REG - dotDigital Group plc - Final Results
07/11/2023 07:00
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RNS Number : 5644S dotDigital Group plc 07 November 2023
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Dotdigital Group plc
("Dotdigital" or the "Group")
Final Results for the year ended 30 June 2023
Strong profitable growth and cash generation
Dotdigital Group plc (AIM: DOTD), the leading SaaS provider of an all-in-one
customer experience and data platform (CXDP), announces its final audited
results for the year ended 30 June 2023 ("FY23").
Financial Highlights
· Group revenue growth of 10% to £69.2m (FY22: £62.8m)
o Recurring and repeating revenue was maintained at 94% of total revenue (FY22:
94%). Contracted recurring revenue continues to represent 79% of total revenue
o ARPC(1) increased 11% to £1,622 per month (FY22: £1,461 per month)
o ARR(2) growth of 10% to £54.4m (FY22: 10%)
· Adjusted EBITDA(3) of £22.0m (FY22: £21.7m) and adjusted operating profit of
£14.5m (FY22: £14.5m)
· Adjusted profit before tax(4) of £15.4m (FY22: £14.5m)
· Adjusted diluted earnings per share increased 6% to 4.43p (FY22: 4.18p)
· Strong net cash balance on 30 June 2023 of £52.7m (30 June 2022: £43.9m)
· Proposed final dividend of 1p per ordinary share (FY22: 0.98p) in line with
progressive dividend policy
Operating Highlights
· Growth in all global regions has underpinned the double-digit revenue growth
performance at Group level
· Customers continue to expand usage of platform and ongoing product innovation
resulting in functionality recurring revenue(5) increasing 11% to £24.9m
(FY22: £22.3m)
· Launch of next-generation Customer Experience Data Platform (CXDP) and
significantly enhanced AI-powered functionality supporting growth in higher
value customers
· New technology integrations with partners extending market coverage, with
revenue from strategic partners increasing 8% to £31.2m (FY22: £28.9m)
· Investment in people to strengthen international footprint, with headcount up
by 15%
· On track to achieve target of Net Zero emissions by 2030
· Integration of Fresh Relevance on track, acquired in September 2023 post
period end, driving step-change in CXDP roadmap. First new joint customer wins
already completed
Milan Patel, Chief Executive Officer of Dotdigital, commented:
"We are pleased to have delivered a year of strong growth and cash generation,
slightly ahead of initial expectations, whilst continuing to invest in our
growth opportunity and maintaining high profit levels. The Group's product
offering has advanced materially in the year with the launch of our CXDP
platform and enhanced AI functionality. We have also bolstered our global
teams which is translating into positive momentum.
"The post period acquisition of Fresh Relevance's personalisation technology
and talented team marks a leap forward in our strategy, accelerating our
product roadmap and opening up new, high value market opportunities. We start
the new financial year with solid global foundations, a substantially enhanced
product offering and a robust financial position. We have had an encouraging
start to FY24 and look forward to our continued profitable growth."
Analyst Briefing and Investor Presentation
Management will be hosting a live online presentation and Q&A for analysts
today at 9.30am GMT. To register to attend the analyst presentation, please
contact dotdigital@almastrategic.com (mailto:dotdigital@almastrategic.com)
.
The Company will also host a live presentation and Q&A covering the
results via the Investor Meet Company platform on Monday 13 November at
11.00am GMT. The presentation is open to all existing and potential
shareholders. Investors can sign up to Investor Meet Company for free and add
to meet Dotdigital via this link
(https://www.investormeetcompany.com/dotdigital-group-plc/register-investor) .
Investor Deck: A copy of the slides relating to the FY23 results is available
here: https://www.dotdigitalgroup.com/events-presentations/
(https://www.dotdigitalgroup.com/events-presentations/)
Annual Report: A copy of the Annual Report for FY23 will be available on our
website shortly: https://www.dotdigitalgroup.com/reports/
(https://www.dotdigitalgroup.com/reports/)
1. ARPC means Average Revenue Per Customer (including new customers added in
period and existing customers)
2. ARR means Annual Recurring Revenue
3. Adjusted EBITDA is earnings before interest, tax, depreciation and
amortisation and adjusted for acquisition costs and share-based payments
4. Adjusted profit before tax is earnings before tax and adjusted for acquisition
costs, exceptional costs and share-based payments
5. Functionality revenue refers to license fees and enhanced bolt-on
functionality
Dotdigital Group Plc Tel: 020 3953 3072
Milan Patel, CEO
Alistair Gurney, CFO investorrelations@dotdigital.com (mailto:investorrelations@dotdigital.com)
Alma (Financial Communications) Tel: 020 3405 0210
Hilary Buchanan dotdigital@almastrategic.com
David Ison
Kieran Breheny
Canaccord Genuity (Nominated Advisor and Joint Broker) Tel: 020 7523 8000
Bobbie Hilliam, Corporate Finance
Jonathan Barr, Sales
Cavendish Capital Markets Limited (Joint Broker) Tel: 020 7220 0500
Jonny Franklin Adams, Corporate Finance
Sunila de Silva, Equity Capital Markets
Singer Capital Markets (Joint Broker) Tel: 020 7496 3000
Shaun Dobson, Corporate Finance
Alex Bond, Corporate Finance
About Dotdigital
Dotdigital Group plc (AIM: DOTD) is a leading provider of cross-channel
marketing automation technology to marketing professionals. Dotdigital's
customer experience and data platform (CXDP) combines the power of automation
and AI to help businesses deliver hyper-relevant customer experiences at
scale. With Dotdigital, marketing teams can unify and enrich their customer
data, identify valuable customer segments, and deliver personalised
cross-channel customer journeys that result in engagements, conversions, and
loyalty.
Founded in 1999, Dotdigital is headquartered in London with offices in
Croydon, Manchester, New York, Melbourne, Sydney, Singapore, Cape Town, and
Warsaw. Dotdigital's solutions empower over 4,000 brands across 150 countries.
CHAIR'S STATEMENT
Since we announced our FY22 results, Dotdigital Group Plc (Dotdigital) has
made important steps forward and I am pleased to be able to report on a year
characterised by solid commercial out-turn and, crucially, material advances
in development and delivery of our growth strategy. We have entered the new
financial year in a strong position and are optimistic about the future.
Optimal allocation of cash to accelerate growth and build long-term value
I would first like to welcome our new colleagues that joined the business with
the post-period acquisition of Fresh Relevance Ltd (Fresh Relevance), a
leading cross-channel personalisation technology firm. (For further details
see note 33 of the consolidated financial statements).
Behind the scenes, much of the financial year was spent refining our Customer
Experience and Data Platform (CXDP) growth strategy and ensuring we have a
crystal-clear picture of where we want to get to as a business and the
deliverables required to achieve this.
We operate in an incredibly dynamic industry that is in a perpetual state of
evolution, so it is important that we build out our offering at pace to cement
our competitive advantage. The Fresh Relevance deal enables us to meet several
deliverables that would have taken considerable time and resource to achieve
organically, enabling us to leapfrog several of our competitors and bringing
us closer to providing the most complete platform on the market.
Dotdigital is a highly cash generative business and had built up significant
cash reserves for a company of its size. The Board firmly believes that using
Dotdigital's balance sheet to fortify its strategic position and unlock higher
growth potential will deliver the best long-term returns to shareholders. The
acquisition of Fresh Relevance is aligned to this and, supported by a
financial position that remains strong, we are continuing to explore M&A
opportunities where we are confident it will further accelerate progress
towards our goals.
Established teams and steadily improving performance
Since joining Dotdigital in July 2022, I have observed a steady continued
improvement as the Group moved past the challenges of H1 FY22. In some ways
the year prior was a period of transition with important personnel changes
against an uncertain macroeconomic backdrop. We now have the right talented
leadership in place and teams well-embedded across all regions, with activity
ramping up as expected.
A return to growth in the US reflects the management's drive and the work they
have done to enhance sales discipline. Our North American operations are now
stable and there is a sense that momentum is building. Our venture into Japan,
while still in its infancy, looks promising. For the team there to have
achieved the level of sales traction they have at this stage is remarkable and
bolsters the performance of an already strong Asia-Pacific region. (See note
3)
Geographic expansion remains a key pillar of our growth strategy and our
overseas operations are now in excellent condition. The progress we are making
overseas demonstrates the truly global appeal of our platform and we are
confident of making further inroads as we elevate our offering and strengthen
the channels and partners that underpin our growth ambitions.
