REG - dotDigital Group plc - Final Results
06/11/2024 07:00
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RNS Number : 0823L dotDigital Group plc 06 November 2024
6 November 2024
Dotdigital Group plc
("Dotdigital", the "Company", or the "Group")
Full Year Results
Enhanced technology platform paving the way for higher value opportunities
Dotdigital Group plc (AIM: DOTD), the leading SaaS provider of an all-in-one
customer experience and data platform (CXDP), announces its final audited
results for the year ended 30 June 2024 ("FY24").
Financial Highlights
· Group revenue increased 14% to £79.0m (FY23: £69.2m)
o Organic revenue (excluding Fresh Relevance) increased 9% in constant
currency (7% on a reported basis) to £74.3m
o Recurring and repeating revenue as a percentage of total revenue of 94%
(FY23: 94%)
o Organic average revenue per customer (ARPC) growth of 15% to £1,861 per
month (not materially affected by the Fresh Relevance acquisition)
o Contracted ARR growth of 13%. Recognised contracted revenue remained at
79% of total
· Adjusted EBITDA increased 10% to £24.3m (FY23: £22.0m)
· Adjusted profit before tax increased 10% to £16.8m (FY23: £15.4m)
· Adjusted diluted earnings per share increased 6% to 4.71p (FY23: 4.43p)
· Cash balance at 30 June 2024 of £42.2m (31 December 2023: £37.1m), following
acquisition of Fresh Relevance (of which £18.9m was paid in cash) and strong
cash generation
· Proposed final dividend of 1.1p per ordinary share (FY23: 1.0p) in line with
progressive dividend policy
Operational Highlights
· Acquisition and integration of Fresh Relevance, bringing web personalisation
and advanced omnichannel capabilities to the Group
· Combined Dotdigital and Fresh Relevance offering now contributing to higher
value deals, with a c. 60% increase in average order value from new customer
wins.
· Functionality recurring revenues increased 27% to £31.6m due to the
acquisition and increased engagement across the platform
· Growth in all geographic regions, with international revenue growth of 12% to
£25.4m (inclusive of Fresh Relevance), with a significantly enhanced
proposition in the Japanese market and continued growth in North America
· Revenue from the Group's strategic partners increased 9% to £34.1m (FY23:
£31.2m), and the Group's active partner ecosystem has grown significantly
with over 600 active agency partners and nearly 190 technology partners
· Product innovation delivering further enhancements to Dotdigital's platform
and functionality, enabling more sophisticated campaigns and touchpoints with
customers
· The Group enters FY25 with a larger pipeline of higher value opportunities
Milan Patel, CEO of Dotdigital, commented:
"We are pleased to have delivered a strong performance in FY24, which saw
growth across all geographic regions and continued robust cash generation to
support further investment and acquisitions.
"Our CXDP offering has developed substantially during the year through further
product innovation and the acquisition of Fresh Relevance, which brings
sought-after personalisation technology and opens doors to larger market
opportunities. With Fresh Relevance now primed to scale outside of its core
EMEA market, we anticipate further larger value opportunities and increased
engagement from our customer base with the platform.
"As we enter FY25, with market drivers continuing to work in our favour and an
enhanced product offering, we are positioned well for further growth."
Analyst Briefing and Investor Presentation
Management will be hosting an in-person briefing and Q&A for analysts
today at 9am GMT. To register to attend the analyst presentation, please
contact dotdigital@almastrategic.com (mailto:dotdigital@almastrategic.com)
.
The Company will also host a live presentation and Q&A covering the
results via the Investor Meet Company platform on Friday, 8 November at 10am
GMT. The presentation is open to all existing and potential shareholders.
Investors can sign up to Investor Meet Company for free and add to meet
Dotdigital via this link
(https://www.investormeetcompany.com/dotdigital-group-plc/register-investor) .
Investor Deck: A copy of the slides relating to the FY24 results will be
available on our website
shortly: https://www.dotdigitalgroup.com/events-presentations/
(https://www.dotdigitalgroup.com/events-presentations/)
Annual Report: A copy of the Annual Report for FY24 will be available on our
website shortly: https://www.dotdigitalgroup.com/reports/
(https://www.dotdigitalgroup.com/reports/)
For further information please contact:
Dotdigital Group Plc Tel: 020 3953 3072
Milan Patel, CEO
Alistair Gurney, CFO investorrelations@dotdigital.com (mailto:investorrelations@dotdigital.com)
Alma Strategic Communications Tel: 020 3405 0210
Hilary Buchanan dotdigital@almastrategic.com
David Ison
Kieran Breheny
Canaccord Genuity (Nominated Advisor and Joint Broker) Tel: 020 7523 8000
Bobbie Hilliam, Corporate Finance
Jonathan Barr, Sales
Cavendish Capital Markets Limited (Joint Broker) Tel: 020 7220 0500
Jonny Franklin Adams, Corporate Finance
Sunila de Silva, Equity Capital Markets
Singer Capital Markets (Joint Broker) Tel: 020 7496 3000
Shaun Dobson, Corporate Finance
Alex Bond, Corporate Finance
About Dotdigital
Dotdigital Group plc (AIM: DOTD) is a leading provider of cross-channel
marketing automation technology to marketing professionals. Dotdigital's
customer experience and data platform (CXDP) combines the power of automation
and AI to help businesses deliver hyper-relevant customer experiences at
scale. With Dotdigital, marketing teams can unify and enrich their customer
data, identify valuable customer segments, and deliver personalised
cross-channel customer journeys that result in engagements, conversions, and
loyalty.
Founded in 1999, Dotdigital is headquartered in London with offices in
Croydon, Manchester, New York, Melbourne, Sydney, Singapore, Tokyo, Amsterdam,
Cape Town, and Warsaw. Dotdigital's solutions empower over 4,000 brands across
150 countries.
CHAIR'S STATEMENT
The year has been one of steady progress against our stated strategy and
continued commercial resilience in a testing macroeconomic environment.
Following the hard work that has gone into building out our Customer
Experience Data Platform (CXDP), the Group registered a solid performance,
characterised by growth across all regions.
It is gratifying to see positive momentum in our international markets
following an investment of significant capital and time over recent years. The
US performed strongly, and we continue to see rapid growth in APAC. Japan in
particular has experienced impressive commercial traction and looks set to
become an increasingly important contributor to the Asia-Pacific region, and
the opportunity remains strong.
Successful Integration of Fresh Relevance
Our acquisition of Fresh Relevance, a leading cross-channel personalisation
technology firm, in September 2023 has advanced well. Both the technology and
teams, greatly enhancing our CXDP vision.
Initially in EMEA, where Fresh Relevance was already well-established, the
combined proposition has opened doors to a number of larger and more
sophisticated customers that are combining relevancy and personalisation
across all channels to provide a better experience for their customers.
Moving into the new financial year, the groundwork has been laid to accelerate
cross-selling to our existing customer base and broaden commercialisation
across other regions.
The executive team in particular deserve a great deal of credit for
successfully driving this forward while navigating challenging trading
conditions.
Future-Proofing through Product Innovation
Our focus on innovation continues to drive our competitive advantage. With the
Group having leveraged elements of AI in its platform for several years, the
integration of generative AI - a technology that lends itself well to the kind
of creative campaigns that Dotdigital enables - continues at pace and is now
an integral part of the user experience.
The number of new technology integrations increased considerably in the year,
ultimately strengthening retention through enhancing the platform's
versatility. These integrations make it easier for customers to bring external
data into the platform, providing them with a more seamless experience across
their technology stacks and enabling them to drive value more quickly. This
innovation has led to further product adoption and increased penetration among
our customer base.
Advancing our ESG goals
We remain committed to our objective of achieving Net Zero by 2030 and made
important strides towards it in the year. Important developments include the
inclusion of Fresh Relevance in our ISO14001 certification, and the launch of
a UK Electric Vehicle salary sacrifice scheme, which has already resulted in a
tangible reduction in emissions.
On the social front, the Group continues to deliver on its commitment to
diversity, equity and inclusion (DEI) through initiatives such as
participation in Neurodiversity Awareness Week, the launch of a guide to help
colleagues align their day-to-day work life with DEI principles, and the
deepening of our long-term partnership with The Girls' Network. Substantial
progress was made in narrowing the gender pay gap across the Group in the
year, as we continue to work towards creating a more equitable workplace.
Looking Ahead: A Wealth of Opportunity
Our financial position remains strong and the business enjoys healthy cash
balances that provide us with flexibility to accelerate growth and explore new
opportunities. Our teams continue to push the envelope in terms of what's
possible through R&D, while at the same time disciplined M&A remains a
key priority.
I would like to take this opportunity to express my thanks to our teams around
the world for their continued dedication to strengthening Dotdigital's
presence in the market.
Supported by a robust business model, leading technology and talented teams, I
am confident the Group is well-positioned to deliver another year of progress
in FY25.
CHIEF EXECUTIVE OFFICER'S REPORT
Overview
Dotdigital delivered a robust performance for FY24, despite challenging
macroeconomic conditions, following good demand for the Group's CXDP. The
Group saw growth in all geographic regions along with continued strong cash
generation.
Our CXDP has advanced materially during the year through a number of product
enhancements, including new AI capabilities and omni-channel functionality.
The regular pace of product innovation continues to drive incremental value
and underpin the Group's cross-selling strategy, reflected in ARPC organic
growth of 15% to £1,861 per month at the end of the financial year.
The platform has been further enhanced through the integration of Fresh
Relevance acquired in September 2023 which has brought in-demand cross-channel
personalisation and web technology to broaden and complement the Group's
offering. This has supported both a shift to higher-value deals for customer
acquisition, with roughly a 60% increase in average order value from new
customers won in the last year, as well as increased engagement across the
platform from both new and existing customers, driving functionality recurring
revenue (licence, data and other bolt on functionality fees) growth of 27% to
£31.6m (inclusive of Fresh Relevance).
Usage of email has continued to grow, alongside growth in all customer cohorts
also using more than two channels, as marketeers embrace more sophisticated
means to reach their customers. We have seen a 44% increase in the volume of
new messages from other channels (MMS, Mobile Push, WhatsApp etc).
We have commenced the new financial year with good trading momentum across all
our geographic regions. As a result of investment into our product and teams,
the Group's enhanced product proposition is resonating well within our global
markets, and we are benefitting from strengthened brand recognition for our
comprehensive offering of intelligent digital tools for marketers and
merchants. With market drivers continuing to work in our favour despite
continued macroeconomic uncertainty, we have a high degree of confidence in
the growth opportunity.
Results
The Group benefits from its profitable and cash generative business model with
high levels of recurring revenues. For FY24, Group revenue grew 14% to £79.0m
(FY23: £69.2m), with recurring and repeating revenue representing 94% of
total (FY23: 94%). Organic revenue (excluding Fresh Relevance) increased by 9%
in constant currency to £74.3m. Adjusted profit before tax grew 10% to
£16.8m (FY23: £15.4m) and adjusted EBITDA was in line with expectations(1)
at £24.3m (FY23: £22.0m). Cash generation during the period was strong,
ahead of expectations and contributed to a cash balance of £42.2m at year end
(31 December 2023: £37.1m).
The Group's strong cash generation and healthy cash balance provide the
foundation for continued investment into our people, go to market strategy and
product roadmap, as well as acquisitions to expand the range and depth of our
offering.
We have continued to evaluate further acquisition opportunities over the
period but have not progressed with any thus far due to them not meeting our
required strategic objectives. We will continue to assess other opportunities
in line with our disciplined approach for the benefit of all our stakeholders.
