REG - Dianomi PLC - Half-year Report
21/09/2022 07:00
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RNS Number : 0637A Dianomi PLC 21 September 2022
21 September 2022
Dianomi plc
("Dianomi", the "Company" or the "Group")
Interim Results
Dianomi, a leading provider of native digital advertising services to premium
clients in the Business, Finance and Lifestyle sectors, is pleased to announce
its unaudited interim results for the six months ending 30 June 2022.
Financial Highlights
· Revenue increased 3.7% to £18.0 million (H1 2021: £17.4
million)
· Gross margin of 27.9% (H1 2021: 28.7%) reflecting an increasing
contribution from CNN Business
· Adjusted EBITDA* of £1.1 million (H1 2021: £1.7
million) reflecting investments made in people to expand and capitalise on
growth opportunities as well as additional marketing and plc costs.
· Adjusted EPS** of 3.55 pence per share (H1 2021: 2.11 pence per
share)
· As at 30 June 2022 the Company had no borrowings and cash of
£10.4 million (31 December 2021: cash of £10.3 million)
Operating Highlights
· The Group continues to successfully scale business within its
existing top tier client base with average spend by the top 100 advertisers
increasing by 5% and RPC increasing 7% compared to H1 21
· Further additions of premium brands to advertiser base both
during the period and post period end with new client wins including Goldman
Sachs, John Lewis and Porsche
· Successful rollout of new partnership with CNN Business as its
exclusive content recommendation partner, which, even though not yet fully
implemented, is already a top 5 publisher
· Investments made to support future growth with key hires in
programmatic. Trials of contextually led programmatic platform with select
clients are progressing well and represent an exciting long-term opportunity
· Video represents an ongoing opportunity with video revenue up 9%
year-on-year
Rupert Hodson, Chief Executive Officer of Dianomi, said:
"We are pleased to report that in spite of a tough comparative base and
challenging macro-economic conditions, Dianomi delivered revenue growth of 4%
in the first half of the year. The Group is not alone in facing these
challenging times. However, the Board expects revenue growth in the second
half of the year versus the first, and revenue for the full year to be ahead
of the prior year. We also continue to scale our business with existing
premium advertisers, with average spend of our top 100 clients increasing 5%
in the first half of the year compared to the first half of 2021. Furthermore,
we continue to win new top tier clients and have made investments to support
our future growth. Dianomi is well-placed to deliver this growth as the
contextual native partner of choice as we transition to a cookie-less world
and strive to connect brands to consumers through both direct and programmatic
channels. We are supported by our strong balance sheet with a healthy cash
balance which continues to grow, underpinning our ability to invest in
long-term growth opportunities."
* Adjusted EBITDA is calculated as profit after tax before deducting net
finance costs, tax, depreciation, exceptional items and share based payment
charges
** Adjusted to exclude exceptional costs related to the IPO and share based
payments.
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014.
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/Claire de Groot
dianomiplc@novella-comms.com
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 over 400 advertisers,
including blue chip names such as abrdn, Invesco and Baillie Gifford, with
access to an international audience of over 500 million devices per month
through its partnerships with over 300 premium publishers, including blue chip
names such as Reuters, CNN Business, Bloomberg and WSJ. Adverts served are
contextually relevant to the content of the webpages on which they appear and
mirror the style of the page, which enhances reader engagement.
Chief Executive's Statement
Introduction
In spite of economic headwinds, our vision remains clear - to be the number
one contextual media platform across the premium Business, Finance and
Lifestyle verticals. To achieve this, we are positioning ourselves to take an
increasing share of a growth market. Certainly, the outlook for digital ad
spend in Financial Services remains resilient and in 2022 digital ad revenues
from the Financial Services sector in the US, our biggest market, are expected
to reach $32 billion, up 18% on 2021 and is expected to grow further to $36
billion in 2023( 1 ). We have focused on business development and invested in
people, product development and marketing in order to capture a bigger share
of this market. We believe that we can capitalise on this growth given our
premium positioning, the quality of our inventory, the transparency of our
performance and our contextual platform. In addition, we are also poised to
benefit as a result of the death of the cookie in addition to our nascent
programmatic offering, trials of which are progressing well.
