TIDMDOTD
RNS Number : 5442G
dotDigital Group plc
16 November 2022
16 November 2022
Dotdigital Group plc
("Dotdigital" or the "Group")
Final Results for the year ended 30 June 2022
Growth in all regions with strong profits and cash
generation
Dotdigital Group plc (AIM: DOTD ), the leading 'SaaS' provider
of an omnichannel marketing automation and customer engagement
platform, announces its final audited results for the year ended 30
June 2022 ("FY22").
Financial Highlights
-- Organic revenue growth of 8% to GBP62.8m (FY21: GBP58.1m)
o Recurring revenue increased to 94% (FY21: 93%)
o Monthly ARPC(1) increased 17% to GBP1,461 (FY21: GBP1,251 per
month)
-- Adjusted EBITDA(2) grew 10% to GBP21.7m (FY21: GBP19.8m)
-- Adjusted operating profit(3) increased 6% to GBP14.5m (FY21: GBP13.7m)
-- Adjusted basic earnings per share of 4.27p (FY21: 3.82p)
-- Strong net cash balance at 30 June 2022 of GBP43.9m (FY21: GBP32m)
-- Proposed final dividend of 0.98p per ordinary share (FY21:
0.86p) in line with progressive dividend policy
Operational Highlights
-- Growth across all global regions against exceptional prior year
-- Digital marketing budgets continue to increase with focus on data and actionable insights
-- Deeper and broader partner engagement, with revenue through
strategic partner connectors up 14% to GBP28.9m (FY21:
GBP25.4m)
-- Email marketing remains core alongside growing omnichannel
uptake, with email volumes up 22% YOY
-- Increased headcount and new management team in North America
showing early positive trends as well as strengthening the sales
and customer success teams in APAC
-- Product innovation driving value with functionality recurring
revenue(4) up 18% to GBP22.3m (FY21: GBP18.9m)
-- Customer data platform launched to enable our customers to
aggregate data from their business systems for relevancy and
personalisation
-- Board commitment to net zero emissions target by 2030
-- Post period end appointment of Chairman and CFO adding management bandwidth
Milan Patel, CEO of Dotdigital, commented:
"We are pleased to report a strong year of growth and
profitability for Dotdigital and significant operational
enhancements, comparing well against a strong prior year that was
boosted by one-off pandemic related SMS revenue.
"The advancements we have made to our technology platform over
the year positions us at the heart of Marketeers' evolving needs,
providing the tools they require to drive broader, more targeted
customer engagement. At the same time, we believe we now have in
place the right teams and infrastructure to support our next stage
of growth. Backed by high recurring revenues and strong cash
generation, we will continue our focused investment in the business
to grow our brand awareness through our partner networks, build our
platform offering in line with our technology vision and bolster
our internal talent to ensure we continue to scale across our
territories.
"The positive trading momentum at the end of the period has
continued into the new financial year. With the challenges from the
first half of the year addressed together with favourable market
drivers, the Group is tracking in line with expectations for
revenue growth and profitability marginally ahead.
"Whilst we are monitoring the impact of the wider economic
climate across our markets, our technology's proven ROI provides a
compelling value proposition to customers as they look to connect
with their target audiences. This, together with a clear growth
strategy and strong balance sheet, gives us confidence in our
ability to continue to grow profitably."
Investor Video: A highlights video is available to watch here:
http://bit.ly/3tu7MX1
Investor Deck: A copy of the slides relating to the FY22 results
is available here:
https://www.dotdigitalgroup.com/events-presentations/
Investor Presentation : The management team will provide a live
presentation relating to the final results via the Investor Meet
Company platform on Friday, 18 November at 10.30am GMT. Investors
can register here:
https://www.investormeetcompany.com/dotdigital-group-plc/register-investor
Annual Report: A copy of the Annual Report for FY22 will be
available on our website shortly:
https://www.dotdigitalgroup.com/reports/
Notes
1. ARPC means Average Revenue Per Customer (including new
customers added in period and existing customers)
2. EBITDA is earnings before interest, tax, depreciation and
amortisation and adjusted for acquisition costs and share-based
payments
3. Operating profit is adjusted for acquisition costs and share-based payments
4. Functionality revenue refers to license fees and enhanced bolt-on functionality
For further information please contact:
Dotdigital Group Plc Tel: 020 3953 3072
Milan Patel, CEO InvestorRelations@dotdigital.com
Alistair Gurney, CFO
Alma PR (Financial PR) Tel: 020 3405 0210
Hilary Buchanan dotdigital@almapr.co.uk
David Ison
Kieran Breheny
Canaccord Genuity (Nominated Advisor Tel: 020 7523 8000
and Joint Broker)
Bobbie Hilliam
Jonathan Barr, Sales
finnCap (Joint Broker) Tel: 020 7220 0500
Jonny Franklin Adams, Corporate
Finance
Alice Lane, ECM
Rhys Williams, Sales
Singer Capital Markets (Joint Broker) Tel: 020 7496 3000
Shaun Dobson, Chairman of Corporate
Finance
Alex Bond, Corporate Finance
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO
CONSTITUTE INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE
MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF
THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE
IN THE PUBLIC DOMAIN.
CHAIRMAN'S STATEMENT
I became Chairman of Dotdigital Group Plc post-year end on 5
July 2022, replacing Mike O'Leary, who left the business due to
health reasons. Mike played an important role in helping the
Company navigate the pandemic while continuing to deliver against
its strategic objectives and I would first like to wish him all the
best in his continued recovery.
A compelling opportunity
There were several reasons I took the role. Firstly, the product
is exceptional. The marketing automation technology the Group has
developed is among the most powerful and easy to use on the market,
capable of delivering outstanding returns on investment and
significantly enhancing a brand's reputation.
The second is the quality of the Group's growing customer base.
International in nature and comprising a diverse range of blue-chip
organisations from different sectors, marketeers at some of the
world's biggest brands rely on Dotdigital to power their
campaigns.
Thirdly, the Group has an impeccable knowledge of the markets in
which it operates. Its teams understand the direction the digital
marketing industry is moving in; they understand the evolving needs
of marketeers, they know how to address them through the platform,
and they recognise the steps we need to take as a business to grow
our competitive advantage.
Finally, the business has immense potential. The Group has
firmly established itself as one of the leading firms in the
industry, but there is much more to go for. Supported by a robust
balance sheet, there are several routes to accelerate growth
available to us.
Ending the year on a high
To have successfully delivered a year of strong growth and
profitability despite the challenging circumstances is testament to
the ability and hard work of our teams, the resilience of our
model, and the continuing demand for our products.
The pandemic led to a temporary increase in demand for
transactional SMS in the prior year which tempered the year-on-year
growth rate, our North American operation was negatively impacted
by an unusually competitive labour market in the first half, and
the Group was recruiting for a Chairman and Chief Financial Officer
(CFO) for much of the second.
I'm pleased to report that those challenges were overcome in the
second half, and positive momentum has continued into the new
financial year. Crucially, we now have management in place in North
America and are having success in both hiring and retaining
colleagues in the region. While our teams there continue to embed,
the pipeline is building at a healthy rate.
We have also now filled the vacant roles on the Board, adding
complementary new skills and abilities and providing the bandwidth
for management to return to focusing solely on growing the business
and creating shareholder value.
My priorities since joining
The first was to secure a new Chief Financial Officer with the
right credentials and ambitions that matched our own. A dynamic
finance professional with an impressive track record working in
senior roles at private equity-backed technology businesses,
Alistair Gurney was the outstanding candidate for the position, and
I am delighted we were able to welcome him onto the Board in
September 2022.
The second priority was to work with the Board to sharpen the
strategy. For several years now, much of Dotdigital's R&D
efforts have centred around data functionality as demand for
actionable insight in the market grows. As a result, Dotdigital is
now the platform of choice for thousands of marketeers around the
world looking to design and deliver advanced strategies with
personalisation at their core.
The next step is to build out our data capabilities further,
ensuring we stay ahead of the curve and granting access to new
markets by offering one of the most comprehensive customer data
experience platforms (CDXP) available. Plans are in place across
our R&D teams to this end, and we are exploring opportunities
to accelerate the process through selective acquisitions of
adjacent technology. More information on our CDXP ambitions is
provided in the Chief Executive Officer's review in this
report.
The third priority, in parallel with the first two, was to
engage with the Group and its marketplace and understand the
culture of Dotdigital. Over the past few months, I have met with
many colleagues from across the Group. I have been impressed by the
calibre of talent at our disposal and encouraged by our teams'
enthusiasm for what we as a Group are trying to achieve.
Sustainable foundations
The Board continues to focus efforts on progressing the Group's
Environmental, Social and Governance (ESG) agenda. ESG is central
to what we do and have made significant progress on our initiatives
in the year.
The Board is also aware that focussing on Dotdigital's own
performance, as well as the technology we provide to our customers,
also has a beneficial impact on both the people and our planet. As
a business we prioritise our people through wellbeing initiatives,
meeting governance expectations through our accreditation of
ISO14001 and achieve high standards on data privacy and data
security through our accreditations and control systems of ISO27001
& ISO27701.
We have a number of new initiatives underway, including a Board
commitment to a net zero emissions target by 2030. Further details
of Dotdigital's environmental initiatives and performance in 2022
are set out in the FY22 annual report.
Dividend
The Board has agreed to maintain a progressive dividend in line
with Group EBITDA growth. Therefore, subject to approval at the AGM
in December 2022, the Board proposes that the Group pay a final
dividend of 0.98p per ordinary share (2021: 0.86p), payable at the
end of January 2023.
Looking ahead
We now have in place a strong Board with the right blend of
skills and experience, high quality management and support teams
across our international markets, a first-class product, growing
pipelines, a clear strategy and the financial firepower to
accelerate delivery.
The economic backdrop remains uncertain but, as the pandemic
demonstrated, effective engagement with existing and prospective
customers is just as important to brands in more challenging times
as it is in good, providing Dotdigital a degree of insulation
against recessionary pressures.
We know the direction we want to take the business and are
focussed on using our cash in the optimal way to capture the wealth
of available opportunity. It is early in my tenure, but I am
excited about our prospects, and look forward to keeping
shareholders updated as we progress towards our goals.
John Conoley
Non-Executive Chairman
15 November 2022
CHIEF EXECUTIVE OFFICER'S REPORT AND FINANCIAL REVIEW
Overview - Year of profitable growth and operational
enhancements
We are pleased to report a strong year of growth and
profitability for Dotdigital, along with significant operational
enhancements. These results represent a full financial year since
the onset of the pandemic and, despite challenges in the macro
environment, compare well against a strong prior year performance
that was boosted by one-off pandemic- related SMS revenue. We have
cemented our relationships with our customers as a strategic
partner, helping them deliver a high return on investment from
their digital marketing strategies through a combination of best of
breed functionality and services.
We have a differentiated and well-integrated offering, including
leading orchestration functionality at the heart of the platform,
saving our customers time. We have seen sustained business momentum
through 2022 as a result of continued execution against each pillar
of the Group's growth strategy, namely product innovation,
geographic expansion and strategic partnerships, helping us deliver
Group organic growth of 8%.
During the year, while some form of normality is returning
across the different territories post COVID-related restrictions,
we have continued to see an acceleration in the shift towards
Digital Marketing and the creation of relevant and personalised
experiences to audiences across all industries. The use of data,
platform adoption and automation capabilities are all continuing to
rise and, from a product development perspective, we continue to
enhance the Dotdigital platform to ensure it excels in these areas.
By helping launch targeted campaigns in our customers' advanced
marketing strategies, ensuring they have an individualised message
at every touchpoint with their customer or prospect and a strong
return on investment, our product has cemented itself as the
platform of choice for both B2B and B2C marketeers.
A lot of progress has been made in the second half of the year
rebuilding our team in North America, with management now in place
to lead the vision and execution of growth in the region. We
continue to see employee retention strengthen and the successful
recruitment of new talent as we embed our culture in a hybrid
working environment and competitors pause for breath in their
hiring efforts. Through these investments we are making the
business more scalable, which puts us in a good place to return to
double digit organic growth over the medium term.
We continue to see the increase in customers adopting an
omnichannel approach, with Email Marketing remaining core to their
strategies for driving customer acquisition and retention. We saw
email volumes grow 20% in the period as budgets continued to
increase and verticals/industries started to return to normal
volumes post-pandemic.
As we look forwards, with our vision of building out our
Customer Data Experience Platform (CDXP), alongside our own
research and development efforts, we will look at acquisitions that
offer added value and resilience to our business model. This will
not only allow us to expand our addressable market with larger
customers, but also makes our existing customers stickier.
Business Review - Marketing automation platform underpinned by
rich customer data
Dotdigital is focussed on empowering marketers to connect with
customers through its powerful automation platform that unifies all
digital channels. Our platform provides tools that enable marketing
teams to launch highly targeted, personalised and relevant
campaigns to customers and prospects with personalised engagement
at every touchpoint - the right message, at the right time, through
the right channel to the right person. The result is faster and
more effective marketing campaigns with increased engagement and
demonstrable ROI.
The use cases of the Group's offering are wide and global,
however the Group remains focused on mid-market and enterprise
clients across target verticals including retail, non-profit,
education, financial services, sports and travel to name a few. The
Group's foundations and particular strengths are in email and deep
integrations into strategic partners within e-commerce and CRM.
Results summary - Organic growth and cash generation
The Group generated revenues of GBP62.8m (2021: GBP58.1m). This
8% growth was entirely organic, led by larger value customers,
existing client growth and improved customer retention in the EMEA
region.
Adjusted EBITDA increased by 10% to GBP21.7m (2021: GBP19.8m)
driven by the contribution from organic growth and improving gross
margin due to an increase in email volumes which is a very high
margin compared to lower margin channels such as SMS. Statutory
operating profit was GBP13.6 million (2021: GBP12.9 m) including
adjusting items of GBP8.1 million (2021: GBP6.9 m).
We have a strong track record of cash generation and this
remains a high priority for the Group with net cash increase of
GBP11.6m in the period (2021: GBP6.5m).
Market opportunity - Continued march toward digital and
heightened focus on personalisation
We operate within the large global Marketing Automation market,
estimated to be worth $5.5bn and growing at between 12% -13% year
on year. This market comprises three main target segments with
technologies and business models optimised accordingly. These
segments consist of small/micro companies, mid-market and
enterprise. The mid-market and enterprise segments we are primarily
focussed on together estimated to be worth circa $3bn.
Our target verticals differ slightly depending on region and
level of brand awareness. In North America and APAC, where
awareness of Dotdigital continues to develop, we focus on
e-commerce businesses through our strategic partnerships and
integrations. In the EMEA market, where our brand awareness is
high, we target all industry types. In what remains a fragmented
market, we offer a comprehensive functionality set and range of
services to help customers drive a higher ROI.
