)
- of which capitalised 24,799 19,435
Sales and marketing costs (40,070) (41,574)
Administrative expenses (58,113) (56,741)
Impairment loss on trade and other receivables (3,811) (2,245)
Total operating costs (108,289) (104,534)
Other income 148 249
Operating (loss)/profit (2,430) 1,031
Finance income 124 24
Finance expense (3,968) (4,489)
(Loss)/gain on foreign currency translation (1,560) 10
Net finance costs (5,404) (4,455)
Profit on disposal of associate 88 3,017
(Loss)/profit before taxation (7,746) (407)
Income tax expense (5,626) (480)
Loss for the year from continuing operations (13,372) (887)
Discontinued operations
Loss after tax for the year from discontinued operations 7 (27,412) (3,126)
Loss for the year attributable to owners of the Company (40,784) (4,013)
Consolidated balance sheet
As at 29 February 2024
2024 2023
Note £'000 £'000
Assets
Property, plant and equipment 4 14,581 25,593
Intangible assets and goodwill 5 154,040 175,660
Other financial assets 7,642 9,356
Trade and other receivables 2,146 2,548
Deferred tax assets 11,029 21,313
Non-current assets 189,438 234,470
Trade and other receivables 63,170 96,749
Current tax receivable 10,249 6,114
Cash and cash equivalents 20,787 36,905
Assets classified as held for sale 7 22,879 -
Current assets 117,085 139,768
Total assets 306,523 374,238
Equity
Share capital 140 140
Share premium 104,120 103,789
Share option reserve 19,811 18,974
Fair value reserve (723) 3,002
Currency translation adjustment reserve 441 5,354
Retained earnings 23,195 69,609
Equity attributable to owners of the Company 146,984 200,868
Liabilities
Loans and borrowings 6 44,086 17,026
Trade and other payables 4,498 3,681
Deferred tax liabilities 11,562 15,758
Non-current liabilities 60,146 36,465
Loans and borrowings 2,466 39,911
Trade and other payables 33,690 41,466
Deferred income 43,176 48,407
Current tax payable 1,075 682
Employee benefits 6,349 6,439
Liabilities classified as held for sale 7 12,637 -
Current liabilities 99,393 136,905
Total liabilities 159,539 173,370
Total equity and liabilities 306,523 374,238
Consolidated statement of changes in equity
Year ended 29 February 2024
Share Share Share Fair value Currency Retained Total
capital premium option reserve translation earnings equity
reserve adjustment
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 March 2023 140 103,789 18,974 3,002 5,354 69,609 200,868
Total comprehensive income for the year
Loss for the year - - - - - (40,784) (40,784)
Other comprehensive income
Net exchange gain on net investment in foreign subsidiaries - - - - (5,760) - (5,760)
Net exchange loss on hedge of net investment in foreign subsidiaries - - - - 847 - 847
Net change in fair value of equity investments at FVOCI - - - (3,725) - - (3,725)
Total comprehensive income for the year - - - (3,725) (4,913) (40,784) (49,422)
Transactions with owners of the Company
Tax relating to share options - - (215) - - - (215)
Exercise of share options - 64 - - - - 64
Issue of shares - 267 - - - - 267
Tax on other items taken to reserves - - - - - (5,986) (5,986)
Share based payment release - - (356) - - 356 -
Share based payment charge - - 1,408 - - - 1,408
Balance at 29 February 2024 140 104,120 19,811 (723) 441 23,195 146,984
Share Share Share Fair value Currency Retained Total
capital premium option reserve translation earnings equity
reserve adjustment
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 March 2022 139 100,424 18,404 9,755 (3,574) 67,391 192,539
Total comprehensive income for the year
Loss for the year - - - - - (4,013) (4,013)
Other comprehensive income
Net exchange gain on net investment in foreign subsidiaries - - - - 12,052 - 12,052
Net exchange loss on hedge of net investment in foreign subsidiaries - - - - (3,124) - (3,124)
Transfer of reserve of sale of equity investment - - - (6,231) - 6,231 -
Net change in fair value of equity investments at FVOCI - - - (522) - - (522)
Total comprehensive income for the year - - - (6,753) 8,928 2,218 4,393
Transactions with owners of the Company
Tax relating to share options - - 245 - - - 245
Exercise of share options 1 3,079 - - - - 3,080
