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REG - Dianomi PLC - Final Results

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RNS Number : 2483K  Dianomi PLC  04 May 2022

This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014.

 

Dianomi plc

("Dianomi", the "Company" or the "Group")

 

Final Results

 

Dianomi, a leading provider of native digital advertising services to premium
clients in the Financial Services, Business and Lifestyle sectors, is pleased
to announce its audited financial results for the year ended 31 December 2021.

Financial Highlights

·    Revenue increased significantly by 26% to £35.8 million (FY 2020:
£28.4 million)

 

·    Gross margin increased to 28.9% from 28.6% in FY 2020

 

·    Adjusted EBITDA* increased 30% to £3.1 million (FY 2020: £2.4
million), ahead of market expectations

 

·    Adjusted EPS** increased 29% to 8.27 pence per share (FY 2020: 6.41
pence per share)

 

·    As at 31 December 2021 the Company had no borrowings and cash of
£10.3 million (31 December 2020: net cash of £3.5 million)

 

Operational Highlights

·    Completed a successful listing on AIM alongside a significantly
over-subscribed share placing in May 2021

 

·    Grew both the number of premium advertisers and publishers by 5% to
427 and 18% to 326 respectively, with strong existing customer and partner
retention

 

·    Average spend of the top 100 advertisers increased by 27% to £0.28
million each, driven by greater familiarity and engagement with the Dianomi
model and outperformance on user engagement

 

·    Video revenue grew over 140% to £1.94 million (FY 2020: £0.80
million)

 

·    Successful expansion into lifestyle vertical generating first year
revenues of £1.5 million

 

·    New partnership with CNN as its exclusive content recommendation
partner across CNN Business, replacing the incumbent provider

 

 

* Calculated as profit after tax before interest, tax, depreciation and
amortisation in the financial year, adjusted for share-based payments and
costs which are IPO related. This metric provides a more comparable indication
of the Group's core business performance by removing the impact of non-trading
items that are reported separately.

** Adjusted to exclude costs related to the IPO and share-based
payments. Share numbers for 2020 have been adjusted to reflect the share
reorganisation which took place in May 2021.

 

Rupert Hudson, CEO of Dianomi, commented:

"2021 was an exciting year for Dianomi. These results highlight the strength
of our premium proposition - we have been able to grow revenues within our
existing customer base as well as deliver material new advertiser and
publisher wins.  As a result we have delivered on our targets set at IPO."

"Following a positive start to trading in 2022, we will continue to harness
the power of context and data in a cookie-less world in order to scale and
maximise our existing business as well as add new publishers and advertisers
to our client base. We are confident that our long-standing client
relationships, premium positioning and proprietary technology will again
enable us to deliver further growth for the year ahead."

 

For further information contact:

 Dianomi                                          Tel: +44 (0)207 802 5530

 Rupert Hodson (Chief Executive Officer)

 Charlotte Stranner (Chief Financial Officer)
 Panmure Gordon (Nominated Adviser and Broker)    Tel: +44 (0)207 886 2500

 Emma Earl / Freddy Crossley, Corporate Finance

 Rupert Dearden, Corporate Broking

 Novella Communications (Financial PR)            Tel: +44 (0)203 151 7008

 Tim Robertson / Fergus Young

About Dianomi

Dianomi, established in 2003, is a leading provider of native digital
advertising services to premium clients in the Financial Services and Business
sectors. The Group operates from its offices in London, New York and Sydney.
The Group enables premium brands to deliver native advertisements to a
targeted audience on the desktop and mobile websites, mobile and tablet
applications of premium publishers. It provides over 400 advertisers,
including blue chip names such as abrdn, Invesco and Baillie Gifford, with
access to an international audience of over 400 million devices per month
through its partnerships with over 300 premium publishers of business and
finance content, including blue chip names such as Reuters, Bloomberg and WSJ.
Adverts served are contextually relevant to the content of the webpages on
which they appear and mirror the style of the page, which enhances reader
engagement. http://www.dianom (http://www.dianom) i.com
(http://www.dianomi.com/) .

 

 

Chairman's Statement

 

Introduction

Dianomi Plc ("Dianomi", the "Company" or the "Group") has had a very strong
set of results in a year in which it became a public company and I would like
to thank investors for their support. The Company delivered growth in 2021
both due to continued strong relationships with its advertisers and publishers
and to the expansion of both our advertiser and publisher base, thereby
demonstrating the natural scalability of our technology platform and the
appeal of our premium market positioning.

The outlook is exciting as, based on industry forecasts, there are strong
indications that the significant growth in digital ad spend which we have seen
to date is set to continue. For example, spending by the Financial Services
industry on digital advertising in the US alone has grown from $17.44 billion
in 2019 to $24.49 billion in 2021 while the latest forecasts predict that it
will reach $27.63 billion in 2022( 1 ).

In light of this projected growth in our core market, our aim is to further
increase Dianomi's market share during 2022 and beyond as well as to continue
to expand into the Lifestyle sector. The route to growth comes from continuing
to expand our base of premium advertisers and publishers and, equally
importantly, from organically growing the ad spend from our existing
advertisers. This organic growth is already occurring as recognition of the
capabilities of the Dianomi platform spreads across the different departments
and teams within our advertising customers.

Many of our customers are substantial financial institutions who currently
spend only a small proportion of their annual ad budget with Dianomi. The
results they see when using our Contextual Media Platform often encourage
those customers to increase their advertising spend with us. Furthermore, we
will continue to work with new and existing top tier publishers to expand our
presence throughout their sites and offer them new and exciting ways of
monetising their inventory.

( 1 ) Source: eMarketer (June 2021)

Our Vision

Our vision is to be the #1 Contextual Media Platform across the Premium
Business, Finance and Lifestyle verticals. This ambition has been boosted by
the structural shift occurring around protecting consumers' privacy with the
likes of iOS and Chrome phasing out third-party cookies. This has led to
advertisers seeking alternative solutions that are not reliant on third-party
cookies which puts Dianomi in a very strong position with our contextual
approach to digital ad placement.

To be the Contextual Media Platform of choice requires Dianomi to truly
harness the power of context and data and then drive advertising audience
engagement and publisher yield in a world without third-party cookies. We are
prepared for this change, using our contextual algorithm to analyse the
context of the page, user signals and traits across billions of pages of
content in order to maximise user engagement. This then ensures ad campaigns
are targeted to the content most likely to deliver on campaign metrics and
goals, without compromising user privacy.

The widely heralded imminent demise of third-party cookies is creating even
greater opportunities for Dianomi as advertisers are forced to adapt the ways
in which they plan, target and evaluate their ads. Our Contextual Media
Platform can work as a cookie-free solution while also being able to offer not
just equivalent but also better levels of service and enhanced results.

In addition to delivering ads directly, Dianomi is also investing in the
ability to deliver ads programmatically while retaining the key
characteristics of the Contextual Media Platform as well as investing in
expanding mobile, video and podcast capabilities.

 

Using the strength and proven performance of the Contextual Media Platform,
our strategy is to increase ad spend by doing more work with existing
advertisers as well as attracting new ones. At the same time, in order to
accommodate increased ad spend, we continue to build on our existing publisher
partnerships alongside forming new ones, thus delivering increased
distribution capabilities to our platform as well as increased scale and reach
to our advertisers.

Strength through diversity

We are committed to building a diverse team and to ensuring inclusive
representation at the most senior level. Moreover, we go beyond championing
diversity by turning our stated commitment into positive action. We employ,
support and promote exceptional individuals within a framework where
collaboration, teamwork and respect are our guiding principles.

Charlotte Stranner, who joined as a consultant to the company in August 2020,
became Chief Financial Officer of the Group in March 2021 and was appointed to
the Board in April 2021. We also welcomed Laura Shesgreen as our Independent
Non-Executive Director at the time of the IPO in May which means that a total
of one third of our Board of Directors are women. We will continue to focus on
developing diverse talent within our business.

We operate in an industry where the competition for talent is fierce.  We are
fortunate in having such an extremely committed team and many of our employees
have worked with us for many years. We are able to report high employee
satisfaction levels. Meanwhile, employee share ownership continues to form a
vital part of the culture and incentive structure of the business for
directors and senior employees.

Even though we are a carbon-light business, we still aim to minimise our
carbon footprint wherever we can.  We also do our utmost to ensure that any
third-party suppliers share our values and aspirations on ESG.

Outlook

We have started 2022 positively, with a solid trading performance in Q1,
supported by an increased level of news flow within online media as well as
promising growth from publishers and advertisers which have recently come onto
the Dianomi platform. Looking further ahead, our business is on track to
deliver further growth, supported by a good pipeline of new advertisers and
publishers and continued technical evolution of the Dianomi platform. Dianomi
is well positioned to leverage these opportunities in the months and years
ahead and build successfully on the momentum of 2021.

Finally, on behalf of the board and management team, I would like to thank all
of our stakeholders and our employees for their commitment and hard work in
what has been and continues to be an exciting time for Dianomi within the
rapidly-developing arena of digital advertising.

 

 

 

Chief Executive's Statement

 

Introduction

2021 was an exceptional year for Dianomi. We have delivered on the commitments
made at the time of the Initial Public Offering ("IPO") and I am delighted to
be able to announce a strong set of results.  These results are all the more
impressive considering that our rate of growth has been sustained from a very
strong base.

These results reflect the excellent relationships that we have forged with
advertisers and publishers over a number of years, as well as a series of
material new business wins.

Operational Review

Our core focus is on serving the premium segment of the Business and Finance
sector where our client base includes four of the world's top five largest
asset management companies, seven of the top ten of the largest wealth
management firms in the US and half of the largest banks in the US.

At the year end, the Company had 427 active advertisers up from 405 in 2020
and worked with 326 publishers, up from 276 in 2020 . Of the £35.8 million of
revenue generated, 61% of revenue being generated by publisher relationships
beginning in the past five years and 55% was generated through direct
relationships with advertisers.

Client retention and repeat business is key to Group success and there is
significant scope to maximise our opportunity and grow revenues with
established customers.  Our long-standing relationships are based on our
ability to deliver premium advertising inventory at scale, and to deliver
premium contextual advertising that maximises user engagement and,
importantly, protects brand safety.

This is made possible by our Contextual Media Platform which optimises the
contextual delivery of advertising to maximise user engagement.  In addition,
advertisers can leverage the proprietary Dianomi ad manager platform to
monitor their ROI and measure the impact of a particular advertising campaign.
This gives them the unique ability in real time to monitor and recalibrate the
campaign for improved returns. This proprietary technology, coupled with our
premium positioning, is one of the primary drivers of our success.

We are able to grow revenue organically as we improve and extend account
penetration across a larger number of financial products and advertising teams
within our existing customer base.  By way of example, our relationship with
a tier one global investment bank has evolved as we are engaged to cover a
broader product range - with revenues increasing from £0.46 million in 2020
to £2.25 million in 2021.

There is significant latent spending capacity within our existing advertiser
base that scales with the volume of inventory on our platform, meaning our
network continues to be highly scalable. This organic growth and the
scalability of the business within our existing customer base results in an
inherent operational leverage which supports profitability. The ability to
grow our business and improve our profitability is underlined by our average
revenue per click ("RPC") rate, which increased from £0.52 in 2020 to £0.68
in 2021. Furthermore, the average spend of our top 100 advertisers in 2021
increased 27% to £0.28 million each from £0.22 million each in 2020.

In addition, we have been able to expand our client base as outlined above
with a 5% increase in the number of advertisers, including key new advertisers
such as PIMCO, Julius Bär and Schroders.

