TIDMDODS
RNS Number : 8823X
Dods Group PLC
03 September 2020
3 September 2020
Dods Group plc
("Dods", the "Company" or the "Group")
AUDITED RESULTS FOR THE YEARED 31 MARCH 2020
Dods Group plc (AIM: DODS), a leading technology company
specialising in business intelligence, media and technology
resourcing, announces its audited results for the year ended 31
March 2020. The Group continues to enhance the business with a
strengthened new Board and senior management team.
Highlights
-- Revenue from continuing operations increased by 30% to
GBP27.8 million (2019: GBP21.3 million), including impact from
Merit acquisition
-- Gross profit increased by c. 13% to GBP8.9 million (2019: GBP7.9 million)
-- Adjusted EBITDA improvement from GBP1.5 million in 2019 to GBP2.8 million in 2020
-- Adjusted Operating Profit increased from GBP0.6 million (2019) to GBP0.9 million in 2020
-- Loss before tax for the year reduced from GBP5.7 million (2019) to GBP1.3 million
-- Adjusted EPS from continuing operations of 0.12 pence (2019: 0.12 pence loss)
-- Cash balance at year end of GBP4.4 million and agreed revised
banking arrangements to ensure Dods can manage its way through the
impacts of COVID-19
-- Successful acquisition and integration of Merit and subsequent restructure of core business
-- Appointment post period end of Con Conlon and Munira Ibrahim
as Managing Directors of Dods Technology and Dods Intelligence
respectively
-- The Board is not issuing guidance due to ongoing uncertainty
caused by COVID-19, although remains optimistic that the Group's
strategy is capable of sustainable profit streams in the medium to
longer term
Operational and Trading Update
The year to 31 March 2020 saw significant improvement in our
performance, with total losses for the year reducing from GBP5.5
million in 2019 to GBP1.2 million in 2020 and Adjusted EBITDA
improving from GBP1.5 million (2019) to GBP2.8 million.
Across the organisation we have had a completely new management
team in place from Q1 this year, which brings extensive expertise
in technology, sales, media and financial management. Commercially
focused and "hands on" in all areas of operations, the team is also
developing a clear strategic plan that aims to take the business to
a position which is more technology orientated and is characterised
by best-in-class products, increased recurring revenue and stronger
margins.
Key operational updates in the year include:
- The integration of Merit into Dods has been completed smoothly
and with all the cost synergies envisaged now delivered.
- The Merit team is now helping to drive the development of a
new set of products across Dods in the political and regulatory
domain.
- The original core business, Dods Intelligence, is being
restructured to deliver revenue which is more likely to be of a
recurring nature and deliver higher margins.
- Our political monitoring service is now seeing renewal rates
of 95% and an increasing number of clients.
- We are successfully pivoting many of our live events to a virtual format.
- Merit revenue grew by over 15% in the year including double
digit growth in technical resourcing services. 90% of Merit revenue
was recurring.
- We continue to develop new tools and capabilities in all fields of data collection and data transformation using machine learning and AI tool sets. We are also negotiating several new channel partner deals across Europe to help distribute content and generate additional revenue.
COVID-19 will of course have an adverse impact on both revenue
and profits in the year to 2021. Our events business will be
particularly hard hit, but our strong recurring revenues in
Political Business Intelligence and in Merit are proving to be very
resilient. The new management team have been aggressively reducing
our cost base to make the business much leaner, whilst we make
modest, but important investments in marketing, product development
and technology research. We are confident that these actions will
drive strong growth and enhanced margins in subsequent years.
Going Concern
The Directors have considered the implications for Going Concern
for a period of at least twelve months from the signing of these
accounts. The Board remains satisfied with the Company's funding
and liquidity position as discussed further in note 1 of the group
financial statements.
The Board remains mindful regarding the uncertainties inherent
in the current economic conditions. The company's forecasts and
projections, taking into account reasonable changes in trading
performance given these uncertainties, show the Company operating
within its current cash flow with headroom going forward.
On the basis of these forecasts, and given the level of cash
available, the Board has concluded that the going concern basis of
preparation continues to be appropriate.
For further information, please contact:
Dods Group plc
Mark Smith - Interim Non-Executive
Chairman
www.dodsgroup.com 020 7593 5500
Canaccord Genuity (Nomad and Broker)
Bobbie Hilliam
Georgina McCooke 020 7523 8000
About Dods Group
Dods is a leading technology company specialising in business
intelligence, media and technology resourcing. With extensive
capability in machine learning and AI, we manage and transform
large volumes of data and information across multiple industries,
for some of the UK's leading business intelligence providers. In
the political and regulatory domains, we have built a reputation
for high quality, unbiased content across all of our products and
services in Westminster, Edinburgh, Paris and Brussels.
Strategic report
For the year ended 31 March 2020
Chairman's statement
It is with great sadness that I report the passing of our former
Chairman, David Hammond, on the 18 June 2020. David was appointed
as Non-Executive Chairman on 1 August 2018 and then Executive
Chairman on 22 January 2020. David was always extremely encouraging
to other Board members, senior management and staff alike, with a
great eye for detail and sharp intellect. His contribution to the
Group has been significant, and he will be greatly missed. It was
under these regrettable circumstances that I was appointed Interim
Non-Executive Chairman of the Company.
2020 Financial Year
With the inclusion of approximately 8.5 months' of Merit
results, the Group's revenue from continuing operations increased
by 30% to GBP27.8 million (2019: GBP21.3 million) and gross profit
increased by 13% to GBP8.9 million (2019: GBP7.9 million).
The 2019 Chairman's statement outlined an ongoing strategic
review of the business and a focus on a strategy that seeks to
deliver growth by increasing average client spend, pivoting away
from policy dependent products, raising operating margins through
increased commercialisation of the Group's proprietary data and
enhancing its existing portfolio. The Group continues to progress
this strategy and continues to seek to simplify and strengthen its
core business to deliver sustainable shareholder value in the long
term.
During the year, the Group strengthened its leadership team,
including the appointment of a Chief Information Officer, Chief
Revenue Officer and a new Chief Financial Officer.
As outlined in the trading update issued on 22 January 2020, the
uncertain political and economic environment during the 2020
financial year, which included a December General Election,
adversely impacted the Group's publishing, events and training
businesses. Further to this, the COVID-19 virus had a detrimental
impact on the last month of Group results, particularly on the
Group's events and training businesses.
Significant Acquisition
On 18 July 2019, Dods successfully completed its acquisition of
Meritgroup Limited ("Merit"). The Board believes that this
acquisition will be a transformational deal for the Group and will
enable it to diversify its service offering into faster growing,
higher margin activities.
The addition of Merit brings a deep technical knowledge and
expertise in the field of data engineering, machine learning and
artificial intelligence to the Group, which when combined with
Dods' considerable expertise in analysis and content creation, it
will make the enlarged Group a leading business intelligence
organisation.
Merit brings a highly educated, agile and diverse team with
impressive technical capabilities based in Chennai, Mumbai and
London which will enrich the existing operations of the Group in
London, Edinburgh, Brussels and Paris. The addition of Merit will
enable customers to rapidly test and adapt new technologies to
transform their services. With an emphasis on remaining at the
forefront of innovation in new technologies, Merit will leverage
the significant resident domain knowledge across the Group to drive
actionable business outcomes for its customers.
The integration of Merit was successfully completed during the
2020 financial year.
Board Changes
Following the appointment of new senior management to the Group
and the successful integration of Merit, Simon Presswell stepped
down as Director and Group Chief Executive Officer on 22 January
2020.
On 24 February 2020, the Group's Chief Financial Officer, Nitil
Patel, stepped down as Director of the Company. Subsequent to this,
on 30 March 2020 Simon Bullock was appointed as Nitil Patel's
replacement as Chief Financial Officer. Simon Bullock was appointed
to the Dods Group plc Board on 1 June 2020.
On 1 June 2020, it was also announced that:
- Cornelius Conlon, the Group's Chief Technology Officer, would
take up the position of Managing Director, Dods Technology
- Munira Ibrahim, the Group's Chief Revenue Officer, would take
up the position of Managing Director, Dods Intelligence.
Both Cornelius Conlon and Munira Ibrahim were also appointed to
the Dods Group plc Board on 1 July 2020.
Outlook
The Group has made great progress in the year to 31 March 2020
in terms of its expanded revenues and reduced losses. We have
successfully integrated an enormous amount of technology talent at
Merit and the new management team put in place earlier this year
are running the business successfully and implementing a strategy
that will ensure the Group has sustainable revenue streams in the
medium to long term.
Dods has leading experience, knowledge and understanding
developed over the decades in the political, regulatory and civil
service landscape of the UK and Europe. Merit is one of the UK's
leading providers of data collection, curation and data
transformation services for the business information industry.
We believe that this combination will make Dods an invaluable
partner for global organisations who operate and trade under both
UK and EU regulatory environments driving revenue growth and
profits in the coming years.
The emergence of COVID-19 has lent uncertainty to our core
markets and the Board at this stage cannot predict the medium to
long-term effects of pandemic, and therefore does not expect to be
able to issue any forward looking statements or guidance for the
foreseeable future.
Our bank has been very supportive and agreement has been reached
with them that provides us with the cash resources we need in the
medium term.
I should acknowledge the dedication and commitment of our
employees who have been fantastic in these difficult times, and
with their continued help we will emerge stronger in the future.
Finally, I would like to thank our shareholders and customers for
their loyalty and continued support.
Mark Smith
Interim Non-Executive Chairman
CFO Review
Despite 2020 being a challenging year reflecting both the
uncertain political and economic environment as well as the impact
of COVID-19 in Q4, the successful acquisition of Merit in July 2019
resulted in an increase in Group revenue. In line with Board
expectations, the Group was impacted by a decrease in Dods
Intelligence business revenue, reflecting the conditions outlined
above. However, as mentioned previously the Group is prioritising a
strategy that seeks to deliver growth by increasing average client
spend, pivoting away from policy dependent products, raising
operating margins through increased commercialisation of the
Group's proprietary data and enhancing its existing portfolio. As
we continue to advise, inform and connect businesses in the
political and policy environment, we will be looking to upgrade our
digital offering in our Business Intelligence products. The Group
continues to reduce its reliance on print and advertising as it
replaces these revenue sources with more reliable, recurring
revenue streams, including increasing our subscription-based
revenues and multi-year contracts.
On 18 July 2019, Dods successfully completed its acquisition of
Merit. The acquisition was paid for through a mixture of cash and
new ordinary shares in the Company. A capital fundraise of GBP13
million and a new GBP5 million debt facility were entered into to
fund the cash component of the acquisition.
Adjusted results are prepared to provide a more comparable
indication of the Group's core business performance by removing the
impact of certain items including exceptional items (material and
non-recurring), and volatile items predominantly relating to
investment activities and other separately reported items.
In addition, the Group also measures and presents performance in
relation to various other non-GAAP measures including adjusted
operating profit and adjusted EBITDA. Adjusted results are not
intended to replace statutory results. These have been presented to
provide users with additional information and analysis of the
Group's performance, consistent with how the Board monitors
results.
Adjusted operating profit
2020 2019
GBP'000 GBP'000
-------------------------------------------------- --------- ---------
Operating loss before tax (862) (5,776)
Impairment expense - investment in equity
accounted associate - 1,231
Impairment expense - intangible assets - 259
Increased amortisation of software intangible
assets - 1,230
Amortisation of intangible assets acquired
through business combinations 711 351
Non-recurring acquisition costs and professional
fees 171 2,239
Other non-recurring items 865 1,029
Adjusted Operating Profit 885 563
--------- ---------
Revenue and operating results
With the inclusion of approximately 8.5 months' of Merit
results, the Group's revenue from continuing operations increased
by 30% to GBP27.8 million (2019: GBP21.3 million) and gross profit
increased by 13% to GBP8.9 million (2019: GBP7.9 million).
Gross margin decreased from 37% to 32% in the year. The decrease
in gross margin was largely due to a change in product mix
following the addition of Merit during the year. The Group has
adopted IFRS 16 Leases effective 1 April 2019 and as a result,
operating lease charges previously included within administrative
costs are now included as right-of-use depreciation and lease
interest charges. The impact of this has been a decrease of
approximately GBP1.6 million to administrative costs.
Adjusted EBITDA increased to GBP2.8 million (2019: GBP1.5
million), largely impacted by the IFRS 16 changes outlined above.
Operating loss was GBP0.9 million (2019: loss of GBP5.8 million),
after non-cash items including an amortisation charge of GBP0.7
million (2019: GBP0.4 million) for business combinations and a
charge of GBP0.2 million (2019: GBP1.8 million) for intangible
software assets. The depreciation charge in the year increased
slightly to GBP0.5 million (2019: GBP0.4 million) and a
right-of-use depreciation charge of GBP1.2m (2019: GBPnil) was
booked in relation to IFRS 16. For the prior year, the increased
amortisation charge for software intangibles reflects the strategic
review carried out by the new Board on the useful economic life of
the software platform developed in-house by the Group.
Non-recurring acquisition related costs, impairment expense,
people-related costs and other costs were GBP1.0 million (2019:
GBP4.8 million). This decrease is principally a result of the fact
that the prior year included GBP2.3m of acquisition costs as well
as GBP1.5 million of impairment charges.
The statutory loss before tax for the year was GBP1.3 million
(2019: loss before tax of GBP5.7 million).
Taxation
The Group has booked a tax credit of GBP0.1 million for the year
(2019: credit of GBP0.2 million).
Earnings per share
Adjusted earnings per share, both basic and diluted, from
continuing operations in the year were 0.12 pence (2019: loss of
0.12 pence) and were based on the adjusted profit for the year of
GBP0.6 million (2019: loss of GBP0.4 million) with a basic weighted
average number of shares in issue during the year of 492,696,964
(2019: 341,640,953 ).
Earnings per share, both basic and diluted, from continuing
operations in the year were a loss of 0.24 pence (2019: loss of
1.62 pence) and were based on the net loss for the year of GBP1.2
million (2019: loss of GBP5.5 million).
Dividend
The Board is not proposing a dividend at this time (2019:
GBPnil).