Fostering a culture of responsibility
FY23 was a year of material progress across our ESG strategy. The
establishment of Dotvoice, our colleague-led programme comprising
Dotwellbeing, Dotgreen, Dotcommunity and DotDEI, has helped bring clear
direction and purpose to our efforts. Together these groups have been
instrumental in building a culture of learning and engagement across our
communities and making responsibility an inextricable part of how we do
business.
Dotwellbeing continues to be a beacon for our employees, supporting their
well-being. Dotgreen has championed sustainability, achieving ISO14001
certification and actively contributing to our ambitious Net Zero 2030 target.
DotDEI has made significant strides, ensuring diversity, equity, and inclusion
remain at the heart of our organisational ethos. Dotcommunity, through
impactful partnerships and initiatives, has reinforced our commitment to
social responsibility.
Dividend
The Board will be maintaining its progressive dividend policy in line with
Group EBITDA growth. Therefore, subject to approval at the AGM in December
2023, the Board proposes that the Group pay a final dividend of 1p per
ordinary share (2022: 0.98p), payable at the end of January 2024.
Well-positioned to take advantage of the wealth of available opportunities
On behalf of the Board I would like to extend our gratitude to everyone at
Dotdigital. Through their collective buy-in and dedication we have achieved
important milestones in the year and are well set to make further progress.
The broader economic environment remains uncertain but with a meticulously
mapped out set of organic and inorganic deliverables, an increased focus and
exceptionally capable teams, we will navigate it with confidence.
CHIEF EXECUTIVE OFFICER'S REPORT
Overview
The Group delivered a robust performance in FY23, with double-digit revenue
growth and strong cash generation. This follows healthy demand across the
Group's diverse customer base as marketing professionals focus their budgets
towards data-led marketing initiatives, together with a growing contribution
from prior year investments which drove accelerating momentum in the second
half.
The Group's roadmap of expanding Customer Experience Data Platform ("CXDP")
capabilities and regular functionality enhancements continue to unlock new,
higher value growth opportunities. This is reflected in the continued
progression of Average Revenue Per Customer (ARPC) and functionality recurring
revenue, both increasing 11% in the year, as customers expand their usage of
the platform and the Group converts a larger pipeline of higher value
enterprise deals.
Positive trading continues to translate into financial strength for the Group,
which is governed by a resilient, profitable and cash generative business
model with high levels of recurring revenues. For FY23, Group revenue grew 10%
to £69.2m (FY22: £62.8m), with recurring and repeat revenue representing 94%
(FY22: 94%). Adjusted profit before tax was ahead of expectations at £15.4m
(FY22: £14.5m) and adjusted EBITDA was in line with expectations at £22.0m
(FY22: £21.7m), reflecting planned investment in headcount and operations.
Strong cash generation continued through the period contributing to a cash
balance of £52.7m at year end (FY22: £43.9m).
This provides the resource and flexibility for ongoing investment in the
organic and inorganic growth opportunity, which is centred on building out the
Group's CXDP offering. These efforts were accelerated post year end with the
acquisition of personalisation technology business, Fresh Relevance, adding
highly complementary capabilities to the Group along with more than 300
customers and the ability to address a larger, higher value market
opportunity.
The Group exited the year with positive trading momentum across all regions, a
strong financial position and a clear product strategy. Investments into the
Group's infrastructure, people and product has delivered results as expected,
and worked to create a strong platform to layer on the capabilities and talent
from Fresh Relevance. The Group is now in a stronger position to pursue its
growth ambitions, supported by a healthy pipeline and robust financial
position.
Business Review
Dotdigital provides omnichannel marketing automation technology and customer
data insights to digital marketing professionals. The Group's technology works
to unify datapoints from across marketing stacks to create a single, trusted
source from which marketing professionals can launch highly targeted,
personalised and relevant campaigns to customers and prospects. The result is
better customer experience and improved conversions, helping to drive revenue
and business growth.
Dotdigital's solutions address a common marketing requirement across regions
and sectors, with the Group's customer base comprising a spread of industry
verticals. During the year, the Group saw particularly strong momentum in
charity and not for profit, events and entertainment, health and fitness and
travel sectors , with new customers including Shell Energy UK, CBRE, Lloyds
Pharmacy, Britvic PLC, National Farmers' Union of England and Wales, RSA
Conference LLC and Hawksmoor Group . The Group's global presence, able to
serve customers in multiple territories, its comprehensive offering and focus
on customer support remain key differentiators.
Market opportunity
The overarching shift toward digital marketing continues its progression,
occupying a steadily increasing proportion of marketing budget and forecast to
be double digit growth in the coming years according to Statista. Underneath
this, the uncertain global economic backdrop through the year prompted more
acute focus on retention marketing backed by clear demonstrable Return on
Investment.
The Group's technology platform, built from the ground-up with analytics and
data at its core, represents a compelling proposition in line with long-term
trends and in different market conditions. Customers of Dotdigital on average
see a 409% ROI, $21k of cost savings and $1m increase in profit over a three
year period according to Forrester's Total Economic Impact study that was
commissioned by Dotdigital.
Through this, Email marketing maintains its place as one of the most
cost-effective marketing channels, with email volumes growing 7% in the
period, alongside the ongoing adoption of an omnichannel approach, including
continued adoption of SMS with a pipeline increasing for WhatsApp and In-app
Push messaging capabilities.
Growth strategy
The Group's underlying growth is the result of continued execution against a
consistent organic growth strategy, centred on three pillars: geographic
expansion, product innovation and strategic partnerships.
In addition, the Board looks to complement the Group's organic growth through
select acquisitions focused on the following key categories: adjacent
CXDP-related technologies that will drive ARPC expansion and open up new
markets; consolidation in the market for talent and brand to expand
geographical coverage; and specialist functionality for target verticals.
Geographic expansion
Regional breakdown reported in local currency
The Group delivered growth in all of its regions. Organic international
revenue increased 18% to £22.8m (FY22: £19.2m), with international sales
contributing 33% to total revenue (FY22: 31%).
The Group's largest region, EMEA, continued its upward trajectory, delivering
growth of 9% to £52.3m (FY22: £48.2m). Contributing to this growth was new
customer acquisitions, particularly in non-commerce related customers
complemented by continued expansion within the existing base. Revenue growth
in EMEA was somewhat offset by a lower level of professional service fees due
to slower decision making from organisations due to an uncertain macroeconomic
backdrop.
As anticipated at the half year, North America saw a return to growth in the
second half, delivering an overall performance for the year of US$13.1m, an
increase of 2% (FY22: US$12.9m). This is the result of previous investments
into the region now bearing fruit, including the establishment of a strong
management team in-region, increased emphasis on enablement for our Sales and
Customer Success teams, and early success in converting a reestablished and
growing pipeline.
In APAC, the Group reported strong growth in revenues, up 19% to AUS$10.8m
(FY22: AUS$9.1m). The standout performer was Japan, an area where the Group
has made measured investments in increasing brand awareness across the region,
establishing a solid partner network and making several appointments in the go
to market team. This has led to numerous customer wins in Q4 along with a
stronger pipeline.
Product innovation
The core priority of the Group's R&D efforts is building out and enhancing
its CXDP offering. This is designed to address the growing demand for more
sophisticated marketing tools with a greater depth of analytics and
personalised user experiences delivered via an all-in-one solution. In line
with this vision, the focus areas of product development in the year were on:
Connectivity and Data, culminating in the launch of a new data platform;
Insights and Analytics, to support deeper actionable insights to drive a
higher ROI and increasing efficiencies in the Marketing department; and
Experiences, to facilitate more personalised customer journeys across any
channel.
The first half of the year saw the launch of the Group's CXDP platform, an
evolution of the Dotdigital Engagement platform, incorporating cloud first
data architecture to support unification across channels and support next
generation Application Programming Interface (API). Alongside the platform
launch, the Group unveiled a number of new packages and plans for existing
customers to support their transition and platform adoption of the new CXDP
functionality, with all Dotdigital customers now benefiting from a new and
improved user interface and navigation. The result of this effort can be seen
in the increased functionality recurring revenue and reduction in churn of
clients. Programme enhancements have continued post period end including new
features to enable easy conversion of email campaigns to SMS, and improved
unified contacts capability.