Digital transformation for marketeers continues at pace in a
post-Covid world which has adapted quickly to online experiences.
Marketeers' strategies are becoming more sophisticated with the use
of data and actionable insights. The Dotdigital platform is well
placed to support this, making it easy for customers to make use of
data while providing drag and drop functionality to automate
messaging at all parts of the customer journey.
Email Marketing still generates the highest ROI from all Digital
Marketing campaigns and continues to be the marketeers' channel of
choice, complemented by other channels to form the overall
experience. As the shift to digital progresses, we continue to see
an uptake of additional channels, such as push and app messaging,
aligned with our move towards building out omni-channel
capabilities through the acquisition of Comapi. According to
eMarketer, Digital Marketing as a percentage of overall Marketing
continues to increase and now represents 66%; as some of the
traditional marketing budgets move into Digital. We are well placed
to capture this growth.
Growth strategy - Focussed execution against long-term
vision
Having established a best-in-breed marketing automation platform
with omni-channel capability and global scale, we continue to see
huge growth potential with our core capabilities as the market
moves toward digitally-enabled marketing. At the same time, our
financial strength, combined with broad customer reach, provides us
with the foundation and resources to build our offering, both
organically and through acquisition, in line with our long term
vision of building the most comprehensive CDXP capabilities. CDXP
describes the ecosystem by which companies and brands view and seek
to influence the customer journey - from connecting and
communication with customers and prospects, to retaining and
optimising their purchasing decisions. The tools that enable
marketeers to have insight into the journey is founded on rich
customer data, which is where the Dotdigital Engagement Cloud
excels, and provides an opportunity to leverage through core
capability enhancements as well as new capabilities in this
space.
Customer data sits at the core of everything we do, and there is
substantial scope to broaden our offering to provide even deeper
engagement for our customers across any channel through a unified
source of customer intelligence.
This vision is underpinned by our organic growth strategy, which
continues to be focussed around three core pillars: product
innovation, geographic expansion and strategic partnerships.
Product innovation
We are making good progress in growing the number of customers
using enhanced functionality, including an increasing number of
data connectors through our IPaaS (Infrastructure Platform as a
Service) capabilities, while continuing to enhance our customer
data platform launched in the financial year to enable our
customers to aggregate data from their business systems for
relevancy and personalisation. We continue to educate the markets,
through live sessions and digital marketing content, on how to
adopt new features to enhance messaging. This helped drive an 18%
increase in functionality recurring revenue from product updates
and enhancement, taken by both existing and new customers, to
GBP22.3m (2021: GBP18.9m).
The platform continues to go from strength to strength,
delivering on the needs of our customers and maintaining our
competitive advantage.
Geographic expansion
We continued to successfully grow our presence in international
market in the period, in pursuit of our goal of diversifying
revenues outside of the UK. The Group saw revenue growth across all
key global regions, despite the wider effects of COVID-19, supply
chain issues and a weakening economic backdrop.
In EMEA, revenues grew 8% to GBP48.2m (2021: GBP44.6m) helped by
retention as we strengthen relationships with our customers and
deliver on their ROI metrics. We have continued to see retention
improve in the region as we strengthen relationships with our
customers and deliver on their ROI metrics. We have also seen
continued growth in spend from existing clients as they increase
their email message volumes, start to adopt an omnichannel approach
and continue to increase the use of our platform features.
Revenues from the Americas were up 3% to $12.9m (2021: $12.5m).
Despite headwinds faced in the first half of the financial year
from recruitment challenges, we made great progress in the second
half. A new management team has now been put in place to lead the
execution of the strategy in the region and we were able to step up
our recruitment efforts in our go to market teams, which are now
embedded and are already starting to gain traction. We saw strong
customer wins in the fourth quarter of the financial year and that
momentum has continued into FY23.
The APAC market saw high levels of growth in the year, with
revenues growing 18% to $9.1m (2021: $7.7m). We further increased
Dotdigital's presence in the region in the period through expanding
our team in Singapore, which has led to encouraging pipeline growth
in Japan and the Far East.
Strategic partnerships
Revenues from customers using a data connector from one of our
strategic partners grew 14% to GBP28.9m in the year.
Enhanced brand awareness, alongside additional functionality and
new integrations into technology platforms, have allowed us to
continue growth in the Magento space. Our respective teams continue
to work together on our joint marketing strategy and enhanced
development of our integration. During the year we also became a
premier partner of the Adobe Experience programme. In the year,
revenue from Magento customers grew 10% from GBP14.3m to
GBP15.8m.
Our Shopify relationship continues to go from strength to
strength. We have seen an increasing pipeline resulting from the
integration we have built with Shopify Flow, which allows
e-commerce merchants a seamless connection to easily deploy
campaigns from the Dotdigital platform. We continue to build
relationships with system integrators in the ecosystem. In the
year, revenue from Shopify customers grew 56% from GBP2.1m to
GBP3.3m.
As BigCommerce's global partner, we continue to build on the
brand awareness within the user base and deepen our strategic
relationship, formulating a joint go to market plan and joint
marketing efforts to the user base. We saw a 67% increase in
revenue from BigCommerce-connected customers in the year to GBP0.6m
(from GBP0.4m in June 2021).
As part of our commitment to our B2B Marketing customers, we
have continued to enhance our integrations into both Microsoft
Dynamics and Salesforce CRM as well as building additional
functionality specifically for B2B Marketing tactics. Revenues from
customers using our CRM connectors increased 7% to GBP8.0m in the
year, from GBP7.5m in the prior period.
We have recently launched our integration into a new strategic
partnership with Zendesk to further enhance Zendesk Sell, bringing
the Marketing Automation value proposition to its customer base.
This will allow its customers to store conversations that can be
used to increase relevancy and personalisation. Albeit early days,
we continue to see a growing pipeline.
M&A
Together with our organic growth we intend to create value from
acquisitions to help build our position as a global market leader
in the growing Marketing Automation sector. We will look to invest
in adjacent technology that accelerates development of the
platform's CDXP capabilities. This will allow for average revenue
per customer (ARPC) expansion within our existing global customer
base but also the ability to enter new addressable markets.
The key categories will remain around the three pillars to our
acquisition strategy:
-- Adjacent technology to accelerate our CDXP capability;
-- Consolidation of the market for talent and brand to expand geographical coverage
-- Specialist functionality for target verticals.
To drive value, we will integrate the core capabilities into the
platform to accelerate growth but also manage costs to increase
margins and cash generation.
Financial review
Business model
The Group generates most of its revenues from software and
annual message plans which are recognised equally over the life of
the contract. In addition, we sell upgrade packages to customers,
allowing them to use additional modules and platform features. The
best value is available to those who take advantage of additional
functionality and integrations which help them leverage their
customer data. We also have a small amount of professional services
revenue.
Revenues
The Group achieved revenue growth of 8% (2021: 23%) to GBP62.8m
(GBP58.1m 2021). To achieve this against the backdrop of 2021 in
which, we enjoyed significant revenue from one off COVID-19 related
messaging volumes, is testament to the Group's focus on contracted
SaaS revenues, which grew by 10% to GBP49.6m in 2022. Total
recurring revenues including contracted messaging plans now
comprise 94% of total revenue.
Total recurring revenue has grown with a compound annual growth
rate (CAGR) of 17% since 2018, this is driven by our functional
recurring revenues which have grown at 26% over the same 4 year
period.
International revenues remained at 31% of the Group total.
Gross margin
The gross margin for the period remained at 82%. Whilst the
gross margin for email and standard channels remained above 90%,
this is always diluted by SMS and professional services, which each
have a higher marginal cost of sale. We continue our focus on high
margin growth as opposed to driving revenue irrespective of
quality.
Operating expenses
Adjusted operating profit from continuing operations grew by 6%
from GBP13.7m to GBP14.5m as we continued to invest in people in
the areas of development, sales and marketing, particularly within
the high-growth regional offices, to continue enhancing and adding
to the product suite.
Balance sheet
There was strong cash management in the year with net cash
generated from continuing operations of GBP23.4m (2021: GBP20.7m).
The cash balance at the end of the period was GBP43.9m (2021:
GBP32.0m). The Group continues to be debt free and maintains a
healthy balance sheet. A combination of a highly efficient cash
collection process and an incentivisation push to move more
customers onto Direct Debit and other automated payment collection
methods helped with the year-end position.
Trade receivables have reduced by 3% in the year reflecting
focussed cash management. Overall receivables have reduced by
1%.
The Group continues to invest heavily in the platform to
increase functionality around marketing automation, increasing the
number of messaging channels and surfacing data and providing
insights for our customers to provide excellent customer
engagement. This continued investment is demonstrated by the
increase in product development to GBP7.6m (2021: GBP6.8m).
Tax
Profitability from continuing operations continues to grow. This
is reflected within the tax charge, which is now GBP1.2m with an
effective tax rate of 9%, with a lower than standard rate due to
enhanced R&D tax credits.
EPS
In the year the adjusted basic EPS increased to 4.27p (2021:
3.82p) and adjusted diluted EPS increased to 4.18p (2021: 3.76p),
despite the higher effective tax rate of 9%, (2021: 8%). Basic EPS
also increased to 3.96p (2021: 3.55p)
Dividend policy
As announced last year, the Board conducted its review of its
organic business plan for the following three years. This included
evaluating the cash needs required for opportunities in organic
growth to increase shareholder value and capital expenditure. The
Board decided that it will continue to keep a progressive dividend
in line with Group EBITDA growth. Therefore, subject to approval at
the AGM in December 2022, the Board proposes that the Group will
pay a final dividend of 0.98 pence per ordinary share (2021:
0.86p), to be payable at the end of January 2023.
People - The lifeblood of Dotdigital
John Conoley joined us as Non-Executive Chairman and Board
member on 5 July 2022. John brings significant public company
experience to the Board as well as industry experience following
extensive career spanning various roles within the technology
sector. John has established a track record in growing businesses
and delivering value creation.
Alistair Gurney also joined us as Chief Financial Officer and
Board member on 19 September 2022. Alistair brings significant
experience from private equity backed technology business, M&A
and in areas such as financial planning and analysis.
Through the period we continued investing in management across
all regions as well as in Product Engineering, Sales, Customer
Success, and Marketing to bring new experiences and build scale
within the teams.
Environmental, Social and Governance (ESG) - Our sustainable
foundations
We report on our Scope 1, 2 and 3 Greenhouse Gas (GHG) emission
and there was an increase in the period of gross CO2e by 27% as
travel came back post covid lockdowns and return to some
normalisation to events and face to face meetings. We are
incredibly proud that we have offset our CO2 emission by carbon
offsetting to be Carbon neutral through the period. We have also
continued to adhere to the standard on ISO14001 Environmental
Management systems and continue to support the Terra carta on
environmental matters.
Current trading and outlook
The advancements we have made to our technology platform over
the year positions us at the heart of Marketeers' evolving needs,
providing the tools they require to drive broader, more targeted
customer engagement. At the same time, we believe we now have in
place the right teams and infrastructure to support our next stage
of growth. Backed by high recurring revenues and strong cash
generation, we will continue our focused investment in the business
to grow our brand awareness through our partner networks, build our
platform offering in line with our technology vision and bolster
our internal talent to ensure we continue to scale across our
territories.
The positive trading momentum at the end of the period has
continued into the new financial year. With the challenges from the
first half of the year addressed together with favourable market
drivers, the Group is tracking in line with expectations for
revenue growth and profitability marginally ahead.
Whilst we are monitoring the impact of the wider economic
climate across our markets, our technology's proven ROI provides a
compelling value proposition to customers as they look to connect
with their target audiences. This, together with a clear growth
strategy and strong balance sheet, gives us confidence in our
ability to continue to grow profitably.