Issue of shares - 286 - - - - 286
Share based payment charge - - 325 - - - 325
Balance at 28 February 2023 140 103,789 18,974 3,002 5,354 69,609 200,868
Consolidated cash flow statement
Year ended 29 February 2024
2024 2023
£'000 £'000
Cash flows from operating activities
Loss for the year (40,784) (4,013)
Adjustments for:
Net finance costs 6,176 2,646
Depreciation of property, plant and equipment 6,339 7,265
Amortisation of intangible assets 15,291 14,331
Lease modification (1,469) -
Impairment loss on remeasurement of the disposal group 21,204 -
Equity-settled share based payment transactions 1,408 325
Profit on disposal of associate (88) (3,017)
Loss on disposal of fixed assets 10 5
Other income - (9)
Grant income (148) (240)
Tax expense 2,735 2,836
10,674 20,129
Changes in:
Trade and other receivables 12,039 (14,604)
Trade and other payables and deferred income (1,218) 22,970
Cash generated from operating activities 21,495 28,495
Taxes paid (3,845) (1,467)
Net cash from operating activities 17,650 27,028
Cash flows from investing activities
Interest received 125 24
Sale of associate 3,005 100
(Investment in)/sale of other investments (249) 8,139
Acquisition of property, plant and equipment (654) (2,940)
Proceeds from sale of property, plant and equipment - 67
Acquisition of intangible assets (27,220) (23,468)
Net cash used in investing activities (24,993) (18,078)
Cash flows from financing activities
Proceeds from issue of share capital 64 3,080
Drawdown of loans and borrowings 37,867 -
Repayment of borrowings (38,019) (17,823)
Payment of lease liabilities (3,381) (4,000)
Interest paid (4,235) (3,666)
Net cash used in financing activities (7,704) (22,409)
Net decrease in cash and cash equivalents (15,047) (13,459)
Cash and cash equivalents at 1 March 36,905 48,564
Effects of exchange rate changes on cash held (1,071) 1,800
Cash and cash equivalents at end of year 20,787 36,905
Cash and cash equivalents at end of year (continuing operations) 20,787 32,788
Cash and cash equivalents at end of year (discontinued operations) - 4,117
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 29 February
2024 nor 28 February 2023 but is derived from those accounts. Statutory
accounts for 2023 have been delivered to the Registrar of Companies and those
for 2024 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").
2. Operating and business segments
Information about reportable segments
KX FD Total MRP (discontinued)
2024 2023 restated* 2024 2023 restated* 2024 2023 restated* 2024 2023
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue by segment
Revenue 79,146 70,981 169,717 183,587 248,863 254,568 28,975 41,474
Gross profit 61,978 54,076 43,733 51,240 105,711 105,316 12,817 17,025
Adjusted EBITDA 5,103 12,824 17,969 20,509 23,072 33,333 (4,124) 1,429
Restructure and non-operational costs (3,805) (6,963) (1,667) (1,753)
IT systems implementation costs expensed (1,077) (5,562) - -
Share based payment and related costs (1,408) (436) - -
Depreciation and amortisation (18,839) (16,690) (2,316) (2,109)
Amortisation of acquired (373) (2,651) (101) (146)
intangibles
Operating (loss)/profit (2,430) 1,031 (8,208) (2,579)
Net finance costs (5,404) (4,455) (774) 1,809
Impairment of intangible assets and goodwill - - (21,204) -
Profit on disposal of associate 88 3,017 - -
Lease costs - - (117) -
Loss before taxation (7,746) (407) (30,303) (770)
*Reclassification of KX service revenue to First Derivative
During the period we transferred professional services contracts relating to
post implementation consultancy and development from KX to First Derivative,
where it is better placed to be serviced and grow. The numbers stated above
reflect this change and the prior year results have also been restated to
enable like-for-like comparison. The impact in the period was to move £9,040k
of KX services revenue to First Derivative (FY23: £9,258k), along with
£5,609k cost of sales (FY23: £5,363k) resulting in an impact on gross profit
of £3,431k (FY23: £3,895k). A £100k movement in adjusted admin expenses
(FY23: £100k) resulted in a net movement in adjusted EBITDA of £3,331k from
KX to FD for the period (FY23: £3,795k).
