REG - Dianomi PLC - Half-year Report
20/09/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230920:nRST9875Ma&default-theme=true
RNS Number : 9875M Dianomi PLC 20 September 2023
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, announces its
unaudited interim results for the six months ending 30 June 2023.
Financial Headlines
· Revenue decreased 17.6% to £14.8 million (H1 2022: £18.0
million) reflecting decline in traffic volumes across the Group's direct
publisher inventory
· Gross margin of 20.9% (H1 2022: 27.9%) as a result of the contract
amendment with a major publisher partner as announced separately today
· Adjusted loss at EBITDA* level of £1.0 million (H1 2022: profit
of £1.1 million)
· Adjusted loss per share** of 4.69 pence per share (H1 2022:
profit of 3.55 pence per share)
· As at 30 June 2023 the Company had no borrowings and cash of £7.1
million (31 December 2022: cash of £11.7 million, 30 June 2022: £10.4
million), a reflection of working capital movements, restructuring costs and
forex.
Operating Headlines
· Strong retention of publishers and advertisers with churn rates
for advertisers and publishers remaining low
· New premium advertisers and publishers continuing to join the
platform
· Mindful of a challenging environment, the Group has reorganised
its management and sales teams and reduced its cost base on an annualised
basis by £1 million
· Programmatic continues to yield promising results with revenues
of £0.4m, up 6x compared to the same period last year
· Growth in Lifestyle vertical with integration into full publisher
distribution underway
· Partnership with CNN Business as exclusive content recommendation
partner now firmly embedded and CNN Business now ranks as Dianomi's top
publisher with further scope for growth
· On average there are 0.4 billion readers per month across
Dianomi's premium financial publications
Outlook:
· Benefits of cost saving plan coming through
· Market conditions still difficult but expect to be profitable in
H2
· Continued evolution into a full format advertising platform
offering premium brands and agencies a single point of access to ad buying
Rupert Hodson, Chief Executive Officer of Dianomi, said:
"We are mindful of an environment that continues to be challenging and the
need to adapt. The Group's operational cost base has been streamlined and
optimised following the restructuring of the Group's global management and
sales teams, resulting in an annualised cost reduction of £1 million.
However, in spite of a difficult backdrop, I am pleased to report that Dianomi
continues to attract new clients and now counts all 10 of the top 10 US asset
managers as clients. Our expansion into programmatic is delivering and we
continue to attract new premium clients to the platform as well as focusing on
the scalability of our service within our existing top accounts. We are
expanding our range of ad products to present a compelling offer to our
clients. I am confident that in spite of macro-economic headwinds we are well
placed to capitalise on the opportunity ahead."
* Adjusted EBITDA is calculated as loss or 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 restructuring and
share based payments.
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 as it forms part of UK domestic law by virtue of
the European Union (Withdrawal) Act 2018 ("MAR").
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 300 advertisers,
including blue chip names such as abrdn, Invesco and Baillie Gifford, with
access to an international audience of over 400 million devices per month
through its partnerships with over 300 premium publishers, including blue chip
names such as Reuters, CNN Business, the Times 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
Dianomi is evolving from a native ad platform, focused within business and
finance, to a full format advertising platform. We aim to be a privacy first
platform offering premium brands and agencies a single point of access to ad
buying across the world's premium publishers. This year we have reorganised
our management and sales teams to optimise our structure to drive sales growth
and enhance profitability. Dianomi has invested in expanding its programmatic
capacity, in addition to developing ad products such as video and polls whilst
ensuring that it has the right team in place to deliver.
Operating Review
A decline in traffic volumes has been a key challenge for publishers in 2023
and Dianomi is not immune to this trend with traffic levels across Dianomi's
key publisher partners down by between 10% to 30%. As we discussed at the time
of our trading statement in July, whilst demand from our advertiser base has
remained consistent this reduced traffic affects our ability to generate
revenue from the adverts that we place. Dianomi's total impressions were down
by 7.4% year on year. Revenue per click ("RPC") was also down by 17% year on
year due to an increase in Apple News publishers which tend to command lower
RPCs.
However, retention of both publishers and advertisers remains a key strength.
The number of advertisers that we worked with was stable at 288 in H1 (H1
2022: 295) and our publisher base was also broadly unchanged at 309 (H1 2022:
316). This is testament to the differentiated platform and products that we
are able to provide to our clients.