Milan Patel
Chief Executive Officer
15 November 2022
Alistair Gurney
Chief Financial Officer
15 November 2022
DOTDIGITAL GROUP PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 30 JUNE 2022
30.6.22 30.6.21
GBP'000 GBP'000
Notes
CONTINUING OPERATIONS
Revenue from contracts with customers 62,832 58,124
Cost of sales 7 (11,570) (10,356)
------------ ---------
Gross profit 51,262 47,768
Administrative expenses 7 (36,726) (34,089)
OPERATING PROFIT FROM CONTINUING OPERATIONS PRE SHARE-BASED
PAYMENTS AND EXCEPTIONAL COSTS 14,536 13,679
Share based payments 28 (456) (625)
Exceptional costs 5 (475) (188)
------------ ---------
OPERATING PROFIT FROM CONTINUING OPERATIONS 13,605 12,866
Finance costs 6 (57) (74)
Finance income 6 57 20
------------ ---------
PROFIT BEFORE INCOME TAX FROM CONTINUING OPERATIONS 7 13,605 12,812
Income tax expense 8 (1,774) (1,322)
------------ ---------
Profit for the year from continuing operations 11,831 11,490
Loss for the year from discontinuing operations 12 - (899)
============ =========
Profit for the year attributable to the owners of the
parent 11,831 10,591
==================== =============
Earnings per share from all operations (pence per share)
Basic 11 3.96 3.55
Diluted 11 3.88 3.50
Adjusted Basic 11 4.27 3.82
Adjusted Diluted 11 4.18 3.76
Earnings per share from continuing operations (pence per share)
Basic 11 3.96 3.85
Diluted 11 3.88 3.79
Adjusted Basic 11 4.27 4.12
Adjusted Diluted 11 4.18 4.06
============ =========
Earnings per share from discontinued operations (pence per share)
Basic 11 (0.00) (0.30)
Diluted 11 (0.00) (0.30)
Adjusted Basic 11 (0.00) (0.30)
Adjusted Diluted 11 (0.00) (0.30)
=======
DOTDIGITAL GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 JUNE 2022
30.6.22 30.6.21
GBP'000 GBP'000
PROFIT FOR THE YEAR 11,831 10,591
OTHER COMPREHENSIVE INCOME
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translating foreign operations 333 (87)
-------- --------
Total comprehensive income attributable to:
Owners of the parent 12,164 10,504
======== ========
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Comprehensive income from continuing operations 12,164 11,403
Comprehensive loss from discontinued operations - (899)
======== ========
DOTDIGITAL GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 JUNE 2022
30.6.22 30.6.21
GBP'000 GBP'000
Notes
ASSETS
NON-CURRENT ASSETS
Goodwill 13 9,680 9,680
Intangible assets 14 17,698 16,134
Property, plant and equipment 15 3,285 3,972
---------- ----------
30,663 29,786
---------- ----------
CURRENT ASSETS
Trade and other receivables 17 13,211 13,350
Cash and cash equivalents 18 43,919 31,951
---------- ----------
57,130 45,301
---------- ----------
TOTAL ASSETS 87,793 75,087
========== ==========
EQUITY ATTRIBUTABLE TO THE
OWNERS OF THE PARENT
Called up share capital 19 1,496 1,494
Share premium 20 7,124 7,124
Reverse acquisition reserve 20 (4,695) (4,695)
Other reserves 20 2,005 3,066
Retranslation reserve 20 296 (37)
Retained earnings 20 63,582 54,081
---------- ----------
TOTAL EQUITY 69,808 61,033
LIABILITIES
NON-CURRENT LIABILITIES
Lease liabilities 22 1,758 2,489
Deferred tax 24 2,755 1,207
---------- ----------
4,513 3,696
CURRENT LIABILITIES
Trade and other payables 21 12,654 9,334
Financial liabilities:
Interest bearing loans and borrowings - -
Lease liabilities 22 818 934
Current tax payable - 90
---------- ----------
13,472 10,358
---------- ----------
TOTAL LIABILITIES 17,985 14,054
---------- ----------
TOTAL EQUITY AND LIABILITIES 87,793 75,087
========== ==========
DOTDIGITAL GROUP PLC
COMPANY STATEMENT OF FINANCIAL POSITION
30 JUNE 2022
30.6.22 30.6.21
GBP'000 GBP'000
Notes
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 7 4
Investments 16 18,362 18,141
-------- --------
18,369 18,145
-------- --------
CURRENT ASSETS
Trade and other receivables 17 1,545 140
Cash and cash equivalents 18 163 85
-------- --------
1,708 225
-------- --------
TOTAL ASSETS 20,077 18,370
======== ========
EQUITY ATTRIBUTABLE TO THE
OWNERS OF THE PARENT
Called up share capital 19 1,496 1,494
Share premium 20 7,124 7,124
Other reserves 20 1,915 1,690
Retained earnings 20 9,400 7,570
-------- --------
TOTAL EQUITY 19,935 17,878
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 21 142 492
TOTAL LIABILITIES 142 492
-------- --------
TOTAL EQUITY AND LIABILITIES 20,077 18,370
======== ========
DOTDIGITAL GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2022
Called up share
Retained Share
capital earnings premium
GBP'000 GBP'000 GBP'000
Balance as at 1 July 2020 1,493 45,655 6,967
Transactions with owners
Issue of share capital 1 - 157
Dividends - (2,472) -
Transfer in reserves - 307 -
Deferred tax on share options - - -
Share-based payments - - -
---------------- ----------- --------
Transactions with owners (restated) 1 (2,165) 157
---------------- ----------- --------
Total comprehensive income
Profit for the year - 10,591 -
Other comprehensive income - - -
Total comprehensive income - 10,591 -
---------------- ----------- --------
Restated balance as at 30 June 2021 1,494 54,081 7,124
================ =========== ========
Balance as at 1 July 2021 1,494 54,081 7,124
Issue of share capital 2 - -
Dividends - (2,564) -
Transfer in reserves - 234 -
Deferred tax on share options - - -
Share-based payments - - -
---------------- ----------- --------
Transactions with owners 2 (2,330) -
---------------- ----------- --------
Profit for the year - 11,831 -
Other comprehensive income - - -
---------------- ----------- --------
Total comprehensive income - 11,831 -
---------------- ----------- --------
Balance as at 30 June 2022 1,496 63,582 7,124
================ =========== ========
DOTDIGITAL GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2022
CONTINUED...
Retranslation Reverse acquisition Other Total equity
reserve reserve reserves
GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1 July 2020 50 (4,695) 1,600 51,070
Transactions with owners
Issue of share capital - - - 158
Dividends - - - (2,472)
Transfer in reserves - - (307) -
Deferred tax on share options - - 1,148 1,148
Share-based payments - - 625 625
Transactions with owners - - 1,466 (541)
-------------- -------------------- --------- -------------
Total comprehensive income
Profit for the year - - - 10,591
Other comprehensive income (87) - - (87)
-------------- -------------------- --------- -------------
Total comprehensive income (87) - - 10,504
-------------- -------------------- --------- -------------
Balance as at 30 June 2021 (37) (4,695) 3,066 61,033
============== ==================== ========= =============
Balance as at 1 July 2021
Issue of share capital - - - 2
Dividends - - - (2,564)
Transfer in reserves - - (234) -
Deferred tax on share options - - (1,283) (1,283)
Share-based payments - - 456 456
Transactions with owners - - (1,061) (3,389)
-------------- -------------------- --------- -------------
Profit for the year - - - 11,831
Other comprehensive income 333 - - 333
-------------- -------------------- --------- -------------
Total comprehensive income 333 - - 12,164
-------------- -------------------- --------- -------------
Balance as at 30 June 2022 296 (4,695) 2,005 69,808
============== ==================== ========= =============
-- Share capital is the amount subscribed for shares at nominal value.
-- Retained earnings represents the cumulative earnings of the
Group attributable to equity shareholders.
-- Share premium represents the excess of the amount subscribed
for share capital over the nominal value net of the share issue
expenses.
-- Retranslation reserve relates to the retranslation of foreign
subsidiaries into the functional currency of the Group.
-- The reverse acquisition reserve relates to the adjustment
required to account for the reverse acquisition in accordance with
UK Adopted International Accounting Standards.
-- Other reserves relate to the charge for the share-based
payment in accordance with IFRS 2and the transfer on the exercise
or lapsing of share options.
DOTDIGITAL GROUP PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2022
Called up share
Retained Share Other
capital earnings premium Reserves Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1 July 2020 1,493 5,924 6,967 1,372 15,756
Transactions with owners
Issue of share capital 1 - 157 - 158
Dividends - (2,472) - - (2,472)
Transfer in reserves - 307 - - 307
Share based payments - - - 318 318
---------------- ----------- -------- ------------ -------------
Transactions with owners 1 (2,165) 157 318 (1,689)
---------------- ----------- -------- ------------ -------------
Total comprehensive income
Profit for the year - 3,811 - - 3,811
Total comprehensive income (restated) - 3,811 - - 3,811
---------------- ----------- -------- ------------ -------------
Balance as at 30 June 2021 1,494 7,570 7,124 1,690 17,878
================ =========== ======== ============ =============
Balance as at 1 July 2021 1,494 7,570 7,124 1,690 17,878
Issue of share capital 2 - - - 2
Dividends - (2,564) - - (2,564)
Transfer in reserves - 231 - (231) -
Share based payments - - - 456 456
---------------- ----------- -------- ------------ -------------
Transactions with owners 2 (2,333) - 225 (2,106)
---------------- ----------- -------- ------------ -------------
Profit for the year - 4,163 - - 4,163
Total comprehensive income - 4,163 - - 4,163
---------------- ----------- -------- ------------ -------------
Balance as at 30 June 2022 1,496 9,400 7,124 1,915 19,935
================ =========== ======== ============ =============
-- Share capital is the amount subscribed for shares at nominal value.
-- Retained earnings represents the cumulative earnings of the
Company attributable to equity shareholders.
-- Share premium represents the excess of the amount subscribed
for share capital over the nominal value net of the share issue
expenses.
-- Other reserves relate to the charge for the share-based
payment in accordance with IFRS 2 and the transfer on the exercise
or lapsing of share options.
DOTDIGITAL GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2022
30.6.22 30.6.21
GBP'000 GBP'000
Notes
Cash flows from operating activities
Cash generated from operations 29 25,162 17,969
Tax paid (1,761) (975)
-------- --------
Net cash generated from all operating activities 23,401 16,994
-------- --------
Net cash generated from continuing operating activities 23,401 20,710
Net cash used in discontinued operating activities - (3,716)
-------- --------
Cash flows from investing activities
Purchase of intangible fixed assets 14 (7,686) (6,870)
Purchase of property, plant and equipment 15 (465) (169)
Proceeds from sale of property, plant and equipment - 2
Interest received 57 20
-------- --------
Net cash flows used in investing activities (8,094) (7,017)
-------- --------
Net cash used in from continuing investing activities (8,094) (7,017)
Net cash used in discontinued investing activities - -
-------- --------
Cash flows from financing activities
Equity dividends paid (2,564) (2,472)
Payment of lease liabilities (1,110) (1,182)
Proceeds from share issues 2 158
Net cash flows used in financing activities (3,672) (3,496)
-------- --------
Net cash used in continuing financing activities (3,672) (3,446)
Net cash used in discontinued financing activities - (50)
-------- --------
Increase/(decrease) in cash and cash equivalents 11,635 6,481
Cash and cash equivalents at beginning of year 30 31,951 25,383
Effect of foreign exchange rate changes 333 87
-------- --------
Cash and cash equivalents at end of year 30 43,919 31,951
======== ========
.
DOTDIGITAL GROUP PLC
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2022
30.6.22 30.6.21
GBP'000 GBP'000
Notes
Cash flows from operating activities
Cash generated from operations 29 2,645 2,006
-------- --------
2,645 2,006
-------- --------
Net cash generated from operating activities
Cash used in investing activities
Purchase of property, plant and equipment (5) (3)
-------- --------
Net cash flows used in investing activities (5) (3)
-------- --------
Cash flows used in financing activates
Equity dividends paid (2,564) (2,472)
Proceeds from share issues 2 158
Net cash flows used in financing activities (2,562) (2,314)
-------- --------
Increase in cash and cash equivalents 78 (311)
Cash and cash equivalents at beginning of year 30 85 396
-------- --------
Cash and cash equivalents at end of year 30 163 85
======== ========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2022
1. GENERAL INFORMATION
Dotdigital Group Plc ("Dotdigital") is a public limited company
incorporated in England and Wales and quoted on the AIM Market. The
address of the registered office is disclosed on the inside back
cover of the financial statements. The principal activity of the
Group is described below.
2.ACCOUNTING POLICIES
Basis of preparation
These financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted by the UK
(IFRSs as adopted by the UK) and those parts of Companies Act 2006
applicable to companies reporting under IFRS. The financial
statements have been prepared under the historical cost
convention.
The Group has applied all accounting standards and
interpretations issued by the International Accounting Standards
Board and the IFRS Interpretations Committee effective at the time
of preparing the consolidated financial statements.
New and amended standards adopted by the Company
The Company adopted the following new and amended relevant IFRS in the year:
IFRS 7 Financial Instruments: Disclosures - amendments regarding replacement issues in the context
of the IBOR reform
IFRS 9 Financial Instruments - Amendments regarding replacement issues in the context of the IBOR
reform
IFRS 9 Financial Instruments - Amendments resulting from Annual Improvements to IFRS Standards 2018-2020
(fees in the "10 per cent" test for derecognition of financial liabilities)
IAS 37 Provisions, Contingent Liabilities and Contingent Assets - Amendments regarding the costs
to include when assessing whether a contract is onerous
IFRS 16 Leases - Amendments regarding COVID-19 related rent concessions
The adoption of these accounting standards did not have any effect on the Company's Statement
of Comprehensive Income, Statement of Financial Position or equity.
Accounting standards issued but not yet effective
The International Accounting Standards Board ("IASB") has issued/revised a number of relevant
standards with an effective date after the date of these financial statements. Any standards
that are not deemed relevant to the operations of the Company have been excluded. The Directors
have chosen not to early adopt these standards and interpretations and they do not anticipate
that they would have a material impact on the Company's financial statements in the period
of initial application.
Effective date
IAS 1 Presentation of Financial Statements - amendments regarding the 1 January 2023
classification of liabilities
IAS 1 Presentation of Financial Statements - amendments regarding the disclosure of
accounting policies 1 January 2023
IAS 8 Accounting Policies, Changes in Accounting Estimates - amendments regarding
the definition 1 January 2023
of accounting estimates
IAS 12 Income Taxes - amendments regarding deferred tax related to assets and
liabilities arising 1 January 2023
from a single transaction
IFRS 16 Leases - amendments regarding the classification of liabilities 1 January 2024
The financial statements are presented in sterling (GBP),
rounded to the nearest thousand pounds.
Significant accounting policies
The Group has consistently applied the following accounting
policies to all periods presented in these consolidated financial
statements, except if mentioned otherwise.
Basis of consolidation
In the period ended 2009, the Company acquired via a share for
share exchange the entire issued share capital of Dotdigital EMEA
Limited, whose principal activity is that of providing SaaS via a
leading omni-channel marketing automation platform and managed
services to digital marketing professionals.
Under IFRS 3 'Business combinations', the Dotdigital EMEA
Limited share exchange has been accounted for as a reverse
acquisition. Although these consolidated financial statements have
been issued in the name of the legal parent, the Company it
represents in substance is a continuation of the financial
information of the legal subsidiary, Dotdigital EMEA Limited. The
following accounting treatment has been applied in respect of the
reverse acquisition:
- the assets and liabilities of the legal subsidiary, Dotdigital
EMEA Limited, are recognised and measured in the consolidated
financial statements at their pre-combination carrying amounts,
without restatement to their fair value;
- the retained reserves recognised in the consolidated financial
statements for the beginning of the prior period reflect the
retained reserves of Dotdigital EMEA Limited to 30 April 2008.
However, in accordance with IFRS3 'Business combinations', the
equity structure appearing in the consolidated financial statements
reflects the equity structure of the legal parent Dotdigital Group
Plc, including the equity instruments issued under the share
exchange to effect the business combination;
- a reverse acquisition reserve has been created to enable the
presentation of a consolidated balance sheet which combines the
equity structure of the legal parent with the non-statutory
reserves of the legal subsidiary and;
- comparative numbers are prepared on the same basis.
The following accounting treatment has been applied in respect
of the acquisition of Dotdigital Group Plc:
- the assets and liabilities of Dotdigital Group Plc are
recognised and measured in the consolidated financial statements at
their fair value at the date of acquisition and;
- the cost of an acquisition is measured as the fair value of
the assets given, equity instruments issued and liabilities
incurred or assumed at the date of exchange, plus costs directly
attributable to the acquisition. Identifiable assets acquired and
liabilities assumed in a business combination are measured
initially at their fair values at the date of acquisition,
irrespective of the extent of any minority interest. The excess of
the cost of acquisition over the fair value of the Group's share of
the identifiable net assets acquired is recorded as goodwill. If
the cost of acquisition is less than the fair value of the net
assets of the subsidiary acquired, the difference is recognised
directly in the income statement.
Subsidiaries
A subsidiary is an entity whose operating and financing policies
are controlled by the Group. Subsidiaries are consolidated from the
date on which control was transferred to the Group. Subsidiaries
cease to be consolidated from the date the Group no longer has
control. Intercompany transactions, balances and unrealised gains
on transactions between Group companies have been eliminated on
consolidation.