Assets
Non-current assets consisted of goodwill of GBP28.9 million
(2019: GBP13.3 million), intangible assets of GBP11.2 million
(2019: GBP6.4 million) and property, plant and equipment of GBP2.1
million (2019: GBP2.1 million). The increases to goodwill and
intangible assets reflect the acquisition of Merit during the year.
The Group, since February 2017, has held a 40% stake in the issued
share capital of Sans Frontières Associates (SFA) and has loaned
SFA GBP0.5 million (2019: GBP0.7 million) at the year end, the
movement reflecting part-repayment during the year. The loan is
unsecured and carries no interest charge. The carrying value of
this investment increased to GBP0.2 million during the year (2019:
GBPnil) reflecting the Group's share of profit for the year.
Additionally, the Group has held a 30% stake in Social 360 since
November 2017 which it carries at GBP0.5 million (2019: GBP0.5
million).
As mentioned previously, the Group has adopted IFRS 16 Leases
effective 1 April 2019. As a result, operating leases have been
recognised on balance sheet as right-of-use assets and lease
liabilities. Under the modified retrospective approach the Group
has not restated prior periods. The impact has been to increase
non-current assets by GBP7.9 million (2019: GBPnil) at the balance
sheet date.
Trade and other receivables increased by GBP4.2 million to
GBP7.8 million (2019: GBP3.6 million) as a result of the Merit
acquisition. Included in prepayments is an amount of GBP0.8 million
due in cash to certain former shareholders of Merit. The
corresponding amount is in current and non-current liabilities as
other payables.
Liabilities
Current liabilities increased by GBP6.5 million to GBP18.0
million (2019: GBP11.5 million) as a result of the Merit
acquisition (including deferred consideration), the current
component of the lease liability arising on the adoption of IFRS 16
and the impact of the current component of the bank loan. The
increase is partly offset by the decrease in accruals relating to
acquisition costs (2019: GBP1.5 million).
The GBP0.9 million (2019: GBP0.5 million) deferred tax liability
balance reflects a GBP0.7 million increase arising from the
acquisition of Merit, offset by a credit booked in the deferred tax
liability of GBP0.3 million (2019: GBP0.3 million). In FY20,
non-current liabilities also reflect the non-current component of
the lease liability and amounts recognised in relation to the
acquisition which are payable in both shares and cash to certain
Merit vendors.
Capital and Reserves
Total assets of the Group were GBP63.9 million (2019: GBP35.0
million) with the main movements being the additions to intangibles
and other assets associated with the Merit acquisition. Total
equity increased by GBP12.8 million to GBP35.8 million (2019:
GBP23.0 million), largely reflecting issue of shares in July 2019,
partly offset by the loss for the year.
Liquidity and capital resources
During the year, the Group borrowed a term loan of GBP3.0
million (2019: GBPnil) over a 5-year period carrying a rate of
3.25% over LIBOR. The full amount outstanding at year end. In
addition, the Group also drew down on a revolving credit facility
(RCF) during the year of GBP2.0 million. This RCF balance was
repaid subsequently and at balance sheet date the outstanding
amount was GBPnil (2019: GBPnil).
The Group has a cash and cash equivalents balance of GBP4.4
million (2019: GBP8.4 million) and a net cash position of GBP1.4
million (2019: GBP8.4 million).
Updated banking facilities and covenant waiver
During the year end audit process, the Group became aware of a
change in a contractual obligation that existed as at 31 March 2020
that caused it to be in breach of one of its three banking
covenants.
The Group has secured a waiver from the bank for this breach;
however, because the waiver was not in place as at the balance
sheet date the entire GBP3 million loan balance has been classified
as current in these financial statements. The Group expects the
GBP3 million loan balance to be classified as a long term liability
in its interim result balance sheet on 30 September 2020.
In the 12 month period from the balance sheet date capital
repayments of GBP0.4 million will be repaid to the bank with the
remaining GBP2.6 million due in subsequent periods. The group
continues to enjoy the support of Barclays Bank plc and agreement
has been reached on new covenants to support the Group in 2021.
Principal risks and uncertainties
Risks Mitigating Actions Opportunity
Geo-political Dods continues to focus To be well positioned
on growing a diverse range with a balanced portfolio
Brexit negotiations, of customers, in different of customers and
global political tensions markets, which helps to markets.
and potential trade mitigate this risk.
issues with the major
trading blocs could
cause uncertain economic
conditions
============================= ===========================
Technology changes Constant focus on efficiency As volume of information
programmes in service grows, and becomes
The markets in which delivery platforms and more readily available,
Dods operates are increasing the quality there is a greater
constantly changing of our content. need for users to
due to rapid technology receive the type
advancements of curated information
provided by Dods.
============================= ===========================
Further migration Dods continues to invest Further capitalise
of print advertising and develop in digital on our diverse brand
to online expertise and platforms. portfolio.
An industry wide change
============================= ===========================
People Increased our talent and We are implementing
leadership capacity with key employee engagement
Succession planning key hires. programmes.
============================= ===========================
Data storage/cyber Effective data management As part of implementing
attack detailing where all business GDPR we are reviewing
data is stored and how, data stores, security,
Loss, integrity and together with ISO27001 processes and procedures
breach of data Information Security Management and continue to monitor
System containing these on an ongoing basis.
controls. Intrusion detection
monitoring software exists
on our network.
GDPR Delegated Limits of Authority, Cleansing of data,
setting out requirements new procedures and
Stricter rules on for approval and execution more effective marketing
how data is handled of legally binding should benefit Dods
documents (limits set in the long term.
by value and legal risk).
================================= ==========================
COVID-19 and other Remote working for employees; deferral of
pandemics statutory payments where allowable; accessing
the government furlough scheme; the agreement
Impact on face-to-face of a covenant and loan repayment holiday
events and training with the Group's bankers; a reduction in
business, as well Board and senior management remuneration;
as more general macroeconomic a roll out of online delivery capabilities
impacts. for our training and events businesses; and
various other strategic and operational actions.
It is not considered appropriate to comment
on opportunities arising.
=============================================================
Simon Bullock
Chief Financial Officer
Annual General Meeting
The Annual General Meeting of the Company will be held on 29
September 2020 at the office of Dods Group plc in London, at which
the directors will present their annual report together with the
audited financial statements of Dods Group plc (the "Company") and
its subsidiaries (together, the "Group") for the 12 months ended 31
March 2020. The Notice of Meeting and Explanation of Special
Business will be provided in the annual report and accounts.
Financial statements
Basis of Preparation
The financial information, which comprises the consolidated
income statement, consolidated statement of comprehensive income,
consolidated balance sheet, consolidated cash flow statement,
consolidated statement of changes in equity and related notes, does
not constitute full accounts within the meaning of s435 (1) and (2)
of the Companies Act 2006. The auditors have reported on the
Group's statutory accounts for the each of the years ended 31 March
2020 and 2019 which do not contain any statement under s498 of the
Companies Act 2006 and are unqualified. The statutory accounts for
the year ended 31 March 2019 have been delivered to the Registrar
of Companies and the statutory accounts for the year ended 31 March
2020 will be filed with the registrar in due course.
Consolidated income statement
For the year ended 31 March 2020
2020 2019
Note GBP'000 GBP'000
---------------------------------------------------------- ------- --------- ---------
Revenue 3 27,796 21,301
Cost of sales (18,852) (13,419)
---------------------------------------------------------- ------- --------- ---------
Gross profit 8,944 7,882
Administrative expenses (6,154) (6,381)
Other operating income 4 - -
---------------------------------------------------------- ------- --------- ---------
Adjusted EBITDA 2,790 1,501
Depreciation of tangible fixed assets 15 (537) (379)
Depreciation of right-of-use assets 25 (1,210) -
Amortisation of intangible assets acquired
through business combinations 14 (711) (351)
Amortisation of software intangible assets 14 (158) (1,789)
Non-recurring items 5
Non-recurring acquisition costs and professional
fees (171) (2,239)
Impairment expense - investment in equity
accounted associate - (1,231)
Impairment expense - intangible assets - (259)
People-related costs (785) (332)
Other non-recurring items (80) (697)
Operating loss (862) (5,776)
Net finance costs 9,10 (555) -
Share of profit of associate 17 158 50
---------------------------------------------------------- ------- --------- ---------
Loss before tax 6 (1,259) (5,726)
Income tax credit 11 76 197
---------------------------------------------------------- ------- --------- ---------
Loss for the year (1,183) (5,529)
---------------------------------------------------------- ------- --------- ---------
Loss per share (pence)
Basic 12 (0.24p) (1.62p)
Diluted 12 (0.24p) (1.62p)
----------- --- -------- --------
Consolidated statement of comprehensive income
For the year ended 31 March 2020
2020 2019
GBP'000 GBP'000
------------------------------------------------ --------- ---------
Loss for the year (1,183) (5,529)
Items that may be subsequently reclassified
to Profit and loss
Exchange differences on translation of foreign
operations 6 (8)
------------------------------------------------ --------- ---------
Other comprehensive income / (loss) for the
year 6 (8)
------------------------------------------------ --------- ---------
Total comprehensive loss for the year (1,177) (5,537)
------------------------------------------------ --------- ---------
Consolidated statement of financial position
As at 31 March 2020
2020 2019
Note GBP'000 GBP'000
----------------------------------------- ------- --------- ---------
Non-current assets
Goodwill 13 28,911 13,282
Intangible assets 14 11,238 6,421
Property, plant and equipment 15 2,134 2,063
Right-of-use asset 25 7,926 -
Investment in associates 17 661 503
Long-term loan receivable 17 560 700
Total non-current assets 51,430 22,969
Current assets
Work in progress and inventories 18 273 16
Trade and other receivables 20 7,819 3,584
Cash and cash equivalents 20 4,368 7,160
Restricted cash held in deposit account 20 - 1,266
Total current assets 12,460 12,026
Total assets 63,890 34,995
----------------------------------------- ------- --------- ---------
Capital and reserves
Issued capital 24 19,239 17,096
Share premium 20,082 8,142
Other reserves 409 409
Retained loss (3,991) (2,616)
Share option reserve 75 55
Translation reserve (61) (67)
Total equity 35,753 23,019
Current liabilities
Trade and other payables 21 12,423 11,489
Deferred consideration 16 1,046 -
Bank loan 22 3,000 -
Lease liability 25 1,515 -
Total current liabilities 17,984 11,489
Non-current liabilities
Deferred tax liability 23 862 487
Deferred consideration 16 1,045 -
Other payables 21 545 -
Lease liability 25 7,701 -
----------------------------------------- ------- --------- ---------
Total non-current liabilities 10,153 487
Total equity and liabilities 63,890 34,995
----------------------------------------- ------- --------- ---------
These financial statements were approved by the Board of
Directors and were signed on its behalf by:
Simon Bullock
Chief Financial Officer
2 September 2020
Consolidated statement of changes in equity
For the year ended 31 March 2020
Total
Share Retained Translation Share shareholders'
Share premium Merger earnings reserve(3) option funds
capital reserve(1) reserve(2) GBP'000 GBP'000 reserve(4) GBP'000
GBP'000 GBP'000 GBP'000 GBP'000
------------------ ---------- ------------ ------------ ----------- ------------- ------------- ---------------
At 1 April 2018 17,096 8,142 409 2,913 (59) 44 28,545
Total
comprehensive
income
Loss for the
year - - - (5,529) - - (5,529)
Other
comprehensive
income
Currency
translation
differences - - - - (8) - (8)
Share-based
payment - - - - - 11 11
------------------ ---------- ------------ ------------ ----------- ------------- ------------- ---------------
At 31 March
2019 17,096 8,142 409 (2,616) (67) 55 23,019
Effect of
adoption
of IFRS 16
Leases
(see note 25) - - - (192) - - (192)
------------------ ---------- ------------ ------------ ----------- ------------- ------------- ---------------
At 1 April 2019
(adjusted) 17,096 8,142 409 (2,808) (67) 55 22,827
Total
comprehensive
income
Loss for the
year - - - (1,183) - - (1,183)
Other
comprehensive
loss
Currency
translation
differences - - - - 6 - 6
Share-based
payment - - - - - 20 20
Transactions with
owners
Issue of
ordinary
shares 2,143 11,940 - - - - 14,083
------------------ ---------- ------------ ------------ ----------- ------------- ------------- ---------------
At 31 March 2020 19,239 20,082 409 (3,991) (61) 75 35,753
------------------ ---------- ------------ ------------ ----------- ------------- ------------- ---------------
1 The share premium reserve represents the amount paid to the
Company by shareholders above the nominal value of shares
issued.
2 The merger reserve represents accounting treatment in relation
to historical business combinations.
3 The translation reserve comprises foreign currency translation
differences arising from the translation of financial statements of
the Group's foreign entities into sterling.
4 The share option reserve represents the cumulative expense
recognised in relation to equity-settled share-based payments.
Consolidated statement of cash flows
For the year ended 31 March 2020
2020 2019
Note GBP'000 GBP'000
-------------------------------------------------- ------- --------- ---------
Cash flows from operating activities
Loss for the year (1,183) (5,529)
Depreciation of property, plant and equipment 15 537 379
Depreciation of right-of-use assets 25 1,210 -
Amortisation of intangible assets acquired
through business combinations 14 711 351
Amortisation of other intangible assets 14 158 1,789
Impairment charges 5 - 1,490
Share-based payments charge 26 20 11
Share of profit of associate 17 (158) (50)
Lease interest expense 25 420 -
Net finance costs 9,10 135 -
Non-recurring acquisition costs and professional
fees 2,010 400
Income tax credit 11 (76) (197)
Operating cash flows before movement in
working capital 3,784 (1,356)
Change in inventories 18 (257) (4)
Change in trade and other receivables (1,013) (114)
Change in trade and other payables (282) 2,337
Cash generated by operations 2,232 863
Taxation paid (193) (166)
-------------------------------------------------- ------- --------- ---------
Net cash from operating activities 2,039 697
-------------------------------------------------- ------- --------- ---------
Cash flows from investing activities
Interest and similar income received 9 5 12
Non-recurring acquisition costs and professional
fees (2,010) (400)
Additions to property, plant and equipment 15 (187) (115)
Additions to intangible assets 14 (1,400) (512)
Investment in subsidiaries (net of cash
acquired) 16 (17,055) -
Net proceeds from bank loan 22 3,000 -
Repayment of long-term loan by associate 17 140 -
-------------------------------------------------- ------- --------- ---------
Net cash used in investing activities (17,507) (1,015)
-------------------------------------------------- ------- --------- ---------
Cash flows from financing activities
Proceeds from issue of share capital 13,037 -
Interest and similar expenses paid 10 (140) (12)
Payment of lease liabilities (1,487) -
-------------------------------------------------- ------- --------- ---------
Net cash used in financing activities 11,410 (12)
-------------------------------------------------- ------- --------- ---------
Net decrease in cash and cash equivalents (4,058) (330)
Opening cash and cash equivalents 8,426 8,757
Effect of exchange rate fluctuations on
cash held - (1)
-------------------------------------------------- ------- --------- ---------
Closing cash at bank 4,368 8,426
-------------------------------------------------- ------- --------- ---------
Comprised of:
Cash and cash equivalents 4,368 7,160
Restricted cash held in deposit account - 1,266
Closing cash at bank 20 4,368 8,426
-------------------------------------------------- ------- --------- ---------
Notes to the consolidated financial statements
For the year ended 31 March 2020
1. Statement of significant accounting policies and judgements
Dods Group plc is a Company incorporated in England and
Wales.
