REG - Dianomi PLC - Final Results
20/04/2023 07:00
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RNS Number : 8318W Dianomi PLC 20 April 2023
Dianomi plc
("Dianomi, the "Company" or the "Group")
Final Results
'Contextual Platform remains Relevant and Robust'
Dianomi, a leading provider of native digital advertising services to premium
clients in the Business, Finance and Lifestyle sectors, announces the
Company's audited results for the year ended 31 December 2022.
Financial Highlights
· Revenue of £35.9 million for the year (2021: £35.8 million) was
flat as the market in the second half of the year became more challenging
leading to slower advertising spend and a decrease in newsletter spend
· Gross margin for the full year of 27.3% (2021: 28.9%) due to
publisher mix with a larger contribution from CNN Business which is now the
second largest publisher for the Group
· Adjusted EBITDA* of £1.6 million (2021: £ 3.1 million) as a
result of a contraction in gross margin as well as investment in marketing and
people
· Adjusted EPS** of 2.58 pence (2021: 8.27 pence) reflecting lower
levels of profit
· As at 31 December 2022, the Group had no borrowings and cash of
£11.7 million (31 December 2021: £10.3 million)
Operating Highlights
· Client retention remains one of our key strengths with annual
advertiser and publisher churn (calculated on a revenue basis) of 5.5 per
cent. (FY21: 2.5%) and 2.8 per cent. (FY21: 4.1 per cent.) respectively
· Continue to add new publishers to our client base with the number
of publishers at year end standing at 336 (FY21: 326)
· This year, we counted Goldman Sachs, EY and Porsche amongst our
new premium advertisers and the overall number of advertisers who used our
platform during the year stood at 387 (FY21: 427)
· Our client focus remains the premium segment of the Business and
Finance sector where our client base today includes all of the top 10 asset
management companies in the US, 7 of the top ten largest wealth management
firms in the US and 5 of the top 10 largest US banks
· We continued to roll out our new partnership with CNN Business as
its exclusive content recommendation partner and CNN is now our second largest
publisher with further integration and potential for growth to be completed in
2023
· Successfully developing our programmatic offering with positive
trials with the likes of Morgan Stanley and Porsche leading to material uplift
in programmatic sales to stand at £1.2 million this year (2021: £0.2
million)
Outlook
· As the contextual native advertising partner of choice in the
business and finance sectors, we are in an optimal position to benefit from a
return of confidence amongst advertisers as well as new opportunities with
publishers
· Continued development and expansion of our programmatic offering
to a larger number of publishers across the platform over the course of the
year
· Strong balance sheet positioning the Company well for growth, and
cost base aligned with current unpredictable environment and uncertain levels
of spend in order to protect profitability
· Current year has started in line with management expectations
Rupert Hodson, CEO of Dianomi commented:
"2022 started well for Dianomi and growth in revenues in the first half was
solid. However, the macro-economic backdrop proved more challenging as we
moved into the second half of the year and the advertising sector was not
immune to this. Given a tougher than expected environment, I am encouraged to
see that the Dianomi platform remains as relevant and robust as ever. Client
retention remains one of our key strengths and we have also added some very
impressive premium names to our advertiser and publisher base. Our
programmatic trials have gone well and we look forward to rolling this out to
a broader client base.
2023 has started well and in line with management expectations. As we move
through the year, we believe that we are well placed to capitalise on a return
of confidence amongst advertisers. We are entering a new chapter for Dianomi
given recent management changes which has led to new talent joining the
Company providing fresh impetus across the business. Our pipeline of new
prospects is good and we continue to enjoy a strong balance sheet which
underpins our ability to invest in strategic opportunities as they arise."
* Calculated as profit after tax before charging interest, tax, depreciation
and amortisation in the financial year, adjusted for share-based payments,
other, non-recurring income and costs which were 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 in the comparative year,
other, non-recurring income and share-based payments.
The information contained within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulations (EU) No.
596/2014. It forms part of United Kingdom domestic law by virtue of the
European Union (Withdrawal) Act 2018. Upon the publication of this
announcement, this inside information is now considered to be in the public
domain.
For further information contact:
Dianomi Tel: +44 (0)207 802 5530
Rupert Hodson (Chief Executive Officer)
Charlotte Stranner (Chief Financial Officer)
Panmure Gordon (NOMAD and Broker) Tel: +44 (0)207 886 2500
Emma Earl/ Freddy Crossley, Corporate Finance
Rupert Dearden, Corporate Broking
Novella Communications Tel: +44 (0)203 151 7008
Tim Robertson / Safia Colebrook
About Dianomi
Dianomi, established in 2003, is a leading provider of native digital
advertising services to premium clients in the Business, Finance and Lifestyle
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 circa 400 advertisers,
including blue chip names such as abrdn, Invesco and Charles Schwab, with
access to an international audience of over 400 million devices per month
through its partnerships with over 300 premium publishers, including blue chip
names such as Reuters, CNN Business 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
Over the course of 2022, Dianomi demonstrated its relevance and its resilience
during a year characterised by increasingly challenging macro-economic
conditions which have affected the advertising industry across the board. In
spite of the difficult backdrop, Dianomi has been able to maintain its
impressive list of premium advertisers and publishers. We are proud of our
client "stickiness", as underlined by the recent renewal of our contract with
Reuters as their exclusive content recommendation partner. We are able to
count some truly global premium advertisers amongst our new advertisers this
year including Goldman Sachs, EY and Porsche. Advertisers are being more
selective in how they spend but Dianomi remains a contextual partner of
choice. Our platform delivers innovative ways to monetise inventory for
publishers and well as measurable and transparent results for our advertisers.
We feel strongly that in turbulent times, publishers and marketers value high
quality partnerships with measurable, premium results and we are committed to
maintaining high standards and ambitious goals.
The prospects for market growth remain encouraging. Industry forecasts suggest
that, despite the challenges of 2022, digital advertising spend is set to
experience strong growth in 2023, with E-marketer predicting that digital
advertising spend in the US Financial Services Sector will increase by 13% in
2023 to $36 billion.
Our Strategy
Our vision remains unchanged - to be the #1 Contextual Media Platform across
the Premium Business, Finance and Lifestyle verticals, harnessing the power of
context and data to drive advertising audience engagement and publisher yield.
With major internet browsers such as Safari and Firefox already blocking
third-party cookies and Google Chrome expected to phase them out completely by
2024, marketers must consider preparing for a cookie-less future and adapt
instead to a contextual approach. We boast a premium positioning in the
contextual space and have the platform and technology to offer transparency on
performance for publishers and advertisers alike. Dianomi's platform provides
a cookie-free solution to deliver improved results as our contextual
algorithms facilitate access to premium inventory and deliver tailored content
most likely to meet advertiser metrics as well as delivering very measurable
audience engagement.