The Group applies the acquisition method to account for business
combinations. In the statement of financial position, the
acquiree's identifiable assets and liabilities are initially
recognised at their fair values at the acquisition date.
As a result of applying reverse acquisition accounting since 30
January 2009, the consolidated IFRS financial information of
Dotdigital Group Plc is a continuation of the financial information
of Dotdigital EMEA Limited.
Revenue recognition
Revenue comprises the fair value of the consideration received
or receivable for the sale of services in the ordinary course of
the Group's activities. Revenue is shown net of value added tax
returns, rebates and discounts after eliminating sales within the
Group.
The Group recognises revenue when the amount of revenue can be
reliably measured and it is probable that the future economic
benefits will flow to the entity. The Group bases its estimates on
historical results, taking into consideration the type of customer,
the type of transaction and the specifics of each arrangement.
The Group sells omni-channel marketing services to other
businesses, and services are either provided on a usage basis or
fixed price bespoke contract. All revenue is from contracts signed
with new customers and upgrades and additional functional recurring
revenue sold to existing contracted clients. Revenue from contracts
is recognised under percentage of completion method based on a
percentage of services performed to date as a percentage of the
total services to be performed.
Professional services at no charge: The Group sells professional
services to its customers and there are occasions when these
services are provided at no cost as part of the contract sold. The
services provided for no charge are recognised at the price stated
within the latest price list and accounted for as separate
performance obligations when the service occurs. The amount
allocated to the services is deducted from the contract value and
the remainder of the contract value is spread evenly over the term
of the contract.
Prepaid contracts: The Group sells 12-, 24- and 36-month
contracts to its customers. This revenue is recognised monthly over
the period of the contract. Where a customer prepays their
contract, this is recognised over the period of the contract
irrespective of materiality.
Term contract billing: The Group raises the first invoice to its
new customers when the service agreement is signed. Occasionally,
the service does not start in the same month as when the service
agreement is signed but is invoiced in the month where the service
agreement is signed. The revenue is then recognised over the period
of the contract irrespective of materiality.
Going concern
The Directors are required to satisfy themselves that it is
reasonable for them to conclude whether it is appropriate to
prepare the financial statements on a going concern basis, and as
part of that process they have followed the Financial Reporting
Council's guidelines ("Guidance on the Going Concern Basis of
Accounting and Reporting on Solvency and Liquidity Risk" issued
April 2016).
The Group's business activities together with factors that are
likely to affect its future development and position are set out in
the Chairman's report, the Chief Executive Officer's report and
financial review and the Directors' report. Budgets and detailed
profit and loss forecasts that look beyond twelve months from the
date of these consolidated financial statements have been prepared
and used to ensure that the Group can meet its liabilities as they
fall due.
The Directors have made various assumptions in preparing these
forecasts, using their view of both the current and future economic
conditions that may impact on the Group during the forecast period.
The Directors have also considered the continued impact of the
COVID-19 pandemic and the impact of the measures taken to contain
it, on the Group. Due to the nature of the Group's activities,
there has not been a significant on-going impact on the business
(as detailed in the Chief Executive Officer's Review and Risk
section).
The Directors, at the time of approving the financial
statements, have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence
for the foreseeable future. Thus, they continue to adopt the going
concern basis of accounting in preparing the financial
statements.
Operating profit
Operating profit is stated after charging operating expenses but
before finance costs and finance income.
Dividends
Final dividend distributions to the Company's shareholders are
recognised as a liability in the financial statements in the period
in which the dividends are approved by the Company's shareholders
while interim dividends distributions are recognised in the period
in which the dividends are declared and paid.
Goodwill
Goodwill represents the excess of the fair value of the
consideration over the fair values of the identifiable net tangible
and intangible assets acquired and is allocated to cash generating
units.
Under IFRS 3 "Business Combinations", goodwill arising on
acquisitions is not subject to amortisation but is subject to
annual impairment testing. Any impairment is recognised immediately
in the income statement and not subsequently reversed.
Investments in subsidiaries
Investments are held as non-current assets at cost less any
provision for impairment. Where the recoverable amount of the
investment is less than the carrying amount, impairment is
recognised.
Intangible assets
Intangible assets are recorded as separately identifiable assets
and recognised at historical cost less any accumulated
amortisation. These assets are amortised over their useful economic
lives of four to five years, with the charge included in
administrative expenses in the income statement.
Intangible assets are reviewed for impairment annually.
Impairment is measured by determining the recoverable amount of an
asset or cash generating unit (CGU) which 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 or CGU. For the purpose of impairment
testing, assets that cannot be tested individually 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 CGUs.
- Domain names
Acquired domain names are shown at historical cost. Domain names
have a finite life and are carried at cost less accumulated
amortisation. Amortisation is calculated using straight-line method
to allocate the cost of domain names over their useful lives of
four years.
- Software
Acquired software and websites are shown at historical cost.
They have a finite life and are carried at cost less accumulated
amortisation. Amortisation is calculated using straight-line method
to allocate the cost of software and websites over their useful
lives of four years.
- Product development
Product development expenditure is capitalised when it is
considered that there is a commercially and technically viable
product, the related expenditure is separately identifiable and
there is a reasonable expectation that the related expenditure will
be exceeded by future revenues. Following initial recognition,
product developments are carried at cost less any accumulated
amortisation and any accumulated impairment losses. The useful
lives of these intangible assets are assessed to have a finite life
of five years. Amortisation is charged on assets with finite lives,
and until economic benefit can be received and recognised, this
expense is taken to the income statement and useful lives are
reviewed on an annual basis. Amortisation is charged from the point
when the asset is available for use.
Other development expenditures that do not meet these criteria
are recognised as an expense as incurred. Capitalised development
costs are recorded as intangible assets and amortised from the
point at which they are ready for use on a straight-line basis over
their useful life.
Costs incurred on development projects (relating to the design
and testing of new or improved products) are recognised as
intangible assets when the following criteria as detailed in IAS 38
'Intangible Assets' are fulfilled:
- It is technically feasible to complete the intangible asset so
that it will be available for use or resale;
- Management intends to complete the intangible asset and use or
sell it;
- There is an ability to use or sell the intangible asset;
- It can be demonstrated how the intangible asset will generate
possible future economic benefits;
- Adequate technical, financial and other resource to complete
the development and to use or sell the intangible asset are
available; and
- The expenditure attributable to the intangible asset during
its development can be reliably measured.
-Technology
Technology represents the cost that would be incurred to build
the entire Comapi platform had the acquisition not occurred. The
useful life of this intangible asset is assessed to have a finite
life of 10 years. Amortisation is charged on assets with finite
lives, and until economic benefit can be received and recognised,
this expense is taken to the income statement and useful lives are
reviewed on an annual basis. Amortisation is charged from the point
when the asset is available for use.
-Customer relationships
This represents the value of high-value customer contracts
within Comapi. The useful life of this intangible asset is assessed
to have a finite life of three years. Amortisation is charged on
assets with finite lives, and until economic benefit can be
received and recognised, this expense is taken to the income
statement and useful lives are reviewed on an annual basis.
Amortisation is charged over the lifetime of the customer
contract.
Impairment of non-financial assets (excluding goodwill)
At each balance sheet date, the Group reviews the carrying
amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash generating unit to
which the asset belongs. An intangible asset with an indefinite
useful life is tested for impairment annually and whenever there is
an indication that the asset may be impaired.
Property, plant and equipment
Tangible non-current assets are stated at historical cost less
accumulated depreciation. Historical cost includes expenditure that
is directly attributable to the acquisition of the items.
Subsequent costs are included in the assets' carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits are associated with the item
will flow to the company and the cost of the item can be measured
reliably. The carrying amount of the replaced part is derecognised.
All other repairs and maintenance are charged to the income
statement during the financial period in which they are incurred.
Depreciation is provided at the following rates in order to write
off each asset over its estimated useful life and is based on the
cost of assets less residual value. Significant components of
individual assets are assessed and if a component has a useful life
that is different from the remainder of that asset, that component
is depreciated separately.
Right of use assets: over the term of the lease
Short leaseholds: over the term of the lease
Fixtures and fittings: 25% on cost
Computer equipment: 25% on cost
The assets' residual values and useful economic lives are
reviewed and adjusted, if appropriate, at each reporting date. An
asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable value.
Gains and losses on disposals are determined by comparing the
proceeds with the carrying amount and are recognised within other
(losses) or gains in the income statement.
Capital management
The Group manages its capital to ensure it is able to continue
as a going concern while maximising the return to stakeholders
through the optimisation of the debt and equity balance. The
capital structure of the Group consists of cash equivalents and
equity attributable to the owners of the parent as disclosed in the
statement of changes in equity.
Taxation
The tax expense for the year comprises current and deferred tax.
Tax is recognised in the income statement, to the extent that it
relates to items recognised in other comprehensive income or
directly in equity. In this case, the tax is also recognised in
other comprehensive income or directly in equity, respectively.
Current tax
Current taxes are based on the results shown in the financial
statements and are calculated according to local tax rules, using
tax rates enacted or substantially enacted by the balance sheet
date.
Deferred taxation
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial
statements.
Deferred income tax assets are recognised to the extent that it
is probable that future taxable profit will be available against
which the temporary difference will be utilised.
Deferred income tax is determined using tax rates that have been
enacted or substantially enacted by the balance sheet date and are
expected to apply when the related deferred income asset is
realised or deferred income tax liability is settled.
Leases
Leases are recognised as a right-of-use asset and a
corresponding liability at the date at which the leased asset is
available for use by the Group. Each lease payment is allocated
between the liability and finance cost. The finance cost is charged
to the income statement over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the
liability for each period. The right-of-use asset is depreciated
over the shorter of the asset's useful life and the lease term on a
straight-line basis.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
- fixed payments (including in-substance fixed payments), less
any lease incentives receivable;
- variable lease payment that are based on an index or a rate;
- amounts expected to be payable by the lessee under residual value guarantees;
- the exercise price of a purchase option if the lessee is
reasonably certain to exercise that option, and;
- payments of penalties for terminating the lease, if the lease
term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be determined, the
lessee's incremental borrowing rate is used, being the rate that
the lessee would have to pay to borrow the funds necessary to
obtain an asset of similar value in a similar economic environment
with similar terms and conditions.
Right-of-use assets are measured at cost comprising the
following:
- the amount of the initial measurement of lease liability;
- any lease payments made at or before the commencement date
less any lease incentives received;
- any initial direct costs; and
- restoration costs.
Payments associated with short-term leases and leases of
low-value assets are recognised on a straight-line basis as an
expense in the income statement. Short-term leases are leases with
a lease term of 12 months or less. Low-value assets, being less
than GBP5,000, comprise IT equipment and small items of office
furniture.
Extension and termination options
Extension and termination options are included in a number of
property and equipment leases across the Group. These terms are
used to maximise operational flexibility in terms of managing
contracts. The majority of extension and termination options held
are exercisable only by the Group and not by the respective lessor.
None of the total lease payments made in the period to 30 June 2022
were optional.
In determining the lease term, management considers all facts
and circumstances that create an economic incentive to exercise an
extension option, or not exercise a termination option. Extension
options (or periods after termination options) are only included in
the lease term if the lease is reasonably certain to be extended
(or not terminated). Potential future cash outflows have not been
included in the lease liability because it is not reasonably
certain that the leases will be extended (or not terminated), the
amount of these cash flows is uncertain as several rounds of rent
reviews are due before this extension date.
Financial instruments
Financial assets and financial liabilities are recognised on the
statement of financial position when an entity becomes a party to
the contractual provisions of the instruments. Financial assets and
financial liabilities are initially measured at fair value.
Transaction costs that are directly attributable to the acquisition
or issue of financial assets and financial liabilities (other than
financial assets and financial liabilities at fair value through
profit or loss) are added to or deducted from the fair value of the
financial assets or financial liabilities, as appropriate, on
initial recognition. Transaction costs directly attributable to the
acquisition of financial assets or financial liabilities at fair
value through profit or loss are recognised immediately in the
income statement.
Financial assets
The Group's accounting policies for financial assets are set out
below.
Management determine the classification of its financial assets
at initial recognition depending on the purpose for which the
financial assets were acquired and, where allowed and appropriate,
revaluate this designation at every reporting date.
All financial assets are recognised on a trade date when, and
only when, the Group becomes a party to the contractual provisions
of an instrument. When financial assets are recognised initially,
they are measured at fair value plus transaction costs, except for
those finance assets classified as at fair value through profit or
loss ('FVTPL'), which are initially measured at fair value.
Financial assets are classified into the following specified
categories: financial assets at FVTPL, 'held-to-maturity'
investments, and loans and receivables. The classification depends
on the nature and purpose of the financial assets and is determined
at the time of recognition.
Financial assets are classified into the following specified
categories: financial assets at FVPL, 'amortised cost' or 'fair
value through other comprehensive income' ('FVOCI'). The
classification depends on the nature and purpose of the financial
assets and is determined at the time of recognition.
Financial assets are assessed for indicators of impairment at
each balance sheet date. Financial assets are impaired where there
is objective evidence that, as a result of one or more events that
occurred after the initial recognition of the financial asset, the
estimated future cash flows of the investment have been
impacted.
For certain categories of financial asset, such as trade
receivables, assets that are assessed not to be impaired
individually, the Group recognises lifetime expected credit losses
('ECL') when there has been a significant increase in credit risk
since initial recognition. However, if the credit risk on the
financial instrument has not increased significantly since initial
recognition, the Group measures the loss allowance for that
financial instrument at an amount equal to 12-month ECL.
Lifetime ECL represents the expected credit losses that will
result from all possible default events over the expected life of a
financial instrument. In contrast, 12-month ECL represents the
portion of lifetime ECL that is expected to result from default
events on a financial instrument that are possible within 12 months
after the reporting date.
On derecognition of a financial asset measured at amortised
cost, the difference between the asset's carrying amount and the
sum of the consideration received and receivable is recognised in
profit or loss.
- Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand,
demand deposits with banks and other financial institutions, and
short-term, highly liquid investments that are readily convertible
into known amounts of cash and which are subject to an
insignificant risk of changes in value, having been within three
months of maturity at acquisition. Bank overdrafts that are
repayable on demand and form an integral part of the Group's cash
management are also included as a component of cash and cash
equivalents for the purpose of the consolidated statement of cash
flows.
- Trade receivables
Trade receivables are recognised initially at the lower of their
original invoiced value and recoverable amount. A provision is made
when it is likely that the balance will not be recovered in full.
Terms on receivables range from 30 to 90 days.