We increased the number of publishers we work with by 18% compared to 2020 and
expect to continue to add new publishers as our ability to deliver contextual
advertising in a brand safe manner is highly valued by publishers and
advertisers alike. The Group has a significant pipeline of premium publishers
and we are pleased to confirm that our partnership with CNN is now firmly
embedded and is expected to be a material growth driver in 2022.

We believe there is scope to continue to expand the rapidly growing mobile and
video segments. Mobile revenue has grown significantly, up by 26% to £18.58
million (2020: £14.74 million) with 52% of all advertising revenue coming
from ads served to mobile devices. Growth in mobile income has benefitted from
Dianomi becoming an Apple News sales agent thereby enabling the Group to work
directly with Apple News publishers, with 20% of all Group revenue generated
via the Apple News channel through 72 publishers (2020: 25% through 32
publishers). Video, while still smaller in revenue terms currently, is a
growing segment and increased by over 140% to £1.94 million (2020: £0.80
million).

Expansion into the premium Lifestyle vertical has begun well as we achieved
first year revenues of £1.54 million (2020: £nil). New advertisers and
publishers include Kiehl's, Lucky Saint, Condé Nast and Hearst and there is a
good pipeline of future prospects.

Recently we hired a new Head of Programmatic, Martin Hill who was previously
Vice President of Solutions Consulting at Adform. We are developing the
capability to enable brands to buy directly from us programmatically and to
allow us to buy programmatically from publishers. These processes are in
technical development as we strive to ensure the key characteristics of our
Contextual Media Platform are retained when operating programmatically.

Financial

The Group delivered a strong set of results with revenue growing by £7.4
million to £35.8 million in the year to 31 December 2021 (2020: £28.4
million), an increase of 26.0%. Adjusted EBITDA* grew to £3.1 million (2020:
£2.4 million), an increase of 30% with gross margin up by 30 basis points.

In May 2021 the Company completed a successful listing on the AIM market of
the London Stock Exchange alongside a significantly over-subscribed placing,
raising gross proceeds of £5 million for the Company.

The Group continues to be in a strong financial position and as at 31 December
2021, the Company had no borrowings and cash of £10.3 million (31 December
2020: net cash of £3.5 million). The exceptional cash generation during the
period was the result of strong working capital performance due to the timing
of debtor receipts.

The Group is in the growth phase of its evolution and so the Board is not
proposing to recommend a dividend and instead the Company will continue to
invest in the expansion of the global team and our ongoing R&D programme
to further the Group's proprietary technology.

* Calculated as profit after tax before interest, tax, depreciation and
amortisation in the financial year, adjusted for share-based payments and
costs which are IPO related. This metric provides a more comparable indication
of the Group's core business performance by removing the impact of non-trading
items that are reported separately.

Our People

I would like to take this opportunity to thank our talented and dedicated
Dianomi team. We have successfully navigated an incredibly important period
for the Group and have delivered on our IPO targets.  This performance is
testament to the strength of our existing customer relationships as well as to
the ability of our team to identify and capitalise on new business
opportunities.

Outstanding team work has been of paramount importance in this effort and we
believe that Dianomi is a workplace where people thrive on interaction and
collaboration. Dianomi has long benefitted from a hybrid working approach,
which has become increasingly relevant in the post-pandemic world. I am in no
doubt that our team's collaborative approach will continue to play a key role
in our future success.

 

 

Life as a Plc

In May 2021 we successfully floated on AIM which has brought many positive
changes to Dianomi. The £5 million raised at the time of our launch on the
London Stock Exchange enabled us to repay all debt and create an investment
plan that extends our sales, technology and marketing functions thereby
allowing us to serve our partners and customers even more effectively.

Furthermore, the IPO has enabled us to motivate our employees through our
ability to offer share options in recognition of their hard work, enthusiasm
and impressive results.

 

Outlook

For 2022, we have had a positive start to the year and as we continue to
harness the power of context and data in a cookie-less world, we will be
able to scale and maximise existing business as well as add new publishers
and advertisers to our client base. We continue to invest in both people and
technology in order to accelerate our growth and are confident that our
long-standing client relationships, premium positioning and proprietary
technology will again enable us to deliver robust growth for the year ahead.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Review

 

                                                2021   2020   Change
 Revenue (£m)                                   35.8   28.4   +26.0%
 Gross profit (£m)                              10.3   8.1    +26.8%
 Gross margin                                   28.9%  28.6%  +30 bps
 Adjusted EBITDA* (£m)                          3.1    2.4    +29.2%
 Adjusted profit before tax*                    2.9    2.2    +33.3%
 Adjusted EPS* (p)                              8.27   6.41   +29.0%
 Operating cash conversion to adjusted EBITDA*  111%   88%    +2,300 bps
 Net cash (£m)                                  10.3   3.5    194%

 

* In order to provide better clarity to the underlying performance of the
Group, Dianomi uses adjusted EBITDA, adjusted profit before tax and adjusted
EPS as alternative performance measures.

 

Basis of Preparation

The financial statements, for the year ended 31 December 2021 together with
the comparative period data for 31 December 2020, are the first the Group has
prepared in accordance with International Financial Reporting Standards. For
periods up to and including the year ended 31 December 2020, the Group
prepared its financial statements in accordance with local generally accepted
accounting principles (FRS 102).

 

Revenue

Revenue grew by 26% to £35.8 million in the year, driven by growth in
revenues from existing advertisers and publishers and revenue from new
advertisers and publishers.

Mobile and Video are two growth segments for the Company. Mobile revenue has
grown significantly over the last year, in 2021 £18.6 million of revenue
(2020: £14.7 million) came from ads served to mobile devices. Video, while
much smaller in revenue terms currently, also saw significant growth from
£0.8 million to £1.9 million in the year to 31 December 2021.

Revenue from the Group's new Lifestyle segment amounted to over £1.5m from a
standing start.

Gross profit and margin

Gross profit represents the Group's share of revenue from publishers under the
terms of the revenue share agreements that the Group has with them. Gross
profit increased by 27% from £8.1 million to £10.3 million, representing an
improved gross margin of 28.9% (2020: 28.6%).

Administrative expenses

Administrative expenses increased to £10.2 million in the year to 31 December
2021 from £5.9 million in 2020. Included in administrative expenses were
share-based payments of £2.9 million (2020: £nil) of which £2.6 million
were incurred as a result of accounting for the fair value of share options
exercised by employees at IPO and the remainder relating to options issued on
and post IPO. The remainder of the increase was primarily driven by increases
in staff costs resulting from an increase in overall headcount and incremental
costs associated with being a listed company.

The Group does not capitalise costs relating to the ongoing support and
development of its platform, these are included within administrative
expenses.

Costs relating to IPO

Costs relating to the IPO amounted to £0.6 million (2020: £0.1 million),
with a further £0.6 million of IPO related costs, including commission
payable on new shares issued, being set against share premium.

Group profitability

Adjusted EBITDA grew 30.2% to £3.1 million (2020: £2.4 million) representing
an adjusted EBITDA margin of 8.7% (2020: 8.4%). The growth in adjusted EBITDA
was slower in the second half of the year as a result of new employees joining
the Group. Adjusted profit before tax amounted to £2.9 million, representing
a margin of 8.0% (2020: £2.2 million, margin of 7.6%). To provide a better
guide to the underlying business performance, adjusted EBITDA excludes
share-based payments and IPO related costs along with depreciation,
amortisation, interest and tax from the measure of profit. Adjusted profit
before tax excludes share-based payments, IPO related costs and tax from the
measure of profit.

Statutory loss after tax was £0.5 million (2020: profit of £1.5 million)
reflecting the significant share-based payments and costs incurred as a result
of the IPO.

Net finance expense

Net finance costs were £0.04 million compared to £0.10 million in 2020, the
decrease reflecting the repayment of the loan notes in issue shortly after the
Group's admission to AIM. The Group is now debt-free and has no interest rate
exposure.

Taxation

The Group had a tax credit for the year ended 31 December 2021 of £122k
(2020: charge of £534k). The tax credit arose as a result of significant tax
losses in the Company due to the options which were exercised at the time of
the IPO, offset to some extent by foreign tax payable of £553k. For further
detail on taxation see notes 9 and 10 of the Financial Statements. Adjusted
profit after tax, used in calculating adjusted earnings per share, is shown
after adjustments for the applicable tax on adjusting items as set out in
notes 7 and 11.

Earnings per share

Loss per share for the year ended 31 December 2021 was 1.77 pence (2020:
profit of 6.05 pence). Adjusted earnings per share increased by 29.0% to 8.27
pence (2020: 6.41 pence). Adjusting items and their tax impacts are set out in
note 11. Share numbers for 2020 have been adjusted to reflect the share
reorganisation which took place in May 2021.

Diluted loss per share for the year ended 31 December 2021 was 1.77 pence
(2020: profit of 5.45 pence). Adjusted diluted earnings per share increased by
32.4% to 7.65 pence (2020: 5.78 pence). As at 31st December 2021, 1,594,387
share options were outstanding.

Cashflow

The Group's net cash position increased by 194% to £10.3 million (2020: £3.5
million). The Group enjoyed strong cash generation with net cash flow
generated from operations of £3.4 million in 2021 (2020: £2.1 million). The
Group saw strong conversion of adjusted EBITDA to operating cashflow of over
100% assisted by some working capital benefit resulting from the timing of
debtor receipts.

Statement of Financial Position

Net assets as at 31 December 2021 totalled £10.1 million (2020: £3.3
million). In May 2021, shortly before the IPO, the Company undertook a share
reorganisation whereby the various classes of shares were redesignated and
sub-divided into ordinary shares of £0.002 pence each. At the time of the
IPO, the Company raised gross proceeds of £5.0 million by the issue of
1,831,501 new ordinary shares at a price of £2.73 each. Further details on
the movements in share capital can be found in note 19.

The Group's net cash position increased to £10.3 million as at 31 December
2021 (2020: £3.5 million) as a result of the net proceeds of the IPO (£3.8
million) and the cash generated from operations. In May 2021, the Group repaid
the £1.25 million loan note principal outstanding to BGF Investments LP and
is now debt-free.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

                   Year ended                                           Year

                   31 Dec 2021                                          ended

                                                                        31 Dec 2020
                   £000                                                 £000

 Note
 Revenue  3        35,782                                               28,430
 Cost of sales     (25,455)                                             (20,285)
                   ---------------------------------------------------  -------------------------------------------------------
 Gross profit      10,327                                               8,145

 

 Administrative expenses                                                   6                          (10,264)                         (5,939)
 Other gains and losses                                                                               18                               -
 Costs relating to IPO                                                                                (637)                            (115)
 Other operating income                                                    5                          -                                38
 Fair value movements                                                      (21)                                                        9
 ----------------------------------------------------                                                                                  -----------------------------------------------------
 Operating (loss)/profit                                                                              (577)                            2,138

 Depreciation                                                                                         154                              103
 Share-based payments                                                      20                         2,854                            -
 Costs relating to IPO                                                                                637                              115
                                                                                                      -------------------------------  -----------------------------
 Adjusted EBITDA                                                                                      3,068                            2,356

 

 Finance income               8                            5                                                  7
 Finance expense              8                            (46)                                               (105)
                                                           -------------------------------------------------  -----------------------------------------------------
 (Loss)/profit on ordinary activities before taxation      (618)                                              2,040

 

 Taxation                                         9                                                                   122                                                                  (534)
                                                   -------------------------------------------------                                                                                                      -----------------------------------------------------
 (Loss)/profit for the year                       (496)                                                                                                                                                   1,506

 Other comprehensive income/ (loss) items that may be reclassified subsequently                                       44                                                                                  (182)
 to profit or loss

 Currency translation differences

                                                                                                                       -------------------------------------------------                                  ---------------------------------------------------
                                                                                                                      (452)                                                 1,324

 Total comprehensive (loss)/income for the year attributable to the owners of
 the company
                                                                                                                      =================================================     ==================================================

 Basic (loss)/ earnings per ordinary share (p)    11                                                                  (1.77)                                                6.05

 Diluted (loss)/ earnings per ordinary share (p)  11                                                                  (1.77)                                                5.78

 

All operations are continuing operations.