In May, the Group launched its WinstonAI intelligence engine within the
Dotdigital CXDP platform, incorporating artificial intelligence and
machine-learning capabilities to help marketers discover deeper insights and
analytics, curate captivating content, and optimise communication for higher
customer engagement. The platform's single customer view now includes
WinstonAI's features such as predictive Customer Lifetime Value, predictive
churn and predictive next order. The newly released capabilities have been one
of the fastest adopted functionality features in the platform driving
efficiencies within Marketing teams.
The Group's acquisition of Fresh Relevance post period end marked a leap
forward in the Group's CXDP growth journey, bringing together customer
insights, cross-channel engagement, and on-site personalisation capabilities
to provide marketers with the tools to exert greater influence across the
customer journey. The result is a much-expanded addressable market
opportunity, particularly within larger enterprises, as businesses consolidate
their marketing tools and focus spend (see note 33)
Strategic partnerships
The Group's strategic partnerships refer to a partner where a customer using
that technology integration has the potential to represent or accounts for 10%
of Group revenue. This network is complemented by a broader general partner
referral network which includes over 200 active global partners.
The main efforts of the Group's partnership expansion are on forming
connectors into both ecommerce and CRM platforms, with the Group's core
functionality able to serve a range of industry verticals. During the year,
the Group has made significant additions to its technology integrations,
enabling "out of the box" connectivity to customers' existing technology
stacks including Zendesk, TrustPilot, Shopify Hydrogen, Facebook Lead Ads and
Google Analytics 4.
Revenue from strategic partners increased 8% to £31.2m (FY22: £28.9m), with
new partnerships secured in the year including NetSuite and Shopware. Of the
two market segments, the main growth driver was CRM connectors, which
increased 22% to £9.8m following targeted investment. Relationships in the
ecommerce segment remain solid with partners including Magento, BigCommerce
and Shopify contributing to overall ecommerce partner channel revenue growth
of 2% to £21.4m where the pipeline remains strong but with a slightly
lengthened sales cycle.
Investing in people
A key aspect of Dotdigital's differentiation is the Group's reputation for
high levels of customer support and handling, alongside its innovative
technology offering, a position rewarded to the Group as a result of the work
of its dedicated and talented team. The Group's workforce of over 400
employees across 8 countries is fundamental to the Group's continued success,
and we were delighted to see the result of the team's hard work culminate in
the Dotdigital Summit post period end in October, showcasing Dotdigital's
leadership position by bringing together over 900 professionals from across
the industry sharing insight on the ever changing landscape of digital
marketing.
We have continued to invest in our people and regional teams during the year,
seizing the opportunity to add talent and expertise at a time when other
businesses took stock of their prior expansion plans. Headcount grew 15% in
the year, with a focus on bolstering the Group's international footprint.
Update on Fresh Relevance acquisition
Post year end we were delighted to welcome our new colleagues from Fresh
Relevance to the team following its acquisition. With the two organisations
having worked together as partners for five years, with circa. 60 joint
customers and strong cultural alignment, the team integration has progressed
well.
The existing integration between the Dotdigital and Fresh Relevance platforms
facilitates the smooth transfer of web personalisation data from the Fresh
Relevance platform into Dotdigital to deliver even more targeted campaigns.
Looking ahead, the integration roadmap focuses on enabling new and joint
customers to seamlessly log into and move between the platforms, making it
easier for customers to access all capabilities across both. Work will also
begin on enhancing the data flow between both platforms to leverage the
combined data sets to enable personalisation, segmentation, orchestration and
content creation.
From the cost synergies that have been identified and the interest from higher
value prospects and existing customers, we expect the acquisition to support
the growth of higher margin recurring revenue and have a similar profitable
profile to the Group in the medium term.
Current trading and outlook
The Board is pleased to confirm that positive trading has continued through
the start of the new financial year, in line with expectations, alongside the
continuation of increasing average order value and building momentum in new
industry verticals.
The Group's product positioning, enhanced through the acquisition of Fresh
Relevance is resonating in the market with increased pipeline, particularly
for larger value deals. The Board is pleased to confirm that the integration
of the two teams is on track to complete, and the combined Group has secured
its first brand-new customer taking both capabilities. We have also seen an
increase in interest from our existing customers from the additional
capabilities Fresh Relevance brings to the Dotdigital platform.
The robustness of the Group's financial model and a healthy pipeline gives the
Board comfort in the ongoing investment plans as the Group seizes the market
opportunity. The Group continues to demonstrate its resilience and capacity to
execute strategic progress, and the Board remains confident in the Group's
continued growth prospects.
FINANCIAL REVIEW
Business model
The Group generates circa 80% of its revenues from software and annual message
plans which are recognised evenly over the life of the contract. New
customers are typically sold one of three packages of modules which are
designed to address the most common customer personas, with pricing driven by
the functionality adopted, the number of contacts, and the volume of messages
a customer intends to send. These contracted volumes are committed; however,
we of course allow customers to upgrade through their contract period as they
recognise value in the platform and require more capacity.
The best value is available to those customers who take advantage of
additional functionality and integrations which help them leverage their
customer data - this is evidenced by the very low churn we see amongst those
customers who have invested in the full power of the product. We have a small
amount of professional service revenue (less than 5% of total group revenues)
which is recognised as work is delivered. These services relate to both the
initial deployment of software, design services, training and support to
customers who want to get the maximise value from the product.
FY23 saw the business change from a period of consolidation, as a rebuilt
North American sales team ramped up and a new CFO was appointed, into a period
of growth with many new hires to drive both sales and development
productivity.
In this context, and against the backdrop of challenging macro-economic in
which many businesses reported slowing growth, we are proud to deliver
revenue, profit before tax, Earnings per share and Cash slightly ahead of
market expectations.
Revenue and gross margin
Our recurring and diversified revenue base proved to be resilient and thus we
exit the year in a strong position to continue delivering in FY24. We saw a
reduction in customer churn particularly in North America and over 94% of our
revenues continue to be predictably repeating or contractually recurring.
Revenue increased by 10% FY23 to £69.2m (FY22: £62.8m), driven by SaaS and
contracted marketing SMS revenue uplift of £4.8m (10%) and transactional SMS
revenue uplift of £1.9m (20%). EMEA remains our largest region with revenue
of £52.3m (FY22: £48.2m), however our growth rate in APAC of 19% continues
to show the strength of our proposition in that market. Although the weakening
pound through H1 had supported our interim revenues, these benefits largely
reversed through H2.
Gross margin on our core software product continues to be close to 90% but is
diluted by SMS which is typically under 50%. Gross margin of 79.3% in the
year reported was marginally lower than FY22 (81.6%) due to a small increase
in transactional SMS volume.
Operating expenses
Despite high inflationary environment in all regions and significant
investment in sales and development capacity to strengthen all the regions, we
maintained a good adjusted operating margin at 21% (FY22: 23%). FY23
operating expenses of £40.4m (FY22: £36.7m) grew primarily because we
increased net headcount by 54 and offered inflationary pay increases earlier
in the year. This investment has resulted in declining staff attrition
through the year, reducing to 12% on a 12 month rolling basis by June 2023.
Balance sheet
The business continues to generate cash in line with profitability and
maintain a healthy working capital profile such that we end the year with
£52.7m cash (FY22: £43.9m). We have implemented new cash treasury
management processes through the year and have benefited from the higher
interest rates that have been available for fixed term cash deposits than in
recent history. Whilst after the balance sheet date, we completed the
acquisition of Fresh Relevance and so reduced our cash balance by circa £20m,
we continue to hold over £30m.
Tax
Our effective tax rate is 12.4% (FY22: 13%). This continues to be
significantly lower than the mainstream UK corporation tax rate because of our
Research & Development tax claim.
EPS
Adjusted Diluted EPS has grown by 6% to 4.43p (FY22: 4.18p). There has been
only marginal movement in the number of shares in issue and share options
granted in the year, so this reflects underlying profitability growth.
Dividend policy
Consistent with our progressive dividend policy we have increased our proposed
final dividend in line with EBITDA growth to 1p in FY23 from 0.98p in FY22.