The consolidated financial statements of Dods Group plc have
been prepared and approved by the directors in accordance with
International Financial Reporting Standards as endorsed by the
International Accounting Standards Board and as adopted by the EU
("adopted IFRS"). The Company has elected to prepare its parent
company financial statements in accordance with FRS 102; these are
presented after the notes to the consolidated financial
statements.
The consolidated financial statements consolidate those of the
Company and its subsidiaries (together referred to as the "Group").
The parent company financial statements present information about
the Company as a separate entity and not about its group.
The accounting policies set out below have, unless otherwise
stated, or as outlined in the 'Standards adopted' section below,
been applied consistently to all periods presented in these Group
financial statements.
Judgements made by the directors in the application of these
accounting policies that have a significant effect on the financial
statements and estimates with a significant risk of material
adjustment in the next year are discussed in note 2.
Standards adopted
There are no IFRS or IFRIC interpretations that are effective
for the first time for the financial year beginning on or after 1
April 2019 that have had a material impact on the Group, with the
exception of IFRS 16 Leases, which was adopted by the Group for the
year.
IFRS 16 Leases (effective periods beginning on or after 1
January 2019); IFRS 16 replaces IAS 17 Leases and eliminates the
classification of operating and finance leases. Under the standard
a contract is, or contains, a lease if it conveys the right to
control the use of an identified asset for a period of time in
exchange for consideration. The Group has elected to apply the
practical expedient not to reassess whether a contract is, or
contains, a lease for all lease contracts in place prior to 1 April
2019. The Group has applied the definition of a lease and related
guidance as stated in IFRS 16 to all lease contracts entered in to
or modified after 1 April 2019.
Contracts may contain both lease and non-lease components. The
Group allocates the consideration in the contract to the lease and
non-lease component based on their relative stand-alone prices. The
Group has elected to account for leases of real estate as a single
lease component.
Leases under the new standard are recognised in the Statement of
financial position as right-of-use assets with a corresponding
lease liability. The lease liability is initially measured at the
present value of the remaining lease payments, discounted using the
discount rate implicit to the lease. If this rate cannot be readily
determined, the Group's incremental borrowing rate will be used.
The lease liability is subsequently increased by the related
interest expense and decreased by the lease payments made. The
lease liability can be remeasured to reflect changes in the lease
term or change in future lease payments. The lease liability
includes the following payments, when applicable:
-- Fixed lease payments;
-- Variable lease payments based on an index or rate;
-- Amounts to be paid under residual value guarantees;
-- The exercise price of a purchase option, if the Group is
reasonably certain to exercise the option; and
-- Payments of penalties for terminating the lease, if the Group
is reasonably certain to exercise the option
Right-of-use assets are measured at the value of the associated
lease liability plus any initial direct costs incurred, adjusted
for any prepaid or accrued lease payments. The right-of-use asset
is initially recognised at cost, and subsequently measured at cost
less accumulated depreciation and impairment losses. Right-of-use
assets comprise the following, when applicable:
-- The amount of the initial measurement of the lease liability;
-- Any lease payments made at or before the commencement date;
-- Any initial direct costs; and
-- Restoration costs
Leases which meet the criteria of "short-term" or "low-value
assets" are exempt and continue to be recognised under IAS 17
Leases. The new standard does not substantially change how a lessor
accounts for leases.
The Group has elected to apply the modified retrospective
approach, with the cumulative effect of adopting the standard being
recognised as an opening balance adjustment to retained earnings as
at 1 April 2019. There have been no changes to prior year figures
as a result of adoption. See note 25 for further information on the
adoption of IFRS 16.
Basis of preparation
The financial statements have been prepared in accordance with
applicable accounting standards, and under the historical cost
accounting rules, except for goodwill which is stated at the lower
of previous carrying value and fair value less costs to sell.
The following Group entities are exempt from audit by virtue of
Section 479A of the Companies Act 2006. Dods Group plc has provided
statutory guarantees to the following entities in accordance with
Section 479C of the Companies Act 2006:
Fenman Limited
Total Politics Limited
Holyrood Communications Ltd
Going Concern
The Group had net current liabilities as at 31 March 2020 of
GBP5.5 million (2019: net current assets of GBP0.5 million). The
Directors have considered the implications for going concern below,
for a period of at least twelve months from the signing of these
accounts.
During the year end audit process, the Group became aware of a
change in a contractual obligation that existed as at 31 March 2020
that meant that it was in breach of one of its three banking
covenants.
The Group has secured a waiver from the bank for this breach;
however, because the waiver was not in place as at the balance
sheet date the entire GBP3 million loan balance has been classified
as current in these financial statements. The Group expects the
GBP3 million loan balance to be classified as long term liability
in its interim result balance sheet on 30 September 2020.
In the 12 month period from the balance sheet date capital
repayments of GBP0.4 million will be repaid to the bank with the
remaining GBP2.6 million due in subsequent periods.
The Group continues to enjoy the support of Barclays Bank plc
and agreement has been reached on new covenants to support the
Group in 2021.
The Directors had approved the budget for the year ending 31
March 2021, under which they had assessed the future funding
requirements of the Group and compared them with the level of
available borrowing facilities and had assessed the impact of them
on the Group's cash flow, facilities and headroom within its future
banking covenants. Subsequent to this, the impact of COVID-19
became apparent and as a result, the Group prepared an updated 3
year forecast, which has been adjusted to take account of the
current trading environment. The Directors consider the forecasts
to be reasonable. Based on this work, and in light of the
mitigating actions undertaken by the Group to respond to the impact
of COVID-19, the Directors are satisfied that the Group has
adequate resources to continue in operational existence for the
foreseeable future. For this reason, they continue to adopt the
going concern basis in preparing the financial statements.
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control is
achieved where the Group is exposed to, or has rights to, variable
returns and has the ability to affect those returns. The results of
subsidiaries acquired or sold are included in the consolidated
financial statements from the date control commences to the date
control ceases. Where necessary, adjustments are made to the
results of the acquired subsidiaries to align their accounting
policies with those of the Group. All intra-group transactions,
balances, income and expenditure are eliminated on
consolidation.
Business combinations
Business combinations are accounted for using the acquisition
method at the acquisition date, which is the date on which control
is transferred to the Group. In assessing control, the Group takes
into consideration potential voting rights that currently are
exercisable.
The Group measures goodwill as the fair value of the
consideration transferred (including the fair value of any
previously-held equity interest in the acquiree) and the recognised
amount of any non-controlling interest in the acquiree, less the
net recognised amount (generally fair value) of the identifiable
assets acquired and liabilities assumed, all measured as at the
acquisition date. When the excess is negative, a bargain purchase
gain is recognised immediately in profit or loss.
Any contingent consideration payable is recognised at fair value
at the acquisition date. If the contingent consideration is
classified as equity, it is not remeasured and settlement is
accounted for within equity. Otherwise, subsequent changes to the
fair value of the contingent consideration are recognised in profit
or loss.
Revenue recognition - sale of goods
Revenue is measured at the fair value of consideration received
or receivable and represents amounts receivable for goods provided
in the normal course of business, net of discounts, VAT and other
sales-related taxes, and provisions for returns and
cancellations.
Revenue on books or magazines provided for clients is recognised
when the performance obligation has been satisfied, at the point of
delivery, and the amount of revenue can be measured reliably.
Revenue recognition - sale of services
Revenue in respect of subscription-based services, including
online services and licensing, is recognised on a straight-line
basis over the period of subscription or licence. The unrecognised
element is carried within creditors as deferred revenue.
Revenue in respect of advertising services is recognised on
publication, being the performance obligation. Where publications
are printed and distributed in more than one volume, the fair value
of the revenue attributable to each volume is recognised as it is
distributed.
When long term training programmes are designed on a client's
behalf, revenue relating to the conception, set-up and design of
the programme is recognised when the first event occurs. Revenue in
relation to the organisation and administration of the programme is
recognised over the programme's life.
Revenue on all one-off events and conferences is recognised as
they occur. Cash received in advance and directly attributable
costs relating to future events are deferred. Losses anticipated at
the balance sheet date are provided in full.
Leases
A contract contains a lease if the contract gives a right to
control the use of an asset for a period of time in exchange for
consideration. Leases which meet the criteria of "short-term," for
which the lease term is less than 12 months, or "low-value assets"
are exempt from IFRS 16. Lease payments associated with
"short-term" and "low-value assets" are expensed on a straight-line
basis over the life of the lease.
For all other leases, at the lease commencement date, a
right-of-use asset and corresponding lease liability are recognised
in the Statement of financial position. The lease liability is
initially measured at the present value of the remaining lease
payments, discounted using the Group's incremental borrowing rate.
Right-of-use assets are measured at the value of the associated
lease liability plus any initial direct costs incurred, adjusted
for any prepaid or accrued lease payments. The right-of-use asset
is initially recognised at cost, and subsequently measured at cost
less accumulated depreciation and impairment losses. Right-of-use
assets are depreciated over the shorter of the asset's useful life
and the lease term on a straight-line basis. The lease liability is
increased by the interest cost and decreased by the lease payments
made.
Post-retirement benefits - defined contribution
The Group contributes to independent defined contribution
pension schemes. The assets of the schemes are held separately from
those of the Group in independently administered funds. The amount
charged to the profit and loss account represents the contributions
payable to the schemes in respect of the accounting period.
Share-based payment
The Group operates a number of equity-settled, share-based
compensation plans. The fair value of the employee services
received in exchange for the grant of the options is recognised as
an expense with a corresponding increase in equity. The total
amount to be expensed over the vesting period is determined by
reference to the fair value of the options granted, but excluding
the impact of any non-market related vesting conditions. Non-market
related vesting conditions are included in assumptions about the
number of options that are expected to vest. At each balance sheet
date, the Group revises its estimates of the number of options that
are expected to vest. It recognises the impact of the revision to
original estimates, if any, in the income statement, with a
corresponding adjustment to equity.
Deferred tax is recognised where it is probable that tax relief
will be available on the difference between exercise price and
market price at the balance sheet date.
Non-recurring items
Non-recurring items are items which in management's judgement
need to be disclosed by virtue of their size, incidence or nature.
Such items are included within the income statement line item to
which they relate and are separately disclosed either in the notes
to the consolidated financial statements or on the face of the
consolidated income statement.
Non-recurring items are not in accordance with any specific IFRS
definition and therefore may be different to other companies'
definition of non-recurring items.
Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
Current tax is based on taxable profit for the year and any
adjustment to tax payable in respect of previous years. Taxable
profit differs from net profit as reported in the income statement
because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are
never taxable or deductible.
The Group's assets and liabilities for current tax are
calculated using tax rates that have been enacted or substantively
enacted by the balance sheet date.
Deferred tax is tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profit will be available against which
temporary differences can be utilised. Such assets and liabilities
are not recognised if the temporary difference arises from the
initial recognition of goodwill or from the initial recognition of
other assets and liabilities in a transaction that affects neither
the tax nor the accounting profit other than in a business
combination.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries except where the
Group is able to control the reversal of the temporary difference
and it is probable that the temporary difference will not reverse
in the foreseeable future.
The carrying amount of the deferred tax asset is reviewed at
each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available
to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates enacted or that are
expected to apply (substantively enacted) at the balance sheet
dated when the liability is settled or the asset is realised.
Deferred tax is charged or credited to the income statement, except
when it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in equity.
Goodwill
Goodwill represents the difference between the cost of
acquisition of a business and the fair value of identifiable
assets, liabilities and contingent liabilities acquired.
Identifiable intangibles are those which can be sold separately or
which arise from legal rights regardless of whether those rights
are separable. Goodwill is stated at cost less any accumulated
impairment losses. Goodwill is allocated to cash generating units
and is tested annually for impairment. Any impairment is recognised
immediately in profit or loss.
Intangible assets
Intangible assets acquired by the Group are stated at cost less
accumulated amortisation and impairment losses, if any. Intangible
assets are amortised on a straight-line basis over their useful
lives in accordance with IAS 38 Intangible Assets. Assets are not
revalued. The amortisation period and method are reviewed at each
financial year end and are changed in accordance with IAS 8
Accounting Policies, "Changes in Accounting Estimates and Errors"
if this is considered necessary. The estimated useful lives are as
follows:
Publishing rights 20-75 years (one specific right is deemed to
have a useful economic life of 75 years)
Brand names 15-20 years
Customer relationships 1-8 years
Customer list 4-8 years
Order books 1 year
Other assets 1 year
Software which is not integral to a related item of hardware is
included in intangible assets and amortised over its estimated
useful lives of between 3-6 years. The salaries of staff employed
in the development of new software relating to the Group's
information services products, and salaries of staff employed in
building our digital platform architecture within the Group are
capitalised into software.
Impairment
The carrying amounts of the Group's intangible assets are
reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, then the
asset's recoverable amount is estimated. For goodwill the
recoverable amount is estimated each year at each balance sheet
date.
The recoverable amount of an asset or cash-generating unit is
the greater of its value in use and its fair value less costs to
sell.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset.