We continue to attract premium names to the platform, welcoming 55 new
advertisers during the period including Natixis Investment Management and
First Horizon Bank. Our partnership with CNN Business as exclusive content
recommendation partner is well embedded and they now rank as our top publisher
with further opportunities to scale. Certain new publisher partnerships did
not materialise as originally expected in H1 this year which impacted our
ability to grow but post period end new partnerships have gone live and we
have a strong pipeline of future opportunities.
We continue to focus on driving scale with our core existing advertisers and
direct publisher inventory, expanding existing relationships. We announced
today an amendment to a contract with one of our top publishers, which, while
it has a short term impact on profitability, provides us with additional ad
inventory, including an in-article unit through which we can serve our
enhanced suite of ad products, giving us the ability to generate enhanced
revenues.
We are further developing our programmatic distribution capability and our
programmatic revenue grew 6x in the six months to 30(th) June 2023 to £0.4
million, albeit from a low base (H1 2022: £0.07 million). This allows us to
capitalise on further demand from our premium advertisers and scale their
budgets via the Company's trusted and brand safe platform.
We have taken a strategic decision to open up our lifestyle vertical and place
premium lifestyle advertising alongside financial content whereas historically
lifestyle and financial clients were treated separately. Commencing in the
second half of 2023, selective lifestyle ads will appear across our financial
publisher inventory. The change of strategy has been driven by demand and
reflects the interests of audiences in both business and leisure.
Our operational cost base has been significantly reduced following the
restructuring of our sales and management teams. In March this year, Raphael
Queisser and Cabell de Marcellus stepped down from the board and from their
day to day roles. In April Ken Johnston rejoined Dianomi to spearhead the
global sales team. This reorganisation has resulted in a reduction of cost of
£1 million on an annualised basis. The Group continues to carefully
scrutinise its cost base whilst ensuring that it invests sufficiently in
future growth.
Financial Review
Group revenue decreased by 17.6% to £14.8 million (H1 2022: £18.0
million) in the six months to 30 June 2023 due to the decline in traffic
volumes and decrease in revenue per click as highlighted above.
Gross margin decreased to 20.9% (H1 2022: 27.9%) due to the additional cost of
sale incurred as a result of the contract amendment with one of the Group's
largest customers as detailed above. Without this one-off cost of £0.8
million, gross margin would have been 26.6%, with the decrease vs the prior
period being due to a larger contribution from CNN Business which is now the
Group's largest publisher on a gross revenue basis. As a result, and combined
with the decrease in revenues, gross profit for the period of £3.1 million
showed a decrease of £1.9 million compared to the prior year period (H1 2022:
£5.0 million).
The Group generated a loss at adjusted EBITDA* level of £1.0 million compared
to a profit of £1.1 million in the six months to 30 June 2022. The loss is as
a result of lower revenues and gross profit explained above, combined with
higher IT related costs as a result of the Group's transition from a hosted
data centre solution to Amazon Web Services ("AWS"). Though there were initial
costs associated with the transition, it has resulted in a more
cost-efficient, flexible and scalable solution going forward. During the
period, as noted above, the Group also underwent a restructuring, resulting in
various people leaving the business, and a more appropriate cost base going
forward. However, there were exceptional costs amounting to £0.8 million (H1
2022: £nil) associated with the restructuring, relating to consultancy, legal
and employee settlement costs. There will be further exceptional costs of
c.£0.2 million relating to the restructuring recognised in H2.
Basic loss per share was 7.80 pence per share compared to a basic profit per
share of 2.71 pence H1 2022. Adjusted loss per share** of 4.69 pence compared
to an adjusted profit per share** of 3.55 pence in H1 2022.
Cashflow in the period was impacted by the unwinding of the working capital
benefit recognised at the end of the year, the delay in receipt of certain
overdue debtor balances amounting to c. £1.2 million (received shortly after
the period end), one-off restructuring costs of £0.8 million and foreign
exchange movement as a result of the strengthening of the pound against the
dollar during the period. There will be a short-term impact on cash of c.£0.5
million in the current financial year as a result of the contract amendment
detailed above which will unwind during 2024.
Cash used in operations was £3.4 million due to the costs relating to the
restructuring, the one-off additional cost of sale and a decrease in trade and
other payables of £1.9 million (H1 2022: cash used in operations of £0.6
million). Cash conversion is expected to improve in the second half of the
year as the company returns to profitability.
