Year End Results 31 March 2017
- Revenue of £20.0 million (2016: £19.6 million)
- Gross profit margin at 41% (2016: 38%)
- Adjusted EBITDA at £3.4 million (2016 £3.0 million) *
- Cash generated from operations in the year was £3.4 million (2016 £3.5 million)
- Net cash of £9.0 million at 31 March 2017 (at 31 March 2016: net cash of £9.1 million) **
- Reported profit before tax £1.6 million (2016: £1.1 million)
- Adjusted EPS 0.79 pence (2016: 0.66 pence)
- Total assets of £36.5 million (2016: £34.0 million)
*EBITDA is calculated as earnings before interest, tax, depreciation, amortisation of intangible assets acquired through business combinations, share based payments and non-recurring items
**After major cash investment expenditure relating to new London premises of £2.5 million (2016: £0.1 million)
**Includes restricted cash of £1.3 million (2016: £nil) held in a deposit account, in our name, supporting a lease agreement
Cheryl Jones, Chairman, commented:
“I am pleased to announce the full year results for Dods Group plc which demonstrate a strong operational platform that poises the Company for acquisition and supports future organic growth.”
Turnover for the year ending 31 March 2017 was £20.0 million (2016: £19.6 million). Gross margins continued to improve to 41% (2016: 38%). The Company achieved a 13% increase in adjusted EBITDA to £3.4 million (2016: £3.0 million), and operations generated cash of £3.4 million (2016: £3.5 million).
Planned revenue growth in the second half of the fiscal year was impacted by slow operational implementation of a sales realignment. Consequently, there was an average 5% decrease in sales effectiveness for the second half of the year.
Based upon review, the Board believes the impact of this delay is limited to the missed timing of operational implementation, and is not reflective of market conditions. The Board is confident about the opportunities available in the market for Dods’ professional sales organisation going forward into the new fiscal year.
Continued year over year improvements in both gross margin and EBITDA are a reflection of the scalability and process efficiencies embedded in key functional areas throughout the Group. Robust retention programmes and keen focus on revenue quality are also on-going contributors to these improvements.
The Group’s operations generated £3.4 million of cash during the fiscal year. Continuous improvement in back office procedures, a decrease in days sales outstanding from 37 days to 32 days and diligent management focus all contributed to cash generation. The Group used £3.1 million in investing activities during the year of which £2.5 million was used for the build-out, furnishings and equipment related to the relocation of Dods’ registered office and headquarters into new premises at The Shard in London Bridge Quarter. The remaining £0.6 million included normal expenditures for software and hardware and a strategic investment in Sans Frontières Associates Limited. At year-end, the Group’s net cash position was £9.0 million (includes restricted cash of £1.3 million held in a deposit account, in our name, supporting a lease agreement).
Dods, at the heart of its value proposition to clients, provides tailored solutions that enable actionable insights for critical decision making, in an increasingly fast-paced commercial landscape influenced by public policy and the shape of the political environment.
Because of the required speed of decision-making and the continuous commercial pressure to perform, clients are seeking more bespoke offerings with evolved solutions. This creates demand for providers to recombine products and attempt to offer creative service bundles rather than going to market with traditionally more narrowly defined products.
These dynamics tend to blur the lines of demarcation between service providers as they were historically defined in the marketplace.
The aforementioned trends, well-position the Group to consider acquisitions that not only bring scale to existing products and services, but importantly also allow the Group to evaluate adjacent businesses. An adjacent business could provide speed-to-market for new sector expansion as well as enhance depth of product service competencies.
Recognising the opportunities created from this positive disruption in the market, the Board has dedicated resources to establish an acquisition programme outside of operational management. This programme is currently focussed on identifying and pursuing buy-and-build and market adjacency opportunities.
As a start, in February 2017, the Group announced completion of a strategic investment in Sans Frontières Associates (SFA), acquiring a 40.0% stake in the business. SFA is an international consulting services and communications-led solutions company based in London. The Board believes SFA’s core capabilities and international reach are in keeping with the trends and changing market requirements, and SFA has the ability to redefine the approach taken to international geopolitical and crisis communications consulting.
Given these plans and Dods’ reliance on digital service delivery platforms, its frequency and volume of information exchange with disparate data providers, and the geographical expanse over which electronic communications take place, achieving ISO27001 Information Security certification was set-forward as a priority for the business in late 2015. In February 2017, Dods achieved and was awarded this certification. Certified companies must have an auditable, defined and demonstrable set of processes and procedures covering information security, typically implemented in the form of an information security management system.
During the fiscal year, the Board welcomed three new members.
On 4 August 2016, after serving in the Company in positions of increased responsibility over more than fifteen years, Guy Cleaver was appointed as Chief Executive Officer and joined the Board as a Director. He was previously named as Chief Operating Officer with responsibility for all the Group’s businesses in March 2016.
Subsequently, on 5 September 2016, Nitil Patel was appointed as the Group’s Chief Financial Officer and also named to the Board as a Director. Nitil’s prior operational and strategic acquisitions experience has been very valuable to the Company as it continues transformational plans including acquisitive growth.
Concurrently, Diane Lees CBE, also joined the Board on 5 September 2016 as a Non-executive Director. Diane’s diverse leadership positions, as well as her domain knowledge of specific sectors such as higher education, make her a valued addition of the Board.
Given the Company’s robust client retention programmes, its forward bookings and current sales activity levels, the Board is confident the Company is, year over year, in a position to achieve consistent organic growth. The Board is optimistic about Dods’ prospects for continued success in fiscal year 2018.
On behalf of the Board, I would like to recognise the efforts of each of the valued employees of Dods Group PLC, and recognise their commitment to supporting our overall efforts to become an innovative company where clients, stakeholders and employees all benefit from aspiring to a spirit of excellence.
Cheryl C. Jones
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