For the purpose of impairment testing, assets are grouped
together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the
cash inflows of other assets or groups of assets (the
cash-generating unit). The goodwill acquired in a business
combination, for the purpose of impairment testing, is allocated to
cash-generating units that are expected to benefit from the
synergies of the combination.
An impairment loss is recognised whenever the carrying amount of
an asset or its cash-generating unit exceeds its estimated
recoverable amount. Impairment losses are recognised in profit or
loss. Impairment losses recognised in respect of cash-generating
units are allocated first to reduce the carrying amount of any
goodwill allocated to the units and then to reduce the carrying
amounts of the other assets in the unit (group of units) on a pro
rata basis.
An impairment loss in respect of goodwill is not reversed. In
respect of other assets, impairment losses recognised in prior
periods are assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An impairment loss
is reversed if there has been a change in the estimates used to
determine the recoverable amount.
An impairment loss is reversed only to the extent that the
asset's carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, if
no impairment loss had been recognised.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation and impairment losses, if any.
Depreciation is provided to write off the cost less estimated
residual value of property, plant and equipment by equal
instalments over their estimated useful economic lives as
follows:
Leasehold improvements Over the shorter of the life of the asset or lease period
Equipment, fixtures and
fittings 3-7 years
Depreciation methods, useful lives and residual values are
reviewed at each balance sheet date.
Inventories
Inventories are stated at the lower of cost and net realisable
value.
Cash
Cash includes cash on hand and in banks.
Restricted cash deposits amount to GBPnil (2019: GBP1,266,000).
For the comparative, this balance related to a rental deposit held
in the Group's name which was subject to a guarantee in favour of
the landlord of the London premises of the Group.
Provisions
A provision is recognised on the balance sheet when the Group
has a present legal or constructive obligation as a result of a
past event, and it is probable that an outflow of economic benefits
will be required to settle the obligation.
Financial assets, financial liabilities and equity
instruments
Financial assets and financial transactions are recognised on
the Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. Equity instruments issued by the Company are recorded at the
proceeds received, net of direct issue costs.
Foreign currencies
The individual financial statements of each Group company are
presented in the currency of the primary economic environment in
which it operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial
position of each Group company are expressed in pounds sterling,
which is the presentation currency of the Group.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recorded at the rates
of exchange prevailing on the dates of the transactions. At each
balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing on the balance sheet date.
Non-monetary items that are measured in terms of historical cost
in a foreign currency are not retranslated but remain at the
exchange rate at the date of the transaction.
Exchange differences arising on the settlement of monetary
items, and on the retranslation of monetary items, are included in
profit or loss for the period. Exchange differences arising on the
retranslation of non-monetary items carried at fair value are
included in the income statement for the period except for
differences arising on the retranslation of non-monetary items in
respect of which gains and losses are recognised directly in
equity. For such non-monetary items, any exchange component of that
gain or loss is also recognised directly in equity.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
translated at exchange rates prevailing on the balance sheet date.
Income and expense items are translated at the average exchange
rates for the period ended on the balance sheet date. Exchange rate
differences arising, if any, are recognised directly in equity in
the Group's translation reserve. Such translation differences are
recognised as income or as expense in the income statement in the
period in which the operation is disposed of.
Derivative financial instruments
All of the Group's derivatives are measured at their fair value
at the end of each period. Derivatives that mature within one year
are classified as current.
Associated companies
Associated companies are entities over which the Group has
significant influence, but not control, generally accompanied by a
shareholding giving rise to voting rights of 20% and above but not
exceeding 50%. Investments in associated companies are accounted
for in the consolidated financial statements using the equity
method of accounting less impairment losses.
Investments in associated companies are initially recognised at
cost. The cost of an acquisition is measured at the fair value of
the assets given, equity instruments issued or liabilities incurred
or assumed at the date of exchange, plus costs directly
attributable to the acquisition.
In applying the equity method of accounting, the Group's share
of its associated companies' post-acquisition profits or losses are
recognised in profit or loss and its share of post-acquisition
other comprehensive income is recognised in other comprehensive
income. These post-acquisition movements and distributions received
from the associated companies are adjusted against the carrying
amount of the investment. When the Group's share of losses in an
associated company equals or exceeds its interest in the associated
company, including any other unsecured non-current receivables, the
Group does not recognise further losses, unless it has obligations
or has made payments on behalf of the associated company.
Unrealised gains on transactions between the Group and its
associated companies are eliminated to the extent of the Group's
interest in the associated companies. Unrealised losses are also
eliminated unless the transaction provides evidence of an
impairment of the asset transferred.
Gains and losses arising from partial disposals or dilutions in
investments in associated companies are recognised in profit or
loss. Investments in associated companies are derecognised when the
Group loses significant influence. Any retained interest in the
entity is remeasured at its fair value. The difference between the
carrying amount of the retained investment at the date when
significant influence is lost and its fair value is recognised in
profit or loss.
Financial assets
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are presented as current assets, except for those
expected to be realised later than 12 months after the balance
sheet date which are presented as non-current assets. Loans and
receivables are presented as trade and other receivables and cash
and cash equivalents on the balance sheet. The Group assesses
expected credit losses associated with its trade and other
receivables on a forward-looking basis. For trade receivables, the
Group recognises gross amounts, less an allowance for bad debt
based on expected credit losses. The Group considers its trade and
other receivables to have a low credit risk. Cash and cash
equivalents have a negligible credit risk.
Impairment
The Group assesses at each balance sheet date whether there is
objective evidence that a financial asset or a group of financial
assets is impaired and recognises an allowance for impairment when
such evidence exists.
2. Critical accounting estimates and judgements and adopted IFRS not yet effective
The key assumptions concerning the future and other key sources
of estimation and judgements at the balance sheet date that have a
risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are discussed
below.
a) Capitalisation of internal costs and assessment of their
future recoverability
Management has capitalised certain costs incurred in relation to
the development of internally generated intangible assets. The main
area where costs have been capitalised has been summarised
below:
Development of software
The salaries of staff employed in the development of new
software within the Group have been capitalised into software,
within other intangible assets. These development costs are then
amortised over the estimated useful life of the software, being 3-6
years.
Management estimate the extent to which internally generated
intangibles will be recovered by assessing future earnings. This is
based on past revenue performance and the likelihood of future
releases. Future sales performance varies from such assessments and
changes to provisions against specific publications may be
necessary.
b) Intangible assets
When the Group makes an acquisition, management review the
business and assets acquired to determine whether any intangible
assets should be recognised separately from goodwill. If such an
asset is identified, it is valued by discounting the probable
future cash flows expected to be generated by the asset over the
estimated life of the asset. Where there is uncertainty over the
amount of economic benefit and the useful life, this is factored
into the calculation. Judgements and estimations are also used by
the Directors for the value in use calculation for impairment
purposes of goodwill and other intangible assets. Details of
goodwill and intangible assets are given in notes 13 and 14.
Details of judgements and estimates in relation to impairment of
goodwill are given in note 13.
c) Investments
The Group takes into account the power over its investee, its
exposure and rights to variable returns from its involvement with
the investee, and its ability to use the power over the investee to
affect the amount of the investor's return to determine whether the
investment is treated as an associate or a controlling interest.
See note 17 for further details. Where a controlling interest
exists, the investee is consolidated.
d) Recoverability of trade receivables
Trade receivables are reflected net of estimated provisions for
doubtful accounts. This provision is based on the ageing of
receivable balances and historical experience. Details of trade
receivables are given in note 19.
e) Deferred tax
Deferred tax assets and liabilities require management judgement
in determining the amounts to be recognised. In particular,
judgement is used when assessing the extent to which deferred tax
assets should be recognised with consideration given to the timing
and level of future taxable income. Details of deferred tax are
given in note 23.
f) Classification of non-recurring costs and accrual of
non-recurring acquisition costs
Expenses are recognised as non-recurring when they reflect
one-off costs that are not part of the ongoing operations of the
Group. In relation to non-recurring acquisition costs, as the
proposed acquisition was substantially complete by the year end
date, the Group has accrued all agreed acquisition costs.
g) Recoverability of long-term loan receivable
Management assess the recoverability of the long-term loan
receivable after taking into consideration the expected manner of
recovery and expected and agreed recovery period. On the basis of
the review undertaken by management the long-term loan receivable
is deemed to be recoverable based upon expected future
cashflows.
h) Fair value of separately identifiable intangible assets in
business combinations
The Group is required to calculate the fair value of
identifiable assets and liabilities acquired in business
combinations. In order to estimate the fair value of separately
identifiable assets in business combinations certain assumptions
must be made about the future. The fair values of assets and
liabilities acquired in business combinations, including separately
identifiable intangible assets, are disclosed in note 16.
i) Incremental borrowing rate
The Group uses an incremental borrowing rate to measure its
lease liabilities under IFRS 16. This rate represents the Group's
estimate of the rate it would have to pay to borrow the funds
necessary to obtain an asset of similar value to the right-of-use
lease asset in a similar economic environment. Observable inputs
are adjusted for entity-specific estimates to arrive at the Group's
incremental borrowing rate.
Adopted IFRS not yet applied
The Group has not yet adopted certain new standards, amendments
and interpretations to existing standards which have been published
but are only effective for the Group's accounting periods beginning
on or after 1 April 2020 or later periods. The Group has considered
the new standards, interpretations and amendments to published
standards that are effective for the Group and concluded that they
are either not relevant to the Group or that they would not have a
significant impact on the Group's financial statements. The Group
continues to monitor the potential impact of other new standards
and interpretations which may be endorsed by the European Union and
may require adoption by the Group in future accounting periods.
3. Segmental information
The basis on which operating results are reviewed and resources
allocated is examined from both a business and geographic
perspective by the senior management team.
Business segments
The Group now considers that it has two operating business
segments, Dods Intelligence and Dods Technology. Dods
Intelligences' business segment concentrates on the provision of
key information and insights into the political and public policy
environments around the UK and the European Union. The Dods
Technology segment focuses on the fields of data engineering,
machine learning, and artificial intelligence.
The following table provides an analysis of the Group's segment
revenue by business segment.
2020 2019
Revenue by business segment GBP'000 GBP'000
------------------------------- --------- ---------
Dods Intelligence 20,154 21,301
Dods Technology 7,642 -
27,796 21,301
------------------------------- --------- ---------
No client accounted for more than 10 percent of total
revenue.
Geographical segments
The following table provides an analysis of the Group's segment
revenue by geographical market. Segment revenue is based on the
geographical location of customers.
2020 2019
Revenue by geographical segment GBP'000 GBP'000
----------------------------------- --------- ---------
UK 22,179 16,183
Rest of world 5,617 5,118
27,796 21,301
----------------------------------- --------- ---------
Asset segment information has not been disclosed because this
information is not reviewed by the senior management team for the
purpose of allocating resources.
4. Other operating income
There was no other operating income for the current year or
prior period.
5. Non-recurring items
2020 2019
GBP'000 GBP'000
---------------------------------------------------- --------- ---------
Non-recurring acquisition costs and professional
fees 171 2,239
Impairment expense - investment in equity
accounted associate - 1,231
Impairment expense - intangible assets - 259
People-related costs 785 332
Other
- Branding and marketing - 206
- Costs relating to ongoing strategic corporate
review and initiatives - 244
- Professional services and consultancy 45 211
- Other 35 36
1,036 4,758
---------------------------------------------------- --------- ---------
Non-recurring acquisition costs and professional fees reflect
the costs incurred to date in line with the Group's acquisition
strategy. On 18 July 2019, the Group acquired 100 percent of the
share capital of Meritgroup Limited and its subsidiaries. For the
prior year, as the proposed acquisition was substantially complete
by the year end date, the Group had accrued all agreed acquisition
costs.
For the prior year, Impairment expense - investment in equity
accounted associate relates to the Group's investment in Social 360
Limited - see note 17. Also for the prior year, Impairment expense
- intangible assets relates to specific publishing rights - see
note 14.
People-related costs result from the recruitment of senior
management for roles which have been newly created within the
Group. Also included are redundancy costs reflecting the effect of
Group initiatives to appropriately restructure the business.
Other non-recurring costs include branding and marketing
expenses, costs relating to ongoing strategic corporate review and
initiatives, various legal fees and one-off consultancy
expenses.
6. Loss before tax
Loss before tax has been arrived at after charging:
2020 2019
GBP'000 GBP'000
----------------------------------------------- --------- ---------
Depreciation of property, plant and equipment 537 379
Amortisation of intangible assets acquired
through business combinations 711 351
Amortisation of other intangible assets 158 1,789
Staff costs (see note 8) 14,616 9,804
Non-recurring items (see note 5) 1,036 4,758
Net finance costs 555 -
Operating lease charge(1) - 969
----------------------------------------------- --------- ---------
1 IFRS 16 Leases was adopted on 1 April 2019.
2020 2019
Auditor's remuneration GBP'000 GBP'000
--------------------------------------------------- --------- ---------
Fees payable to the Company's auditor for
the audit of the Company's annual
accounts 20 17
Fees payable to the Company's auditor and
its associates for other services:
- The audit of the Company's subsidiaries,
pursuant to legislation 78 60
- Non-audit services in relation to IT program 18 -
assurance
- Non-audit services in relation to corporate
finance transactions - 293
--------------------------------------------------- --------- ---------
116 370
--------------------------------------------------- --------- ---------
7. Directors' remuneration
The remuneration of the directors of the Company for the years
ended 31 March 2020 and 31 March 2019 is set out below:
Committee Pension Other
Salaries Fees contributions benefits Total
GBP GBP GBP GBP GBP
------------------------- ------ ----------- ---------- --------------- ---------- --------
Executive directors
Dr David Hammond(1) 2020 86,525 5,000 - - 91,525
Interim Executive
Chairman(1) 2019 33,334 3,335 - - 36,669
------------------------- ------ ----------- ---------- --------------- ---------- --------
Simon Presswell(2) 2020 265,000 - 30,000 1,963 296,963
Former Chief Executive
Officer 2019 193,994 - 21,962 1,953 217,909
------------------------- ------ ----------- ---------- --------------- ---------- --------
Nitil Patel(3) 2020 180,000 - 20,000 785 200,785
Former Chief Financial
Officer 2019 180,000 - 20,000 1,083 201,083
------------------------- ------ ----------- ---------- --------------- ---------- --------
Guy Cleaver(4) 2020 - - - - -
Former Chief Executive
Officer 2019 - - - 86,889 86,889
------------------------- ------ ----------- ---------- --------------- ---------- --------
Non-executive directors
Richard Boon(5) 2020 25,000 5,000 - 40,000 70,000
Non-Executive director 2019 15,625 3,125 - - 18,750
------------------------- ------ ----------- ---------- --------------- ---------- --------
Angela Entwistle(6) 2020 25,000 5,000 - - 30,000
Non-Executive director 2019 25,000 5,000 - - 30,000
------------------------- ------ ----------- ---------- --------------- ---------- --------
Diane Lees 2020 25,000 5,000 - - 30,000
Non-Executive director 2019 25,000 2,500 - - 27,500
------------------------- ------ ----------- ---------- --------------- ---------- --------
Mark Smith 2020 45,000 10,000 - - 55,000
Non-Executive director 2019 45,000 10,000 - - 55,000
------------------------- ------ ----------- ---------- --------------- ---------- --------
Cheryl C. Jones(7) 2020 - - - - -
Former Chairman 2019 8,333 - - 593 8,926
------------------------- ------ ----------- ---------- --------------- ---------- --------
Total for 2020 651,525 30,000 50,000 42,748 774,273
--------------------------------- ----------- ---------- --------------- ---------- --------
Total for 2019 526,286 23,960 41,962 90,518 682,726
--------------------------------- ----------- ---------- --------------- ---------- --------
1 Served the role of non-executive chairman to 21 January 2020.
Appointed interim executive chairman on 22 January 2020.
