REG - dotDigital Group plc - Final Results
16/11/2021 07:05
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RNS Number : 4620S dotDigital Group plc 16 November 2021
16 November 2021
Dotdigital Group plc
("Dotdigital" or the "Group")
Final Results for the year ended 30 June 2021
Dotdigital Group plc (AIM: DOTD), the leading 'SaaS' provider of an
omnichannel marketing automation and customer engagement platform, announces
its final audited results for the year ended 30 June 2021 ("FY21").
Financial Highlights
· Organic revenue growth of 23% to £58.1m (FY20: £47.4m)
· Recurring revenue as a percentage of total revenue increased to 93%
(FY20: 91%)
· Monthly ARPC(1) increased 16% to £1,251 (FY20: £1,083 per month)
· Adjusted EBITDA(2) grew 9% to £19.8m (FY20: £18.2m) and adjusted operating
profit(3) grew 5% to £13.7m (FY20: £13.1m)
· Adjusted EPS from continuing operations was 4.06p (FY20: 3.90p)
· Strong net cash balance at 30 June 2021 of £32.0m (30 June 2020: £25.4m)
· The Board proposes to pay a final dividend of 0.86p per ordinary share, in
line with its progressive dividend policy (FY20: 0.83p)
Operational Highlights
· Acceleration of marketing digital transformation spurred by pandemic, driving
significant increase in omnichannel offering, particularly SMS
· Organic international revenue increased 22% to £18.0m (FY20: £14.8m), with
international sales representing 31% of total sales (FY20: 31%)
· APAC region delivered highest growth at 47%, albeit from a smaller
base
· Strong demand from UK customers for multi-channel functionality
· Revenue through connectors into strategic partners grew 14% to £25.4m (FY20:
£22.3m), evidencing strength of relationships and continued refinement of
joint go-to-market strategies
· Product innovation continues to drive value with functionality recurring
revenue (from license fees and enhanced bolt-on functionality) up 31% to
£18.9m (FY20: £14.4m)
· Continued focus on operational excellence in areas of privacy, security and
sustainability
· First customer engagement platform awarded ISO27701 on privacy
information management, ISO27001 information security management and ISO14001
environment management certifications
Outlook
· Normalisation of trading environment continues with transition out of global
lockdowns; Board continues to assess potential varied effects across broad and
diversified customer base
· High level of confidence in delivery of management expectations for the new
financial year following a strong start
Milan Patel, CEO of Dotdigital, commented:
"We are pleased to report a record year for Dotdigital, delivering double
digit organic growth and enhanced profitability as a result of an accelerated
uptake of our omnichannel offering. This performance is testament to our
robust business model, as we navigated and supported our customers through the
pandemic, and the efforts of our talented and dedicated team.
"The investments we have made in our Engagement Cloud platform, international
hubs and partner network are bearing fruit. Our powerful data-driven marketing
automation platform continues to excel in the market as a result of its
feature-rich yet user-friendly functionality, and we are well positioned to
support a growing number of customers as they look to drive deeper, more
personal engagement with their consumers through digital marketing.
"As we enter the new year, trading remains strong. Our healthy balance sheet,
strong recurring revenues and cash generation provides the flexibility to
invest in our growth strategy, giving the Board confidence in the Group's
long-term prospects."
Investor Presentation: https://www.dotdigitalgroup.com/events-presentations/
(https://www.dotdigitalgroup.com/events-presentations/)
Investor Video: A highlights video is available to watch here:
https://bit.ly/DOTD_FY21_overview (https://bit.ly/DOTD_FY21_overview)
Notes
(1. ARPC means Average Revenue Per Customer (including new
customers added in period and existing customers))
(2. EBITDA is earnings before interest, tax, depreciation and
amortisation and adjusted for acquisition costs and share-based payments)
(3. )(Operating profit is adjusted for acquisition costs and
share-based payments)
For further information please contact:
Dotdigital Group Plc Tel: 020 3953 3072
Milan Patel, CEO InvestorRelations@dotdigital.com
Paraag Amin, CFO
Alma PR (Financial PR) Tel: 020 3405 0210
Hilary Buchanan dotdigital@almapr.co.uk
David Ison
Faye Calow
Canaccord Genuity (Nominated Advisor and Joint Broker) Tel: 020 7523 8000
Bobbie Hilliam
Georgina McCooke
Jonathan Barr, Sales
finnCap (Joint Broker) Tel: 020 7220 0500
Stuart Andrews, Corporate Finance
Rhys Williams, Sales
Singer Capital Markets (Joint Broker) Tel: 020 7496 3000
Shaun Dobson, Head of Corporate Finance
Alex Bond, Corporate Finance
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO CONSTITUTE
INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE
REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS
INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
CHAIRMAN'S STATEMENT
Overview
To have delivered our strongest year to date amid pandemic-related challenges,
while managing a pronounced increase in the uptake of newer channels beyond
email, is testament to the exceptional people at Dotdigital.
The effectiveness of our model and the continued desirability of our product
are evident in the numbers, but without the hard work and adaptability of our
teams, we would not have been able to record such a positive performance. On
behalf of the Board, I would like to thank everyone involved in the business
for their contributions.
After a period of disruption in Q4 of the previous financial year, we have
gone from strength to strength, facilitated by the acceleration of digital
transformation brought about by the pandemic. While the mix of channel usage
varied as our customers' circumstances changed and evolved, we saw consistent
levels of overall demand, aided by the diversity of sectors and locations
across our customer base. This was achieved while helping our customers that
struggled where we could.
Although restrictions are easing and vaccination programmes are under way in
most territories, Covid-19 will continue to be a risk factor for the
foreseeable future, and not all its after effects will be easy to foresee. We
therefore need to continue to monitor its impact on our customer base, and be
ready to respond accordingly.
That said, we have traded well since the onset of the pandemic, proving that
the inherent versatility of our offering means we can help organisations, in
both good and more challenging times. As we emerge from the worst of the
pandemic and with a robust model and strong financial position, I am confident
that if we continue to support our customers and execute our strategy in a
measured and purposeful way, we will remain on course to meet our growth
ambitions.
Strategic Progress
This financial year saw a significant increase in appetite for our
omni-channel offering, with SMS proving particularly popular and more and more
organisations choosing to use push messaging, social, WhatsApp for business
and live chat, in line with the growing demand among consumers for alternative
and more personal means of engagement.
The team has built an advanced data-led platform that is tailored to the
increasingly sophisticated needs of the modern marketeer and continues to do
an excellent job of penetrating international markets, with all three of our
regions demonstrating good levels of growth in the year. Performance in APAC
was particularly strong, supplemented by the growing conversion of pipelines
in new markets such as Japan.
Our relationships with strategic partners - a key route to market for
Dotdigital - have deepened considerably, enabling better collaboration in
driving awareness and ultimately sales across their customer bases. As a
result, we saw encouraging growth in revenue from Magento, Shopify,
BigCommerce and Microsoft Dynamics - our four most valuable partnerships.
On the product front, we have continued to focus on building out our data and
personalisation capabilities, and firmly believe we now have one of the most
powerful, feature-packed and yet easy-to-use marketing automation platforms,
capable of delivering unparalleled insight and strong return on investment
without the need for a high level of technical expertise.
Sustainability
At the end of 2020, we set out to broaden and accelerate sustainability
improvements throughout the organisation with a view to reducing the impact of
our operations on the environment. Known internally as the 'dotgreen'
initiative, it marked the point where sustainability was elevated from being
an important consideration to a guiding principle for everything we do.
In the time since, our teams have worked tirelessly to make our infrastructure
and working practices more environmentally friendly. I am pleased to report
that, as a result, we can now claim to be the world's first carbon-neutral
marketing automation platform.
We also obtained ISO 14001, the universally recognised certification awarded
to organisations that meet a high standard of environmental management, became
a Corporate Member of the Woodland Trust and, most recently, signed the Terra
Carta, a part of HRH The Prince of Wales' Sustainable Markets Initiative that
offers the basis of a recovery plan to 2030 with nature, people and planet at
its heart.
In a relatively short space of time and against the backdrop of a pandemic, we
have made significant, meaningful changes to become a more responsible
business. While we are proud of our achievements, we know there is still room
for improvement, and remain committed to driving further change to ensure we
play our part in safeguarding the future of our planet.
People
Our people are the lifeblood of Dotdigital. Ensuring we have the right balance
of technological prowess, interpersonal skills and commercial acumen across
our organisation is vital to the delivery of our strategy, and to that end we
continued to strengthen our workforce in the period. Most notably, our sales
function grew and became more specialised to meet the growing demand for our
product, and we bolstered our marketing and customer care teams with the
internal promotion of a new Global Vice President of Marketing and the
external appointment of a new Head of Customer Success EMEA from a leading
competitor.
As we move through the new financial year, we will continue to hire
high-quality individuals that bring new skills and experience into the Group
while increasing management bandwidth where necessary to enable us to reach
our strategic goals more efficiently. At the same time, we will continue to
invest in our existing colleagues, cementing Dotdigital as one of the best
places to work in the industry from both a development and quality of life
perspective.
Dividend
The Board has agreed to maintain a progressive dividend in line with Group
EBITDA growth. Therefore, subject to approval at the AGM in December 2021, the
Board proposes that the Group will pay a final dividend of 0.86p per ordinary
share (FY20: 0.83p).
Michael O'Leary
Non-Executive Chairman
16 November 2021
CHIEF EXECUTIVE OFFICER'S REPORT AND FINANCIAL REVIEW
Overview
I am pleased to report on a record year for Dotdigital, delivering our
strongest financial performance to date and demonstrating the solidification
of our transformation to an omni-channel platform.
This positive performance has been achieved in what has been a turbulent
environment as a result of the Covid-19 pandemic, testing both our customers
and our own resilience. We are the strong business we are today because of our
passionate team who continued to innovate and stay motivated, supporting our
customers through difficult times and taking our business forward to new
heights. Backed by our solid financial footing, we did not have any staff on
furlough and we continued to add to our teams across our global regional
operations.
