REG - Dianomi PLC - Half-year Report
23/09/2024 07:00
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RNS Number : 1366F Dianomi PLC 23 September 2024
23 September
2024
Dianomi plc
("Dianomi", the "Company" or the "Group")
Interim Results for the six months ending 30 June 2024
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 2024.
Financial Headlines
· Revenue decreased 4% to £14.2 million (H1 2023: £14.8
million) reflecting softer advertiser demand
· Gross margin of 26.2% (H1 2023: 20.9%)
· Adjusted EBITDA* of £0.1 million (H1 2023: loss of £1.0
million) and cash generation of £0.3m (H1 2023: cash used in operations of
£3.4 million)
· Adjusted profit per share** of 0.24 pence per share (H1 2023:
loss of 4.69 pence per share)
· As at 30 June 2024 the Company had no borrowings and cash of £8.1
million (31 December 2023: cash of £7.7 million, 30 June 2023: £7.1 million)
Operating Headlines
· Traffic across the Group's premium publisher base increased by 9%
reaching 24 billion impressions in the six-month period through a combination
of adding new publishers and increased readership of existing publishers
· Demand from premium advertiser base softened, limiting the
Group's ability to monetise the increase in traffic, though some advertisers
who did not spend in H1 have since returned to the platform
· In February, expanded partnership with Dow Jones, serving Dianomi
direct demand ads into display format across Dow Jones properties including
Wall Street Journal and Barrons
· New advertisers included PwC, the London Business School, Polen
Capital and Northern Trust
· Post period end agreement with leading US financial news
aggregator to test integration of bespoke format ads onto their site
Rupert Hodson, Chief Executive Officer of Dianomi, said:
"We are pleased to have recorded a small profit in the first half of the year
at an Adjusted EBITDA* level but disappointed not to have been able to take
more advantage of the increase in traffic across our publisher base. Demand
from advertisers was soft and this has continued into the second half, though
it is starting to pick up as we move into the fourth quarter and the upcoming
US elections provide the opportunity for additional traffic across our base.
Our publisher pipeline includes some leading US publishers with a global
footprint and new advertisers continue to join our platform, attracted by the
premium positioning and performance of our platform as well as its pricing
transparency and being ID-free. Our focus now is on converting our pipeline as
well as growing existing relationships to drive growth in 2025 and beyond."
* Adjusted EBITDA is calculated as loss or profit after tax before deducting
net finance costs, tax, depreciation, exceptional costs and share based
payment charges
** Adjusted to exclude exceptional costs related to the restructuring in 2023
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 Liberum (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 250 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
The six months to 30 June 2024 represented a positive trading period for the
Group as we recorded a small profit at an Adjusted EBITDA* level due to the
actions we took to reduce the cost base of the business last year. The
potential to significantly improve from here is clear, principally through the
conversion of our pipeline of significant new business opportunities.
Alongside this, to augment the premium market positioning of our platform and
to facilitate the demands of a wider client base, we continue to evolve from
being a native ad platform to a full-format advertising platform through our
enhanced offerings which have been or continue to be developed. These include
new ad formats such as polls and content hubs, new products such as brand
intelligence reports and new ways to access the platform, such as our
self-serve and credit card payment capabilities.
Operating Review
Readership traffic across the Dianomi inventory base of premium publishers
increased by 9%, reversing unusually low traffic levels in 2023.
Unfortunately, so far in 2024, advertiser demand has been relatively soft,
with many advertisers holding back from normal spending patterns, limiting the
Group's ability to monetise the increase in traffic.
Reflecting this change in advertiser spend, the number of our advertisers who
worked with Dianomi decreased from 288 in H1 2023 to 221 in the period under
review. However, some advertisers who did not spend in the first half of the
year have returned since the period end and new ones continue to join the
platform. The average spend per advertiser for the top 100 advertisers in the
six months to 30 June 2024 remained steady at £118k vs £119k in H1 2023.
Our publisher base reduced slightly to 289 (2023: 309), however, since the
period end, this number has increased to 311. Revenue per click ("RPC") was
broadly level at £0.51 (2023: £0.53).
Despite operating in a weak market, the Group welcomed 27 new premium
advertisers to the platform including well-known names such as PwC, the London
Business School, Polen Capital and Northern Trust.