2 Resigned as a director on 22 January 2020. See also share-based payments - note 26.
3 Resigned as a director on 24 February 2020.
4 Resigned 29 November 2017. Included within 'Other benefits' is
an amount of GBPnil (2019: GBP86,889) representing compensation for
loss of
office.
5 See also related party transactions - note 27.
6 The GBP30,000 (2019: GBP30,000) paid for the services of
Angela Entwistle as a non-executive director is paid to Deacon
Street Partners Limited.
7 Resigned 1 August 2018. See also related party transactions - note 27.
The current Directors and their interests in the share capital
of the Company at 31 March 2020 are disclosed within the Directors'
Report.
8. Staff costs
The average number of persons employed by the Group (including
executive directors) during the year within each category was:
2020 2019
Number Number
------------------------------------- -------- --------
Editorial and production staff 137 134
Sales and marketing staff 37 35
Managerial and administration staff 31 29
Technology and support staff 724 -
929 198
------------------------------------- -------- --------
The current year figure includes the impact of 8.5 months of
Merit employees.
2020 2019
GBP'000 GBP'000
---------------------------- --------- ---------
Wages and salaries 13,049 8,674
Social security costs 1,376 1,033
Pension and other costs 171 86
Share-based payment charge 20 11
---------------------------- --------- ---------
14,616 9,804
---------------------------- --------- ---------
9. Finance income
2020 2019
GBP'000 GBP'000
-------------------------- --------- ---------
Bank interest receivable 5 12
-------------------------- --------- ---------
10. Finance costs
2020 2019
GBP'000 GBP'000
----------------------------- --------- ---------
Bank interest payable 117 -
Lease interest expense 420 -
Net foreign exchange losses 23 12
----------------------------- --------- ---------
560 12
----------------------------- --------- ---------
11. Taxation
2020 2019
GBP'000 GBP'000
----------------------------------------- --------- ---------
Current tax
Current tax on income for the year at - -
19% (2019: 19%)
Adjustments in respect of prior periods (173) 37
----------------------------------------- --------- ---------
(173) 37
Overseas tax
Current tax expense on income for the
year 260 41
----------------------------------------- --------- ---------
Total current tax expense 87 78
----------------------------------------- --------- ---------
Deferred tax (see note 23)
Origination and reversal of temporary
differences (150) (120)
Effect of change in tax rate 142 13
Adjustments in respect of prior periods (155) (168)
----------------------------------------- --------- ---------
Total deferred tax income (163) (275)
----------------------------------------- --------- ---------
Total income tax charge / (credit) (76) (197)
----------------------------------------- --------- ---------
The tax charge / (credit) for the year differs from the standard
rate of corporation tax in the UK of 19% (2019: 19%). A
reconciliation is provided in the table below:
2020 2019
GBP'000 GBP'000
------------------------------------------ --------- ---------
Loss before tax (1,259) (5,726)
------------------------------------------ --------- ---------
Notional tax credit at standard rate
of 19% (2019: 19%) (239) (1,088)
Effects of:
Expenses not deductible for tax purposes 23 840
Non-qualifying depreciation 88 272
Effect of deferred tax rate changes
on realisation and recognition 142 13
Adjustments to tax charge in respect
of prior periods - (27)
Research and development claim - -
Deferred tax not recognised 10 3
Utilisation of losses not provided for - (155)
Tax losses carried forward 52 7
Other (152) (62)
------------------------------------------ --------- ---------
Total income tax charge / (credit) (76) (197)
------------------------------------------ --------- ---------
12. Earnings per share
2020 2019
GBP'000 GBP'000
------------------------------------------------- --------- ---------
Loss attributable to shareholders (1,183) (5,529)
Add: non-recurring items 1,036 4,758
Add: amortisation of intangible assets acquired
through business combinations 711 351
Add: net exchange losses 23 12
Add: share-based payment expense 20 11
------------------------------------------------- --------- ---------
Adjusted post-tax profit / (loss) attributable
to shareholders 607 (397)
------------------------------------------------- --------- ---------
2020 2019
Ordinary Ordinary
shares shares
------------------------------------ ------------ ------------
Weighted average number of shares
In issue during the year - basic 492,696,964 341,640,953
Adjustment for share options 1,674,500 1,067,375
In issue during the year - diluted 494,371,464 342,708,328
------------------------------------ ------------ ------------
2020 2019
Pence per Pence
share per share
-------------------------------------------- ----------- -----------
Earnings per share - continuing operations
Basic (0.24) (1.62)
Diluted (0.24) (1.62)
Adjusted earnings per share - continuing
operations
Basic 0.12 (0.12)
Diluted 0.12 (0.12)
-------------------------------------------- ----------- -----------
13. Goodwill
2020 2019
GBP'000 GBP'000
--------------------------- --------- ---------
Cost and net book value
Opening balance 13,282 13,282
Acquisition of subsidiary 15,629 -
--------------------------- --------- ---------
Closing balance 28,911 13,282
--------------------------- --------- ---------
Goodwill acquired in a business combination is allocated at
acquisition to the cash-generating units (CGUs) that are expected
to benefit from that business combination. Of the carrying amount
of goodwill, GBP13.282 million has been allocated to the Dods CGU
(2019: GBP13.282 million) and GBP15.629 million has been allocated
to the Merit CGU (2019: GBPnil).
Goodwill is not amortised but tested annually for impairment
with the recoverable amount being determined from value in use
calculations. The key assumptions for the value in use calculations
are those regarding the discount rate, growth rates and forecasts
of income and costs.
The Group assessed whether the carrying value of goodwill was
supported by the discounted cash flow forecasts of the Group based
on financial forecasts approved by management covering a three-year
period, taking in to account both past performance and expectations
for future market developments. Management estimates the discount
rate using a pre-tax rate that reflects current market assessments
of the time value of money and the risks specific to each separate
business.
The impairment charge was GBPnil (2019: GBPnil).
CGU
The recoverable amount of each CGU is determined from value in
use calculations.
Value in use was determined by discounting future cash flows
generated from the continuing use of the titles and was based on
the following most sensitive assumptions:
- cash flows for 2020/21 were projected based on the forecast
for 2020/21, using the budget as a base and sensitising in light of
the current environment;
- cash flows for years ending 31 March 2022 to 2023 were
projected based on the Group forecast for these two years, based on
the current economic environment in respect of COVID-19. For years
ending 31 March 2024 and 31 March 2025, cash flows were prepared
using underlying growth rates of 5% for Dods and 5% for Merit,
based on management's view on likely trading and likely growth for
those years;
- this assumption is based upon both assumed increases in
revenue from yield improvements and expansion of markets and also
strict cost control;
- cash flows beyond 2025 are extrapolated using a 2% growth rate for both Dods and Merit;
- cash flows were discounted using the CGU's pre-tax discount
rate of 10.59% for Dods and 8.59% for Merit.
Based on the above sensitivity assumptions the calculations
disclosed headroom against the carrying value of goodwill for each
CGU. The Executive directors carried out a number of sensitivity
scenarios on the data. These were based on best estimates under the
current economic environment created by COVID-19, however it is
acknowledged that given the environment, it is not possible to
determine what changes to these estimates may eventuate.
14. Intangible assets
Assets acquired Other capitalised
through business costs
combinations(1) Software Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ------------------- ----------- -------------------- ---------
Cost
At 1 April 2018 24,215 2,907 - 27,122
Additions - internally
generated - 512 - 512
Impairment (259) - - (259)
At 31 March 2019 23,956 3,419 - 27,375
Additions - internally
generated - 296 - 296
Additions - other - - 1,304 1,304
Acquisition of subsidiary 4,086 - - 4,086
At 31 March 2020 28,042 3,715 1,304 33,061
---------------------------- ------------------- ----------- -------------------- ---------
Accumulated amortisation
At 1 April 2018 17,359 1,455 - 18,814
Charge for the year 351 1,789 - 2,140
At 31 March 2019 17,710 3,244 - 20,954
Charge for the year 711 158 - 869
At 31 March 2020 18,421 3,402 - 21,824
--------------------------- ------- ------ -------
Net book value
At 31 March 2019 6,246 175 - 6,421
At 31 March 2020 9,621 313 1,304 11,238
--------------------- -------- ------ ------ --------
1 Assets acquired through business combinations are disclosed in
the table below.
In the prior year the GBP259K impairment for the year relates to
Fenman publishing rights.
In the prior year, the increase in amortisation charge for
intangibles reflects the strategic review carried out by the Board
on the useful economic life of the software platform developed
in-house by the Group. As a consequence of that review the
amortisation charge increased by GBP1.3 million reflecting a
shortened useful economic life of the intangible asset.
The useful economic lives of the intangible assets are as
follows:
- Dods 75 years
- Total Politics 20 years
- Holyrood 20 years
- Merit 8 years
- Software intangibles 2-6 years
The carrying value of publishing rights with a useful economic
life of 75 years is GBP4.1 million (2019: GBP4.1 million).
Included within intangible assets are internally generated
assets with a net book value of GBP0.3 million (2019: GBP0.2
million).
Assets acquired through business combinations comprise:
Customer
Publishing Brand names relationships Other
rights and lists assets Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ------------- -------------- ---------------- --------- ---------
Cost
At 1 April 2018 19,193 1,277 3,591 154 24,215
Impairment (259) - - - (259)
At 31 March 2019 18,934 1,277 3,591 154 23,956
Acquisition of
subsidiary - - 4,086 - 4,086
At 31 March 2020 18,934 1,277 7,677 154 28,042
-------------------- ------------- -------------- ---------------- --------- ---------
Accumulated amortisation
At 1 April 2018 12,337 1,277 3,591 154 17,359
Charge for the year 351 - - - 351
At 31 March 2019 12,688 1,277 3,591 154 17,710
Charge for the year 351 - 360 - 711
At 31 March 2020 13,039 1,277 3,951 154 18,421
-------------------------- --------- -------- -------- ------ ---------
Net book value
At 31 March
2019 6,246 - - - 6,246
--------------- -------- ---- ------ ---- --------
At 31 March
2020 5,895 - 3,726 - 9,621
--------------- -------- ---- ------ ---- --------
15. Property, plant and equipment
Leasehold Improvements IT Equipment
and Fixtures Total
and Fittings
GBP'000 GBP'000 GBP'000
--------------------------- ----------------------- -------------- --------
Cost
At 1 April 2018 1,944 1,072 3,016
Additions 66 49 115
Disposals - - -
--------------------------- ----------------------- -------------- --------
At 31 March 2019 2,010 1,121 3,131
Additions 15 172 187
Acquisition of subsidiary - 421 421
At 31 March 2020 2,025 1,714 3,739
---------------------------- ----------------------- -------------- --------
Accumulated depreciation
At 1 April 2018 279 410 689
Charge for the year 201 178 379
Disposals - - -
-------------------------- ------ ------ --------
At 31 March 2019 480 588 1,068
Charge for the year 212 325 537
At 31 March 2020 692 913 1,605
--------------------------- ------ ------ --------
Net book value
At 31 March 2019 1,530 533 2,063
At 31 March 2020 1,333 801 2,134
--------------------- -------- ------ --------
16. Subsidiaries
Company Activity % holding Country of
registration
-------------------------------------- ---------------- ---------- ----------------
Dods Parliamentary Communications Publishing 100 England and
Limited(1) Wales
Fenman Limited(1) Publishing 100 England and
Wales
Holyrood Communications Ltd(2) Publishing 100 Scotland
Le Trombinoscope SAS(3) Publishing 100 France
Total Politics Limited(1) Publishing 100 England and
Wales
Training Journal Limited(1) Holding company 100 England and
Wales
Meritgroup Limited(1) Data and 100 England and
code Wales
Letrim Intelligence Services Private Data and 99.99 India
Limited(4) code
Merit Processes Limited(1) Dormant 100 England and
Wales
European Parliamentary Communications Dormant 100 Belgium
Services SPRL(5)
Mislex (420) Limited(1) Dormant 100 England and
Wales
Monitoring Services Limited(1) Dormant 100 England and
Wales
Political Wizard Limited(1) Dormant 100 England and
Wales
Social Lens Limited(1) Dormant 100 England and
Wales
Vacher Dod Publishing Limited(1) Dormant 100 England and
Wales
VDP Limited(1) Dormant 100 England and
Wales
-------------------------------------- ---------------- ---------- --------------
1 Registered address: 11th Floor, The Shard, 32 London Bridge Street, London, SE1 9SG.
2 Registered address: Panmure Court, 32 Calton Road, Edinburgh, EH8 8DP.
3 Registered address: 315 Bureaux de la Colline, 1 rue Royale,
92213 Saint-Cloud cedex, Paris, France.
4 Registered address: SP 52, 3(rd) Street, Ambattur Industrial Estate, Chennai 600 058.
5 Registered address: Boulevard Carlemagne 1, 1041 Bruxelles, Belgium.
During the current year the Group have elected to provide a
parental guarantee to Fenman Limited, Total Politics Limited and
Holyrood Communications Ltd in accordance with section 479C of the
Companies Act 2006, meaning that they are exempt from the
requirement to have a statutory audit.