During the year we saw increased uptake of our digital marketing platform,
from both new and existing customers, resulting in organic revenue growth of
23% to £58.1m (FY20: £47.4m) and adjusted EBITDA growth of 9% to £19.8m
(FY20: £18.2m). The translation of this financial performance into platform
volume growth demonstrates the scale of the Group's reach: 24 billion emails
were sent via the platform, an increase of 15% YoY, complemented by an
increased uptake of other channels including mobile messages, with a strong
28% YoY uplift in SMS, taking the total number of SMS sent to 665 million
(FY20: 520 million).
Underpinning this growth is the Group's recurring SaaS model, with 93% of
total revenue comprising of recurring revenue. The Group is cash generative
and maintains a strong balance sheet, with no debt and net cash balances of
£32.0m at year end (FY20: £25.4m), giving the Group visibility and scope to
continue to invest in order to drive long-term, sustainable growth.
We continued to enhance our platform functionality during the year with a
focus on driving greater data and automation capabilities. Recurring revenues
derived from enhanced product functionality grew by 31% to £18.9m (FY20:
£14.4m), demonstrating the value derived from our customer-centric R&D
programme.
We remain committed to our responsibility and sustainability ethos by ensuring
that all our stakeholders, including employees, partners and the broader
community, are central to our decision making. We have made significant
strides against this agenda, recognising that we will always be pushing for
better.
The digital transformation of marketing operations across all sectors is
happening at pace, and we saw an acceleration of this during the year as
businesses turned to digital as the primary means of engaging with existing
and prospective customers. Our powerful data-driven platform is delivering
results at scale, supported by a diversified customer base with broad sector
exposure and providing us with a significant opportunity to continue our
growth ambitions
Business Review
Dotdigital is focused on empowering marketers to connect with customers
through its powerful automation platform that unifies all digital channels.
Our Engagement Cloud provides the tools to allow marketing teams to launch
highly targeted and relevant campaigns to customers and prospects with
personalised engagement at every touchpoint - the right message, at the right
time, through the right channel. The result is faster and more effective
marketing campaigns with increased engagement and demonstrable ROI.
The use cases of the Group's offering are wide and global, however the Group
remains focused on mid-market and enterprise clients across target verticals
including retail, non-profit, education, financial services and travel. The
Group's foundations and particular strengths are in email and deep
integrations into strategic partners within e-commerce and CRM.
Market
The digital transformation of the marketing industry continues to progress,
with digital marketing budgets increasingly taking share of overall marketing
budgets. The pace of this transition accelerated in the lockdown environment
as organisations had no alternative but to engage with their end users via
digital channels. As we move through various stages of lockdown easing across
our global operations, the allocation of channels varies but the overall shift
continues its course.
With the rise of digital marketing, the sophistication of marketeers has also
increased. We've seen a greater emphasis on data and personalisation by our
customers and our platform is assisting in reducing the gap between
marketeers' aspirations and the reality of what they can achieve through our
platform. One result is an increasing trend towards direct-to-consumer
engagement. Through our platform, brands can devise more informed marketing
strategies with actionable insights and analytics that help them develop a
deeper understanding of their end customer and drive a positive ROI.
Growth Strategy
Dotdigital's organic growth strategy continues to be focused around its three
core pillars: geographic, product innovation and strategic partnerships.
Three Growth Pillars
1. Geographic
Despite the wider economic impact of Covid-19, all key global regions achieved
strong revenue growth in the period, continuing Dotdigital's diversification
of international exposure. This growth continues to be evident in that revenue
from outside the UK was 31% of Group revenue for the year. We expect to
continue this growth as we invest further in our key international regions. We
saw strong demand for our multichannel functionality from our UK customers
which we expect to continue, although it will be surpassed by growth in our
international markets.
International expansion is a key tenet of our growth strategy and has been a
significant area of investment in the period. We have strengthened our
presence and enhanced our prospects across our key territories as reflected in
the growth across our key international regions. We expect to further build on
this momentum and continue organic growth as we move into FY22 and beyond.
EMEA
Revenues were up by 23% to £44.6m compared to £36.3m for the same period in
FY20. We saw a normalisation of sales cycles in the region, particularly in
the second half of the year, as pandemic restrictions broadly began to ease in
this region. We have also seen an uptick in momentum both from a pipeline and
sales conversion perspective and expect to see this trend continue as lockdown
measures across the region continue to ease.
Take-up of omnichannel marketing solutions was strong in this region,
particularly with SMS, driven by strong demand from our customers in the
education and healthcare sectors as they accelerated their adoption of online
tools to engage with their customer base during the pandemic.
North America
Revenues for North America were up 19% to US$12.5m compared to US$10.5m for
FY20. This was driven by new customer wins, reflecting our growing brand
awareness in this region.
North America presents the largest market opportunity for the Group, and we
expect to increase our investment in this region to solidify our foundations
to capture more opportunities. Our focus remains on growing and cementing
relationships with partners and customers to help us build our presence while
increasing brand awareness. In addition, we will invest in strengthening the
customer facing teams and bolster the management structure in this region
through creating an additional layer to create bandwidth and scale.
APAC
The APAC region delivered the highest growth in revenue in the year, albeit
from a smaller base, as revenues were up 47% to A$7.7m vs A$5.2m in FY20,
evidencing Dotdigital's increasing presence in this region and reflecting
previous periods of investment. We increased our investment in this market in
the period through expanding the team further into Asia. We remain mindful of
the ongoing challenges in the region as a result of the Covid-19 lockdown
which presents a degree of uncertainty for our end customers, however we see a
strong pipeline of opportunities in Japan and the Far East, through our team
based in Singapore.
2. Product innovation
The rate at which the platform is developing means it continues to be at the
forefront of the customer engagement category. Recurring revenue from enhanced
product functionality and upgrades, taken by both existing and new customers,
increased by 31% to £18.9m in the period vs £14.4m in FY20, illustrating
continued growth in the number of customers using our enhanced functionality,
including an increasing number of data connectors through our IPaaS
(Integrations Platform as a Service) capabilities.
We have continued to educate the market through live online sessions and
digital marketing content on how to adopt new features to enhance messaging.
The platform continues to go from strength to strength, differentiated by our
offering of an in-house platform and automation tools across all channels. The
competitive advantage of our offering and our ability to deliver on the needs
of our customers is evidenced in our strong performance this year and the
increased uptake of multichannel solutions by existing and new customers
alike. As we go into the new financial year the focus will be on platform
adoption from the additional functionality added in the period.
Customer-centred R&D investment in the period was £6.8m compared to
£6.5m in FY20, consistent with management expectations. We continued to
execute against our product strategy and our roadmap has continued to develop
as anticipated.
Our focused areas of innovation are:
· Data and intelligence - joining all data together to create a single customer
view and help our customers better target their campaigns from a
personalisation perspective. We have dedicated a great deal of resource to
this in response to increasingly sophisticated customer requirements and will
continue to do so with further upgrades to the platform.
· Marketing automation - harnessing artificial intelligence and machine learning
across targeted parts of the platform's architecture. This included the launch
of sector-tailored product packages for commerce customers and enhanced
product recommendations capabilities.
· Building out further omnichannel functionality - to assist businesses through
the full customer journey at every touch point. This included the launch of a
new live chat solution through the Engagement Cloud and additional SMS
capabilities, with an increase in take-up of both in the period.
3. Developing strategic partnerships
We have continued to invest in all our strategic partner relationships, which
are a key aspect of our growth strategy as they help us to raise brand
awareness, in the regions and verticals in which we operate. Revenue through
connectors into strategic partners was up 14% to £25.4m vs £22.2m in FY20,
evidencing the progress we have made in developing our relationships with
strategic partners and refining our joint go-to-market strategies.
Continued growth in the Magento space was driven by enhanced brand awareness
coupled with the additional functionality that we have developed for
e-commerce merchants. Sign-up of customers in all regions remains strong, with
a net new 66 Magento customers joining the platform in the period, taking the
total number to 782. Revenue from Magento customers grew 11% to £14.3m from
£13.0m in FY20 and we look forward to the continued collaboration between our
respective teams to advance our joint marketing strategy and to enhance
development of our integration.
At the end of the financial year, we had 132 customers using the Shopify
connector compared to 83 this time last year, supporting the continued
strength of our relationship with this partner. Revenue from Shopify customers
grew 79% to £2.1m from £1.2m last year as we saw an increasing pipeline of
new customers from the integration, built with Shopify Flow, which allows
e-commerce merchants a seamless connection to easily deploy campaigns from the
Dotdigital platform.
We saw a 249% increase in revenue from BigCommerce connected customers in the
year to £0.4m from £0.1m. As BigCommerce's global elite partner through the
period, we continue to deepen our strategic relationship, formulating a joint
go-to-market plan through offers for e-commerce merchants, and joint efforts
to the user. This plan will enable us to increase our addressable market
across all regions, and we are already seeing an increasing demand to use the
integration as a result.
As evidence of our commitment to our B2B Marketing customers, we hired a
partner manager to build our strategic relationship with Microsoft for our
integration into Dynamics 365 in North America. Revenues from customers using
our Dynamics connector increased 12% to £4.3m in the year vs £3.8m in FY20;
we believe that this significant opportunity to develop a meaningful
partnership with a major North American player has only begun to be recognised
and we look forward to building on this relationship in future.
Building on our integration success, we have created a repeatable blueprint
for building integrations into the wider connected ecosystem faster and more
agile than before. Most recently, we launched integrations into Shopware 6,
Google Sheets, Eventbrite and Typeform, with more planned on the roadmap for
FY22.