On the publisher side, in February the Group was pleased to expand its
partnership with Dow Jones with the serving of Dianomi direct demand ads into
display formats on the Wall Street Journal and other Dow Jones' properties to
their audience of over 100 million monthly unique visitors.
Shortly after the period end, Dianomi also signed a new agreement with a
leading US financial news aggregator to test integrating bespoke format ads
onto their site, which, if successful, could lead to a permanent integration.
As at today's date, the test is ongoing. There is a further strong pipeline of
publisher prospects which includes a host of premium brands including some US
global publishing leaders with the potential to drive the Group's future
growth in 2025 and beyond. The US election in November provides the potential
for increased traffic and therefore monetisation opportunities in the current
year, and we continue to work on increasing the spend of existing advertisers
on the platform as well as adding new brands in order to maximise any
additional traffic, whether from existing publishers or new partnerships.
The Group's programmatic distribution capability continues to be developed to
support increased advertiser demand and enable customers to scale their ad
budgets via the Company's trusted and brand safe platform. However, reflecting
the reduction in advertiser demand in 2024, programmatic distribution was
lower at £0.21m vs £0.36m in the same period last year, as it acts as
additional distribution to the Company's direct publisher inventory. Video
revenue was also lower at £0.28m in the period vs £0.45m in H1 2023.
In 2023, the Company underwent a successful re-organisation to recalibrate and
reset the business. Part of this process was to reduce the cost base by £1.0m
on an annualised basis. In tandem, new senior talent was brought in to support
the sales and marketing team which now runs as a global unit thereby better
reflecting the operational structure of our global client base.
Overall, Dianomi remains well placed. We continue to work with all the top ten
largest asset managers and seven of the top ten largest wealth management
companies in the US. Similarly, as at 30 June 2024, we were partnered with 289
of the world's leading publishers and this number has increased to 311 since
the period end. This premium positioning with our combination of the world's
leading financial publishers and financial institutions is a core strength of
the business. The advantages to both advertisers and publishers of accessing
our platform are clear. For publishers, our clients are all premium,
aspirational companies whose ads naturally match the aspirations of our
premium publishers. For advertisers, we often outperform competitors on
engagement and price, plus we are ID-Free, brand safe and premium quality.
We are also working to further differentiate our performance and quality
compared to our peers. A recent client testimonial from a leading US Bank
stated that Dianomi was responsible for driving 74% of landing page visits for
their advertising campaigns compared to the other platforms 30%, whilst being
over 10x more cost efficient than their benchmark and pointed to the quality
of Dianomi's audiences and contextual relevance in the wealth management
space. Alongside this, we are making accessing the Dianomi platform easier.
Whilst we still turn away the majority of the advertisers who ask to join us
due to our desire to maintain the premium nature of our platform, for those
that do meet our criteria they have more ways to work with us than ever
before; either direct or programmatically, via an account managed service or
via our newly launched self-service platform which provides the ability for
advertisers to manage adverts independently.
We remain encouraged by the levels of interest in our platform and our focus
is on converting this interest into long-term customers of the business.
Financial Review
Group revenue decreased by 4% to £14.2 million (H1 2023: £ 14.8
million) in the six months to 30 June 2024 due to softer advertiser demand
leading to a small decrease in revenue per click (£0.51 vs £0.53 in H1
2023).
Gross margin increased to 26.2% (H1 2023: 20.9%) with the lower margin in the
previous year reflecting the additional cost of sale incurred as a result of a
contract amendment with one of the Group's largest publishers. This contract
amendment resulted in a one-off cost in H1 2023 which is being recouped by way
of an enhanced revenue share from 1 July 2023 until the end of 2024, the
effect of which will be lower in the second half of this year. Gross profit
for the period was therefore higher than H1 2023 at £3.7 million (H1 2023:
£3.1 million) which, combined with the lower operating cost base of the Group
following the restructuring which took place in 2023, meant that Adjusted
EBITDA* was £0.1 million compared to a loss of £1.0 million in H1 2023. The
restructuring in the first half of the previous year resulted in exceptional
costs of £0.8 million in H1 2023, however, as the restructuring was completed
in 2023, there were no such exceptional costs in the period under review.
Loss before tax was £0.1 million against a loss of £2.1 million in H1 2023.
There was a net tax credit in the period of £0.01 million due to an R&D
tax credit received (H1 2023: tax charge of £0.3 million). Loss after tax was
therefore £0.01 million vs a loss after tax of £2.3 million in H1 2023.