Trials of our programmatic offering are ongoing. Programmatic represents an
attractive solution for advertisers and publishers in terms of speed and
efficiency. The technology facilitating programmatic is constantly evolving
and in the coming year we are expecting to continue to increase the number of
customers engaging programmatically.
ESG
We appreciate the importance of scrutiny of our ESG credentials from investors
and stakeholders. We remain committed to diversity within our workforce. We
aim to ensure our clients and suppliers share our values and aspirations and
turn away those advertisers and publishers who we feel do not. Each new
supplier is sent a copy of our policy and code of conduct which sets out our
expectations in the areas of, inter alia, ethical supply and people practices
including diversity and inclusion as well as environmental responsibility.
In February 2023, we were delighted to announce a new partnership with the
World Media Group, an alliance of international media organisations
championing and supporting trusted journalism. Members of World Media Group
are all considered trusted and premium publishers of journalistic content. The
organization has four key pillars, two of which are specifically focused on
ESG, being (1) promoting sustainable practices in marketing and (2) driving
inclusion and engagement. We are also a member of the Financial Communications
Society in the US, a charity run by and for financial marketing,
communications and media professionals and whose philanthropic mission is
centered on financially supporting a wide range of children's charities.
Overview on Financials and Outlook
We delivered revenue for the full year of £35.9 million, flat on last year.
This performance is in the context of a difficult economic backdrop as well as
a change in spending patterns within our advertiser base. Adjusted EBITDA* of
£1.6 million and Adjusted EPS** of 2.58 pence show a decrease on the prior
year and were affected by a contraction in gross margins due to publisher mix
as well as increased investment in people and marketing. This year has started
in line with our expectations and I am confident that the quality of Dianomi's
offering will continue to attract publishers and advertisers alike. We are
entering a new chapter for Dianomi given recent management changes which has
led to new talent joining the Company providing fresh impetus across the
business. Our pipeline of new prospects is good and we continue to enjoy a
strong balance sheet which underpins our ability to invest in strategic
opportunities as they arise. However, due to the ongoing uncertain market
outlook and in order to maintain our profit margins, the Company is ensuring
that its cost base is appropriate for an unpredictable trading environment. I
would like to thank our shareholders for their continued support and the team
for their hard work over the year and their commitment to deliver in 2023.
Chief Executive's Statement
Introduction
2022 started well for Dianomi but as the year progressed, the business was
affected by a more difficult macro environment and challenging financial
markets which have presented headwinds for a number of our clients. However, I
am pleased to report that, with our focus on delivering results for the most
valuable brands and publishers through relevance and reach, we continue to
have strong client retention rates with annual advertiser and publisher churn
(calculated on a revenue basis) of less than 6 per cent. and 3 per cent.
respectively. Furthermore, we continue to welcome new top-tier premium
advertisers as well as publishers to the platform which is testament to our
model and our team. This year, we added Goldman Sachs, Porsche, and EY as
notable new advertisers as well as a number of well-known publishers such as
Fox News and Sky News. As we transition to a cookie-less world, I believe
that our relevance and position remains unchanged - we continue to be the
contextual native advertising partner of choice in our specialist sectors of
business and finance.
We recently announced that Raphael Queisser and Cabell De Marcellus, both
co-founders of Dianomi, have stepped down from the Board and their roles as
COO and CTO respectively. Dianomi marks its 20(th) anniversary this year and
Raphael and Cabell have been instrumental in supporting the business over the
last two decades. They will continue to support the business as advisers to me
and both will remain significant and supportive shareholders. I am extremely
grateful for their friendship, hard work and vital contribution to the genesis
and success of Dianomi since its inception. It has been a great pleasure to
work with them over the years and I look forward to their continued support.
We are excited about opening a new chapter in the Dianomi story. Ken Johnston
has re-joined the Group in the US as global head of sales. Ken has many years
of experience in Financial Services marketing and was previously at Meta and
Quantcast. Ken worked for Dianomi between 2010 and 2014 and was the first
sales person employed by Dianomi in the US. Ken is a thought leader in
financial services marketing with an excellent 20 year track record of driving
growth. A number of other personnel changes have also been made within the
Group to ensure that Dianomi's cost base is aligned to the current environment
and that resources are optimised so that we are in a strong position when the
market recovers.
Programmatic
We continue to develop our programmatic offering and, during the year, we
hired a new Head of Programmatic. Whilst the development roadmap is taking
longer than expected, we undertook trials where we transacted with a number of
premium clients such as Morgan Stanley and Porsche on this offering and post
year end saw further success with the likes of Citi and Square. The technology
is constantly improving which will enable us to extend this service to a much
wider pool of clients and partners, both existing and new.
We believe that we have an enormous opportunity to be the contextual partner
of choice in the direct and programmatic space within the premium end of the
market. We further believe that an enhanced offering will lead to a net
increase in average advertiser spend with Dianomi and an overall uplift in
revenues going forward.
Operational review
Our client focus remains the premium segment of the Business and Finance
sector where our client base today includes all of the top 10 asset management
companies in the US, 7 of the top ten largest wealth management firms in the
US and 5 of the top 10 largest US banks.
Our premium publisher base increased over the course of 2022 and by the end of
the year we had 336 active publishers vs 326 at year end 2021. CNN Business,
for whom we won the contract to become the exclusive content recommendation
partner in 2021, now ranks as our number two publisher, and we are still to
roll-out across their app, giving scope for further growth. Growth in
impressions was strong, with total impressions of 48.8 billion for the year vs
40.9 billion last year. Revenue per click ("RPC") was down slightly at 0.64
pence in 2022 vs 0.68 pence in 2021 due to an increase in impressions across
Apple News publishers, which tend to command a lower RPC.
During 2022, we had 387 active advertisers, down on last year's 427. We are
pleased to report a number of global premium brands as new advertisers in 2021
including Porsche, Goldman Sachs, and EY. Average spend across our top 100
advertisers is down 9% for the year but this includes financial newsletter
publications who have faced challenges in a period of market volatility. We
continue to focus on driving growth and scaling our business within our
existing premium advertiser base. With a number of key advertisers such as,
inter alia, Charles Schwab, JP Morgan, AJ Bell and the Ascent, we have
recorded a good ramp-up in spend over the period demonstrating the scalability
of the business.
Financial review
Group revenue was flat at £35.9 million (2021: £35.8 million) with a
slow-down in spend by our advertisers in the second half.