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

 

        As at      As at 31 Dec    As at 1 January

       31 Dec      2020            2020

        2021
       £000     £000               £000

 Note

Non-current assets

 Right-of-use assets                 -                                                    154                                                  -
                                     ---------------------------------------------------  ---------------------------------------------------  ---------------------------------------------------
 Total non-current assets            -                                                    154                                                  -

 

Current assets

 Trade and other receivables  12           7,395                                                   5,906                                                4,796
 Deferred tax asset           10           675                                                     -                                                    -
 Cash and cash equivalents    13           10,278                                                  4,722                                                2,842
                                           ------------------------------------------------------  ---------------------------------------------------  ---------------------------------------------------
 Total current assets                      18,348                                                  10,628                                               7,638

 Total assets                              18,348                                                  10,782                                               7,638

 

 Current liabilities
 Trade and other payables    14                 (8,081)                                                 (5,636)                                                (4,399)
 Corporation tax payable                        (142)                                                   (427)                                                  (1)
 Lease liabilities                              -                                                       (157)                                                  -
                                                ------------------------------------------------------  -----------------------------------------------------  ---------------------------------------
 Total current liabilities                      (8,223)                                                 (6,220)                                                (4,400)
                                                -----------------------------------------------------   -----------------------------------------------------  -----------------------------------------------------

 Non-current liabilities
 Loans and borrowings        15                 -                                                       (1,250)                                                (1,250)
                                                -----------------------------------------------------   -----------------------------------------------------  -----------------------------------------------------
 Total non-current liabilities                  -                                                       (1,250)                                                (1,250)
                                                -----------------------------------------------------   -----------------------------------------------------  -----------------------------------------------------

 Total liabilities                              (8,223)                                                 (7,470)                                                (5,650)
                                                ====================================================    ====================================================   ====================================================

 Net assets                                     10,125                                                  3,312                                                  1,988
                                                ====================================================    ====================================================   ====================================================
 Equity

 Share capital               19                 60                                                      -                                                      -
 Share premium account                          5,436                                                   1,085                                                  1,085
 Share options reserve                          2,854                                                   -                                                      -
 Foreign currency reserve                       (512)                                                   (556)                                                  (374)
 Capital redemption reserve                     -                                                       -                                                      -
 Retained earnings                              2,287                                                   2,783                                                  1,277
                                                ====================================================    ====================================================   ====================================================

 Total equity attributable to the               10,125                                                  3,312                                                  1,988

 owners of the company
                                                ====================================================    ====================================================   ====================================================

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

                                                                                                                                                        Attributable to the owners of the Company
                                                                                         Share capital                                   Share premium account                                               Capital redemption reserve                               Share options reserve                                       Foreign                                                     Retained earnings                                        Total equity

                                                                                                                                                                                                                                                                                                                                  currency reserve
                                                                                         £000                                            £000                                                                £000                                                     £000                                                        £000                                                        £000                                                     £000
                                                                                         -----------------------------------------       ------------------------------------------------                    ------------------------------------------------         ------------------------------------------------            ------------------------------------------------            -----------------------------------------------          ------------------------------------------------
                       Balance at 1 January 2021                                         -                                               1,085                                                               -                                                        -                                                           (556)                                                       2,783                                                    3,312
                                                                                         -----------------------------------------       -------------------------------------------------                   -------------------------------------------------        -------------------------------------------------           -------------------------------------------------           -----------------------------------------------          ------------------------------------------------
                       Comprehensive income for the period
                       Loss for the period                                               -                                               -                                                                   -                                                        -                                                           -                                                           (496)                                                    (496)
                       Currency translation differences                                  -                                               -                                                                   -                                                        -                                                           44                                                          -                                                        44
                                                                                         -----------------------------------------       -------------------------------------------------                   -------------------------------------------------        -------------------------------------------------           -------------------------------------------------           -----------------------------------------------          ------------------------------------------------
                       Total comprehensive income for the period         -                                                                                                                                                                                                                                                                                                (496)                                                     (452)

                                                                                                                         -                                                                -                                                        -                                                          44
                                                                         -----------------------------------------       -----------------------------------------------                  -----------------------------------------------          -----------------------------------------------            -----------------------------------------------             -----------------------------------------------           ------------------------------------------------
                       Transactions with owners of the Company
                       Shares issued                                     60                                              4,947                                                            -                                                        -                                                          -                                                           -                                                         5,007
                       Transaction costs                                 -                                               (596)                                                            -                                                        -                                                          -                                                           -                                                         (596)
                       Share-based payment credit                        -                                               -                                                                -                                                        2,854                                                      -                                                           -                                                         2,854
                                                                         -----------------------------------------       -----------------------------------------------                  -----------------------------------------------          -----------------------------------------------            -----------------------------------------------             -------------------------------------------------         ------------------------------------------------
                       Total transactions with owners of the Company     60                                                                                                                                                                                                                                                                                               -                                                         7,265

                                                                                                                         4,351                                                            -                                                        2,854                                                      -
                                                                         -----------------------------------------       -----------------------------------------------                  -----------------------------------------------          -----------------------------------------------            -----------------------------------------------             -------------------------------------------------         ------------------------------------------------
                       Balance at 31 December 2021                                       60                                              5,436                                                               -                                                        2,854                                                       (512)                                                       2,035                                                    10,125
                                                                                         -----------------------------------------       ---------------------------------------------------                 -----------------------------------------                ---------------------------------------------------         ---------------------------------------------------         ------------------------------------------------         ----------------------------------------------

                                                -----------------------------------------                ------------------------------------------------              ------------------------------------------------         ------------------------------------------------          ------------------------------------------------            -----------------------------------------------            ------------------------------------------------
 Balance at 1 January 2020                      -                                                        1,085                                                         -                                                        -                                                         (374)                                                       1,277                                                      1,988
                                                -----------------------------------------                -------------------------------------------------             -------------------------------------------------        -------------------------------------------------         -------------------------------------------------           -----------------------------------------------            ------------------------------------------------

 Comprehensive income for the year
 Profit for the year                            -                                                        -                                                             -                                                        -                                                         -                                                           1,506                                                      1,506
 Currency translation differences               -                                                        -                                                             -                                                        -                                                         (182)                                                       -                                                          (182)
                                                -----------------------------------------                -------------------------------------------------             -------------------------------------------------        -----------------------------------------------           -----------------------------------------------             -----------------------------------------------            ------------------------------------------------
 Total comprehensive income for the year        -                                                        -                                                             -                                                                                                                                                                              1,506                                                      1,324

                                                                                                                                                                                                                                -                                                         (182)

 

                                          -----------------------------------------  -----------------------------------------------      -----------------------------------------------  -----------------------------------------------  -----------------------------------------        -----------------------------------------------        -----------------------------------------------------
 Transactions with owners of the Company  -                                          -                                                    -                                                                                                 -                                                -

                                                                                                                                                                                           -                                                                                                                                                        -
                                          -----------------------------------------  ---------------------------------------------------  -----------------------------------------------  -----------------------------------------------  -----------------------------------------------  --------------------------------------------------     ------------------------------------------------
 Balance at 31 December 2020              -                                          1,085                                                                                                                                                                                                   2,783                                                  3,312

                                                                                                                                          -                                                -                                                (556)
                                          -----------------------------------------  -----------------------------------------------      -----------------------------------------------  -----------------------------------------------  -----------------------------------------------  -----------------------------------------------------  -----------------------------------------------

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

                                                                                                 Year

                                                                                                  ended          Year

                                                                                                  31 Dec 2021    ended 31

                                                                                                                 Dec 2020
                                                                                                 £000            £000

Cash flows from operating activities

 

 (Loss)/ profit on ordinary activities before taxation                         (618)

                                                                                                                                       2,040

 Adjustments for:
 Depreciation - leased assets                                                  154                                                     103
 Interest                                                                      46                                                      105
 payable
 Interest                                                                      (5)                                                     (7)
 receivable
 Increase in trade and other receivables                                       (1,489)                                                 (1,313)
 Increase in trade and other payables                                          2,445                                                   1,154
 Net fair value gain recognised in P&L                                         21                                                      (9)
 Share-based payment charge                                                    2,854                                                   -

                                                                               ------------------------------------------------------  ------------------------------------------------------
 Cash generated from operating activities                                      3,408                                                   2,073
                                                                               ======================================================  ======================================================

 Taxation (paid)/ received                                                     (793)                                                   5

 

                                               ------------------------------------------------------  ------------------------------------------------------
 Net cash generated from operating activities  2,615                                                   2,078
                                               ======================================================  ======================================================

 

Cash flows from investing activities

 Interest received                             5                                                       7
                                               ------------------------------------------------------  ------------------------------------------------------
 Net cash generated from investing activities  5                                                       7
                                               ======================================================  ======================================================

 

Cash flows from financing activities

 Issue of ordinary shares                                 4,411                                                   -
 Loan repayment                                           (1,250)                                                 -
 Interest paid                                            (44)                                                    (102)
 Interest paid in respect of leases                       (2)                                                     (3)
 Capital payments in respect of leases                    (160)                                                   (103)
                                                          ------------------------------------------------------  ------------------------------------------------------
 Net cash generated from/ (used in) financing activities  2,955                                                   (208)
                                                          ======================================================  ======================================================

 

 Net increase in cash and cash equivalents         5,575                                                   1,877
 Cash and cash equivalents at beginning of period  4,722                                                   2,842
 Exchange movement on cash                         (19)                                                    3
                                                   ------------------------------------------------------  ------------------------------------------------------
 Cash and cash equivalents at end of period        10,278                                                  4,722
                                                   ======================================================  ======================================================

 

 

NOTES TO THE FINANCIAL STATEMENTS

 

1.         General information

 

Dianomi plc (the "Company") and its subsidiaries' (together the "Group")
principal activity is the delivery of premium native advertising for the
financial services, technology, corporate sand lifestyle sectors. The Company
was incorporated on 16 August 2002 in England and Wales as a private company
limited by shares under the name Data-ID Limited. On 17 December 2002, the
Company changed its name to Dianomi Limited. On 17 May 2021, the Company
re-registered as a public limited company and changed its name to Dianomi plc.

 

The address of the registered office is 6(th) Floor, 60 Gracechurch Street,
London, EC3V 0HR and the limited company number is 04513809.

 

2.         Basis of preparation and significant accounting policies

 

2.1.         Basis of preparation

 

These financial statements have been prepared on a going concern basis and in
accordance with International Financial Reporting Standards (IFRSs) and the
International Financial Reporting Standards Interpretation Committee (IFRS IC)
interpretations as adopted by the UK that are effective or issued and early
adopted as at the date of these financial statements and in accordance with
the provisions of the Companies Act 2006.

 

The profit before interest, tax, depreciation, amortisation, share-based
payment charge and exceptional costs (adjusted EBITDA) is presented in the
income statement as the Directors consider this performance measure provides a
more accurate indication of the underlying performance of the Company and is
commonly used by City analysts and investors.