Basic loss per share was 0.22 pence per share compared to a basic loss per
share of 7.80 pence in H1 2023. Adjusted profit per share** of 0.24 pence
compared to an adjusted loss per share** of 4.69 pence in H1 2023.
Cash generated from operations was £0.3 million (H1 2023: cash used in
operations of £3.4 million) and as at 30 June 2024 the Company had no
borrowings and cash of £8.1 million (31 December 2023: £7.7 million, 30 June
2022: £7.1 million).
Net assets as at 30 June 2024 amounted to £8.9 million (31 December 2023:
£8.6 million, 30 June 2023: £9.0 million), with the increase compared to the
year-end reflecting the increase in cash.
Outlook
Trading levels from the first half of the year have continued into the second
half, with the summer months being particularly slow. Demand from advertisers
remains soft, however, traffic levels remain above last year and there are
signs of improvement in demand alongside a more positive economic environment.
There is also the US Presidential Election factor in November which is likely
to increase traffic levels. Internally, we are focused on converting our
pipeline of new business opportunities and maximising existing ones, with some
potential partnerships capable of having a material positive impact on the
Group's performance in 2025.
(*) 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 2024
6 months ended 6 months ended Year
30 Jun 2024 30 Jun 2023 ended
31 Dec 2023
£000 £000 £000
Note
Revenue 14,184 14,841 30,154
Cost of sales (10,467) (11,734) (22,792)
--------------------------------------------------- --------------------------------------------------- -------------------------------------------------------
Gross profit 3,717 3,107 7,452
Administrative expenses (3,916) (4,379) (8,329)
Reorganisation costs - (822) (1,054)
---------------------------------------------------- ----------------------------------------------- -----------------------------------------------------
Operating loss (199) (2,094) (1,931)
Depreciation 119 107 213
Share based payments 7 153 145 312
Exceptional items 8 - 822 1,054
----------------------------------------------- ----------------------------------------------- ----------------------------------------------------
Adjusted EBITDA 73 (1,020) (352)
Finance income 59 44 115
Finance expense (2) (2) (3)
------------------------------------------------- ----------------------------------------------- -----------------------------------------------------
Loss on ordinary activities before taxation (142) (2,052) (1,819)
Taxation 76 (289) (1,097)
------------------------------------------------- ------------------------------------------------- -----------------------------------------------------
Loss for the period (66) (2,341) (2,916)
Other comprehensive (loss)/income items that may be reclassified subsequently 181 (544) (600)
to profit or loss
Currency translation differences
------------------------------------------------- ------------------------------------------------- ---------------------------------------------------
115 (2,885) (3,516)
Total comprehensive (loss)/income for the period attributable to the owners of
the company
================================================= ================================================= ==================================================
Adjusted basic earnings/(loss) per ordinary share (p) 6 0.24 (4.69) (3.10)
Adjusted diluted earnings/(loss) per ordinary share (p) 6 0.23 (4.69) (3.10)
Basic loss per ordinary share 6 (0.22) (7.80) (9.71)
(p)
Diluted loss per ordinary share (p) 6 (0.22) (7.80) (9.71)
All operations are continuing operations.