( 1)( ) e-marketer report August 2022
Operating Review
Dianomi continues to focus on and attract premium clients and we were able to
expand our premium advertiser base by adding both new brands and new lines of
business from existing brands in the period. Importantly, both during and post
the period under review, we continue to see high quality, well known and
respected names joining our advertiser base such as Goldman Sachs, Porsche and
PIMCO with the resulting effect that our advertiser mix is shifting in favour
of blue-chip clients away from financial newsletters.
We continue to demonstrate our ability to scale our business with our existing
premium financial clients continuing to increase spend and the average spend
of our top 100 advertisers is up from £152k in H1 '21 to £159k in H1 '22.
Advertisers such as Charles Schwab, JP Morgan, AJ Bell and The Ascent have all
ramped up their spend with us on a consistent basis. For example, one of our
top advertiser's total spend increased from £1.4 million in H1 '21 across 4
lines of business to £1.8 million in H1 '22 across 5 lines of business.
However, there have also been challenges for some of our clients during a
period of market volatility and we have seen changes in spending patterns
across our advertiser base - for example, crypto clients have been hard-hit in
the current climate, and we have witnessed a reduction in spend for financial
newsletter publications. These clients accounted for 37% of revenue at the
beginning of 2021 and in August 2022 represented just 7% of revenue. Having
said that, we do expect these advertisers to come back in force when market
circumstances allow.
The premium publisher base remained stable for the period at 316 vs 326 at
year end with the majority of those coming off the platform having re-joined
since period end. As at today, the number of publishers is 333. The
contribution made by CNN Business is now significant and ranks as our number 3
publisher. This has supported growth in impressions, and I am pleased to
report that impressions are up for the period at 24 billion vs 21 billion in
2021. Similarly, our revenue per click rate was up at 63 pence in H1 '22 vs 59
pence in H1 '21. However, due to the decline in spend by certain advertisers
as detailed above, some impressions were under-monetised. We continue to
explore ways to help our publishers improve their yields.
With regard to programmatic, early results are very encouraging for what is a
nascent solution. We are undertaking sizeable trials with Porsche and Morgan
Stanley, and we believe that in the long term this process could deliver a
significant uplift in revenues. We have a strong pipeline of top tier
corporates across Business and Finance and the Lifestyle sector seeking to
partner with us given our native position and the quality of our inventory.
However, this is an area which is extremely complex and involves third parties
hence evolving this arm of the business requires investment. During the period
we hired a new Head of Programmatic as well as a new sales person from a
programmatic background, both of whom are helping to accelerate our
programmatic offering.
Mobile now accounts for 52% of sales down from 55% last year - largely due to
dilution from CNN Business. There is scope to increase this with opportunities
in the pipeline for the second half with Fox News due to go live shortly on
Apple News. Being an Apple News sales agent enables Dianomi to work directly
with Apple News publishers which drives a sizeable proportion of mobile
traffic. This showcases Dianomi's capabilities to these publishers and often
leads to further opportunities.
Video is a market which is at an early stage but is growing and our video
revenue for the period of £628k was up 9% on H1 '21's £576k. There is a good
pipeline of projects that are expected to complete over the remainder of the
year.
Financial Review
Group revenue grew by 4% to £18.0 million (H1 '21: £ 17.4 million) in the
six months to 30 June 2022. Gross margins were down 80 basis points to 27.9%
largely due to the mix of publishers, with a larger contribution from CNN
Business which is now the third largest publisher for the Group on a gross
revenue basis. As a result, gross profit for the period of £5.0 million was
only marginally up on the prior year period (H1 '21: £4.99 million).
Adjusted EBITDA* of £1.1 million was down by 32% compared to H1 '21 (H1 '21:
£1.7 million), representing a margin of 6%. This decrease reflects a full
period of costs associated with being a public company and investment in
marketing and people. We have added two more people post the period end but do
not expect to add further headcount in the near future, being confident that
we have made the right investments to support our future growth.
