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REG - dotDigital Group plc - Final Results <Origin Href="QuoteRef">DOTD.L</Origin> - Part 1

dotDigitalAnnouncement

13/10/2015 07:01

RNS Number : 0296C

dotDigital Group plc

13 October 2015

FOR IMMEDIATE RELEASE

13 OCTOBER 2015

Analyst meeting today: 9.30am start - at dotdigital's offices, No.1 London Bridge, SE1

Please call Lisa Baderoon if you would like to attend or email: lisa.baderoon@dotdigitalgroup.com

dotdigital's full 2015 Annual Report will be made available on dotdigital's website today: www.dotdigitalgroup.com

dotdigital Group Plc

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

FINAL RESULTS FOR THE YEAR ENDED 30 JUNE 2015

"Continued strong organic growth & International expansion making good headway"

dotdigital Group Plc (AIM:DOTD), the leading provider of intuitive software as a service ("SaaS") and managed services to digital marketing professionals is pleased to announce its Final Results for the year ended 30 June 2015.

2015 Highlights

Financials

Turnover increased by 33% to 21.4m (2014: 16.2m)

EBITDA of 6.8m, up 45% (2014: 4.7m)

Recurring revenues of 76% (2014:78%)

Percentage of recurring revenues outside of UK of 15% (2014:10%)

Strong cash position of 11.9m at year end

Net assets of 18.4m, up 30% (2014:14.2m

EPS up 31% to 1.63p (2014: 1.24p)

Announced today: Final Dividend Proposed of 0.36p per share - please see separate announcement

Operational : UK

Notable new clients in the UK in both the B2B and B2C sectors include: Honeywell, Unison, Ordnance Survey, The All England Lawn Tennis and Croquet Club, Knight Frank, Sony Music, Links of London, Sole Trader, Ladbrokes and Natural History Museum

Average monthly spend per client rose by approximately 41% to 445

94% of clients have now signed up on longer term contracts of between 12 and 24 months

International growth

Revenues from the US performed strongly, increasing from US$1.4m to US$3.0m, an increase of over 114%

The East Coast sales office, located in New York, continues to focus on sector niches including Magento eCommerce platform users and higher value small enterprise clients

New clients include Simple Human, La Vie en Rose, Sail Plein Air Inc & Team Velocity Marketing

Good early progress in the Asia Pacific region with strong partner relationships in Australia and solid revenue pipelines building through these channels

A pilot underway with a partner utilising our localisation and translation capabilities in Latin America

Magento connector

Over 200 clients now using dotmailer's Magento Connector

The average monthly recurring revenue spend has grown to approximately 1,070 per month, a 53% increase on the previous year

Magento Connector UK clients now include The Royal Trust Collection, Fred Perry, Boodles, Calor Gas and Hornby

Magento Systems Integration partners signed as resellers for the dotmailer platform include Gorilla, a Gold Magento Solution Partner with offices across the US and Europe, and named as Magento's Omni-channel Partner of the Year in April 2015

Commenting on the results, Simone Barratt, Chief Executive Officer, said:

"The demand for email marketing and multi-channel automation continues to be strong both in the UK and internationally. The Board believes that the dotmailer platform, with its 'ease of use' proposition, its specialist connectors, its specialist professional services, and now its growing list of global strategic partnerships, is well placed to continue to generate strong organic growth in revenue, not just in the UK, but increasingly overseas as well."

For further enquiries please contact:

dotdigital Group Plc Simone Barratt , CEO Milan Patel, CFO	Tel: 020 8662 2777
Financial PR and Investor Relations Lisa Baderoon Lisa.Baderoon@dotmailer.com	Tel: 07721 413 496
N+1 Singer Shaun Dobson, Head of Corporate Finance Alex Wright, Corporate Finance	Tel: 020 7496 3000
finnCap Stuart Andrews, Corporate Finance	Tel: 020 7220 0500

CHAIRMAN'S STATEMENT

dotdigital has delivered great results for the 2014/15 financial year. The Group continues to be cash generative with no debt and we finished the year with cash reserves of 11.9m, an increase of 28% on the prior year, after capital expenditure and product development costs of 2.3m. The Group returned a profit before tax of 5.2m for the year, which was marginally ahead of market expectations.

Our change in emphasis of how we sell to clients outlined last year has been successful and our average monthly spend by customer has increased by 41%. In addition 94% of new clients signed in the past year have signed longer-term contracts giving the Group greater visibility on future revenue. We have also made significant progress with Magento customers, who tend to be higher volume senders, and these clients now spend considerably more with us on a monthly basis than other clients.

During this past year we have focused on building our indirect sales through partners and distributors and we have signed a number of high-profile partnership agreements in North America and Asia Pacific.

We continue to make good progress in the US and our business there has grown by over 114%, signing a number of significant new clients in that market. We also established an office in Australia which will focus on driving sales across the Asia Pacific region, primarily through carefully selected partners. This operation is now headed up by Rohan Lock, who for the past five years, was head of sales in the UK. We've already seen a good level of sign ups through our partners.

Our professional services division has continued to grow in the past year, achieving nearly 3m of sales, up 56% on the previous year, with good profit margins. We have invested considerably in our infrastructure, ensuring that the business has the ability to offer the service expected by our customers as our business expands in both the volume of emails we send and the geographical markets in which we operate.

Development in our dotmailer platform continues to ensure it conforms to scalability, localisation and compliance in our new markets and product updates and enhancements have been well received by our customers.

As with previous years, our policy on acquisitions remains unchanged. Our continued focus is on organic growth but we will consider acquisition opportunities, should they arise, and only if they allow us to accelerate growth in a market or provide us with a technological advantage.

An evolving team

During the past year we have evolved the plc and operational boards to ensure we have the requisite skills to grow our business in line with market expectations. Peter Simmonds, who has been CEO for the past eight years, left at the end of June 2015. We identified Simone Barratt as Peter's successor in 2014 and during the past year both Peter and Simone have worked on the transition in the months leading up to Peter's retirement and Simone taking on the role of CEO.

On behalf of the Board I would like to take this opportunity to thank Peter for the considerable effort he has put in to building the business and ensuring we have effective processes and controls in place so that we can achieve growth whilst remaining profitable and cash generative. We are delighted that Peter continues as a shareholder of the business and he has also agreed to remain on the Board as a Non-Executive Director.

Simone has an extensive knowledge of the email marketing space and her previous experience as a Non-Executive Director of the Company before becoming CEO has meant she had an excellent understanding of the business. Simone has focused on building the executive management team to ensure the business has the requisite skills as we progress through this stage of our evolution.

Milan Patel continues to do an excellent job as CFO under Simone, with a focus on effective planning and good financial control, thus ensuring our ongoing profitability and cash generation.

Founders Simon Bird and Tink Taylor continue as Board members and to play a strategic role in the business. Both have provided great support to the executive management team. Tink has been instrumental in helping our overseas expansion in not just North America but in Central America and Australia. Simon identified and recruited Steve Shaw who has taken over as IT Director and who, in turn, has made great strides in both the development of our main product suite and the infrastructure required for running our platform.

On behalf of all our stakeholders, I would like to thank the team at dotdigital for their fantastic contribution to another successful year. I would also like to say a special thank you to the executive management team for their continued commitment, hard work and passion in developing the business.

Outlook

The outlook for dotdigital over the coming years is very promising with interesting opportunities both in the UK and in overseas markets. We plan to continue to grow our business via a direct sales model but, increasingly, we see indirect channel and partnerships as a very effective way to achieve significant growth internationally. The rebranding and repositioning of the business has helped fulfil our ambition to be seen as a supplier of choice in the midmarket. With this team and the strategy outlined here we look forward to another successful year ahead.

Frank Beechinor-Collins
Non-Executive Chairman
12 October 2015

CHIEF EXECUTIVE'S REPORT

Introduction

I am pleased to announce that the Group delivered revenue growth in line with market guidance. Our EBITDA and profit before tax are both marginally ahead of market guidance.

This performance is a result of continued strong organic growth in the high-margin and long-term recurring revenues generated by our core multichannel marketing product, dotmailer, both in the UK and, increasingly, overseas.

Financial highlights

Revenues up 32% to 21.4m (2014: 16.2m). EBITDA of 6.8m, an increase of 45% (2014: 4.7m). Net assets grew by 30% to 18.4m (2014: 14.2m) with EPS of 1.63p, an increase of 31% (2014: 1.24p).

Review of 2014/2015

Revenue performance, which grew in line with expectations, was driven by strong growth of 32% across the Group's core high-margin email and multi-channel automation SaaS platform.

This strong organic growth was underpinned by a combination of successful new client wins in the mid-market and small enterprise sectors and, in particular, amongst Magento eCommerce platform users. There has also been healthy growth in recurring revenue from existing clients, and the Group has signed up a higher proportion of clients under contracts than in the previous period.

The Group continues to win notable clients in the UK in both the B2B and B2C sectors. In the past year these include: Honeywell, Unison, Ordnance Survey, The All England Lawn Tennis and Croquet Club, Knight Frank, Sony Music, Links of London, Sole Trader, Ladbrokes and Natural History Museum.

We have also seen a strong performance from our enabling professional services offerings with an increase in revenue from 1.8m to approximately 2.8m, an increase of 56% year on year with margins in the region of 60%.