DOTDIGITAL GROUP PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
30.06.23 30.06.22
£'000 £'000
Notes
CONTINUING OPERATIONS
Revenue from contracts with customers 3 69,228 62,832
Cost of sales 7 (14,351) (11,570)
Gross profit 54,877 51,262
Administrative expenses 7 (40,359) (36,726)
OPERATING PROFIT FROM CONTINUING OPERATIONS PRE SHARE-BASED PAYMENTS AND 14,518 14,536
EXCEPTIONAL COSTS
Share based payments 29 (736) (456)
Exceptional costs 5 (234) (475)
OPERATING PROFIT FROM CONTINUING OPERATIONS 13,548 13,605
Finance costs 6 (57) (57)
Finance income 6 895 57
PROFIT BEFORE INCOME TAX FROM CONTINUING OPERATIONS 14,386 13,605
7
Income tax expense 8 (1,791) (1,774)
Profit for the year from continuing operations 12,595 11,831
Profit for the year attributable to the owners of the parent 12,595 11,831
Earnings per share from all operations (pence per share)
Basic 11 4.21 3.96
Diluted 11 4.11 3.88
Adjusted Basic 11 4.53 4.27
Adjusted Diluted 11 4.43 4.18
DOTDIGITAL GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
30.06.23 30.06.22
£'000 £'000
PROFIT FOR THE YEAR 12,595 11,831
OTHER COMPREHENSIVE INCOME
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translating foreign operations (38) 333
Total comprehensive income attributable to:
Owners of the parent 12,557 12,164
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Comprehensive income from continuing operations 12,557 12,164
DOTDIGITAL GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 JUNE 2023
30.06.23 30.06.22
£'000 £'000
Notes
ASSETS
NON-CURRENT ASSETS
Goodwill 12 9,680 9,680
Intangible assets 13 19,860 17,698
Property, plant and equipment 14 2,696 3,285
32,236 30,663
CURRENT ASSETS
Trade and other receivables 16 15,261 13,211
Cash and cash equivalents 17 52,676 43,919
67,937 57,130
TOTAL ASSETS 100,173 87,793
EQUITY ATTRIBUTABLE TO THE
OWNERS OF THE PARENT
Called up share capital 18 1,496 1,496
Share premium 19 7,124 7,124
Reverse acquisition reserve 19 (4,695) (4,695)
Other reserves 19 2,591 2,005
Retranslation reserve 19 258 296
Retained earnings 19 73,536 63,582
TOTAL EQUITY 80,310 69,808
LIABILITIES
NON-CURRENT LIABILITIES
Lease liabilities 21 1,321 1,758
Deferred tax 24 2,644 2,755
3,965 4,513
CURRENT LIABILITIES
Trade and other payables 20 14,629 12,654
Lease liabilities 21 823 818
Current tax payable 446 -
15,898 13,472
TOTAL LIABILITIES 19,863 17,985
TOTAL EQUITY AND LIABILITIES 100,173 87,793
DOTDIGITAL GROUP PLC
COMPANY STATEMENT OF FINANCIAL POSITION
30 JUNE 2023
30.06.23 30.06.22
£'000 £'000
Notes
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 14 9 7
Investments 15 19,047 18,362
19,056 18,369
CURRENT ASSETS
Trade and other receivables 16 2,939 1,545
Cash and cash equivalents 17 396 163
3,335 1,708
TOTAL ASSETS 22,391 20,077
EQUITY ATTRIBUTABLE TO THE
OWNERS OF THE PARENT
Called up share capital 18 1,496 1,496
Share premium 19 7,124 7,124
Other reserves 19 2,600 1,915
Retained earnings 19 10,969 9,400
TOTAL EQUITY 22,189 19,935
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 20 202 142
TOTAL LIABILITIES 202 142
TOTAL EQUITY AND LIABILITIES 22,391 20,077
As permitted by section 408 of the Companies Act 2006, the parent company's
income statement has not been included in these financial statements. The
profit for the Company was £4,459,042 (2022: £4,163,416).
DOTDIGITAL GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
Called up share
Retained Share
capital earnings premium
£'000 £'000 £'000
Balance as at 1 July 2021 1,494 54,081 7,124
Transactions with owners
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) -
Total comprehensive income
Profit for the year - 11,831 -
Other comprehensive income - - -
Total comprehensive income - 11,831 -
Restated balance as at 30 June 2022 1,496 63,582 7,124
Balance as at 1 July 2022 1,496 63,582 7,124
Issue of share capital - - -
Dividends - (2,926) -
Transfer in reserves - 285 -
Deferred tax on share options - - -
Share-based payments - - -
Transactions with owners - (2,641) -
Profit for the year - 12,595 -
Other comprehensive income - - -
Total comprehensive income - 12,595 -
Balance as at 30 June 2023 1,496 73,536 7,124
DOTDIGITAL GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
CONTINUED…
Retranslation Reverse acquisition Other Total equity
reserve reserve reserves
£'000 £'000 £'000 £'000
Balance as at 1 July 2021 (37) (4,695) 3,066 61,033
Transactions with owners
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)
Total comprehensive income
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
Balance as at 1 July 2022 296 (4,695) 2,005 69,808
Issue of share capital - - - -
Dividends - - - (2,926)
Transfer in reserves - - (285) -
Deferred tax on share options - - 150 150
Share-based payments - - 721 721
Transactions with owners - - 586 (2,055)
Profit for the year - - - 12,595
Other comprehensive income (38) - - (38)
Total comprehensive income (38) - - 12,557
Balance as at 30 June 2023 258 (4,695) 2,591 80,310
· 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 2 and the transfer on the exercise or lapsing
of share options.
DOTDIGITAL GROUP PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
Called up share
Retained Share Other
capital earnings premium Reserves Total equity
£'000 £'000 £'000 £'000 £'000
Balance as at 1 July 2021 1,494 7,570 7,124 1,690 17,878
Transactions with owners
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)
Total comprehensive income
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
Balance as at 1 July 2022 1,496 9,400 7,124 1,915 19,935
Issue of share capital - - - - -
Dividends - (2,926) - - (2,926)
Transfer in reserves - 36 - (36) -
Share based payments - - - 721 721
Transactions with owners - (2,890) - 685 (2,205)
Profit for the year - 4,459 - - 4,459
Total comprehensive income - 4,459 - - 4,459
Balance as at 30 June 2023 1,496 10,969 7,124 2,600 22,189
· 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 YEAR ENDED 30 JUNE 2023
30.06.23 30.06.22
£'000 £'000
Notes
Cash flows from operating activities
Cash generated from operations 30 21,928 25,162
Tax paid (1,119) (1,761)
Net cash generated from all operating activities 20,809 23,401
Cash flows from investing
activities
Purchase of intangible fixed assets 13 (8,760) (7,686)
Purchase of property, plant and equipment 14 (306) (465)
Interest received 895 57
Net cash flows used in investing activities (8,171) (8,094)
Cash flows from financing activities
Equity dividends paid (2,926) (2,564)
Payment of lease liabilities (917) (1,110)
Proceeds from share issues - 2
Net cash flows used in financing activities (3,843) (3,672)
8,795 11,635
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year 31 43,919 31,951
Effect of foreign exchange rate changes (38) 333
Cash and cash equivalents at end of year 31 52,676 43,919
.
DOTDIGITAL GROUP PLC
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
30.06.23 30.06.22
£'000 £'000
Notes
Cash flows from operating activities
Cash generated from operations 30 3,165 2,645
3,165 2,645
Net cash generated from operating activities
Cash used in investing activities
Purchase of property, plant and equipment 14 (6) (5)
Net cash flows used in investing activities (6) (5)
Cash flows used in financing activates
Equity dividends paid (2,926) (2,564)
Proceeds from share issues - 2
Net cash flows used in financing activities (2,926) (2,562)
Increase in cash and cash equivalents 233 78
Cash and cash equivalents at beginning of year 31 163 85
Cash and cash equivalents at end of year 31 396 163
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023
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 on page 43.
2. ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared in accordance with International
Accounting Standards as adopted by the UK (IASs as adopted by the UK) and
International Financial Reporting Interpretations Committee (IFRIC)
Interpretations as endorsed for use in the UK. The financial statements have
also been prepared under the historical cost convention, with the exception of
the valuation of the valuation of investments, financial liabilities and
initial valuation of assets and liabilities acquired in business combinations
which are included on a fair value basis, and in accordance with those parts
of Companies Act 2006 applicable to companies reporting under UK adopted
International Accounting Standards.
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 Group
The Group adopted the following new and amended relevant IFRS in the year:
Annual Improvements to IFRS Standards 2018-2020
IAS 16 Property, Plant and Equipment: Proceeds before Intended Use
IAS 37 Onerous Contracts - Cost of Fulfilling a Contract
IFRS 3 Reference to the Conceptual Framework
The adoption of these accounting standards did not have any effect on the
Group'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 Group 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 Group's financial statements in
the period of initial application.