M&A
To support the Group's organic growth strategy, the Board continues to
evaluate the market for complementary acquisitions, backed by the Group's
robust financial position. The Board's acquisition strategy is focused on set
criteria, being: synergy technology for new revenue streams; bolt-on
functionality to accelerate platform development, new talent acquisition and
the expansion of expertise, and extension of the customer base in strategic
territories.
FINANCIAL REVIEW
Revenues
The Group achieved continuing operations revenue growth of 23% (FY20: 12%),
which delivered record overall revenues of £58.1m, driven in particular by an
increased volume of ARN (alerts, reminders and notifications) SMS messaging,
as the effects of the pandemic continued throughout our financial year.
Recurring revenues comprise 93% of the total, whilst international revenues
continue to account for 31% of the total (FY20: 31%).
Business model
The Group generates the majority of its revenues from annual message plans
which are recognised equally over the life of the contract. In addition, we
sell upgrade packages to customers allowing them to use additional modules and
features of our platform. For more sophisticated customers we offer customised
functionality and integrations so that they can maximise the use of their
customer data. We also have professional services contracts which are
recognised as revenue as the work is performed. Over the past year we have
built other messaging channels into our core platform, including SMS and Live
Chat, and access to these channels are sold separately.
Gross margin
The gross margin for the period for continuing operations was 82% (FY20: 92%).
Whilst the gross margin for email and standard channels remained above 90%,
the decline in overall group gross margin comes from the growth of premium
messaging channels, (routing purchased via a third party on a per message
basis), such as SMS.
Operating expenses
Adjusted operating profit from continuing operations grew by 5% from £13.1m
to £13.7m. Operating expenses as a percentage of revenues dropped from 64% to
59%, reflecting some investment back into the business. The Group continues to
invest in people in the areas of development, sales and marketing,
particularly within the high-growth global offices, to continue enhancing and
adding to the product suite.
Balance sheet
There was strong cash management in the year with net cash generated from
continuing operations of £20.7m (FY20: £18.2m). The cash balance at the end
of the period was £32.0m (FY20: £25.4m). The Group continues to be debt free
and maintains a healthy balance sheet. A combination of a highly efficient
cash collection process and an incentivisation push to move more customers
onto Direct Debit and other automated payment collection methods helped with
the year-end position.
Trade receivables have only grown by 5% in the year, reflecting revenue growth
and good cash management. Overall receivables have grown 3% due to the
deferment of marketing expenditure such as trade shows and conferences, which
have been postponed due to the pandemic, and related deferred commission on
the sale of our products.
The Group continues to invest heavily in the platform to increase
functionality around marketing automation, increasing the number of messaging
channels and surfacing data and providing insights for our customers to
provide excellent customer engagement. This continued investment is
demonstrated by the increase in product development to £6.8m (FY20: £6.5m).
Tax
Profitability from continuing operations continues to grow. This is reflected
within the tax charge, which is now £1.0m with an effective tax rate of 8%,
with a lower than standard rate due to enhanced R&D tax credits.
EPS
In the year the continued operations adjusted basic EPS increased to 4.12p
(FY20: 3.95p) and adjusted diluted EPS increased to 4.06p (FY20: 3.90p),
despite the higher effective tax rate of 8%, (FY20: 5%). Basic EPS also
increased to 3.85p (FY20: 3.68p).
Dividend policy
As announced last year, the Board conducted its review of its organic business
plan for the following three years. This included evaluating the cash needs
required for opportunities in organic growth to increase shareholder value and
capital expenditure. The Board decided that it will continue to keep a
progressive dividend in line with EBITDA growth. Therefore, subject to
approval at the AGM in December 2021, the Board proposes that the Group will
pay a final dividend of 0.86 pence per ordinary share (FY20: 0.83p), to be
payable at the end of January 2022.
Current Trading and Outlook
During the year the Group has significantly advanced its omni-channel
marketing platform vision with strategic progress against all tenants of our
growth strategy, delivering a record financial performance. We have progressed
our geographic expansion with stronger market presence in North America, EMEA
and APAC; our strategic partner relations have deepened with better
collaboration in driving brand awareness to our end markets; and we've added
new capabilities to our platform to drive broader customer engagement. The
focus remains in driving an increased adoption of functionality within the
platform.
As we enter the new year, we do so within a more normalised trading
environment as our end markets transition out of the immediate implications
from the pandemic. Trading remains in line with management expectation and our
technology platform is uniquely positioned to capture the transition to online
marketing across the mid-tier enterprise space. Whilst we remain mindful of
the wider economic uncertainty, our healthy balance sheet, strong recurring
revenues and cash generation provides the flexibility to invest in our growth
strategy. The Board is therefore confident in the Group's long-term growth
prospects.
Milan
Patel
Paraag Amin
Chief Executive
Officer
Chief Financial Officer
16 November
2021
16 November
2021
DOTDIGITAL GROUP PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2021
Restated
30.6.21 30.6.20
£'000 £'000
Notes
CONTINUING OPERATIONS
Revenue from contracts with customers 58,124 47,404
Cost of sales 6 (10,356) (3,899)
Gross profit 47,768 43,505
Administrative expenses 6 (34,089) (30,443)
OPERATING PROFIT FROM CONTINUING OPERATIONS PRE SHARE-BASED PAYMENTS AND 13,679 13,062
EXCEPTIONAL COSTS
Share based payments 25 (625) (682)
Exceptional costs 4 (188) (136)
OPERATING PROFIT FROM CONTINUING OPERATIONS 12,866 12,244
Finance costs 5 (74) (98)
Finance income 5 20 40
PROFIT BEFORE INCOME TAX FROM CONTINUING OPERATIONS 6 12,812 12,186
Income tax expense 7 (1,322) (1,219)
Profit for the year from continuing operations 11,490 10,967
Loss for the year from discontinuing operations 10 (899) (378)
Profit for the year attributable to the owners of the parent 10,591 10,589
Earnings per share from all operations (pence per share)
Basic 9 3.55 3.55
Diluted 9 3.50 3.50
Adjusted Basic 9 3.82 3.95
Adjusted Diluted 9 3.76 3.90
Earnings per share from continuing operations (pence per share)
Basic 9 3.85 3.68
Diluted 9 3.79 3.63
Adjusted Basic 9 4.12 3.95
Adjusted Diluted 9 4.06 3.90
Earnings per share from discontinued operations (pence per share)
Basic 9 (0.30) (0.13)
Diluted 9 (0.30) (0.13)
Adjusted Basic 9 (0.30) (0.00)
Adjusted Diluted 9 (0.30) (0.00)
DOTDIGITAL GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
Restated
30.6.21 30.6.20
£'000 £'000
PROFIT FOR THE YEAR 10,591 10,589
OTHER COMPREHENSIVE INCOME
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translating foreign operations (87) 34
Total comprehensive income attributable to:
Owners of the parent 10,504 10,623
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Comprehensive income from continuing operations 11,403 11,001
Comprehensive loss from discontinued operations (899) (378)
DOTDIGITAL GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 JUNE 2021
Restated Restated
30.6.21 30.6.20 30.6.19
£'000 £'000 £'000
Notes
ASSETS
NON-CURRENT ASSETS
Goodwill 11 9,680 9,680 9,680
Intangible assets 12 16,134 14,059 11,702
Property, plant and equipment 13 3,972 5,262 1,037
29,786 29,001 22,419
CURRENT ASSETS
Trade and other receivables 14 13,350 12,987 12,222
Cash and cash equivalents 15 31,951 25,383 19,320
45,301 38,370 31,542
TOTAL ASSETS 75,087 67,371 53,961
EQUITY ATTRIBUTABLE TO THE
OWNERS OF THE PARENT
Called up share capital 16 1,494 1,493 1,490
Share premium 17 7,124 6,967 6,791
Reverse acquisition reserve 17 (4,695) (4,695) (4,695)
Other reserves 17 3,066 1,600 910
Retranslation reserve 17 (37) 50 16
Retained earnings 17 54,081 45,655 36,971
TOTAL EQUITY 61,033 51,070 41,483
LIABILITIES
NON-CURRENT LIABILITIES
Lease liabilities 19 2,489 3,399 -
Deferred tax 21 1,207 1,983 1,377
3,696 5,382 1,377
CURRENT LIABILITIES
Trade and other payables 18 9,334 9,796 11,096
Financial liabilities:
- Interest bearing loans and borrowings - -
5
- Lease liabilities 19 934 1,068 -
Current tax payable 90 55 -
10,358 10,919 11,101
TOTAL LIABILITIES 14,054 16,301 12,478
TOTAL EQUITY AND LIABILITIES 75,087 67,371 53,961
DOTDIGITAL GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
Called up share
Retained Share
capital earnings premium
£'000 £'000 £'000
Balance as at 1 July 2019, as previously reported 1,490 37,161 6,791
Impact of correction of errors (note 30) - (190) -
Restated balance at 1 July 2019 1,490 36,971 6,791
Transactions with owners (restated)
Issue of share capital 3 - 176
Dividends - (1,996) -
Adjustments in relation to IFRS 16 - 61 -
Transfer in reserves - 30 -
Deferred tax on share options - - -
Share-based payments - - -
Transactions with owners (restated) 3 (1,905) 176
Total comprehensive income (restated)
Profit for the year - 10,589 -
Other comprehensive income - - -
Total comprehensive income (restated) - 10,589 -
Restated balance as at 30 June 2020 1,493 45,655 6,967
Balance as at 1 July 2020 1,493 45,655 6,967
Issue of share capital 1 - 157
Dividends - (2,472) -
Transfer in reserves - 307 -
Deferred tax on share options - - -
Share-based payments - - -
Transactions with owners 1 (2,165) 157
Profit for the year - 10,591 -
Other comprehensive income - - -
Total comprehensive income - 10,591 -
Balance as at 30 June 2021 1,494 54,081 7,124
DOTDIGITAL GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
CONTINUED…
Retranslation Reverse acquisition Other Total equity
reserve reserve reserves
£'000 £'000 £'000 £'000
Balance as at 1 July 2019, as previously reported 16 (4,695) 720 41,483
Impact of correction of errors (note 30) - - 190 -
Restated balance at 1 July 2019 16 (4,695) 910 41,483
Transactions with owners (restated)
Issue of share capital - - - 179
Dividends - - - (1,996)
Adjustments in relation to IFRS 16 - - - 61
Transfer in reserves - - (30) -
Deferred tax on share options - - 38 38
Share-based payments - - 682 682
Transactions with owners (restated) - - 690 (1,036)
Total comprehensive income (restated)
Profit for the year - - - 10,589
Other comprehensive income 34 - - 34
Total comprehensive income (restated) 34 - - 10,623
Balance as at 30 June 2020 50 (4,695) 1,600 51,070
Balance as at 1 July 2020
Issue of share capital - - - 158
Dividends - - - (2,472)
Transfer in reserves - - (307) -
Deferred tax on share options - - 1,148 1,148
Share-based payments - - 625 625
Transactions with owners - - 1,466 (541)
Profit for the year - - - 10,591
Other comprehensive income (87) - - (87)
Total comprehensive income (87) - - 10,504
Balance as at 30 June 2021 (37) (4,695) 3,066 61,033
· 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 net of the share issue expenses.