Acquisitions of subsidiaries
Summary of acquisition
During the current year, on 18 July 2019, the parent entity
acquired 100 percent of the issued share capital of Meritgroup
Limited and its subsidiaries, a provider of data services and
software code. The acquisition will enable the Group to further
diversify and strengthen its presence in new end markets and open
up significant opportunities through the sharing of resources and
talent across the Group.
There were no acquisitions in the prior year.
Details of the purchase consideration, the net assets acquired
and goodwill are as follows:
2020
Purchase consideration GBP'000
-------------------------- ----------
Cash paid 18,231
Ordinary shares issued 1,046
Deferred consideration 2,091
Purchase consideration 21,368
--------------------------- ----------
The fair value of the 13,715,881 shares issued as part of the
consideration was based on the average of the middle market
quotations for Purchaser Ordinary Shares on AIM for each of the
five dealing days prior to the completion date. The deferred
consideration is not contingent on any future event occurring and
requires the Group to issue a variable number of shares to the
value of GBP1.045 million on the first anniversary of the
acquisition and GBP1.045 million on the second anniversary of the
acquisition.
Current Non-current Total
Deferred consideration GBP'000 GBP'000 GBP'000
------------------------------ ---------- -------------- ----------
Deferred consideration to be
settled in shares 1,046 1,045 2,091
------------------------------- ---------- -------------- ----------
2020
Fair value of net assets acquired GBP'000
------------------------------------- ----------
Cash and cash equivalents 1,176
Trade and other receivables 2,336
Property, plant and equipment 421
Right-of-use assets 4,209
Identifiable intangible assets 4,086
Trade and other payables (1,587)
Lease liabilities (4,209)
Deferred tax liability (693)
Net identifiable assets acquired 5,739
Add: Goodwill 15,629
Net assets acquired 21,368
-------------------------------------- ----------
The goodwill arising from the acquisition consists of largely
intangible assets that cannot be separately recognised, such as the
assembled workforce of the acquired entity and cost synergies
expected to flow to the Group. The goodwill is not expected to be
deductible for income tax purposes.
The fair value of trade and other receivables is GBP2.30 million
. The gross amount for trade receivables is GBP2.30 million , with
a loss allowance of GBP0.02 million recognised on acquisition.
The acquired subsidiary contributed revenues of GBP7.6 million
and net profit of GBP0.7 million for the year ended 31 March
2020.
Purchase consideration - cash outflow
2020
Net cash outflow arising on acquisition GBP'000
------------------------------------------- ----------
Cash paid 18,231
Less: cash and cash equivalent balances
acquired (1,176)
Net cash outflow 17,055
-------------------------------------------- ----------
17. Investments in associates
Set out below are the associates and joint ventures of the Group
as at 31 March 2020 which, in the opinion of the directors, are
individually not material to the Group. The entities listed below
have share capital consisting solely of ordinary shares, which are
held directly by the Group. The country of incorporation or
registration is also their principal place of business, and the
proportion of ownership interest is the same as the proportion of
voting rights held.
Carrying Carrying
amount Impairment Share of amount
% ownership 2019 2020 profit 2020
Name of entity GBP'000 GBP'000 2020 GBP'000
GBP'000
---------------------------- -------------- ----------- ------------- ----------- -----------
Sans Frontieres Associates
Ltd(1) 40 - - 164 164
Social 360 Limited(2) 30 503 - (6) 497
---------------------------- -------------- ----------- ------------- ----------- -----------
503 - 158 661
============================ ============== =========== ============= =========== ===========
Place of business/country of incorporation of both entities is
England. The Group accounts for both entities as equity-accounted
associates. In the prior year. after a strategic review, the Board
impaired the Group's
investment in Social 360 Limited by GBP1.231 million.
1. On 16 February 2017, the Group purchased 40% of the issued
share capital of Sans Frontieres Associates Limited (SFA), a
company registered in England and Wales, for a carrying value of
GBP40.
SFA's objective is to redefine the approach taken to
international geopolitical and crisis communications
consulting.
As at the year end the Group had loaned SFA GBP560,000 (2019:
GBP700,000). During the year, repayments of GBP140,000 were
received by the Group. The remaining unsecured loan of GBP560,000
carries no interest rate charge and is repayable in 2022.
Recoverability is reviewed on an annual basis.
After taking into account the Group's power over its investee,
its exposure and rights to variable returns from its involvement
with the investee, and its ability to use the power over the
investee to affect the amount of investor's return, the Directors
have concluded that the Group does not have a controlling interest
in SFA as it is not able to direct the activities of SFA. Therefore
SFA has been accounted for as an associate in these financial
statements.
2. On 16 November 2017, the Group purchased 30% of the enlarged
share capital of Social 360 Limited (Social360), a company
registered in England and Wales, for a carrying value of GBP1.68
million in cash including acquisition costs. Social360 provides
intelligent digital media monitoring and analysis.
The acquisition includes a contractual option for the Group, at
its sole discretion, to purchase the balance of the current
existing shares between November 2019 and November 2020, at a
valuation based upon Social 360's prevailing EBITDA. It is
considered that the fair value of the option at the balance sheet
date is GBPnil (2019: GBPnil).
During the prior year, a fter a strategic review, the Board
impaired the Group's investment in Social 360 Limited by
GBP1,231,000.
The total share of profit recognised from associates is GBP158K
(2019: GBP50K).
18. Work in progress and inventories
2020 2019
GBP'000 GBP'000
---------------------------------- --------- ---------
Work in progress and inventories 273 16
273 16
---------------------------------- --------- ---------
19. Financial instruments
The carrying amount of financial assets and liabilities
recognised at the balance sheet date of the reporting periods under
review may also be categorised as follows:
2020 2019
GBP'000 GBP'000
----------------------------------------- --------- ---------
Financial assets
Trade and other receivables 5,086 2,318
Long-term loan 560 700
Cash and cash equivalents 4,368 7,160
Restricted cash held in deposit account - 1,266
----------------------------------------- --------- ---------
10,014 11,444
Financial liabilities
Trade and other payables (10,226) (9,870)
Bank loan (3,000) -
----------------------------------------- --------- ---------
(13,226) (9,870)
Net financial assets and liabilities (3,212) 1,574
-------------------------------------- -------- ------
Non-financial instruments
Property, plant and equipment 2,134 2,063
Goodwill 28,911 13,282
Other intangible assets 11,238 6,421
Prepayments and accrued income 2,733 1,266
Inventories 273 16
Other non-financial instruments (5,462) (1,116)
Provisions for deferred tax (862) (487)
38,965 21,445
Total equity 35,753 23,019
-------------- ------- -------
The Group has exposure to several forms of risk through its use
of financial instruments. Details of these risks and the Group's
policies for managing these risks are included below.
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations. The Group's principal financial assets
are trade and other receivables, and cash.
The Group's credit risk is primarily attributable to its trade
receivables. The amounts presented in the balance sheet are net of
allowances for doubtful receivables. The Group has no significant
concentration of credit risk, with exposure spread over a large
number of counterparties and customers.
At 31 March 2020, GBP487,000 of the Group's trade receivables
were exposed to risk in countries other than the United Kingdom
(2019: GBP270,000).
The ageing of trade receivables at the reporting date was:
Gross Provided Gross Provided
2020 2020 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- --------- --------- --------- ---------
Current or overdue by less
than 3 months 4,472 - 1,958 -
Overdue by greater than 3 months 104 (64) 96 (95)
4,576 (64) 2,054 (95)
---------------------------------- --------- --------- --------- ---------
Provisions against trade receivables are based on an ageing
analysis of overdue receivables and any other indications which
suggest an impairment as estimated by management.
The movement in allowance for doubtful accounts in respect of
trade receivables during the year was as follows:
2020 2019
GBP'000 GBP'000
-------------------------------- --------- ---------
Balance at the beginning of
the year 95 41
Acquisition of subsidiary 15 -
Movement (46) 54
Balance at the end of the year 64 95
---------------------------------- --------- ---------
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The contractual
cash flows of each financial liability are materially the same as
their carrying amount.
Maturity of financial liabilities:
The tables below analyses the Group's financial liabilities into
relevant maturity groupings based on their contractual maturities
as at 31 March 2020. The amounts disclosed in the table are the
contractual undiscounted cash flows.
Due between
Due within 1 year and Total
1 year 5 years GBP'000
GBP'000 GBP'000
----------------- ------------- -------------- ----------
Trade and other
payables 12,423 545 12,968
Bank loan 3,000 - 3,000
All the financial liabilities in the prior year had a maturity
date of within one year. The GBP3 million bank loan has been
classified as current - see note 22.
Currency risk
The Group is exposed to currency risk on transactions
denominated in Euros, US Dollars and Indian Rupees.
Share capital
The holders of ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share at meetings of the Company. For further details of share
capital see note 24.
Sensitivity analysis
In managing interest rate and currency risks the Group aims to
reduce the impact of short-term fluctuations on the Group's
earnings. Over the longer-term, however, permanent changes in
foreign exchange and interest rates would have an impact on
consolidated earnings.
At 31 March 2020, it is estimated that a general increase of one
percentage point in interest rates would have decreased the Group's
profit before tax by approximately GBP32,000 (2019: GBPnil). In the
prior year the Group did not have any borrowings.
It is estimated that a general increase of one percentage point
in the value of the Euro against Sterling would have increased the
Group's profit before tax by approximately GBP11,000 (2019:
GBP25,000).
Fair values
The directors consider that the fair value of financial
instruments is materially the same as their carrying amounts.
Capital management
The Group manages its capital to ensure that all entities in the
Group will be able to continue as a going concern while maximising
return to stakeholders, as well as sustaining the future
development of the business. The capital structure of the Group
consists of cash and cash equivalents and equity attributable to
the owners of the parent, comprising issued share capital, other
reserves and retained earnings.
20. Other financial assets
2020 2019
Trade and other receivables GBP'000 GBP'000
-------------------------------- --------- ---------
Trade receivables 4,512 1,959
Other receivables 574 359
Prepayments and accrued income 2,733 1,266
-------------------------------- --------- ---------
7,819 3,584
-------------------------------- --------- ---------
Trade and other receivables denominated in currencies other than
Sterling comprise GBP351,000 (2019: GBP270,000) denominated in
Euros and GBP127,000 (2019: GBPnil) denominated in USD.
2020 2019
Cash related GBP'000 GBP'000
----------------------------------------- --------- ---------
Cash and cash equivalents 4,368 7,160
Restricted cash held in deposit account - 1,266
----------------------------------------- --------- ---------
4,368 8,426
----------------------------------------- --------- ---------
Cash includes GBP763,000 (2019: GBP1,794,301) denominated in
Euros, GBP248,000 (2019: GBP480,000) denominated in USD and
GBP998,000 (2019: GBPnil) denominated in Indian rupees.
Included in cash at bank is a rental deposit of GBPnil (2019:
GBP1,266,000) held in a bank account in the Group's name which is
subject to a guarantee in favour of the landlord of the London
premises of the Group.
21. Trade and other payables
2020 2019
Current GBP'000 GBP'000
------------------------------------------ --------- ---------
Trade creditors 1,880 1,129
Other creditors including tax and social
security 2,197 1,619
Other payables 272 -
Accruals and deferred income 8,074 8,741
------------------------------------------ --------- ---------
12,423 11,489
------------------------------------------ --------- ---------
Current liabilities denominated in currencies other than
Sterling compromise GBP47,000 (2019: GBP26,000) denominated in
Euros, GBP20,000 (2019: GBP25,000) denominated in USD and
GBP752,000 (2019: GBPnil) denominated in Indian rupees.
2020 2019
Non-current GBP'000 GBP'000
--------------- --------- ---------
Other payables 545 -
--------------- --------- ---------
The non-current other payables balance reflects an amount
payable arising on the acquisition of Merit, contingent on the
continued employment of certain of the Merit employees.
22. Interest-bearing loans and borrowings
During the year, the Group borrowed a term loan of GBP3 million
(2019: GBPnil) over a 5-year period carrying a rate of 3.25% over
LIBOR. In addition, it has a revolving credit facility (RCF) of
GBP2 million carrying a rate of 3.5% over LIBOR. The current
balance outstanding on the term loan is GBP3 million. The current
balance outstanding on the RCF is GBPnil.
See note 19 for the maturity analysis of the bank loan.
Updated banking facilities and covenant waiver
During the year end audit process, the Group became aware of a
change in a contractual obligation that existed as at 31 March 2020
that caused it to be in breach of one of its three banking
covenants.
The Group has secured a waiver from the bank for this breach;
however, because the waiver was not in place as at the balance
sheet date the entire GBP3million loan balance has been classified
as current in these financial statements. The Group expects the
GBP3 million loan balance to be classified as a long term liability
in its interim result balance sheet on 30 September 2020.
In the 12 month period from the balance sheet date capital
repayments of GBP0.4 million will be repaid to the bank with the
remaining GBP2.6 million due in subsequent periods. The group
continues to enjoy the support of Barclays Bank plc and agreement
has been reached on new covenants to support the Group in 2021.
23. Deferred tax liability
The following are the major deferred tax liabilities and assets
recognised by the Group, and movements thereon during the current
year and prior year:
Liabilities Assets
Accelerated
Intangible Other capital
assets timing allowances Tax losses Total
GBP'000 differences GBP'000 GBP'000 GBP'000
GBP'000
--------------------------- ------------- -------------- ------------ ------------- ----------
At 31 March 2018 973 (3) (70) (139) 763
Charge to income (260) (1) 28 (41) (275)
--------------------------- ------------- -------------- ------------ ------------- ----------
At 31 March 2019 713 (4) (42) (180) 487
Acquisition of subsidiary 693 - - - 693
Other movements (155) - - - (155)
Charge to income (140) 45 2 (70) (163)
--------------------------- ------------- -------------- ------------ ------------- ----------
At 31 March 2020 1,111 41 (40) (250) 862
=========================== ============= ============== ============ ============= ==========
Deferred tax assets and liabilities have been offset in both the
current year and preceding year as the current tax assets and
liabilities can be legally offset against each other, and they
relate to taxes levied by the same taxation authority or the Group
intends to settle its current tax assets and liabilities on a net
basis.