- Financial liabilities and equity
Financial liabilities and equity are recognised on the Group's
statement of financial position when the Group becomes a party to a
contractual provision of an instrument. Financial liabilities and
equity instruments issued by the Group are classified according to
the substance of the contractual arrangements entered into and the
definitions of a financial liability and an equity instrument. An
equity instrument is any contract that evidences a residual
interest in the assets of the Group after deducting all of its
liabilities. Equity instruments issued by the Group are recognised
at the proceeds received, net of transaction costs.
The Group's financial liabilities include trade payables,
accrued liabilities and lease liabilities.
- Trade payables
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method. Terms on accounts payable range from 10 to 90
days.
Foreign currency risk
Currency risk is the risk that the holding of foreign currencies
will affect the Group's position as a result of a change in foreign
currency exchange rates. The Group has no significant foreign
currency risk as most of the Group's financial assets and
liabilities are denominated in functional currencies of relevant
Group entities. Accordingly, no quantitative market risk
disclosures or sensitivity analysis for currency risks have been
prepared.
The results and nancial position of all the Group entities (none
of which has the currency of a hyper-in ationary economy) that have
a functional currency different from the presentation currency are
translated into the presentation currency as follows:
(a) assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance
sheet;
(b) income and expenses for each income statement are translated
at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are
translated at the rate on the dates of the transactions); and
(c) all resulting exchange differences are recognised in other
comprehensive income.
Equity
Share capital is the amount subscribed for shares at their
nominal value.
Share premium represents the excess of the amount subscribed for
the share capital over the nominal value of the respective shares
net of share issue expenses.
Retained earnings represent the cumulative earnings of the Group
attributable to equity shareholders.
The reverse acquisition reserve relates to the adjustment
required by accounting for the reverse acquisition in accordance
with IFRS 3 'Business combinations'.
The retranslation reserve represents the cumulative exchange
differences on the retranslation of foreign subsidiaries into the
functional currency.
Other reserves relate to the charge for share-based payments in
accordance with IFRS 2 'Share-based Payments' plus the movement on
the exercise or lapsing of share options.
Share-based payments
For equity-settled share-based payment transactions the Group,
in accordance with IFRS 2 'Share-Based Payments' measures their
value, and the corresponding increase in equity, indirectly, by
reference to the fair value of the equity instruments granted. The
fair value of those equity instruments is measured at the grant
date using the trinomial method. The expense is apportioned over
the vesting period of the financial instrument and is based on the
number which is expected to vest and the fair value of those
financial instruments at the date of grant. If the equity
instruments granted vest immediately, the expense is recognised in
full.
Functional currency translation
- Functional and presentation currency
Items included in the financial statements of the Company are
measured using the currency of the primary economic environment in
which the entity operates (functional currency), which is mainly
pounds sterling (GBP) and it is this currency the financial
statements are presented in.
- Transaction and balances
Foreign currency transactions are translated into the functional
currency using exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at the
year end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income
statement.
Employee benefit costs
The Group operates a defined contribution pension scheme.
Contributions payable by the Group's pension scheme are charged to
the income statement in the period in which they relate.
Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker,
who is responsible for allocating resources and assessing
performance of the operating segments as identified by the Board of
Directors.
Foreign currency exchange rate risk
The Group has certain investments in foreign operations, whose
net assets are exposed to foreign currency translation risk. As
well as naturally mitigating this risk by offsetting its cost base
in the same currencies where possible, currency exposure arising
from the net assets of the Group's foreign operations is managed
through cash balances denominated in the relevant foreign
currencies.
The Group is mainly exposed to the US Dollar, Australian Dollar,
Singaporean Dollar, Euro, Belarusian Ruble, South African Rand,
Polish Zloty and Canadian Dollar currencies.
The table below details the Group's sensitivity to a 10%
increase or decrease in Sterling against the relevant foreign
currencies. 10% is the sensitivity rate which represents
management's assessment of the reasonable possible change in
foreign exchange rates. The sensitivity analysis includes only
outstanding foreign currency denominated monetary items and adjusts
their translation at the period end of a 10% change in foreign
currency rates. A positive number below indicates an increase in
profit where Sterling strengthens 10% against the relevant
currency. For a 10% weakening of Sterling against the relevant
currency, there would be an equal and opposite impact on the profit
and other equity, and the balances below would be negative or
positive.
30.6.22 30.6.21
GBP'000 GBP'000
US Dollar 60 60
Australian
Dollar 14 13
Singaporean
Dollar (37) (9)
Euro 10 (20)
Belarusian
Ruble (2) 7
South African
Rand (2) 4
Polish Zloty 5 95
Canadian Dollar 1 (1)
-------- --------
49 149
======== ========
Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from
these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial year are discussed below:
Judgements
(a) Capitalisation of development costs - refer to note 14
Our business model is underpinned by our email and data-driven
omnichannel marketing automation platform, Dotmailer. Internal
activities are continually undertaken to enhance and maintain the
product in a bid to stay ahead of our competition. Management
review the work of developers during the period and make the
following judgements:
-Internal work relating to product development is reviewed
against IAS 38 criteria and will be capitalised if management
consider that the criteria have been met;
-Internal work relating to the maintenance of existing products
is expensed to the income statement and accounted for in payroll
costs.
(b) Valuation of goodwill - refer to note 13
The recognition of business combinations requires the excess of
the purchase price of acquisitions over the net book value of
assets acquired to be allocated to the assets and liabilities of
the acquired entity. The Group makes judgements and estimates in
relation to the fair value allocation of the purchase price. If any
unallocated portion is positive it is recognised as goodwill and if
negative, it is recognised in the consolidated income
statement.
Judgement is required in determining the fair value of
identifiable assets, liabilities and contingent assets and
liabilities assumed in a business combination and the fair value of
the consideration payable. Calculating the fair values involves the
use of significant estimates and assumptions, including
expectations about future cash flows, discount rates and the lives
of assets following purchase.
(c) Going concern of Australian entity - refer to note 2: Going
concern
Management review each of the trading entities operations,
particularly when it is loss making to ascertain if it is a going
concern and if its assets should be impaired.
Judgement is therefore required to review future looking
forecasts and review existing and future sales pipeline within the
region. Thereby leading to a decision as to whether the region
remains viable.
Estimates and assumptions
(a) Impairment of goodwill
The Directors have carried out a detailed impairment review in
respect of goodwill. The Group assesses at each reporting date
whether there is an indication that an asset may be impaired, by
considering the net present value of discounted cash flow forecasts
which have been discounted at 19.75% (2021: 6.2%). This has
increased as a result of the increase in the cost equity which was
impacted by both the decline in the share price at the year end
compared to last year and the increase in dividend growth rate. The
cash flow projections are based on the assumption that the Group
can realise projected sales. A prudent approach has been applied
with no residual value being factored.
Further details on the estimates and assumptions we make in our
annual impairment testing of goodwill are included in note 13 to
the financial statements. At the period end, based on the
assumptions, there was no indication of impairment to the carrying
value of goodwill.
(b) Share-based compensation
Key management believe that there will not be only one
acceptable choice for estimating the fair value of share-based
payment arrangements. The judgements and estimates that management
apply in determination of the share-based compensation are
summarised below:
-Selection of a valuation model
-Making assumptions used in determining the variables used in a
valuation model:
i. expected life
ii. expected volatility
iii. expected dividend yield
iv. interest rate
Further detail on the estimates and assumptions we make in our
share-based compensation are included in note 28 to the financial
statements. The charge made to income statement for period is also
disclosed there.
(c) Depreciation and amortisation
The Group depreciates right of use assets, short leasehold,
fixtures and fittings, computer equipment and amortises customer
relationships, technology, computer software, internally generated
development costs and domain names on a straight-line method over
the estimated useful lives. The estimated useful lives reflect the
Directors' estimate of the periods that the Group intends to derive
future economic benefits from the use of the Group's right of use
assets, short leasehold, fixtures and fittings, computer equipment,
customer relationships, technology, computer software, internally
generated development costs and domain names.
(d) Bad debt provision
We perform ongoing credit evaluations of our customers and grant
credit based upon past payment history, financial condition and
anticipated industry conditions. Customer payments are regularly
monitored and a provision for doubtful accounts is established
based upon specific situations and overall industry conditions.
Hence the provision is maintained for potential credit losses based
upon management's assessment of the expected collectability of all
accounts receivable. In making this assessment, management take
into consideration (i) any circumstances of which we are aware
regarding a customer's inability to meet its financial obligations
and (ii) our judgements as to potential prevailing economic
conditions in the industry and their potential impact on the
Group's customers.
Where a general provision is set then specific rationale will be
set against this which will be a combination of looking at
historical data to ascertain the percentage of debt which goes bad.
Plus set against debts within a specific business sector which
might be facing financial difficulty, thereby leading to a deemed
higher risk of defaulting on their debts.
(e) Lease accounting - incremental borrowing rate
IFRS 16 "Leases" requires lease payments to be discounted using
the lessee's incremental borrowing rate. The Group's incremental
borrowing rate, as at the date of adoption of IFRS 16, has been
based on local commercial bank loans. Management have taken the
view that specific costs of borrowing should be applied to each
lease as this reflects the different economic conditions within
each geography and hence is more representative of the funding
facilities available in those countries.
Exceptional items
Where items of income and expense are of such size, nature or
incidence that their disclosure is relevant to explain the
performance of the company for the period, the nature and amount of
such items should be disclosed separately.
3. SEGMENTAL REPORTING
In the current year, Dotdigital's single line of business
remains the provision of data-driven omni-channel marketing
automation. In the previous year Dotdigital had two lines of
business; the additional line being communication platform as a
service (CPaaS). The chief operating decision maker considers the
Group's segments to be by geographical location, this being EMEA,
US and APAC operations and by business activity, this being core
Engagement Cloud and CPaaS as shown in the tables that follow:
Geographical revenue and results (from all operations)
30.6.2022
----------------------------------------
EMEA US APAC Total
GBP'000 GBP'000 GBP'000 GBP'000
Income statement
Revenue 48,191 9,688 4,953 62,832
Gross profit 38,374 8,537 4,351 51,262
Profit/(loss) before income tax 12,444 972 189 13,605
--------- -------- -------- ---------
Total comprehensive income attributable to the owners of the parent 10,967 1,049 148 12,164
========= ======== ======== =========
Financial position
Total assets 83,664 3,498 631 87,793
Net current assets/(liabilities) 42,270 2,204 (816) 43,658
========= ======== ======== =========
Revenue from external customers is attributed to the
geographical segments noted above based on the customers' location.
There were no customers who account for more than 10% of revenue
(2021: none).
All revenue is from contracts signed with new customers and
upgrades and additional functional recurring revenue sold to
existing contracted clients. Revenue from contracts is recognised
under percentage of completion method based on a percentage of
services performed to date as a percentage of the total services to
be performed.
30.6.2021
----------------------------------------
EMEA US APAC Total
GBP'000 GBP'000 GBP'000 GBP'000
Income statement
Revenue 47,024 9,264 4,262 60,550
Gross profit 36,878 8,241 3,864 48,983
Profit/(loss) before income tax 11,669 609 (294) 12,014
--------- -------- -------- ---------
Total comprehensive income attributable to the owners of the parent 10,436 379 (311) 10,504
========= ======== ======== =========
Financial position
Total assets 71,566 3,098 423 75,087
Net current assets/(liabilities) 33,942 1,387 (386) 34,943
========= ======== ======== =========
Revenue from external customers is attributed to the
geographical segments noted above based on the customers' location.
There were no customers who account for more than 10% of revenue
(2021: none).
All revenue is from contracts signed with new customers and
upgrades and additional functional recurring revenue sold to
existing contracted clients. Revenue from contracts is recognised
under percentage of completion method based on a percentage of
services performed to date as a percentage of the total services to
be performed.
Segmental reporting
Business activity revenue and results
30.6.2022
Core CPaaS Total
GBP'000 GBP'000 GBP'000
Income statement
Revenue 62,832 - 62,832
Gross profit 51,262 - 51,262
Profit/(loss) before income tax 13,655 (50) 13,605
--------- -------- ---------
Total comprehensive income attributable to the owners of the parent 12,214 (50) 12,164
========= ======== =========
Financial position
Total assets 87,774 19 87,793
Net current assets/(liabilities) 43,640 18 43,658
========= ======== =========
30.6.2021
Core CPaaS Total
GBP'000 GBP'000 GBP'000
Income statement
Revenue 58,124 2,426 60,550
Gross profit 47,768 1,215 48,983
Profit/(loss) before income tax 12,812 (798) 12,014
--------- -------- ---------
Total comprehensive income attributable to the owners of the parent 11,403 (899) 10,504
========= ======== =========
Financial position
Total assets 74,976 111 75,087
Net current assets/(liabilities) 34,974 (31) 34,943
========= ======== =========
4. EMPLOYEES AND DIRECTORS
30.6.22 30.6.21
GBP'000 GBP'000
Wages and salaries 24,650 22,005
Social security costs 2,396 2,228
Other pension costs 561 534
---------------------- ---------------------
27,609 24,767
====================== =====================
The average monthly number of employees during the year is as follows
30.6.22 30.6.21
Directors 5 5
Sales and marketing product 157 160
Development and system engineers 117 105
Administration 69 69
---------------------- ---------------------
348 339
====================== =====================
Included in the total employees cost above, GBP6,194,834 (2021: GBP5,198,785) was capitalised
in relation to internally generated development costs.
5. EXCEPTIONAL COSTS
Continuing exceptional costs incurred in the year relate to the amortisation of acquired intangibles
of GBP120,000 (2021: GBP120,000), senior management settlement costs of GBP355,053 (2021:GBPnil)
and the acquisition costs of Comapi of GBPnil (2021: GBP68,095).
6. NET FINANCE INCOME
30.6.22 30.6.21
GBP'000 GBP'000
Finance income:
Deposit account interest 57 20
Finance cost:
Finance lease interest (57) (74)
---------------------- ---------------------
- (54)
====================== =====================
7. OPERATING PROFIT
Costs by nature
Profit from continuing operations has been arrived at after charge and crediting:-
30.6.22 30.6.21
GBP'000 GBP'000
Outsourcing and tech infrastructure 11,570 10,356
Total cost of sales 11,570 10,356
======== ===========
30.6.22 30.6.21
GBP'000 GBP'000
Direct marketing 3,066 2,976
Partner commission 2,125 2,198
Staff related costs (inc Directors' emoluments) 20,290 19,208
Auditor's remuneration 81 52
Amortisation of intangibles* 6,001 4,675
Depreciation charge* 1,080 1,410
Legal, professional and consultancy fees 1,028 848
Computer expenditure 802 538
Bad debts 682 897
Foreign exchange losses/(gains) (452) 543
Travel and subsistence costs 119 87
Office running 413 388
Gain on disposal of property, plant and equipment - (2)
Staff welfare 432 342
Other costs 1,059 549
Management charge - (620)
-------- -----------
Total administrative expenses 36,726 34,089
======== ===========
During the year the Group obtained the following services from the Group's auditor at costs
detailed below:
30.6.22 30.6.21
GBP'000 GBP'000
Fees payable to the Company's auditor for the audit of Parent Company and
consolidated financial
statements 33 28
Fees payable to the Company's auditor for other services
- audit of Company subsidiaries 45 47
- review of interim accounts 3 5
-------- --------
81 80
======== ========
*Both amortisation of intangibles and depreciation charge will
not agree to the relevant notes as these numbers exclude amounts
capitalised as development expenditure, amounts included in
exceptional costs and amounts in cost of sales.