Mobile revenue for the year decreased from £18.6 million to £16.9 million
predominantly due to a decrease in RPC across mobile properties. Video revenue
also decreased from £1.9 million to £1.4 million. Video revenue tends to be
tied to one-off campaigns and one particular advertiser which we expected to
spend significantly in the second half of the year cut its spend in 2022 vs
2021. We still believe that video represents a key growth opportunity for
Dianomi and hope to report improved progress in the current year.
Revenue from the Group's new Lifestyle segment amounted to £1.3 million
(2021: £1.5 million). Lifestyle advertisers tend to transact programmatically
and this should increase as the Group builds scale in this space.
Gross margin was down 160 basis points to 27.3 % largely due to publisher mix
with a larger contribution from CNN Business which is now the second largest
publisher for the Group. Gross profit for the period was £9.8 million, a 5 %
decline on the previous year despite flat revenue year on year.
Adjusted EBITDA* of £1.6 million (2021: £3.1 million) and Adjusted EPS**
2.58 pence (2021: 8.27 pence) were down 48% and 69% respectively, reflecting a
contraction in gross margin as well as investment in marketing and people, in
addition to a full period of costs associated with being a public company.
We currently have no borrowings and at the end of the year we had cash of
£11.7 million vs £10.3 million end of 2021.
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
preserve its cash resources so that it has sufficient capacity to invest in
the growth of the Company and/or take advantage of strategic opportunities
should they arise.
Outlook
I would like to take this opportunity to extend thanks to our team who have
shown such commitment to the business and have worked extremely hard to
deliver a fantastic service to our existing clients as well as onboard new
ones during a period of market uncertainty. The start of the year is in line
with our expectations, in spite of tough year-on-year comparisons. I believe
that we are well placed to benefit when there is a return in advertiser
confidence and are well positioned to grow our market share through an
increase in demand in both direct and programmatic channels as well as through
product innovation.
* Calculated as profit after tax before charging interest, tax, depreciation
and amortisation in the financial year, adjusted for share-based payments,
other, non-recurring income and costs which were 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 in the comparative year,
other, non-recurring income and share-based payments.
CFO Statement
Financial KPIs
2022 2021 Change
Revenue (£m) 35.9 35.8 +0.4%
Gross profit (£m) 9.8 10.3 (4.9)%
Gross margin 27.3% 28.9% (5.5)%
Adjusted EBITDA* (£m) 1.6 3.1 (48.4)%
Adjusted profit before tax* 1.5 2.9 (48.3)%
Adjusted EPS* (p) 2.58 8.27 (68.8)%
Operating cash conversion to adjusted EBITDA* 82% 111% (26.1)%
Net cash (£m) 11.7 10.3 13.6%
Revenue
Revenue remained flat year on year at £35.9 million (2021: £35.8 million),
due to slower growth in new advertiser spend and change in existing advertiser
spend patterns due to a difficult macro environment. One notable change to the
prior year was a decrease in newsletter spend from £7.0 million to £4.3
million as advertisers adjusted their spend in response to a more challenging
market environment.
Mobile revenue from ads served to mobile devices decreased to £16.9 million,
from £18.6 million in 2021 due to a decrease in revenue per click across
mobile properties. Video revenue also decreased from £1.9 million in the year
to 31 December 2021 to £1.4 million with lower spend from one particular
advertiser contributing to the decrease.
Revenue from the Group's nascent Lifestyle segment amounted to £1.3 million
(2021: £1.5 million) as many lifestyle advertisers tend to transact
programmatically, hence the Directors believe that this segment will grow once
the Group's nascent programmatic offering builds scale.
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 decreased 4.9% to £9.8 million from £10.3 million, representing a
gross margin of 27.3% (2021: 28.9%). The decrease was largely due to the mix
of publishers, with a larger contribution from CNN Business which is now the
second largest publisher for the Group, but which is on a 80/20 revenue share
in favour of the publisher with scope to increase Dianomi's share as revenue
grows.
Administrative expenses
Administrative expenses decreased to £9.0 million in the year to 31 December
2022 from £10.3 million in 2021. Included in administrative expenses were
share-based payments of £0.5 million (2021: £2.9 million of which £2.6
million were incurred as a result of accounting for the fair value of share
options exercised by employees at IPO). The increase outside of share-based
payments was primarily driven by increases in staff costs and IT expenses due
to the increase in impressions across the Group's publisher partners' sites.
The Group does not capitalise costs relating to the ongoing support and
development of its platform, these are included within administrative
expenses.
Group profitability
Adjusted EBITDA decreased to £1.6 million from £3.1 million in 2021
representing an adjusted EBITDA margin of 4.4% (2021: 8.7%). The decrease in
adjusted EBITDA reflected the decrease in gross margin, alongside the Group's
investment in the platform and people to support the current operations. To
provide a better guide to the underlying business performance, adjusted EBITDA
excludes share-based payments, other, non-recurring income and IPO related
costs in the prior year along with depreciation, amortisation, interest and
tax from the measure of profit.
Statutory profit after tax was £0.5 million (2021: loss of £0.5 million)
with 2021 including the significant share-based payments and costs incurred as
a result of the IPO.
Net finance income
Net finance income was £0.04 million compared to net finance costs of £0.04
million in 2021, reflecting the repayment of the loan notes in issue shortly
after the Group's admission to AIM in May 2021 and an increasing interest rate
environment. The Group is now debt-free and has no interest rate exposure.
Taxation
The Group had a tax charge for the year ended 31 December 2022 of £0.7
million (2021: tax credit of £0.1 million) which predominantly related to the
tax payable in the US. The tax credit arose in 2021 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 £0.5 million. For
further detail on taxation see notes 11 and 12 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 8 and 13.
Earnings per share
Earnings per share for the year ended 31 December 2022 was 1.62 pence (2021:
loss of 1.77 pence). Adjusted earnings per share was 2.58 pence (2021: 8.27
pence). Adjusting items and their tax impacts are set out in note 13.
Diluted earnings per share for the year ended 31 December 2022 was 1.46 pence
(2021: loss of 1.77 pence). Adjusted diluted earnings per share was 2.34 pence
(2021: 7.65 pence). As at 31st December 2022, 1,721,551 share options were
outstanding (31 December 2021: 1,594,387).
Statement of Financial Position
Net assets as at 31 December 2022 totalled £11.8 million (31 December 2021:
£10.1 million). Trade receivables increased to £7.5 million (31 December
2021: £7.2 million) and trade creditors decreased to £3.0 million as at 31
December 2022 (31 December 2021: £3.8 million). Accruals, which predominantly
reflect the payments due to the Group's publisher partners, increased to £4.5
million as at 31 December 2022 from £3.6 million as at 31 December 2021.