At the balance sheet date, the Group has unused tax losses of
GBP8.1 million (2019: GBP5.1 million) available for offset against
future profits. A deferred tax asset of GBP250,000 (2019:
GBP180,000) has been recognised in respect of such losses.
24. Issued capital
9p deferred 1p ordinary Total
shares shares GBP'000
Number Number
------------------------------- ------------ ------------ ---------
Issued share capital as at
1 April 2019 151,998,453 341,640,953 17,096
Shares issued during the year - 214,288,760 2,143
Issued share capital as at
31 March 2020 151,998,453 555,929,713 19,239
------------------------------- ------------ ------------ ---------
Holders of deferred shares do not have the right to receive
notice of any general meeting of the Company or any right to
attend, speak or vote at such meeting. The deferred shareholders
are not entitled to receive any dividend or distribution and shall
on a return of assets in a winding up of the Company entitle the
holders only to the repayment of 1pence aggregate. The deferred
shares are also incapable of transfer and no share certificate will
be issued.
During the year the Company issued 214,288,760 ordinary shares
to part fund the acquisition of Merit.
During the year the Group issued nil (2019: nil) ordinary shares
on the exercise of employee share options for cash consideration of
GBPnil (2019: GBPnil) of which GBPnil (2019: GBPnil) was credited
to share capital and GBPnil (2019: GBPnil) to share premium.
25. Leases
The Group has adopted IFRS 16 Leases as at 1 April 2019, which
replaces IAS 17 Leases. The Group has elected to apply the modified
retrospective approach, with the cumulative effect of adopting IFRS
16 being recognised as an opening balance adjustment to retained
earnings as at 1 April 2019. Prior periods have not been
restated.
On transition to IFRS 16 on 1 April 2019, the Group recognised a
GBP4.9 million right-of-use asset, along with a corresponding lease
liability of GBP6.2 million. Accrued rent has been adjusted by
GBP1.1 million and the difference of GBP0.2 million against opening
retained earnings. The incremental borrowing rate used by the Group
in applying IFRS 16 is 5 percent.
A reconciliation of total operating lease commitments disclosed
at 31 March 2019 to the lease liability amount recognised on
adoption of IFRS 16 is as follows:
GBP'000
--------------------------------------------- --------
Total operating lease commitments disclosed
at 31 March 2019 7,546
Discounted using incremental borrowing
rate (1,359)
Total lease liabilities recognised under
IFRS 16 at 1 April 2019 6,187
---------------------------------------------- --------
Right-of-use Lease liabilities
assets GBP'000
GBP'000
--------------------------------------------- ------------- ------------------
On adoption - 1 April 2019 4,927 (6,187)
Additions through acquisition of subsidiary 4,209 (4,209)
Depreciation (1,210) -
Lease interest - (420)
Lease payments - 1,732
Decrease in accruals/prepayments - (132)
---------------------------------------------- ------------- ------------------
As at 31 March 2020 7,926 (9,216)
Current n/a (1,515)
Non-current n/a (7,701)
---------------------------------------------- ------------- ------------------
The statement of profit or loss shows the following amounts
relating to leases:
2020 2019
GBP'000 GBP'000
-------------------------------------- ---------- ----------
Depreciation charge of right-of-use 1,210 -
assets
Interest expense (included in finance 420 -
cost)
-------------------------------------- ---------- ----------
The right-of-use assets relate to office space in five locations
and at the balance date have remaining terms ranging up to 6.5
years.
26. Share-based payments
Executive Share Option Scheme
The Company operates an Unapproved Executive Share Option Scheme
under which equity-settled share options are granted to selected
Group employees. Currently, only 1 employee holds options under the
scheme, and this employee is not a director of the Company. The
contractual life of each grant is 10 years. No more awards will be
made under this scheme.
Grant date Outstanding Granted Lapsed/exercised Outstanding
options at during the during the options at 31
1 April 2019 year year March 2020
------------ -------------- ------------ ----------------- ---------------
6 May 2009 150,000 - (150,000) -
4 November
2010 100,000 - - 100,000
250,000 - (150,000) 100,000
------------ -------------- ------------ ----------------- ---------------
All options granted are discretionary (as determined by the
Board) and carry a pre-exercise performance condition, requiring
the Company's Earnings Per Share achievement during any rolling
three-year financial performance year to exceed the retail/consumer
price index by at least 3%, in aggregate, during the same period.
No consideration is received for an award and no grants can be made
at an option exercise price per share which is less than the market
price at the time of grant.
Long-Term Incentive Plan (LTIP)
During the prior year, the Company granted the former Chief
Executive Officer a conditional award under a new
long-term incentive plan. No more awards will be made under this scheme.
Grant date Outstanding Granted Lapsed/exercised Outstanding
options at during the during the options at 31
1 April 2019 year year March 2020
-------------- -------------- ------------ ----------------- ---------------
21 September
2018 1,562,000 - - 1,562,000
1,562,000 - - 1,562,000
-------------- -------------- ------------ ----------------- ---------------
To become exercisable, the options are dependent on the market
capitalisation of the Group. The options have a contractual life of
3 years, with the potential for additional value to be realised
after a 4(th) year, subject to performance hurdles. The first
GBP250,000 of this long-term incentive plan are under an approved
EMI scheme. The option pricing model used in relation to the LTIP
is a Monte-Carlo simulation model. Significant assumptions used
include volatility and risk-free rates.
Details of the share options outstanding during the year are as
follows.
Number of Ordinary Weighted average
shares exercise price
(pence)
------------------------- ------------------- -----------------
As at 1 April 2018 250,000 10.0p
Granted during the year 1,562,000 n/a
As at 31 March 2019 1,812,000 n/a
Granted during the year - n/a
Lapsed during the year (150,000) n/a
As at 31 March 2020 1,662,000 n/a
------------------------- ------------------- -----------------
The following options were outstanding under the Company's
Executive Share Option Scheme and LTIP, as at 31 March 2020:
Number of Exercise price
Ordinary shares per share Exercise
(pence) period
-------------------------- ----------------- --------------- -----------
Executive Share Option
Scheme
4 November 2010 100,000 10.0p Nov 2020
Long-Term Incentive Plan
21 September 2018 1,562,000 16.1087p Sept 2021
1,662,000
-------------------------- ----------------- --------------- -----------
The income statement charge in respect of the LTIP for the year
was GBP20,000 (2019: GBP11,000).
27. Related party transactions
During the year, CC Jones Consulting Limited provided strategic
consultancy services to Dods Group plc to the value of GBPnil
(2019: GBP85,000). Former Chairman Cheryl C. Jones is also a
director of CC Jones Consulting Limited (also refer to note 7
detailing directors' remuneration).
During the year, Artefact Partners LLP provided strategic
consultancy services to Dods Group plc to the value of GBP20,000
(2019: GBP20,000). Current non-executive director Richard Boon is
an LLP designated member of Artefact Partners LLP (also refer to
note 7 detailing directors' remuneration).
During the year, the Group received a repayment of GBP140,000
(2019: GBPnil) on its interest free loan to its associate Sans
Frontieres Associates (SFA). At 31 March 2020 the balance
outstanding was GBP560,000 (2019: GBP700,000).
During the year, an amount of GBP55,720 (2019: GBP60,781) was
payable to an associate Social 360 Limited, in relation to
profit-share for monitoring services provided. At 31 March 2020,
GBP22,620 (2019: GBP11,490) of this balance was outstanding.
On acquisition of Merit, an arm's length non-repairing 7-year
lease was entered into between a Merit subsidiary (Letrim
Intelligence Services Private Limited) and Merit Software Services
Private Limited. Cornelius Conlon, a director of the Group, is the
beneficial owner of Merit Software Services Private Limited. The
lease relates to the Chennai office of Merit. During the year,
payments of GBP535,000 were made to Merit Software Services Private
Limited in relation to the lease.
The Executive directors of the Group are considered key
management personnel. See note 7 for details of directors'
remuneration.
28. Events occurring after the reporting date
On 23 May 2020 the Group agreed certain modifications to its
banking facilities with Barclays Bank plc including an additional 9
month capital repayment holiday on a GBP3 million loan (note
duration of the loan has not been extended), a waiver of all
covenants through to 31(st) December 2020 and certain revised
covenants thereafter.
In addition, on 1 September the Group agreed revised covenants
for the period starting 1 January 2021 and also agreed a waiver of
the annual covenant test for 31 March 2021.
On 29 July 2020 the Group announced the allotment of 26,141,667
new ordinary shares in connection with its deferred consideration
obligations entered into as part of the Company's acquisition of
Meritgroup Limited.
The Group has been impacted by COVID-19 from March 2020. As
discussed earlier, continuing efforts to manage the COVID-19
situation are in place and are fluid. The Board at this stage
cannot predict the medium to long-term effects of COVID-19 and
therefore does not expect to be able to issue any forward-looking
statements or guidance for the foreseeable future.
Parent company balance sheet
As at 31 March 2020
Company number: 04267888
2020 2019
Note GBP'000 GBP'000
------------------------------- ------- --------- ---------
Non-current assets
Intangible assets 31 1,624 1,085
Tangible fixed assets 32 1,658 1,954
Investments 33 42,342 20,974
Long-term loan 560 700
Total non-current assets 46,184 24,713
Current assets
Debtors 34 3,862 4,663
Cash 35 120 1,962
Total current assets 3,982 6,625
Total assets 50,166 31,338
------------------------------- ------- --------- ---------
Capital and reserves
Called-up share capital 38 19,239 17,096
Share premium account 20,082 8,143
Merger reserve 409 409
Profit and loss account 1,366 1,340
Total equity 41,096 26,988
Current liabilities
Trade and other payables 36 3,058 3,974
Deferred consideration 33 1,046 -
Bank loan 37 3,000 -
Total current liabilities 7,104 3,974
Non-current liabilities
Other payables 36 921 376
Deferred consideration 33 1,045 -
Total non-current liabilities 1,966 376
Total equity and liabilities 50,166 31,338
------------------------------- ------- --------- ---------
During the year, the company made a profit of GBP26,000 (2019:
loss of GBP3,196,929).
These financial statements were approved by the Board of
directors and were signed on its behalf by:
Simon Bullock
Chief Financial Officer
2 September 2020
Parent company statement of changes in equity
For the year ended 31 March 2020
Total shareholders'
Share Share Merger Retained funds
capital premium(1) reserve(2) earnings GBP'000
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ---------- ------------- ------------- ----------- --------------------
At 1 April 2018 17,096 8,143 409 4,537 30,185
Total comprehensive
income
Loss for the year - - - (3,197) (3,197)
Share-based payment - - - - -
charge
Transactions with
the owners
Issue of ordinary - - - - -
shares
At 31 March 2019 17,096 8,143 409 1,340 26,988
Total comprehensive
income
Profit for the year - - - 26 26
Share-based payment - - - - -
charge
Transactions with
the owners
Issue of ordinary
shares 2,143 11,939 - - 14,082
At 31 March 2020 19,239 20,082 409 1,366 41,096
-------------------------- ---------- ------------- ------------- ----------- --------------------
1 The share premium reserve represents the amount paid to the
Company by shareholders above the nominal value of shares
issued.
2 The merger reserve represents accounting treatment in relation
to historical business combinations.
Notes to the parent company financial statements
For the year ended 31 March 2020
29. Statement of Accounting Policies - company
The following accounting policies have been applied consistently
in dealing with items which are considered material in relation to
the Company's financial statements.
Basis of accounting
The financial statements have been prepared in accordance with
United Kingdom applicable accounting standards, including Financial
Reporting Standard 102, and with the Companies Act 2006. The
financial statements have been prepared on the historical cost
basis.
Under section 408 of the Companies Act 2006, the Company is
exempt from the requirement to present its own profit and loss
account.
The individual accounts of the Company have also adopted the
following disclosure exemptions:
-- the requirement to present a statement of cash flows and related notes;
-- financial instrument disclosures, including: categories of
financial instruments, items of income, expenses, gains or losses
relating to financial instruments, and exposure to and management
of financial risks;
-- the requirement to present share-based payment disclosures; and
-- the requirement to disclose key management personnel
compensation.
Going Concern
The Directors have considered the implications for Going Concern
for a period of at least twelve months from the signing of these
accounts. The Board remains satisfied with the Company's funding
and liquidity position as discussed further in note 1 of the group
financial statements.
The Board remains mindful regarding the uncertainties inherent
in the current economic conditions. The company's forecasts and
projections, taking into account reasonable changes in trading
performance given these uncertainties, show the Company operating
within its current cash flow with headroom going forward.
On the basis of these forecasts, and given the level of cash
available, the Board has concluded that the going concern basis of
preparation continues to be appropriate.
Share-based payments
The Company operates a number of equity-settled, share based
compensation plans. The fair value of the employee services
received in exchange for the grant of the options is recognised as
an expense with a corresponding increase in equity. The total
amount to be expensed over the vesting period is determined by
reference to the fair value of the options granted, excluding the
impact of any non-market vesting conditions. Non-market vesting
conditions are included in assumptions about the number of options
that are expected to vest. At each balance sheet date, the Company
revises its estimates of the number of options that are expected to
vest. It recognises the impact of the revision to original
estimates, if any, in the income statement, with a corresponding
adjustment to equity.
Deferred tax is recognised where it is likely that tax relief
will be available on the difference between exercise price and
market price at the balance sheet date.
Where the Company grants options over its own shares to the
employees of its subsidiaries, it recognises a movement in the cost
of investment in its subsidiaries equivalent to the equity-settled
share based payment charge recognised in its subsidiary's financial
statements, with the corresponding movement being recognised
directly in equity.