(1) Market expectations for the year to 30 June 2024 were as follows:
- Revenue £78.7m
- Adjusted profit before tax £16.4m
- Adjusted EBITDA £24.0m
Fresh Relevance
Following the acquisition in September 2023, Fresh Relevance has bedded in
well to the Group, adding web personalisation and advanced omnichannel
capabilities to the Group's CXDP platform. Over the last year, the focus has
been around integrating the business with Dotdigital, and training business
development staff to sell the product while optimising the business to drive
profitability. As previously announced, the integration of Fresh Relevance is
now complete, with the anticipated cost synergies realised. The Group has made
further progress rationalising some of the joint marketing opportunities and
optimising cost of sales.
The Group continues to see demand building from the existing customer base,
with cross sales and upsells achieved in the year, providing increased
visibility of revenues and an enhanced awareness of the platform capabilities.
Furthermore, the enhanced proposition is supporting the acquisition of higher
value new customer wins, with c.15 new joint customers secured in the year.
The Group has seen that customers taking both Dotdigital and Fresh Relevance
solutions often leads to a significant increase in the average order value.
Following the integration and joint marketing work to date, the Group is now
primed to scale the enhanced offering with Fresh Relevance beyond the Group's
core EMEA market and into the North American and APAC regions.
Business Review
Dotdigital's CXDP offering provides marketeers across the globe with a
comprehensive tool to power digital marketing campaigns to enhance the
experience for their customers. Through our enhanced AI and data capabilities,
our platform enables powerful, personalised customer experiences at every
touchpoint which deliver increased engagement and a significant ROI.
The Group works with organisations of all sizes across c. 60 countries with a
focus on capturing mid-market and enterprise customers across both commerce
and non-commerce verticals. While the Group's foundations are in email
marketing, the Group now provides a comprehensive offering of customer
touchpoints across email, web, SMS, WhatsApp, MMS and beyond, as well as
providing data-driven analytics to enhance return on investment from their
campaigns.
Market Opportunity
Digital marketing remains at the forefront of agendas for marketeers,
representing the highest return on investment. This large and growing market
is estimated to be worth $6.5bn in 2024 and forecast to be worth $9.68bn in
2028, growing at a CAGR of 8.6%(1). In tandem, there is an ongoing drive for
marketeers to consolidate their marketing technology stack, making these
services more cost effective and quicker to deploy. Marketeers also continue
to focus not only on customer acquisition but also on retention Marketing.
Equally, the personalisation market is forecast to grow by over 23% annually
from $1.6bn in 2024 to $5.14bn by 2030(2). This is driven by evolving consumer
preferences, with end users expecting 1-to-1, personalised experiences across
the channel of their choice.
In July 2024, Dotdigital conducted a survey of over 750 marketing
professionals from a range of organisations from 13 sectors across the UK,
Australia and the United States. Innovation was found to be a key priority
among marketing professionals, with respondents seeing marketing automation
(43%), data-driven marketing (34%), customer experience (31%) and AI
integration (30%) as top investment areas. Artificial intelligence represents
a critical tool for marketeers, through both the efficiency this can provide
in the delivery of campaigns, using features like content suggestion as well
as through the aggregation of data.
The demand for sophisticated digital marketing tools among marketing
professionals continues to grow, with a focus on the significant ROI benefits
derived by artificial intelligence and data. Accordingly, Dotdigital added new
customers in the period across a range of verticals, including the e-commerce,
travel and leisure markets.
(1)(https://www.researchandmarkets.com/report/marketing-automation?srsltid=AfmBOoqZuD7rm7udpE1fr70lu9EDgQfMUBi38M8bFydCt0VjC3sUJV58
(https://www.researchandmarkets.com/report/marketing-automation?srsltid=AfmBOoqZuD7rm7udpE1fr70lu9EDgQfMUBi38M8bFydCt0VjC3sUJV58)
)
(2) (https://virtuemarketresearch.com/report/personalization-software-market
(https://virtuemarketresearch.com/report/personalization-software-market) )
Growth strategy
Dotdigital's organic growth strategy centres around three core pillars:
geographic, product and partnerships.
The Board is also focused on complementing the Group's organic growth through
select acquisitions focused on the following key categories: adjacent
CXDP-related technologies that will drive ARPC expansion and open new markets;
consolidation in the market for talent and brand to expand geographical
coverage; and specialist functionality for target verticals.
Geographic
The Group achieved double-digit growth across its geographic markets, with
revenue from international regions, including Fresh Relevance, growing 12%
from £22.8m to £25.4m and representing 32% of Group revenues (FY23: 33%).
EMEA
In EMEA, Dotdigital's largest market, the Group delivered revenue growth of
14% to £59.7m (FY23: £52.3m). EMEA revenues represented 76% of Group
revenues in FY24 (FY23: 76%). The acquisition of Fresh Relevance made an
important contribution to the Group's new customer wins and upsells in the
region. The Group has a strong brand within both commerce and non-commerce and
delivered more new logo wins than in the prior year, including Neal's Yard,
Great Ormond Street Hospital, Danone Benelux, Car Giant, Birmingham Airport
and Krispy Kreme. This strong new business performance was somewhat offset by
higher churn from some smaller customers due to increased administrations,
leading to organic growth in EMEA for the year of 6%. The Group was pleased to
see 6% growth in professional services, following a lower level of fees seen
in FY23 as a result of slower decision making due to the uncertain
macroeconomic backdrop.
Within EMEA, the Group has invested in the business with a focus on enhanced
customer experience, new business development and business infrastructure to
support further scaling of the Group.
APAC
APAC delivered growth of 27% in the period to AUS$13.8m (FY23: AUS$10.8m).
While the Group maintains a healthy presence across the region, Japan
represents a significant opportunity for Dotdigital, with the Group having
established strong relationships in the country via its Tokyo office. Our
proposition is now more tailored for the Japanese market, providing us with
competitive differentiation and the capability to capitalise on the growing
demand for more sophisticated offerings. In line with this opportunity, we are
increasing our level of investment in the current financial year, growing our
headcount within the Tokyo office, building on our partner network and
establishing the office as a legal entity and adding further back-office
operations. The Group is investing in dedicated resources for community
advocates and solutions consultants in Japan which we expect to have a
positive effect on attracting new customers.
North America
Following the stabilisation and investment action taken in the previous year
in North America, we are pleased to report a return to double-digit organic
growth in the region. Including the contribution from Fresh Relevance,
revenues increased 16% in the period to $15.2m with a healthy pipeline of
opportunities in the region. The Group is now focused on the land and expand
opportunities with higher value customers and is led by a more experienced
team. The Group is now expanding beyond commerce with a focus on the wider
addressable market and is investing in customer success and solutions
consultants to build the pipeline of opportunities, particularly for the
nascent Fresh Relevance offering in the region.
Product
The Group's core product focus for FY24 centred around the integration of
Fresh Relevance to the platform, including the optimisation of user experience
for customers using both platforms. The Group has established a single sign on
feature, now utilised by all of the joint customers, and has established a
homogenisation of interfaces to provide users with the same look and feel
across both platforms. Further enhancements include Dotdigital tag, a joint
web script for both products which combines the interface of both platforms
into a single experience. The Group has also launched an advanced
personalisation pack which works as an easy entry point for new customers,
which can be subsequently scaled as usage grows and more functionality is
adopted.
Following the launch of Dotdigital's marketing intelligence engine
WinstonAI™ in 2023, further enhancements have been made during the year
including the addition of email content and subject line assistants, grammar
checking, tools for rewriting content tone and length, and a one-click email
to SMS conversion feature. Pleasingly, the Group has seen a 59% increase in
the number of email campaigns created through machine-learning powered product
recommendations, and a 71% increase in predictive segmentation enabled by
WinstonAI™.
MMS functionality for the Group's North American customers was launched in
November 2023, and the Group has seen a good level of adoption in the region
with 1.4m messages sent via this channel in H2 2024. As reported in March
2024, SMS/MMS channels now have liquid scripting capabilities to enable
hyper-personalisation of messages such as abandoned cart, booking
notifications and order notifications on these channels. Mobile has emerged as
the most popular means for brands to interact with customers and, in line with
this, the Group has furthered its work around enhancing its platform to
support customer-led identifiers and is continuing to expand native marketing
channel capabilities such as WhatsApp.
To enable customers to get the most from the full range of functionality
across Dotdigital and Fresh Relevance's capabilities, the Group launched its
Dotdigital Academy in February 2024. This platform provides a range of courses
and webinars to ensure customers are extracting the greatest benefits out of
their platform functionality, and to encourage knowledge sharing and community
amongst Dotdigital customers.
In April 2024, we were pleased to be awarded the status of "Crowd Leader" by
global software marketplace G2 in 11 marketing software categories, in
recognition of our ongoing product innovation and best-in-class offering.
Partnerships
Revenue from our largest technology partners increased 9% to £34.1m (FY23:
£31.2m) during the year. These partnerships are also proving key in
attracting customers through joint marketing efforts and helping influence the
outcome of leads from larger customers.
The Group retains strong relationships within the e-commerce segment,
including partnerships with Magento (Now Adobe Commerce), Shopify,
BigCommerce, WooCommerce, Commerce Cloud and Shopware. These partnerships
contributed to an overall e-commerce partner channel revenue growth of 9% to
£23.3m. Revenue from the Group's CRM connectors also grew by 10%, from £9.8m
to £10.8m following progress with Microsoft Dynamics, Salesforce and
Netsuite.
The Group's partnership program has grown substantially with over 600 active
agency partners and nearly 190 tech partners increasing our serviceable
addressable market and providing a continuous flow of new engagements. In the
year, we have established 53 new integrations in-house, with 33 verified
integration partners (those partners who have developed integrations with our
platform and passed our rigorous quality and support checks). We now have 136
integrations in total, with new integration partnerships added including
LinkedIn Leads for cross-channel marketing, Shopline for e-commerce, and
Stamped.io for loyalty programs. In APAC, we have added key integrations with
Retail Express, Cin7, and EC Force, which aligns with our sales growth in the
region.
Current trading and outlook
The Group enters the new financial year with continued positive momentum and a
good level of visibility of future revenues. While economic conditions remain
challenging across our end markets, the impact on trading has been limited to
date.
Looking forward to FY25, our core priority for the business is to convert a
large pipeline of higher value contracts while placing an increased focus on
retention across all regions. We are also focused on enhancing our CXDP, and
maximising our personalisation capabilities across all regions through the
scaling of Fresh Relevance. We also continue to appraise potential
acquisitions to further the development and range of offering and unlock new
verticals.
With a significantly enhanced product offering, the Board is confident that
Dotdigital's investments in product innovation, strong new business prospects,
and high levels of recurring revenue-alongside a large, diversified customer
base and a robust financial position-underpin the Group's ongoing success.
Supported by underlying market demand, these strengths position Dotdigital
well for continued expansion in the year ahead.
FINANCIAL REVIEW
Business model
The Group principally sells access to a software platform and messaging
functionality (email, SMS, MMS etc) to its customers. The contracts are
typically between one and three years, and are priced based on the
functionality required (which modules are selected), the volume of data to be
put in the platform (contact numbers) and the volume of messaging required.
Revenues from these customer contracts are recognised evenly over the life of
the agreements in accordance with IFRS15. The contracted volumes are
committed; however, we of course allow customers to upgrade through their
contract period as they recognise value in the platform and require more
capacity.
The acquisition of Fresh Relevance in September 2023 added a range of advanced
personalisation options for our customers, particularly around their use of
the website and associated triggered messaging. In addition to the pricing
levers described above, this has added website page views as an additional
basis upon which we can drive pricing up.
In our standard contracts we have the ability to increase prices after the
customers first renewal date. Whilst historically it has been the Group's
preferred strategy to grow average revenue per customer through deployment of
additional functionality and growth of customer contact and message volumes,
through the financial year ending 30 June 2024, we increased our list prices
broadly in line with inflation.