 

The preparation of financial statements requires management to exercise its
judgement in the process of applying accounting policies.

 

The presentational and functional currency of the Company is sterling. Results
in these financial statements have been prepared to the nearest £1,000.

 

2.2.         Adoption of IFRS

 

This is the first period of account where the Company has prepared its
financial statements in accordance with IFRSs as adopted by the UK. The
statutory financial statements for the year ended 31 December 2020 were
prepared in accordance with FRS 102, the Financial Reporting Standard
applicable in the UK and the Republic of Ireland (United Kingdom Generally
Accepted Accounting Practice - "UK GAAP").

 

The Company's effective IFRS transition date for the purposes of these
financial statements was 1 January 2020. The effect of this transition to IFRS
on the year-end statements of financial position at 1 January 2020 and 31
December 2020 and the statement of comprehensive income for the year ended 31
December 2020 are set out in note 22.

 

 

 

 

 

 

2.3.       Basis of consolidation

 

The consolidated financial information incorporates the financial information
of Dianomi Plc and all of its subsidiary undertakings. Subsidiary undertakings
include entities over which the Group has effective control. The Group
controls a group when it is exposed to, or has right to, variable returns from
its involvement with the Group and has the ability to affect those returns
through its power over the Group. In assessing control, the Group takes into
consideration potential voting rights.

 

2.4.       Going concern

 

At the time of approving the financial statements, the Directors have a
reasonable expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future.

 

At 31 December 2021 the Company had cash and cash equivalents of £10.3
million (2020; £4.7 million) and net current assets of £10.1 million (2020:
£4.4 million). The  Group has no debt facilities in place (2020: £1.2
million).

 

The Directors have prepared detailed cash flow forecasts for the next 18
months that indicate the existing activities of the Group do not require
additional funding during that period. The forecasts are challenged by various
downside scenarios to stress test the estimated future cash position. The
Directors are pleased to note that the stress tests did not have a significant
impact on the cash flow or cash position of the Group. In addition, current
trading is in line with the forecast.

 

 

2.5.       Principal Accounting Policies

 

2.5.1.     Revenue

 

The Group's customers are direct advertisers, affiliate advertisers and
advertising agencies with whom the Group will enter into a contract or
insertion order.

 

The Group generates revenue by charging advertisers for advertising campaigns
delivered through its platform. The customer's total spend on advertising is
determined by multiplying an agreed performance metric option, such as cost
per mil (CPM), cost per impression (CPI), click (CPC) or action (CPA) with the
volumes of units delivered.

 

Revenue is recognised on completion of the performance criteria which, in most
cases, is when an internet user clicks through to an advertisement that has
been displayed on a web page.

 

Where advanced payments are made in advance of satisfying the performance
obligation, these amounts are transferred to deferred revenue (contract
liabilities) and recognised when the performance obligation has been met.

 

The Group's standard payment terms require settlement of invoices within 60-90
days of receipt.

 

The Group does not adjust the transaction price for the time value of money as
it does not expect to have any contracts where the period between the transfer
of the promised services to the client and the payment by the client exceeds
one year.

 

 

 

 

2.5.2.     Cost of sales

 

Cost of sales represents the direct expenses that are attributable to the
services sold. They consist primarily of payments to publishers under the
terms of the revenue share agreements that the Group has with them. Depending
on the terms of the revenue share agreements, cost of sales can include
commissions where applicable.

 

2.5.3.     Taxation

 

Current tax is the tax currently payable based on the taxable profit for the
year.

 

The Group recognises current tax assets and liabilities of entities in
different jurisdictions separately as there is no legal right of offset.

 

Deferred tax is provided in full on temporary differences between the carrying
amounts of assets and liabilities and their tax bases, except when, at the
initial recognition of the asset or liability, there is no effect on
accounting or taxable profit or loss under a business combination. Deferred
tax is determined using tax rates and laws that have been substantially
enacted by the statement of financial position date, and that are expected to
apply when the temporary difference reverses.

 

Tax losses available to be carried forward, and other tax credits to the
Group, are recognised as deferred tax assets, to the extent that it is
probable that there will be future taxable profits against which the temporary
differences can be utilised.

 

Changes in deferred tax assets or liabilities are recognised as a component of
the tax expense in the statement of comprehensive income, except where they
relate to items that are charged or credited directly to equity, in which case
the related deferred tax is also charged or credited directly to equity.

 

2.5.4.     Government grants

 

Government grants are not recognised until there is reasonable assurance that
the Group will comply with the conditions attaching to them and that the
grants will be received. Government grants are recognised in profit or loss on
a systematic basis over the periods in which the Group recognises as expenses
the related costs for which the grants are intended to compensate.

 

Government grants that are receivable as compensation for expenses or losses
already incurred or for the purpose of giving immediate financial support to
the Group with no future related costs are recognised in profit or loss in the
period in which they become receivable.

 

2.5.5.     Development costs

 

Costs relating to the ongoing support and development of the Group's platform
are recognised as an expense in profit and loss as incurred.

 

2.5.6.     Foreign currency translation

 

a)   Function and presentational currency

Items included in the financial information of each of the Group's entities
are measured using the currency of the primary economic environment in which
the entity operates ('the functional currency'). The consolidated financial
information is presented in 'sterling', which is the Company's functional
currency and the Group's presentation currency.

 

 

On consolidation, the results of overseas operations are translated into
sterling at rates approximating to those ruling when the transactions took
place. All assets and liabilities of overseas operations are translated at the
rate ruling at the reporting date. Exchange differences arising on translating
the opening net assets at opening rate and the results of overseas operations
at actual rate are recognised in other comprehensive income.

 

b)   Transactions and balances

Foreign currency transactions are translated into the functional currency
using the 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 year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the income
statement.

 

2.5.7.     Cash and cash equivalents

 

Cash is represented by cash in hand and deposits with financial institutions
repayable without penalty on notice of not more than 24 hours.

 

2.5.8.     Leases

 

The Group leases property in the UK, US and Australia.

 

All leases are accounted for by recognising a right-of-use asset and a lease
liability except for:

 

-      Leases of low value assets; and

 

-      Leases with a duration of twelve months or less.

 

These leases are recognised as an expense on a straight-line basis over the
term of the lease.

 

Lease liabilities are measured at the present value of contractual payments
due to the lessor over the lease term, with the discount rate determined by
reference to the rate inherent in the lease unless (as is typically the case)
this is not readily determinable, in which case the Group's incremental
borrowing rate on commencement of the lease is used. This is 3.0 per cent.
Variable lease payments are only included in the measurement of the lease
liability if they depend on an index or rate. In such cases, the initial
measurement of the lease liability assumes the variable element will remain
unchanged throughout the lease term. Other variable lease payments are
expensed in the period to which they relate.

 

Right-of-use assets are initially measured at the amount of the lease
liability, reduced for any lease incentives received, and increased for:

-      Lease payments made at or before commencement of the lease;

 

-      Initial direct costs incurred; and

 

-      The amount of any provision recognised where the Group is
contractually required to dismantle, remove or restore the leased asset
(typically leasehold dilapidations).

 

Subsequent to initial measurement lease liabilities increase as a result of
interest charged at a constant rate on the balance outstanding and are reduced
for lease payments made. Right-of-use assets are amortised on a straight-line
basis over the remaining term of the lease or over the remaining economic life
of the asset if, rarely, this is judged to be shorter than the lease term.

 

No lease modification or reassessment changes have been made during the
reporting period from changes in any lease terms or rent charges.

 

 

2.5.9.     Earnings per share

 

The Group presents basic and diluted earnings per share on an IFRS basis. In
calculating the weighted average number of shares outstanding during the
period, any share restructuring is adjusted to allow comparability with other
periods. The calculation of diluted earnings per share assumes conversion of
all potentially dilutive ordinary shares, which arise from share options
outstanding.

2.5.10.   Financing income and expenses

 

Financing expenses comprise interest payable, finance charges on shares
classified as liabilities and leases recognised in the income statement using
the effective interest method, unwinding of the discount on provisions, and
not foreign exchange losses that are recognised in the statement of
comprehensive income.

 

Financing income includes interest receivable on funds invested.

 

Interest income and interest payable are recognised in the statement of
comprehensive income as they accrue, using the effective interest method.

 

2.5.11.   Costs relating to IPO

 

Items which are material because of their size or nature and which are
non-recurring are highlighted separately on the face of the consolidated
statement of comprehensive income.  The separate reporting of exceptional
items helps provide a better picture of the Group's underlying performance.
Items which have been included within this category are the costs relating to
the Company's IPO on AIM in May 2021. The costs specifically related to the
issue of new shares have been set against share premium. Other IPO costs which
relate to listing both new and existing shares have been allocated on a 50/50
basis between exceptional P&L costs and share premium.

Costs relating to the IPO are excluded from the headline profit measures used
by the Group and are highlighted separately in the consolidated statement of
comprehensive income as management believe that they need to be considered
separately to gain an understanding the underlying profitability of the
trading businesses.

2.5.12.   Employee Benefits

 

Post-retirement benefits

 

The Group operates a defined contribution plan for its employees. A defined
contribution plan is a pension plan under which the Group pays fixed
contributions into a separate entity. Once the contributions have been paid
the Group has no further payment obligations.

 

The contributions are recognised as an expense in administrative expenses in
the Consolidated Statement of Comprehensive Income when they fall due. Amounts
not paid are shown in accruals as a liability in the Statement of Financial
Position. The assets of the plan are held separately from the Group in
independently administered funds.

Share-based payments

 

Where share options are awarded to employees, the fair value of the options at
the date of grant is charged to profit or loss over the vesting period.
Non-market vesting conditions are taken into account by adjusting the number
of equity instruments expected to vest at each Statement of Financial Position
date so that, ultimately, the cumulative amount recognised over the vesting
period is based on the number of options that eventually vest. Market vesting
conditions are factored into the fair value of the options granted. The
cumulative expense is not adjusted for failure to achieve a market vesting
condition.

 

The fair value of the award also takes into account non-vesting conditions.
These are either factors beyond the control of either party (such as a target
based on an index) or factors which are within the control of one or other of
the parties (such as the group keeping the scheme open or the employee
maintaining any contributions required by the scheme).

 

Where the terms and conditions of options are modified before they vest, the
increase in the fair value of the options, measured immediately before and
after the modification, is also charged to profit or loss over the remaining
vesting period.

 

Where equity instruments are granted to persons other than employees, profit
or loss is charged with the fair value of goods and services received.

 

2.6.   Standards issued but not yet effective

 

At the date of authorisation of these financial statements, there is expected
to be no material impact to the Group financial statements from IFRSs, IFRICs
or other standards or interpretations that have been issued but which are not
yet effective.

 

At the date of authorisation of these financial statements, the Group has not
applied the following new and revised IFRSs that have been issued but are not
yet effective:

 

·      IAS 1 Presentation of liabilities as current or non-current

 

·      IAS 1 Disclosure of accounting policies

 

·      IAS 8 Definition of accounting estimates

 

The new standards, listed above, are not expected to have a material impact on
the Group in the current or future reporting periods and on foreseeable future
transactions.