During the year, the Group's average monthly spend per client rose by approximately 41% from 315 in the prior financial year to 445 in 2014/15. This, combined with a focus on longer term contracts (94% of clients that signed up in the year are on contracts between 12 and 24 months), and client retention has resulted in higher client lifetime values.

International growth

Revenues from the US performed strongly, increasing from US$1.4m to US$3.0m, an increase of over 114% compared to the same period last year. The East Coast sales office, located in New York, continues to focus on sector niches including Magento eCommerce platform users and higher value small enterprise clients. As a result the Group has secured a number of new clients, including Simple Human, La Vie en Rose, Sail Plein Air Inc & Team Velocity Marketing.

The Group has also made good early progress in the Asia Pacific region and the Group has established strong partner relationships in Australia and solid revenue pipelines building through these channels.

We are in the process of undertaking a pilot utilising the localisation and translation capabilities of our platform in LATAM with a partner.

Magento Connector

The quality of dotdigital's connector into the Magento eCommerce platform and the Group's ability to build strong relationships with Magento partners has resulted in significant increased revenues during the year.

The number of our clients now using dotmailer's Magento Connector has more than doubled during the financial year. The average monthly recurring revenue spend for a typical Magento customer has also grown to approximately 1,070 per month, a 53% increase on the previous year.

In addition to those International clients listed above, Magento Connector UK clients now include The Royal Trust Collection, Fred Perry, Boodles, Calor Gas and Hornby.

We have also signed a number of Magento Systems Integration partners as resellers for the dotmailer platform, including Gorilla, a Gold Magento Solution Partner with offices across the US and Europe, and named as Magento's Omni-channel Partner of the Year in April 2015.

Technology, product development and support

Within the year we have restructured our technology, product development and support teams. The teams are now clearly aligned with operational support for our clients and our infrastructure, or on our product roadmap.

Also, within the year we have revised our approach to our product development and release process. Our new approach has delivered increasingly innovative software in an agile manner, but in a more structured quarterly release process. The key tenets of our product development strategy remain 'ease of use' and 'ease of integration'. Our highly skilled and creative team of developers continue to create functionality that makes it easy for our clients to deliver complex marketing processes, and easy for marketers to integrate with the best-of-breed platforms they already use.

People

After a two-year term as a Non-Executive Director, I took over the CEO role on 24 February 2015. Peter Simmonds stepped down as Deputy CEO on 30 June 2015 and I am delighted that Peter remains on the Board as a Non-Executive Director.

2013/2014 was a year of important investment in new hires and the appointment of new senior management. During 2014/2015 these new hires have been successfully integrated into the business. The senior management team have implemented new structures and processes to support our ambitious growth plans whilst driving operational efficiencies for the business. As a result we have delivered a 32% increase in revenue, a 45% increase in EBITDA for a nominal 8% increase in headcount.

Another key hire in April 2015 was Chief Privacy Officer, James Koons, a high-profile industry expert who is based in the US. Our reputation with ISPs around the world and our knowledge of and approach to global data privacy legislation are critical to providing our clients with the highest level of protection and security and to ensuring we continue to deliver their emails around the world.

Cash generation

The business continues to be highly cash generative with cash at the end of the period standing at 11.9m, an increase of 28% on the prior year (2014: 9.3m) after capital expenditure and product development of 2.3m. The Group continues to be debt free. Highly efficient cash collection processes, combined with over 45% of clients paying retainers by direct debit, contributed to the Group's strong cash position at the year end.

Dividend policy

I am pleased to announce that the Board has conducted a review of the business plans for the next three years including evaluating the cash needs for increased investment in both organic growth and capital expenditure and has decided that an increase in dividend can be proposed this year.

Therefore, subject to approval at the AGM in December 2015, the Board propose that the Group will pay a dividend of 0.36 pence per share, payable at the end of January 2016.

Growth strategy

During the year we evaluated a number of potential acquisition opportunities in the email marketing space. However, as in prior years none of the businesses evaluated were judged to be likely to create long-term shareholder value when execution and integration risks were factored in. We will, of course, continue to consider acquisition opportunities if they arise.

We anticipate further organic growth in the UK market and will continue to offer our products directly to a wide range of industry sectors. Growth will come from winning business from competitors as well as from developing and promoting additional and increasingly sophisticated personalisation and automation product functionality to our existing customer base.

We have established a strong brand presence in the US, especially in the growing B2C and B2B eCommerce sectors, and we anticipate further penetration and growth. Growth to date has been as a result of the quality of our connector to the Magento platform and our Gold Standard Partnership. Going forward, we will continue to focus on growing our network and relationships with the system Integrators who service and influence the Magento community and on continuing to broaden and deepen our product offering to this sector.

We are pleased with the early results of a pilot in LATAM (Latin America), commencing in October 2014 and conducted with a partner utilising our localisation technologies to translate our interface to the local market.

In addition, we expect to augment this growth through further expansion; into the Americas and Asia Pacific, and via strategic and channel partners and resellers.

The model of growing internationally by focusing on key partners has proven to be successful and profitable in the US. The Group aims to take the same focused approach to growing our new office in Australia, identifying a number of key partners and resellers who have an existing footprint in Australia and the broader Asia Pacific region.

Going forward, we intend to deepen existing relationships, and identify new local and global strategic partners to fast track our penetration into specific sectors, niches or geographies.

The Group will also look to exploit what we believe to be an opportunity in the market - particularly in the US - to provide an alternative email and multi-channel automation platform to a network of mid-sized resellers and we are currently hiring to exploit this opportunity.

This growth will be supported by a technology programme that delivers scale internationally.

We are encouraged by the response we have had from partners and see this as a key tenet for our growth strategy in future.

Technology and infrastructure

We continue to invest in technology and infrastructure to cater for a growing international customer base. dotdigital has recently commenced a three-year hybrid-cloud infrastructure project - Project Cirrus - with the key aim of deploying our platform into new territories: North America (to support growth in the Americas), and Australia (to support growth in Asia Pacific). This will provide our clients with increased performance and resilience and the ability to keep their data within their economic region.

Email delivery remains a high priority and we will retain a small physical infrastructure presence in key regions to act as delivery nodes. This ensures we have full control over our IP address ranges and their reputation, which are crucial for email delivery.

These additional dotmailer instances will allow us to scale and spread risk, putting us in stronger position to continue to deliver on our customers' expectations and to handle continued growth.

Looking forward

The dotmailer email marketing and multichannel automation platform continues to perform strongly both in the UK and, increasingly, internationally.

In readiness for the next phase of our growth I have created a Senior Executive Team that sits between the Plc Board and the cross-departmental Operations Board. In addition to myself and Milan Patel, CFO, the Senior Executive Team comprises Sharon Head - previously Director of Operations, now Chief Operating Officer, and Steve Shaw - previously Director of Technology, now Chief Technology Officer. This structure will allow us to allocate senior executive sponsorship to key global strategic partnerships. For clarification, these are not Plc Board appointments.

Together with the recent appointment of Anup Khera to the role of Senior Vice President (SVP) of Global Sales, and Phil Draper as Marketing Director, the Group is well placed with a strong team of senior executives to deliver future results.

Further growth in the US will be supported by new sales offices in the MidWest and West Coast. These offices will be located to mirror the concentrations of Magento systems integrators, allowing us to forge stronger relationships and to provide those Integrators with local support.

Rohan Lock, who has headed the UK sales team for five years, is now responsible for the Asia Pacific region, based in Australia. He has considerable experience of building an effective sales organisation in the UK and is expected to help the Group accelerate sales growth in this region. Hiring a sales team has already begun and early indications from the Asia Pacific region show strong interest from high-value strategic channel partners and a growing pipeline.

In addition to channel partners, resellers are important for the Group's growth ambitions including further penetration into the US as well as for entering new markets. To this end the Group plans to appoint a Global Reseller Director who will be based in the US. There have been a number of acquisitions in the email marketing sector and the Directors believe this has created an opportunity for dotmailer to replace their current platform.

The ongoing investment in technology and product development, and the resulting new multi-channel automation functionality launched in early 2015, has helped the Group build new revenues. The Directors believe this will increase both the quality and quantum of recurring revenues from our technology, and also from a recently introduced range of new productised multi-channel automation services offerings.

Summary

The demand for email marketing and multi-channel automation continues to be strong both in the UK and internationally. The Board believes that the dotmailer platform, with its 'ease of use' proposition, its specialist connectors, its specialist professional services, and now its growing list of global strategic partnerships, is well placed to continue to generate strong organic growth in revenue, not just in the UK, but increasingly overseas as well.