Net assets as at 30 June 23 amounted to £9.0 million (31 December 2022:
£11.8 million, 30 June 2022: £11.9 million), with the decrease compared to
the year and prior period ends reflecting the decrease in cash. As at 30 June
2023 the Company had no borrowings and cash of £7.1 million (31 December
2022: £11.7 million, 30 June 2022: £10.4 million) with the decrease in cash
reflecting the factors detailed above.
Outlook
While our markets are evolving so too is Dianomi. We are pursuing our plan to
evolve into a full format advertising platform offering premium brands and
agencies a single point of access to ad buying across the world's leading
publishers aimed at generating increased and more predictable levels of
revenue. We have the teams and products in place to achieve this goal whilst
also continuing to drive our core native advertising platform attracting new
advertisers and publishers.
We expect improvements in profitability as we move into the second half of the
year, as cost savings from restructuring begin to feed through in addition to
the enhanced revenue share from one of our major publisher partners. That
said, while it is likely that our markets will remain challenging in the short
term, the business has a solid financial base and a clear focus on the path to
driving future sales and profitability.
(*) Adjusted EBITDA is calculated as profit after tax before deducting net
finance costs, tax, depreciation, exceptional items relating to the
restructuring and share based payment charges
(**) Adjusted basic earnings per share is calculated using profit after tax
before deducting exceptional items relating to the restructuring and share
based payment charges
DIANOMI PLC
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS
ENDED 30 JUNE 2023
6 months ended 6 months ended Year
30 Jun 2023 30 Jun 2022 ended
31 Dec 2022
£000 £000 £000
Note
Revenue 14,841 18,006 35,915
Cost of sales (11,734) (12,978) (26,127)
--------------------------------------------------- --------------------------------------------------- -------------------------------------------------------
Gross profit 3,107 5,028 9,788
Administrative expenses (5,201) (4,132) (8,981)
Other gains and losses - - 136
Other income - - 167
---------------------------------------------------- ----------------------------------------------- -----------------------------------------------------
Operating (loss)/profit (2,094) 896 1,110
Depreciation 107 - 107
Share based payments 7 145 250 526
Exceptional items 8 822 - -
Other income - (167)
----------------------------------------------- ----------------------------------------------- ----------------------------------------------------
Adjusted EBITDA (1,020) 1,146 1,576
Finance income 44 2 41
Finance expense (2) (1) (4)
------------------------------------------------- ----------------------------------------------- -----------------------------------------------------
(Loss)/profit on ordinary activities before taxation (2,052) 897 1,147
Taxation (289) (83) (662)
------------------------------------------------- --------------------------------------------- -----------------------------------------------------
(Loss)/profit for the period (2,341) 814 485
Other comprehensive (loss)/income items that may be reclassified subsequently (544) 677 651
to profit or loss
Currency translation differences
------------------------------------------------- ------------------------------------------------- ---------------------------------------------------
(2,885) 1,491 1,136
Total comprehensive (loss)/income for the period attributable to the owners of
the company
================================================= ================================================= ==================================================
Adjusted basic (loss)/earnings per ordinary share (p) 6 (4.69) 3.55 2.58
Adjusted diluted (loss)/earnings per ordinary share (p) 6 (4.69) 3.21 2.34
Basic (loss)/earnings per ordinary share 6 (7.80) 2.71 1.62
(p)
Diluted (loss)/earnings per ordinary share (p) 6 (7.80) 2.46 1.46
All operations are continuing operations.