 

 

2.7.       Alternative performance measures

 

In order to provide better clarity to the underlying performance of the Group,
adjusted EBITDA and adjusted earnings per share are used as alternative
performance measures. These measures are not defined under IFRS. These
non-GAAP measures are not intended to be a substitute for, or superior to, any
IFRS measures of performance, but have been included as the Directors consider
adjusted EBITDA and adjusted earnings per share to be a key measures used
within the business for assessing the underlying performance of the Group's
ongoing business across periods. Adjusted EBITDA excludes from operating
profit non-cash depreciation, share-based payment charges and non-recurring
exceptional costs. Adjusted EPS excludes from profit after tax share-based
payment charges and non-recurring exceptional items and their related tax
impacts. Please refer to note 7 for reconciliations to Alternative Performance
Measures ("APMs").

3.      Revenue

 

        Revenue arises from:

             Year to                                                 Year to

              31 Dec 2021                                            31 Dec 2020
             £000                                                    £000

 EMEA        7,149                                                   4,836
 U.S.A.      27,451                                                  21,879
 APAC        1,182                                                   1,715
             ======================================================  ======================================================
             35,782                                                  28,430
             ======================================================  ======================================================

 

4.      Operating segments

 

The Group is operated as one global business by its executive team, with key
decisions being taken by the same leaders irrespective of the geography where
work for clients is carried out. The Directors consider that the geographies
where the Group operates have similar economic and operating characteristics
and the products and services provided in each region are all related to
premium native advertising. Management therefore consider that the Group has
one operating segment. The Group report is presented and measured to the
Board as a single segment and is consistent with the financial statements.
 As such, no additional disclosure has been recorded under IFRS 8.

 

 

5.      Other operating income

 

                             Year to                                                 Year to

                              31 Dec 2021                                            31 Dec 2020
                             £000                                                    £000

 Other operating income      -                                                       38
                             ======================================================  ======================================================
                             -                                                       38
                             ======================================================  ======================================================

 

 

Other operating income in the year ended 31 December 2020 related to a grant
Dianomi Pty Ltd received from the Australian government as financial support
during the Covid-19 pandemic.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6.      Administrative expenses

 

                                                       Year to                                                 Year to

                                                        31 Dec 2021                                            31 Dec 2020
                                                       £000                                                    £000

 Direct staff costs                                    4,702                                                   3,966
 IT and software costs                                 834                                                     677
 Legal and professional                                905                                                     620
 Rent                                                  106                                                     148
 Insurance                                             90                                                      56
 Depreciation - leased assets                          154                                                     104
 Foreign exchange losses/(gains)                       90                                                      (1)
 Share-based payments                                  2,854                                                   -
 Other administrative expenses                         529                                                     369
                                                       ======================================================  ======================================================
                                                       10,264                                                  5,939
                                                       ======================================================  ======================================================

During the year the Group obtained the following services from the Company's
auditors as detailed below:

 

                                                Year to                                                 Year to

                                                 31 Dec 2021                                            31 Dec 2020
                                                £000                                                    £000

 Audit fees                                     75                                                      48
 Other services:
 Tax compliance                                 11                                                      12
 Accounts preparation                           -                                                       8
 Transfer pricing advice                        12                                                      -
 Agreed upon procedures on interim results      19                                                      -
                                                ======================================================  ======================================================
                                                117                                                     68
                                                ======================================================  ======================================================

 

 

7.      Reconciliations to Alternative Profit Measures

 

In order to provide better clarity to the underlying performance of the Group,
Dianomi uses adjusted EBITDA and adjusted earnings per share as alternative
performance measures. These measures are not defined under IFRS. These
non-GAAP measures are not intended to be a substitute for, or superior to, any
IFRS measures of performance, but have been included as the Directors consider
adjusted EBITDA and adjusted earnings per share to be key measures used within
the business for assessing the underlying performance of the Group's ongoing
business across periods. Adjusted EBITDA excludes non-cash depreciation
charges, share-based payment charges and non-recurring exceptional costs from
operating profit. Adjusted EPS excludes share-based payment charges and
non-recurring exceptional items and their related tax impacts from profit
after tax.

 

 

 

 

 

 

 

 

The table below sets out the reconciliation of the Group's adjusted EBITDA and
adjusted profit before tax from profit before tax.

 

                                 Year to                                                 Year to

                                  31 Dec 2021                                            31 Dec 2020
                                 £000                                                    £000

                                 ======================================================  ======================================================
 (Loss)/ profit before tax       (618)                                                   2,040
                                 ======================================================  ======================================================
 Adjusting items:
 Costs relating to the IPO       637                                                     115
 Share-based payments            2,854                                                   -
                                 ======================================================  ======================================================
 Adjusted profit before tax      2,873                                                   2,155
                                 ======================================================  ======================================================

 Depreciation                    154                                                     103
 Net finance expense             41                                                      98
                                 ======================================================  ======================================================
 Adjusted EBITDA                 3,068                                                   2,356
                                 ======================================================  ======================================================

 

The table below sets out the reconciliation of the Group's adjusted profit
after tax to adjusted profit before tax.

 

                                    ======================================================  ======================================================
 Adjusted profit before tax         2,873                                                   2,155
                                    ======================================================  ======================================================

 Tax credit/ (charge)               122                                                     (534)
 Tax impact of adjusting items      (677)                                                   (23)
                                    ======================================================  ======================================================
 Adjusted profit after tax          2,318                                                   1,598
                                    ======================================================  ======================================================

 

Adjusted profit after tax is used in calculating adjusted basic and adjusted
diluted EPS. Adjusted profit after tax is stated before adjusting items and
their associated tax effects. Adjusted EPS is calculated by dividing the
adjusted profit after tax for the period attributable to Ordinary shareholders
by the weighted average number of ordinary shares outstanding during the
period. Adjusted diluted EPS is calculated by dividing adjusted profit after
tax by the weighted average number of shares adjusted for the impact of
potential ordinary shares. Potential Ordinary shares are treated as dilutive
when their conversion to Ordinary shares would decrease EPS. Please refer to
note 11 for further detail.

 

 

 

 

 

 

 

 

 

 

 

8.      Finance income and expenses

 

                        Year to                                         Year to

                        31 Dec 2021                                      31 Dec 2020
                        £000                                            £000

 Interest received      5                                               7
                        ----------------------------------------------  ----------------------------------------------
 Total finance income   5                                               7
                        ============================================    ============================================
 Loan note interest     44                                              101
 On lease liability     2                                               4
                        ----------------------------------------------  ----------------------------------------------
 Total finance expense  46                                              105
                        ============================================    ==============================================

 

 

9.      Taxation

 

                                                 Year to                                            Year to

                                                 31 Dec 2021                                        31 Dec 2020
                                                 £000                                               £000
 UK corporation tax
 Current tax on income for the year              -                                                  -
 Adjustments in respect of prior periods         -                                                  -
                                                 ----------------------------------------------     ----------------------------------------------
                                                 -                                                  -
                                                 =================================================  =================================================
 Foreign tax
 Foreign tax on income for the year              553                                                534
                                                 -----------------------------------------------    -----------------------------------------------
 Total current tax                               553                                                534
                                                 =================================================  =================================================
 Deferred tax
 Origination and reversal of timing differences  (675)                                              -
                                                 -----------------------------------------------    -----------------------------------------------
 Total deferred tax                              (675)                                              -
                                                 =================================================  =================================================
                                                 ----------------------------------------------     ----------------------------------------------
 Taxation on profit on ordinary activities       (122)                                              534
                                                 =================================================  =================================================

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of tax expense

 

The tax assessed on the profit on ordinary activities for the year is lower
than (2020: higher than) the standard rate of corporation tax in the UK of 19%
(2020: 19%).

 

                                                                       Year to                                                  Year to

                                                                       31 Dec 2021                                              31 Dec 2020
                                                                       £000                                                     £000

 (Loss)/ profit on ordinary activities before taxation                 (618)                                                    2,040
                                                                       =======================================================  ======================================================

 (Loss)/ profit on ordinary activities multiplies by standard rate of  (118)                                                    388
 corporation tax in the UK of 19% (2020: 19%)

 Effects of:
 Expenses not deductible for tax purposes                              657                                                      96
 Foreign tax                                                           225                                                      144
 Difference in tax rates                                               (96)                                                     (17)
 Deferred tax not recognised                                           (790)                                                    (77)

                                                                       =======================================================  ======================================================
 Tax on profit                                                         (122)                                                    534
                                                                       =======================================================  ======================================================

 

 

10.    Deferred Tax

 

 Deferred Tax Asset

 

             As at                                        As at

             31 Dec 2021                                  31 Dec 2020
             £000                                         £000

 Tax losses  675                                          -
             ----------------------------------------     ----------------------------------------
               675                                        -
             =============  ===========================   ========================================

 

Deferred tax assets are recognised to the extent that it is probable that
future taxable profit will be available against which the deductible temporary
differences can be utilised. There is a potential additional deferred tax
asset of £1.3 million in respect of tax losses of £5.1 million.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11.    Earnings per share

The Group presents non-adjusted and adjusted basic and diluted earnings/loss
per share (EPS) for its ordinary shares. Basic EPS is calculated by dividing
the profit/loss for the period attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during the period.
Share numbers for 2020 have been adjusted to reflect the share reorganisation
which took place in May 2021

Diluted EPS takes into consideration the Company's dilutive contingently
issuable shares. The weighted average number of ordinary shares used in the
diluted EPS calculation is inclusive of the number of share options that are
expected to vest subject to performance criteria as appropriate, being met.

The (loss) / profit and weighted average number of shares used in the
calculations are set out below:

 

                                                                               Year to       Year to

                                                                               31 Dec 2021   31 Dec 2020
                                                                               £000          £000
 (Loss)/ profit attributable to the ordinary equity holders of the Group used  (496)         1,506
 in calculating basic and diluted EPS

 Basic (loss)/ earnings per ordinary share (p)                                 (1.77)        6.05
 Diluted (loss)/ earnings per ordinary share (p)                               (1.77)        5.45

 

 

                                                                                Year to                                                 Year to

                                                                                31 Dec 2021                                             31 Dec 2020
 Adjusted basic and diluted EPS                                                 £000                                                    £000

 Reconciliation of earnings used in calculating adjusted EPS:
 (Loss) / profit attributable to the ordinary equity holders of the Group used  (496)                                                   1,506
 in calculating basic and diluted EPS

 Adjusting items:
 Share-based payments                                                           2,854                                                   -
 Costs relating to the IPO                                                      637                                                     115

 Tax impact of adjusting items                                                  (677)                                                   (23)
                                                                                ======================================================  ======================================================
 Profit attributable to the ordinary equity holders of the Group used in        2,318                                                   1,598
 calculating adjusted basic and diluted EPS

 Adjusted basic earnings per ordinary share (p)                                 8.27                                                    6.41
 Adjusted diluted earnings per ordinary share (p)                               7.65                                                    5.78

 

 

                                                                            Year to                                                 Year to

                                                                            31 Dec 2021                                             31 Dec 2020

 Weighted average number of ordinary shares used as the denominator in      28,024,038                                              24,913,036
 calculating non-adjusted and adjusted basic EPS
 Weighted share option dilution impact                                      2,264,678                                               2,716,169
                                                                            ======================================================  ======================================================
 Weighted average number of ordinary shares used as the denominator in      30,288,716                                              27,629,205
 calculating non-adjusted and adjusted diluted EPS

 

 

 

12.    Trade and other receivables

 

                                                                                 As at 31 Dec                                    As at 31 Dec 2020                               As at 1 Jan 2020

                                                                                 2021
                                                                                 £000                                            £000                                            £000
 Current
 Trade receivables                                                               7,169                                           5,240                                           3,522
 Prepayments                                                                     59                                              52                                              40
 Loan receivable                                                                 97                                              154                                             165
 Other receivables                                                               70                                              74                                              192
 Derivative financial instruments measured at fair value through profit or loss  -                                               386                                             858
                                                                                 ----------------------------------------------  ----------------------------------------------  ----------------------------------------------
                                                                                 7,395                                           5,906                                           4,797
                                                                                 ============================================    ==============================================  ==============================================

 

All of the trade receivables were non-interest bearing and receivable under
normal commercial terms. The directors consider that the carrying value of
trade and other receivables approximates to their fair value.