Simone Barratt
Chief Executive Officer
12 October 2015

DOTDIGITAL GROUP PLC

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 30JUNE2015


			30.6.15	30.6.14
			'000	'000
		Notes
CONTINUING OPERATIONS
Revenue		3	21,366	16,213
Cost of sales			(2,292)	(1,533)

Gross profit			19,074	14,680

Administrative expenses		7	(13,858)	(11,059)

OPERATING PROFIT			5,216	3,621

Finance income		6	27	20

PROFIT BEFORE INCOME TAX		7	5,243	3,641

Income tax expense		8	(587)	(181)

Profit for the year from continuing operations			4,656	3,460

DISCONTINUED OPERATIONS

Loss for the year from discontinued operations		4	-	(41)

Profit for the year			4,656	3,419

Attributable to the owners of the parent:
	Profit for the year from continuing operations	4	4,656	3,460
	Loss for the year from discontinued operations		-	(41)

	Profit for the year attributable to the owners of the parent		4,656	3,419

Earnings per share from continuing operations (pence per share)
	Basic	11	1.63	1.24
	Diluted	11	1.61	1.19

Earnings per share from continuing and discontinued operations (pence per share)
	Basic	11	1.63	1.22
	Diluted	11	1.61	1.18

DOTDIGITAL GROUP PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30JUNE2015


			30.6.15	30.6.14
			'000	'000
		Notes

PROFIT FOR THE YEAR			4,656	3,419

OTHER COMPREHENSIVE INCOME
Items that may be subsequently reclassified to profit and loss:
Exchange differences on translating foreign operations			3	(4)

Total comprehensive income attributable to:
	Owners of the parent		4,659	3,415

TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Comprehensive income from continuing operations			4,659	3,456
Comprehensive income from discontinued operations			-	(41)

DOTDIGITAL GROUP PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

30 JUNE 2015


		30.6.15	30.6.14
		'000	'000
	Notes
ASSETS
NON-CURRENT ASSISTS
Goodwill	12	609	609
Intangible assets	13	3,444	2,991
Property, plant and machinery	14	1,097	827

		5,150	4,427

CURRENT ASSETS
Trade and other receivables	16	5,328	3,662
Cash and cash equivalents	17	11,932	9,306

		17,260	12,968

TOTAL ASSETS		22,410	17,395


EQUITYATTRIBUTABLE TO THE
OWNERS OF THE PARENT
Called up share capital	18	1,435	1,414
Share premium	19	5,382	5,147
Reverse acquisition reserve	19	(4,695)	(4,695)
Other reserves	19	(25)	82
Retranslation reserve	19	(3)	(6)
Retained earnings	19	16,297	12,211

TOTAL EQUITY		18,391	14,153


LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax	23	383	58

CURRENT LIABILITIES
Trade and other payables	20	3,437	2,984
Current tax payable		199	200

		3,636	3,184

TOTAL LIABILITIES		4,019	3,242

TOTAL EQUITY & LIABILITIES		22,410	17,395

DOTDIGITAL GROUP PLC

COMPANY STATEMENT OF FINANCIAL POSITION

30 JUNE 2015


		30.6.15	30.6.14
		'000	'000
	Notes
ASSETS
NON-CURRENT ASSISTS
Investments	15	5,186	5,186

		5,186	5,186

CURRENT ASSETS
Trade and other receivables	16	3,124	3,845
Cash and cash equivalents	17	166	109

		3,290	3,954

TOTAL ASSETS		8,476	9,140


EQUITYATTRIBUTABLE TO THE
OWNERS OF THE PARENT
Called up share capital	18	1,435	1,414
Share premium	19	5,382	5,147
Other reserves	19	(25)	82
Retained earnings	19	1,534	2,423

TOTAL EQUITY		8,326	9,066


LIABILITIES
CURRENT LIABILITIES
Trade and other payables	20	150	74

		150	74

TOTAL LIABILITIES		150	74

TOTAL EQUITY & LIABILITIES		8,476	9,140

DOTDIGITAL GROUP PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2015


	Called up share	Retained earnings	Share premium
	capital
	'000	'000	'000

Balance as at 1 July 2013	1,387	9,071	4,863

Issue of share capital	27	-	284
Dividends	-	(279)	-
Share based payment	-	-	-
Transactions with owners	27	(279)	284

Profit for the year	-	3,419	-
Total comprehensive income	-	3,419	-

Balance as at 30 June 2014	1,414	12,211	5,147

Issue of share capital	21	-	235
Share repurchase	-	-	-
Dividends	-	(570)	-
Share based payment	-	-	-
Transactions with owners	21	(570)	235

Profit for the year	-	4,656	-
Total comprehensive income	-	4,656	-

Balance as at 30 June 2015	1,435	16,297	5,382

DOTDIGITAL GROUP PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2015


	Retranslation	Reverse acquisition	Other	Total equity
	reserve	reserve	reserves
	'000	'000	'000	'000

Balance as at 1 July 2013	(2)	(4,695)	13	10,637

Issue of share capital	-	-	-	311
Dividends	-	-	-	(279)
Share based payments	-	-	69	69
Transactions with owners	-	-	69	101

Profit for the year	-	-	-	3,419
Other comprehensive income	(4)	-	-	(4)
Total comprehensive income	(4)	-	-	3,415

Balance as at 30 June 2014	(6)	(4,695)	82	14,153

Issue of share capital	-	-	-	256
Share repurchase	-	-	(213)	(213)
Dividends	-	-	-	(570)
Share based payments	-	-	106	106
Transactions with owners	-	-	(107)	(421)

Profit for the year	-	-	-	4,656
Other comprehensive income	3	-	-	3
Total comprehensive income	3	-	-	4,659

Balance as at 30 June 2015	(3)	(4,695)	(25)	18,391

Share capital is the amount subscribed for shares at nominal value.

Retained earnings represents the cumulative earnings of the Group attributable to equity shareholders.

Share premium represents the excess of the amount subscribed for share capital over the nominal value of the net share issue expenses.

Retranslation reserve relates to the retranslation of a foreign subsidiary into the functional currency of the Group.

The reverse acquisition reserve relates to the adjustment required to account the reverse acquisition in accordance with International Financial Reporting Standards.

Other reserves relate to the charge for the share based payment in accordance with International Financial Reporting Standard 2 and shares repurchased in the year classified as treasury shares.

DOTDIGITAL GROUP PLC

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2015


	Called up share	Retained earnings	Share premium
	capital
	'000	'000	'000

Balance as at 1 July 2013	1,387	3,065	4,863

Issue of share capital	27	-	284
Dividends	-	(279)	-
Share based payment	-	-	-
Transactions with owners	27	(279)	284

Loss for the year	-	(363)	-
Other compressive income	-	-	-
Total comprehensive income	-	(363)	-

Balance as at 30 June 2014	1,414	2,423	5,147

Issue of share capital	21	-	235
Share repurchase	-	-	-
Dividends	-	(570)	-
Share based payment	-	-	-
Transactions with owners	21	(570)	235

Loss for the year	-	(319)	-
Other comprehensive income	-	-	-
Total comprehensive income	-	(319)	-

Balance as at 30 June 2015	1,435	1,534	5,382

DOTDIGITAL GROUP PLC

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2015


	Other	Total equity
	reserves
	'000	'000

Balance as at 1 July 2013	13	9,328

Issue of share capital	-	311
Dividends	-	(279)
Share based payments	69	69
Transactions with owners	69	101

Loss for the year	-	(363)
Other comprehensive income	-	-
Total comprehensive income	-	(363)

Balance as at 30 June 2014	82	9,066

Issue of share capital	-	256
Share repurchase	(213)	(213)
Dividends	-	(570)
Share based payments	106	106
Transactions with owners	(107)	(421)

Loss for the year	-	(319)
Total comprehensive income	-	(319)

Balance as at 30 June 2015	(25)	8,326

Share capital is the amount subscribed for shares at nominal value.

Retained earnings represents the cumulative earnings of the Group attributable to equity shareholders.

Share premium represents the excess of the amount subscribed for share capital over the nominal value of the net share issue expenses.

Retranslation reserve relates to the retranslation of a foreign subsidiary into the functional currency of the Group.

Other reserves relate to the charge for the share based payment in accordance with International Financial Reporting Standard 2 and shares repurchased in the year classified as treasury shares.

DOTDIGITAL GROUP PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2015


		30.6.14	30.6.14
		'000	'000
	Notes
Cash flows from operating activities
Cash generated from operations	28	5,667	5,297
Tax paid		(263)	(100)

Net cash generated from operating activities		5,404	5,197


Cash flows from investing activities
Purchase of intangible fixed assets		(1,612)	(1,408)
Purchase of tangible fixed assets		(667)	(607)
Sale of tangible fixed assets		1	-
Interest received		27	20

Net cash flows used in investing activities		(2,251)	(1,995)


Cash flows from financing activities
Equity dividends paid		(570)	(279)
Share issue		256	311
Share repurchase		(213)	-

Net cash flows (used)/from financing activities		(527)	32


Increase in cash and cash equivalents		2,626	3,234

Cash and cash equivalents at beginning of year	29	9,306	6,072

Cash and cash equivalents at end of year	29	11,932	9,306



Increase in cash and cash equivalents from continuing operations		2,626	3,268

Increase in cash and cash equivalents from discontinuing operations		-	(34)

Increase in cash and cash equivalents		2,626	3,234

The above does not include the effect of foreign exchange rate changes on cash and cash equivalents due to its immaterial nature.

DOTDIGITAL GROUP PLC

COMPANY STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30JUNE2015


		30.6.14	30.6.14
		'000	'000
	Notes
Cash flows from operating activities
Cash generated from operations	28	584	7

		584	7
Net cash generated from operating activities



Cash flows from financing activities
Equity dividends paid		(570)	(279)
Share issue		256	311
Share repurchase		(213)	-

Net cash flows (used)/from financing activities		(527)	32


Increase in cash and cash equivalents		57	39

Cash and cash equivalents at beginning of year	29	109	70

Cash and cash equivalents at end of year	29	166	109

DOTDIGITAL GROUP PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2015

1. GENERAL INFORMATION

dotdigital Group Plc ("dotdigital") is a company incorporated in England and Wales and quoted on the AIM Market. The address of the registered office is disclosed on the inside back cover of the financial statements.