The best value is available to those customers who take advantage of
additional functionality and integrations which help them leverage their
customer data - this is evidenced by the low churn we see amongst those
customers who have invested in the full breadth of the products'
functionality. We have a small amount of professional service revenue (less
than 5% of total revenue) which is recognised as work is delivered. These
services relate to both the initial deployment of software, design services,
training and support to customers who want to maximise value from the product.
FY24 saw the business continue on a profile of stable double digit growth,
with strong contributions from all regions. We have balanced investment in
go to market activities to increase our serviceable addressable market (new
geographies) without diluting our customer acquisition cost metrics.
In this context, and against the backdrop of a challenging macroeconomic
environment in which many businesses reported slowing growth, we are proud to
deliver revenue and adjusted profit before tax in line, with adjusted earnings
per share and cash ahead of market expectations.
Revenue and gross margin
Our recurring and diversified revenue base proved to be resilient and thus we
exit the year in a strong position to continue delivering in FY24. We saw a
reduction in customer churn particularly in North America and over 94% of our
revenues continue to be predictably repeating or contractually recurring.
Total revenue increased by 14% FY24 to £79.0m (FY23: £69.2m), driven by SaaS
and contracted marketing SMS revenue uplift of £8.3m (15%) and transactional
SMS revenue uplift of £0.7m (6%). This growth was supported by the
acquisition of Fresh Relevance which added £4.7m in the period. The vast
majority of these acquired revenues related to contracted SaaS.
EMEA remains our largest region with revenue of £59.7m (FY23: £52.3m),
however our organic growth in APAC of 27% shows our ability to deliver value
to users across the globe in multiple languages.
Gross margin on our core software product continues to be close to 90% but is
diluted by SMS which is typically under 50%. Gross margin of 79.5% in the
year reported was substantially unchanged from FY23 (79.3%) as the positive
impact of relatively lower growth in transactional SMS volume was offset
slight dilution due to the acquisition of Fresh Relevance.
Operating expenses
Despite a high inflationary environment in all regions and significant
investment in sales and development capacity to strengthen all the regions, we
maintained a good adjusted operating margin at 20% (FY23: 21%) despite slight
short term dilution from the acquisition of Fresh Relevance. FY24 operating
expenses of £47.2m (FY23: £40.4m) grew primarily because we increased
headcount through the acquisition of Fresh Relevance and experienced
inflationary pressure on both salary costs and third party suppliers in the
year. We expect headcount to be relatively more stable throughout FY25,
subject to making any further acquisitions.
Balance sheet
The business continues to generate cash in line with profitability and
maintain a healthy working capital profile such that we end the year with
£42.2m cash (FY23: £52.7m) despite the acquisition of Fresh Relevance which
drove close to £20m of consideration. At year end we had a higher
proportion of our cash in high interest accounts than ever, as we continue to
refine our cash management processes.
Tax
Our effective tax rate increased to 16.1% (FY23: 12.4%) driven by the increase
of the mainstream corporation tax rate. This continues to be significantly
lower than the mainstream UK corporation tax rate because of our Research
& Development tax claim.
EPS
Adjusted Diluted EPS has grown by 6% to 4.71p (FY23: 4.43p). There has been
a small adverse impact of the issuance of shares for the acquisition and the
increased effective tax rate, each offsetting the growth in underlying
profitability.
Dividend policy
Consistent with our progressive dividend policy we have increased our proposed
final dividend in line with EBITDA growth to 1.1p in FY24 from 1p in FY23.
DOTDIGITAL GROUP PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2024
30.06.24 30.06.23
£'000 £'000
Notes
CONTINUING OPERATIONS
Revenue from contracts with customers 3 78,973 69,228
Cost of sales 7 -16,177 -14,351
Gross profit 62,796 54,877
Administrative expenses 7 -47,222 -40,359
OPERATING PROFIT FROM CONTINUING OPERATIONS PRE SHARE-BASED PAYMENTS, 15,574 14,518
AMORTISATION OF ACQUIRED INTANGIBLES AND EXCEPTIONAL COSTS
Share based payments 29 -1,219 -736
Amortisation of acquired intangibles 13 -1,462 -120
Exceptional costs 5 -973 -114
OPERATING PROFIT FROM CONTINUING OPERATIONS 11,920 13,548
Finance costs 6 -88 -57
Finance income 6 1,351 895
PROFIT BEFORE INCOME TAX FROM CONTINUING OPERATIONS 13,183 14,386
7
Income tax expense 8 -2,117 -1,791
Profit for the year from continuing operations 11,066 12,595
Profit for the year attributable to the owners of the parent 11,066 12,595
Earnings per share from all operations (pence per share)
Basic 11 3.62 4.21
Diluted 11 3.54 4.11
Adjusted basic 11 4.82 4.53
Adjusted diluted 11 4.71 4.43
DOTDIGITAL GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2024
30.06.24 30.06.23
£'000 £'000
PROFIT FOR THE YEAR 11,066 12,595
OTHER COMPREHENSIVE INCOME
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translating foreign operations (27) (38)
Total comprehensive income attributable to:
Owners of the parent 11,039 12,557
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Comprehensive income from continuing operations 11,039 12,557
DOTDIGITAL GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 JUNE 2024
30.06.24 30.06.23
£'000 £'000
Notes
ASSETS
NON-CURRENT ASSETS
Goodwill 12 22,278 9,680
Intangible assets 13 37,556 19,860
Property, plant and equipment 14 3,568 2,696
63,402 32,236
CURRENT ASSETS
Trade and other receivables 16 18,011 15,261
Cash and cash equivalents 17 42,160 52,676
60,171 67,937
TOTAL ASSETS 123,573 100,173
EQUITY ATTRIBUTABLE TO THE
OWNERS OF THE PARENT
Called up share capital 18 1,538 1,496
Share premium 19 12,786 7,124
Reverse acquisition reserve 19 (4,695) (4,695)
Share-based payment reserve 19 2,835 2,591
Retranslation reserve 19 231 258
Retained earnings 19 82,505 73,536
TOTAL EQUITY 95,200 80,310
LIABILITIES
NON-CURRENT LIABILITIES
Lease liabilities 21 2,334 1,321
Deferred tax 24 6,330 2,644
8,664 3,965
CURRENT LIABILITIES
Trade and other payables 20 18,348 14,629
Lease liabilities 21 746 823
Current tax payable 615 446
19,709 15,898
TOTAL LIABILITIES 28,373 19,863
TOTAL EQUITY AND LIABILITIES 123,573 100,173
DOTDIGITAL GROUP PLC
COMPANY STATEMENT OF FINANCIAL POSITION
30 JUNE 2024
Restated
30.06.24 30.06.23
£'000 £'000
Notes
ASSETS
NON-CURRENT ASSETS
Intangible assets 13 3 -
Property, plant and equipment 14 9 9
Investments 15 43,794 19,047
43,806 19,056
CURRENT ASSETS
Trade and other receivables 16 11,321 5,072
Cash and cash equivalents 17 724 396
12,045 5,468
TOTAL ASSETS 55,851 24,524
EQUITY ATTRIBUTABLE TO THE
OWNERS OF THE PARENT
Called up share capital 18 1,538 1,496
Share premium 19 12,786 7,124
Share-based payment reserve 19 2,828 2,600
Retained earnings 19 7,057 10,969
TOTAL EQUITY 24,209 22,189
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 20 31,642 2,335
TOTAL LIABILITIES 31,642 2,335
TOTAL EQUITY AND LIABILITIES 55,851 24,524
As permitted by section 408 of the Companies Act 2006, the parent company's
income statement has not been included in these financial statements. The loss
for the Company was £1,814,895 (2023: profit of £4,459,042).
DOTDIGITAL GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2024
Called up share
Retained Share
capital earnings premium
£'000 £'000 £'000
Balance as at 1 July 2022 1,496 63,582 7,124
Transactions with owners
Issue of share capital - - -
Dividends - (2,926) -
Transfer in reserves - 285 -
Deferred tax on share options - - -
Share-based payments - - -
Transactions with owners - (2,641) -
Total comprehensive income
Profit for the year - 12,595 -
Other comprehensive income - - -
Total comprehensive income - 12,595 -
Restated balance as at 30 June 2023 1,496 73,536 7,124
Balance as at 1 July 2023 1,496 73,536 7,124
Transactions with owners
Issue of share capital 42 - 5,662
Dividends - (3,066) -
Transfer in reserves - 969 -
Deferred tax on share options - - -
Share-based payments - - -
Transactions with owners 42 (2,097) 5,662
Profit for the year - 11,066 -
Other comprehensive income - - -
Total comprehensive income - 11,066 -
Balance as at 30 June 2024 1,538 82,505 12,786
Retranslation Reverse acquisition Share-based payment Total equity
reserve reserve reserve
£'000 £'000 £'000 £'000
Balance as at 1 July 2022 296 (4,695) 2,005 69,808
Transactions with owners
Dividends - - - (2,926)
Transfer in reserves - - (285) -
Deferred tax on share options - - 150 150
Share-based payments - - 721 721
Transactions with owners - - 586 (2,055)
Total comprehensive income
Profit for the year - - - 12,595
Other comprehensive income (38) - - (38)
Total comprehensive income (38) - - 12,557
Balance as at 30 June 2023 258 (4,695) 2,591 80,310
Balance as at 1 July 2023 258 (4,695) 2,591 80,310
Transactions with owners
Issue of share capital - - - 5,704
Dividends - - - (3,066)
Transfer in reserves - - (969) -
Deferred tax on share options - - 16 16
Share-based payments - - 1,197 1,197
Transactions with owners - - 244 3,851
Total comprehensive income
Profit for the year - - - 11,066
Other comprehensive income (27) - - (27)
Total comprehensive income (27) - - 11,039
Balance as at 30 June 2024 231 (4,695) 2,835 95,200
· 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 UK Adopted
International Accounting Standards.
· Share-based payment reserve relates to the charge for the
share-based payment in accordance with IFRS 2 and the transfer on the exercise
or lapsing of share options.
DOTDIGITAL GROUP PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2024
Called up share
Retained Share Share-based payment
capital earnings premium reserve Total equity
£'000 £'000 £'000 £'000 £'000
Balance as at 1 July 2022 1,496 9,400 7,124 1,915 19,935
Transactions with owners
Dividends - (2,926) - - (2,926)
Transfer in reserves - 36 - (36) -
Share-based payments - - - 721 721
Transactions with owners - (2,890) - 685 (2,205)
Total comprehensive income
Profit for the year - 4,459 - - 4,459
Total comprehensive income - 4,459 - - 4,459
Balance as at 30 June 2023 1,496 10,969 7,124 2,600 22,189
Balance as at 1 July 2023 1,496 10,969 7,124 2,600 22,189
Transactions with owners
Issue of share capital 42 - 5,662 - 5,704
Dividends - (3,066) - - (3,066)
Transfer in reserves - 969 - (969) -
Share-based payments - - - 1,197 1,197
Transactions with owners 42 (2,097) 5,662 228 3,835
Total comprehensive loss
Loss for the year - (1,815) - - (1,815)
Total comprehensive loss - (1,815) - - (1,815)
Balance as at 30 June 2024 1,538 7,057 12,786 2,828 24,209
· Share capital is the amount subscribed for shares at nominal
value.
· Retained earnings represents the cumulative earnings of the Company
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.
· Share-based payment reserve relates to the charge for the
share-based payment in accordance with IFRS 2 and the transfer on the exercise
or lapsing of share options.