· Retranslation reserve relates to the retranslation of foreign
subsidiaries into the functional currency of the Group.
· The reverse acquisition reserve relates to the adjustment
required to account for the reverse acquisition in accordance with
International Financial Reporting Standards.
· Other reserves relate to the charge for the share-based
payment in accordance with IFRS 2and the transfer on the exercise or lapsing
of share options.
DOTDIGITAL GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
30.6.21 30.6.20
£'000 £'000
Notes
Cash flows from operating activities
Cash generated from operations 26 17,969 15,907
Tax paid (975) (124)
Net cash generated from all operating activities 16,994 15,783
Net cash generated from continuing operating activities 20,710 18,214
Net cash used in discontinued operating activities (3,716) (2,431)
Cash flows from investing activities
Purchase of intangible fixed assets (6,870) (6,505)
Purchase of property, plant and equipment (169) (277)
Proceeds from sale of property, plant and equipment 2 -
Interest received 20 40
Net cash flows used in investing activities (7,017) (6,742)
Net cash used in from continuing investing activities (7,017) (6,741)
Net cash used in discontinued investing activities - (1)
Cash flows from financing activities
Equity dividends paid (2,472) (1,996)
Payment of lease liabilities (1,182) (1,127)
Proceeds from share issues 158 179
Net cash flows used in financing activities (3,496) (2,944)
(3,446) (2,884)
Net cash used in continuing financing activities
Net cash used in discontinued financing activities (50) (60)
6,481 6,097
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year 27 25,383 19,320
Effect of foreign exchange rate changes 87 (34)
Cash and cash equivalents at end of year 27 31,951 25,383
.
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
1. GENERAL INFORMATION
Dotdigital Group Plc ("Dotdigital") is a public limited company incorporated
in England and Wales and quoted on the AIM Market.
2. SEGMENTAL REPORTING
Dotdigital's single line of business remains the provision of data-driven
omni-channel marketing automation. The chief operating decision maker
considers the Group's segments to be by geographical location, this being
EMEA, US and APAC operations and by business activity, this being core
Engagement Cloud and CPaaS as shown in the tables that follow:
Geographical revenue and results (from all operations)
30.6.2021
EMEA US APAC Total
£'000 £'000 £'000 £'000
Income statement
Revenue 47,024 9,264 4,262 60,550
Gross profit 36,878 8,241 3,864 48,983
Profit/(loss) before income tax 11,699 609 (294) 12,014
Total comprehensive income attributable to the owners of the parent
10,436 379 (311) 10,504
Financial position
Total assets 71,566 3,098 423 75,087
Net current assets/(liabilities) 33,942 1,387 (386) 34,943
Revenue from external customers is attributed to the geographical segments
noted above based on the customers' location. There were no customers who
account for more than 10% of revenue (2020: none).
All revenue is from contracts signed with new customers and upgrades and
additional functional recurring revenue sold to existing contracted clients.
Revenue from contracts is 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.
30.6.2020
EMEA US APAC Total
£'000 £'000 £'000 £'000
Income statement
Revenue 43,810 8,325 2,777 54,912
Gross profit (restated* see note 30) 35,181 7,420 2,496 45,097
Profit/(loss) before income tax 11,256 598 (46) 11,808
Total comprehensive income attributable to the owners of the parent
(restated** see note 30)
10,429 291 (97) 10,623
Financial position
Total assets 60,959 4,846 1,566 67,371
Net current assets/(liabilities) (restated** see note 30)
26,915 1,006 (470) 27,451
Revenue from external customers is attributed to the geographical segments
noted above based on the customers' location. There were no customers who
account for more than 10% of revenue (2019: none).
All revenue is from contracts signed with new customers and upgrades and
additional functional recurring revenue sold to existing contracted clients.
Revenue from contracts is 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.
Business activity revenue and results
30.6.2021
Core CPaaS Total
£'000 £'000 £'000
Income statement
Revenue 58,124 2,426 60,550
Gross profit 47,768 1,215 48,983
Profit/(loss) before income tax 12,812 (798) 12,014
Total comprehensive income attributable to the owners of the parent
11,403 (899) 10,504
Financial position
Total assets 74,976 111 75,087
Net current assets/(liabilities) 34,974 (31) 34,943
30.6.2020
Core CPaaS Total
£'000 £'000 £'000
Income statement
Revenue 47,404 7,508 54,912
Gross profit (restated* see note 30) 43,505 1,592 45,097
Profit/(loss) before income tax 12,186 (378) 11,808
Total comprehensive income attributable to the owners of the parent
(restated** see note 30)
11,001 (378) 10,623
Financial position
Total assets 65,114 2,257 67,371
Net current assets/(liabilities) (restated** see note 30)
29,174 (1,723) 27,451
* Direct marketing and partner commission were reclassified from cost of sales
to administrative expenses and tech infrastructure was reclassified from
administrative expenses to cost of sales to reflect more appropriately the
gross profit and administrative expenses.
** In
the prior year there was a correction re deferred tax and corporation tax
provision. See note 30 for details.
3. EMPLOYEES AND DIRECTORS
30.6.21 30.6.20
£'000 £'000
Wages and salaries 22,005 20,892
Social security costs 2,228 2,377
Other pension costs 534 505
24,767 23,774
The average monthly number of employees during the year is as follows
30.6.21 30.6.20
Directors 5 4
Sales and marketing product 160 164
Development and system engineers 105 103
Administration 69 67
339 338
Included in the total employees cost above, £5,198,785 (2020: £5,293,321)
was capitalised in relation to internally generated development costs.
4. EXCEPTIONAL COSTS
Continuing exceptional costs incurred in the year relate to the ongoing
acquisition costs of Comapi of £68,095 (2020: £15,714) and
amortisation of acquired intangibles of £120,000 (2020: £120,000).
Discontinued exceptional costs in the year relate to the amortisation of
acquired intangibles of £nil (2020: £381,072).
5. NET FINANCE INCOME
30.6.21 30.6.20
£'000 £'000
Finance income:
Deposit account interest 20 40
Finance cost:
Finance lease interest (74) (98)
(54) (58)
6. OPERATING PROFIT
Costs by nature
Profit from continuing operations has been arrived at after charge and
crediting:-
30.6.21 Restated* 30.6.20
£'000 £'000
Outsourcing and tech infrastructure 10,356 3,899
Total cost of sales 10,356 3,899
30.6.21 30.6.20
£'000 £'000
Direct marketing 2,976 1,727
Partner commission 2,198 2,566
Staff related costs (inc Directors' emoluments) 19,208 17,929
Auditor's remuneration 52 64
Amortisation of intangibles** 4,675 3,647
Depreciation charge** 1,410 1,475
Legal, professional and consultancy fees 848 479
Computer expenditure 538 578
Bad debts 897 1,248
Foreign exchange losses/(gains) 543 (120)
Travel and subsistence costs 87 509
Office running 388 176
Gain on disposal of property, plant and equipment (2) (3)
Staff welfare 342 399
Other costs 549 531
Management charge (620) (762)
Total administrative expenses 34,089 30,443
During the year the Group obtained the following services from the Group's
auditor at costs detailed below:
30.6.21 30.6.20
£'000 £'000
Fees payable to the Company's auditor for the audit of Parent Company and 28 22
consolidated financial statements
Fees payable to the Company's auditor for other services
- audit of Company subsidiaries 47 47
- review of interim accounts 5 3
80 72
*Partner commission and direct marketing have been reclassed under
administrative expenses and tech infrastructure have been reclassed under cost
of sales and comparatives restated (see note 30).
**Both amortisation of intangibles and depreciation charge will not agree to
the relevant notes as these numbers only apply to the continuing operations.
7. INCOME TAX EXPENSE
Analysis of the tax charge from continuing operations: *Restated
30.6.21 30.6.20
£'000 £'000
Current tax on profits for the year 1,008 575
Changes in estimates related to prior years (53) -
Deferred tax on origination and reversal of timing differences 367 644
1,322 1,219
Analysis of the tax charge from discontinuing operations:
30.6.21 30.6.20
£'000 £'000
Current tax on profits for the year - -
Deferred tax on origination and reversal of timing differences 101 -
101 -
Factors affecting the tax charge:
*Restated 30.6.20
30.6.21
£'000 £'000
Profit on ordinary activities from all operations before tax 12,014 11,808
Profit on ordinary activities multiplied by the average rate of corporation 2,283 2,244
tax suffered globally: 19% (2020: 19%)
Effects of:
Expenses not deductible 281 176
Research and development enhanced claim (2,239) (2,069)
Expenditure permitted on exercising options (49) (98)
Overseas tax losses (5) (20)
Depreciation in excess of capital allowances 737 843
Group relief losses brought forward - (501)
Current tax on profit for the year 1,008 575
Changes in estimates related to prior years (53) -
Deferred tax on origination and reversal of timing differences 468 644
Total tax charge for the year 1,423 1,219
*See note 30
Deferred tax was
calculated using the rate 25% (2020: 19%). For further details on deferred tax
see note 21.