The Group's net cash position increased 13.6% to £11.7 million as at 31
December 2022 (31 December 2021: £10.3 million) The Group enjoyed positive
cash generation with net cash flow generated from operations of £1.3 million
in 2022 (2021: £3.4 million). The Group saw good conversion of adjusted
EBITDA to operating cashflow of 81.5% assisted by some working capital benefit
which is expected to unwind in the first half of 2023. 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 Year
ended ended
31 Dec 2022 31 Dec 2021
£000 £000
Note
Revenue 4 35,915 35,782
Cost of sales (26,127) (25,455)
--------------------------------------------------- ---------------------------------------------------
Gross profit 9,788 10,327
Administrative expenses 7 (8,981) (10,264)
Other gains and losses 136 18
Costs relating to IPO 3 - (637)
Other income 6 167 -
Fair value movements - (21)
---------------------------------------------------- -----------------------------------------------------
Operating profit/(loss) 1,110 (577)
Depreciation 14 107 154
Share-based payments 24 526 2,854
Costs relating to IPO 3 - 637
Other income 6 (167) -
------------------------------- -------------------------------
Adjusted EBITDA 1,576 3,068
Finance income 10 41 5
Finance expense 10 (4) (46)
------------------------------------------------- -----------------------------------------------------
Profit/(loss) on ordinary activities before taxation 1,147 (618)
Taxation 11 (662) 122
------------------------------------------------- -----------------------------------------------------
Profit/(loss) for the year 485 (496)
Other comprehensive income items that may be reclassified subsequently to 651 44
profit or loss
Currency translation differences
------------------------------------------------- ---------------------------------------------------
1,136 (452)
Total comprehensive income/(loss) income for the year attributable to the
owners of the company
================================================= ==================================================
Basic earnings/(loss) per ordinary share (p) 13 1.62 (1.77)
Diluted earnings/(loss) per ordinary share (p) 13 1.46 (1.77)
All operations are continuing operations.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at
31 Dec 31 Dec
2022 2021
£000 £000
Note
Non-current assets
Right-of-use asset 14 213 -
--------------------------------------------------- ---------------------------------------------------
Total non-current assets 213 -
Current assets
Trade and other receivables 16 7,874 7,395
Deferred tax asset 12 675 675
Cash and cash equivalents 17 11,663 10,278
------------------------------------------------------ ------------------------------------------------------
Total current assets 20,212 18,348
Total assets 20,425 18,348
Current liabilities
Trade and other payables 18 (8,048) (8,081)
Corporation tax payable (371) (142)
Lease liabilities 19 (219) -
------------------------------------------------------ -----------------------------------------------------
Total current liabilities (8,638) (8,223)
----------------------------------------------------- -----------------------------------------------------
Total liabilities (8,634) (8,223)
==================================================== ====================================================
Net assets 11,787 10,125
==================================================== ====================================================
Equity
Share capital 23 60 60
Share premium account 5,436 5,436
Share options reserve 3,380 2,854
Foreign currency reserve 139 (512)
Capital redemption reserve - -
Retained earnings 2,772 2,287
==================================================== ====================================================
Total equity attributable to the 11,787 10,125
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 2022 60 5,436 - 2,854 (512) 2,287 10,125
----------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ----------------------------------------------- ------------------------------------------------
Comprehensive income for the period
Profit for the period - - - - - 485 485
Currency translation differences - - - - 651 - 651
----------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ----------------------------------------------- ------------------------------------------------
Total comprehensive income for the period - 485 1,136
- - - 651
----------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ------------------------------------------------
Transactions with owners of the Company
Share-based payment credit - - - 526 - - 526
----------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ------------------------------------------------- ------------------------------------------------
Total transactions with owners of the Company - - 526
- - 526 -
----------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ------------------------------------------------- ------------------------------------------------
Balance at 31 December 2022 60 5,436 - 3,380 139 2,772 11,787
----------------------------------------- --------------------------------------------------- ----------------------------------------- --------------------------------------------------- --------------------------------------------------- ------------------------------------------------ ----------------------------------------------
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) 2,287 10,125
----------------------------------------- --------------------------------------------------- ----------------------------------------- --------------------------------------------------- --------------------------------------------------- ------------------------------------------------ ----------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
Year
ended Year
31 Dec 2022 ended 31
Dec 2021
£000 £000
Cash flows from operating activities
Profit/(loss) on ordinary activities before taxation 1,147 (618)
Adjustments for:
Depreciation - leased assets 107 154
Interest 4 46
payable
Interest (41) (5)
receivable
Increase in trade and other receivables (478) (1,489)
Increase in trade and other payables 185 2,445
Other income (167)
Net fair value gain recognised in P&L - 21
Share-based payment charge 526 2,854
------------------------------------------------------ ------------------------------------------------------
Cash generated from operating activities 1,283 3,408
====================================================== ======================================================
Taxation paid (269) (793)
------------------------------------------------------ ------------------------------------------------------
Net cash generated from operating activities 1,014 2,615
====================================================== ======================================================
Cash flows from investing activities
Interest received 41 5
------------------------------------------------------ ------------------------------------------------------
Net cash generated from investing activities 41 5
====================================================== ======================================================
Cash flows from financing activities
Issue of ordinary shares - 4,411
Loan repayment - (1,250)
Interest paid - (44)
Interest paid in respect of leases (4) (2)
Capital payments in respect of leases (106) (160)
------------------------------------------------------ ------------------------------------------------------
Net cash generated (used in)/ generated from financing activities (110) 2,955
====================================================== ======================================================
Net increase in cash and cash equivalents 945 5,575
Cash and cash equivalents at beginning of period 10,278 4,722
Exchange movement on cash 440 (19)
------------------------------------------------------ ------------------------------------------------------
Cash and cash equivalents at end of period 11,663 10,278
====================================================== ======================================================
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 and 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
The financial report for the year ended 31 December 2022 has been prepared in
accordance with the historical cost convention and with international
accounting standards in conformity with the requirements of the Companies Act
2006 and with UK adopted International Financial Reporting International
Financial Reporting Standards (IFRSs).
The profit before charging interest, tax, depreciation, amortisation,
share-based payment charges, other, non-recurring income 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 areas involving
a higher degree of judgement, or areas where assumptions and estimates are
significant to the financial information, are disclosed in note 3.
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. 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, which in
Dianomi's case are Dianomi Inc. and Dianomi Pty Ltd. 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.
2.3. 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 2022 the Company had cash and cash equivalents of £11.7
million (2021; £10.3 million) and net current assets of £11.8 million (2021:
£10.1 million). The Group has no debt outstanding or facilities in place
(2021: £nil).
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.