2. ACCOUNTING POLICIES

Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS's as adopted by the EU) and those parts of Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention.

The Group has applied all accounting standards and interpretations issued by the International Accountancy Standards Board and International Accounting Interpretations Committee effective at the time of preparing the financial statements.

New and amended standards adopted by the Group

There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on or after 1 July 2014 that would be expected to have a material impact on the Group.

Standards, interpretations and amendments to published standards that are not yet effective

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 July 2014 and have not been early adopted:

Reference	Title	Summary	Application date of standard (Periods commencing on or after)
IFRS 14	Regulatory deferral accounts	Aims to enhance the comparability of financial reporting by entities subject to rate-regulations	1 January 2016
IFRS 15	Revenue from contracts with customers	Specifies how and when to recognise revenue from contracts as well as requiring more information and relevant disclosures.	1 January 2017
Amendments to IFRS 11	Joint arrangements	On acquisitions of interest in joint operations	1 January 2016
Amendments to IAS 16 and IAS 41	IAS 16: Property plant and equipment and IAS 41: Agriculture	On Bearer plants	1 January 2016
Amendments to IAS 16 and IAS 38	Intangible Assets	Clarification of acceptable methods of depreciation and amortization	1 January 2016
Amendments to IAS 27	Separate financial statements	Equity method in separate financial statements	1 January 2016
Amendments to IFRS 10 and IAS 28	IFRS 10:Consolidated financial and IAS 28: Investments in Associates	Investment entities: Applying the consolidation exception	1 January 2016
Amendments to IFRS 10 and IAS 28	IFRS 10:Consolidated financial and IAS 28: Investments in Associates	Sale or contribution of assets between an investor and its associate or joint venture	1 January 2016
Amendments to IAS 1	Presentation of Financial statements	Disclosure initiative	1 January 2016
Improvements to IFRS 5	Non current assets held for sale and discontinued operations	Methods of disposal	1 January 2016
Improvements to IFRS 7	Financial instruments	Disclosures on servicing contracts and interim financial statements	1 January 2016
Improvements to IAS 19	Employee benefits	Determining the discount rates for post-employment obligations	1 January 2016
Improvements to IAS 34	Interim financial reporting	Information disclosed elsewhere in the interim financial report	1 January 2016
IFRS 9	Financial instruments	Requirements on the classification and measurement of financial assets and liabilities and includes an expected credit losses model which replaces the current incurred loss impairment model. Also includes the hedging amendment that was issued in 2013	1 January 2018

The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Group. The Group does not intend to apply any of these pronouncements early.

The financial statements are presented in sterling (), rounded to the nearest thousand pound.

Basis of consolidation

In the period ended 2009 the Company acquired via a share for share exchange the entire issued share capital of dotmailer Limited, whose principle activity is that of web and email based marketing.

Under IFRS 3 'Business combinations' the dotmailer Limited share exchange has been accounted for as a reverse acquisition. Although these consolidated financial statements have been issued in the name of the legal parent, the company it represents in substance is a continuation of the financial information of the legal subsidiary, dotmailer Limited. The following accounting treatment has been applied in respect of the reverse acquisition:

- The assets and liabilities of the legal subsidiary, dotmailer Limited are recognised and measured in the consolidated financial statements at their pre combination carrying amounts, without restatement to their fair value;

- The retained reserves recognised in the consolidated financial statements for the beginning of the prior period reflect the retained reserves of dotmailer Limited to 30 April 2008. However, in accordance with IFRS3 'Business combinations' the equity structure appearing in the consolidated financial statements reflects the equity structure of the legal parent dotdigital Plc, including the equity instruments issued under the share exchange to effect the business combination;

- A reverse acquisition reserve has been created to enable the presentation of a consolidated balance sheet which combines the equity structure of the legal parent with the non statutory reserves of the legal subsidiary;

- Comparative numbers are prepared on the same basis.

The following accounting treatment has been applied in respect of the acquisition of dotdigital Plc:

- The assets and liabilities of dotdigital are recognised and measured in the consolidated financial statements at their fair value at the date of acquisition.

- The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the date of acquisition, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

Subsidiaries

A subsidiary is an entity whose operating and financing policies are controlled by the Group. Subsidiaries are consolidated from the date on which control was transferred to the Group. Subsidiaries cease to be consolidated from the date the Group no longer has control. Intercompany transactions, balances and unrealised gains on transactions between Group companies have been eliminated on consolidation.

As a result of applying reverse acquisition accounting since 30 January 2009, the consolidated IFRS financial information of dotdigital Group Plc is a continuation of the financial information of dotmailer Limited.

Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group's activities. Revenue is shown net of value added tax returns, rebates and discounts after eliminating sales within the Group.

The Group recognises revenue when the amount of revenue can be reliably measured and it is probable that the future economic benefits will flow to the entity. The Group bases its estimates on historical results, taking in to consideration the type of customer, the type of transaction and the specifics of each arrangement.

The Group sells web based marketing services to other businesses and services are either provided on a usage basis or fixed price bespoke contract. Revenue from contracts are recognised under percentage of completion method based on a percentage of services performed to date as a percentage of the total services to be performed.

Going concern

The directors, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.

Operating profit

Operating profit is stated after charging operating expenses but before finance costs.

Dividends

Final dividend distributions to the Company's shareholders are recognised as a liability in the financial statements in the period in which the dividends are approved by the Company's shareholders while interim dividends distributions are recognised in the period in which the dividends are declared and paid.

Goodwill

Goodwill represents the excess of the fair value of the consideration over the fair values of the identifiable net tangible and intangible assets acquired.

Under IFRS 3 "Business Combinations" goodwill arising on acquisitions is not subject to amortisation but is subject to annual impairment testing. Any impairment is recognised immediately in the income statement and not subsequently reversed.

Investments in subsidiaries

Investments are held as non-current assets at cost less any provision for impairment. Where the recoverable amount of the investment is less than the carrying amount, impairment is recognised.

Intangible assets

Intangible assets are recorded as separately identifiable assets and recognised at historical cost less any accumulated amortisation. These assets are amortised over their useful economic lives 4-5 years, with the charge included in administrative expenses in the income statement.

Intangible assets are reviewed for impairment annually. Impairment is measured by determining the recoverable amount of an asset or cash generating unit (CGU) which is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest Group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGU.

- Domain names

Acquired domain names are shown at historical cost. Domain names have a finite life and are carried at cost less accumulated amortisation. Amortisation is calculated using straight line method to allocate the cost of domain names over their useful lives of four years.

- Software

Acquired software and websites are shown at historical cost. They have a finite life and are carried at cost less accumulated amortisation. Amortisation is calculated using straight line method to allocate the cost of software and websites over their useful lives of four years.

- Product development

Product development expenditure is capitalised when it is considered that there is a commercially and viable technically product, the related expenditure is separable identifiable and there is a reasonable expectation that the related expenditure will be exceeded by future revenues. Following initial recognition, product developments are carried at cost less any accumulated amortisation and any accumulated impairment losses. The useful lives of these intangible assets are assessed to have a finite life of five years. Amortisation is charged on assets with finite lives and until economic benefit can be received and recognised, this expense is taken to the income statement and useful lives are reviewed on an annual basis. Amortisation is charged from the point when the assets is available for use.

Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Capitalised development costs are recorded as intangible assets and amortised from the point at which they are ready for use on a straight line basis over its useful life.

Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when the following criteria are fulfilled:

- It is technically feasible to complete the intangible asset so that it will be available of use or resale

- Management intends to complete the intangible asset and use or sell it

- There is an ability to use or sell the intangible

- It can be demonstrated how the intangible asset will generate possible future economic benefits

- Adequate technical, financial and other resource to complete the development and to use or sell the intangible asset are available and

- The expenditure attributable to the intangible asset during its development can be reliably measured.

- Impairment of non financial assets (excluding goodwill)

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.

Property, plant and equipment

Tangible non-current assets are stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits are associated with the item will flow to the company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Depreciation is provided at the following rates in order to write off each asset over its estimated useful life and are based on the cost of assets less residual value. Significant components of individual assets are assessed and if a component has a useful life that is different from the remainder of that asset, that component is depreciated separately.

Short leasehold:	over the term of the lease
Fixtures and fittings:	25% on cost
Computer equipment:	25% on cost

The asset's residual values and useful economic lives are reviewed and adjusted, if appropriate, at each reporting date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater then its estimated recoverable value.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within other (losses) or gains in the income statement.

Capital risk management

The Group manages its capital to ensure it is able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of cash equivalents and equity attributable to the owners of the parent as disclosed in the Statement of Changes in Equity.

Taxation

The tax expense for the year comprises current and deferred tax. Tax is recognised in the Income Statement, extent to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income for directly in equity, respectively.

Current tax

Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax rates enacted or substantially enacted by the balance sheet date.

Deferred taxation

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary difference will be utilised.

Deferred income tax is determined using tax rates that have been enacted or substantially enacted by the balance sheet date and are expected to apply when they related deferred income asset is realised or deferred income tax liability is settled.

Operating leases

Rent payable under operating leases is not recognised in the Group's statement of financial position. Such costs are expensed on a straight line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total expense, over the term of the lease.