Taxation for each region is calculated at the rates prevailing in the
respective jurisdiction.
The main rate of UK corporation tax in the period was 19% (2020: 19%). UK
deferred balances have been recognised at 25% in the period (2020: 19%).
8. DIVIDENDS
Amounts recognised as distributions to equity holders in the period
30.6.21 30.6.20
£'000 £'000
Paid dividend for year end 30 June 2021 of 0.83p (2020: 0.67p) per share 2,472 1,996
Proposed dividend for the year end 30 June 2021 of 0.86p (2020: 0.83p) per 2,583 2,480
share
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.
9. 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. Adjusted earnings per share is based on the consolidated profit
deducting the acquisition related exceptional costs and share-based payment.
A number of non-IFRS adjusted profit measures are used in this annual report
and financial statements. Adjusting items are excluded from our headline
performance measures by virtue of their size and nature, in order to reflect
management's view of the performance of the Group. Summarised below is a
reconciliation between statutory results to adjusted results. The Group
believes that alternative performance measures such as adjusted EBITDA are
commonly reported by companies in the markets in which it competes and are
widely used by investors in comparing performance on a consistent basis
without regard to factors such as depreciation and amortisation, which can
vary significantly depending upon accounting methods (particularly when
acquisitions have occurred), or based on factors which do not reflect the
underlying performance of the business. The adjusted profit after tax earnings
measure is also used for the purpose of calculating adjusted earnings per
share.
Reconciliations to earnings figures used in arriving at adjusted earnings per
share are as follows:
30.6.21 *Restated 30.6.20
From all operations £'000 £'000
Profit for the year attributable to the owners of the parent 10,591 10,589
Amortisation of acquisition-related intangible fixed assets (see note 12) 120 501
Other exceptional costs (see note 4) 68 16
Share-based payment (see note 25) 625 682
Adjusted profit for the year attributable to the owners of the parent 11,404 11,788
Management does not consider the above adjustments to reflect the underlying
business performance. The other exceptional costs relate to ongoing
acquisition costs of Comapi.
30.6.21 *Restated
30.6.20
£'000 £'000
Adjusted profit for the year attributable to the owners of the parent for 12,303 11,785
continuing activities.
Adjusted loss for the year attributable to the owners of the parent for (899) 3
discontinuing activities.
Adjusted profit for the year attributable to the owners of the parent 11,404 11,788
30.6.21
Weighted
average Per share
From all operations Earnings number of Amount
£'000 shares Pence
Basic EPS
Profit for the year attributable to the owners of the parent 10,591 298,598,459 3.55
Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the parent 11,404 298,598,459 3.82
Options and warrants - 4,322,868 -
Diluted EPS
Profit for the year attributable to the owners of the parent 10,591 302,921,327 3.50
Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the parent 11,404 302,921,327 3.76
30.6.21
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 11,490 298,598,459 3.85
Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the parent 12,303 298,598,459 4.12
Options and Warrants - 4,322,868 -
Diluted EPS
Profit for the year attributable to the owners of the parent 11,490 302,921,327 3.79
Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the parent
12,303 302,921,327 4.06
30.6.21
Weighted
average Per share
From discontinued operations Earnings number of Amount
£'000 shares Pence
Basic EPS
Loss for the year attributable to the owners of the parent (899) 298,598,459 (0.30)
Adjusted Basic EPS
Adjusted loss for the year attributable to the owners of the parent (899) 298,598,459 (0.30)
Options and warrants - 4,322,868 -
Diluted EPS
Loss for the year attributable to the owners of the parent (899) 302,921,327 (0.30)
Adjusted Diluted EPS
Adjusted loss for the year attributable to the owners of the parent (899) 302,921,327 (0.30)
*Restated 30.6.20
Weighted
average Per share
From all operations Earnings number of Amount
£'000 shares Pence
Basic EPS
Profit for the year attributable to the owners of the parent 10,589 298,306,813 3.55
Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the parent 11,788 298,306,813 3.95
Options and Warrants - 3,883,050 -
Diluted EPS
Profit for the year attributable to the owners of the parent 10,589 302,189,863 3.50
Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the parent
11,788 302,189,863 3.90
*Restated 30.6.20
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 10,967 298,306,813 3.68
Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the parent 11,785 298,306,813 3.95
Options and warrants - 3,883,050 -
Diluted EPS
Profit for the year attributable to the owners of the parent 10,967 302,189,863 3.63
Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the parent 11,785 302,189,863 3.90
30.6.20
Weighted
average Per share
From discontinued operations Earnings number of Amount
£'000 shares Pence
Basic EPS
Loss for the year attributable to the owners of the parent (378) 298,306,813 (0.13)
Adjusted Basic EPS
Adjusted Loss for the year attributable to the owners of the parent 3 298,306,813 (0.00)
Options and Warrants - 3,883,050 -
Diluted EPS
Loss for the year attributable to the owners of the parent (378) 302,189,863 (0.13)
Adjusted Diluted EPS
Adjusted loss for the year attributable to the owners of the parent
3 302,420,648 (0.00)
30.6.21 30.6.20
Shares Shares
Basic EPS 298,598,459 298,306,813
Diluted EPS 302,921,327 302,189,863
Weighted average number of shares
*See note 30
10. CONTINUING AND DISCONTINUED OPERATIONS
The analysis between continuing and discontinued
operation is as follows:
Year ended 30 June 2021
Continuing operations Discontinuing operations
TOTAL
£'000 £'000 £'000
Revenue 58,124 2,426 60,550
Cost of sales (10,356) (1,211) (11,567)
Gross profit 47,768 1,215 48,983
Administrative expense (34,089) (2,012) (36,101)
Share based payments (625) - (625)
Exceptional costs (188) - (188)
OPERATING PROFIT 12,866 (797) 12,069
Finance income 20 - 20
Finance costs (74) (1) (75)
PROFIT BEFORE INCOME TAX 12,812 (798) 12,014
Income tax expense (1,322) (101) (1,423)
PROFIT FOR THE YEAR 11,490 (899) 10,591
Year ended 30 June 2020
Continuing operations Discontinuing operations
TOTAL
£'000 £'000 £'000
Revenue 47,404 7,508 54,912
Cost of sales (restated see note 30) (3,899) (5,916) (9,815)
Gross profit 43,505 1,592 45,097
Administrative expense (restated see note 30) (30,443) (1,587) (32,030)
Share based payments (682) - (682)
Exceptional costs (136) (381) (517)
OPERATING PROFIT 12,244 (376) 11,868
Finance income 40 - 40
Finance costs (98) (2) (100)
PROFIT BEFORE INCOME TAX 12,186 (378) 11,808
Income tax expense (1,219) - (1,219)
PROFIT FOR THE YEAR 10,967 (378) 10,589
11. GOODWILL
Group
30.6.21 30.6.20
COST £'000 £'000
At 1 July 13,192 13,192
13,192 13,192
At 30 June
IMPAIRMENT
At 1 July 3,512 3,512
At 30 June 3,512 3,512
NET BOOK VALUE 9,680 9,680
Goodwill is allocated to the Group's two cash generating units (CGUs)
identified, those being Dotdigital and Comapi.
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 CGUs that are expected to benefit from that
business combination.
The carrying amount of goodwill relates to the Group's two trading activities
and business segments. This has been tested for impairment during the current
period by comparison with the recoverable amounts of the CGU. Recoverable
amounts for CGUs 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. Cash flows beyond the five-year period are extrapolated
using the estimated growth rate for the continuing operations of the Group.
These long-term growth rates are management's estimates. The discount rates
used are pre-tax and reflect specific risks relating to the continuing
operations of the Group.
The key assumptions for the value in use calculations are those regarding
discount rates, growth rates, and expected changes in margins.
Discount rate
Management estimates discount rates using pre-tax rates that reflect the
current market assessment of the time value of money and the risks specific to
the CGUs. The pre-tax discount rate used to calculate the value in use is 6.2%
(2020: 6.2%).
Growth rates
The growth rate is stated as the compound annual growth rates in the initial
five years for the continuing operations of the Group which are then used for
impairment testing. These are performed using the projected cash flows based
on budgets approved by management over a five-year period. Cash flow
projections from the sixth year onwards are based on an estimated constant
growth rate. The growth rate used to calculate the value in use is 14% (2020:
12%).
Gross profit margin
Changes in income and expenditure are based on experience and expectations of
the future changes in the market. The impairment review is based on these
estimated gross profit margins which were included with the budgets approved
by management over a five-year period. From the sixth year onwards, an assumed
constant margin is used. The gross profit margin used to calculate the value
in use in 75% (2020: 86%).
The valuations indicate sufficient headroom such that a reasonably possible
change in key assumptions would not result in impairment of goodwill.
Sensitivity analysis
The principal variables used, being both the discount rate and growth rates,
these would need to change before an impairment is required, this being 225%
(2020: 155%) discount rate and growth rate of (21%) (2020: -17%).