DIANOMI PLC
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2024
As at As at 30 Jun As at 31 Dec
30 Jun 2023 2023
2024
£000 £000 £000
Non-current assets
Right-of-use assets 119 106 -
--------------------------------------------------- --------------------------------------------------- ---------------------------------------------------
Total non-current assets 119 106 -
Current assets
Trade and other receivables 6,341 7,593 8,339
Deferred tax asset - 675 -
Corporation tax receivable 254 - 145
Cash and cash equivalents 8,086 7,089 7,740
------------------------------------------------------ ------------------------------------------------------ ---------------------------------------------------
Total current assets 14,681 15,357 16,224
Total assets 14,800 15,463 16,224
Current liabilities
Trade and other payables (5,826) (6,281) (7,641)
Corporation tax payable - (24) -
Lease liabilities (123) (111) -
------------------------------------------------------ ----------------------------------------------------- ------------------------------------------------------
Total current liabilities (5,949) (6,416) (7,641)
----------------------------------------------------- ----------------------------------------------------- -----------------------------------------------------
Total liabilities (5,949) (6,416) (7,641)
==================================================== ==================================================== ====================================================
Net assets 8,851 9,047 8,583
==================================================== ==================================================== ====================================================
Equity
Share capital 60 60 60
Share premium account 5,436 5,436 5,436
Share options reserve 3,845 3,525 3,692
Foreign currency reserve (280) (405) (461)
Capital redemption reserve - - -
Retained earnings (210) 431 (144)
==================================================== ==================================================== ====================================================
Total equity attributable to the 8,851 9,047 8,583
owners of the company
==================================================== ==================================================== ====================================================
DIANOMI PLC
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2024
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 2024 60 5,436 - 3,692 (461) (144) 8,583
----------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ----------------------------------------------- ------------------------------------------------
Comprehensive loss for the period
Loss for the period - - - - - (66) (66)
Currency translation differences - - - - 181 - 181
----------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ----------------------------------------------- ------------------------------------------------
Total comprehensive profit for the period - (66) 115
- - - 181
----------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ------------------------------------------------
Transactions with owners of the Company
Share based payment credit - - - 153 - - 153
----------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ------------------------------------------------- ------------------------------------------------
Total transactions with owners of the Company - - 153
- - 153 -
----------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ------------------------------------------------- ------------------------------------------------
Balance at 30 June 2024 60 5,436 - 3,845 (280) (210) 8,851
----------------------------------------- --------------------------------------------------- ----------------------------------------- --------------------------------------------------- --------------------------------------------------- ------------------------------------------------ ----------------------------------------------
----------------------------------------- ------------------------------------------------ ------------------------------------------------ ------------------------------------------------ ------------------------------------------------ ----------------------------------------------- ------------------------------------------------
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 2023 60 5,436 - 3,380 139 2,772 11,787
----------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ----------------------------------------------- ------------------------------------------------
Comprehensive income for the period
Loss for the period - - - - - (2,916) (2,916)
Currency translation differences - - - - (600) - (600)
----------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ----------------------------------------------- ------------------------------------------------
Total comprehensive income for the period - (2,916) (3,516)
- - - (600)
----------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ------------------------------------------------
Transactions with owners of the Company
Share-based payment credit - - - 312 - - 312
----------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ------------------------------------------------- ------------------------------------------------
Total transactions with owners of the Company - - - 312
- 312 -
----------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ------------------------------------------------- ------------------------------------------------
Balance at 31 December 2023 60 5,436 - 3,692 (461) (144) 8,583
----------------------------------------- --------------------------------------------------- ----------------------------------------- --------------------------------------------------- --------------------------------------------------- ------------------------------------------------ ----------------------------------------------
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended Six months ended
30 Jun 2024 30 Jun 2023 Year
ended 31
Dec 2023
£000 £000 £000
Cash flows from operating activities
Loss on ordinary activities before taxation (142) (2,052) (1,819)
Adjustments for:
Depreciation - leased assets 119 107 213
Interest payable 2 2 3
Interest receivable (59) (44) (115)
Decrease/ (increase) in trade and other receivables 1,998 281 (465)
(Decrease)/increase in trade and other payables (1,815) (1,874) (407)
Other costs - 33
Share based payment charge 153 145 312
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------
Cash generated from/(used in) operations 256 (3,435) (2,245)
Taxation paid (32) (621) (907)
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------
Net cash (used in)/generated from operating activities 224 (4,056) (3,152)
====================================================== ====================================================== ======================================================
Cash flows from investing activities
Interest received 59 44 115
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------
Net cash generated from investing activities 59 44 115
====================================================== ====================================================== ======================================================
Cash flows from financing activities
Interest paid in respect of leases (2) (2) (3)
Capital payments in respect of leases (115) (111) (219)
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------
Net cash used in financing activities (117) (113) (222)
====================================================== ====================================================== ====================================================
Net increase/(decrease) in cash and cash equivalents 166 (4,125) (3,259)
Cash and cash equivalents at beginning of period 7,740 11,663 11,663
Exchange movement on cash 180 (449) (664)
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------
Cash and cash equivalents at end of period 8,086 7,089 7,740
====================================================== ====================================================== ======================================================
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 2024 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 2023,
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 20 September
2024 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 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 2024 the
Group had net assets of £8.9 million (30 June 2023: £9.0 million) and cash
and cash equivalents of £8.1 million (30 June 2023: £7.1 million). The Group
has no debt outstanding or facilities in place (30 June 2023: £nil).