DIANOMI PLC
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2023
As at As at 30 Jun As at 31 Dec
30 Jun 2022 2022
2023
£000 £000 £000
Non-current assets
Right-of-use assets 106 - 213
--------------------------------------------------- --------------------------------------------------- ---------------------------------------------------
Total non-current assets 106 - 213
Current assets
Trade and other receivables 7,593 7,207 7,874
Deferred tax asset 675 675 675
Cash and cash equivalents 7,089 10,446 11,663
------------------------------------------------------ ------------------------------------------------------ ---------------------------------------------------
Total current assets 15,357 18,328 20,212
Total assets 15,463 18,328 20,425
Current liabilities
Trade and other payables (6,281) (6,100) (8,048)
Corporation tax payable (24) (362) (371)
Lease liabilities (111) - (219)
------------------------------------------------------ ----------------------------------------------------- ------------------------------------------------------
Total current liabilities (6,416) (6,462) (8,638)
----------------------------------------------------- ----------------------------------------------------- -----------------------------------------------------
Total liabilities (6,416) (6,462) (8,634)
==================================================== ==================================================== ====================================================
Net assets 9,047 11,866 11,787
==================================================== ==================================================== ====================================================
Equity
Share capital 60 60 60
Share premium account 5,436 5,436 5,436
Share options reserve 3,525 3,104 3,380
Foreign currency reserve (405) 165 139
Capital redemption reserve - - -
Retained earnings 431 3,101 2,772
==================================================== ==================================================== ====================================================
Total equity attributable to the 9,047 11,866 11,787
owners of the company
==================================================== ==================================================== ====================================================
DIANOMI PLC
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2023
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 2023 60 5,436 - 3,380 139 2,772 11,787
----------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ----------------------------------------------- ------------------------------------------------
Comprehensive loss for the period
Loss for the period - - - - - (2,341) (2,341)
Currency translation differences - - - - (544) - (544)
----------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ----------------------------------------------- ------------------------------------------------
Total comprehensive loss for the period - (2,341) (2,855)
- - - (544)
----------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ------------------------------------------------
Transactions with owners of the Company
Share based payment credit - - - 145 - - 145
----------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ------------------------------------------------- ------------------------------------------------
Total transactions with owners of the Company - - 145
- - 145 -
----------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ------------------------------------------------- ------------------------------------------------
Balance at 30 June 2023 60 5,436 - 3,525 (405) 431 9,047
----------------------------------------- --------------------------------------------------- ----------------------------------------- --------------------------------------------------- --------------------------------------------------- ------------------------------------------------ ----------------------------------------------
----------------------------------------- ------------------------------------------------ ------------------------------------------------ ------------------------------------------------ ------------------------------------------------ ----------------------------------------------- ------------------------------------------------
Balance at 1 January 2022 60 5,436 - 2,854 (512) 2,287 10,125
----------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ----------------------------------------------- ------------------------------------------------
Comprehensive loss for the period
Loss for the period - - - - - 814 814
Currency translation differences - - - - 677 - 677
----------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ----------------------------------------------- ------------------------------------------------
Total comprehensive loss 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 9,080
----------------------------------------- --------------------------------------------------- ----------------------------------------- --------------------------------------------------- --------------------------------------------------- ------------------------------------------------ ----------------------------------------------
----------------------------------------- ------------------------------------------------ ------------------------------------------------ ------------------------------------------------ ------------------------------------------------ ----------------------------------------------- ------------------------------------------------
Balance at 1 January 2022 60 5,436 - 2,854 (512) 2,287 10,125
----------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ----------------------------------------------- ------------------------------------------------
Comprehensive income for the period
Loss 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
----------------------------------------- --------------------------------------------------- ----------------------------------------- --------------------------------------------------- --------------------------------------------------- ------------------------------------------------ ----------------------------------------------
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended Six months ended
30 Jun 2023 30 Jun 2022 Year
ended 31
Dec 2022
£000 £000 £000
Cash flows from operating activities
(Loss)/profit on ordinary activities before taxation (2,052) 897 1,147
Adjustments for:
Depreciation - leased assets 107 - 107
Interest payable 2 1 4
Interest receivable (44) (2) (41)
Decrease/ (increase) in trade and other receivables 281 187 (478)
(Decrease)/increase in trade and other payables (1,874) (1,980) 185
Other income - - (167)
Share based payment charge 145 250 526
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------
Cash (used in)/generated from operations (3,435) (647) 1,283
Taxation received/(paid) (621) 119 (269)
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------
Net cash (used in)/generated from operating activities (4,056) (528) 1,014
====================================================== ====================================================== ======================================================
Cash flows from investing activities
Interest received 44 2 41
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------
Net cash generated from investing activities 44 2 41
====================================================== ====================================================== ======================================================
Cash flows from financing activities
Interest paid - (1) -
Interest paid in respect of leases (2) - (4)
Capital payments in respect of leases (111) - (106)
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------
Net cash used in financing activities (113) (1) (110)
====================================================== ====================================================== ====================================================
Net (decrease)/ increase in cash and cash equivalents (4,125) (527) 945
Cash and cash equivalents at beginning of period 11,663 10,278 10,278
Exchange movement on cash (449) 695 440
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------
Cash and cash equivalents at end of period 7,089 10,446 11,663
====================================================== ====================================================== ======================================================
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 2023 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 2022,
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 2022,
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 19 September
2023 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 interim report, a reasonable
expectation that the Company and the Group have adequate resources to continue
in operation for the foreseeable future. As at 30 June 2023 the Group had net
assets of £9.0 million (30 June 2022: £11.9 million) and cash and cash
equivalents of £7.1 million (30 June 2022: £10.45 million). The Group has no
debt outstanding or facilities in place (30 June 2022: £nil).