12. INTANGIBLE ASSETS
Group
Customer
relationships Technology
£'000 £'000
COST
At 1 July 2020 1,205 1,200
Additions - -
At 30 June 2021 1,205 1,200
AMORTISATION
At 1 July 2020 1,205 310
Amortisation for the year - 120
At 30 June 2021 1,205 430
NET BOOK VALUE
At 30 June 2021 - 770
Internally generated development
Computer Domain
software costs names Totals
£'000 £'000 £'000 £'000
COST
At 1 July 2020 954 27,255 42 30,656
Additions 69 6,797 4 6,870
At 30 June 2021 1,023 34,052 46 37,526
AMORTISATION
At 1 July 2020 793 14,255 34 16,597
Amortisation for the year 81 4,592 2 4,795
At 30 June 2021 874 18,847 36 21,392
NET BOOK VALUE
At 30 June 2021 149 15,205 10 16,134
Customer
relationships Technology
£'000 £'000
COST
At 1 July 2019 1,205 1,200
Additions - -
At 30 June 2020 1,205 1,200
AMORTISATION
At 1 July 2019 824 190
Amortisation for the year 381 120
At 30 June 2020 1,205 310
NET BOOK VALUE
At 30 June 2020 - 890
Internally generated development
Computer Domain
software costs names Totals
£'000 £'000 £'000 £'000
COST
At 1 July 2019 911 20,794 41 24,151
Additions 43 6,461 1 6,505
At 30 June 2020 954 27,255 42 30,656
AMORTISATION
At 1 July 2019 697 10,706 32 12,449
Amortisation for the year 96 3,549 2 4,148
At 30 June 2020 793 14,255 34 16,597
NET BOOK VALUE
At 30 June 2020 161 13,000 8 14,059
Development cost additions represents resources the Group has 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.
Technology represents the cost that would be incurred to build the entire
Comapi platform had the acquisition not occurred. Customer relationships
represent the value of high-value customer contracts within Comapi.
13. PROPERTY, PLANT AND EQUIPMENT
Group
Right of Short Fixtures & Computer
Use assets leasehold fittings equipment Totals
£'000 £'000 £'000 £'000 £'000
COST
At 1 July 2020 5,458 730 770 2,473 9,431
Additions 115 - - 169 284
Disposals (136) - (4) (14) (154)
Exchange differences (53) (5) (12) (14) (84)
At 30 June 2021 5,384 725 754 2,614 9,477
DEPRECIATION
At 1 July 2020 1,058 465 632 2,014 4,169
Depreciation for the year 1,091 65 63 244 1,463
Disposals (66) - (2) (10) (78)
Exchange differences (22) (4) (13) (10) (49)
At 30 June 2021 2,061 526 680 2,238 5,505
NET BOOK VALUE
At 30 June 2021 3,323 199 74 376 3,972
Right of Short Fixtures & Computer
Use assets leasehold fittings equipment Totals
£'000 £'000 £'000 £'000 £'000
COST
At 1 July 2019 - 646 779 2,294 3,719
Additions 63 78 22 177 340
Disposals - - (30) - (30)
Adjustment on transition of IFRS 16 5,335 - - - 5,335
Exchange differences 60 6 (1) 2 67
At 30 June 2020 5,458 730 770 2,473 9,431
DEPRECIATION
At 1 July 2019 - 402 554 1,726 2,682
Depreciation for the year 1,122 63 77 286 1,548
Disposals (61) - - - (61)
Exchange differences (3) - 1 2 -
At 30 June 2020 1,058 465 632 2,014 4,169
NET BOOK VALUE
At 30 June 2020 4,400 265 138 459 5,262
Included in the net carrying amount of property, plant and equipment are the
right-of-use assets as follows:
Motor
Properties vehicles Totals
£'000 £'000 £'000
COST
As at 1 July 2020 5,376 82 5,458
Termination of leases (136) - (136)
Additions 42 73 115
Foreign currency translation (53) - (53)
At 30 June 2021 5,229 155 5,384
DEPRECIATION
As at 1 July 2020 1,015 43 1,058
Depreciation for the year 1,010 81 1,091
Termination of leases (65) - (65)
Foreign currency translation (18) (5) (23)
At 30 June 2021 1,942 119 2,061
NET BOOK VALUE
At 30 June 2021 3,287 36 3,323
Motor
Properties vehicles Totals
£'000 £'000 £'000
COST
Transition on adoption of IFRS 16 5,678 82 5,760
Re-measurement of existing lease liabilities (156) - (156)
Termination of leases (269) - (269)
Additions 63 - 63
Foreign currency translation 60 - 60
At 30 June 2020 5,376 82 5,458
DEPRECIATION
Depreciation for the year 1,079 43 1,122
Termination of leases (61) - (61)
Foreign currency translation (3) - (3)
At 30 June 2020 1,015 43 1,058
NET BOOK VALUE
At 30 June 2020 4,361 39 4,400
14. TRADE AND OTHER RECEIVABLES
Group
30.6.21 30.6.20
£'000 £'000
Current:
Trade receivables 10,895 10,364
Less: Provision for impairment of trade receivables
(1,785) (1,589)
Trade receivables - net 9,110 8,775
Other receivables 60 194
Amounts owed by Group undertakings - -
VAT - -
Tax receivable - -
Prepayments and contract assets 4,180 4,018
13,350 12,987
Further details on the above can be found in note
20.
Included within Group prepayments is an amount of £299,016 (2020: £404,150)
in relation to deferred commission which is considered to be long term. The
Group has applied IFRS 9 simplified approach to measuring expected credit
losses, the balances have been assessed based on each entitiy's ability to
repay amounts owed and no expected credit loss has been recognised.
15. CASH AND CASH EQUIVALENTS
Group
30.6.21 30.6.20
£'000 £'000
Bank accounts 31,951 25,383
31,951 25,383
Further details on the above can be found in note 20.
16. CALLED UP SHARE CAPITAL
Allotted, issued, fully paid Nominal 30.6.21 30.6.20
number value £'000 £'000
298,778,630 (2020: 298,547,645) £0.005 1,494 1,493
1,494 1,493
During the reporting period the Company undertook the following transactions
involving the issuing of share capital:
On 12 March 2021 an employee exercised their share options, increasing the
issued share capital by 20,000 shares at a premium price of 68.5p.
On 12 March 2021 an employee exercised their share options, increasing the
issued share capital by 65,000 shares at a premium price of 68.5p.
On 28 April 2021 an employee exercised their share options, increasing the
issued share capital by 145,985 shares at a premium price of 68.5p.
17. RESERVES
Group
Retained Share Reverse acquisition
earnings premium reserve
£'000 £'000 £'000
As at 1 July 2020 45,655 6,967 (4,695)
Issue of share capital - 157 -
Dividends (2,472) - -
Profit for the year 10,591 - -
Transfer of reserves 307 - -
Deferred tax on share options - - -
Other comprehensive income: currency translation - - -
Share-based payment - - -
Balance as at 30 June 2021 54,081 7,124 (4,695)
Retranslation Other
Reserve reserves Totals
£'000 £'000 £'000
As at 1 July 2020 50 1,600 49,577
Issue of share capital - - 157
Dividends - - (2,472)
Profit for the year - - 10,591
Transfer of reserves - (307) -
Deferred tax on share options - 1,148 1,148
Other comprehensive income: currency translation (87) - (87)
Share-based payment - 625 625
Balance as at 30 June 2021 (37) 3,066 59,539
Group
Retained Share Reverse acquisition
earnings premium reserve
£'000 £'000 £'000
Restated balance as at 1 July 2019 (see note 30) 36,971 6,791 (4,695)
Issue of share capital - 176 -
Dividends (1,996) - -
Profit for the year 10,589 - -
Transfer in reserves 30 - -
Deferred tax on share options - - -
Adjustments in relation to IFRS 16 61 - -
Currency translation - - -
Share-based payment - - -
Restated balance as at 30 June 2020 (see note 30) 45,655 6,967 (4,695)
Retranslation Other
reserve reserves Totals
£'000 £'000 £'000
Restated balance at 1 July 2019 (see note 30) 16 910 39,993
Issue of share capital - - 176
Dividends - - (1,996)
Profit for the year - - 10,589
Transfer in reserves - (30) -
Deferred tax on share options - 38 38
Adjustments in relation to IFRS 16 - - 61
Currency translation 34 - 34
Share-based payment - 682 682
Restated balance as at 30 June 2020 (see note 30) 50 1,600 49,577
18. TRADE AND OTHER PAYABLES
Group
30.6.21 30.6.20
£'000 £'000
Current:
Trade payables 769 1,732
Amounts owed to Group undertakings - -
Social security and other taxes 29 50
Other payables 84 179
VAT 18 1,801
Accruals and contract liabilities 8,434 6,034
9,334 9,796
Further details on liquidity and interest rate risk can be found in note 20.
Amounts owed to group undertakings are non-interest bearing and are repayable
on demand.
19. LEASE LIABILITIES
Group
Properties Motor Vehicles Totals
£'000 £'000 £'000
At 1 July 2020 4,427 40 4,467
Termination of leases (67) - (67)
Additions 42 73 115
Principal repayments (1,132) (50) (1,182)
Interest 110 1 111
Foreign currency retranslation (21) - (21)
At 30 June 2021 3,359 64 3,423
Current 906 28 934
Non-current 2,453 36 2,489
At 30 June 2021 3,359 64 3,423
Group
Properties Motor Vehicles Totals
£'000 £'000 £'000
At 1 July 2019 - - -
Transition on adoption of IFRS 16 5,678 82 5,760
Re-measurement of existing lease liabilities (162) - (162)
Termination of leases (264) - (264)
Additions 63 - 63
Principal repayments (1,084) (44) (1,128)
Interest 136 2 138
Foreign currency retranslation 60 - 60
At 30 June 2020 4,427 40 4,467
Current 1,034 34 1,068
Non-current 3,393 6 3,399
At 30 June 2020 4,427 40 4,467
The properties are office leases located in various
location where the term in ranging from one to eight years. The motor vehicles
are company cars offered to senior staff where the term is always three years.
20. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Group's 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 holds no financial or other non-financial instruments other than
those utilised in the working operations of the Group and that are listed in
this note. It is the Group's policy not to trade in derivative contracts.