 

      The loan receivable balances relate to a loan owed from Buckingham
Gate Financial Services Limited, a shareholder and related party. The loan
accrues annual interest at 4%.

 

The expected credit loss on trade and other receivables was not material at
the current or prior year end. For analysis of the maximum exposure to credit
risk, please refer to note 22.

 

The impairment loss recognised in the income statement for the period in
respect of bad and doubtful trade receivables was £17k (2020: £nil).

 

 

 

 

 

 

 

The ageing of trade receivables is detailed below:

 

        As at 31 December 2021

                        < 30 days                                        < 60 days                                       < 90 days                                     < 180 days                                    > 180 days                                      Total
                        £000                                             £000                                            £000                                          £000                                          £000                                            £000

 Gross carrying amount  3,920                                            1,459                                           889                                           407                                           494                                             7,169
                        ===============================================  ==============================================  ============================================  ============================================  ==============================================  =================================================

 

 

        As at 31 December 2020

                        < 30 days                                        < 60 days                                     < 90 days                                     < 180 days                                    > 180 days                                      Total
                        £000                                             £000                                          £000                                          £000                                          £000                                            £000

 Gross carrying amount  3,377                                            948                                           436                                           215                                           264                                             5,240
                        ===============================================  ============================================  ============================================  ============================================  ==============================================  =================================================

 

As at 1 January 2020

                        < 30 days                                        < 60 days                                       < 90 days                                     < 180 days                                    > 180 days                                      Total
                        £000                                             £000                                            £000                                          £000                                          £000                                            £000

 Gross carrying amount  1,849                                            843                                             547                                           237                                           46                                              3,522
                        ===============================================  ==============================================  ============================================  ============================================  ==============================================  =================================================

 

13.    Cash and cash equivalents

 

                           As at 31 Dec                                  As at 31 Dec 2020                               As at 1 Jan 2020

                            2021
                           £000                                          £000                                            £000

 Cash at bank and in hand  10,278                                        4,722                                           2,842
                           ============================================  ==============================================  ==============================================

 

        Cash at bank earns interest at floating rates based on daily
bank deposit rates.

 

 

14.    Trade and other payables

 

                                                                                 As at 31 Dec                                    As at 31 Dec 2020                               As at 1 Jan 2020

                                                                                  2021
                                                                                 £000                                            £000                                            £000
 Current liabilities
 Trade payables                                                                  3,780                                           2,359                                           1,665
 Other taxes and social security costs                                           228                                             63                                              107
 Contract liabilities                                                            376                                             263                                             229
 Other payables and accruals                                                     3,697                                           2,586                                           1,551
 Derivative financial instruments measured at fair value through profit or loss  -                                               365                                             847
                                                                                 ----------------------------------------------  ----------------------------------------------  ----------------------------------------------
                                                                                 8,081                                           5,636                                           4,399
                                                                                 ============================================    =============================================   =============================================

 

The fair value of trade and other payables approximates to book value at each
year end. Trade payables are non-interest bearing and are normally settled
monthly.

 

 

15.    Loans and borrowings

 

                          As at 31 Dec                                  As at 31 Dec 2020                             As at 1 Jan 2020

                          2021
                          £000                                          £000                                          £000
 Non-current liabilities
 Other loans              -                                             1,250                                         1,250
                          --------------------------------------------  --------------------------------------------  --------------------------------------------
                          -                                             1,250                                         1,250
                          ==========================================    ====================================          ====================================

 

In 2018 the Group issued loan notes totalling £1,250,000 to BGF Investments
LP ("BGF"), a shareholder and related party. The loan notes accrued annual
interest at 8% and were repayable in 4 equal, bi-annual instalments starting
31 December 2023, however the loan notes were repaid in full following the
Company's admission to trading on AIM in May 2021.

 

16.  Financial instruments

 

The Group's and Company's financial instruments may be analysed as follows:

 

                                                                                 As at 31 Dec                                     As at 31 Dec 2020                                As at 1 Jan 2020

                                                                                 2021
                                                                                 £000                                             £000                                             £000
 Financial assets
 Derivative financial instruments measured at fair value through profit or loss  -                                                386                                              858
 Financial assets measured at amortised cost:
 Cash at bank and in hand                                                        10,278                                           4,722                                            2,842
 Trade receivables                                                               7,169                                            5,240                                            3,522
 Loan receivable                                                                 97                                               154                                              165
 Other receivables                                                               70                                               74                                               91
                                                                                 ===============================================  ===============================================  ===============================================
                                                                                 17,614                                           10,576                                           7,478
                                                                                 ===============================================  ===============================================  ===============================================
 Financial liabilities
 Derivative financial instruments measured at fair value through profit or loss                                                   365                                              847

                                                                                 -
 Financial liabilities measured at amortised cost:
 Trade payables                                                                  3,780                                            2,359                                            1,665
 Other payables and accruals                                                     3,697                                            2,586                                            1,551
                                                                                 ===============================================  ===============================================  ===============================================
                                                                                 7,477                                            5,310                                            4,063
                                                                                 ===============================================  ===============================================  ===============================================

 

The Group's income, expense, gains and losses in respect of financial assets
measured at fair value through profit or loss realised a fair value loss of
£21k (2020: gain of £9k).

 

Hedge against volatility of foreign exchange rates

 

In order to hedge against the potential volatility of unfavourable foreign
exchange rates, during 2020 and 2019, the Group entered into various forward
contract agreements with Silicon Valley Bank.

 

As at 1 January 2020, the Group had three forward contract agreements yet to
reach their settlement date and as such were fair valued generating a fair
value gain of £11,491. These contracts closed in 2020 resulting in the
reversal of the fair value gain.

 

As at 31 December 2020, the Group had one forward contract agreement yet to
reach its settlement date and as such was fair valued generating a fair value
gain of £20,612. The net fair value gain for 2020 was £9,121.

 

The contract yet to reach its settlement date as at 31 December 2020 closed in
2021 resulting in the reversal of the fair value gain of £20,612.

 

 

17.  Financial risk management

 

The Group and Company is exposed to a variety of financial risks through its
use of financial instruments which result from its operating activities. All
of the Group's financial instruments are classified as loans and receivables.
The Group does not actively engage in the trading of financial assets for
speculative purposes. The most significant financial risks to which the Group
is exposed are described below:

 

      Credit risk

      Generally the Group's and Company's maximum exposure to credit risk
is limited to the carrying amount of the financial assets recognised at the
reporting date, as summarised below:

 

                    As at 31 Dec                                        As at 31 Dec                                        As at 1 Jan 2020

                     2021                                                2020
                    £000                                                £000                                                £000
 Trade receivables  7,169                                               5,240                                               3,522
 Other receivables  167                                                 228                                                 357
                    --------------------------------------------------  -----------------------------------------------     -----------------------------------------------
                    7,336                                               5,468                                               3,879
                    ================================================    ==============================================      ==============================================

 

        Credit risk is the risk of financial risk to the Group and
Company  if a counter party to a financial instrument fails to meets its
contractual obligation. The nature of the Group's and Company's debtor
balances, the time taken for payment by clients and the associated credit risk
are dependent on the type of engagement.

 

      The Group's and Company's trade and other receivables are actively
monitored. The ageing profile of trade receivables is monitored regularly by
Directors. Any debtors over 60 days are individually reviewed by Directors
every month and explanations sought for any balances that have not been
recovered.

 

      Unbilled revenue is recognised by the Group and Company only when
all conditions for revenue recognition have been met in line with the Group's
accounting policy.

 

      The Directors are of the opinion that there is no material credit
risk at group level.

 

        Liquidity risk

        Liquidity risk is the risk that the Group will encounter
difficulty in meeting its obligations associated with its financial
liabilities. The Group seeks to manage financial risks to ensure sufficient
liquidity is available to meet foreseeable needs and to invest cash assets
safely and profitably.

 

      The tables below analyses the Group's financial liabilities into
relevant maturity groupings based on their contractual maturities.

 

      The amounts disclosed in the tables are the contractual
undiscounted cash flows. Balances due within 12 months equal their carrying
balances, because the impact of discounting is not significant.

 

Contractual maturities of financial liabilities at 31 December 2021

                                                                                                                                                                                                                                                                                                               Carrying amount (assets)/

                                                                                                                       Between 1 and 2 years                         Between 2 and 5 years                                                                       Total contractual cashflows                   liabilities

                           Less than 6 months                            6-12 months                                                                                                                               Over 5 years
                           £000                                          £000                                          £000                                          £000                                          £000                                          £000                                          £000

 Trade and other payables  8,081                                         -                                             -                                             -                                             -                                             8,081                                         8,081
                           ============================================  ============================================  ============================================  ============================================  ============================================  ============================================  ============================================
 Total                     8,081                                         -                                             -                                             -                                             -                                             8,081                                         8,081
                           ============================================  ============================================  ============================================  ============================================  ============================================  ============================================  ============================================

 

Contractual maturities of financial liabilities at 31 December 2020

                                                                                                                                                                                                                                                                                                               Carrying amount (assets)/

                                                                                                                       Between 1 and 2 years                         Between 2 and 5 years                                                                       Total contractual cashflows                   liabilities

                           Less than 6 months                            6-12 months                                                                                                                               Over 5 years
                           £000                                          £000                                          £000                                          £000                                          £000                                          £000                                          £000

 Trade and other payables  5,636                                         -                                             -                                             -                                             -                                             5,636                                         5,636
 Loan borrowings           -                                             -                                             -                                             1,250                                         -                                             1,250                                         1,250
 Lease liabilities         79                                            78                                            -                                             -                                             -                                             157                                           157

                           ============================================  ============================================  ============================================  ============================================  ============================================  ============================================  ============================================
 Total                     5,715                                         78                                            -                                             1,250                                         -                                             7,043                                         7,043
                           ============================================  ============================================  ============================================  ============================================  ============================================  ============================================  ============================================

 

Contractual maturities of financial liabilities at 1 January 2020

                                                                                                                                                                                                                                                                                                               Carrying amount (assets)/

                                                                                                                       Between 1 and 2 years                         Between 2 and 5 years                                                                       Total contractual cashflows                   liabilities

                           Less than 6 months                            6-12 months                                                                                                                               Over 5 years
                           £000                                          £000                                          £000                                          £000                                          £000                                          £000                                          £000

 Trade and other payables  3,522                                         -                                             -                                             -                                             -                                             3,522                                         3,522
 Loan borrowings           -                                             -                                             -                                             1,250                                         -                                             1,250                                         1,250
 Corporation tax payable   1                                             -                                             -                                             -                                             -                                             1                                             1

                           ============================================  ============================================  ============================================  ============================================  ============================================  ============================================  ============================================
 Total                     3,523                                         -                                             -                                             1,250                                         -                                             4,803                                         4,803
                           ============================================  ============================================  ============================================  ============================================  ============================================  ============================================  ============================================

 

 

 

        Interest rate risk

        As at 31st December 2021 the Group has no interest rate risk
exposure as following the IPO, the loan notes in issue to BGF were repaid in
full.