The Group's forecasts and projections, taking into account reasonable possible
changes in trading performance, show that the Group has sufficient working
capital and available funds to honour all of its obligations to creditors as
and when they fall due. 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. 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 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
2024 2023 2023
£000 £000 £000
EMEA 2,664 2,328 4,811
APAC 323 466 915
U.S.A. 11,197 12,047 24,428
====================================================== ====================================================== ======================================================
14,184 14,841 30,154
====================================================== ====================================================== ======================================================
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 24 30 Jun 23 ended
31 Dec 2023
£000 £000 £000
Loss attributable to the ordinary equity holders of the Group used in (2,916)
calculating basic and diluted EPS
(66) (2,341)
Basic loss per ordinary share (p) (0.22) (7.80) (9.71)
Diluted loss per ordinary share (p) (0.22) (7.80) (9.71)
Six months ended Six months ended Year
30 Jun 24 30 Jun 23 ended
31 Dec 23
Adjusted basic and diluted EPS £000 £000 £000
Reconciliation of earnings used in calculating adjusted EPS:
Loss attributable to the ordinary equity holders of the Group used in (66) (2,341) (2,916)
calculating basic and diluted EPS
Adjusting items:
Share based payments 153 145 312
Reorganisation costs - 822 (1,054)
Derecognition of deferred tax asset - - 675
Tax impact of adjusting items (15) (34) (55)
====================================================== ====================================================== ======================================================
Profit/(loss) attributable to the ordinary equity holders of the Group used in 72 (1,408) (930)
calculating adjusted basic and diluted EPS
Adjusted basic earnings/(loss) per ordinary share (p) 0.24 (4.69) (3.10)
Adjusted diluted earnings/(loss) per ordinary share (p) 0.23 (4.69) (3.10)
Six months ended Six months
30 Jun 24 ended Year
30 Jun 23 ended
31 Dec 23
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 1,420,017 1,732,936 1,642,490
====================================================== ====================================================== ======================================================
Weighted average number of ordinary shares used as the denominator in 31,447,988 31,760,907 31,670,461
calculating non-adjusted and adjusted diluted EPS
7. Share based payments
At the time of the Company's IPO in May 2021, the Company introduced share
option schemes (the "IPO Option Schemes") in order to retain, incentivise and
align employees with shareholders. Under the IPO Option Schemes employees were
granted share options with an exercise price equal to the IPO price (or for
those granted post IPO equal to the then current share price), a vesting
period of 3 years and a non-market performance condition.
In 2023, it became clear that the performance condition for those options
granted at IPO was not going to be met and for those options granted in 2022
under the same scheme it was unlikely to be met.
Therefore, it was decided that employees who were granted options in 2021 and
2022 would be given the option to have their original options cancelled (the
"Cancellation"), and replacement option schemes (the "Replacement Option
Schemes") would be introduced under which employees would be issued with new
options with a revised performance condition, exercise price and extended
vesting period but at a lower number than those originally issued.
315,950 options lapsed before the Cancellation due to employees leaving the
Group as part of the reorganisation.
242,424 options were granted in April 2023 under the IPO Option Schemes with
an exercise price of 82.5 pence were not cancelled.
1,405,601 options which were granted under the IPO Option Schemes were
cancelled in November 2023. Simultaneously, 1,177,593 new options were issued
under the Replacement Option Schemes.
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:
Options granted under IPO Option Schemes
Weighted average share price at grant date (£) 2.78
Weighted average exercise price (£) 2.78
Volatility (%) 44.00%
Weighted average vesting period (years) 3
Risk free rate (%) 3.482%
Expected dividend yield (%) -
Options granted under Replacement Option Schemes
Weighted average share price at grant date (£) 48
Weighted average exercise price (£) 50
Volatility (%) 52.91%
Weighted average vesting period (years) 3
Risk free rate (%) 3.595%
Expected dividend yield (%) -
The share-based remuneration expense comprises:
As at 30 Jun 2024 As at 30 Jun 2023 As at 31 Dec 2023
£000 £000 £000
Equity-settled schemes 153 145 312
========================================== ========================================== ==========================================
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 2024 As at 30 Jun 2023 As at 31 Dec 2023
£000 £000 £000
Restructuring costs - 822 1,054
========================================== ========================================== ==========================================
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