Principal financial instruments
The principal 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
- Lease Liabilities
Financial instruments by category
The following table sets out the financial instruments as at the reporting
date:
Group
30.6.21 30.6.20
£'000 £'000
Financial assets
Trade and other receivables 9,167 8,969
Bank balances 31,951 25,383
41,118 34,352
Financial liabilities
Trade payables 769 1,732
Amounts owed to group undertakings - -
Accrued liabilities and other payables 8,221 7,268
8,990 9,000
The fair value of the financial assets and financial liabilities is 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 quarterly
reports from the Risk Committee, through which it 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 no external borrowings and therefore is
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 Group's 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 £10,221,000 (2020: £9,013,000) 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 2021 there were no significant debts past their due period which had
not been provided for. The maturity of the Group's trade receivables is as
follows:
30.6.21 30.6.20
£'000 £'000
0-30 days 5,734 6,770
30-60 days 2,701 911
More than 60 days 2,550 2,683
10,985 10,364
The maturity of the Group's provision for impairment is as follows:
30.6.21 30.6.20
£'000 £'000
0-30 days 140 1
30-60 days 154 13
More than 60 days 1,491 1,575
1,785 1,589
The movement in the provision for the impairment is as follows:
30.06.21 30.6.20
£'000 £'000
As at 1 July 1,589 999
Provision for impairment 262 1,048
Receivable written off in the year (66) (335)
Unused amount reversed - (123)
As at 30 June 1,785 1,589
The Group minimises its credit risk by profiling all new customers and
monitoring existing customers 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 £2,484,862 (2020: £2,960,513) of which
£1,502,918 (2020: £1,574,891) was provided for. The Group felt that the
remainder would be collected post year-end as they were with long-standing
relationships, and 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 rating bodies. The majority of
the Company's cash holdings are held at NatWest Bank, which has a BBB credit
rating.
The carrying value of both financial assets and liabilities approximates to
fair value.
Capital policy
The Group's 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 (2020: £nil)
and amounts payable over one year are nil (2020: £nil). The Group had a
strong cash reserve to utilise for any short-term capital requirements that
were needed.
The Group has continued to look for 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.
Maturities of financial liabilities
The tables below analyse the Group's financial liabilities into relevant
maturity groupings based on their contractual maturities for all
non-derivative financial liabilities (the Group does not hold any derivative
financial instruments in the current or prior financial year).
The amounts disclosed in the table are the contractual undiscounted cash
flows. Balances due within 12 months equal their carrying balances as the
impact of the discounting is not significant.
<6 months 6 to 12 months 1 to 2 years 2 to 5 years Total contractual cash flows carrying amounts
£'000 £'000 £'000 £'000 £'000
Contractual maturities at 30 June 2021
Trade and other payables 9,334 - - - 9,334
Lease liabilities 480 454 759 1,730 3,423
Total non-derivatives 9,814 454 759 1,730 12,757
<6 months 6 to 12 months 1 to 2 years 2 to 5 years Total contractual cash flows carrying amounts
£'000 £'000 £'000 £'000 £'000
Contractual maturities at 30 June 2020
Trade and other payables 9,796 - - - 9,796
Lease liabilities 532 536 960 2,439 4,467
Total non-derivatives 10,328 536 960 2,439 14,263
21. DEFERRED TAX
Restated*
30.6.21 30.6.20
£'000 £'000
As at 1 July 1,983 1,377
Current year provision (776) 606
1,207 1,983
The deferred tax liability above comprises the
following temporary differences:
30.6.21 Restated *
30.6.20
£'000 £'000
Acquired intangibles 146 169
Capital allowances in excess of depreciation 38 53
R&D relief in excess of amortisation 2,963 2,325
Share option relief (1,805) (495)
Losses (135) (69)
1,207 1,983
*Refer to note 30.
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.
22. CAPITAL COMMITMENTS
The Company and Group have no capital commitments as at the year end.
23. 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 and were made
on terms equivalent to those that prevail in arm's length transactions.
30.6.21 30.6.20
£'000 £'000
Sale of services
Ipswich Town Football Club Entity under common directorship Email marketing services 4 -
Epwin Group Plc Entity under common directorship Email marketing services 6 4
10 4
Year end balances arising from sale of services 30.6.21 30.6.20
£'000 £'000
Ipswich Town Football Club Entity under common directorship Email marketing services 1 -
Epwin Group Plc Entity under common directorship Email marketing services 1 1
2 1
Directors
30.6.21 30.6.20
£'000 £'000
Aggregate emoluments 1,136 897
Company contributions to money purchase pension scheme 26 25
Share-based payments from the LTIP options granted 347 438
1,509 1,360
Directors' pay summary does include Non-Executive Directors.
Information in relation to the highest paid Director is as follows:
30.6.21 30.6.20
£'000 £'000
Salaries 574 440
Other benefits 14 17
Pension costs 16 15
Share-based payments on the LTIP options granted 198 289
802 761
The receivables and payables are unrestricted in nature and bear no interest.
No provisions are held against receivables from related parties.
Loans to/from related parties
30.6.21 30.6.20
£'000 £'000
Dotdigital EMEA Limited Subsidiary
As at 1 July (3,545) (4,580)
Loans advanced 5,075 3,060
Loans repaid (2,571) (2,025)
(1,041) (3,545)
IAS 24 Related Party Disclosure allows
disclosure exemption of transactions between wholly-owned subsidiaries that
are eliminated on consolidation.
24. ULTIMATE CONTROLLING PARTY
There is no ultimate controlling party of the Group. Dotdigital Group Plc acts
as the Parent Company to Dotdigital EMEA Limited, Dotdigital Inc, Dotdigital
APAC Pty Limited, Dotdigital B.V., Dotmailer Developments Limited, Dotmailer
SA Pty, Dotmailer LLC, Dotdigital SG Pte. Limited, Dynmark International Ltd,
Dotdigital Canada Inc and Dynmark S.p. z.o.o.
25. 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 £625,000 (2020: £682,000).
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 below illustrates the number and weighted average exercise price
(WAEP) of, and movements in, share options during the period. The options
outstanding at 30 June 2021 had a WAEP of 26.05p (2020: 51.09p) and a weighted
average contracted life of 5.14 years (2020: 3.01 years) and their exercise
prices ranged from 0.5p to 147.5p. All share options are settled in form of
equity issued.
30.06.21 30.6.20
No of options WAEP No of options WAEP
Outstanding at the beginning of the period 3,910,984 51.09p 4,428,064 49.16p
Granted during the year 1,093,728 107.54p - 0p
Forfeited/cancelled during the period (480,992) 13.03p - 0p
Exchanged for shares (230,985) 68.50p (517,080) 34.57p
Outstanding at the end of the period 4,292,735 27.51p 3,910,984 51.09p
Exercisable at the end of the period - - 230,985 68.50p
The weighted average share price at the date of the exercise for share options
exercised during the period was 178.57p (2020: 92p). The Black Scholes model
was used in measuring the fair use of the options granted.
22December 2020 14 December 2020 24 19
October December
2018 2017
Number of options granted 306,728 787,000 2,305,000 1,375,000
Share price at grant date 152.0p 147.50p 77.5p 85.95p
Exercise price 0.50p 147.50p 0.50p 0.50p
Option life in years 5 years 10 years 5 years 5 years
Risk-free rate 0.95% 1.23% 1.23% 1.33%
Expected volatility 30% 32% 30% 30%
Expected dividend yield 1% 1% 1% 1%
Fair value of 103.72p 26.99p 52.70p 65.03p
options
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.
The share options granted on 24 October 2018 and 22 December 2020 were
following the approval of the LTIP scheme at the AGM on 19 December 2017 and
the end-to-end awards that were granted to key personnel.
26. GROUP RECONCILIATION OF PROFIT BEFORE CORPORATION TAX TO CASH GENERATED FROM
OPERATIONS
The weighted average share price at the date of the exercise for share options
exercised during the period was 178.57p (2020: 92p). The Black Scholes model
was used in measuring the fair use of the options granted.
22December 2020 14 December 2020 24 19
October December
2018 2017
Number of options granted 306,728 787,000 2,305,000 1,375,000
Share price at grant date 152.0p 147.50p 77.5p 85.95p
Exercise price 0.50p 147.50p 0.50p 0.50p
Option life in years 5 years 10 years 5 years 5 years
Risk-free rate 0.95% 1.23% 1.23% 1.33%
Expected volatility 30% 32% 30% 30%
Expected dividend yield 1% 1% 1% 1%
Fair value of 103.72p 26.99p 52.70p 65.03p
options
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.
The share options granted on 24 October 2018 and 22 December 2020 were
following the approval of the LTIP scheme at the AGM on 19 December 2017 and
the end-to-end awards that were granted to key personnel.
26.
GROUP RECONCILIATION OF PROFIT BEFORE CORPORATION TAX TO CASH GENERATED FROM
OPERATIONS
Group
30.6.21 30.6.20
£'000 £'000
Current:
Profit before tax from all operations 12,014 11,808
Amortisation 4,795 4,148
Depreciation 1,267 1,548
Exceptional costs 68 16
Finance lease non-cash movement (48) 4
Adjustments in relation to IFRS 16 - 61
Gain on disposal of fixed assets (2) (3)
Loss on disposal of investments - -
Share-based payments 625 682
Finance expense 75 100
18,794 18,364
(Increase)/decrease in trade receivables (363) (1,157)
Increase in trade payables (462) (1,300)
Cash generated from operations 17,969 15,907
27. GROUP CASH AND CASH EQUIVALENTS
The amounts disclosed in the statement of cash flow in respect of cash and
cash equivalents are in respect of these statements of financial position
amounts:
Group
£'000
As at 1 July 2019 19,320
As at 30 June 2020 25,383
As at 30 June 2021 31,951
28. PROJECT DEVELOPMENT
During the year the Group incurred £6,797,279 (2020: £6,461,313) in
development investments. All resources utilised in development have been
capitalised as outlined in the accounting policy governing this area.
29. EVENTS AFTER THE END OF THE REPORTING PERIOD
There are no events after the end of the
reporting period which impact the Group's and Company's financial statements.