Geographical location analysis
Revenues Non-current assets
2024 2023 2024 2023
£'000 Restated £'000 £'000
£'000
UK 78,360 95,189 81,817 87,589
EMEA 51,473 51,698 15,683 17,028
The Americas 92,398 88,561 79,593 106,317
Asia Pacific 26,632 19,120 1,316 2,223
Total 248,863 254,568 178,409 213,157
Disaggregation of revenue
KX FD Total
2024 2023 2024 2023 2024 2023
restated* restated*
£'000 £'000 £'000 £'000 £'000 £'000
Type of good or service
Sale of goods - perpetual 2,251 1,556 - - 2,251 1,556
Sale of goods - recurring 68,438 57,554 - - 68,438 57,554
Rendering of services 8,457 11,871 169,717 183,587 178,174 195,458
79,146 70,981 169,717 183,587 248,863 254,568
Timing of revenue recognition
At a point in time 2,251 1,556 - - 2,251 1,556
Over time 76,895 69,425 169,717 183,587 246,612 253,012
79,146 70,981 169,717 183,587 248,863 254,568
*See note 3 for further details on 2023 reclassification of KX service revenue
to First Derivative
3. a) Loss per ordinary share - from continuing and discontinued operations
Basic
The calculation of basic loss per share at 29 February 2024 was based on the
loss attributable to ordinary shareholders of £40,784k (2023: £4,013k), and
a weighted average number of ordinary shares in issue of 28,080k (2023:
27,962k).
2024 2023
Pence Pence
per share per share
Basic loss per share (145.2) (14.4)
Loss per share from continuing operations at 29 February 2024 is 47.6p (FY23:
3.2p), based on the loss attributable to ordinary shareholders from continuing
operations £13,372k (2023: £887k).
Weighted average number of ordinary shares
2024 2023
Number Number
'000 '000
Issued ordinary shares at 1 March 28,065 27,826
Effect of share options exercised 4 124
Effect of shares issued as remuneration 11 12
Weighted average number of ordinary shares at 29/28 February 28,080 27,962
Diluted
The calculation of diluted loss per share at 29 February 2024 was based on the
loss attributable to ordinary shareholders of £40,784k (2023: £4,013k) and a
weighted average number of ordinary shares after adjustment for the effects of
all dilutive potential ordinary shares of 28,080k (2023: 27,962k).
2024 2023
Pence Pence
per share per share
Diluted loss per share (145.2) (14.4)
Diluted loss per share from continuing operations at 29 February 2024 is 47.6p
(FY23: loss per share 3.2p), based on the loss attributable to ordinary
shareholders from continuing operations £13,372k (2023: £887k).
Weighted average number of ordinary shares (diluted)
2024 2023
Number Number
'000 '000
Weighted average number of ordinary shares (basic) 28,080 27,962
Effect of dilutive share options in issue - -
Weighted average number of ordinary shares (diluted) at 29/28 February 28,080 27,962
In accordance with IAS 33, share options in issue are anti-dilutive meaning
there is no difference between basic and diluted loss per share in FY24 and
FY23.
3. b) Loss before tax per ordinary share - from continuing and discontinued
operations
Loss before tax per share is based on loss before taxation of £38,049k (2023:
£1,177k). The number of shares used in this calculation is consistent with
note 3(a) above.