 

As at 1 January 2020 and 31 December 2020 the Group was not exposed to
interest rate risk as the only loan facilities that the Group had in place
were loan notes, which were subject to a fixed rate of interest of 8% per
annum. The balance on the loan notes was £1,250,000 as at 31 December
2020.

 

      Foreign currency risk

The Group operates internationally and is exposed to foreign exchange risk
arising from various currency exposures, primarily US Dollars and Australian
Dollars. The Group monitors exchange rate movements closely and occasionally
enters into forward contract agreements to hedge against the potential
volatility of unfavourable foreign exchange rates. The Group ensures adequate
funds are maintained in appropriate currencies to meet known liabilities. The
Group also has trade receivable balances in foreign currency and monitors the
potential effect of any exchange rate movements on these balances.

 

      The Group's exposure to foreign currency risk at the end of the
respective reporting period, expressed in Currency Units, was as follows:

 

                              As at 31 Dec 2021

                              £000
                              USD     CAD   EUR   AUD   INR   SGD
 Cash & cash equivalents

                              7,486   84    731   727   914   225

                              As at 31 Dec 2020

                              £000
                              USD     CAD   EUR   AUD   INR   SGD
 Cash & cash equivalents

                              4,210   464   116   747   914   168

                              As at 1 Jan 2020

                              £000
                              USD     CAD   EUR   AUD   INR   SGD
 Cash & cash equivalents

                              2,212   136   123   629   954   -

 

        The Group is exposed to foreign currency risk on the
relationship between the functional currencies of the Group companies and the
other currencies in which the Group's material assets and liabilities are
denominated. The table below summaries the effect on profit and loss had the
functional currency of the Group weakened or strengthened against these other
currencies, with all other variables held constant.

 

                                           As at 31 Dec                                        As at 31 Dec 2020                                     As at 1 Jan 2020

                                           2021
                                           £000                                                £000                                                  £000

 10% weakening of functional currency      191                                                 400                                                   222
                                           ==================================================  ====================================================  ====================================================

 10% strengthening of functional currency  (156)                                               (400)                                                 (222)
                                           ==================================================  ====================================================  ====================================================

 

        The impact of a change of 10% has been selected as this has
been considered reasonable given the current level of exchange rates and the
volatility observed both on a historical basis and market expectations for
future movements.

 

Fair value of financial instruments

      The fair values of all financial assets and liabilities
approximates their carrying value.

 

Capital risk management policy

 

The Group's capital management objectives are:

·      to ensure the Group's ability to continue as a going concern in
order to continue to provide returns for shareholders and benefits for other
stakeholders

·      maintain an optimal capital structure to reduce the cost of
capital

 

The Group considers its capital comprises share capital plus all reserves,
which amounted to £10.1net cu million as at 31 December 2021 (2020: £3.3
million).

 

The Group has no debt facilities in place as at 31 December 2021 (2020: £1.25
million). Management assesses the Group's capital requirements in order to
maintain an efficient overall financing structure while avoiding excessive
leverage. The Group manages the capital structure and makes adjustments to it
in the light of changes in economic conditions and the risk characteristics of
the underlying assets.

 

 

18.  Related party disclosures

 

In 2018, BGF acquired shares in the Company alongside which the Group issued
loan notes totalling £1.25 million to BGF. The loan notes accrued annual
interest at 8% and were repaid in full following the Company's admission to
trading on AIM in May 2021.

 

Transactions with BGF are disclosed below:

                         Year ended                                          Year ended                                       Year ended

                         31 Dec 2021                                         31 Dec 2020                                      1 Jan 2020
                         £000                                                £000                                             £000

 Annual fee              50                                                  53                                               55
 Interest on loan notes  42                                                  101                                              100
                         --------------------------------------------------  -----------------------------------------------  -----------------------------------------------
                         92                                                  154                                              155
                         ================================================    ==============================================   ==============================================

 

The annual fee due to BGF as at 31 December 2021 is £27k (2020: £16k). Up
until the Company's IPO in May 2021, the annual fee related to a management
fee payable by the Company under the terms of the investment agreement between
BGF and the Company whereby BGF could appoint a representative to the Board.
Following the Company's IPO, the annual fee relates specifically to Matthew
Singh's (a representative of BGF) services as a Non-Executive Director.

Interest on loan notes due as at 31 December 2021 is £nil (31 December 2020:
£30k, 1 January 2020: £25k). As at 31 December 2021, BGF held £nil loan
notes (1 January 2020 and 31 December 2020: £1,250k).

The Group received revenues of £76k (2020: £54k) from Buckingham Gate
Financial Services Limited, a company that is controlled by the shareholders
of the Company. As at 31 December 2021 there were trade receivables from
Buckingham Gate Financial Services Limited of £7k (31 December 2020: £16k, 1
January 2020: £28k). The Group also has a loan receivable from Buckingham
Gate Financial Services Limited of £97k as at 31 December 2021 (31 December
2020: £154k, 1 January 2020: £165k), details of which are set out in note
16. Interest receivable of £5k accrued in the year ended 31 December 2021
(2020: £7k).

 

19.  Share capital

                                                                     Issued Shares Number         Nominal Value                Issued Amount

£
£
 Ordinary Shares
 As at 1 January 2020 and 31 December 2020                           18,345                               0.01                 184
 As at 1 January 2021                                                18,345                               0.01                 184
 Bonus issue                                                         3,100,305                            0.01                 31,003
 Redesignation of A, B and C ordinary shares to Ordinary Shares      1,859,514                            0.01                 18,595
 Subtotal                                                            4,978,164                            0.01                 49,782

 Subdivision of ordinary shares                                      24,890,820                         0.002                     49,782
 Issue of shares pursuant to exercise of options                     3,305,650                          0.002                       6,611
 Issue of shares pursuant to placing                                 1,831,501                          0.002                       3,663

 As at 31 December 2021                                                        30,027,971                         0.002                    60,056

 

 A ordinary shares                             Issued Shares Number                                                      Nominal Value                 Issued

                                                                                                                        £                              Amount

                                                                                                                                                       £
 As at 1 January 2020 and 31 December 2020     10,361                                                                            0.01                  104
 As at 1 January 2021                          10,361                                                                              0.01                104
 Bonus issue                                   1,751,009                                                                           0.01                17,510
 Redesignation to Ordinary Shares              (1,761,370)                                                                         0.01                (17,614)
 As at 31 December 2021                                          -                                                                                                       -

 B ordinary shares                                             Issued Shares Number                         Nominal Value              Issued Amount

                                                                                                           £                           £

 As at 1 January 2020 and 31 December 2020                     602                                                  0.01               6
 As at 1 January 2021                                          602                                                 0.01                6
 Bonus issue                                                   101,738                                             0.01                1,017
 Redesignation to Ordinary Shares                              (80,124)                                            0.01                (801)
 Redesignation to deferred shares                              (22,216)                                            0.01                (222)
 As at 31 December 2021                                                         -                                                                        -

 

 

 Share capital (continued)           Issued Shares Number                   Nominal Value             Issued Amount

 C ordinary shares                                                         £                          £

 As at 1 January 2020, 30 June 2020  106                                            0.01              1

 and 31 December 2020
 As at 1 January 2021                106                                              0.01            1
 Bonus issue                         17,914                                           0.01            179
 Redesignation to Ordinary Shares    (18,020)                                         0.01            (180)
 As at 30 June 2021                                  -                                                             -

 

 Deferred shares                            Issued Shares Number           Nominal Value     Issued Amount

                                                                          £                  £

 As at 1 January 2020 and 31 December 2020              -                                                  -
 As at 1 January 2021                                   -                                                  -
 Redesignation of B ordinary shares         22,216                               0.01        222
 Repurchase of deferred shares              (22,216)                      0.01               (222)

 As at 31 December 2021                                 -                                                  -

 

 

On 6 May 2021, £49,709.66 of the available £1,084,776 of the Company's share
premium account was capitalised through the issue of bonus ordinary shares of
£0.01 each, A ordinary shares of £0.01 each ("A Shares"), B ordinary shares
of £0.01 each ("B Shares"), and C ordinary shares of £0.01 each ("C Shares")
to existing shareholders pro rata to their holdings of ordinary shares of
£0.01 each, A Shares, B Shares and/or C Shares. The capitalisation resulted
in an issued share capital of 3,118,650 ordinary shares of £0.01 each,
1,761,370 A Shares, 102,340 B Shares and 18,020 C Shares.

 

A new set of interim articles of association was adopted by the Company to
reflect its re-registration as a public limited company and the Company's name
was changed to Dianomi plc.

 

Immediately prior to the Company's admission to trading on AIM ("Admission")
taking place, the A Shares and C Shares were re-designated as ordinary shares
of £0.01 each in the capital of the Company on the basis of one ordinary
share of £0.01 per A Share or C Share then in issue.

 

 

 

Immediately prior to Admission taking place, the 102,340 B Shares in issue
after the bonus issue described above were re-designated as 80,124 ordinary
shares of £0.01 each and 22,216 deferred shares of £0.01 each in the capital
of the Company.

 

Immediately after the re-designation of shares described above, each ordinary
share of £0.01 was sub-divided into five ordinary shares of £0.002 each.

 

Immediately on Admission taking place on 24 May 2021, all of the deferred
shares of £0.01 each were repurchased by the Company for an aggregate
consideration of £1.00 to be satisfied in cash.

 

Furthermore, on Admission 1,831,501 new ordinary shares of £0.002 pence were
issued pursuant to the placing, raising gross proceeds of £5 million for the
Company.

 

20.  Share-based payments

 

      The Group operates an equity-settled share-based remuneration
scheme for employees. All UK employees are eligible to participate in the long
term incentive scheme, the only vesting condition being that the individual
remains an employee of the Group over the ten year vesting period.

 

The number of options and weighted average exercise price in the table below
have not been adjusted to reflect the share capital reorganisation in May 2021
as described in Note 24.

 

                                                 Weighted average exercise price (pence)       Number                                                                            Weighted average exercise price (pence)                               Number
                                                 Dec 21                                        Dec 21                                                                            Dec 20                                                                Dec 20

 Outstanding at the beginning of the period      1.0                                           3,627                                                                                                   1.0                                             2,927
 Granted during the period                       225.9                                         1,982,926                                                                                               1.0                                             700
 Exercised/ lapsed during the period             0.2                                           (392,166)                                                                                               1.0                                             -
                                                 --------------------------------------------  -----------------------------------------------                                                         ----------------------------------------------  ----------------------------------------------
 Outstanding at the end of the period            273                                           1,594,387                                                                                               1.0                                             3,627
                         ==========================================                                             ==============================================  ============================================                                           ============================================

 

 

      Of the total number of options outstanding at the end of the
period, Nil (31 Dec 20: Nil) had vested and were exercisable at the end of the
year with a weighted average exercise price of 273p (31 Dec 20: 1.0p).

 

Certain options granted under the existing option schemes in place prior to
Admission were due to lapse on 17 May 2021, and all but two of these lapsing
options were replaced with equivalent options. Of the two other lapsing
options, one of these was replaced with an option over a greater number of
ordinary shares. All of the options granted under the existing option schemes
in place prior to Admission were exercised immediately on Admission.

 

 

 

 

On Admission, new option schemes were established and a total of 1,640,926
options were granted under these new option schemes with an exercise price of
273p. During the year, 46,539 options lapsed as a result of employees leaving
the Company.

 

The Black-Scholes option pricing model was used to value the equity-settles
share-based payment awards as it was considered that this approach would
result in materially accurate estimate of the fair value of the options
granted.