DOTDIGITAL GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2024
30.06.24 30.06.23
£'000 £'000
Notes
Cash flows from operating activities
Cash generated from operations 30 23,212 21,985
Interest paid (88) (57)
Tax paid (2,057) (1,119)
Net cash generated from all operating activities 21,067 20,809
Cash flows from investing activities
Purchase of subsidiary net of cash acquired 12 (18,325) -
Additional consideration for repayment of debt at acquisition (607) -
12
Purchase of intangible fixed assets 13 (9,709) (8,760)
Purchase of property, plant and equipment 14 (195) (306)
Interest received 1,351 895
Net cash flows used in investing activities (27,485) (8,171)
Cash flows from financing activities
Equity dividends paid (3,066) (2,926)
Payment of lease liabilities (1,012) (917)
Proceeds from share issues 7 -
Net cash flows used in financing activities (4,071) (3,843)
(10,489) 8,795
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year 31 52,676 43,919
Effect of foreign exchange rate changes (27) (38)
Cash and cash equivalents at end of year 31 42,160 52,676
DOTDIGITAL GROUP PLC
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2024
30.06.24 30.06.23
£'000 £'000
Notes
Cash flows from operating activities
Cash generated from operations 30 22,217 3,165
22,217 3,165
Net cash generated from operating activities
Cash used in investing activities
Purchase of investment 12 (18,823) -
Purchase of intangible fixed assets 13 (3) -
Purchase of property, plant and equipment 14 (4) (6)
Net cash flows used in investing activities (18,830) (6)
Cash flows used in financing activates
Equity dividends paid (3,066) (2,926)
Proceeds from share issues 7 -
Net cash flows used in financing activities (3,059) (2,926)
Increase in cash and cash equivalents 328 233
Cash and cash equivalents at beginning of year 31 396 163
Cash and cash equivalents at end of year 31 724 396
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 30 JUNE 2024
1. GENERAL INFORMATION
Dotdigital Group Plc ("Dotdigital") is a public limited 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. The principal activity of the Group is described on page 43.
2. ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared in accordance with the accounting
policies and presentation required by UK adopted International Accounting
Standards, and International Financial Reporting Interpretations Committee
(IFRIC) Interpretations as endorsed for use in the UK. The financial
statements have also been prepared under the historical cost convention, with
the exception of the valuation of share based payments, financial liabilities
and initial valuation of assets and liabilities acquired in business
combinations which are included on a fair value basis, and in accordance with
those parts of Companies Act 2006 that are relevant to companies that prepare
financial statements in accordance with UK adopted International Accounting
Standards.
The Group has applied all accounting standards and interpretations issued by
the International Accounting Standards Board (IASB) and the International
Financial Reporting Standards (IFRS) Interpretations Committee effective at
the time of preparing the consolidated financial statements.
New and amended standards adopted by the Group
The Group adopted the following new and amended relevant IFRS in the year:
IAS 1 and IFRS Practice Statement 2 Presentation of Financial Statements - amendments regarding the disclosure of
accounting policies
IAS 8 Accounting Policies, Changes in Accounting Estimates - amendments regarding
the definition of accounting estimates
IAS 12 Income Taxes - amendments regarding deferred tax related to assets and
liabilities arising from a single transaction
The adoption of these accounting standards did not have any effect on the
Group's Statement of comprehensive income, Statement of financial position or
equity.
Accounting standards issued but not yet effective
The International Accounting Standards Board ("IASB") has issued/revised a
number of relevant standards with an effective date after the date of these
financial statements. Any standards that are not deemed relevant to the
operations of the Group have been excluded. The Directors have chosen not to
early adopt these standards and interpretations and they do not anticipate
that they would have a material impact on the Group's financial statements in
the period of initial application.
Effective for periods commencing on or after
IFRS 16 Leases - amendments regarding lease liability in a sale and leaseback 1 January 2024
IAS 1 Presentation of Financial Statements - amendments regarding the classification 1 January 2024
of liabilities as current or non-current and non-current liabilities with
covenants
IFRS 7 & IAS7 Financial Instruments - supplier finance arrangements 1 January 2024
The financial statements are presented in sterling (£), rounded to the
nearest thousand pounds.
Significant accounting policies
The Group has consistently applied the following accounting policies to all
periods presented in these consolidated financial statements, except if
mentioned otherwise.
Basis of consolidation
The Group financial statements consolidate those of the Company and all its
subsidiary undertakings drawn up to 30 June 2024.
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.
The Group applies the acquisition method to account for business combinations.
In the statement of financial position, the acquiree's identifiable assets and
liabilities are initially recognised at their fair values at the acquisition
date.
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 Dotdigital EMEA Limited.
Revenue recognition
Revenue comprises the fair value of the consideration received or receivable
for the sale of 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. All revenue is from contracts signed
with new customers and upgrades and additional functional recurring revenue
sold to existing contracted businesses.
The Group recognises revenue when the amount of revenue can be reliably
measured, and it is probable that future economic benefits will flow to the
entity. The Group bases its estimates on historical results, taking into
consideration the type of customer, the type of transaction and the specifics
of each arrangement. For most of our revenue streams, there is a low level of
judgement applied in determining the transaction price or the timing of
transfer of control.
Disaggregation of revenue from contracts with customers
The Group has disaggregated revenue recognised from contracts based on the
geographical location of the customer and recurring revenue profile, as
management believe that they best depict how the nature, amount, timing and
uncertainty of the Group's revenue and cash flows are affected by economic
factors. For disaggregation of revenue based on geographical location of
customer please see the segmental reporting disclosure (Note 3).
Revenue Profile
2024 2023
£'000 £'000
Non-recurring revenue 4,590 3,837
Repeating revenue 11,665 11,013
Recurring revenue 62,718 54,378
Total 78,973 69,228
Licence fees
The Group provides an all-in-one customer experience and data platform (CXDP)
to other businesses via a licence fee for the use of the Dotdigital
platform. The licence fee is sold as a fixed price bespoke contract. The
licence fee also scales to provide access to varying functionalities,
including reporting and AI capabilities, within the platform. Management
consider these functionalities to be indistinct from the licence fee.
Revenue is recognised over time on the basis that access to an IP exists at
any given time throughout the licence period. The contract price is
recognised on a straight-line basis over the licence period. Variable
consideration can be charged for extra capacity required under the licence.
In these circumstances, the rules for usage-based royalties are applied and
revenue is recognised when the performance obligation has been satisfied
(charged in line with the contract as the usage occurred).
Message plans
Message plans allow businesses to send a fixed amount of messages for a fixed
fee. The plans are considered to be a combined performance obligation with the
Dotdigital licence as they are not distinct in the context of the contract.
Revenue is therefore recognised in line with the licence fee. Management
believe that if they were to apply an accounting policy in which the messages
were considered to be a separate performance obligation, this would not have a
material impact.
Overage fees can be incurred where message plans have been exceeded or have
not been purchased in advance. In these circumstances the rules for
usage-based royalties are applied and revenue is recognised when the
performance obligation has been satisfied (charged in line with the contract
as the usage occurred). For overages fees where management do not consider
it possible to forecast and recognise revenue having regard to the variable
consideration constraint, extra capacity not purchased in advance is charged
in line with the contract as usage occurs.
Professional services
Professional services are considered to have a human element and can include
training, design, build, support work and onboarding. Revenue is recognised
over time on the basis that the customer benefits from the service as it is
provided. The output method is used to assess the stage of completion of
each service at the reporting date. Judgement is required to determine the
stage of completion. A review of deliverables by management and the
professional services team is undertaken at the reporting date and considered
together with time elapsed. Management believes that this provides a
faithful depiction of the transfer of goods based on prior experience.
There are occasions when these services are provided at no cost as part of the
contract sold. The services provided for no charge are recognised at the price
stated within the latest price list and accounted for as separate performance
obligations when the service occurs. The amount allocated to the services is
deducted from the contract value and the remainder of the contract value is
spread evenly over the term of the contract.
Integration licence fees
A licence to access a strategic partner's platform through an integration with
the Dotdigital platform. Revenue is recognised over time on the basis that
access to an IP exists at any given time throughout the licence period. The
contract price is recognised on a straight-line basis over the licence period.
Contract assets and contract liabilities
Costs to obtain a contract relate to sales commissions paid to staff and
commissions paid to strategic partners for referrals or integrations to their
platforms. The costs are deferred as contract assets and are amortised on a
systematic basis consistent with the pattern or transfer of services to which
the asset relates.
Where a customer prepays their contract in advance of commencement, the value
of the consideration received is initially recognised as a contract
liability. Revenue is subsequently recognised as the performance obligations
are met.
Going concern
The Directors are required to satisfy themselves that it is reasonable for
them to conclude whether it is appropriate to prepare the financial statements
on a going concern basis, and as part of that process they have followed the
Financial Reporting Council's guidelines ("Guidance on the Going Concern Basis
of Accounting and Reporting on Solvency and Liquidity Risk" issued April
2016).
The Group's business activities together with factors that are likely to
affect its future development and position are set out in the Chairman's
report, the Chief Executive Officer's report and financial review and the
Directors' report. Budgets and detailed profit and loss forecasts that look
beyond 12 months from the date of these consolidated financial statements have
been approved and used to ensure that the Group can meet its liabilities as
they fall due.
The Directors have made various assumptions in preparing these forecasts,
using their view of both the current and future economic conditions that may
impact on the Group during the forecast period.
The Directors, at the time of approving the financial statements, have 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 and finance income.
Dividends
Provision is made for the amount of any dividend declared, being appropriately
authorised and no longer at the discretion of the Company, on or before the
end of the reporting period but not distributed at the end of the reporting
period.
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
and is allocated to cash generating units.
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 of four to five 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 CGUs.
- 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 to five years.
- Intellectual Property
Acquired intellectual property is shown at historical cost. Intellectual
property has a finite life and is carried at cost less accumulated
amortisation. Amortisation is calculated using straight-line method to
allocate the cost of intellectual property over its useful life of five years.
- Product development
Product development expenditure is capitalised when it is considered that
there is a commercially and technically viable product, the related
expenditure is separately 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 asset is available for use.
Other development expenditures that do not meet these criteria are recognised
as an expense as incurred. 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 their 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 as detailed in IAS 38 'Intangible Assets' are fulfilled:
- It is technically feasible to complete the intangible asset so that it will
be available for 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 asset;
- 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.
-Technology
Technology represents the cost that would be incurred to build the entire
Fresh Relevance platform had the acquisition not occurred. The useful life of
the intangible assets are assessed to have a finite life of 8 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 asset is available for use.
-Customer relationships
This represents the value of customer contracts within Fresh Relevance. The
useful life of the intangible assets are assessed to have a finite life of 13
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 over the lifetime of the customer contract.
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 is 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.
Right of use assets: over the term of the
lease
Leasehold improvements: over the term of the lease
Fixtures and fittings: 25% on cost
Computer equipment: 25%-33.33% on cost
The assets' 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 than 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 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, 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 or directly in
equity, respectively.
Dotdigital EMEA Limited and Fresh Relevance Limited qualify to prepare R&D
tax credit claims under the SME scheme and to account for them under IAS 12
'Income Taxes'.
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
the related deferred income asset is realised or deferred income tax liability
is settled.
Leases
Leases are recognised as a right-of-use asset and a corresponding liability at
the date at which the leased asset is available for use by the Group. Each
lease payment is allocated between the liability and finance cost. The finance
cost is charged to the income statement over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of the liability
for each period. The right-of-use asset is depreciated over the shorter of the
asset's useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a
present value basis. Lease liabilities include the net present value of the
following lease payments:
- fixed payments (including in-substance fixed payments), less any lease
incentives receivable;
- variable lease payment that are based on an index or a rate;
- amounts expected to be payable by the lessee under residual value
guarantees;
- the exercise price of a purchase option if the lessee is reasonably certain
to exercise that option, and;
- payments of penalties for terminating the lease, if the lease term reflects
the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the
lease. If that rate cannot be determined, the lessee's incremental borrowing
rate is used, being the rate that the lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value in a similar economic
environment with similar terms and conditions.