2024 2023
Pence Pence
per share per share
Basic loss before tax per ordinary share (135.5) (4.3)
Diluted loss before tax per ordinary share (135.5) (4.3)
Reconciliation from loss per ordinary share to loss before tax per ordinary
share:
2024 2023
Pence Pence
per share per share
Basic loss per share (145.2) (14.4)
Impact of taxation charge 9.7 10.1
Basic loss before tax per share (135.5) (4.3)
Diluted loss per share (145.2) (14.4)
Impact of taxation charge 9.7 10.1
Diluted loss before tax per share (135.5) (4.3)
Loss before tax per share is presented to facilitate pre-tax comparison
returns on comparable investments.
3. c) Adjusted earnings after tax per ordinary share
The reconciliation of adjusted earnings after tax per share is shown below:
2024 2023
(restated)
£'000 £'000
Loss after tax (40,784) (4,013)
Amortisation of acquired intangibles after tax effect 373 2,419
Share based payments after tax effect 1,408 353
Restructure and non-operational costs after tax effect 4,077 10,395
Profit on sale of associate after tax effect (66) (3,017)
Loss/(gain) on foreign currency translation after tax effect 1,177 (8)
Finance costs after tax effect 208 902
Discrete items for tax 6,011 -
Loss after tax from discontinued operations 27,412 3,126
Adjusted (loss)/profit after tax (184) 10,157
The number of shares used in this calculation is consistent with note 3(a)
above.
2024 2023
(restated)
Pence Pence
per share per share
Adjusted basic (loss)/earnings after tax per ordinary share (0.7) 36.3
Adjusted diluted (loss)/earnings after tax per ordinary share (0.7) 36.3
4. Property, plant and equipment
Group
Leasehold Plant and Office Right-of-use Total
improvements equipment furniture assets £'000
£'000 £'000 £'000 £'000
Cost
At 1 March 2023 7,479 15,856 1,592 31,769 56,696
Additions 14 639 1 185 839
Disposals (1,527) (1,469) (620) (1,013) (4,629)
Impairment - - - (1,059) (1,059)
Transferred to assets held for sale* (1,506) (4,269) (97) (5,638) (11,510)
Exchange adjustments (154) (401) (22) (802) (1,379)
At 29 February 2024 4,306 10,356 854 23,442 38,958
Depreciation
At 1 March 2023 4,261 11,331 1,362 14,149 31,103
Charge for the year 561 2,363 112 3,303 6,339
Disposals (1,508) (1,469) (620) (559) (4,156)
Transferred to assets held for sale* (880) (3,870) (97) (3,214) (8,061)
Exchange adjustments (96) (320) (17) (415) (848)
At 29 February 2024 2,338 8,035 740 13,264 24,377
Carrying Amount
At 29 February 2024 1,968 2,321 114 10,178 14,581
*At the financial reporting date MRP has been classified as a disposal group
held for sale.
Leasehold Plant and Office Right-of-use Total
improvements equipment furniture assets £'000
£'000 £'000 £'000 £'000
Cost
At 1 March 2022 5,444 14,372 1,366 30,171 51,353
Additions 441 2,362 137 1,035 3,975
Disposals (104) (34) - (880) (1,018)
Reclass 1,468 (1,468) - - -
Exchange adjustments 230 624 89 1,443 2,386
At 28 February 2023 7,479 15,856 1,592 31,769 56,696
Depreciation
At 1 March 2022 3,544 8,544 1,116 9,806 23,010
Charge for the year 671 2,257 171 4,166 7,265
Disposals (32) - - (451) (483)
Reclass (38) (9) 47 - -
Exchange adjustments 116 539 28 628 1,311
At 28 February 2023 4,261 11,331 1,362 14,149 31,103
Carrying Amount
At 28 February 2023 3,218 4,525 230 17,620 25,593
5. Intangible assets and goodwill
Group
Goodwill Customer Acquired Brand Internally Total
£'000 lists software name developed £'000
£'000 £'000 £'000 software
£'000
Cost
Balance at 1 March 2023 116,642 13,917 32,976 802 125,656 289,993
Additions - - 49 - - 49
Development costs - - - - 27,171 27,171
Disposals - - - - (557) (557)
Transferred to assets held for sale* (18,099) (3,523) (5,660) (229) (16,136) (43,647)
Exchange adjustments (4,781) (523) (1,349) (29) (588) (7,270)
At 29 February 2024 93,762 9,871 26,016 544 135,546 265,739
Amortisation
Balance at 1 March 2023 - 13,779 30,449 795 69,310 114,333
Amortisation for the year - 136 333 5 14,817 15,291
Disposals - - - - (557) (557)
Transferred to assets held for sale* - (3,523) (3,949) (228) (7,459) (15,159)
Exchange adjustment - (521) (1,258) (30) (400) (2,209)
At 29 February 2024 - 9,871 25,575 542 75,711 111,699
Carrying Amount
At 29 February 2024 93,762 - 441 2 59,835 154,040
*At the financial reporting date MRP has been classified as a disposal group
held for sale.