Basic EPS was 2.71 pence per share compared to a loss of 7.87 pence per share
in H1 '21. The loss in H1 '21 was due to the large share-based payment
associated with options exercised on IPO. Adjusted basic EPS** of 3.55 pence
increased 68% (H1 '21: 2.11 pence).
Cashflow in the period was impacted by the unwinding of the working capital
benefit recognised at the end of the year. Cash used in operations was £0.6
million due to a decrease in trade and other payables of £2.0 million (H1
'21: cash generated from operations of £0.6 million). Cash conversion is
expected to improve in the second half of the year.
Net assets as at 30 June 22 amounted to £11.9 million (31 December 2021:
£10.1 million) reflecting the Group's strong cash position and decrease in
trade and other receivables. As at 30 June 2022 the Company had no borrowings
and cash of £10.4 million (31 December 2021: net cash of £10.3 million).
Outlook
The year started well for Dianomi, however, as a result of a volatile market
and the challenges and uncertainties on a macro-economic level, the summer saw
a slowdown in advertiser demand. We continue to invest in people as we are
confident of our long-term opportunity and our team now stands at 45 people
compared to 41 at the end of 2021 and 33 at the end of 2020. Though we have a
significant pipeline of opportunities for both new and existing advertisers as
well as publishers, due to the decrease in financial newsletter spend
alongside the delays experienced to date in contracts being signed we expect
both revenue and profit to be behind market expectations.
The Board expects revenue growth in the second half of the year versus the
first, and full year revenue to be ahead of the prior year. EBITDA margin for
the full year is expected to remain at a similar level to that of the first
half of the year due to the investments we have made in people and marketing
to support our future growth. As a result, operating margins and profitability
in future years are anticipated to increase as we expect costs to largely
remain steady as our revenues grow, reflecting the operational leverage
inherent in our business. We have a strong balance sheet with a healthy cash
balance which continues to grow.
The quality of our platform alongside our deep partnerships with premium
publishers continue to differentiate us as we scale our business within our
existing advertiser base as well as deliver new top tier client wins. Given
the contextual nature of our platform, we expect to benefit from the
transition to a cookie-less world. We continue to develop our programmatic
offering, and, whilst this is still in development, we believe that it
represents a huge opportunity for the business to accelerate its revenue
growth. Though a number of uncertainties persist on a macroeconomic level, we
are confident that our premium proposition focused on long-term publisher
partnerships and performance driven advertising will drive growth and
profitability and see us succeed in our vision to be the number one contextual
media platform across the premium Business, Finance and Lifestyle verticals.
(*) Adjusted EBITDA is calculated as profit after tax before deducting net
finance costs, tax, depreciation, exceptional items and share based payment
charges
(**) Adjusted basic earnings per share is calculated using profit after tax
before deducting exceptional items and share based payment
DIANOMI PLC
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS
ENDED 30 JUNE 2022
6 months ended 6 months Year
30 Jun 2022 ended ended
30 Jun 2021 31 Dec 2021
£000 £000 £000
Note
Revenue 18,006 17,358 35,782
Cost of sales (12,978) (12,368) (25,455)
--------------------------------------------------- --------------------------------------------------- -------------------------------------------------------
Gross profit 5,028 4,990 10,327
Administrative expenses (4,132) (6,038) (10,264)
Other gains and losses - 18
Costs relating to IPO - (568) (637)
Fair value movements - (21) (21)
---------------------------------------------------- ----------------------------------------------- -----------------------------------------------------
Operating profit/(loss) 896 (1,637) (577)
Depreciation - 77 154
Share based payments 7 250 2,673 2,854
Exceptional items - 568 637
----------------------------------------------- ----------------------------------------------- ----------------------------------------------------
Adjusted EBITDA 1,146 1,681 3,068
Finance income 2 2 5
Finance expense (1) (43) (46)
------------------------------------------------- ----------------------------------------------- -----------------------------------------------------
Profit/(loss) on ordinary activities before taxation 897 (1,678) (618)
Taxation (83) (366) 122
------------------------------------------------- --------------------------------------------- -----------------------------------------------------
Profit/(loss) for the period 814 (2,044) (496)
Other comprehensive income/(loss) items that may be reclassified subsequently 677 (2) 44
to profit or loss
Currency translation differences
------------------------------------------------- ------------------------------------------------- ---------------------------------------------------
1,491 (2,046) (452)
Total comprehensive income/(loss) for the period attributable to the owners of
the company
================================================= ================================================= ==================================================
Adjusted basic earnings per ordinary share (p) 6 3.55 2.11 8.27
Adjusted diluted earnings per ordinary share (p) 6 3.21 1.90 7.65
Basic earnings/(loss) per ordinary share 6 2.71 (7.87) (1.77)
(p)
Diluted earnings/(loss) per ordinary share (p) 6 2.46 (7.87) (1.77)
All operations are continuing operations.