Effective date
IAS 1 and IFRS Practice Statement 2 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 of accounting estimates
1 January 2023
IAS 12 Income Taxes - amendments regarding deferred tax related to assets and
liabilities arising from a single transaction
1 January 2023
IAS 12 International Tax Reform-Pillar Two Model Rules 1 January 2024
IFRS 16 Leases - amendments regarding Lease Liability in a Sale and Leaseback 1 January 2024
IAS 1 Presentation of Financial Statements - amendments regarding the classification 1 January 2024
of liabilities as current or non-current and Non-current Liabilities with
Covenants
The financial statements are presented in sterling (£), rounded to the
nearest thousand pounds.
The financial statements are presented in sterling (£), 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 intuitive software as a service (SaaS) via an
all-in-one customer experience and data platform (CXDP).
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 IFRS 3
'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 omnichannel 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 professional services 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 12 months from the date of these consolidated financial statements have
been approved 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, 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 to five 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 £5,000, 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 2023 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 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 a maturity
period of 95 days or less at the date of 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. This accounting policy has been
changed for the year ended 30 June 2023 to classify short term highly liquid
investments that have a maturity of up to 95 days as cash equivalents, the
policy in the previous year having referred to 3 months. Management believe
that both the financial position and liquidity of the Group are made clearer
for the reader when all cash and cash equivalent items are analysed together
and that the change therefore results in the presentation of more relevant and
reliable information in the financial statements. The change in accounting
policy has not resulted in a prior period adjustment.
- 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 financial position of all the Group entities (none of which
has the currency of a hyper-inflationary 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. For options granted after 2019, a Monte Carlo model is used to
measure the fair use of options granted that are subject to a TSR performance
condition. A Black Scholes model is used to measure the fair use of all other
options granted. 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 (£) 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.
30.06.23 30.06.22
£'000 £'000
US Dollar 68 60
Australian Dollar 17 14
Singaporean Dollar (42) (37)
Euro 4 10
Belarusian Ruble (8) (2)
South African Rand 9 (2)
Polish Zloty 11 5
Canadian Dollar 0 1
59 49
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 13
Our business model is underpinned by our email and data-driven omnichannel
marketing automation platform. 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 12
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 4.28% (2022:
19.75%). This has decreased as a result of the decrease in the cost equity
which was impacted by the increase in the share price at the year end compared
to last year and the decrease 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 12 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 as follows:
-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 29 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
Dotdigital's single line of business remains the provision intuitive software
as a service (SaaS) via an all-in-one customer experience and data platform
(CXDP). In the previous years 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)
30.06.2023
EMEA US APAC Total
£'000 £'000 £'000 £'000
Income statement
Revenue 52,338 10,862 6,028 69,228
Gross profit 39,773 9,702 5,402 54,877
Profit/(loss) before income tax 14,067 921 (602) 14,386
Total comprehensive income/(loss) attributable to the owners of the parent
12,522 686 (651) 12,557
Financial position
Total assets 95,742 4,170 261 100,173
Net current assets/(liabilities) 50,620 2,647 (1,228) 52,039
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 (2022: 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.
30.06.2022
EMEA US APAC Total
£'000 £'000 £'000 £'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/(loss) 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 (2022: 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.
Business activity revenue and results
30.06.2023
Core CPaaS Total
£'000 £'000 £'000
Income statement
Revenue 69,228 - 69,228
Gross profit 54,877 - 54,877
Profit/(loss) before income tax 14,386 - 14,386
Total comprehensive income attributable to the owners of the parent
12,557 - 12,557
Financial position
Total assets 100,173 - 100,173
Net current assets/(liabilities) 52,039 - 52,039
30.6.2022
Core CPaaS Total
£'000 £'000 £'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/(loss) 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
4. EMPLOYEES AND DIRECTORS
30.6.23 30.6.22
£'000 £'000
Wages and salaries 26,290 24,650
Social security costs 2,744 2,396
Other pension costs 671 561
29,705 27,607
The average monthly number of employees during the year is as follows
30.6.23 30.6.22
Directors 4 5
Sales and marketing product 193 157
Development and system engineers 126 117
Administration 61 69
384 348
Included in the total employees cost above, £6,581,768 (2022: £6,194,834)
was capitalised in relation to internally generated development costs.
5. EXCEPTIONAL COSTS
Exceptional costs incurred in the year relate to the amortisation of acquired
intangibles of £120,000 (2022: £120,000), professional acquisition costs
£100,000 (2022: £nil) please see note 33, professional fees related to the
valuation of share options £14,000 (2022: £nil) and senior management
settlement costs of £nil (2022: £355,053).
6. FINANCE INCOME AND COSTS
30.6.23 30.6.22
£'000 £'000
Finance income
Deposit account interest 895 57
Total finance income 895 57
Finance cost
Interest on lease liabilities (57) (57)
Total finance cost (57) (57)
7. OPERATING PROFIT
Costs by nature
Profit from continuing operations has been arrived at after charge and
crediting:-
30.6.23 30.6.22
£'000 £'000
Outsourcing and tech infrastructure 14,351 11,570
Total cost of sales 14,351 11,570
30.6.23 30.6.22
£'000 £'000
Direct marketing 3,004 3,066
Partner commission 1,109 2,125
Staff related costs (inc Directors' emoluments) 23,544 20,290
Auditor's remuneration 140 81
Amortisation of intangibles* 6,458 6,001
Depreciation charge* 1,025 1,080
Legal, professional and consultancy fees 840 1,028
Computer expenditure 1,081 802
Bad debts (193) 682
Foreign exchange losses/(gains) 593 (452)
Travel and subsistence costs 421 119
Office running 465 413
Insurance 214 122
Staff welfare 535 432
Bank and credit card 431 401
Recruitment fees 214 195
Other costs 478 341
Total administrative expenses 40,359 36,726
During the year the Group obtained the following services from the Group's
auditor at costs detailed below:
30.6.23 30.6.22
£'000 £'000
Fees payable to the Company's auditor for the audit of Parent Company and 41 33
consolidated financial statements
Fees payable to the Company's auditor for other services
- audit of Company subsidiaries 63 45
- review of interim accounts 4 3
- overrun of prior year audit services 32 -
140 81
*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:
30.6.23 30.6.22
£'000 £'000
Current tax on profits for the year 1,448 968
Foreign tax suffered 266 212
Changes in estimates related to prior years 38 329
Deferred tax on origination and reversal of timing differences 39 265
1,791 1,774
Factors affecting the tax charge:
30.6.23 30.6.22
£'000 £'000
Profit on ordinary activities from all operations before tax 14,386 13,605
Profit on ordinary activities multiplied by the standard rate of corporation 3,597 2,585
tax in the UK: 25% (2022: 19%)
Effects of:
Adjustments in respect of prior years (46) 142
Expenses not deductible 66 98
Research and development enhanced claim (1,761) (1,439)
Income not taxable (18) (21)
Share options 78 71
Tax rate changes (160) 291
Effects of overseas tax rates 35 38
Other - 9
Total tax charge for the year 1,791 1,774
Deferred tax was
calculated using the rate 25% (2022: 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 increased on 1 April 2023 from 19% to 25%.
The effective tax rate in the period was 12.44% (2022: 13.03%). UK deferred
balances have been recognised at 25% in the period (2022: 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 for the financial year
was £4,459,042 (2022: £4,163,416)
10. DIVIDENDS
Amounts recognised as distributions to equity holders in the period
30.6.23 30.6.22
£'000 £'000
Paid dividend for year end 30 June 2022 of 0.98p (2021: 0.86p) per share 2,926 2,564
Proposed dividend for the year end 30 June 2023 of 1.00p (2022: 0.98p) per 3,050 2,925
share
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.
The number of shares considered for the proposed dividend includes 6,862,683
shares issued post year end as part of the consideration for the acquisition
of Fresh Relevance.
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:
30.6.23 30.6.22
From all operations £'000 £'000
Profit for the year attributable to the owners of the parent 12,595 11,831
Amortisation of acquisition-related intangible fixed assets (see note 13) 120 120
Other exceptional costs (see note 5) 114 355
Share-based payment (see note 29) 736 456
Adjusted profit for the year attributable to the owners of the parent 13,565 12,762
Management does not consider the above adjustments to reflect the underlying
business performance. The other exceptional costs relate to acquisition costs
and professional fees. In 2022 the other exceptional costs related to senior
management settlement costs.