Goodwill Customer Acquired Brand Internally Total
£'000 lists software name developed £'000
£'000 £'000 £'000 software
£'000
Cost
Balance at 1 March 2022 106,501 12,834 29,769 743 101,540 251,387
Additions - - 330 - - 330
Disposals - - - - - -
Development costs - - - - 23,138 23,138
Exchange adjustments 10,141 1,083 2,877 59 978 15,138
At 28 February 2023 116,642 13,917 32,976 802 125,656 289,993
Amortisation
Balance at 1 March 2022 - 11,832 26,106 703 57,139 95,780
Amortisation for the year - 944 1,816 37 11,534 14,331
Exchange adjustment - 1,003 2,527 55 637 4,222
At 28 February 2023 - 13,779 30,449 795 69,310 114,333
Carrying Amount
At 28 February 2023 116,642 138 2,527 7 56,346 175,660
6. Loans and borrowings
This note provides information about the contractual terms of the Group and
Company's interest-bearing loans and borrowings, which are measured at
amortised cost.
Group Company
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Current liabilities
Secured bank loans - 36,499 - 36,499
Lease liabilities 2,466 3,412 1,096 1,007
2,466 39,911 1,096 37,506
Non-current liabilities
Secured bank loans 35,200 - 35,200 -
Lease liabilities 8,886 17,026 6,450 7,522
44,086 17,026 41,650 7,522
Terms and repayment schedule
In May 2023, FD Technologies plc refinanced its banking facilities, which had
been due to expire in June 2024, on improved terms. The total facility remains
at £130m and is entirely comprised of a revolving credit facility, replacing
a £65m term loan and £65m revolving credit facility. The interest rate
payable is SONIA/SOFR plus a fixed margin that depends on the level of debt
relative to adjusted EBITDA. The margin on the new revolving credit facility
is equal to 1.85% to 2.80%, which compares favourably to the previous margin
of 2% to 3%. The lead arranger for the facility remains Bank of Ireland,
with continued participation from Barclays and AIB and new participation from
HSBC.
7. Discontinued operations and assets/liabilities classified as held for sale
In October 2023 the Group decided to conduct a formal Group structure review
to achieve an optimal organisational structure and capital allocation to
deliver best value for the Group's shareholders. After considering the
available options and consulting with the shareholders and external advisers,
the Board unanimously concluded on the separation of its interest in the MRP
Business and related entities.
As at 29 February 2024, the disposal group was stated at fair value less costs
to sell and results were presented within loss from discontinued operations.
8. Subsequent events
On 1 March 2024 following the review process and after extensive discussions
with shareholders, the Board announced its intention to separate its three
businesses and announced that it had agreed to an all-share merger of its MRP
business with CONTENTgine, a provider of B2B technology buyer insights and
lead generation. FD Technologies Group will own 49% of the combined entity,
which will be reflected as an associate investment rather than consolidated in
the Group financial statements.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR FBLLLZELZBBBRecent news on FD Technologies
See all newsREG - FD Technologies PLC - Issue of Equity
AnnouncementREG - FD Technologies PLC - Holding(s) in Company
AnnouncementREG - FD Technologies PLC - PDMR Notice and Issue of Equity
AnnouncementREG - FD Technologies PLC - Notice of AGM
AnnouncementREG - FD Technologies PLC - Holding(s) in Company
Announcement