DIANOMI PLC
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2022
As at As at 30 Jun As at 31 Dec
30 Jun 2021 2021
2022
£000 £000 £000
Non-current assets
Right-of-use assets - 77 -
--------------------------------------------------- --------------------------------------------------- ---------------------------------------------------
Total non-current assets - 77 -
Current assets
Trade and other receivables 7,207 7,141 7,395
Deferred tax asset 675 - 675
Cash and cash equivalents 10,446 7,854 10,278
------------------------------------------------------ ------------------------------------------------------ ---------------------------------------------------
Total current assets 18,328 14,995 18,348
Total assets 18,328 15,072 18,348
Current liabilities
Trade and other payables (6,100) (6,445) (8,081)
Corporation tax payable (362) (198) (142)
Lease liabilities - (79) -
------------------------------------------------------ ----------------------------------------------------- ------------------------------------------------------
Total current liabilities (6,462) (6,722) (8,223)
----------------------------------------------------- ----------------------------------------------------- -----------------------------------------------------
Total liabilities (6,462) (6,722) (8,223)
==================================================== ==================================================== ====================================================
Net assets 11,866 8,350 10,125
==================================================== ==================================================== ====================================================
Equity
Share capital 60 60 60
Share premium account 5,436 5,436 5,436
Share options reserve 3,104 2,673 2,854
Foreign currency reserve 165 (558) (512)
Capital redemption reserve - - -
Retained earnings 3,101 739 2,287
==================================================== ==================================================== ====================================================
Total equity attributable to the 11,866 8,350 10,125
owners of the company
==================================================== ==================================================== ====================================================
DIANOMI PLC
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2022
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 - - - - - 814 814
Currency translation differences - - - - 677 - 677
----------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ----------------------------------------------- ------------------------------------------------
Total comprehensive income for the period - 814 1,491
- - - 677
----------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ------------------------------------------------
Transactions with owners of the Company
Share based payment credit - - - 250 - - 250
----------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ------------------------------------------------- ------------------------------------------------
Total transactions with owners of the Company - - 250
- - 250 -
----------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ------------------------------------------------- ------------------------------------------------
Balance at 30 June 2022 60 5,436 - 3,104 165 3,101 11,866
----------------------------------------- --------------------------------------------------- ----------------------------------------- --------------------------------------------------- --------------------------------------------------- ------------------------------------------------ ----------------------------------------------
----------------------------------------- ------------------------------------------------ ------------------------------------------------ ------------------------------------------------ ------------------------------------------------ ----------------------------------------------- ------------------------------------------------
Balance at 1 January 2021 - 1,085 - - (556) 2,783 3,312
----------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ----------------------------------------------- ------------------------------------------------
Comprehensive loss for the period
Loss for the period - - - - - (2,044) (2,044)
Currency translation differences - - - - (2) - (2)
----------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ----------------------------------------------- ------------------------------------------------
Total comprehensive income for the period - (2,044) (2,046)
- - - (2)
----------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ------------------------------------------------
Transactions with owners of the Company
Shares issued 60 - - - - - 60
Contributions of equity - 4,947 - - - - 4,947
Transaction costs - (596) - - - - (596)
Share buybacks - - - - - - -
Share based payment credit - - - 2,673 - - 2,673
----------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ------------------------------------------------- ------------------------------------------------
Total transactions with owners of the Company 60 - 7,084