8. INCOME TAX EXPENSE
Analysis of the tax charge from continuing operations:
30.6.22 30.6.21
GBP'000 GBP'000
Current tax on profits for the year 1,180 1,008
Changes in estimates related to prior years 142 (53)
Deferred tax on origination and reversal of timing
differences 452 367
-------- --------
1,774 1,322
Analysis of the tax charge from discontinuing operations:
30.6.22 30.6.21
GBP'000 GBP'000
Current tax on profits for the year - -
Deferred tax on origination and reversal of timing
differences - 101
-------- --------
- 101
======== ========
Factors affecting the tax charge:
30.6.22 30.6.21
GBP'000 GBP'000
Profit on ordinary activities from all operations
before tax 13,605 12,014
============ =========
Profit on ordinary activities multiplied by the
average rate of corporation tax suffered globally:
19% (2021: 19%) 2,585 2,283
Effects of:
Adjustments in respect of prior years 142 (102)
Expenses not deductible 98 673
Research and development enhanced claim (1,439) (1,266)
Income not taxable (21) (505)
Share options 71 11
Tax rate changes 291 375
Effects of overseas tax rates 38 (36)
Other 9 (10)
Total tax charge for the year 1,774 1,423
Deferred tax was calculated using the rate 25% (2021: 25%). For
further details on deferred tax see note 24.
Taxation for each region is calculated at the rates prevailing
in the respective jurisdiction.
The main rate of UK corporation tax in the period was 19% (2021:
19%). Finance Act 2021 makes provision for the rate of corporation
tax in the UK to increase (from 1 April 2023) from 19% to 25%. UK
deferred balances have therefore been recognised at 25% in the
period (2021: 25%).
9. PROFIT OF PARENT COMPANY
The profit and loss account of the Parent Company is not
presented as part of these financial statements. The Parent
Company's profit before exceptional items for the financial year
was GBP4,163,416 (2021: GBP3,879,692)
10. DIVIDS
Amounts recognised as distributions to equity holders in the period
30.6.22 30.6.21
GBP'000 GBP'000
Paid dividend for year end 30 June 2021 of 0.86p (2020: 0.83p) per share 2,564 2,472
====== ========
Proposed dividend for the year end 30 June 2022 of 0.98p (2021: 0.86p) per share 2,925 2,583
====== ========
The proposed final dividend is subject to approval by the shareholders at the Annual General
Meeting and has not been included as a liability in these financial statements.
11. EARNINGS PER SHARE
Earnings per share data is based on the consolidated profit
using and the weighted average number of shares in issue of the
Parent Company. Basic earnings per share are calculated by dividing
the earnings attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the
period.
Diluted earnings per share is calculated using the weighted
average number of shares adjusted to assume the conversion of all
dilutive potential ordinary shares. Adjusted earnings per share is
based on the consolidated profit deducting the acquisition related
exceptional costs and share-based payment.
A number of non-IFRS adjusted profit measures are used in this
annual report and financial statements. Adjusting items are
excluded from our headline performance measures by virtue of their
size and nature, in order to reflect management's view of the
performance of the Group. Summarised below is a reconciliation
between statutory results to adjusted results. The Group believes
that alternative performance measures such as adjusted EBITDA are
commonly reported by companies in the markets in which it competes
and are widely used by investors in comparing performance on a
consistent basis without regard to factors such as depreciation and
amortisation, which can vary significantly depending upon
accounting methods (particularly when acquisitions have occurred),
or based on factors which do not reflect the underlying performance
of the business. The adjusted profit after tax earnings measure is
also used for the purpose of calculating adjusted earnings per
share.
Reconciliations to earnings figures used in arriving at adjusted
earnings per share are as follows:
30.6.22 30.6.21
From all operations GBP'000 GBP'000
Profit for the year attributable to the owners of
the parent 11,831 10,591
Amortisation of acquisition-related intangible fixed
assets (see note 14) 120 120
Other exceptional costs (see
note 5) 355 68
Share-based payment (see
note 28) 456 625
Adjusted profit for the year attributable to the
owners of the parent 12,762 11,404
======== ========
Management does not consider the above adjustments to reflect
the underlying business performance. The other exceptional costs
relate to senior management settlement costs.
30.6.22 30.6.21
GBP'000 GBP'000
Adjusted profit for the year attributable to the owners of the parent for continuing
activities. 12,762 12,303
Adjusted loss for the year attributable to the owners of the parent for discontinuing
activities. - (899)
-------- --------
Adjusted profit for the year attributable to the owners of the parent 12,762 11,404
======== ========
30.6.22
----------------------------------------
Weighted
average Per share
From all operations Earnings number of Amount
GBP'000 shares Pence
Basic EPS
Profit for the year attributable to the owners of the parent 11,831 298,995,582 3.96
Adjusted Basic EPS
Adjusted profit for the year attributable to the owners
of the parent 12,762 298,995,582 4.27
Options and warrants - 6,222,724 -
----------- ------------- ----------
Diluted EPS
Profit for the year attributable to the owners of the parent 11,831 305,218,306 3.88
Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of
the parent 12,762 305,218,306 4.18
=========== ============= ==========
30.6.22
------------------------------------
Weighted
average Per share
From continuing operations Earnings number of Amount
GBP'000 shares Pence
Basic EPS
Profit for the year attributable to the owners of the parent 11,831 298,995,582 3.96
Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the
parent 12,762 298,995,582 4.27
Options and Warrants - 6,222,724 -
--------- ------------- ----------
Diluted EPS
Profit for the year attributable to the owners of the parent 11,831 305,218,306 3.88
Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the
parent 12,762 305,218,306 4.18
========= ============= ==========
30.6.21
------------------------------------
Weighted
average Per share
From all operations Earnings number of Amount
GBP'000 shares Pence
Basic EPS
Profit for the year attributable to the owners of the parent 10,591 298,598,459 3.55
Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the
parent 11,404 298,598,459 3.82
Options and Warrants - 4,322,868 -
--------- ------------- ----------
Diluted EPS
Profit for the year attributable to the owners of the parent 10,591 302,921,327 3.50
Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the
parent 11,404 302,921,327 3.76
========= ============= ==========
30.6.21
----------------------------------------
Weighted
average Per share
From continuing operations Earnings number of Amount
GBP'000 shares Pence
Basic EPS
Profit for the year attributable to the owners of
the parent 11,490 298,598,459 3.85
Adjusted Basic EPS
Adjusted profit for the year attributable to
the owners of the parent 12,303 298,598,459 4.12
Options and warrants - 4,322,868 -
--------- -------------- ------------
Diluted EPS
Profit for the year attributable to the owners
of the parent 11,490 302,921,327 3.79
Adjusted Diluted EPS
Adjusted profit for the year attributable to the
owners of the parent 12,303 302,921,327 4.06
========= ============== ============
30.6.21
--------------------------------------
Weighted
average Per share
From discontinued operations Earnings number of Amount
GBP'000 shares Pence
Basic EPS
Loss for the year attributable to the owners of the
parent (899) 298,598,459 (0.30)
Adjusted Basic EPS
Adjusted Loss for the year attributable to the
owners of the parent (899) 298,598,459 (0.30)
Options and Warrants - 4,322,868 -
--------- -------------- ----------
Diluted EPS
Loss for the year attributable to the owners of the
parent (899) 302,921,327 (0.30)
Adjusted Diluted EPS
Adjusted loss for the year attributable to the owners
of the parent (899) 302,921,327 (0.30)
========= ============== ==========
Weighted average number of shares 30.6.22 30.6.21
Shares Shares
Basic EPS 298,995,582 298,598,459
============ ============
Diluted EPS 305,218,306 302,921,327
============ ============
12. CONTINUING AND DISCONTINUED OPERATIONS
The analysis between continuing and discontinued operation is as
follows:
Year ended 30 June 2022
Continuing operations Discontinuing operations
TOTAL
GBP'000 GBP'000 GBP'000
Revenue 62,832 - 62,832
Cost of sales (11,570) - (11,570)
---------------------- ------------------------- ---------
Gross profit 51,262 - 51,262
Administrative expense (36,726) - (36,726)
Share based payments (456) - (456)
Exceptional costs (475) - (475)
---------------------- ------------------------- ---------
OPERATING PROFIT 13,605 - 13,605
Finance income 57 - 57
Finance costs (57) - (57)
---------------------- ------------------------- ---------
PROFIT BEFORE INCOME TAX 13,605 - 13,605
Income tax expense (1,774) - (1,774)
---------------------- ------------------------- ---------
PROFIT FOR THE YEAR 11,831 - 11,831
====================== ========================= =========
Year ended 30 June 2021
Continuing operations Discontinuing operations
TOTAL
GBP'000 GBP'000 GBP'000
Revenue 58,124 2,426 60,550
Cost of sales (10,356) (1,211) (11,567)
---------------------- ------------------------- ---------
Gross profit 47,768 1,215 48,983
Administrative expense (34,089) (2,012) (36,101)
Share based payments (625) - (625)
Exceptional costs (188) - (188)
---------------------- ------------------------- ---------
OPERATING PROFIT 12,866 (797) 12,069
Finance income 20 - 20
Finance costs (74) (1) (75)
---------------------- ------------------------- ---------
PROFIT BEFORE INCOME TAX 12,812 (798) 12,014
Income tax expense (1,322) (101) (1,423)
---------------------- ------------------------- ---------
PROFIT FOR THE YEAR 11,490 (899) 10,591
====================== ========================= =========
13. GOODWILL
Group
30.6.22 30.6.21
COST GBP'000 GBP'000
At 1 July 13,192 13,192
-------- --------
At 30 June 13,192 13,192
-------- --------
IMPAIRMENT
At 1 July 3,512 3,512
At 30 June 3,512 3,512
-------- --------
NET BOOK VALUE 9,680 9,680
======== ========
Goodwill is allocated to the Groups cash generating unit (CGUs)
identified, being Dotdigital.
Goodwill arising on business combinations is not amortised but
is reviewed for impairment on an annual basis, or more frequently
if there are indications that goodwill may be impaired. Goodwill
acquired in a business combination is allocated, at acquisition, to
CGUs that are expected to benefit from that business
combination.
The carrying amount of goodwill relates to the Groups trading
activity and business segment. This has been tested for impairment
during the current period by comparison with the recoverable
amounts of the CGU. Recoverable amounts for CGUs are based on the
higher of value in use and fair value less costs to sell. The
recoverable amounts of the CGU have been determined from value in
use calculations. These calculations use pre-tax cash flow
projections based on financial budgets approved by management
covering a five-year period. Cash flows beyond the five-year period
are extrapolated using the estimated growth rate for the continuing
operations of the Group. These long-term growth rates are
management's estimates. The discount rates used are pre-tax and
reflect specific risks relating to the continuing operations of the
Group.
The key assumptions for the value in use calculations are those
regarding discount rates, growth rates, and expected changes in
margins.
Discount rate
Management estimates discount rates using pre-tax rates that
reflect the current market assessment of the time value of money
and the risks specific to the CGUs. The pre-tax discount rate used
to calculate the value in use is 19.75% (2021: 6.2%). This has
increased as a result of the increase in the cost equity which was
impacted by both the decline in the share price at the year end
compared to last year and the increase in dividend growth rate.
Growth rates
The growth rate is stated as the compound annual growth rates in
the initial five years for the continuing operations of the Group
which are then used for impairment testing. These are performed
using the projected cash flows based on budgets approved by
management over a five-year period. Cash flow projections from the
sixth year onwards are based on an estimated constant growth rate.
The growth rate used to calculate the value in use is 15% (2021:
14%).
Gross profit margin
Changes in income and expenditure are based on experience and
expectations of the future changes in the market. The impairment
review is based on these estimated gross profit margins which were
included with the budgets approved by management over a five-year
period. From the sixth year onwards, an assumed constant margin is
used. The gross profit margin used to calculate the value in use in
75% (2021: 75%).
The valuations indicate sufficient headroom such that a
reasonably possible change in key assumptions would not result in
impairment of goodwill.
Sensitivity analysis
The principal variables used, being both the discount rate and
growth rates, these would need to change before an impairment is
required, this being 161% (2021: 225%) discount rate and growth
rate of -5% (2021: -21%).
14. INTANGIBLE ASSETS
Group
Customer
relationships Technology
GBP'000 GBP'000
COST
At 1 July 2021 1,205 1,200
Additions - -
At 30 June 2022 1,205 1,200
-------------- -----------
AMORTISATION
At 1 July 2021 1,205 430
Amortisation for the year - 120
At 30 June 2022 1,205 550
-------------- -----------
NET BOOK VALUE
At 30 June 2022 - 650
============== ===========
Internally
generated
Computer development Domain
software costs names Totals
GBP'000 GBP'000 GBP'000 GBP'000
COST
At 1 July 2021 1,023 34,052 46 37,526
Additions 87 7,599 - 7,686
Exchange differences 1 - - 1
----------- -------------------- ------------------ ---------------
At 30 June 2022 1,111 41,651 46 45,213
-----------
AMORTISATION
At 1 July 2021 874 18,847 36 21,392
Amortisation for the
year 71 5,931 1 6,123
At 30 June 2022 945 24,778 37 27,515
NET BOOK VALUE
At 30 June 2022 166 16,873 9 17,698
Customer
relationships Technology
GBP'000 GBP'000
COST
At 1 July 2020 1,205 1,200
Additions - -
At 30 June 2021 1,205 1,200
-------------- -------------
AMORTISATION
At 1 July 2020 1,205 310
Amortisation for the
year - 120
At 30 June 2021 1,205 430
-------------- -------------
NET BOOK VALUE
At 30 June 2021 - 770
============== =============
Internally generated development
Computer Domain
software costs names Totals
GBP'000 GBP'000 GBP'000 GBP'000
COST
At 1 July 2020 954 27,255 42 30,656
Additions 69 6,797 4 6,870
At 30 June 2021 1,023 34,052 46 37,526
----------- --------------------------------- --------- ---------
AMORTISATION
At 1 July 2020 793 14,255 34 16,597
Amortisation for the year 81 4,592 2 4,795
At 30 June 2021 874 18,847 36 21,392
----------- --------------------------------- --------- ---------
NET BOOK VALUE
At 30 June 2021 149 15,205 10 16,134
=========== ================================= ========= =========
Development cost additions represents resources the Group has
invested in the development of new, innovative and ground-breaking
technology products for marketing professionals. This platform
allows them to create, send and automate marketing campaigns.