Financial instruments

Financial assets and financial liabilities are recognised on the statement of financial position when an entity becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that is directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the income statement.

- Financial assets

The Group's accounting policies for financial assets are set out below.

Management determine the classification of its financial assets at initial recognition depending on the purpose for which the financial assets were acquired and where allowed and appropriate, revaluate this designation at every reporting date.

All financial assets are recognised on a trade date when, and only when, the Group becomes a party to the contractual provisions of an instrument. When financial assets are recognised initially, they are measured at fair value plus transaction costs, except for those finance assets classified as at fair value through profit or loss ('FVTPL'), which are initially measured at fair value.

Financial assets are classified into the following specified categories: financial assets at FVTPL, 'held-to-maturity' investments, 'available for sale' (AFS) financial assets and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of recognition.

Derecognition of financial assets occurs when the rights to receive cash flows from the investments expire or are transferred and substantially all of the risks and rewards of ownership have been transferred.

At each reporting date, financial assets are reviewed to assess whether there is objective evidence of impairment. If any such evidence exists, impairment loss is determined and recognised based on the classification of the financial asset.

Loans and receivables (including trade receivables, prepayments, deposits and other receivables, cash and bank balances) are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market. At each reporting date subsequent to initial recognition, loans and receivables are carried at amortised cost using the effective interest method, less any identified impairment losses. An impairment loss is recognised in the statement of comprehensive income when there is objective evidence that the asset is impaired, and is measured as the difference between the asset's carrying amount and the present value of estimated future cashflows discounted at the original effective interest rate. Impairment losses are reversed in subsequent periods when an increase in the asset's recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to a restriction that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

- Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are also included as a component of cash and cash equivalents for the purpose of the consolidated statement of cash flows.

- Trade receivables

Trade receivables are recognised initially at the lower of their original invoiced value and recoverable amount. A provision is made when it is likely that the balance will not be recovered in full. Terms on receivables range from 30 to 90 days.

- Financial liabilities and equity

Financial liabilities and equity are recognised on the Group's statement of financial position when the Group becomes a party to a contractual provision of an instrument. Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of transaction costs.

The Group's financial liabilities include trade payables and accrued liabilities.

- Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Terms on accounts payables range from 10 to 90 days.

Foreign currency risk

Currency risk is the risk that the holding of foreign currencies will affect the Group's position as a result of a change in foreign currency exchange rates. The Group has no significant foreign currency risk as most of the Group's financial assets and liabilities are denominated in functional currencies of relevant group entities. Accordingly, no quantitative market risk disclosures or sensitivity analysis for currency risk have been prepared.

The results and nancial position of all the group entities (none of which has the currency of a hyper-inationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(a) Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
(b) Income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
(c) All resulting exchange differences are recognised in other comprehensive income.

Equity

Share capital is the amount subscribed for shares at their nominal value.

Share premium represents the excess of the amount subscribed for the share capital over the nominal value of the respective shares net of share issue expenses.

Retained earnings represent the cumulative earnings of the Group attributable to equity Shareholders.

The reverse acquisition reserve relates to the adjustment required by accounting for the reverse acquisition in accordance with IFRS3 'Business combinations'.

Other reserves relate to the charge for share based payments in accordance with IFRS2 'Share based payments'.

Share based payments

For equity settled share based payment transactions the Group, in accordance with IFRS 2 "Share Based Payments" measures their value, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted. The fair value of those equity instruments is measured at the grant date using the trinomial method. The expense is apportioned over the vesting period of the financial instrument and is based on the number which is expected to vest and the fair value of those financial instruments at the date of grant. If the equity instruments granted vested immediately, the expense is recognised in full.

Functional currency translation

- Functional and presentation currency

Items included in the financial statements of the company are measured using the currency of the primary economic environment in which the entity operates (functional currency), which is mainly pounds sterling () and it this currency the financial statements are presented in.

- Transaction and balances

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

Employee benefit costs

The Group operates a defined contribution pension scheme. Contributions payable by the Group's pension scheme are charged to the income statement in the period in which they relate.

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provide to the chief operating decision-maker. The chief operating decision maker who is responsible for allocating resources and assessing performance of the operating segments as identified by the board of directors.

Critical accounting adjustments

The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Judgements

(a) Capitalisation of development costs

Our business model is underpinned by our email and cross-channel marketing automation platform, dotmailer. Internal activities are continually undertaken to enhance and maintain the product in a bid to stay ahead of our competition. Management review the work of developers during the period and make the following judgements:

- Internal work relating to product development is reviewed against IAS 38 criteria and will be capitalised if management feel the criteria have been met.

- Internal work relating to the maintenance of existing products is expensed to the income statement and accounted for in payroll costs.

Estimates and assumptions

(a) Impairment testing of goodwill

The Directors have carried out a detailed impairment review in respect of goodwill. The Group assesses at each reporting date whether there is an indication that an asset may be impaired, by considering the net present value of discounted cash flows forecasts which have been discounted using a pre-tax discount rate of 10%. The cash flow projections are based on the assumption that the Group can realise projected sales. A prudent approach has been applied with no residual value being factored.

Further details on the estimates and assumptions we make in our annual impairment testing of goodwill are included in Note 12 to the Financial Statements. At the period end, based on these assumptions there was no indication of impairing to carrying value of goodwill.

(b) Share-based compensation

Key management believe that there will not be only one acceptable choice for estimating the fair value of share-based payment arrangements. The judgements and estimates that management apply in determination of the share-based compensation are summarised below:

- Selection of a valuation model

- Making assumptions used in determining the variables used in a valuation model

i. expected life,

ii. expected volatility,

iii. expected dividend yield,

iv. interest rate

Further detail on the estimates and assumptions we make in our share-based compensation are included in Note 27 to the Financial Statements. The charge made to income statement for period is also disclosed here.

The Group depreciates short leasehold, fixtures and fittings, computer equipment and amortises computer software, internally generated development costs and domain names on a straight line method over the estimated useful lives. The estimated useful lives reflect the directors' estimate of the periods that the Group intends to derive future economic benefits from the use of the Group's short leasehold fixtures and fittings, computer equipment, computer software, internally generated development costs and domain names.

(d) Bad debt provision

We perform ongoing credit evaluations of our customers and grant credit based upon past payment history, financial condition and anticipated industry conditions. Customer payments are regularly monitored and a provision for doubtful accounts is established based upon specific situations and overall industry conditions. Hence the provision is maintained for potential credit losses based upon management's assessment of the expected collectability of all accounts receivable. In making this assessment, management takes into consideration (i) an circumstances of which we are aware regarding a customer's inability to meet its financial obligations and (ii) our judgements as to potential prevailing economic conditions in the industry and their potential impact on the Group's customers.

3. SEGMENTAL REPORTING

The Group's single line of business is the provision of web based marketing services. Last year more than 90% of the Group's revenue arose in the UK and all of the Group's non-current assets were held there. This year the chief operating decision maker considers the Group's only reportable segment to be by geographical location. This being UK and rest of the world ("RoW") operations as shown below:

	30.06.2015
	UK Operations	RoW Operations	Total
	'000	'000	'000
Income statement
Revenue	18,274	3,092	21,366
Gross profit	16,676	2,398	19,074
Profit before income tax	3,476	1,767	5,243
Total comprehensive income attributable to the owners of the parent	2,895	1,764	4,659

Financial position
Total assets	21,591	819	22,410
Net current assets	12,964	660	13,624

Revenue from external customers are attributed to the geographical segments noted above based on the customers' location. There was no customers who account for more than 10% of revenue (2014: none)

	30.06.2014
	UK Operations	RoW Operations	Total
	'000	'000	'000
Income statement
Revenue	14,647	1,566	16,213
Gross profit	13,267	1,413	14,680
Profit before income tax	2,430	1,211	3,641
Total comprehensive income attributable to the owners of the parent	2,205	1,210	3,415

Financial position
Total assets	17,002	293	17,395
Net current assets	10,030	(246)	9,784

4. DISCONTINUED OPERATIONS

Discontinued operations refers to the closure of the service division.