30. PRIOR YEAR RESTATEMENT NOTE
During the year, the Group made the decision to modify the classification of
direct marketing and partner commission from cost of sales to administrative
expenses and tech infrastructure from under administrative expenses to cost of
sales, to reflect more appropriately gross profit and gross profit margin plus
also administrative expenses under continuing operations. Comparative amounts
in the Consolidated Income Statement have been reclassified for consistency.
As a result, £4,293,125 was reclassified from cost of sales to administrative
expenses and £1,826,195 were reclassified from administrative expenses to
cost of sales. There has been no impact on the prior year's profit for the
year however gross profit has increased from £41,038,000 to £43,505,000 and
administrative expenses have increased from £27,976,000 to £30,443,000.
During the year, the Group discovered that the share-based payment arrangement
had been erroneously recognised in Dotdigital Group PLC instead of being
recognised in the subsidiaries in which the employees are employed. Under IFRS
2 Share based payments, when a parent grants rights to its equity instruments
to employees of its subsidiaries this arrangement should be accounted for as
equity-settled in the consolidated financial statements but results in an
investment being created in the parent's own statement of financial position.
Therefore, the subsidiaries should in their own separate financial statements,
measure the services received from its employees in accordance with the
requirements of IFRS 2 applicable to equity-settled share-based payment
transactions. Thereby resulting in a corresponding increase recognised in
equity as a capital contribution from the parent. There has been no impact on
the prior year's Group profit for the year, however company only investments
increased from £15,142,000 to £17,516,000 and retained earnings increased
from £3,550,000 to £5,924,000.
At the year end, the Group discovered on the calculation of deferred tax on
the share options and the internally generated development costs that this had
been misallocated and miscalculated respectively. On the matter of the
misallocation of the deferred tax on the share option under IFRS 2 Share based
payment, where the final deferred tax calculation exceeds the cumulative
amount recognised as a share-based payment expense in the Income Statement,
the maximum amount of deferred tax income that can be recognised in the Income
Statement can only equal the total share-based payment expense. Any excess
deferred tax income is recognised directly in reserves.
As for the miscalculation of deferred tax on the internally generated
development costs this is with respect to the identification and calculation
of the net book value for internally generated development costs qualifying
for research and development, thereby impacting the deferred tax liability.
Both adjustments have impacted the prior year's profit for the year from
continuing operations where this has increased from £10,636,000 to
£10,967,000 and total comprehensive income attributable to owners of the
parent has increased from £10,292,000 to £10,623,000. Net assets as per the
consolidated statement of financial position have also increased from
£50,701,000 to £51,070,000.
Consolidated Income Statement for the year ended 30 June 2020
As previously reported
As restated
Adjustments
£'000 £'000 £'000
CONTINUING OPERATIONS
Revenue from contracts with customers 47,404 - 47,404
Cost of sales (6,366) 2,467 (3,899)
Gross profit 41,038 2,467 43,505
Administrative expenses (27,976) (2,467) (30,443)
OPERATING PROFIT FROM CONTINUING OPERATIONS PRE SHARE-BASED PAYMENTS AND 13,062 - 13,062
EXCEPTIONAL COSTS
Share-based payments (682) - (682)
Exceptional costs (136) - (136)
OPERATING PROFIT FROM CONTINUING OPERATIONS 12,244 - 12,244
Finance costs (98) - (98)
Finance income 40 - 40
PROFIT BEFORE INCOME TAX FROM CONTINUING OPERATIONS 12,186 - 12,186
Income tax expense (1,550) 331 (1,219)
Profit for the year from continuing operations 10,636 331 10,967
Loss for the year from discontinuing operations (378) - (378)
Profit for the year attributable to the owners of the parent 10,258 331 10,589
Consolidated Statement of Comprehensive Income for the year ended
30 June 2020
As previously reported
As restated
Adjustments
£'000 £'000 £'000
PROFIT FOR THE YEAR 10,258 331 10,589
OTHER COMPREHENSIVE INCOME
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translating foreign operations 34 - 34
Total comprehensive income attributable to:
Owners of the parent 10,292 331 10,623
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Comprehensive income from continuing operations 10,670 331 11,001
Comprehensive loss from discontinued operations (378) - (378)
Operating Profit
Costs by nature
Profit from continuing operations has been arrived after charging:-
As previously As
reported Adjustments restated
£'000 £'000 £'000
Direct marketing 1,727 (1,727) -
Outsourcing and other costs 4,639 (4,639) -
Outsourcing and tech infrastructure - 3,899 3,899
Total cost of sales 6,366 (2,467) 3,899
As previously As
reported Adjustments restated
£'000 £'000 £'000
Direct marketing - 1,727 1,727
Partner commission - 2,566 2,566
Staff-related costs (inc Directors' emoluments) 17,929 - 17,929
Auditor's remuneration 64 - 64
Amortisation of intangibles 3,647 - 3,647
Depreciation charge 1,475 - 1,475
Legal, professional and consultancy fees 479 - 479
Computer expenditure 2,404 (1,826) 578
Bad debts 1,248 - 1,248
Foreign exchange losses/(gains) (120) - (120)
Travel and subsistence costs 509 - 509
Office running 176 - 176
Gain on disposal of tangible asset (3) - (3)
Staff welfare 399 - 399
Other costs 531 - 531
Management charge (762) - (762)
Total administration costs 27,976 2,467 30,443
Consolidated Statement of Financial Position
30 June 2019
As previously reported As restated
Adjustments
£'000 £'000 £'000
ASSETS
NON-CURRENT ASSETS
Goodwill 9,680 - 9,680
Intangible assets 11,702 - 11,702
Property, plant and equipment 1,037 - 1,037
22,419 - 22,419
CURRENT ASSETS
Trade and other receivables 12,222 - 12,222
Cash and cash equivalents 19,320 - 19,320
31,542 - 31,542
TOTAL ASSETS 53,961 - 53,961
EQUITY ATTRIBUTABLE TO THE
OWNERS OF THE PARENT
Called up share capital 1,490 - 1,490
Share premium 6,791 - 6,791
Reverse acquisition reserve (4,695) - (4,695)
Other reserves 720 190 910
Retranslation reserve 16 - 16
Retained earnings 37,161 (190) 36,971
TOTAL EQUITY 41,483 - 41,483
LIABILITIES
NON-CURRENT LIABILITIES
Lease liabilities - - -
Deferred tax 1,377 - 1,377
1,377 - 1,377
CURRENT LIABILITIES
Trade and other payables 11,096 - 11,096
Financial liabilities:
- Interest bearing loans and borrowings 5 - 5
11,101 - 11,101
TOTAL LIABILITIES 12,478 - 12,478
TOTAL EQUITY AND LIABILITIES 53,961 - 53,961
Consolidated Statement of Financial Position
30 June 2020
As previously reported As restated
Adjustments
£'000 £'000 £'000
ASSETS
NON-CURRENT ASSETS
Goodwill 9,680 - 9,680
Intangible assets 14,059 - 14,059
Property, plant and equipment 5,262 - 5,262
29,001 - 29,001
CURRENT ASSETS
Trade and other receivables 12,987 - 12,987
Cash and cash equivalents 25,383 - 25,383
38,370 - 38,370
TOTAL ASSETS 67,371 - 67,371
EQUITY ATTRIBUTABLE TO THE
OWNERS OF THE PARENT
Called up share capital 1,493 - 1,493
Share premium 6,967 - 6,967
Reverse acquisition reserve (4,695) - (4,695)
Other reserves 1,372 228 1,600
Retranslation reserve 50 - 50
Retained earnings 45,514 141 45,655
TOTAL EQUITY 50,701 369 51,070
LIABILITIES
NON-CURRENT LIABILITIES
Lease liabilities 3,399 - 3,399
Deferred tax 2,169 (186) 1,983
5,568 (186) 5,382
CURRENT LIABILITIES
Trade and other payables 9,796 - 9,796
Financial liabilities:
- Lease liabilities 1,068 - 1,068
Current tax payable 238 (183) 55
11,102 (183) 10,919
TOTAL LIABILITIES 16,670 (369) 16,301
TOTAL EQUITY AND LIABILITIES 67,371 - 67,371
Company Statement of Financial Position
30 June 2019
As previously reported As restated
Adjustments
£'000 £'000 £'000
ASSETS
NON-CURRENT ASSETS
Investments 15,147 1,692 16,839
15,147 1,692 16,839
CURRENT ASSETS
Trade and other receivables 808 - 808
Cash and cash equivalents 594 - 594
1,402 - 1,402
TOTAL ASSETS 16,549 1,692 18,241
EQUITY ATTRIBUTABLE TO THE
OWNERS OF THE PARENT
Called up share capital 1,490 - 1,490
Share premium 6,791 - 6,791
Other reserves 720 - 720
Retained earnings 3,515 1,692 5,207
TOTAL EQUITY 12,516 1,692 14,208
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 4,033 - 4,033
TOTAL LIABILITIES 4,033 - 4,033
TOTAL EQUITY AND LIABILITIES 16,549 1,692 18,241
Company Statement of Financial Position
30 June 2020 As previously reported As restated
Adjustments
£'000 £'000 £'000
ASSETS
NON-CURRENT ASSETS
Owned Property, plant and equipment 3 - 3
Investments 15,142 2,374 17,516
15,145 2,374 17,519
CURRENT ASSETS
Trade and other receivables 797 - 797
Cash and cash equivalents 396 - 396
1,193 - 1,193
TOTAL ASSETS 16,338 2,374 18,712
EQUITY ATTRIBUTABLE TO THE
OWNERS OF THE PARENT
Called up share capital 1,493 - 1,493
Share premium 6,967 - 6,967
Other reserves 1,372 - 1,372
Retained earnings 3,550 2,374 5,924
TOTAL EQUITY 13,382 2,374 15,756
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 2,956 - 2,956
TOTAL LIABILITIES 2,956 - 2,956
TOTAL EQUITY AND LIABILITIES 16,338 2,374 18,712
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