Following development of the products the Group intends to licence
the use of the platform.
Technology represents the cost that would be incurred to build
the entire Comapi platform had the acquisition not occurred.
Customer relationships represent the value of high-value customer
contracts within Comapi.
15. PROPERTY, PLANT AND EQUIPMENT
Group
Right of Short Fixtures & Computer
Use assets leasehold fittings equipment Totals
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
COST
At 1 July 2021 5,384 725 754 2,614 9,477
Additions 167 - - 465 632
Disposals (60) - - - (60)
Exchange differences 64 6 19 23 112
-----------
At 30 June 2022 5,555 731 773 3,102 10,161
----------- ---------- ----------- ---------- --------
DEPRECIATION
At 1 July 2021 2,061 526 680 2,238 5,505
Depreciation for the year 983 61 40 236 1,320
Disposals (45) - - - (45)
Exchange differences 56 6 16 18 96
-----------
At 30 June 2022 3,055 593 736 2,492 6,876
----------- ---------- ----------- ---------- --------
NET BOOK VALUE
At 30 June 2022 2,500 138 37 610 3,285
=========== ========== =========== ========== ========
Right of Short Fixtures & Computer
Use assets leasehold fittings equipment Totals
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
COST
At 1 July 2020 5,458 730 770 2,473 9,431
Additions 115 - - 169 284
Disposals (136) - (4) (14) (154)
Exchange differences (53) (5) (12) (14) (84)
-----------
At 30 June 2021 5,384 725 754 2,614 9,477
----------- ---------- ----------- ---------- --------
DEPRECIATION
At 1 July 2020 1,058 465 632 2,014 4,169
Depreciation for the year 1,091 65 63 244 1,463
Disposals (66) - (2) (10) (78)
Exchange differences (22) (4) (13) (10) (49)
-----------
At 30 June 2021 2,061 526 680 2,238 5,505
----------- ---------- ----------- ---------- --------
NET BOOK VALUE
At 30 June 2021 3,323 199 74 376 3,972
=========== ========== =========== ========== ========
Included in the net carrying amount of property, plant and
equipment are the right-of-use assets as follows:
Motor
Properties vehicles Totals
GBP'000 GBP'000 GBP'000
COST
As at 1 July 2021 5,229 155 5,384
Termination of leases (60) - (60)
Additions 167 - 167
Foreign currency translation 64 - 64
At 30 June 2022 5,400 155 5,555
----------- --------- --------
DEPRECIATION
As at 1 July 2021 1,942 119 2,061
Depreciation for the year 953 30 983
Termination of leases (45) - (45)
Foreign currency translation 56 - 56
At 30 June 2022 2,906 149 3,055
----------- --------- --------
NET BOOK VALUE
At 30 June 2022 2,494 6 2,500
=========== ========= ========
Motor
Properties vehicles Totals
GBP'000 GBP'000 GBP'000
COST
As at 1 July 2020 5,376 82 5,458
Termination of leases (136) - (136)
Additions 42 73 115
Foreign currency translation (53) - (53)
At 30 June 2021 5,229 155 5,384
----------- --------- --------
DEPRECIATION
As at 1 July 2020 1,015 43 1,058
Depreciation for the year 1,010 81 1,091
Termination of leases (65) - (65)
Foreign currency translation (18) (5) (23)
At 30 June 2021 1,942 119 2,061
----------- --------- --------
NET BOOK VALUE
At 30 June 2021 3,287 36 3,323
=========== ========= ========
16. INVESTMENTS
Company
Group Group
undertakings undertakings
30.6.22 30.6.21
COST GBP'000 GBP'000
At 1 July 21,660 21,035
Additions 456 625
Disposals - -
At 30 June 22,116 21,660
IMPAIRMENT
At 1 July and 30 June 3,519 3,519
Impairment 234 -
------------- -------------
At 30 June 3,753 3,519
------------- -------------
NET BOOK VALUE
At 30 June 18,363 18,141
============= =============
The Group's or the Company's investments at the balance sheet
date in the share capital of companies include the following:
Subsidiaries Nature of business Class of share Proportion of
voting power
held directly %
Dotdigital EMEA Limited Omni-channel Ordinary 100
communication platform
Omni-channel
Dotdigital Inc communication platform Ordinary 100
Dotdigital APAC Pty Omni-channel communication
Limited platform Ordinary 100
Omni-channel communication
Dotdigital B.V. platform Ordinary 100
Dotmailer Development Ltd Holding company Ordinary 100
Dotmailer SA Pty Development hub Ordinary 100
Dotmailer LLC** Development hub Ordinary 100
Omni-channel communication
Dotdigital SG Pte Limited platform Ordinary 100
Omni-channel communication
Dynmark International Ltd platform Ordinary 100
Dynmark S.p z.o.o** Development hub Ordinary 100
Dotdigital Canada Inc Consultancy services Ordinary 100
** These are held indirectly at 100%.
All of the above subsidiaries have been included within the
consolidated results, however Dynmark International Ltd was exempt
from audit by virtue of s479A of Companies Act 2006 plus Dotdigital
Canada Inc was also fully shut down before the year end. Dotdigital
EMEA Limited, Dotmailer Development Limited and Dynmark
International Ltd were incorporated in England and Wales.
Dotdigital Inc was incorporated in Delaware (US), Dotdigital APAC
Pty Limited was incorporated in New South Wales (Australia),
Dotdigital B.V. was incorporated in Netherlands, Dotdigital SG Pte
Ltd was incorporated in Singapore, Dotmailer SA Pty was
incorporated in South Africa, Dotmailer LLC was incorporated in the
Republic of Belarus, Dynmark S.p. z.o.o. was incorporated in Poland
and Dotdigital Canada Inc was incorporated in British Columbia
(Canada).
Subsidiary Registered office
Dotdigital EMEA Ltd No.1 London Bridge
Dynmark International Ltd London
Dotmailer Development Ltd SE1 9BG
Dotdigital Inc 16192 Coastal Highway
Lewes
Delaware 19958-9776
County of Sussex
USA
Dotdigital Canada Inc 939 Granville Street
Vancouver
British Columbia
V6Z 1L3
Canada
Dotdigital APAC Pty Ltd 60/2 O'Connell Street
Parramatta
New South Wales 2150
Australia
Dotdigital SG Pte Ltd Level 17, Frasers Tower
182 Cecil Street
069547 Singapore
Dotmailer SA Pty Ltd BDO Building
Wanderers Office Park
52 Corlett Drive
Illovo
Johannesburg 2196
South Africa
Dotdigital B.V. 15 Hoogoorddreef
Amsterdam
1101 BA
Netherlands
Dynmark s.p. z.o.o Al. Jana Pawla II 22
00-133 Warsaw
Poland
Dotmailer LLC Office 11-9
Tolbukhina Street
Minsk 220012
Belarus
17. TRADE AND OTHER RECEIVABLES
Group Company
30.6.22 30.6.21 30.6.22 30.6.21
GBP'000 GBP'000 GBP'000 GBP'000
Current:
Trade receivables 10,748 10,895 - -
Less: Provision for impairment of trade receivables (1,892) (1,785) - -
---------- ---------- -------- --------
Trade receivables - net 8,856 9,110 - -
Other receivables 52 60 - -
Amounts owed by Group undertakings - - 1,426 -
VAT - - 34 52
Tax receivable 186 - - -
Prepayments and contract assets 4,117 4,180 845 88
---------- ---------- -------- --------
13,211 13,350 1,545 140
========== ========== ======== ========
Further details on the above can be found in note 23.
Included within Group prepayments is an amount of GBP246,057
(2021: GBP299,016) in relation to deferred commission which is
considered to be long term. The Group has applied IFRS 9 simplified
approach to measuring expected credit losses, the balances have
been assessed based on each entitiy's ability to repay amounts owed
and no expected credit loss has been recognised.
18. CASH AND CASH EQUIVALENTS
Group Company
30.6.22 30.6.21 30.6.22 30.6.21
GBP'000 GBP'000 GBP'000 GBP'000
Bank accounts 43,919 31,951 163 85
43,919 31,951 163 85
======== ======== ======== ========
Further details on the above can be found in note 23.
19. CALLED UP SHARE CAPITAL
Allotted, issued, fully paid Nominal 30.6.22 30.6.21
Number value GBP'000 GBP'000
299,216,130 (2021: 298,778,630) GBP0.005 1,496 1,494
-------- --------
1,496 1,494
======== ========
During the reporting period the Company undertook the following
transactions involving the issuing of share capital:
On 1 April 2022 an employee exercised their share options,
increasing the issued share capital by 437,500 shares.
20. RESERVES
Group
Retained Share Reverse acquisition
earnings premium reserve
GBP'000 GBP'000 GBP'000
As at 1 July 2021 54,081 7,124 (4,695)
Issue of share capital - - -
Dividends (2,564) - -
Profit for the year 11,831 - -
Transfer of reserves 234 - -
Deferred tax on share options - - -
Other comprehensive income: currency translation - - -
Share-based payment - - -
--------- -------- --------------------
Balance as at 30 June 2022 63,582 7,124 (4,695)
========= ======== ====================
Retranslation Other
Reserve reserves Totals
GBP'000 GBP'000 GBP'000
As at 1 July 2021 (37) 3,066 59,539
Issue of share capital - - -
Dividends - - (2,564)
Profit for the year - - 11,831
Transfer of reserves - (234) -
Deferred tax on share options - (1,283) (1,283)
Other comprehensive income: currency translation 333 - 333
Share-based payment - 456 456
-------------- --------- --------
Balance as at 30 June 2022 296 2,005 68,312
============== ========= ========
Group
Retained Share Reverse acquisition
earnings premium reserve
GBP'000 GBP'000 GBP'000
As at 1 July 2020 45,655 6,967 (4,695)
Issue of share capital - 157 -
Dividends (2,472) - -
Profit for the year 10,591 - -
Transfer of reserves 307 - -
Deferred tax on share options - - -
Other comprehensive income: currency - - -
translation
Share-based payment - - -
--------- -------- ----------------------
Balance as at 30 June 2021 54,081 7,124 (4,695)
========= ======== ======================
Retranslation Other
reserve reserves Totals
GBP'000 GBP'000 GBP'000
As at 1 July 2020 50 1,600 49,577
Issue of share capital - - 157
Dividends - - (2,472)
Profit for the year - - 10,591
Transfer in reserves - (307) -
Deferred tax on share options - 1,148 1,148
Other comprehensive income: currency translation (87) - (87)
Share-based payment - 625 625
-------------- --------- --------
Balance as at 30 June 2021 (37) 3,066 59,539
============== ========= ========
Company
Retained Share Other
earnings premium Reserves Totals
GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 2021 7,570 7,124 1,690 16,384
Issue of share capital - - - -
Dividends (2,564) - - (2,564)
Profit for the year 4,163 - - 4,163
Transfer in reserves 231 - (231) -
Share based payments - - 456 456
--------- -------- --------- --------
At 30 June 2022 9,400 7,124 1,915 18,439
========= ======== ========= ========
Company
Retained Share Other
earnings premium Reserves Totals
GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 2020 5,924 6,967 1,372 14,263
Issue of share capital - 157 - 157
Dividends (2,472) - - (2,472)
Profit for the year 3,811 - - 3,811
Transfer in reserves 307 - - 307
Share based payments - - 318 318
--------- -------- --------- --------
Restated balance as at 30 June 2021 7,570 7,124 1,690 16,384
========= ======== ========= ========
21. TRADE AND OTHER PAYABLES
Group Company
30.6.22 30.6.21 30.6.22 30.6.21
GBP'000 GBP'000 GBP'000 GBP'000
Current:
Trade payables 2,428 769 81 16
Amounts owed to Group undertakings - - - 390
Social security and other taxes 68 29 - -
Other payables 151 84 - -
VAT 228 18 - -
Accruals and contract liabilities 9,779 8,434 61 86
12,654 9,334 142 492
======== ======== ======== ========
Further details on liquidity and interest rate risk can be found
in note 23. Amounts owed to group undertakings are non-interest
bearing and are repayable on demand.
22. LEASE LIABILITIES
Group
Properties Motor Vehicles Totals
GBP'000 GBP'000 GBP'000
At 1 July 2021 3,359 64 3,423
Termination of leases (15) - (15)
Additions 167 - 167
Principal repayments (1,081) (29) (1,110)
Interest 89 1 90
Foreign currency retranslation 21 - 21
----------- --------------- --------
At 30 June 2022 2,540 36 2,576
=========== =============== ========
Current 796 22 818
Non-current 1,744 14 1,758
----------- --------------- --------
At 30 June 2022 2,540 36 2,576
=========== =============== ========
Group
Properties Motor Vehicles Totals
GBP'000 GBP'000 GBP'000
At 1 July 2020 4,427 40 4,467
Termination of leases (67) - (67)
Additions 42 73 115
Principal repayments (1,132) (50) (1,182)
Interest 110 1 111
Foreign currency retranslation (21) - (21)
----------- --------------- --------
At 30 June 2021 3,359 64 3,423
=========== =============== ========
Current 906 28 934
Non-current 2,453 36 2,489
----------- --------------- --------
At 30 June 2021 3,359 64 3,423
=========== =============== ========
The properties are office leases located in various location
where the term in ranging from one to eight years. The motor
vehicles are company cars offered to senior staff where the term is
always three years.
23. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Group's activities expose it to a number of financial risks
that include credit risk, liquidity risk, currency risk and
interest rate risk. These risks and the Group's policies for
managing them have been applied consistently during the year and
are set out below.
The Group holds no financial or other non-financial instruments
other than those utilised in the working operations of the Group
and that are listed in this note. It is the Group's policy not to
trade in derivative contracts.