30.6.23
Weighted
average Per share
From all operations Earnings number of Amount
£'000 shares Pence
Basic EPS
Profit for the year attributable to the owners of the parent 12,595 299,216,130 4.21
Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the parent 13,565 299,216,130 4.53
Options and warrants - 7,219,476 -
Diluted EPS
Profit for the year attributable to the owners of the parent 12,595 306,435,606 4.11
Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the parent 13,565 306,435,606 4.43
30.6.22
Weighted
average Per share
From all operations Earnings number of Amount
£'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
Weighted average number of shares 30.6.23 30.6.22
Shares Shares
Basic EPS 299,216,130 298,995,582
Diluted EPS 306,435,606 305,218,306
12. GOODWILL
Group
30.6.23 30.6.22
COST £'000 £'000
At 1 July 13,192 13,192
13,192 13,192
At 30 June
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
4.28% (2022: 19.75%). This has decreased as a result of the decrease in the
cost equity which was impacted by the increase in the share price at the year
end compared to last year and the decrease 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 11% (2022:
15%).
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 73% (2022: 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 145%
(2022: 161%) discount rate and growth rate of -5% (2022: -5%).
13. INTANGIBLE ASSETS
Group
Customer
relationships Technology
£'000 £'000
COST
At 1 July 2022 1,205 1,200
Additions - -
Disposals - -
Exchange differences - -
At 30 June 2023 1,205 1,200
AMORTISATION
At 1 July 2022 1,205 550
Amortisation for the year - 120
Disposals - -
Exchange differences - -
At 30 June 2023 1,205 670
NET BOOK VALUE
At 30 June 2023 - 530
Internally generated development
Computer Domain
software costs names Totals
£'000 £'000 £'000 £'000
COST
At 1 July 2022 1,111 41,651 46 45,213
Additions 26 8,729 5 8,760
Disposals (1) (17) - (18)
Exchange differences (1) (4) - (5)
At 30 June 2023 1,135 50,359 51 53,950
AMORTISATION
At 1 July 2022 945 24,778 37 27,515
Amortisation for the year 83 6,375 - 6,578
Disposals - (2) - (2)
Exchange differences (1) - - (1)
At 30 June 2023 1,027 31,151 37 34,090
NET BOOK VALUE
At 30 June 2023 108 19,208 14 19,860
Customer
relationships Technology
£'000 £'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 development
Computer Domain
software costs names Totals
£'000 £'000 £'000 £'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
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.
14. PROPERTY, PLANT
AND EQUIPMENT
Group
Right of Leasehold Fixtures & Computer
Use assets improvements fittings equipment Totals
£'000 £'000 £'000 £'000 £'000
COST
At 1 July 2022 5,555 731 773 3,102 10,161
Additions 406 3 53 250 712
Disposals (719) (46) (200) (323) (1,288)
Re-measurement of existing lease liabilities (33) - - - (33)
Exchange differences - (3) (14) (31) (48)
At 30 June 2023 5,209 685 612 2,998 9,504
DEPRECIATION
At 1 July 2022 3,055 593 736 2,492 6,876
Depreciation for the year 873 52 23 278 1,226
Disposals (719) (46) (190) (311) (1,266)
Re-measurement of existing lease liabilities 14 - - - 14
Exchange differences (3) (3) (14) (22) (42)
At 30 June 2023 3,220 596 555 2,437 6,808
NET BOOK VALUE
At 30 June 2023 1,989 89 57 561 2,696
Right of Leasehold Fixtures & Computer
Use assets improvements fittings equipment Totals
£'000 £'000 £'000 £'000 £'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
Included in the net carrying amount of property, plant and equipment are the
right-of-use assets as follows:
Motor
Properties vehicles Totals
£'000 £'000 £'000
COST
As at 1 July 2022 5,400 155 5,555
Termination of leases (719) - (719)
Additions 366 40 406
Re-measurement of existing lease liabilities (33) - (33)
Foreign currency translation - - -
At 30 June 5,014 195 5,209
2023
DEPRECIATION
As at 1 July 2022 2,906 149 3,055
Depreciation for the year 836 37 873
Termination of leases (719) - (719)
Re-measurement of existing lease liabilities 14 - 14
Foreign currency translation (3) - (3)
At 30 June 2023 3,034 186 3,220
NET BOOK VALUE
At 30 June 2023 1,980 9 1,989
Motor
Properties vehicles Totals
£'000 £'000 £'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 5,400 155 5,555
2022
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
Company
Computer Equipment
£'000
COST
As at 1 July 2022 11
Additions 6
Foreign currency translation -
At 30 June 17
2023
DEPRECIATION
As at 1 July 2022 4
Depreciation for the year 4
At 30 June 2023 8
NET BOOK VALUE
At 30 June 2023 9
Computer Equipment
£'000
COST
As at 1 July 2021 6
Additions 5
At 30 June 2022
11
DEPRECIATION
As at 1 July 2021 2
Depreciation for the year 2
At 30 June 2022
4
NET BOOK VALUE
At 30 June 2022 7
15. INVESTMENTS
Company
Group Group
undertakings undertakings
30.6.23 30.6.22
COST £'000 £'000
At 1 July 22,116 21,660
Additions 721 456
Disposals - -
At 30 June 22,837 22,116
IMPAIRMENT
At 1 July and 30 June 3,754 3,519
Impairment 36 235
At 30 June 3,789 3,754
NET BOOK VALUE
At 30 June 19,047 18,362
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 All-in-one customer experience and data platform Ordinary 100
Dotdigital Inc All-in-one customer experience and data platform Ordinary 100
Dotdigital APAC Pty Limited All-in-one customer experience and data platform Ordinary 100
Dotdigital B.V. All-in-one customer experience and data platform Ordinary 100
Dotmailer Development Ltd J Holding company Ordinary 100
Dotdigital Development SA Pty Development hub Ordinary 100
Dotdigital SG Pte Limited All-in-one customer experience and data platform
Ordinary 100
Dynmark International Ltd All-in-one customer experience and data platform Ordinary 100
Dotdigital Poland S.p. z.o.o Development hub Ordinary 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 Dotmailer LLC was also dissolved on 29 June
2023. 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, Dotdigital Development SA
Pty was incorporated in South Africa, and Dotdigital Poland S.p. z.o.o was
incorporated in Poland.
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 APAC Pty Ltd
60/2 O'Connell Street
Parramatta
New South Wales 2150
Australia
Dotdigital SG Pte Ltd
6001 Beach Road
11-06 Golden Mile Tower
199589 Singapore
Dotdigital Development SA Pty Ltd
BDO Building
Wanderers Office Park
52 Corlett Drive
Illovo
Johannesburg 2196
South Africa
Dotdigital B.V.
Spaces Amstel
Mr. Treublaan 7
Amsterdam
1097DP
Netherlands
Dotdigital Poland S.p. z.o.o
Al. Jana Pawla II 22
00-133 Warsaw
Poland
16. TRADE AND OTHER RECEIVABLES
Group Company
30.6.23 30.6.22 30.6.23 30.6.22
£'000 £'000 £'000 £'000
Current:
Trade receivables 11,487 10,748 - -
Less: Provision for impairment of trade receivables - -
(1,305) (1,892)
Trade receivables - net 10,182 8,856 - -
Other receivables 29 52 - -
Amounts owed by Group undertakings - - 2,834 1,426
VAT - - 34 34
Tax receivable - 186 - -
Prepayments and contract assets 5,050 4,117 71 85
15,261 13,211 2,939 1,545
Further details on the above can be found in note
22.
Included within Group prepayments is an amount of £255,846 (2022: £246,057)
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.
17. CASH AND CASH EQUIVALENTS
Group Company
30.6.23 30.6.22 30.6.23 30.6.22
£'000 £'000 £'000 £'000
Cash at bank 17,534 23,458 396 163
Short term deposit accounts 35,142 20,461 - -
52,676 43,919 396 163
Further details on the above can be found in note 22.