Post year end, in March 2023, the Federal Deposit Insurance Corporation
announced that it had been appointed receiver to SVB Financial Group ("SVB")
and the Bank of England announced that it intended to apply to the Court to
place Silicon Valley Bank UK Limited ('SVBUK') into a Bank Insolvency
Procedure. At the time of the announcements, Dianomi had £3.9 million in
deposits across SVB and SVBUK. Shortly thereafter SVBUK was acquired by HSBC
UK Bank Plc and the Federal Deposit Insurance Corporation ("FDIC") and other
regulators guaranteed all depositors in SVB, with First Citizens Bank
subsequently acquiring Silicon Valley Bridge Bank, N.A. from the FDIC, meaning
that all deposits were safe and secure.
2.4. Principal Accounting Policies
2.4.1. 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), cost per click (CPC) or cost per
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.
2.4.2. 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.
In limited instances, the Company incurs costs with publishers based on a
guaranteed minimum rate of payment from the Company in exchange for guaranteed
placement of the Company's promoted recommendations on specified portions of
the publisher's online properties. These guaranteed rates are typically either
a minimum monthly payment or a minimum CPM and are recognised as an expense as
incurred.
2.4.3. 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.
The Group's US subsidiary does not charge US sales tax on its services as it
provides non-taxable services.
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.
2.4.4. 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.
2.4.5. 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.
2.4.6. Cash and cash equivalents
Cash is represented by cash in hand and deposits with financial institutions.
2.4.7. Financial Instruments
The Group classifies financial instruments, or their component parts, on
initial recognition as a financial asset, a financial liability or an equity
instrument in accordance with the substance of the contractual arrangement.
Financial instruments are recognised on trade date when the Group becomes a
party to the contractual provisions of the instrument. Financial instruments
are recognised initially at fair value plus, in the case of a financial
instrument not a fair value through profit and loss, transaction costs that
are directly attributable to the acquisition or issue of the financial
instrument. Financial instruments are derecognised on the trade date when the
Group is no longer a party to the contractual provisions of the instrument.
Non-derivative financial instruments comprise trade and other receivables,
cash and cash equivalents, loans and borrowings and trade and other payables.
All financial instruments held are classified as loans and receivables.
a) Trade and other receivables and trade and other payables
Trade and other receivables are recognised initially at transaction price less
attributable transaction costs. Trade and other payables are recognised
initially at transaction price plus attributable transaction costs. Subsequent
to initial recognition they are measured at amortised cost using the effective
interest method, less any expected credit losses in the case of trade
receivables. If the arrangement constitutes a financing transaction, for
example if payment is deferred beyond normal business terms, then it is
measured at the present value of future payments discounted at a market rate
of interest for a similar debt instrument.
b) Contract liabilities
A contract liability is recognised if a payment is received or a payment is
due (whichever is earlier) from a customer before the Group transfers the
related services. Contract liabilities are recognised as revenue when the
performance obligation has been met.
c) Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at the present value of
future payments discounted at a market rate of interest. Subsequent to initial
recognition, interest-bearing borrowings are stated at amortised costs using
the effective interest method, less any impairment losses.
d) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits.
e) Derivative financial instruments
Derivative financial instruments comprise economic hedges. Hedge accounting is
not applied to derivative instruments that economically hedge financial assets
and liabilities denominated in foreign currencies. Changes in the fair value
of such derivatives are recognized in profit or loss under financing income or
expenses.
2.4.8. 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.
2.4.9. 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.
2.4.10. 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.
2.4.11. 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
related to listing both new and existing shares were 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.
2.4.12. 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.
2.5. Standards issued but not yet effective
The IASB and IFRIC have issued the following relevant standards and
interpretations with effective dates as noted below
Standard Key Requirements Effective date (for annual periods beginning on or after)
IFRS 17 'Insurance contracts' as amended in June 2020 by amendments to 'IFRS The standard establishes principles for the recognition, measurement, 1 January 2023
17, Insurance Contract presentation and disclosure of insurance contracts issued. No impact is
expected on the results of the Group.
Amendments to IAS 1 Presentation of Liabilities as Current or Non-current The standard clarifies how conditions with which an entity must comply within 1 January 2024
twelve months after the reporting period affect the classification of a
liability.
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice The standard makes it clear that accounting policies governing material 1 January 2023
Statement 2: Disclosure of Accounting Policies balances are not necessarily themselves material. Therefore the quantity of
accounting policy disclosures may reduce.
Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and The standard introduces a new definition for accounting estimates. No impact 1 January 2023
Errors: Definition of Accounting Estimates is expected on the results of the Group.
Amendments to IAS 12 Deferred Tax related to Assets and Liabilities arising The standard clarifies how companies account for deferred tax on transactions 1 January 2023
from a Single Transaction such as leases and decommissioning obligations.
Amendments to IFRS 16 Lease Liability in a Sale and Leaseback The standard clarifies how a seller-lessee subsequently measures sale and 1 January 2024
leaseback transactions that satisfy the requirements in IFRS 15 to be
accounted for as a sale.
Amendments to IAS 1 Non-Current Liabilities with Covenants The standard clarifies how conditions with which an entity must comply within 1 January 2024
twelve months after the reporting period affect the classification of a
liability.
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.
2.6. 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 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, other, non-recurring
income and non-recurring exceptional costs. Adjusted EPS excludes from profit
after tax share-based payment charges, other, non-recurring income and
non-recurring exceptional items and their related tax impacts. Please refer to
note 8 for reconciliations to Alternative Performance Measures ("APMs").
3. Judgements and key sources of estimation uncertainty
The preparation of the consolidated financial information requires the
Directors to make estimates and judgements that affect the reported amounts of
assets, liabilities, costs and revenue in the consolidated financial
information. Actual results could differ from these estimates. The judgements,
estimates and associated assumptions are based on historical experience and
other factors that are considered to be relevant. The judgements and key
sources of estimation uncertainty that have a significant effect on the
amounts recognised in the consolidated financial information are:
Estimations:
- Share-based payments: the Group measures the cost of
equity-settled transactions with employees by reference to the fair value of
equity instruments at the date at which they are granted. The fair value is
determined by using the Black-Scholes model taking into account the terms and
conditions upon which the instruments were granted and requires assumptions to
be made in particular the value of the shares at the date of options granted.
Management have had to apply judgement when selecting assumptions.
- Receivables provision: the Group reviews the amount of credit loss
associated with its trade receivables, intercompany receivables and other
receivables based on historical default rates as well as forward looking
estimates that consider current and forecast credit conditions.
Judgements:
- Deferred tax: the extent to which deferred tax assets can be
recognised is based on an assessment of the probability that future taxable
income will be available against which the deductible temporary differences
and tax loss carry-forwards can be utilised. In addition, significant
judgement is required in assessing the impact of any legal or economic limits
or uncertainties.