Principal financial instruments
The principal financial instruments used by the Group, from
which financial instrument rate risk arises, are as follows:
-Trade receivables
-Cash and cash equivalents
-Trade and other payables
- Lease Liabilities
Financial instruments by category
The following table sets out the financial instruments as at the
reporting date:
Group Company
30.6.22 30.6.21 30.6.22 30.6.21
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Trade and other receivables 8,908 9,170 - -
Amounts owed from group undertakings - - 1,426 -
Bank balances 43,919 31,951 163 85
52,827 41,121 1,589 85
======== ======== ======== ========
Financial liabilities
Trade payables 2,428 769 81 16
Amounts owed to group undertakings - - - 390
Accrued liabilities and other payables 9,779 8,221 61 86
12,207 8,990 142 492
============ ====== ==== ====
The fair value of the financial assets and financial liabilities
is equal to their carrying values. All financial assets are
categorised as loans and receivables and all financial liabilities
are categorised as financial liabilities at amortised costs.
General objectives, policies and processes
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies and whilst
retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the
Group's Risk Committee. The Board receives quarterly reports from
the Risk Committee, through which it reviews the effectiveness of
the processes put in place and the appropriateness of the
objectives and policies it sets.
The overall objective of the Board is to set policies that seek
to reduce risk as far as possible without unduly affecting the
Company's competitiveness and flexibility. Further details
regarding these policies are set out below:
Interest rate risk
The Group's interest rate risk arises from interest-bearing
assets and liabilities. The Group has in place a policy of
maximising finance income by ensuring that cash balances earn a
market rate of interest offsetting where possible cash balances,
and by forecasting and financing its working capital requirements.
As at the reporting date the Group was not exposed to any movement
in interest rates as it has no external borrowings and therefore is
not exposed to interest rate risk. No sensitivity analysis has been
prepared.
The Group's working capital requirements are managed through
regular monitoring of the overall cash position and regularly
updated cash flow forecasts to ensure there are sufficient funds
available for its operations.
Liquidity risk
The Group's working capital requirements are managed through
regular monitoring of the overall position and regularly updated
cash flow forecasts to ensure there are funds available for its
operations. Management forecasts indicate no new borrowing
facilities will be required in the upcoming financial period.
Trade and other payables of GBP13,175,482 (2021: GBP10,221,000)
are expected to mature in less than a year
Credit risk
Credit risk arises principally from the Group's trade
receivables, as there are no trade receivables within the Company,
which comprise amounts due from customers. Prior to accepting new
customers, a credit check is obtained. As at 30 June 2021 there
were no significant debts past their due period which had not been
provided for. The maturity of the Group's trade receivables is as
follows:
30.6.22 30.6.21
GBP'000 GBP'000
0-30 days 6,225 5,734
30-60 days 2,572 2,701
More than 60 days 1,951 2,550
10,748 10,985
======== ========
The maturity of the Group's provision for impairment is as
follows:
30.6.22 30.6.21
GBP'000 GBP'000
0-30 days 195 140
30-60 days 231 154
More than 60 days 1,466 1,491
1,892 1,785
======== ========
The movement in the provision for the impairment is as
follows:
30.06.22 30.6.21
GBP'000 GBP'000
As at 1 July 1,785 1,589
Provision for impairment 126 262
Receivable written off in the year (19) (66)
Unused amount reversed - -
---------
As at 30 June 1,892 1,785
========= ========
The Group minimises its credit risk by profiling all new
customers and monitoring existing customers of the Group for
changes in their initial profile. The level of trade receivables
older than the average collection period consisted of a value of
GBP2,055,923 (2021: GBP2,484,862) of which GBP1,476,586) (2021:
GBP1,502,918) was provided for. The Group felt that the remainder
would be collected post year-end as they were with long-standing
relationships, and the risk of default is considered to be low and
write-offs due to bad debts are extremely low. The Group has no
significant concentration of credit risk, with the exposure spread
over a large number of customers.
The credit risk on liquid funds is low as the counterparts are
banks with high credit ratings assigned by international credit
rating bodies. The majority of the Company's cash holdings are held
at NatWest Bank, which has a BBB credit rating.
The carrying value of both financial assets and liabilities
approximates to fair value.
Capital policy
The Group's objectives when managing capital are to safeguard
its ability to continue as a going concern in order to provide
optimal returns for shareholders and to maintain an efficient
capital structure to reduce the cost of capital.
In doing so the Group's strategy is to maintain a capital
structure commensurate with a strong credit rating and to retain
appropriate levels of liquidity headroom to ensure financial
stability and flexibility. To achieve this, the Group monitors key
credit metrics, risk and fixed charge cover to maintain this
position. In addition the Group ensures a combination of
appropriate short-term and long-term liquidity headroom.
During the year the Group had a short-term loan balance of
GBPnil (2021: GBPnil) and amounts payable over one year are nil
(2021: GBPnil). The Group had a strong cash reserve to utilise for
any short-term capital requirements that were needed.
The Group has continued to look for further long-term
investments or acquisitions and therefore, to maintain or re-align
the capital structure, the Group may adjust when dividends are paid
to shareholders, return capital to shareholders, issue new shares
or borrow from lenders.
Foreign currency exchange rate risk
Refer to foreign currency exchange rate risk under note 2..
Maturities of financial liabilities
The tables below analyse the Group's financial liabilities into
relevant maturity groupings based on their contractual maturities
for all non-derivative financial liabilities (the Group does not
hold any derivative financial instruments in the current or prior
financial year).
The amounts disclosed in the table are the contractual
undiscounted cash flows. Balances due within 12 months equal their
carrying balances as the impact of the discounting is not
significant.
<6 6 to 12 1 to 2 years 2 to 5 Total
months months years contractual
cash flows
carrying
amounts
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Contractual
maturities
at 30 June 2022
Trade and other
payables 12,654 - - - 12,654
Lease
liabilities 425 392 741 1,018 2,576
Total
non-derivatives 13,079 392 741 1,018 15,230
========= ======== ======================== ============================== ============
<6 6 to 12 1 to 2 years 2 to 5 Total
months months years contractual
cash flows
carrying
amounts
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Contractual
maturities
at 30 June 2021
Trade and other
payables 9,334 - - - 9,334
Lease
liabilities 480 454 759 1,730 3,423
Total
non-derivatives 9,814 454 759 1,730 12,757
========= ======== ======================== ============================== ============
24. DEFERRED TAX
30.6.22 30.6.21
GBP'000 GBP'000
As at 1 July 1,207 1,983
Current year provision 1,548 (776)
2,755 1,1,207
======== ========
The deferred tax liability above comprises the following
temporary differences:
30.6.22 30.6.21
GBP'000 GBP'000
Acquired intangibles 163 146
Capital allowances in excess of depreciation 82 38
Temporary differences (82) -
R&D relief in excess of amortisation 3,181 2,963
Share option relief (453) (1,805)
Losses (136) (135)
2,755 1,207
======== ========
Deferred tax provision relates to taxes to be levied by the same
authority on the same entity expected to be settled at the same
time. As such deferred tax assets and liabilities have been
offset.
25. CAPITAL COMMITMENTS
The Company and Group have no capital commitments as at the year
end.
26. RELATED PARTY DISCLOSURES
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
Group
The following transactions were carried out with related parties
and were made on terms equivalent to those that prevail in arm's
length transactions.
30.6.22 30.6.21
GBP'000 GBP'000
Sale of services
Entity under common
Ipswich Town Football Club directorship Email marketing services 5 4
Entity under common
Epwin Group Plc directorship Email marketing services 4 6
9 10
======== ========
Year end balances arising 30.6.22 30.6.21
from sale of services GBP'000 GBP'000
Ipswich Town Football Entity under common
Club directorship Email marketing services - 1
Entity under common
Epwin Group Plc directorship Email marketing services - 1
- 2
=========== =========
Directors
30.6.22 30.6.21
GBP'000 GBP'000
Aggregate emoluments 938 1,136
Ex-gratia payment 213 -
Company contributions to money purchase pension scheme 25 26
Share-based payments from the LTIP options granted 176 347
1,352 1,509
======== ========
Directors' pay summary does include Non-Executive Directors.
Ex-gratia payment related to a settlement payment made to the old
CFO.
Information in relation to the highest paid Director is as
follows:
30.6.22 30.6.21
GBP'000 GBP'000
Salaries 529 574
Other benefits 2 14
Pension costs 18 16
Share-based payments on the LTIP options granted 126 198
675 802
======== ========
Company
The following transactions were carried out with related
parties
30.06.22 30.06.21
GBP'000 GBP'000
Year end balances arising from sales/purchase of
services
Dotdigital EMEA Limited Subsidiary Receivables/(Payables) 2,151 (651)
2,151 (651)
========= =========
The receivables and payables are unrestricted in nature and bear
no interest. No provisions are held against receivables from
related parties.
Loans to/from related parties
30.6.22 30.6.20
GBP'000 GBP'000
Dotdigital EMEA Limited Subsidiary
As at 1 July (1,041) (3,545)
Loans advanced 5,653 5,075
Loans repaid (3,886) (2,571)
(726) (1,041)
======== ========
IAS 24 Related Party Disclosure (Revised) allows disclosure
exemption of transactions between wholly-owned subsidiaries that
are eliminated on consolidation.
27. ULTIMATE CONTROLLING PARTY
There is no ultimate controlling party of the Group. Dotdigital
Group Plc acts as the Parent Company to Dotdigital EMEA Limited,
Dotdigital Inc, Dotdigital APAC Pty Limited, Dotdigital B.V.,
Dotmailer Developments Limited, Dotmailer SA Pty, Dotmailer LLC,
Dotdigital SG Pte. Limited, Dynmark International Ltd, Dotdigital
Canada Inc and Dynmark S.p. z.o.o.
28. SHARE-BASED PAYMENT TRANSACTIONS
The measurement requirements of IFRS 2 have been implemented in
respect of share options that were granted after 7 November 2002.
The expense recognised for share-based payment made during the year
is GBP455,549 (2021: GBP625,000).
Vesting conditions of the options dictate that employees must
remain in the employment of the Group for the whole period to
qualify.
Movement in issued share options during the year
The table below illustrates the number and weighted average
exercise price (WAEP) of, and movements in, share options during
the period. The options outstanding at 30 June 2022 had a WAEP of
49.04p (2021: 26.05p) and a weighted average contracted life of
5.82 years (2021: 5.14 years) and their exercise prices ranged from
0.5p to 181.2p. All share options are settled in form of equity
issued.
30.06.22 30.6.21
No of options WAEP No of options WAEP
Outstanding at the beginning of the
period 4,292,735 26.05p 3,910,984 51.09p
Granted during the year 2,463,663 89.85p 1,093,728 104.67p
Forfeited/cancelled during the period (259,562) 137.88p (480,992) 13.03p
Exchanged for shares (437,500) 0.50p (230,985) 68.50p
------------------- ------------- ------------------- -------------
Outstanding at the end of the period 6,059,337 49.04p 4,292,735 26.05p
------------------- ------------- ------------------- -------------
Exercisable at the end of the period - - - -
The weighted average share price at the date of the exercise for
share options exercised during the period was 0.84p (2021:
178.57p). For options granted after 2019, a Monte Carlo model was
used in measuring the fair use of options granted that were subject
to a TSR performance condition. A Black Scholes model was used in
measuring the fair use of all other options granted.
22 December 2020 23 September 2021 24 December 2021
Relative Relative Relative
EPS (50%) TSR (50%) EPS (50%) TSR (50%) EPS (50%) TSR (50%)
Number of options granted 153,364 153,364 100,729 100,729 193,894 193,894
Share price at grant date 152.0p 152.0p 264.0p 264.0p 196.0p 196.0p
Exercise price 0.50p 0.50p 0.50p 0.50p 0.50p 0.50p
Option life in years 5 years 5 years 5 years 5 years 5 years 5 years
Risk-free rate (0.08)% (0.08)% 0.38% 0.38% 0.57% 0.57%
Expected volatility 40.40% 40.40% 39.00% 39.00% 43.00% 43.00%
Expected dividend yield 0% 0% 0% 0% 0% 0%
Fair value of options 152.0p 99.0p 264.0p 181.0p 196.0p 115.0p
19 December 24 October 14 December 15 December 14 April
2017 2018 2020 2021 2022
Number of options granted 1,375,000 2,305,000 535,920 567,300 1,367,547
Share price at grant date 85.95p 77.5p 148.0p 181.0p 90.0p
Exercise price 0.50p 0.50p 147.5p 181.2p 86.5p
Option life in years 5 years 5 years 10 years 10 years 10 years
Risk-free rate 1.33% 1.23% (0.01)% 0.54% 1.68%
Expected dividend yield 1% 1% 0.56% 0.46% 0.96%
Fair value of options 65.3p 52.7p 47.0p 62.0p 42.0p
Expected volatility was determined by calculating the historical
volatility of the Group's share price from the date it listed to
the grant date of the share option. The expected life used in the
model is based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural
considerations.
The share options granted on 24 October 2018, 22 December 2020,
23 September 2021 and 24 December 2021 were following the approval
of the LTIP scheme at the AGM on 19 December 2017 and the
end-to-end awards that were granted to key personnel.
29. GROUP RECONCILIATION OF PROFIT BEFORE CORPORATION TAX TO CASH GENERATED FROM OPERATIONS
Group Company
30.6.22 30.6.21 30.6.22 30.6.21
GBP'000 GBP'000 GBP'000 GBP'000
Current:
Profit before tax from all operations 13,605 12,014 4,163 3,811
Amortisation 6,123 4,795 - -
Depreciation 1,124 1,267 2 2
Exceptional costs - 68 - -
Finance lease non-cash movement 152 (48) - -
Gain on disposal of fixed assets - (2) - -
Loss on disposal of investments - - - -
Share-based payments 456 625 - -
Impairment on investment - - 235 -
Finance expense 57 75 - -
-------- -------- -------- --------
21,517 18,794 4,400 3,813
(Increase)/decrease in trade receivables 325 (363) (1,405) 657
Increase in trade payables 3,320 (462) (350) (2,464)
-------- -------- -------- --------
Cash generated from operations 25,162 17,969 2,645 2,006
======== ======== ======== ========
30. GROUP CASH AND CASH EQUIVALENTS
The amounts disclosed in the statement of cash flow in respect
of cash and cash equivalents are in respect of these statements of
financial position amounts:
Group Company
GBP'000 GBP'000
As at 1 July 2020 25,383 396
======== ========
As at 30 June 2021 31,951 85
======== ========
As at 30 June 2022 43,919 163
======== ========
31. PROJECT DEVELOPMENT
During the year the Group incurred GBP7,599,073 (2021:
GBP6,797,279) in development investments. All resources utilised in
development have been capitalised as outlined in the accounting
policy governing this area.
32. EVENTS AFTER THE END OF THE REPORTING PERIOD
There are no events after the end of the reporting period which
impact the Group's and Company's financial statements .
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END
FR FFFEDIEESELF
(END) Dow Jones Newswires
November 16, 2022 02:00 ET (07:00 GMT)
dotDigital (AQSE:DOTD.GB)
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