18. CALLED UP SHARE CAPITAL
Allotted, issued, fully paid Nominal 30.6.23 30.6.22
number value £'000 £'000
299,216,130 (2022: 299,216,130) £0.005 1,496 1,496
1,496 1,496
19. RESERVES
Group
Retained Share Reverse acquisition
earnings premium reserve
£'000 £'000 £'000
As at 1 July 2022 63,582 7,124 (4,695)
Issue of share capital - - -
Dividends (2,926) - -
Profit for the year 12,595 - -
Transfer of reserves 285 - -
Deferred tax on share options - - -
Other comprehensive income: currency translation - - -
Share-based payment - - -
Balance as at 30 June 2023 73,536 7,124 (4,695)
Retranslation Other
Reserve reserves Totals
£'000 £'000 £'000
As at 1 July 2022 296 2,005 68,312
Issue of share capital - - -
Dividends - - (2,926)
Profit for the year - - 12,595
Transfer of reserves - (285) -
Deferred tax on share options - 150 150
Other comprehensive income: currency translation (38) - (38)
Share-based payment - 721 721
Balance as at 30 June 2023 258 2,591 78,814
Group
Retained Share Reverse acquisition
earnings premium reserve
£'000 £'000 £'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
£'000 £'000 £'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 in 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
Company
Retained Share Other
earnings premium Reserves Totals
£'000 £'000 £'000 £'000
At 1 July 2022 9,400 7,124 1,915 18,439
Issue of share capital - - - -
Dividends (2,926) - - (2,926)
Profit for the year 4,459 - - 4,459
Transfer in reserves 36 - (36) -
Share based payments - - 721 721
Balance as at 30 June 2023 10,969 7,124 2,600 20,693
Company
Retained Share Other
earnings premium Reserves Totals
£'000 £'000 £'000 £'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
Balance as at 30 June 2022 9,400 7,124 1,915 18,439
20. TRADE AND OTHER PAYABLES
Group Company
30.6.23 30.6.22 30.6.23 30.6.22
£'000 £'000 £'000 £'000
Current:
Trade payables 2,175 2,428 - 81
Social security and other taxes 588 68 - -
Other payables 170 151 - -
VAT 730 228 - -
Accruals and contract liabilities 10,966 9,779 202 61
14,629 12,654 202 142
Further details on liquidity and interest rate risk can be found in note 2.
Included within revenue is £1,322,000 relating to contract liabilities that
had been recognised at 30 June 2022 (£636,000 related to contract liabilities
recognised at 30 June 2021 that had been included within revenue in 2022)
21. LEASE LIABILITIES
Group
Properties Motor Vehicles Totals
£'000 £'000 £'000
At 1 July 2022 2,540 36 2,576
Termination of leases (4) - (4)
Additions 366 41 407
Principal repayments (864) (53) (917)
Interest 79 2 81
Foreign currency retranslation 1 - 1
At 30 June 2023 2,118 26 2,144
Current 797 26 823
Non-current 1,321 - 1,321
At 30 June 2023 2,118 26 2,144
Group
Properties Motor Vehicles Totals
£'000 £'000 £'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
The properties are office leases located in various
location where the term ranges from one to ten years. The motor vehicles are
company cars offered to senior staff where the term is always three years.
22. 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
30.6.23 30.6.22 30.6.23 30.6.22
£'000 £'000 £'000 £'000
Financial assets at amortised cost
Trade and other receivables 10,211 8,908 - -
Amounts owed from group undertakings - - 2,834 1,426
Cash and cash equivalents 52,676 43,919 396 163
62,887 52,827 3,230 1,589
Financial liabilities at amortised cost
Trade payables 2,175 2,428 - 81
Accrued liabilities and other payables 5,380 4,974 202 61
Lease liabilities 2,144 2,576 - -
9,699 9,978 202 142
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 £8,377,583 (2022: £8,220,247) 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 2023 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:
30.6.23 30.6.22
£'000 £'000
0-30 days 609 432
30-60 days 664 653
More than 60 days 1,184 702
2,457 1,787
The maturity of the Group's provision for impairment is as follows:
30.6.23 30.6.22
£'000 £'000
0-30 days 68 195
30-60 days 11 231
More than 60 days 1,226 1,466
1,305 1,892
The movement in the provision for the impairment is as follows:
30.06.23 30.6.22
£'000 £'000
As at 1 July 1,892 1,785
Provision for impairment 13 126
Receivable written off in the year (193) (19)
Unused amount reversed (407) -
As at 30 June 1,305 1,892
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 £2,203,244 (2022: £1,614,266) of which
£1,219,374 (2022: £1,476,586) 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 Group's cash holdings are held at NatWest Bank and Investec Bank Plc,
which have A+ and BBB+ credit ratings respectively.
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 £nil (2022: £nil)
and amounts payable over one year are £nil (2022: £nil). 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 on page 63.
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 months 6 to 12 months 1 to 2 years 2 to 5 years Total contractual cash flows carrying amounts
£'000 £'000 £'000 £'000 £'000
Contractual maturities at 30 June 2023
Trade and other payables 8,873 - - - 8,873
Lease liabilities 474 415 426 955 2,270
Total non-derivatives 9,347 415 426 955 11,143
<6 months 6 to 12 months 1 to 2 years 2 to 5 years Total contractual cash flows carrying amounts
£'000 £'000 £'000 £'000 £'000
Contractual maturities at 30 June 2022
Trade and other payables 7,698 - - - 7,698
Lease liabilities 463 448 816 1,082 2,809
Total non-derivatives 8,161 448 816 1,082 10,507
23. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING
ACTIVITES
30.06.23 30.6.22
Lease Liabilities Lease Liabilities
£'000 £'000
As at 1 July 2,576 3,423
Cash flows (917) (1,110)
Interest 81 90
Foreign exchange movement 1 21
Lease additions and terminations 403 152
As at 30 June 2,144 2,576
24. DEFERRED TAX
The gross movement in deferred tax is as follows:
Acquired Accelerated Short-term R&D relief Share- Tax Total
intangibles capital timing in excess of based Losses
Deferred tax liability allowances differences amortisation payments
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1st July 2021 146 38 - 2,963 (1,805) (135) 1,207
(Credit)/charge to the consolidated income statement 17 44 (82) 218 69 (1) 265
(Credit)/charge to the consolidated statement of changes in equity - - - - 1,283 - 1,283
At 1st July 2022 163 82 (82) 3,181 (453) (136) 2,755
(Credit)/charge to the consolidated income statement (30) (22) (18) 350 (176) (65) 39
(Credit)/charge to the consolidated statement of changes in equity - - - - (150) - (150)
At 30 June 2023 133 60 (100) 3,531 (779) (201) 2,644
30.6.23 30.6.22
£'000 £'000
As at 1 July 2,755 1,207
Current year provision (111) 1,548
2,644 2,755
The following is the analysis of the
deferred tax balances after any offset:
30.6.23 30.6.22
£'000 £'000
Deferred tax assets (201) (136)
Deferred tax liabilities 2,845 2,891
2,644 2,755
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. CONTINGENT LIABILITIES
The company and Group have no Contingent liabilities as at the year end.
27. 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.
30.6.23 30.6.22
£'000 £'000
Sale of services
Ipswich Town Football Club Entity under common directorship Email marketing services - 5
Epwin Group Plc Entity under common directorship Email marketing services - 4
- 9
Year end balances arising from sale of services 30.6.23 30.6.22
£'000 £'000
Ipswich Town Football Club Entity under common directorship Email marketing services - -
Epwin Group Plc Entity under common directorship Email marketing services - -
- -
Key Management
Personnel
30.6.23 30.6.22
£'000 £'000
Aggregate emoluments 1,191 938
Ex-gratia payment - 213
Company contributions to money purchase pension scheme 22 25
Share-based payments from the LTIP options granted 248 176
1,461 1,352
The Board of Directors are deemed to be key management personnel. Details of
directors' emoluments are provided in the Remuneration Committee report on
page 41. Ex-gratia payment related to a settlement payment made to a former
CFO.
Information in relation to the highest paid Director is as follows:
30.6.23 30.6.22
£'000 £'000
Salaries 698 529
Other benefits 4 2
Pension costs 19 18
Share-based payments on the LTIP options granted 224 126
945 675
The number of directors for whom retirement benefits are accruing under
defined contribution pension schemes amounted to 2 (2022: 2).
Company
The following transactions were carried out with related parties
30.06.23 30.06.22
£'000 £'000
Year end balances arising from sales/purchase of services
Dotdigital EMEA Limited Subsidiary Receivables/(Payables) 4,904 2,151
4,904 2,151
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
30.6.23 30.6.22
£'000 £'000
Dotdigital EMEA Limited Subsidiary
As at 1 July 726 (1,041)
Loans advanced 5,330 5,653
Loans repaid (3,923) (3,886)
2,133 726
IAS 24 Related Party Disclosure (Revised)
allows disclosure exemption of transactions between wholly-owned subsidiaries
that are eliminated on consolidation.