 

The inputs into the model were as follows:

 

                           Post-IPO Option Scheme                                                                Pre-IPO Option Scheme*
 Weighted average share price at grant date (£)      2.73                                                                                414
 Weighted average exercise price (£)                 2.73                                                                                0.01
 Volatility (%)                                      44.00%                                                      30.28%
 Weighted average vesting period (years)                                          3                                                          10
 Risk free rate (%)                                  0.76%                                                       0.25%
 Expected dividend yield (%)                         -                                                           -

 

* The share price and exercise price have not been adjusted for the share
capital reorganisation which took place immediately before the IPO

The share-based remuneration expense comprises:

 

                         As at                                       As at

                         31 Dec 2021                                 31 Dec 2020
                         £000

 Equity-settled schemes  2,854                                       -
                         ==========================================  ==========================================

 

 

21.  Reserves

 

Share Capital

Share capital represents the nominal value of share capital subscribed.

 

Share Premium

Share premium represents the funds received in exchange for shares over and
above the nominal value, offset by costs incurred on the raise of equity.

 

Capital redemption reserve

The capital redemption reserve is a non-distributable reserve into which
amounts are transferred following the redemption or purchase of the Company's
own shares.

 

Foreign currency translation reserve The foreign currency translation reserve
represents exchange differences that arise on consolidation from the
translation of the financial statements of foreign subsidiaries.

 

Retained earnings

The retained earnings reserve represents cumulative net gains and losses
recognised in the statement of comprehensive income.

 

Share option reserve

The share-based payment reserve represents amounts accruing for equity settled
share options granted plus the fair value of share options exercised upon IPO.

 

 

22.  First time adoption of IFRS

 

These financial statements, for the year ended 31 December 2021, are the first
the Group has prepared in accordance with IFRS. For periods up to and
including the year ended 31 December 2020, the Group prepared its financial
statements in accordance with local generally accepted accounting principles
(FRS 102).

 

Accordingly, the Group has prepared financial statements that comply with IFRS
applicable as at 31 December 2021, together with the comparative period data
for the year ended 31 December 2020, as described in the summary of
significant accounting policies. In preparing the financial statements, the
Group's opening statement of financial position was prepared as at 1 January
2020, the Group's date of transition to IFRS.

 

The principal adjustment arising was to recognise a property lease (previously
treated as an operating lease) as a right of use asset and corresponding lease
liability as required by IFRS 16. The tables below set out the adjustments
made by the Group in restating its FRS 102 financial statements, including the
statement of financial position as at 1 January 2020 and the financial
statements as of, and for, the year ended 31 December 2020.

 

Group reconciliation of equity as at 1 January 2020 (date of transition to
IFRS)

 

           FRS 102 as at 1 Jan 2020  IFRS Adjustments

                                                       IFRS as at

                                                       1 Jan 2020
     Note  £000                      £000              £000

 

 Current assets
 Trade and other receivables      4,796                                                -                                                    4,796
 Cash and cash equivalents        2,842                                                -                                                    2,842
                                  ---------------------------------------------------  ---------------------------------------------------  ---------------------------------------------------
 Total current assets             7,638                                                -                                                    7,638

 Total assets                     7,638                                                -                                                    7,638

 

 Current liabilities
 Trade and other payables                   (4,399)                                                -                                                      (4,399)
 Corporation tax payable                    (1)                                                    -                                                      (1)
                                            ---------------------------------------------          -----------------------------------------------------  -----------------------------------------------------
 Total current liabilities                  (4,400)                                                -                                                      (4,400)
                                            ---------------------------------------------          -----------------------------------------------------  -----------------------------------------------------

 Non-current liabilities
 Loans and borrowings                       (1,250)                                                -                                                      (1,250)
                                            -----------------------------------------------------  -----------------------------------------------------  -----------------------------------------------------
 Total non-current liabilities              (1,250)                                                -                                                      (1,250)
                                            -----------------------------------------------------  -----------------------------------------------------  -----------------------------------------------------

 Total liabilities                          (5,650)                                                -                                                      (5,650)
                                            ====================================================   ====================================================   ====================================================

 Net assets                                 1,988                                                  -                                                      1,988
                                            ====================================================   ====================================================   ====================================================
 Equity

 Share capital                              -                                                      -                                                      -
 Share premium account                      1,085                                                  -                                                      1,085
 Share options reserve                      -                                                      -                                                      -
 Foreign currency translation reserve  (c)  -                                                      (374)                                                  (374)
 Capital redemption reserve                 -                                                      -                                                      -
 Retained earnings                     (c)  903                                                    374                                                    1,277
                                            ====================================================   ====================================================   ====================================================
 Total equity attributable to the           1,988                                                  -

 owners of the company                                                                                                                                    1,988
                                            ====================================================   ====================================================   ====================================================

 

Group reconciliation of equity as at 31 December 2020

           FRS 102 as at 31 Dec 2020  IFRS Adjustments

                                                        IFRS as at

                                                        31 Dec 2020
     Note  £000                       £000              £000

Non-current assets

 Right-of-use asset    (a)  -                                                       154                                                  154
                            ------------------------------------------------------  ---------------------------------------------------  ---------------------------------------------------
 Total current assets       -                                                       154                                                  154

 

Current assets

 Trade and other receivables      5,906                                                   -                                                    5,906
 Cash and cash equivalents        4,722                                                   -                                                    4,722
                                  ------------------------------------------------------  ---------------------------------------------------  ---------------------------------------------------
 Total current assets             10,628                                                  -                                                    10,628

 Total assets                     10,628                                                  154                                                  10,782

 

 Current liabilities
 Trade and other payables                                     (5,636)                                                -                                                      (5,636)
 Corporation tax payable                                      (427)                                                  -                                                      (427)
 Lease liabilities                                       (a)  -                                                      (157)                                                  (157)
                                                              -----------------------------------------------------  -----------------------------------------------------  -----------------------------------------------------
 Total current liabilities                                    (6,063)                                                (157)                                                  (6,220)
                                                              -----------------------------------------------------  -----------------------------------------------------  -----------------------------------------------------

 Non-current liabilities
 Loans and borrowings                                         (1,250)                                                -                                                      (1,250)
                                                              -----------------------------------------------------  -----------------------------------------------------  -----------------------------------------------------
 Total non-current liabilities                                (1,250)                                                -                                                      (1,250)
                                                              -----------------------------------------------------  -----------------------------------------------------  -----------------------------------------------------

 Total liabilities                                            (7,313)                                                (157)                                                  (7,470)
                                                              ====================================================   ====================================================   ====================================================

 Net assets                                                   (3,315)                                                (3)                                                    3,312
                                                              ====================================================   ====================================================   ====================================================
 Equity

 Share capital                                                -                                                      -                                                      -
 Share premium account                                        1,085                                                  -                                                      1,085
 Share options reserve                                        -                                                      -                                                      -
 Foreign currency translation reserve                    (c)  -                                                      (556)                                                  (556)
 Capital redemption reserve                                   -                                                      -                                                      -
 Retained earnings                                       (c)  2,230                                                  553                                                    2,783
                                                              ====================================================   ====================================================   ====================================================
 Total equity attributable to the owners of the company       3,315                                                  (3)

                                                                                                                                                                            3,312
                                                              ====================================================   ====================================================   ====================================================

 

 

Group Reconciliation of Total Comprehensive Income for the year ended 31
December 2020

 

                      FRS 102                                              IFRS Adjustments                                     IFRS

                      Year ended                                                                                                Year ended

                      31 Dec 2020                                                                                               31 Dec 2020
                Note  £000                                                 £000                                                 £000

 Revenue              28,430                                               -                                                    28,430
 Cost of sales        (20,285)                                             -                                                    (20,285)
                      ---------------------------------------------------  ---------------------------------------------------  -------------------------------------------------------
 Gross profit         8,145                                                -                                                    8,145

 

 Administrative expenses    (b)                          (6,055)                                          115                                        (5,939)
 Costs relating to the IPO  (b)                          -                                                (115)                                      (115)
 Other operating income                                  38                                               -                                          38
 Fair value movements                                    9                                                -                                          9
                            ----------------------------------------------------                          -----------------------------------------  -----------------------------------------------------
 Operating (loss)/profit                                 2,138                                            -                                          2,138

 Depreciation               (a)                          -                                                103                                        103
 Costs relating to the IPO  (b)                          -                                                115                                        115
                                                         -----------------------------------------------  -----------------------------------------  ----------------------------------------------------
 Adjusted EBITDA                                         2,138                                            218                                        2,356

 

 Finance income                                      7                                                  -                                          7
 Finance expense                                (a)  (102)                                              (3)                                        (105)
                                                     -------------------------------------------------  -----------------------------------------  -----------------------------------------------------
 Profit on ordinary activities before taxation       2,043                                                                                         2,040

                                                                                                        (3)

 

 Taxation                                                                            (534)                                                -                                                    (534)
                                                                                      -------------------------------------------------   -----------------------------------------            -----------------------------------------------------
 Profit for the year                                                                 1,509                                                (3)                                                  1,506

 Other comprehensive loss items that may be reclassified subsequently to profit      (182)                                                                                                     (182)
 or loss

 Currency translation differences

                                                                                                                                          -
                                                                                      -------------------------------------------------    -------------------------------------------------   ---------------------------------------------------
                                                                                     1,327                                                                                                     1,324

 Total comprehensive income for the year attributable to the owners of the
 company

                                                                                                                                          (3)

 

 

Notes to the reconciliation of equity as at 1 January 2020 and 31 December
2020 and total comprehensive income for the year ended 31 December 2020.

 

a) Leases

Under FRS 102, a lease is classified as a finance lease or an operating lease.
Operating lease payments are recognised as an operating expense in the
statement of profit or loss on a straight-line basis over the lease term.
Under IFRS, a lessee applies a single recognition and measurement approach for
all leases, except for short-term leases and leases of low-value assets and
recognises lease liabilities to make lease payments and right-of-use assets
representing the right to use the underlying assets.

 

At the date of transition to IFRS, the Group applied the transitional
provision and measured lease liabilities at the present value of the remaining
lease payments, discounted using the lessee's incremental borrowing rate at
the date of transition to IFRS. Right-of-use assets were measured at the
amount equal to the lease liabilities adjusted by the amount of any prepaid or
accrued lease payments.

 

The transition to IFRS did not result in any adjustment to the opening
balances at 1 January 2020 but resulted in an adjustment to the Right of Use
asset and lease at 31 December 2020 of £154k and £157k respectively. The net
impact to retained earnings for 2020 was £3k.

 

b) Costs relating to the IPO

Costs incurred in 2020 relating to preparation for the Company's IPO have been
separated out on the statement of comprehensive income.

 

c) Translation reserve

The Group included its foreign currency translation reserves in retained
earnings under FRS 102; on transition to IFRS these reserves have been
reclassified to a foreign currency reserve.

 

d) Cash flows

Lease payments have moved from operating activities to financing activities.

 

27.  Ultimate controlling party

 

There is no ultimate controlling party as at 31st December 2021 nor was there
as at 31 December 2020.

 

28.  Events after the balance sheet date

 

There have been no material events.

 

29.  Contingent liabilities and contingent assets

The Group had no contingent liabilities or contingent assets at 31 December
2021 (1 January 2020 and 31 December 2020: £nil).

 

30.  Capital Commitments

The Group's capital commitments at 31 December 2021 are £nil (1 January 2020
and 31 December 2020: £nil).

 

 

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.   END  FR FIFVEELISIIF

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