Analysis of continuing and discontinued operations is as follows:

	Year ended 30 June 2015	Continuing operations		Discontinued operations
		30.6.15		30.6.15
		'000		'000

	Revenue	21,366		-
	Cost of sales	(2,292)		-

	Gross profit	19,074		-

	Administrative expenses	(13,858)		-

	Operating profit before exceptional items		5,216	-

	Finance income	27		-

	Income tax	(587)		-

	Profit for the year attributable to owners of the parent	4,656		-


	Year ended 30 June 2014	Continuing operations		Discontinued Operations
		30.6.14		30.6.14
		'000		'000

	Revenue	16,213		199
	Cost of sales	(1,533)		(122)

	Gross profit	14,680		77

	Administrative expenses	(11,059)		(118)

Operating profit/(loss) before exceptional items		3,621		(41)

	Finance income including exceptional items	20		-

	Income tax	(181)		-

	Profit/(loss) for the year attributable to owners of the parent	3,460		(41)

5. EMPLOYEES AND DIRECTORS

				30.6.15		30.6.14
				'000		'000

		Wages and salaries		7,711		6,024
		Social security costs		871		679
		Other pension costs		221		147

				8,803		6,850

The average monthly number of employees during the year are as follows

				30.6.15		30.6.14

		Directors		7		7
		Sales and Marketing		84		80
		SEO and Product Developers		48		41
		Administration		47		44

				186		172

	Remuneration of key management personal is included in note 25 During the year the Group also capitalised staff related costs of 1,549,066 (2014 - 1,232,341) in relation to internally generated development costs.
6. NET FINANCE INCOME
			30.6.15		30.6.14
			'000		'000
		Finance income:
		Deposit account interest	27		20

			27		20

7. OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS

Costs by nature
Profit from continuing operations has been arrived after charging/(crediting):-
		30.6.15			30.6.14
		'000			'000

Direct marketing			1,516	1,033
Outsourcing			415	471
Other costs			361	29

	Total cost of sales		2,292	1,533


			30.6.15	30.6.14
			'000	'000

Staff related costs (inc Directors emoluments) -note 5			8,803	6,850
Operating leases: Land and buildings			834	586
Operating lease: Other			44	68
Audit remuneration			38	36
Amortisation of intangibles			1,159	866
Depreciation charge			397	251
Legal, professional and consultancy fees			417	480
	Computer expenditure		828	584
Bad debts			103	302
Foreign exchange losses			61	67
Travelling			351	250
Office running			217	160
Other costs			606	559

Total administration costs			13,858	11,059

During the year the Group obtained the following services from the Group's auditor at costs detailed below:

	30.6.15		30.6.14
	'000		'000

Fees payable to the Company's auditor for the audit of Parent Company and consolidated financial statements		7		7
Fees payable to the Company's auditor for other services
- The audit of Company subsidiaries		27		26
- Non audit fees: Tax and review of interim accounts		4		3

		38		36

8. INCOME TAX EXPENSE

Analysis of the tax charge from continuing operations:
	30.6.15		30.6.14
	'000		'000

Current tax on profits for the year		262		166
Deferred tax on origination and reversal of timing differences		325		44

		587		210
Overprovision in previous periods		-		(29)

		587		181



Tax charge from continuing operations		587		181

		587		181

Factors affecting the tax charge:
		30.6.15		30.6.14
		'000		'000

Profit on ordinary activities before tax		5,243		3,600
Profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 20.75% (2014: 22.50%)		1,088		810
Effects of:
Expenses not deductible		(250)		281
Research and development enhanced claim		(747)		(661)
Expenditure permitted on exercising options		(238)		(247)
Overseas tax (profits)/losses		(43)		25
Capital allowances in excess of depreciation		(48)		(42)

Total income tax		262		166

Deferred tax was calculated using the rate 20% (2014: 20.75%). For further details on deferred tax please see note 23.

9. PROFIT/(LOSS) OF PARENT COMPANY

As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the parent company is not presented as part of these financial statements. The parent company's loss for the financial year was 318,852 (2014: 363,022).

10. DIVIDENDS

Amounts recognised as distributions to equity holders in the period
	30.6.15		30.6.14
	'000		'000

Final dividend for year end 30 June 2015 of 0.2p per share		570	279

Proposed dividend for the year end 30 June 2015 of 0.36p (2014: 0.2p) per share		1,041	566
The proposed final dividend is subject to approval by the shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

11. EARNINGS PER SHARE

Earnings per share data is based on the consolidated profit using and the weighted average number of shares in issue of the parent company. Basic earnings per share are calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential ordinary shares.

Reconciliations are as follows:-

	30.6.15
		Weighted
		average	Per share
From continuing operations	Earnings	number of	Amount
	'000	shares	Pence

Basic EPS
Profit for the year attributable to the owners of the parent	4,656	284,804,914	1.63


Options and Warrants	-	5,001,766	-

Diluted EPS
Profit for the year attributable to the owners of the parent	4,656	289,806,680	1.61

From continuing operations
		30.6.15			30.6.14
		'000			'000

Profit for the year attributable to the owners of the parent		4,656			3,419
Adjustments to exclude profit/(loss) from discontinued operations		-			41

Profit for the year from continuing operations for the purpose of basic of basic earnings per share excluding discontinued operations
		4,656			3,460

From discontinued operations
		30.6.15			30.6.14
		Per share (p)			Per share (p)

Basic EPS		-			(0.02)
Diluted EPS		-			(0.01)

There was no difference in the weighted average number of shares used in the calculation of basic and diluted earnings per share as the effect of all notionally dilutive shares outstanding were anti-dilutive.
		2015			2014
Weightedaveragenumberofshares		Shares			Shares

Basic EPS		284,804,914			279,107,898
Diluted EPS		289,806,680			290,380,434

The denominators and numerators used are the same those detailed above for both basic and diluted earnings per share from continuing and discontinued operations.
			30.6.14
				Weighted
				average		Per share
	From continuing and discontinued operations		Earnings	number of		Amount
			'000	shares		Pence

	Basic EPS
	Profitfortheyearattributabletotheownersoftheparent		3,419	279,107,898		1.22


	Options and Warrants		-	11,272,536		-

	Diluted EPS
	Profitfortheyearattributabletotheownersoftheparent		3,419	290,380,434		1.18
			30.6.14
				Weighted
				average		Per share
	From continuing operations		Earnings	number of		Amount
			'000	shares		Pence

	Basic EPS
	Profit for the year attributable to the owners of the parent		3,460	279,107,898		1.24


	Options and Warrants		-	11,272,536		-

	Diluted EPS
	Profit for the year attributable to the owners of the parent		3,460	290,380,434		1.19

Adjusted earnings per share represents the performance of the company had the exceptional item listed above not occurred in the year and is only presented for guidance purposes.

12. GOODWILL

Group
	30.6.15	30.6.14
COST	'000	'000
At 1 July
And 30 June	4,121	4,121

ACCUMULATED INPAIRMENT LOSS
At 1 July and at 30 June	3,512	3,512


NET BOOK VALUE	609	609

Goodwill arising on business combinations is not amortised but is reviewed for impairment on an annual basis, or more frequently if there are indications that goodwill may be impaired. Goodwill acquired in a business combination is allocated, at acquisition, to cash generating units (CGU's) that are expected to benefit from that business combination.

The carrying amount of goodwill relates wholly to the Group's single trading activity and business segment. This has been tested for impairment during the current financial year by comparison with the recoverable amounts of the CGU.

Recoverable amounts for CGU's are based on the higher of value in use and fair value less costs to sell. The recoverable amounts of the CGU have been determined from value in use calculations. These calculations use pre-tax cash flow projections based on financial budgets approved by management covering a five year period. The key assumptions for the value in use calculations are those regarding discount rates, growth rates, and expected changes in margins. Management estimate discount rates using pre-tax rates that reflect the current market assessment of the time value of money and the risks specific to the CGU's. Changes in income and expenditure are based on past experience and expectations of the future changes in the market. The pre-tax discount rate used to calculate the value in use are 10% (2014 - 10%). The valuations indicate sufficient headroom such that a reasonably possible change in key assumptions would not result in impairment of goodwill.

13. INTANGIBLE ASSETS

Group

	Computer	Internally generated development	Domain
	softwares	costs	names	Totals
	'000	'000	'000	'000
COST
At 1 July 2014	274	5,013	16	5,303
Additions	-	1,612	-	1,612

At 30 June 2015	274	6,625	16	6,915

AMORTISATION
At 1 July 2014	195	2,102	15	2,312
Amortisation for the year	33	1,125	1	1,159

At 30 June 2015	228	3,227	16	3,471

NET BOOK VALUE	46	3,398	-	3,444
At 30 June 2015


	Computer	Internally generated development	Domain
	softwares	costs	names	Totals
	'000	'000	'000	'000
COST
At 1 July 2013	211	3,668	16	3,895
Additions	63	1,345	-	1,408

At 30 June 2014	274	5,013	16	5,303

AMORTISATION
At 1 July 2013	155	1,278	13	1,446
Amortisation for the year	40	824	2	866

At 30 June 2014	195	2,102	15	2,312

NET BOOK VALUE	79	2,911	1	2,991
At 30 June 2014

Development cost additions represents resources the Group have invested in the development of new innovative and ground breaking technology products for marketing professionals. This platform allows them to create, send and automate marketing campaigns. Following development of the products the group intends to licence the use of the platform.