4,351 - 2,673 -
----------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ------------------------------------------------- ------------------------------------------------
Balance at 30 June 2021 60 5,436 - 2,673 (558) 739 8,350
----------------------------------------- --------------------------------------------------- ----------------------------------------- --------------------------------------------------- --------------------------------------------------- ------------------------------------------------ ----------------------------------------------
----------------------------------------- ------------------------------------------------ ------------------------------------------------ ------------------------------------------------ ------------------------------------------------ ----------------------------------------------- ------------------------------------------------
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
----------------------------------------- --------------------------------------------------- ----------------------------------------- --------------------------------------------------- --------------------------------------------------- ------------------------------------------------ ----------------------------------------------
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended Six months ended
30 Jun 2022 30 Jun 2021 Year
ended 31
Dec 2021
£000 £000 £000
Cash flows from operating activities
Profit/(loss) on ordinary activities before taxation 898 (1,678) (618)
Adjustments for:
Depreciation - leased assets - 77 154
Interest payable 1 43 46
Interest receivable (2) (2) (5)
Increase in trade and other receivables 187 (1,552) (1,489)
Increase in trade and other payables (1,981) 1,096 2,445
Net fair value gain recognised in P&L - (21) 21
Share based payment charge 250 2,673 2,854
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------
Cash (used in)/generated from operations (647) 636 3,408
Taxation received/(paid) 119 (622) (793)
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------
Net cash (used in)/generated from operating activities (528) 14 2,615
====================================================== ====================================================== ======================================================
Cash flows from investing activities
Interest received 2 2 5
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------
Net cash generated from investing activities 2 2 5
====================================================== ====================================================== ======================================================
Cash flows from financing activities
Issue of ordinary shares - 4,411 4,411
Loan repayment - (1,250) (1,250)
Interest paid (1) (43) (44)
Interest paid in respect of leases - - (2)
Capital payments in respect of leases - - (160)
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------
Net cash (used in)/generated from financing activities (1) 3,118 2,955
====================================================== ====================================================== ======================================================
Net (decrease)/ increase in cash and cash equivalents (527) 3,134 5,575
Cash and cash equivalents at beginning of period 10,278 4,722 4,722
Exchange movement on cash 695 (2) (19)
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------
Cash and cash equivalents at end of period 10,446 7,854 10,278
====================================================== ====================================================== ======================================================
DIANOMI PLC
NOTES TO THE HISTORICAL FINANCIAL INFORMATION
1. General information
Dianomi plc (the "Company") and its subsidiaries' (together the "Group")
principal activity is the delivery of premium native advertising for the
financial services, technology, corporate sand lifestyle sectors. The Company
was incorporated on 16 August 2002 in England and Wales as a private company
limited by shares under the name Data-ID Limited. On 17 December 2002, the
Company changed its name to Dianomi Limited. On 17 May 2021, the Company
re-registered as a public limited company and changed its name to Dianomi plc.
The address of the registered office is 6(th) Floor, 60 Gracechurch Street,
London, EC3V 0HR and the limited company number is 04513809.
2. Basis of preparation and significant accounting policies
2.1. Basis of preparation
The financial information relating to the half year ended 30 June 2022 is
unaudited and does not constitute statutory financial statements as defined in
section 434 of the Companies Act 2006.
The financial information set out in this Interim Report does not constitute
statutory accounts as defined in Section 434 of the Companies Act 2006. The
Group's statutory financial statements for the year ended 31 December 2021,
prepared under IFRS, have been filed with the Registrar of Companies. The
auditor's report on those financial statements was unqualified and did not
contain a statement under Section 498 (2) or (3) of the Companies Act 2006.