- Going concern: The financial statements have been prepared on the
going concern basis based on a judgement by the Directors that the Group will
continue to be able to meet its liabilities as they fall due for the
foreseeable future, being a period of at least 18 months from the date of
signing these financial statements. In this context, 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 were challenged by various downside scenarios to stress
test the estimated future cash position. The Directors 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.
- Treatment of costs incurred on the equity raise: the decision of
how to split the costs incurred on an equity raise via IPO requires judgement
given that, whilst costs incurred on an equity raise should be recognised
against equity in share premium, costs that relate to a stock market listing
should be recognised as an expense in the Statement of Comprehensive Income.
Costs incurred relating to Admission were split as follows:
Year to Year to
31 Dec 2022 31 Dec 2021
£000 £000
Share Premium - 596
Statement of Comprehensive Income - 637
====================================================== ======================================================
- 1,233
====================================================== ======================================================
4. Revenue
Revenue arises from:
Year to Year to
31 Dec 2022 31 Dec 2021
£000 £000
EMEA 6,591 7,149
U.S.A. 28,317 27,451
APAC 1,007 1,182
====================================================== ======================================================
35,915 35,782
====================================================== ======================================================
5. 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.
6. Other income
Year to Year to
31 Dec 2022 31 Dec 2021
£000 £000
Other income 167 -
====================================================== ======================================================
167 -
====================================================== ======================================================
Other income in the year ended 31 December 2022 related to a tax refund as a
result of an R&D tax credit.
7. Administrative expenses
Year to Year to
31 Dec 2022 31 Dec 2021
£000 £000
Direct staff costs 5,167 4,702
IT and software costs 1,273 834
Legal and professional 754 905
Rent 239 106
Insurance 186 90
Depreciation - leased assets 107 154
Foreign exchange losses 33 90
Share-based payments 526 2,854
Other administrative expenses 696 529
====================================================== ======================================================
8,981 10,264
====================================================== ======================================================
During the year the Group obtained the following services from the Company's
auditors as detailed below:
Year to Year to
31 Dec 2022 31 Dec 2021
£000 £000
Audit fees 118 75
Other services:
Tax compliance 19 11
Transfer pricing advice - 12
Agreed upon procedures on interim results 15 19
====================================================== ======================================================
152 117
====================================================== ======================================================
8. 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, other, non-recurring income and
non-recurring exceptional costs from operating profit. Adjusted EPS excludes
share-based payment charges, other, non-recurring income 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 2022 31 Dec 2021
£000 £000
====================================================== ======================================================
Profit/(loss) before tax 1,147 (618)
====================================================== ======================================================
Adjusting items:
Costs relating to the IPO - 637
Share-based payments 526 2,854
Other income (167) -
====================================================== ======================================================
Adjusted profit before tax 1,506 2,873
====================================================== ======================================================
Depreciation 107 154
Net finance (income)/expense (37) 41
====================================================== ======================================================
Adjusted EBITDA 1,576 3,068
====================================================== ======================================================
The table below sets out the reconciliation of the Group's adjusted profit
after tax to adjusted profit before tax.
====================================================== ======================================================
Adjusted profit before tax 1,506 2,873
====================================================== ======================================================
Tax (expense)/credit (662) 122
Tax impact of adjusting items (68) (677)
====================================================== ======================================================
Adjusted profit after tax 776 2,318
====================================================== ======================================================
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 13 for further detail.
9. Employee information
The average number of persons employed by the Group (including directors)
during the year, analysed by category, was as follows:
Year to Year to
31 Dec 2022 31 Dec 2021
Number Number
Directors 7 7
Employees 39 34
------------------------------------------------ ------------------------------------------------
46 41
======================================== ========================================
The aggregate payroll costs of these persons (including directors) were as
follows:
Year to Year to
31 Dec 2022 31 Dec 2021
£000 £000
Wages and salaries 4,537 4,226
Social security costs 569 408
Pension costs 61 69
Share-based payment expense 526 2,854
------------------------------------------------ ------------------------------------------------
5,693 7,557
====================================================== ======================================================
A defined contribution pension scheme is operated by a third party and the
Group pays contributions on behalf of the employees. The assets of the scheme
are held separately from those of the Group in an independently administered
fund. The pension charge represents contributions payable by the Group to the
fund. Contributions amounting to £nil were payable to the fund at the end of
2022 (2021: £nil).
Key management personnel include employees across the Group who together have
authority and responsibility for planning, directing and controlling the
activities of the Group. Key management personnel are considered to be the
executive directors of the Group and details regarding their remuneration are
set out below:
FY22
Salary Bonus/ Commission Benefits Pension Total
Name £'000s £'000s £'000s £'000s £'000s
Rupert Hodson 220 - 11 2 233
Charlotte Stranner 180 - - 1 181
Raphael Queisser( 1 ) 220 - 7 3 230
Robert Cabell de Marcellus( 1 ) 220 - 2 4 226
Total 840 - 20 10 870
FY21
Salary Bonus/ Commission Benefits Pension Total
Name £'000s £'000s £'000s £'000s £'000s
Rupert Hodson 205 96 7 2 310
Charlotte Stranner( 2 ) 133 53 - 1 187
Raphael Queisser 205 96 4 4 309
Robert Cabell de Marcellus 205 96 4 4 309
Total 748 251 15 11 1,115
( 1 ) Raphael Queisser and Robert Cabell de Marcellus stepped down from the
board and from their positions as COO and CTO respectively on 15 March 2023.
( 2 ) Charlotte Stranner joined the board on 27 April 2021
The highest paid director received remuneration of £233k (2021: £310k). No
share options were exercised by the directors in the year (2021: nil).
10. Finance income and expenses
Year to Year to
31 Dec 2022 31 Dec 2021
£000 £000
Interest received 41 5
---------------------------------------------- ----------------------------------------------
Total finance income 41 5
============================================ ============================================
Loan note interest - 44
On lease liability 4 2
---------------------------------------------- ----------------------------------------------
Total finance expense 4 46
============================================ ==============================================
11. Taxation
Year to Year to
31 Dec 2022 31 Dec 2021
£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 662 553
----------------------------------------------- -----------------------------------------------
Total current tax 553
================================================= =================================================
Deferred tax
Origination and reversal of timing differences - (675)
----------------------------------------------- -----------------------------------------------
Total deferred tax - (675)
================================================= =================================================
---------------------------------------------- ----------------------------------------------
Taxation on profit on ordinary activities 662 (122)
================================================= =================================================
Reconciliation of tax expense
The tax assessed on the profit on ordinary activities for the year is higher
than (2021: lower than) the standard rate of corporation tax in the UK of 19%
(2021: 19%).