Right-of-use assets are measured at cost comprising the following:
- the amount of the initial measurement of lease liability;
- any lease payments made at or before the commencement date less any lease
incentives received;
- any initial direct costs; and
- restoration costs.
Payments associated with short-term leases and leases of low-value assets are
recognised on a straight-line basis as an expense in the income statement.
Short-term leases are leases with a lease term of 12 months or less. Low-value
assets, being less than £5,000, comprise IT equipment and small items of
office furniture.
Extension and termination options
Extension and termination options are included in a number of property and
equipment leases across the Group. These terms are used to maximise
operational flexibility in terms of managing contracts. The majority of
extension and termination options held are exercisable only by the Group and
not by the respective lessor. None of the total lease payments made in the
period to 30 June 2024 were optional.
In determining the lease term, management considers all facts and
circumstances that create an economic incentive to exercise an extension
option, or not exercise a termination option. Extension options (or periods
after termination options) are only included in the lease term if the lease is
reasonably certain to be extended (or not terminated). Potential future cash
outflows have not been included in the lease liability because it is not
reasonably certain that the leases will be extended (or not terminated), the
amount of these cash flows is uncertain as several rounds of rent reviews are
due before this extension date.
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 are 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 FVPL, 'amortised cost' or 'fair value through other
comprehensive income' ('FVOCI'). The classification depends on the nature and
purpose of the financial assets and is determined at the time of recognition.
Financial assets are assessed for indicators of impairment at each balance
sheet date. Financial assets are impaired where there is objective evidence
that, as a result of one or more events that occurred after the initial
recognition of the financial asset, the estimated future cash flows of the
investment have been impacted.
For certain categories of financial asset, such as trade receivables, assets
that are assessed not to be impaired individually, the Group recognises
lifetime expected credit losses ('ECL') when there has been a significant
increase in credit risk since initial recognition. The Group applies the
simplified approach to measuring expected credit losses.
On derecognition of a financial asset measured at amortised cost, the
difference between the asset's carrying amount and the sum of the
consideration received and receivable is recognised in profit or loss.
- 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 a maturity
period of 95 days or less at the date of 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. Short term highly liquid
investments that have a maturity of up to 95 days are classified as cash
equivalents. Management believe that both the financial position and liquidity
of the Group are made clearer for the reader when all cash and cash equivalent
items are analysed together.
- 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, accrued liabilities
and lease 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 payable 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 risks have been
prepared.
The results and financial position of all the Group entities (none of which
has the currency of a hyper-inflationary 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 IFRS 3 'Business
combinations'.
The retranslation reserve represents the cumulative exchange differences on
the retranslation of foreign subsidiaries into the functional currency.
Other reserves relate to the charge for share-based payments in accordance
with IFRS 2 'Share-based Payment' plus the movement on the exercise or lapsing
of share options.
Share-based payments
For equity-settled share-based payment transactions the Group, in accordance
with IFRS 2 'Share-based Payment' 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. For options granted after 2019, a Monte Carlo model is used to
measure the fair use of options granted that are subject to a TSR performance
condition. A Black Scholes model is used to measure the fair use of all other
options granted. 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 vest 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 is this
currency the financial statements are presented in.
- Transaction and balances
Foreign currency transactions are translated into 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 provided to 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.
Foreign currency exchange rate risk
The Group has certain investments in foreign operations, whose net assets are
exposed to foreign currency translation risk. As well as naturally mitigating
this risk by offsetting its cost base in the same currencies where possible,
currency exposure arising from the net assets of the Group's foreign
operations is managed through cash balances denominated in the relevant
foreign currencies.
The Group is mainly exposed to the US Dollar, Australian Dollar, Singaporean
Dollar, Euro, South African Rand and Polish Zloty currencies.
The table below details the Group's sensitivity to a 10% increase or decrease
in Sterling against the relevant foreign currencies. 10% is the sensitivity
rate which represents management's assessment of the reasonable possible
change in foreign exchange rates. The sensitivity analysis includes only
outstanding foreign currency denominated monetary items and adjusts their
translation at the period end of a 10% change in foreign currency rates. A
positive number below indicates an increase in profit where Sterling
strengthens 10% against the relevant currency. For a 10% weakening of Sterling
against the relevant currency, there would be an equal and opposite impact on
the profit and other equity, and the balances below would be negative or
positive.
30.06.24 30.06.23
£'000 £'000
US Dollar 66 68
Australian Dollar 15 17
Singaporean Dollar (23) (42)
Euro 6 4
Belarusian Ruble - (8)
South African Rand 9 9
Polish Zloty 17 11
90 59
Accounting estimates and judgements
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 judgements
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:
Critical Judgements
(a) Capitalisation of development costs - refer to note 13
Our business model is underpinned by our email and data-driven omnichannel
marketing automation platform. 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 consider that 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.
(b) Valuation of goodwill - refer to note 12
The recognition of business combinations requires the excess of the purchase
price of acquisitions over the net book value of assets acquired to be
allocated to the assets and liabilities of the acquired entity. The Group
makes judgements and estimates in relation to the fair value allocation of the
purchase price. If any unallocated portion is positive it is recognised as
goodwill and if negative, it is recognised in the consolidated income
statement.
Judgement is required in determining the fair value of identifiable assets,
liabilities and contingent assets and liabilities assumed in a business
combination and the fair value of the consideration payable. Calculating the
fair values involves the use of significant estimates and assumptions,
including expectations about future cash flows, discount rates and the lives
of assets following purchase.
Other estimates and assumptions
Estimates and assumptions used by the business that do not 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:
(a) Impairment 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 flow forecasts which have been discounted at 15.08% (2023:
4.28%). This has increased as a result of the increase in the cost equity
which was impacted by the increase in the share price at the year end compared
to last year and the increase in dividend growth rate. 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 the assumptions, there was no
indication of impairment to the 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 as follows:
-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 29 to the financial statements. The charge
made to income statement for period is also disclosed there.
(c) Depreciation and amortisation
The Group depreciates right of use assets, short leasehold, fixtures and
fittings, computer equipment and amortises customer relationships, technology,
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 right of use
assets, short leasehold, fixtures and fittings, computer equipment, customer
relationships, technology, 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 take into
consideration (i) any 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.
Where a general provision is set then specific rationale will be set against
this which will be a combination of looking at historical data to ascertain
the percentage of debt which goes bad. Plus set against debts within a
specific business sector which might be facing financial difficulty, thereby
leading to a deemed higher risk of defaulting on their debts.
(e) Lease accounting - incremental borrowing rate
IFRS 16 'Leases' requires lease payments to be discounted using the lessee's
incremental borrowing rate. The Group's incremental borrowing rate, as at the
date of adoption of IFRS 16, has been based on local commercial bank loans.
Management have taken the view that specific costs of borrowing should be
applied to each lease as this reflects the different economic conditions
within each geography and hence is more representative of the funding
facilities available in those countries.
Exceptional items
Where items of income and expense are of such size, nature or incidence that
their disclosure is relevant to explain the performance of the company for the
period, the nature and amount of such items should be disclosed separately.
3. SEGMENTAL REPORTING
Dotdigital's single line of business remains the provision of intuitive
software as a service (SaaS) via an all-in-one customer experience and data
platform (CXDP). In the previous years Dotdigital had two lines of business;
the additional line being communication platform as a service (CPaaS). The
chief operating decision maker considers the Group's segments to be by
geographical location, this being EMEA, US and APAC operations as shown in the
tables that follow:
Geographical revenue and results (from all operations)
30.06.2024
EMEA US APAC Total
£'000 £'000 £'000 £'000
Income statement
Revenue 59,731 12,082 7,160 78,973
Gross profit 45,576 10,737 6,483 62,796
Profit/(loss) before income tax 12,390 1,159 (366) 13,183
Total comprehensive income/(loss) attributable to the owners of the parent
10,690 991 (642) 11,039
Financial position
Total assets 113,894 8,552 1,127 123,573
Net current assets 36,777 2,843 842 40,462
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 (2023: 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.
30.06.2023
EMEA US APAC Total
£'000 £'000 £'000 £'000
Income statement
Revenue 52,338 10,862 6,028 69,228
Gross profit 39,773 9,702 5,402 54,877
Profit/(loss) before income tax 14,067 921 (602) 14,386
Total comprehensive income/(loss) attributable to the owners of the parent
12,522 686 (651) 12,557
Financial position
Total assets 95,742 4,170 261 100,173
Net current assets/(liabilities) 50,620 2,647 (1,228) 52,039
The Company is domiciled in the UK, its consolidated non-current assets, other
than financial instruments and deferred tax assets are as follows:
30.06.24 30.06.23
£'000 £'000
Non-current assets
United Kingdom 62,867 31,661
Rest of the World 535 575
63,402 32,236
4. EMPLOYEES AND DIRECTORS
30.06.24 30.6.23
£'000 £'000
Wages and salaries 30,529 26,290
Social security costs 3,231 2,744
Other pension costs 824 671
34,584 29,705
The average monthly number of employees during the year is as follows
30.06.24 30.6.23
Directors 5 4
Sales and marketing 226 193
Product development and system engineers 161 126
Administration 59 61
451 384
Included in the total employees cost above, £7,315,285 (2023: £6,581,768)
was capitalised in relation to internally generated development costs.
5. EXCEPTIONAL COSTS
Exceptional costs incurred in the year relate to professional acquisition
costs £389,000 (2023: £100,000), employers NI paid on the exercise of LTIPs
by a member of the leadership team £143,000 (2023: £nil), severance payment
as a result of a departmental restructure £430,000 (2023: £nil) and
professional fees related to the valuation of share options and review of
long-term incentive plan £11,000 (2023: £14,000).
6. NET FINANCE INCOME
30.06.24 30.6.23
£'000 £'000
Deposit account interest 1,351 895
Finance income: 1,351 895
Interest on lease liabilities -81 -81
Other net interest payable -28 -
Interest capitalised 21 24
Finance expense: -88 -57
Net finance income 1,263 838
7. PROFIT FROM CONTINUING OPERATIONS
Costs by nature
Profit from continuing operations has been arrived at after charge and
crediting:-
30.06.24 30.06.23
£'000 £'000
Outsourcing and tech infrastructure 16,177 14,351
Total cost of sales 16,177 11,570
30.06.24 30.06.23
£'000 £'000
Direct marketing 3,328 3,004
Partner commission 1,795 1,109
Staff related costs (inc Directors' emoluments) 27,336 23,544
Auditor's remuneration 128 140
Amortisation of intangibles* 7,691 6,458
Depreciation charge* 974 1,025
Legal, professional and consultancy fees 977 840
Computer expenditure 1,432 1081
Bad debts 459 (193)
Foreign exchange losses 90 593
Travel and subsistence costs 483 421
Office running 599 465
Insurance 274 214
Staff welfare 604 535
Bank and credit card charges 477 431
Telephone 122 128
Subscriptions 50 53
Recruitment fees 60 214
Other costs 343 297
Total administrative expenses 47,222 40,359
During the year the Group obtained the following services from the Group's
auditor at costs detailed below:
30.06.24 30.06.23
£'000 £'000
Fees payable to the Company's auditor for the audit of Parent Company and 20 41
consolidated financial statements
Fees payable to the Company's auditor for other services
- audit of Company subsidiaries 104 63
- review of interim accounts 4 4
- overrun of prior year audit services - 32
128 140
*Both amortisation of intangibles and depreciation charge will not agree to
the relevant notes as these numbers exclude amounts capitalised as development
expenditure, amounts included in exceptional costs and amounts in cost of
sales.