The interim financial information has been prepared in accordance with the
recognition and measurement principles of International Financial Reporting
Standards (IFRS) and on the same basis and using the same accounting policies
as used in the financial statements for the year ended 31 December 2021,
subject to the introduction of any new accounting standards applicable in the
period.
Whilst the financial information included in these interim accounts has been
prepared in accordance with IFRS, they do not contain sufficient information
to comply with IFRS. In addition, this report is not prepared in accordance
with IAS 34.
This interim report was approved by the board of directors on ● September
2022 and is available on the Company's website, dianomi.com
(http://www.dianomi.com)
The presentational currency of these financial statements and the functional
currency of the Group is pounds sterling.
2.2. Measurement convention
The consolidated financial information has been prepared under the historical
cost convention. Historical cost is generally based on the fair value of the
consideration given in exchange for assets.
The preparation of the consolidated financial information in compliance with
IFRS requires the use of certain critical accounting estimates and management
judgements in applying the accounting policies. The significant estimates and
judgements that have been made and their effect is disclosed in note 3.
2.3. Basis of consolidation
The consolidated financial information incorporates the financial information
of Dianomi Plc and all of its subsidiary undertakings. Subsidiary undertakings
include entities over which the Group has effective control. The Group
controls a group when it is exposed to, or has right to, variable returns from
its involvement with the Group and has the ability to affect those returns
through its power over the Group. In assessing control, the Group takes into
consideration potential voting rights.
2.4. Going concern
The Directors have, at the time of approving the financial statements, a
reasonable expectation that the Company and the Group have adequate resources
to continue in operation for the foreseeable future. As at 30 June 2022 the
Group had net assets of £11.9 million (30 June 2021: £8.4 million) and cash
and cash equivalents of £10.4 million (30 June 2021: £7.9 million). The
Group's forecasts and projections, taking into account reasonable possible
changes in trading performance, show that the Group has sufficient financial
resources, together with assets that are expected to generate cash flow in the
normal course of business. Accordingly, the Directors have adopted the going
concern basis in preparing these consolidated financial statements.
2.5. Principal Accounting Policies
2.5.1.1. Revenue
The Group's customers are direct advertisers, affiliate advertisers and
advertising agencies with whom the Group will enter into a contract or
insertion order.
The Group generates revenue by charging advertisers for advertising campaigns
delivered through its platform. The customer's total spend on advertising is
determined by multiplying an agreed performance metric option, such as cost
per mil (CPM), cost per impression (CPI), click (CPC) or action (CPA) with the
volumes of units delivered.
Revenue is recognised on completion of the performance criteria which, in most
cases, is when an internet user clicks through to an advertisement that has
been displayed on a web page.
Where advanced payments are made in advance of satisfying the performance
obligation, these amounts are transferred to deferred revenue (contract
liabilities) and recognised when the performance obligation has been met.
The Group's standard payment terms require settlement of invoices within 60-90
days of receipt.
The Group does not adjust the transaction price for the time value of money as
it does not expect to have any contracts where the period between the transfer
of the promised services to the client and the payment by the client exceeds
one year.
.
2.5.1.2. Cost of sales
Cost of sales represents the direct expenses that are
attributable to the services sold. They consist primarily of payments to
publishers under the terms of the revenue share agreements that the Group has
with them. Depending on the terms of the revenue share agreements, cost of
sales can include commissions where applicable.
2.5.1.3. 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
Group's functional currency and the Group's presentation currency.
On consolidation, the results of overseas operations are translated into
sterling at rates approximating to those ruling when the transactions took
place. All assets and liabilities of overseas operations are translated at the
rate ruling at the reporting date. Exchange differences arising on translating
the opening net assets at opening rate and the results of overseas operations
at actual rate are recognised in other comprehensive income.
b) Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the income
statement.
2.5.1.4. 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 the exceptional category are the costs
relating to the Company's IPO on AIM in May 2021. The costs specifically
related to the issue of new shares have been set against share premium. Other
IPO costs which relate to listing both new and existing shares were allocated
on a 50/50 basis between exceptional P&L costs and share premium.