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.
2.5. 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. Exceptional Costs
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 restructuring undertaken by the Company during 2023.
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.
4. Revenue
Revenue arises from:
6 months to 6 months to Year to
30 Jun 30 Jun 31 Dec
2023 2022 2022
£000 £000 £000
EMEA 2,328 3,101 6,591
APAC 466 544 1,007
U.S.A. 12,047 14,361 28,317
====================================================== ====================================================== ======================================================
14,841 18,006 35,915
====================================================== ====================================================== ======================================================
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 23 30 Jun 22 ended
31 Dec 2022
£000 £000 £000
(Loss)/profit attributable to the ordinary equity holders of the Group used in 485
calculating basic and diluted EPS
(2,341) 814
Basic (loss)/earnings per ordinary share (p) (7.80) 2.71 1.62
Diluted (loss)/earnings per ordinary share (p) (7.80) 2.46 1.46
Six months ended Six months ended
30 Jun 23 30 Jun 22 Year
ended
31 Dec 22
Adjusted basic and diluted EPS £000 £000 £000
Reconciliation of earnings used in calculating adjusted EPS:
(Loss)/profit attributable to the ordinary equity holders of the Group used in (2,341) 814 485
calculating basic and diluted EPS
Adjusting items:
Share based payments 145 250 526
Other income - - (167)
Exceptional items 822 - -
Tax impact of adjusting items (34) - (68)
====================================================== ====================================================== ======================================================
(Loss)/profit attributable to the ordinary equity holders of the Group used in (1,408) 1,064 776
calculating adjusted basic and diluted EPS
Adjusted basic (loss)/earnings per ordinary share (p) (4.69) 3.55 2.58
Adjusted diluted (loss)/earnings per ordinary share (p) (4.69) 3.21 2.34
Six months ended Six months
30 Jun 23 ended Year
30 Jun 22 ended
31 Dec 22
Weighted average number of ordinary shares used as the denominator in 30,027,971 30,027,971 30,027,971
calculating non-adjusted and adjusted basic EPS
Weighted share option dilution impact 3,189,063 3,151,686 3,184,268
====================================================== ====================================================== ======================================================
Weighted average number of ordinary shares used as the denominator in 33,217,034 33,179,657 33,212,239
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 242,424 options were granted under these new option schemes during
the period with an exercise price of 82.5p, being the closing mid-market price
the day before grant. 208,487 options lapsed during the period.
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 (£) 2.68
Weighted average exercise price (£) 2.68
Volatility (%) 44.00%
Weighted average vesting period (years) 3
Risk free rate (%) 5.04%
Expected dividend yield (%) -
The share-based remuneration expense comprises:
As at 30 Jun 2023 As at 30 Jun 2022 As at 31 Dec 2022
£000 £000 £000
Equity-settled schemes 145 250 526
========================================== ========================================== ==========================================
8. Exceptional items
Items which have been included within the exceptional category are the costs
relating to the restructuring undertaken by the Company during 2023 and
include settlement payments and legal costs.
As at 30 Jun 2023 As at 30 Jun 2022 As at 31 Dec 2022
£000 £000 £000
Restructuring costs 822 - -
========================================== ========================================== ==========================================
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR FZGMLGLDGFZZRecent news on Dianomi
See all newsREG - Dianomi PLC - Trading Statement
AnnouncementREG - Dianomi PLC Canaccord GenuityGrp - Holding(s) in Company
AnnouncementREG - Dianomi PLC - Holding(s) in Company
AnnouncementREG - Dianomi PLC - Holding(s) in Company
AnnouncementREG - Dianomi PLC - Holding(s) in Company
Announcement