8. INCOME TAX EXPENSE
Analysis of the tax charge from continuing operations:
30.06.24 30.06.23
£'000 £'000
Current tax on profits for the year 2,030 1,448
Foreign tax suffered 301 266
Changes in estimates related to prior years 48 38
Deferred tax on origination and reversal of timing differences (262) 39
2,117 1,791
Factors affecting the tax charge:
30.06.24 30.06.23
£'000 £'000
Profit on ordinary activities from all operations before tax 13,183 14,386
Profit on ordinary activities multiplied by the standard rate of corporation 3,296 3,597
tax in the UK: 25% (2022: 19%)
Effects of:
Adjustments in respect of prior years (67) (46)
Expenses not deductible 300 66
Research and development enhanced claim (1,469) (1,761)
Income not taxable (1) (18)
Share options 55 78
Amounts not recognised and previously unrecognised (4) -
Tax rate changes 1 (160)
Effects of overseas tax rates 8 35
Other (2) -
Total tax charge for the year 2,117 1,791
Deferred tax was calculated using the rate 25% (2023: 25%). For further
details on deferred tax see note 24.
Taxation for each region is calculated at the rates prevailing in the
respective jurisdiction.
The effective tax rate in the period was 16.06% (2023: 12.44%). UK deferred
balances have been recognised at 25% in the period (2023: 25%).
9. PROFIT OF PARENT COMPANY
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 £1,814,895 (2023: profit of £4,459,042)
10. DIVIDENDS
Amounts recognised as distributions to equity holders in the period
30.06.24 30.06.23
£'000 £'000
Paid dividend for year end 30 June 2023 of 1.00p (2022: 0.98p) per share 3,066 2,926
Proposed dividend for the year end 30 June 2024 of 1.10p (2023: 1.00p) per 3,392 3,050
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.
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. 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:
30.06.24 30.06.23
From all operations £'000 £'000
Profit for the year attributable to the owners of the parent 11,066 12,595
Amortisation of acquisition-related intangible fixed assets (see note 13) 1,462 120
Professional acquisition costs(see note 5) 389 100
Other exceptional costs (see note 5) 584 14
Share-based payment (see note 29) 1,219 736
Adjusted profit for the year attributable to the owners of the parent 14,720 13,565
Management does not consider the above adjustments to reflect the underlying
business performance. The other exceptional costs relate to professional fees.
30.06.24
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 11,066 305,472,095 3.62
Adjusted basic EPS
Adjusted profit for the year attributable to the owners of the parent 14,720 305,472,095 4.82
Options and warrants - 7,192,298 -
Diluted EPS
Profit for the year attributable to the owners of the parent 11,066 312,664,393 3.54
Adjusted diluted EPS
Adjusted profit for the year attributable to the owners of the parent 14,720 312,664,393 4.71
30.06.23
Weighted Per share
average
From all operations Earnings number of Amount
£'000 shares Pence
Basic EPS
Profit for the year attributable to the owners of the parent 12,595 299,216,130 4.21
Adjusted basic EPS
Adjusted profit for the year attributable to the owners of the parent 13,565 299,216,130 4.53
Options and Warrants - 7,219,476 -
Diluted EPS
Profit for the year attributable to the owners of the parent 12,595 306,435,606 4.11
Adjusted diluted EPS
Adjusted profit for the year attributable to the owners of the parent 13,565 306,435,606 4.43
Weighted average number of shares 30.06.24 30.06.23
Shares Shares
305,472,095 299,216,130
Basic EPS
Diluted EPS 312,664,393 306,435,606
12. GOODWILL
Group
30.06.24 30.06.23
COST £'000 £'000
At 1 July 13,192 13,192
Additions 12,598 -
25,790 13,192
At 30 June
IMPAIRMENT
At 1 July 3,512 3,512
At 30 June 3,512 3,512
NET BOOK VALUE 22,278 9,680
On 11 September 2023, the Group acquired all the voting rights of Fresh
Relevance Limited for a purchase consideration of £18.8m in cash and £5.7m
in shares in exchange for all Fresh Relevance Limited shares. Further
consideration of £0.6m was paid at acquisition to aid Fresh Relevance Limited
in the repayment of debt.
The Directors believe the acquisition will:
- Accelerate Dotdigital's CXDP roadmap, bringing highly complementary
cross-channel personalisation and website technology together with technical
expertise.
- Increase the Group's addressable market, enabling the acquisition of higher
value customers and supporting customer retention by providing the means to
expand its role in existing customers' technology stacks.
- Add over £6.0m of annual revenues, of which 93% are recurring SaaS revenue,
and £0.6m annual EBITDA before integration costs.
- Create revenue and cost synergies over the medium term and is expected to be
earnings enhancing in the financial year ending 30 June 2025.
Goodwill of £12.6m was recognised on the acquisition, being the excess of the
purchase consideration over the fair value of net assets acquired as set out
below.
Fair value of assets acquired
£'000
Assets
Non-current assets
Intangibles assets 17,129
Property, plant and equipment 22
17,151
Current assets
Trade and other receivables 808
Tax asset 118
Cash and cash equivalents 498
1,424
Total assets 18,575
Liabilities
Non-current liabilities
Deferred tax 3,974
3,974
Current liabilities
Trade and other payables 2,680
2,680
Total liabilities 6,654
Total fair value of assets acquired 11,921
Goodwill 12,598
Consideration in cash 18,823
Consideration in ordinary shares 5,696
Total consideration 24,519
Consideration transferred settled in cash 18,823
Cash and cash equivalents acquired (498)
Net cash outflow on acquisition 18,325
Goodwill is allocated to the Group's cash generating unit (CGUs) identified,
being Dotdigital.
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 trading activity and
business segment. 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
15.08% (2023: 4.28%). This has increased as a result of the increase in the
cost equity which was impacted by the increase in the share price at the year
end compared to last year and the increase in dividend growth rate.
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 9% (2023:
11%) and the same rate has been used as the long-term constant growth rate.
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 80% (2023: 73%).
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 109%
(2023: 145%) discount rate and growth rate of -4% (2023: -5%).
13. INTANGIBLE ASSETS
Group
Technology Customer relationships Intellectual property
£'000 £'000 £'000
At 1 July 2023 1,200 1,205 55
Additions - - 3
Acquisition 7,251 9,878 -
At 30 June 2024 8,451 11,083 58
AMORTISATION
At 1 July 2023 670 1,205 47
Amortisation for the year 850 612 1
At 30 June 2024 1,520 1,817 48
NET BOOK VALUE
At 30 June 2024 6,931 9,266 10
Internally generated development
Computer Domain
software costs names Totals
£'000 £'000 £'000 £'000
COST
At 1 July 2023 1,080 50,359 51 53,950
Additions 16 9,690 - 9,709
Acquisition - - - 17,129
At 30 June 2024 1,096 60,049 51 80,788
AMORTISATION
At 1 July 2023 980 31,151 37 34,090
Amortisation for the year 49 7,629 1 9,142
At 30 June 2024 1,029 38,780 38 43,232
NET BOOK VALUE
At 30 June 2024 67 21,269 13 37,556
Customer
Technology relationships Intellectual Property
COST £'000 £'000 £'000
At 1 July 2022 1,200 1,205 55
Additions - - -
Disposals - - -
Exchange differences - - -
At 30 June 2023
1,200 1,205 55
AMORTISATION
At 1 July 2022 550 1,205 46
Amortisation for the year 120 - 1
Disposals - - -
Exchange differences - - -
At 30 June 2023
670 1,205 47
NET BOOK VALUE
530 - 8
At 30 June 2023
Internally generated development
Computer Domain
Software costs names Totals
£'000 £'000 £'000 £'000
COST
At 1 July 2022 1,056 41,651 46 45,213
Additions 26 8,729 5 8,760
Disposals (1) (17) - (18)
Exchange differences (1) (4) - (5)
At 30 June 2023 1,080 50,359 51 53,950
AMORTISATION
At 1 July 2022 899 24,778 37 27,515
Amortisation for the year 82 6,375 - 6,578
Disposals - (2) - (2)
Exchange differences (1) - - (1)
At 30 June 2023 980 31,151 37 34,090
NET BOOK VALUE
At 30 June 2023 100 19,208 14 19,860
Development cost additions represent 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
licences the use of the platform.
Technology represents the cost that would be incurred to build the entire
Comapi and Fresh Relevance platforms had the acquisitions not occurred.
Customer relationships represent the value of customer contracts within Comapi
and Fresh Relevance.
Company
Intellectual
Property
£'000
COST
As at 1 July 2023 -
Additions 3
Foreign currency translation -
At 30 June 2024 3
DEPRECIATION
As at 1 July 2023 -
Depreciation for the year -
At 30 June 2024 -
NET BOOK VALUE
At 30 June 2024 3
14. PROPERTY, PLANT AND EQUIPMENT
Group
Right of Leasehold Fixtures & Computer
Use assets improvements fittings equipment Totals
£'000 £'000 £'000 £'000 £'000
COST
At 1 July 2023 5,209 685 612 2,998 9,504
Additions 1,857 - - 195 2,052
Acquisition - - 2 20 22
Re-measurement of existing lease liabilities 8 - - - 8
Disposals (1,959) - - - (1,959)
Exchange differences 3 - 1 5 9
At 30 June 2024 5,118 685 615 3,218 9,636
DEPRECIATION
At 1 July 2023 3,220 596 555 2,437 6,808
Depreciation for the year 894 45 14 265 1,218
Disposals (1,959) - - - (1,959)
Exchange differences - - - 1 1
At 30 June 2024 2,155 641 569 2,703 6,068
NET BOOK VALUE
At 30 June 2024 2,963 44 46 515 3,568
Right of Leasehold Fixtures & Computer
Use assets improvements fittings equipment Totals
£'000 £'000 £'000 £'000 £'000
COST
At 1 July 2022 5,555 731 773 3,102 10,161
Additions 406 3 53 250 712
Disposals (719) (46) (200) (323) (1,288)
Re-measurement of existing lease liabilities (33) - - - (33)
Exchange differences - (3) (14) (31) (48)
At 30 June 2023 5,209 685 612 2,998 9,504
DEPRECIATION
At 1 July 2022 3,055 593 736 2,492 6,876
Depreciation for the year 873 52 23 278 1,226
Disposals (719) (46) (190) (311) (1,266)
Re-measurement of existing lease liabilities 14 - - - 14
Exchange differences (3) (3) (14) (22) (42)
At 30 June 2023 3,220 596 555 2,437 6,808
NET BOOK VALUE
At 30 June 2023 1,989 89 57 561 2,696
Included in the net carrying amount of property, plant and equipment are the
right-of-use assets as follows:
Properties Motor Totals
vehicles
£'000 £'000 £'000
COST
As at 1 July 2023 5,014 195 5,209
Termination of leases (1,959) - (1,959)
Additions 1,772 85 1,857
Re-measurement of existing lease liabilities 8 - 8
Foreign currency translation 3 - 3
At 30 June 2024 4,838 280 5,118
DEPRECIATION
As at 1 July 2023 3,034 186 3,220
Depreciation for the year 852 42 894
Termination of leases (1,959) - (1,959)
At 30 June 2024 1,927 228 2,155
NET BOOK VALUE
At 30 June 2024 2,911 52 2,963
Properties Motor Totals
vehicles
£'000 £'000 £'000
COST
As at 1 July 2022 5,400 155 5,555
Termination of leases (719) - (719)
Additions 366 40 406
Remeasurement of existing lease liabilities (33) - (33)
Foreign currency translation - - -
At 30 June 2023 5,014 195 5,209
DEPRECIATION
As at 1 July 2022 2,906 149 3,055
Depreciation for the year 836 37 873
Termination of leases (719) - (719)
Re-measurement of existing lease 14 - 14
Foreign currency translation (3) - (3)
At 30 June 2023 3,034 186 3,220
NET BOOK VALUE
At 30 June 2023 1,980 9 1,989
Company
Computer Equipment
£'000
COST
As at 1 July 2023 17
Additions 4
Foreign currency translation -
At 30 June 21
2024
DEPRECIATION
As at 1 July 2023 8
Depreciation for the year 4
At 30 June 2024 12
NET BOOK VALUE
At 30 June 2024 9
Computer Equipment
£'000
COST
As at 1 July 2022 11
Additions 6
At 30 June 2023
17
DEPRECIATION
As at 1 July 2022 4
Depreciation for the year 4
At 30 June 2023
8
NET BOOK VALUE
At 30 June 2023 9
15. INVESTMENTS
Company
Group Group
undertakings undertakings
30.6.24 30.6.23
COST £'000 £'000
At 1 July 22,837 22,116
Additions 25,717 721
Disposals - -
At 30 June 48,554 22,837
IMPAIRMENT
At 1 July 3,790 3,754
Impairment (lapsed share options) 970 36
At 30 June 4,760 3,790
NET BOOK VALUE
At 30 June 43,794 19,047
The Group's or the Company's investments at the balance sheet date in the
share capital of companies include the following:
Subsidiaries Nature of business Class of share Proportion of
voting power
held directly %
Dotdigital EMEA Limited All-in-one customer experience and data platform Ordinary 100
Dotdigital Inc All-in-one customer experience and data platform Ordinary 100
Dotdigital APAC Pty Limited All-in-one customer experience and data platform Ordinary 100
Dotdigital B.V. All-in-one customer experience and data platform Ordinary 100
Dotdigital Development SA Pty Development hub Ordinary 100
Dotdigital SG Pte Limited All-in-one customer experience and data platform
Ordinary 100
Dynmark International Ltd Non-trading Ordinary 100
Dotdigital Poland S.p. z.o.o Development hub Ordinary 100
Fresh Relevance Ltd Cross-channel personalisation platform Ordinary 100
Fresh Relevance Inc Cross-channel personalisation platform Ordinary 100
All of the above subsidiaries have been included within the consolidated
results, however Dynmark International Ltd and Fresh Relevance Limited was
exempt from audit by virtue of s479A of Companies Act 2006. Dotdigital EMEA
Limited, Dynmark International Ltd and Fresh Relevance Ltd were incorporated
in England and Wales. Dotdigital Inc was incorporated in Delaware (US), Fresh
Relevance Inc was incorporated in Delaware (US), Dotdigital APAC Pty Limited
was incorporated in New South Wales (Australia), Dotdigital B.V. was
incorporated in Netherlands, Dotdigital SG Pte Ltd was incorporated in
Singapore, Dotdigital Development SA Pty was incorporated in South Africa, and
Dotdigital Poland S.p. z.o.o was incorporated in Poland.