Year to Year to
31 Dec 2022 31 Dec 2021
£000 £000
Profit/ (loss) on ordinary activities before taxation 1,147 (618)
======================================================= =======================================================
Profit/ (loss) on ordinary activities multiplies by standard rate of 218 (118)
corporation tax in the UK of 19% (20201: 19%)
Effects of:
Expenses not deductible for tax purposes 16 657
Foreign tax 321 225
Difference in tax rates - (96)
Deferred tax not recognised 107 (790)
======================================================= =======================================================
Tax on profit 662 (122)
======================================================= ======================================================
12. Deferred Tax
Deferred Tax Asset
As at As at
31 Dec 2022 31 Dec 2021
£000 £000
Tax losses 675 675
---------------------------------------- ----------------------------------------
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 which has not
been recognised due to a prudent approach being taken as to the timing and
level of future taxable profits.
13. 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.
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 profit/(loss) and weighted average number of shares used in the
calculations are set out below:
Year to Year to
31 Dec 2022 31 Dec 2021
£000 £000
Profit/(loss) attributable to the ordinary equity holders of the Group used in 485 (496)
calculating basic and diluted EPS
Basic earnings/(loss) per ordinary share (p) 1.62 (1.77)
Diluted earnings/(loss) per ordinary share (p) 1.46 (1.77)
Year to Year to
31 Dec 2022 31 Dec 2021
Adjusted basic and diluted EPS £000 £000
Reconciliation of earnings used in calculating adjusted EPS:
Profit/(loss) attributable to the ordinary equity holders of the Group used in
calculating basic and diluted EPS
(496)
485
Adjusting items:
Share-based payments 526 2,854
Costs relating to the IPO - 637
Other income (167) -
Tax impact of adjusting items (68) (677)
====================================================== ======================================================
Profit attributable to the ordinary equity holders of the Group used in 776 2,318
calculating adjusted basic and diluted EPS
Adjusted basic earnings per ordinary share (p) 2.58 8.27
Adjusted diluted earnings per ordinary share (p) 2.34 7.65
Year to Year to
31 Dec 2022 31 Dec 2021
Weighted average number of ordinary shares used as the denominator in 30,027,971 28,024,038
calculating non-adjusted and adjusted basic EPS
Weighted share option dilution impact 3,184,268 2,264,678
====================================================== ======================================================
Weighted average number of ordinary shares used as the denominator in 33,212,239 30,288,716
calculating non-adjusted and adjusted diluted EPS
14. Right-of-use assets
Leased property
£000
Cost
At 1 January 2021 -
Additions 257
==================================================
At 31 December 2021 257
==================================================
At 1 January 2022 257
Additions 320
===================================================
At 31 December 2022 577
==================================================
Depreciation
At 1 January 2021 103
Depreciation charge 154
===================================================
At 31 December 2021 257
==================================================
At 1 January 2022 257
Depreciation charge 107
===================================================
At 31 December 2022 364
===================================================
Net book value
At 31 December 2021 -
At 31 December 2022 213
During the year the Company entered into an 18 month lease for its serviced
office premises in London. The total payments due under the term of the lease
amount to £0.3 million. Lease liabilities in respect of right-of-use assets
were £0.2 million as at 31 December 2022 (2021: £nil). The discount rate
used in determining the present value of the lease liability was 3%. The
interest expense recognised in the statement of comprehensive income for the
year ended 31 December 2022 was £4k (2021: £2k).
15. Subsidiaries
The undertakings in which the Group's interest at the year-end is 20 per cent.
or more are as follows:
Subsidiary undertakings Country of incorporation Principal activity
At 31 Dec At 31 Dec 2021
2022
Dianomi Inc United States Business support services 100% 100%
Dianomi PTY Australia Business support services 100% 100%
The registered office of Dianomi Inc is Corporate Service Bureau Inc., 28 Old
Rudnick Lane, Dover, Delaware,19901. The registered office of Dianomi PTY is
ALM Williams Partners, Level 2, 570 St Kilda Road, Melbourne, VIC 3004.
16. Trade and other receivables
As at As at
31 Dec 2021 31 Dec 2021
£000 £000
Current
Trade receivables 7,488 7,169
Prepayments 116 59
Loan receivable 52 97
Other receivables 218 70
---------------------------------------------- ----------------------------------------------
7,874 7,395
============================================== ==============================================
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 21.
The impairment loss recognised in the income statement for the period in
respect of bad and doubtful trade receivables was £52k (2021: £17k).
The ageing of trade receivables is detailed below:
As at 31 December 2022
< 30 days < 60 days < 90 days < 180 days > 180 days Total
£000 £000 £000 £000 £000 £000
Gross carrying amount 3,626 1,743 814 456 849 7,488
=============================================== ============================================== ============================================ ============================================ ============================================== =================================================
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
=============================================== ============================================== ============================================ ============================================ ============================================== =================================================
17. Cash and cash equivalents
As at 31 Dec As at 31 Dec 2021
2022
£000 £000
Cash at bank and in hand 11,663 10,278
============================================ ==============================================
Cash at bank earns interest at floating rates based on bank
deposit rates. Post year end, in March 2023, the Federal Deposit Insurance
Corporation announced that it had been appointed receiver to SVB Financial
Group ("SVB") and the Bank of England announced that it intended to apply to
the Court to place Silicon Valley Bank UK Limited ('SVBUK') into a Bank
Insolvency Procedure. At the time of the announcements, Dianomi had £3.9
million in deposits across SVB and SVBUK. Shortly thereafter SVBUK was
acquired by HSBC UK Bank Plc and the Federal Deposit Insurance Corporation
("FDIC") and other regulators guaranteed all depositors in SVB, with First
Citizens Bank subsequently acquiring Silicon Valley Bridge Bank, N.A. from the
FDIC, meaning that all deposits were safe and secure.
18. Trade and other payables
As at 31 Dec As at 31 Dec 2021
2022
£000 £000
Current liabilities
Trade payables 3,035 3,780
Other taxes and social security costs 116 228
Contract liabilities 104 376
Other payables and accruals 4,793 3,697
---------------------------------------------- ----------------------------------------------
8,048 8,081
============================================ =============================================
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.
19. Lease liabilities
As at 31 Dec As at 31 Dec
2022 2021
£000 £000
Current liabilities
Lease liabilities
219 -
-------------------------------------------- --------------------------------------------
219 -
========================================== ==========================================
The Group leases an office building in London for use by its
staff. The discount rate used in determining the present value of lease
liabilities was the Group's incremental borrowing rate of 3%. The interest
expense recognised in the consolidated statement of comprehensive income for
the year ended 31 December 2022 was £4k (2021: £2k). Payments of £106k
(2021: £160k) in respect of rental payments paying down lease liabilities
have been recognised in the consolidated statement of cash flows.