28. 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 Development Limited, Dotdigital
Development SA Pty Ltd, Dotdigital SG Pte. Limited, Dynmark International Ltd,
and Dotdigital Poland S.p. z.o.o.
29. 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 £721,070 and £15,003
movement in the provision of NI (2022: £455,549).
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 2023 had a WAEP of 36.91p (2022: 49.04p) and a weighted
average contracted life of 7.27 years (2022: 5.82 years) and their exercise
prices ranged from 0.5p to 181.2p. All share options are settled in form of
equity issued.
30.06.23 30.06.22
No of options WAEP No of options WAEP
Outstanding at the beginning of the period 26.05p
6,059,337 49.04p 4,292,735
Granted during the year 89.85p
1,654,722 2.30p 2,463,663
Forfeited/cancelled during the period 137.88p
(201,636) 117.51p (259,562)
Exchanged for shares 0.50p
- - (437,500)
Outstanding at the end of the period 6,059,337 49.04p
7,512,423 36.91p
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 n/a (2022: 0.84p). 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 10 years 10 years 10 years 10 years 10 years 10 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
08 December 2022 24 December 2022
Relative Relative
EPS (50%) TSR (50%) EPS (50%) TSR (50%)
Number of options granted 438,435 438,434 283,157 283,156
Share price at grant date 93.0p 93.0p 83.9p 83.9p
Exercise price 0.50p 0.50p 0.50p 0.50p
Option life in years 10 years 10 years 10 years 10 years
Risk-free rate 3.10% 3.10% 3.50% 3.50%
Expected volatility 52.60% 52.60% 52.70% 52.70%
Expected dividend yield 0% 0% 0% 0%
Fair value of options 92.54p 71.0p 83.45p 60.0p
19 December 24 October 14 December 15 December 12 April
2017 2018 2020 2021 2022
Number of options granted 1,375,000 2,305,000 535,920 567,300 91,127
Share price at grant date 85.95p 77.5p 148.0p 181.0p 86.4p
Exercise price 0.50p 0.50p 147.5p 181.2p 0.50p
Option life in years 5 years 5 years 10 years 10 years 5 years
Risk-free rate 1.33% 1.23% (0.01)% 0.54% 1.65%
Expected volatility 30.0% 30.0% 34.3% 35.5% 53.2%
Expected dividend yield 1% 1% 0.56% 0.46% 1%
Fair value of options 65.3p 52.7p 47.0p 62.0p 80.5p
14 April 22 December 12 April
2022 2022 2023
Number of options granted 1,367,547 35,149 85,264
Share price at grant date 90.0p 83.9p 91.8p
Exercise price 86.5p 85.35p 0.50p
Option life in years 10 years 5 years 5 years
Risk-free rate 1.68% 3.55% 3.40%
Expected volatility 50.3% 60.7% 58.3%
Expected dividend yield 0.96% 1.03% 1.07%
Fair value of options 42.0p 46.56p 85.25p
The weighted average share price at the date of the exercise for share options
exercised during the period was n/a (2022: 0.84p). 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 10 years 10 years 10 years 10 years 10 years 10 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
08 December 2022 24 December 2022
Relative Relative
EPS (50%) TSR (50%) EPS (50%) TSR (50%)
Number of options granted 438,435 438,434 283,157 283,156
Share price at grant date 93.0p 93.0p 83.9p 83.9p
Exercise price 0.50p 0.50p 0.50p 0.50p
Option life in years 10 years 10 years 10 years 10 years
Risk-free rate 3.10% 3.10% 3.50% 3.50%
Expected volatility 52.60% 52.60% 52.70% 52.70%
Expected dividend yield 0% 0% 0% 0%
Fair value of options 92.54p 71.0p 83.45p 60.0p
19 December 24 October 14 December 15 December 12 April
2017 2018 2020 2021 2022
Number of options granted 1,375,000 2,305,000 535,920 567,300 91,127
Share price at grant date 85.95p 77.5p 148.0p 181.0p 86.4p
Exercise price 0.50p 0.50p 147.5p 181.2p 0.50p
Option life in years 5 years 5 years 10 years 10 years 5 years
Risk-free rate 1.33% 1.23% (0.01)% 0.54% 1.65%
Expected volatility 30.0% 30.0% 34.3% 35.5% 53.2%
Expected dividend yield 1% 1% 0.56% 0.46% 1%
Fair value of options 65.3p 52.7p 47.0p 62.0p 80.5p
14 April 22 December 12 April
2022 2022 2023
Number of options granted 1,367,547 35,149 85,264
Share price at grant date 90.0p 83.9p 91.8p
Exercise price 86.5p 85.35p 0.50p
Option life in years 10 years 5 years 5 years
Risk-free rate 1.68% 3.55% 3.40%
Expected volatility 50.3% 60.7% 58.3%
Expected dividend yield 0.96% 1.03% 1.07%
Fair value of options 42.0p 46.56p 85.25p
Expected volatility was determined by calculating the historical volatility of
the Group's share price over a 3-year/6.5-year period prior to the date of
grant. 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, 24 December 2021, 8 December 2022 and 24 December 2022 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.
30. GROUP RECONCILIATION OF PROFIT BEFORE CORPORATION TAX TO CASH GENERATED FROM
OPERATIONS
Group Company
30.6.23 30.6.22 30.6.23 30.6.22
£'000 £'000 £'000 £'000
Current:
Operating profit from all operations 13,548 13,605 4,459 4,163
Amortisation 6,578 6,123 - -
Depreciation 1,035 1,124 4 2
Finance lease non-cash movement 212 152 - -
Loss on disposal of fixed assets 38 - - -
Share-based payments 721 456 - -
Impairment on investment - - 36 235
Finance expense 57 57 - -
22,189 21,517 4,499 4,400
(Increase)/decrease in trade receivables (2,236) 325 (1,394) (1,405)
Increase in trade payables 1,975 3,320 60 (350)
Cash generated from operations 21,928 25,162 3,165 2,645
31. 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
£'000 £'000
As at 1 July 2021 31,951 85
As at 30 June 2022 43,919 163
As at 30 June 2023 52,676 396
32. PROJECT DEVELOPMENT
During the year the Group incurred £8,729,106 (2022: £7,599,073) in
development investments. All resources utilised in development have been
capitalised as outlined in the accounting policy governing this area.
33. EVENTS AFTER THE END OF THE REPORTING PERIOD
On 11 September 2023 Dotdigital Group Plc acquired 100% of the voting equity
instruments in Fresh Relevance Limited, a vendor of cross-channel
personalisation technology.
The principal reason for the acquisition was to bring complementary
personalisation technology and website expertise to the Group which
accelerates Dotdigital's CXDP roadmap, together with technical expertise.
The increased functionality the acquisition will both increase our total
addressable market and help drive net revenue expansion.
The financial effects of this transaction have not been recognised at 30 June
2023. The operating results and assets and liabilities of the acquired company
will be consolidated from 11 September 2023.
As the acquisition was completed a short time before the authorisation date of
these financial statements, it was not practical to disclose an accurate book
value of the net assets acquired as at 11 September 2023. The following
figures presented represent Fresh Relevance Limited unaudited management
accounts for 31 August 2023:
Provisional
31-Aug-23
£'000
Intangible assets 208
Property, plant and equipment 22
Trade and other receivables 909
Cash and cash equivalents 1,545
Assets 2,684
Trade and other payables 1,612
Interest bearing loans and borrowings 1,899
Liabilities 3,511
Total net liabilities (827)
At the date of authorisation of these financial statements a thorough and
extensive detailed assessment of the fair value of the identifiable net assets
has not been completed.
Fair value of consideration paid
Dotdigital paid a total consideration of £25.0 million, 100% payable on
completion, with circa £18.9 million being satisfied in cash and circa £6.1
million by the issue of 6,862,683 new ordinary shares in Dotdigital at
88.698p, which are subject to a 12 month lock-in.
It is expected that post fair value adjustments this will result in recognised
goodwill especially after pre acquisition adjustments such as the repayment of
interesting bearing loans. The goodwill represents items, such as the know how
of the workforce, which do not qualify as assets.
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