14. PROPERTY, PLANT AND EQUIPMENT

Group

	Short	Fixtures &	Computer
	Leasehold	fittings	equipment	Totals
	'000	'000	'000	'000
COST
At 1 July 2014	288	308	888	1,484
Additions	107	93	467	667
Disposals	-	-	(1)	(1)

At 30 June 2015	395	401	1,354	2,150

DEPRECIATION
At 1 July 2014	47	112	498	657
Depreciation for the year	48	91	258	397
Eliminated on disposal	-	-	(1)	(1)

At 30 June 2015	95	203	755	1,053

NET BOOK VALUE
At 30 June 2015	300	198	599	1,097


	Short	Fixtures &	Computer
	Leasehold	fittings	equipment	Totals
	'000	'000	'000	'000
COST
At 1 July 2013	107	155	620	882
Additions	181	154	272	607
Disposals	-	(1)	(4)	(5)

At 30 June 2014	288	308	888	1,484

DEPRECIATION
At 1 July 2013	25	64	321	410
Depreciation for the year	22	49	180	251
Eliminated on disposal	-	(1)	(3)	(4)

At 30 June 2014	47	112	498	657

NET BOOK VALUE
At 30 June 2014	241	196	390	827

15. INVESTMENTS

Company

	Shares in	Shares in
	Group	Group
	undertakings	undertakings
	30.6.15	30.6.14
COST	'000	'000


At 1 July and 30 June	8,705	8,705

AMORTISATION

At 1 July and at 30 June	3,519	3,519

NET BOOK VALUE
At 30 June	5,186	5,186

The Group or the company's investments at the balance sheet date in the share capital of companies include the following:


Subsidiaries	Proportion of
	voting power
	held %:
Dotmailer Limited
Class of share
Ordinary	100
Ordinary A	100
Nature of business: web and Email based marketing
Dotagency Limited
Class of share
Ordinary	100
Nature of business: Non-trading
Dotsearch Europe Limited
Class of share
Ordinary	100
Nature of business: Branch company
Dotcommerce Limited
Class of share
Ordinary	100
Nature of business: Dormant
Doteditor Limited
Class of share
Ordinary Nature of business: Dormant	100
DotSEO Limited
Class of share
Ordinary Nature of business: Dormant	100

Dotsurvey Limited
Class of share
Ordinary B, C and D Nature of business: Dormant	100

Dotmailer Inc
Class of share
Ordinary Nature of business: Web and email based marketing	100

All of the above subsidiaries have been included within the consolidated results

All the above companies with the exception of dotmailer Inc were incorporated in England and Wales. Dotmailer Inc was incorporated in Delaware, USA.

16. TRADE AND OTHER RECEIVABLES

	Group		Company
	30.6.15	30.6.14	30.6.15	30.6.14
	'000	'000	'000	'000
Current:
Trade receivables	4,589	3,119	-	-
Less: Provision for impairment of trade receivables	(343)	(336)	-	-

Trade receivables - net	4,246	2,783	-	-
Other receivables	39	35	-	-
Amounts owed by group undertakings	-	-	3,108	3,821
VAT	-	-	7	12
Prepayments	1,043	844	9	12

	5,328	3,662	3,124	3,845

Further details on the above can be found in note 22.

Included within prepayments is an amount of 121,998 (2014: 104,429) in relation to deferred commission which is considered to be long term.

17. CASH AND CASH EQUIVALENTS

	Group		Company
	30.6.15	30.6.14	30.6.15	30.6.14
	'000	'000	'000	'000

Bank accounts	11,932	9,306	166	109

	11,932	9,306	166	109

18. CALLED UP SHARE CAPITAL

Allotted, issued, fully paid	Nominal	30.6.15	30.6.14
number	value	'000	'000

287,002,065	0.005	1,435	1,414
(2014: 282,782,065)
		1,435	1,414

During the reporting period the company undertook the following transactions involving the issuing and reclassifying issued share capital:

On 07 August 2014 a number of employees exercised their share options increasing the issued share capital by 790,000 shares at a premium price of between 5p and 7.5p.

On 20 October 2014 a number of employees exercised their share options increasing the issued share capital by 730,000 shares at a premium price of between 5p and 7.5p.

On 18 December 2014 a number of employees exercised their share options increasing the issued share capital by 910,000 shares at a premium price of between 5p and 7.5p.

On 27 April 2015 a number of employees exercised their share options increasing the issued share capital by 1,790,000 shares at a premium price of between 5p and 7.5p.

19. RESERVES

Group

	Retained	Share	Reverse acquisition
	earnings	premium	reserve
	'000	'000	'000

As at 1 July 2014	12,211	5,147	(4,695)

Issue of share capital	-	235	-
Share repurchase	-	-	-
Dividends	(570)	-	-
Profit for the year	4,656	-	-
Other comprehensive income: Currency translation	-	-	-
Share based payment	-	-	-

Balance as at 30 June 2015	16,297	5,382	(4,695)

	Retranslation	Other
	Reserve	reserves		Totals
	'000	'000		'000

As at 1 July 2014	(6)	82		12,739

Issue of share capital	-	-		235
Share repurchase	-	(213)		(213)
Dividends	-	-		(570)
Profit for the year	-	-		4,656
Other comprehensive income: Currency translation	3	-		3
Share based payment	-	106		106

Balance as at 30 June 2015	(3)	(25)		16,956

	Retained	Share	Reverse acquisition
	earnings	premium	reserve
	'000	'000	'000

As at 1 July 2013	9,071	4,863	(4,695)

Issue of share capital	-	284	-
Dividends	(279)	-	-
Profit for the year	3,419	-	-
Currency translation	-	-	-
Share based payment	-	-	-

Balance as at 30 June 2014	12,211	5,147	(4,695)

	Retranslation	Other
	reserve	reserves	Totals
	'000	'000	'000

As at 1 July 2013	(2)	13	9,250

Issue of share capital	-	-	284
Dividends	-	-	(279)
Profit for the year	-	-	3,419
Currency translation	(4)	-	(4)
Share based payment	-	69	69

Balance as at 30 June 2014	(6)	82	12,739

Company


	Retained	Share	Other
	earnings	Premium	reserves	Totals
	'000	'000	'000	'000

At 1 July 2014	2,423	5,147	82	7,652

Issue of share capital	-	235	-	235
Share repurchase	-	-	(213)	(213)
Dividends	(570)	-	-	(570)
Loss for the year	(319)	-	-	(319)
Share based payment	-	-	106	106

At 30 June 2015	1,534	5,382	(25)	6,891

			Share
	Retained	Share	based
	earnings	premium	payments	Totals
	'000	'000	'000	'000

At 1 July 2013	3,065	4,863	13	7,941

Issue of share capital	-	284	-	284
Reclassification of reserves	(279)	-	-	(279)
Loss for the year	(363)	-	-	(363)
Share based payment	-	-	69	69

At 30 June 2014	2,423	5,147	82	7,652

20. TRADE AND OTHER PAYABLES

	Group		Company
	30.6.15	30.6.14	30.6.15	30.6.14
	'000	'000	'000	'000
Current:
Trade payables	853	819	16	2
Social security and other taxes	498	549	-	-
Other payables	349	391	91	12
VAT	574	559	-	-
Accruals and deferred income	1,163	666	39	60

	3,437	2,984	150	74

Further details on liquidity and interest rate risk can be found in note 22.

21. LEASING AGREEMENTS

Minimum lease payments under non cancellable operating leases fall due as follows:-

	30.06.15
	Land &
	Buildings	Others	Totals
	'000	'000	'000

Within one year	232	19	251
Between two to five years	1,490	12	1,502

	1,722	31	1,753

	30.06.14
	Land &
	Buildings	Others	Totals
	'000	'000	'000

Within one year	311	34	345
Between two to five years	2,147	19	2,166

	2,458	53	2,511

Operating leases represent rents payable by the Group for its office properties. Leases are negotiated for an average term if five years and rentals are fixed on average for two years with the option to extend for a further five years at the prevailing market rate at the time.

22. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The Groups activities expose it to a number of financial risks that include credit risk, liquidity risk, currency risk and interest rate risk. These risks and the Group's policies for managing them have been applied consistently during the year and are set out below.

The Group hold no financial or non other financial instruments other than those utilised in the working operations of the Group and that listed in this note. It is the Group's policy not to trade in derivative contracts.

Principle financial instruments

The principle financial instruments used by the Group, from which financial instrument rate risk arises, are as follows:

-Trade receivables

-Cash and cash equivalents

-Trade and other payables

Financial instruments by category

The following table sets out the financial instruments as at the reporting date:

	Group		Company
	30.6.15	30.6.14	30.6.15	30.6.14
	'000	'000	'000	'000
Financial assets
Trade and other receivables	5,328	3,662	16	24
Bank balances	11,932	9,306	166	109

	17,260	12,968	182	133

Financial liabilities
Trade payables	853	819	16	2
Accrued liabilities and other payables	2,584	2,165	130	72

	3,437	2,984	146	74

The fair value of the Financial assets and Financial liabilities equal to their carrying values. All financial assets are categorised as loans and receivables and all financial liabilities are categorised as financial liabilities at amortised costs.

General objectives, policies and processes

The Board has overall responsibility for the determination of the Group's risk management objectives and policies and whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group's risk committee. The Board receives monthly reports from the Risk Committee through which reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company's competitiveness and flexibility. Further details regarding these policies are set out below:

Interest rate risk

The Group's interest rate risk arises from interest bearing assets and liabilities. The Group has in place a policy of maximising finance income by ensuring that cash balances earn a market rate of interest; offsetting where possible, cash balances and by forecasting and financing its working capital requirements. As at the reporting date the Group was not exposed to any movement in interest rates as it has not external borrowings and therefore not exposed to interest rate risk. No sensitivity analysis has been prepared.

The Group's working capital requirements are managed through regular monitoring of the overall cash position and regularly updated cash flow forecasts to ensure there are sufficient funds available for its operations.

Liquidity risk

The Groups working capital requirements are managed through regular monitoring of the overall position and regularly updated cash flow forecasts to ensure there are funds available for its operations. Management forecasts indicate no new borrowing facilities will be required in the upcoming financial period.