All other leases are considered short term as the lease terms are 12 months or
less. The total amount recorded in the consolidated statement of comprehensive
income in respect of short term leases is £239k (2021: £88k). Remaining
commitments on short term leases are recorded below.
As at 31 Dec As at 31 Dec 2021
2022
£000 £000
Within one year 27 175
-------------------------------------------- --------------------------------------------
27 175
========================================== ==============================================
19. Financial instruments
The Group's and Company's financial instruments may be analysed as follows:
As at 31 Dec As at 31 Dec 2021
2022
£000 £000
Financial assets
Financial assets measured at amortised cost:
Cash at bank and in hand 11,663 10,278
Trade receivables 7,488 7,169
Loan receivable 52 97
Other receivables 218 70
=============================================== ===============================================
19,421 17,614
=============================================== ===============================================
Financial liabilities
Financial liabilities measured at amortised cost:
Trade payables 3,035 3,780
Other payables and accruals 4,793 3,697
=============================================== ===============================================
7,828 7,477
=============================================== ==============================================
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
£nil (2021: gain of £21k).
21. 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
2022 2021
£000 £000
Trade receivables 7,488 7,169
Other receivables 386 167
-------------------------------------------------- --------------------------------------------------
7,874 7,336
================================================ ================================================
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 2022
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 8,048 - - - - 8,048 8,048
============================================ ========================================= ============================================ ============================================ ============================================ ============================================ ============================================
Total 8,048 - - - - 8,048 8,048
======================================= ======================================== ============================================ ============================================ ============================================ ============================================ ============================================
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
============================================ ============================================ ============================================ ============================================ ============================================ ============================================ ============================================
Interest rate risk
As at 31st December 2022 and 2021 the Group has no interest
rate risk exposure as the Group had no debt outstanding.
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 2022
£000
USD CAD EUR AUD INR SGD
Cash & cash equivalents 11,017 1,170 249 825 - 265
As at 31 Dec 2021
£000
USD CAD EUR AUD INR SGD
Cash & cash equivalents
7,486 84 731 727 914 225
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 2021
2022
£000 £000
10% weakening of functional currency 193 191
================================================== ==================================================
10% strengthening of functional currency (160) (156)
================================================== ========================================
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 £11.8 million as at 31 December 2022 (2021: £10.1
million).
The Group has no debt facilities in place as at 31 December 2022 (2021:
£nil). 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.
22. Related party disclosures
Transactions with BGF are disclosed below:
Year ended Year ended
31 Dec 2022 31 Dec 2021
£000 £000
Annual fee 50 50
Interest on loan notes - 42
-------------------------------------------------- --------------------------------------------------
50 92
================================================ ==============================================
The amount due to BGF as at 31 December 2022 is £77k (2021: £27k). 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.
The Group received revenues of £45k (2021: £76k) from Buckingham Gate
Financial Services Limited, a company that is controlled by the shareholders
of the Company. As at 31 December 2022 there were trade receivables from
Buckingham Gate Financial Services Limited of £4k (31 December 2021: £7k).
The Group also has a loan receivable from Buckingham Gate Financial Services
Limited of £52k as at 31 December 2022 (31 December 2021: £97k), details of
which are set out in note 16. Interest receivable of £3k accrued in the year
ended 31 December 2022 (2021: £5k).
23. Share capital
Issued Shares Number Nominal Value Issued Amount
£
£
Ordinary Shares
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, 1 January 2022 and 31 December 2022 30,027,971 0.002 60,056
A ordinary shares Issued Shares Number Nominal Value Issued
£ Amount
£
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, 1 January 2022 and 31 December 2022 - -
B ordinary shares Issued Shares Number Nominal Value Issued Amount
£ £
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, 1 January 2022 and 31 December 2022 - -
Issued Shares Number Nominal Value Issued Amount
C ordinary shares £ £
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 31 December 2021, 1 January 2022 and 31 December 2022 - -
Deferred shares Issued Shares Number Nominal Value Issued Amount
£ £
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, 1 January 2022 and 31 December 2022 - -
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.
24. 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 23.
Weighted average exercise price (pence) Number Weighted average exercise price (pence) Number
Dec 22 Dec 22 Dec 21 Dec 21
Outstanding at the beginning of the period 273 1,594,387 1.0 3,627
Granted during the period 335 134,627 225.9 1,982,926
Lapsed/exercised during the period 335 (7,463) 0.2 (392,166)
-------------------------------------------- ----------------------------------------------- -------------------------------------------- -----------------------------------------------
Outstanding at the end of the period 278 1,721,551 273 1,594,387
========================================== ============================================== ============================================ ============================================
Of the total number of options outstanding at the end of the
period, Nil (31 Dec 21: Nil) had vested and were exercisable at the end of the
year.
Certain options granted under the existing option schemes in place prior to
the admission to trading on AIM of the Company's share capital ("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 ended 31 December 2021, 46,539 options lapsed as a
result of employees leaving the Group.
During the year ended 31 December 2022 134,627 options were granted with an
exercise prices of 335 pence. 7,463 options lapsed as a result of employees
leaving the Group.
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
Weighted average share price at grant date (£) 2.78
Weighted average exercise price (£) 2.78
Volatility (%) 44.00%
Weighted average vesting period (years) 3
Risk free rate (%) 3.482%
Expected dividend yield (%) -
The share-based remuneration expense comprises:
As at As at
31 Dec 2022 31 Dec 2021
£000 £000
Equity-settled schemes 526 2,854
========================================== ==========================================
25. 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.
26. Ultimate controlling party
There is no ultimate controlling party as at 31st December 2022 nor was there
as at 31 December 2021.
27. Events after the balance sheet date
On 15 March 2023 the Company announced that Raphael Queisser and Robert Cabell
de Marcellus were stepping down from the board and their positions as COO and
CTO respectively. The departures of Raphael and Cabell were part of an
internal reorganisation involving a number of other personnel changes in order
to ensure the optimal structure for the Group and to align the cost base to
the current climate. The costs associated with the reorganisation, estimated
to be circa £0.9 million will be classified as exceptional in the Financial
Statements for the year ended 31 December 2023 and excluded from alternative
performance measures such as Adjusted EBITDA and Adjusted EPS.
28. Contingent liabilities and contingent assets
The Group had no contingent liabilities or contingent assets at 31 December
2022 (31 December 2022: £nil).
29. Capital Commitments
The Group's capital commitments at 31 December 2022 are £nil (31 December
2021: £nil).
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