Exceptional items are excluded from the headline profit measures used by the
Group and are highlighted separately in the consolidated statement of
comprehensive income as management believes that they need to be considered
separately to gain an understanding the underlying profitability of the
trading businesses.
2.5.1.5. 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 fair value of goods and services
received.
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 a key measures used
within the business for assessing the underlying performance of the Group's
ongoing business across periods. Adjusted EBITDA excludes from operating
profit non-cash depreciation and share based payment charges and non-recurring
exceptional costs. Adjusted EPS excludes from profit after tax, share based
payment charges and non-recurring exceptional items and their related tax
impacts.
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:
-
6 months to 6 months to 30 Jun Year to
30 Jun 2021 31 Dec
2022 2021
£000 £000 £000
Share Premium - 596 596
Statement of Comprehensive Income - 567 637
====================================================== ====================================================== ======================================================
- 1,163 1,233
====================================================== ====================================================== ======================================================
4. Revenue
Revenue arises from:
6 months to 6 months to Year to
30 Jun 30 Jun 31 Dec
2022 2021 2021
£000 £000 £000
EMEA 3,101 2,817 7,149
APAC 544 620 1,182
U.S.A. 14,361 13,921 27,451
====================================================== ====================================================== ======================================================
18,006 17,358 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.
6. 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:
Six months ended Six months ended Year
30 Jun 22 30 Jun 21 ended
31 Dec 2021
£000 £000 £000
Profit/(loss) attributable to the ordinary equity holders of the Group used in (496)
calculating basic and diluted EPS
814 (2,044)
Basic earnings/(loss) per ordinary share (p) 2.71 (7.87) (1.77)
Diluted earnings/(loss) per ordinary share (p) 2.46 (7.87) (1.77)
Six months ended Six months ended
30 Jun 22 30 Jun 21 Year
ended
31 Dec 21
Adjusted basic and diluted EPS £000 £000 £000
Reconciliation of earnings used in calculating adjusted EPS:
Profit attributable to the ordinary equity holders of the Group used in 814 (2,044) (496)
calculating basic and diluted EPS
Adjusting items:
Share based payments 250 2,673 2,854
Costs relating to IPO - 568 636
Tax impact of adjusting items - (648) (677)
====================================================== ====================================================== ======================================================
Profit attributable to the ordinary equity holders of the Group used in 1,064 549 2,317
calculating adjusted basic and diluted EPS
Adjusted basic earnings per ordinary share (p) 3.55 2.11 8.27
Adjusted diluted earnings per ordinary share (p) 3.21 1.90 7.65
Six months ended Six months
30 Jun 22 ended Year
30 Jun 21 ended
31 Dec 21
Weighted average number of ordinary shares used as the denominator in 30,027,971 25,986,890 28,024,038
calculating non-adjusted and adjusted basic EPS
Weighted share option dilution impact 3,151,686 2,900,015 2,264,678
====================================================== ====================================================== ======================================================
Weighted average number of ordinary shares used as the denominator in 33,179,657 28,886,905 30,288,716
calculating non-adjusted and adjusted diluted EPS
7. Share based payments
The Group operates an equity-settled share based remuneration scheme for
employees. All employees are eligible to participate in the long term
incentive scheme and the vesting conditions are both time and performance
based.
On admission to trading on AIM in May 2021, new option schemes were
established.
A total of 134,627 options were granted under these new option schemes during
the period with an exercise price of 335p, being the closing mid-market price
the day before grant.
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 for the period were as follows:
Option Scheme
Weighted average share price at grant date (£) 2.75
Weighted average exercise price (£) 2.75
Volatility (%) 44.00%
Weighted average vesting period (years) 3
Risk free rate (%) 1.84%
Expected dividend yield (%) -
The share-based remuneration expense comprises:
As at 30 Jun 2022 As at 30 Jun 2021 As at 31 Dec 2021
£000 £000 £000
Equity-settled schemes 250 2,673 2,854
========================================== ============================================== ==========================================
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