Leases
Operating lease rentals are charged to the profit and loss
account on a straight-line basis over the period of the lease.
Post-retirement benefits - defined contribution
The Company contributes to independent defined contribution
pension schemes. The assets of the schemes are held separately from
those of the Company in independently administered funds. The
amount charged to the profit and loss account represents the
contributions payable to the schemes in respect of the accounting
period.
Dividends
Dividends from subsidiary companies are accounted for when
payable. Dividends payable to shareholders are recognised when they
are approved by the shareholders at the Annual General Meeting.
Unpaid dividends that do not meet these criteria are disclosed in
the notes to the financial statements.
Tax
Current tax is recognised for the amount of income tax payable
in respect of the taxable profit for the current or past reporting
periods using the tax rates and laws that that have been enacted or
substantively enacted by the reporting date.
Deferred tax is recognised in respect of all timing differences
at the reporting date, except as otherwise indicated.
Deferred tax assets are only recognised to the extent that it is
probable that they will be recovered against the reversal of
deferred tax liabilities or other future taxable profits. If and
when all conditions for retaining tax allowances for the cost of a
fixed asset of a fixed asset have been met, the deferred tax is
reversed, recognised, and will be assessed. Deferred tax is
recognised when income or expenses from a subsidiary or associate
have been for tax in a future period, except where:
-- the Company is able to control the reversal of the timing difference; and
-- it is probable that the timing difference will not reverse in
the foreseeable future.
Deferred tax is calculated using the tax rates and laws that
that have been enacted or substantively enacted by the reporting
date that are expected to apply to the reversal of the timing
difference. Deferred tax liabilities are presented within
provisions for liabilities and deferred tax assets within debtors.
Deferred tax assets and deferred tax liabilities are offset only
if:
-- the Company has a legally enforceable right to set off
current tax assets against current tax liabilities; and
-- the deferred tax assets and deferred tax liabilities relate
to income taxes levied by the same taxation authority on either the
same taxable entity or different taxable entities which intend
either to settle current tax liabilities and assets on a net basis,
or to realise the assets and settle the liabilities
simultaneously.
Intangible assets
Intangible assets represent publishing rights acquired by the
Company. These are amortised over their useful economic life of 20
years.
Tangible fixed assets and depreciation
Depreciation is provided to write off the cost less estimated
residual value of tangible fixed assets by equal instalments over
their estimated useful economic lives as follows:
Leasehold improvements Over the remaining life of the lease
Equipment and fixtures and fittings 3-5 years
Fixed asset investments
In the Company's financial statements, investments in subsidiary
undertakings and participating interests are stated at cost less
any provisions for impairment.
Impairment of fixed assets and goodwill
The carrying amounts of the Company's assets are reviewed for
impairment when events or changes in circumstances indicate that
the carrying amount of the fixed asset may not be recoverable. If
any such indication exists, the asset's recoverable amount is
estimated.
An impairment loss is recognised whenever the carrying amount of
an asset or its income-generating unit exceeds its recoverable
amount. Impairment losses are recognised in the profit and loss
account unless it arises on a previously revalued fixed asset. An
impairment loss on a revalued fixed asset is recognised in the
profit and loss account if it is caused by a clear consumption of
economic benefits. Otherwise impairments are recognised in the
statement of other comprehensive income until the carrying amount
reaches the asset's depreciated historic cost.
Calculation of recoverable amount
The recoverable amount of fixed assets is the greater of their
net realisable value and value in use. In assessing value in use,
the expected future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market
assessments of the rate of return expected on an equally risky
investment. For an asset that does not generate largely independent
income streams, the recoverable amount is determined for the
income-generating unit to which the asset belongs.
Reversals of impairment
An impairment loss is reversed on intangible assets and goodwill
only if subsequent external events reverse the effect of the
original event which caused the recognition of the impairment or
the loss arose on an intangible asset with a readily ascertainable
market value and that market value has increased above the impaired
carrying amount.
For other fixed assets where the recoverable amount increases as
a result of a change in economic conditions or in the expected use
of the asset then the resultant reversal of the impairment loss
should be recognised in the current period.
An impairment loss is reversed only to the extent that the
asset's carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, if
no impairment loss had been recognised.
Financial assets, liabilities and equity instruments
The Company only enters into basic financial instruments
transactions that result in the recognition of financial assets and
liabilities like trade and other debtors and creditors, loans from
banks and other third parties, loans to related parties and
investments in non-puttable ordinary shares.
Debt instruments (other than those wholly repayable or
receivable within one year), including loans and other accounts
receivable and payable, are initially measured at present value of
the future cash flows and subsequently at amortised cost using the
effective interest method. Debt instruments that are payable or
receivable within one year, typically trade debtors and creditors,
are measured, initially and subsequently, at the undiscounted
amount of the cash or other consideration expected to be paid or
received. However, if the arrangements of a short-term instrument
constitute a financing transaction, like the payment of a trade
debt deferred beyond normal business terms or financed at a rate of
interest that is not a market rate or in case of an out-right
short-term loan not at market rate, the financial asset or
liability is measured, initially, at the present value of the
future cash flow discounted at a market rate of interest for a
similar debt instrument and subsequently at amortised cost.
Financial assets that are measured at cost and amortised cost
are assessed at the end of each reporting period for objective
evidence of impairment. If objective evidence of impairment is
found, an impairment loss is recognised in the Statement of
comprehensive income.
For financial assets measured at amortised cost, the impairment
loss is measured as the difference between an asset's carrying
amount and the present value of estimated cash flows discounted at
the asset's original effective interest rate. If a financial asset
has a variable interest rate, the discount rate for measuring any
impairment loss is the current effective interest rate determined
under the contract. For financial assets measured at cost less
impairment, the impairment loss is measured as the difference
between an asset's carrying amount and best estimate of the
recoverable amount, which is an approximation of the amount that
the Company would receive for the asset if it were to be sold at
the reporting date.
30. Staff costs - company
The average number of persons employed by the Company (including
executive directors) during the year within each category was:
2020 2019
------------------------------------- ----- -----
Managerial and administration staff 8 8
------------------------------------- ----- -----
The aggregate payroll costs in respect of these employees
(including executive directors) were:
2020 2019
GBP'000 GBP'000
---------------------------- --------- ---------
Wages and salaries 678 786
Social security costs 76 96
Pension and other costs - 1
Share-based payment charge 20 11
---------------------------- --------- ---------
774 894
---------------------------- --------- ---------
Detailed disclosures on directors' remuneration is given in note
7.
31. Intangible assets - company
Oher capitalised
Publishing costs
rights Total
GBP'000 GBP'000 GBP'000
-------------------- ------------- ------------------- --------
Cost
At 1 April 2018 1,357 - 1,357
----------------------- ------------- ------------------- --------
At 31 March 2019 1,357 - 1,357
Additions - 607 607
----------------------- ------------- ------------------- --------
At 31 March 2020 1,357 607 1,964
----------------------- ------------- ------------------- --------
Accumulated amortisation
At 1 April 2018 204 - 204
Charge for the year 68 - 68
At 31 March 2019 272 - 272
Charge for the year 68 - 68
At 31 March 2020 340 - 340
--------------------------- ------ ---- ------
Net book value
At 31 March 2019 1,085 - 1,085
At 31 March 2020 1,017 607 1,624
--------------------- -------- ---- --------
32. Tangible fixed assets - company
Leasehold Improvements
IT equipment Total
GBP'000 GBP'000 GBP'000
-------------------- ----------------------- --------------- --------
Cost
At 1 April 2018 1,926 748 2,674
Additions 66 - 66
At 31 March 2019 1,992 748 2,740
Additions 14 - 14
At 31 March 2020 2,006 748 2,754
--------------------- ----------------------- --------------- --------
Accumulated depreciation
At 1 April 2018 262 200 462
Charge for the year 201 123 324
At 31 March 2019 463 323 786
Charge for the year 204 106 310
At 31 March 2020 667 429 1,096
--------------------------- ------ ------ ------
Net book value
At 31 March 2019 1,529 425 1,954
At 31 March 2020 1,339 319 1,658
--------------------- -------- ------ --------
33. Fixed asset investments - company
Subsidiary
Associates undertakings Total
GBP'000 GBP'000 GBP'000
--------------------- ------------- -------------- ----------
Cost
As at 1 April 2019 463 20,511 20,974
Addition - 21,368 21,368
--------------------- ------------- -------------- ----------
As at 31 March 2020 463 41,879 42,342
--------------------- ------------- -------------- ----------
Detailed disclosures on subsidiary undertakings are given in
note 16 and associates in note 17. During the current year, the
Company purchased 100 percent of the share capital of Meritgroup
Limited. During the prior year, the carrying value of the Company's
investment in Social 360 Limited was impaired by GBP1,231,000.
Deferred and contingent consideration payable in relation to the
acquisition of Meritgroup Limited are also outlined in note 16.
34. Trade and other receivables - company
2020 2019
GBP'000 GBP'000
------------------------------------ --------- ---------
Other debtors - 162
Amounts owed by group undertakings 2,692 4,285
Prepayments and accrued income 1,170 216
------------------------------------ --------- ---------
3,862 4,663
------------------------------------ --------- ---------
35. Cash and cash equivalents - company
2020 2019
GBP'000 GBP'000
--------------------------- --------- ---------
Cash and cash equivalents 120 1,962
--------------------------- --------- ---------
36. Trade and other payables - company
2020 2019
Trade and other payables: amounts falling GBP'000 GBP'000
due within one year
--------------------------------------------- --------- ---------
Amounts owed to group undertakings 1,179 1,232
Other creditors including tax and social
security 18 15
Other payables 272 -
Accruals and deferred income 1,589 2,727
--------------------------------------------- --------- ---------
3,058 3,974
--------------------------------------------- --------- ---------
2020 2019
Trade and other payables: amounts falling GBP'000 GBP'000
due after more than one year
--------------------------------------------- --------- ---------
Amounts owed to group undertakings 376 376
Other payables 545 -
--------------------------------------------- --------- ---------
921 376
--------------------------------------------- --------- ---------
The non-current other payables balance reflects an amount
payable arising on the acquisition of Merit, contingent on the
continued employment of certain of the Merit employees.
37. Interest-bearing loans and borrowings - company
During the year, the Company borrowed a term loan of GBP3
million (2019: GBPnil) over a 5-year period carrying a rate of
3.25% over LIBOR. In addition, it has a revolving credit facility
(RCF) of GBP2 million carrying a rate of 3.5% over LIBOR. The
current balance outstanding on the term loan is GBP3m. The current
balance outstanding on the RCF is GBPnil.
See note 19 for the maturity analysis of the bank loan.
38. Share capital - company
9p deferred 1p ordinary Total
shares shares GBP'000
Number Number
------------------------------- ------------ ------------ ---------
Issued share capital as at
1 April 2019 151,998,453 341,640,953 17,096
Shares issued during the year - 214,288,760 2,143
Issued share capital as at
31 March 2020 151,998,453 555,929,713 19,239
------------------------------- ------------ ------------ ---------
Holders of deferred shares do not have the right to receive
notice of any general meeting of the Company or any right to
attend, speak or vote at such meeting. The deferred shareholders
are not entitled to receive any dividend or distribution and shall
on a return of assets in a winding up of the Company entitle the
holders only to the repayment of 1pence aggregate. The deferred
shares are also incapable of transfer and no share certificate will
be issued.
During the year the Company issued 214,288,760 ordinary shares
to part fund the acquisition of Merit.
During the year the Company issued nil (2019: nil) ordinary
shares on the exercise of employee share options for cash
consideration of GBPnil (2019: GBPnil) of which GBPnil (2019:
GBPnil) was credited to share capital and GBPnil (2019: GBPnil) to
share premium.
39. Operating lease commitments - company
At the balance sheet date, the Company had outstanding
commitments for future minimum lease payments under non-cancellable
operating leases which fall due as follows:
Land and buildings 2020 2019
GBP'000 GBP'000
---------------------------- --------- ---------
Within one year 1,056 1,056
Between two and five years 4,223 4,223
After five years 1,078 2,136
---------------------------- --------- ---------
6,357 7,415
---------------------------- --------- ---------
40. Related party disclosures - company
The Company has taken advantage of the exemption conferred by
Financial Reporting Standard 102 Related Party Disclosures Section
33 (33.1A) from disclosing transactions which occurred between
wholly owned subsidiaries of the Group headed by Dods Group
plc.
During the year, CC Jones Consulting Limited provided strategic
consultancy services to Dods Group plc to the value of GBPnil
(2019: GBP85,000). Former Chairman Cheryl C. Jones is also a
director of CC Jones Consulting Limited (also refer to note 7
detailing directors' remuneration).
During the year, Artefact Partners LLP provided strategic
consultancy services to Dods Group plc to the value of GBP20,000
(2019: GBP20,000). Current Non-Executive Director Richard Boon is a
LLP designated member of Artefact Partners LLP (also refer to note
7 detailing directors' remuneration).
During the year, the Company received repayment of GBP140,000
(2019: GBPnil) of an interest free loan from its associate Sans
Frontieres Associates (SFA). At 31 March 2020 the balance
outstanding was GBP560,000 (2019: GBP700,000).
41. Events occurring after the reporting date
On 23 May 2020 the Company agreed certain modifications to its
banking facilities with Barclays Bank plc including an additional 9
month capital repayment holiday on a GBP3 million loan (note
duration of the loan has not been extended), a waiver of all
covenants through to 31(st) December 2020 and certain revised
covenants thereafter.
In addition, on 1 September the Group agreed revised covenants
for the period starting 1 January 2021 and also agreed a waiver of
the annual covenant test for 31 March 2021.
On 29 July 2020 the Company announced the allotment of
26,141,667 new ordinary shares in connection with its deferred
consideration obligations entered into as part of the Company's
acquisition of Meritgroup Limited.
The Group has been impacted by COVID-19 from March 2020. As
discussed earlier, continuing efforts to manage the COVID-19
situation are in place and are fluid. The Board at this stage
cannot predict the medium to long-term effects of COVID-19 and
therefore does not expect to be able to issue any forward-looking
statements or guidance for the foreseeable future.
.
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END
FR KZGGLMZKGGZZ
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September 03, 2020 02:02 ET (06:02 GMT)
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