Trade and other payables of 2,365,000 (2014: 1,876,000) are expected to mature in less than a year

Credit risk

Credit risk arises principally from the Group's trade receivables, as there are no trade receivables within the company, which comprise amounts due from customers. Prior to accepting new customers a credit check is obtained. As at 30 June 2015 there were no significant debts pass their due period which had not been provided for. The maturity of the Groups trade receivables is as follows:


	30.6.15	30.6.14
	'000	'000

0-30 days	2,311	1,817
30-60 days	813	702
More than 60 days	1,465	600

	4,589	3,119

The maturity of the Group's provision for impairment is as follows:

	30.6.15	30.6.14
	'000	'000

0-30 days	2	-
30-60 days	2	83
More than 60 days	339	253

	343	336

The movement in the provision for the impairment is as follows:

	30.06.15	30.6.14
	'000	'000

As at 1 July 2014	336	249

Provision for impairment	103	302
Receivable written off in the year	(47)	(165)
Unused amount reversed	(49)	(50)

As at 30 June 2015	343	336

The Group minimises its credit risk by profiling all new customers and monitoring existing client of the Group for changes in their initial profile. The level of trade receivables older than the average collection period consisted of a value of 1,486,597 (2014: 678,260) of which 294,735 (2014: 327,242) was provided for. The Group felt that the remainder would be collected post year end as they were with long standing relationships, the risk of default is considered to be low and write offs due to bad debts are extremely low. The Group has no significant concentration of credit risk, with the exposure spread over a large number of customers.

The credit risk on liquid funds is low as the counterparts are banks with high credit ratings assigned by international credit ratings. The majority of the company's cash holdings are held at NatWest Bank who has an A credit rating.

The carrying value of both financial assets and liabilities approximates to fair value.

Capital Policy

The Groups objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide optimal returns for shareholders and to maintain an efficient capital structure to reduce the cost of capital.

In doing so the Group's strategy is to maintain a capital structure commensurate with a strong credit rating and to retain appropriate levels of liquidity headroom to ensure financial stability and flexibility. To achieve this, the Group monitors key credit metrics, risk and fixed charge cover to maintain this position. In addition the Group ensures a combination of appropriate short term and long term liquidity headroom.

During the year the Group had a short term loan balance of nil (2014: nil) and amounts payable over one year are nil. The Group had a strong cash reserve to utilise for any short term capital requirements that were needed by the Group.

The Group has continued to look for a further long term investments or acquisitions and therefore to maintain or re-align the capital structure, the Group may adjust when dividends are paid to shareholders, return capital to shareholders, issue new shares or borrow from lenders.

23. DEFERRED TAX

	30.6.15	30.6.14
	'000	'000

As at 1 July	58	14
Current year provision	325	44

	383	58

The deferred tax liability above comprises the following temporary differences:

	30.6.15 '000	30.6.14 '000
Capital allowances in excess of depreciation	103	58
R & D relief in excess of amortisation	679	600
Share option relief	(399)	(600)
	383	58

The deferred tax provision relates to taxes to be levied by the same authority on the same entity expected to be settled at the same time. As such deferred tax assets and liabilities have been offset.

24. CAPITAL COMMITMENTS

The company and Group have no capital commitments as at the year end. Last year the Company and Group had capital committed to 191,000 towards the fit out of the new London Bridge office.

25. RELATED PARTY DISCLOSURES

Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

Group

The following transactions were carried out with related parties

			30.6.15	30.6.14
			'000	'000
Sale of services
Codence performance	Entity under common directorship	Email marketing services	3	2
Coms.com	Entity under common directorship	Email marketing services	4	8

			7	10

Sales of services are based on the price lists in force and at terms that would be available to third parties

			30.6.15	30.6.14
			'000	'000
Purchase of services
Barratts of Old Ltd	Entity under common directorship	Consultancy services	8	41

			8	41

Key management compensation

Key management include directors and the company secretary. The compensation paid for key management for employee services are shown below

	30.6.15	30.6.14
	'000	'000

Remuneration and other short term employee benefits	1,002	966
Share based payments	20	15
Pension cost	60	42

	1,082	1,023

Directors

	30.6.15	30.6.14
	'000	'000

Aggregate emoluments	1,002	877
Company contributions to money purchase pension scheme	60	42
Share based payments	20	5

	1,082	924

Information in relation to the highest paid Director is as follows:

	30.6.15	30.6.14
	'000	'000

Salaries	234	230
Other benefits	11	7
Pension costs	15	14
Share based payment	20	-

	280	251

The highest paid director exercised 660,000 share options in the year (2014: none).

Company

The following transactions were carried out with related parties

			30.06.15	30.06.14
			'000	'000
Year end balances arising from sales/purchase of services

Dotmailer Limited	Subsidiary	Payables	(3,280)	(1,864)
Dotagency Limited	Subsidiary	Receivables	-	9

			(3,280)	(1,855)

The receivables and payables are unrestricted in nature and bear no interest. No provisions are held against receivables from related parties.

Loans to related parties

		30.6.15	30.6.14
		'000	'000
Dotmailer Limited	Subsidiary
As at 1 July		5,681	5,400
Loans advanced		751	324
Loans repaid		(44)	(43)

		6,388	5,681

Key management compensation

Key management are non-executive directors. The compensation paid for key management for employee services are shown below

	30.6.15	30.6.14
	'000	'000

Remuneration and other short term employee benefits	-	95

	-	95

Directors

	30.6.15	30.6.13
	'000	'000

Aggregate emoluments	-	95

	-	95

26. ULTIMATE CONTROLLING PARTY

There is no ultimate controlling party of the Group. dotdigital Group PLC acts as the parent company to Dotmailer Limited, Dotagency Limited, Dotsearch Europe Limited, Dotmailer Inc, Dotsurvey Limited (Dormant), DotSEO Limited (Dormant), Dotcommerce Limited (Dormant) and Doteditor Limited (Dormant).

27. SHARE-BASED PAYMENT TRANSACTIONS

The measurement requirements of IFRS 2 have been implemented in respect of share options that were granted after 7 November 2002. The expense recognised for share based payment made during the year is 106,000 (2014: 69,000)

Vesting conditions of the options dictate that employees must remain in the employment of the Group for the whole period to qualify.

Movement in issued share options during the year

The table illustrates the number and weighted average exercise price (WAEP) of, and movements in share options during the period. The options outstanding at 30 June 2015 had a WAEP of 14.43p (2014: 8.82p) and a weighted average contracted life of 2.1 (2014: 2.8) years and their exercise prices ranged from 1p to 31.50p. All share options are settled in form of equity issued.

	30.06.15		30.6.14
	No of options	WAEP	No of options	WAEP

Outstanding at the beginning of the period	13,923,790	8.82p	16,117,930	7.54p
Granted during the year	2,275,000	29.53p	3,655,860	18.25p
Forfeited/cancelled during the period	1,040,000	16.56p	540,000	12.57p
Exchanged for shares	4,220,000	6.06p	5,310,000	5.80p
Outstanding at the end of the period	10,938,790	14.43p	13,923,790	8.82p
Exercisable at the end of the period	8,462,724	10.44p	9,517,930	4.09p

The weighted average share price at the date of the exercise for share options exercised during the period was 30.52p (2014: 30.58p).

The input into the Black-Scholes model are as follows:

	10 April 2015	28 November 2014	18 October 2013

Number of options granted	750,000	1,525,000	3,554,794
Share price at grant date	31.50p	29.00p	17.82p
Exercise price	31.50p	28.50p	18.25p
Option life in years	5	5	5
Risk free rate	1.33%	1.35%	1.40%
Expected volatility	30%	30%	30%
Expected dividend yield	0%	0%	0.4%
Fair value of options/warrants	5.64p	5.33p	3.31p

Expected volatility was determined by calculating the historical volatility of the group's share price from the date it listed to the grant date of the share option. The expected life used in the model is based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

28.

GROUP RECONCILIATION OF PROFIT BEFORE CORPORATION TAX TO CASH GENERATED FROM OPERATIONS

	Group		Company
	30.6.15	30.6.14	30.6.15	30.6.14
	'000	'000	'000	'000
Current:
Profit before tax from all operations	5,243	3,600	(319)	(363)
Currency revaluation	3	(4)	-	-
Depreciation	1,556	1,117	-	-
(Profit)/Loss on disposal of fixed assets	(1)	1	-	-
Share based payments	106	69	106	69
Finance income	(27)	(20)	-	-

	6,880	4,763	(213)	(294)

Decrease/(increase) in trade receivables	(1,666)	(769)	721	1,578
Increase/(decrease) in trade payables	453	1,303	76	(1,277)

Cash generated from operations	5,667	5,297	584	7

29. GROUP CASH AND CASH EQUIVALENTS

The amounts disclosed on the statement of cash flow in respect of cash and cash equivalents are in respect of these statements of financial position amounts:

	Group	Company
	'000	'000

As at 1 July 2013	6,072	70

As at 31 July 2014	9,306	109

As at 30 June 2015	11,932	166

	30.06.15	30.06.14
	'000	'000
Net cash flow from discontinued operations

Net cash generated from operating activities	-	(95)

Net cash generated from investing activities	-	-

Net cash used in financing activities	-	-

30. PROJECT DEVELOPMENT

During the period the Group incurred 1,611,929 (2014: 1,344,414) in development investments. All resources utilised in development has been capitalised as outlined in the accounting policy governing this area.

31. EVENTS AFTER THE END OF THE REPORTING PERIOD

There are no post balance sheet events which impact the Group's financial statement.

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR FFAFAEFISEFS

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