Subsidiary
Registered office
Dotdigital EMEA Ltd
No.1 London Bridge
Dynmark International Ltd
London
Fresh Relevance Ltd
SE1 9BG
Dotdigital Inc
16192 Coastal Highway
Lewes
Delaware 19958-9776
County of Sussex
USA
Fresh Relevance Inc
6 Liberty Square
Unit 248
Boston
MA 02109
USA
Dotdigital APAC Pty Ltd
60/2 O'Connell Street
Parramatta
New South Wales 2150
Australia
Dotdigital SG Pte Ltd
6001 Beach Road
11-06 Golden Mile Tower
199589 Singapore
Dotdigital Development SA Pty Ltd
BDO Building
Wanderers Office Park
52 Corlett Drive
Illovo
Johannesburg 2196
South Africa
Dotdigital B.V.
Spaces Amstel
Mr. Treublaan 7
Amsterdam
1097DP
Netherlands
Dotdigital Poland S.p. z.o.o
Al. Jana Pawla II 22
00-133 Warsaw
Poland
16. TRADE AND OTHER RECEIVABLES
Group Company
Restated*
30.06.24 30.06.23 30.06.24 30.06.23
£'000 £'000 £'000 £'000
Current:
Trade receivables 14,026 11,487 181 -
Less: Provision for impairment of trade receivables - -
(1,621) (1,305)
Trade receivables - net 12,405 10,182 181 -
Other receivables 61 29 - -
Amounts owed by Group undertakings - - 10,944 4,967
VAT - - 150 34
Prepayments and contract assets 5,545 5,050 46 71
18,011 15,261 11,321 5,072
*See note 35.
Amounts owed by Group undertakings have been reviewed for impairment in
accordance with IFRS 9. The Group undertaking has excess cash and is able to
make full payment upon request. Management are therefore satisfied that an
impairment is not required.
Included within Group prepayments is an amount of £326,827 (2023: £255,846)
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.
On that basis, the loss allowance as at 30 June 2024 and 30 June 2023 was
determined as follows for trade receivables:
Current 30-60 days 60-90 days over 90 days Total
£'000 £'000 £'000 £'000 £'000
As at 30 June 2024
Trade receivables 7,353 3,560 809 2,304 14,026
Provsion for impairment 102 24 269 1,226 1,621
Expected loss rate 1% 1% 33% 53%
Current 30-60 days 60-90 days over 90 days Total
£'000 £'000 £'000 £'000 £'000
As at 30 June 2023
Trade receivables 6,320 2,629 871 1,667 11,487
Provsion for impairment 68 11 171 1,055 1,305
Expected loss rate 1% 1% 20% 63%
No expected credit losses have been recognised on contract assets.
Further details on the above can be found in note
22.
17. CASH AND CASH EQUIVALENTS
Group Company
30.06.24 30.06.23 30.06.24 30.06.23
£'000 £'000 £'000 £'000
Cash at bank 9,701 17,534 724 396
Short-term deposit accounts 32,459 35,142 - -
42,160 52,676 724 396
Further details on the above can be found in note 22.
18. CALLED UP SHARE CAPITAL
Allotted, issued, fully paid Nominal 30.06.24 30.06.23
number value £'000 £'000
307,508,353 (2023: 299,216,130) £0.005 1,538 1,496
1,538 1,496
During the reporting period the Company undertook the following transactions
involving the issuing of share capital:
On 11 September 2023 6,862,684 shares were issued as part of the consideration
for Fresh Relevance Limited shares. The shares had a nominal value of
£34,000 and a share premium value of £5,662,000. See note 12 and 19.
On 3 November 2023 an employee exercised their share options increasing the
issued share capital by 437,500 shares.
On 18 December 2023 an employee exercised their share options increasing the
issued share capital by 741,647 shares.
On 28 March 2024 an employee exercised their share options increasing the
issued share capital by 250,393 shares.
19. RESERVES
Group
Retained Share Reverse acquisition
earnings premium reserve
£'000 £'000 £'000
As at 1 July 2023 73,536 7,124 (4,695)
Issue of share capital - 5,662 -
Dividends (3,066) - -
Profit for the year 11,066 - -
Transfer of reserves 969 - -
Deferred tax on share options - - -
Other comprehensive income: currency translation - - -
Share-based payment - - -
Balance as at 30 June 2024 82,505 12,786 (4,695)
Retranslation Share based
Reserve Payment reserve Totals
£'000 £'000 £'000
As at 1 July 2023 258 2,591 78,814
Issue of share capital - - 5,662
Dividends - - (3,066)
Profit for the year - - 11,066
Transfer of reserves - (969) -
Deferred tax on share options - 16 16
Other comprehensive income: currency translation (27) - (27)
Share-based payment - 1,197 1,197
Balance as at 30 June 2024 231 2,835 93,662
Group
Retained Share Reverse acquisition
earnings premium reserve
£'000 £'000 £'000
As at 1 July 2022 63,582 7,124 (4,695)
Dividends (2,926) - -
Profit for the year 12,595 - -
Transfer of reserves 285 - -
Deferred tax on share options - - -
Other comprehensive income: currency translation - - -
Share-based payment - - -
Balance as at 30 June 2023 73,536 7,124 (4,695)
Retranslation Share based
reserve Payment reserve Totals
£'000 £'000 £'000
As at 1 July 2022 296 2,005 68,312
Dividends - - (2,926)
Profit for the year - - 12,595
Transfer in reserves - (285) -
Deferred tax on share options - 150 150
Other comprehensive income: currency translation (38) - (38)
Share-based payment - 721 721
Balance as at 30 June 2023 258 2,591 78,814
Company
Retained Share Share based
earnings premium Payment reserve Totals
£'000 £'000 £'000 £'000
At 1 July 2023 10,969 7,124 2,600 20,693
Issue of share capital - 5,662 - 5,662
Dividends (3,066) - - (3,066)
Loss for the year (1,815) - - (1,815)
Transfer in reserves 969 - (969) -
Share based payments - - 1,197 1,197
Balance as at 30 June 2024 7,057 12,786 2,828 22,671
Company
Retained Share Share based
earnings premium Payment reserve Totals
£'000 £'000 £'000 £'000
At 1 July 2022 9,400 7,124 1,915 18,439
Issue of share capital - - - -
Dividends (2,926) - - (2,926)
Profit for the year 4,459 - - 4,459
Transfer in reserves 36 - (36) -
Share based payments - - 721 721
Balance as at 30 June 2023 10,969 7,124 2,600 20,693
20. TRADE AND OTHER PAYABLES
Group Company
Restated*
30.06.24 30.06.23 30.06.24 30.06.23
£'000 £'000 £'000 £'000
Current:
Trade payables 2,262 2,175 52 -
Social security and other taxes 688 588 - -
Other payables 214 170 - -
Amounts owed to Group undertakings - - 31,492 2,133
VAT 1,202 730 - -
Accruals and contract liabilities 13,982 10,966 98 202
18,348 14,629 31,642 2,335
*See note 35.
Further details on liquidity and interest rate risk can be found in note 2.
Contract liabilities at 30 June 2024 were £7,937,000. Included within
revenue is £1,751,000 relating to contract liabilities of £5,750,000 that
had been recognised at 30 June 2023 (£1,322,000 was included within revenue
in the year ended 30 June 2023, which related to contract liabilities
recognised at 30 June 2022). Contract liabilities have significantly
increased during the year due to an uplift in customers who have chosen to pay
upfront on their contracts.
21. LEASE LIABILITIES
Group
Properties Motor Vehicles Totals
£'000 £'000 £'000
At 1 July 2023 2,118 26 2,144
Additions 1,772 85 1,857
Principal repayments (967) (45) (1,012)
Interest 78 3 81
Remeasurement of existing lease liabilities 8 - 8
Foreign currency retranslation 2 - 2
At 30 June 2024 3,011 69 3,080
Current 722 24 746
Non-current 2,289 45 2,334
At 30 June 2024 3,011 69 3,080
Group
Properties Motor Vehicles Totals
£'000 £'000 £'000
At 1 July 2022 2,540 36 2,576
Termination of leases (4) - (4)
Additions 366 41 407
Principal repayments (864) (53) (917)
Interest 79 2 81
Foreign currency retranslation 1 - 1
At 30 June 2023 2,118 26 2,144
Current 797 26 823
Non-current 1,321 - 1,321
At 30 June 2023 2,118 26 2,144
The properties are office leases located in various
location where the term ranges from one to ten years. The motor vehicles are
company cars offered to senior staff where the term is always three years.
22. 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.
22. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT -
continued
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 Company
Restated*
30.06.24 30.06.23 30.06.24 30.06.23
£'000 £'000 £'000 £'000
Financial assets at amortised cost
Trade and other receivables 12,466 10,211 181 -
Amounts owed from group undertakings - - 10,944 2,834
Cash and cash equivalents 42,160 52,676 724 396
54,626 62,887 11,849 3,230
Financial liabilities at amortised cost
Trade payables 2,262 2,175 52 -
Accrued liabilities and other payables 6,260 5,380 98 202
Amounts owed from group undertakings - - 31,492 2,133
Lease liabilities 3,080 2,144 - -
11,602 9,699 31,642 2,335
*See note 35
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 Operational Risk Committee. The Audit and Risk Committee
and in turn the Board receives quarterly reports from the Operational 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 £9,267,366 (2023: £8,377,583) 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 2024 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:
30.06.24 30.06.23
£'000 £'000
0-30 days 146 609
30-60 days 578 664
More than 60 days 2,649 1,184
3,373 2,457
The maturity of the Group's provision for impairment is as follows:
30.06.24 30.06.23
£'000 £'000
0-30 days 126 68
30-60 days 269 11
More than 60 days 1,289 1,226
1,684 1,305
The movement in the provision for the impairment is as follows:
30.06.24 30.06.23
£'000 £'000
As at 1 July 1,305 1,892
Charged to the income statement 459 (193)
Utilisations and other movements (80) (394)
As at 30 June 1,684 1,305
22. FINANCIAL
INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - continued
As of 30 June 2024, no other receivables or contract assets were impaired
(2023: £nil).
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 of 45 days, consisted of a value of £3,685,294 (2023: £2,203,244) of
which £1,288,148 (2023: £1,219,374) 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 Group's cash holdings are held at NatWest Bank, Investec Bank Plc and HSBC
Bank Plc, which have A, B and A+ credit ratings respectively.
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 (2023: £nil)
and amounts payable over one year are £nil (2023: £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.
Foreign currency exchange rate risk
Refer to foreign currency exchange rate risk under note 2.
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 2024
Trade and other payables 11,400 - - - 11,400
Lease liabilities 467 442 862 1,704 3,475
Total non-derivatives 11,867 442 862 1,704 14,875
<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 2023
Trade and other payables 8,873 - - - 8,873
Lease liabilities 474 415 426 955 2,270
Total non-derivatives 9,347 415 426 955 11,143
23.RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITES
30.06.24 30.06.23
Lease Liabilities Lease Liabilities
£'000 £'000
As at 1 July 2,144 2,576
Cash flows (1,012) (917)
Interest 81 81
Foreign exchange movement 2 1
Lease additions, terminations and re-measurements 1,865 403
As at 30 June 3,080 2,144
24. DEFERRED TAX
The gross movement in deferred tax is as follows:
Acquired Accelerated Short-term R&D relief Share- Tax Total
intangibles capital timing in excess of based Losses
Deferred tax liability allowances differences amortisation payments
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1st July 2022 163 82 (82) 3,181 (453) (136) 2,755
(Credit)/charge to the consolidated income statement (30) (22) (18) 350 (176) (65) 39
(Credit) to the consolidated statement of changes in equity - - - - (150) - (150)
At 1st July 2023 133 60 (100) 3,531 (779) (201) 2,644
Acquired 4,282 5 (14) - - (309) 3,964
(Credit)/charge to the consolidated income statement (366) (20) (7) 261 17 (147) (262)
(Credit) to the consolidated statement of changes in equity - - - - (16) - (16)
At 30 June 2023 4,049 45 (121) 3,792 (778) (657) 6,330
30.06.24 30.06.23
£'000 £'000
As at 1 July 2,644 2,755
Acquired 3,964 -
Current year provision (278) (111)
6,330 2,644
The following is the analysis of the
deferred tax balances after any offset:
30.06.24 30.06.23
£'000 £'000
Deferred tax assets (1,556) (1,080)
Deferred tax liabilities 7,886 3,724
6,330 2,644
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.
25. CAPITAL COMMITMENTS
The Company and Group have no capital commitments as at the year end (2023:
£nil).
26. CONTINGENT LIABILITIES
The company and Group have no Contingent liabilities as at
the year end (2023: £nil).
27. 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.
Key management
personnel
30.06.24 30.06.23
£'000 £'000
Aggregate emoluments 1,288 1,191
Company contributions to money purchase pension scheme 27 22
Share-based payments from the LTIP options granted 313 248
1,628 1,461
The Board of Directors are deemed to be key management personnel. Details of
directors' emoluments are provided in the Remuneration Committee report.
Information in relation to the highest paid Director is as follows:
30.06.24 30.06.23
£'000 £'000
Salaries 714 698
Other benefits 5 4
Pension costs 19 19
Share-based payments on the LTIP options granted 239 224
977 945
The number of directors for whom retirement benefits are accruing under
defined contribution pension schemes amounted to 2 (2023: 2).
Company
The following transactions were carried out with related parties
30.06.24 30.06.23
£'000 £'000
Year end balances arising from sales/purchase of services
Dotdigital EMEA Limited Subsidiary Receivables 10,337 4,968
Dotdigital EMEA Limited Subsidiary (Payables) (31,491) (2,133)
Fresh Relevance Limited Subsidiary Receivables 607 -
(20,547) 2,835
The receivables and payables are unrestricted in nature and bear no interest.
No provisions are held against receivables from related parties.
IAS 24 Related Party Disclosure (Revised)
allows disclosure exemption of transactions between wholly-owned subsidiaries
that are eliminated on consolidation.
28. 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., Dotdigital Development SA Pty Ltd,
Dotdigital SG Pte. Limited, Dynmark International Limited, Dotdigital Poland
S.p. z.o.o, Fresh Relevance Limited and Fresh Relevance Inc.
29. 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 £1,196,972 (2023: £721,070)
and £22,248 movement in the provision of NI (2023: £15,003).
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 2024 had a WAEP of 44.23p (2023: 36.91p) and a weighted
average contracted life of 8.86 years (2023: 7.27 years) and their exercise
prices ranged from 0.5p to 181.2p. All share options are settled in form of
equity issued.
30.06.24 30.06.23
No of options WAEP No of options WAEP
Outstanding at the beginning of the period 49.04p
7,512,423 36.91p 6,059,337
Granted during the year 2.30p
4,244,955 40.13p 1,654,722
Forfeited/cancelled during the period 117.51p
(544,474) 28.2p (201,636)
Exchanged for shares -
(1,402,893) 0.5p -
Outstanding at the end of the period
9,810,011 44.23p 7,512,423 36.91p
Exercisable at the end of the period - -
- -
The weighted average share price at the date of the exercise for share options
exercised during the period was 0.5p (2023: n/a). For options granted after
2019, a Monte Carlo model was used in measuring the fair use of options
granted that were subject to a TSR performance condition. A Black Scholes
model was used in measuring the fair use of all other options granted.
22 December 2020 23 September 2021 24 December 2021
Relative Relative Relative
EPS (50%) TSR (50%) EPS (50%) TSR (50%) EPS (50%) TSR (50%)
Number of options granted 153,364 153,364 100,729 100,729 193,894 193,894
Share price at grant date 152.0p 152.0p 264.0p 264.0p 196.0p 196.0p
Exercise price 0.50p 0.50p 0.50p 0.50p 0.50p 0.50p
Option life in years 10 years 10 years 10 years 10 years 10 years 10 years
Risk-free rate (0.08)% (0.08)% 0.38% 0.38% 0.57% 0.57%
Expected volatility 40.40% 40.40% 39.00% 39.00% 43.00% 43.00%
Expected dividend yield 0% 0% 0% 0% 0% 0%
Fair value of options 152.0p 99.0p 264.0p 181.0p 196.0p 115.0p
08 December 2022 24 December 2022 5 December 2023
Relative Relative Relative
EPS (50%) TSR (50%) EPS (50%) TSR (50%) EPS (50%) TSR (50%)
Number of options granted 438,435 438,434 283,157 283,156 1,018,371 1,018,370
Share price at grant date 93.0p 93.0p 83.9p 83.9p 96.0p 96.0p
Exercise price 0.50p 0.50p 0.50p 0.50p 0.50p 0.50p
Option life in years 10 years 10 years 10 years 10 years 10 years 10 years
Risk-free rate 3.10% 3.10% 3.50% 3.50% 4.30% 4.30%
Expected volatility 52.60% 52.60% 52.70% 52.70% 50.30% 50.30%
Expected dividend yield 0% 0% 0% 0% 0% 0%
Fair value of options 92.54p 71.0p 83.45p 60.0p 95.2p 68.0p
19 December 24 October 14 December 15 December 12 April
2017 2018 2020 2021 2022
Number of options granted 1,375,000 2,305,000 535,920 567,300 91,127
Share price at grant date 85.95p 77.5p 148.0p 181.0p 86.4p
Exercise price 0.50p 0.50p 147.5p 181.2p 0.50p
Option life in years 5 years 5 years 10 years 10 years 5 years
Risk-free rate 1.33% 1.23% (0.01)% 0.54% 1.65%
Expected volatility 30.0% 30.0% 34.3% 35.5% 53.2%
Expected dividend yield 1% 1% 0.56% 0.46% 1%
Fair value of options 65.3p 52.7p 47.0p 62.0p 80.5p
22 December 12 April 5 March 21 March
14 April
2022 2022 2023 2024 2024
Number of options granted 1,367,547 35,149 85,264 250,393 1,957,821
Share price at grant date 90.0p 83.9p 91.8p 95.2p 87.3p
Exercise price 86.5p 85.35p 0.50p 0.50p 87.6p
Option life in years 10 years 5 years 5 years 1 year 5 years
Risk-free rate 1.68% 3.55% 3.40% 4.63% 3.78%
Expected volatility 50.3% 60.7% 58.3% 57.9% 57.9%
Expected dividend yield 0.96% 1.03% 1.07% 1.05% 1.15%
Fair value of options 42.0p 46.56p 85.25p 93.7p 46.8p
The weighted average share price at the date of the exercise for share options
exercised during the period was 0.5p (2023: n/a). For options granted after
2019, a Monte Carlo model was used in measuring the fair use of options
granted that were subject to a TSR performance condition. A Black Scholes
model was used in measuring the fair use of all other options granted.
22 December 2020 23 September 2021 24 December 2021
Relative Relative Relative
EPS (50%) TSR (50%) EPS (50%) TSR (50%) EPS (50%) TSR (50%)
Number of options granted 153,364 153,364 100,729 100,729 193,894 193,894
Share price at grant date 152.0p 152.0p 264.0p 264.0p 196.0p 196.0p
Exercise price 0.50p 0.50p 0.50p 0.50p 0.50p 0.50p
Option life in years 10 years 10 years 10 years 10 years 10 years 10 years
Risk-free rate (0.08)% (0.08)% 0.38% 0.38% 0.57% 0.57%
Expected volatility 40.40% 40.40% 39.00% 39.00% 43.00% 43.00%
Expected dividend yield 0% 0% 0% 0% 0% 0%
Fair value of options 152.0p 99.0p 264.0p 181.0p 196.0p 115.0p
08 December 2022 24 December 2022 5 December 2023
Relative Relative Relative
EPS (50%) TSR (50%) EPS (50%) TSR (50%) EPS (50%) TSR (50%)
Number of options granted 438,435 438,434 283,157 283,156 1,018,371 1,018,370
Share price at grant date 93.0p 93.0p 83.9p 83.9p 96.0p 96.0p
Exercise price 0.50p 0.50p 0.50p 0.50p 0.50p 0.50p
Option life in years 10 years 10 years 10 years 10 years 10 years 10 years
Risk-free rate 3.10% 3.10% 3.50% 3.50% 4.30% 4.30%
Expected volatility 52.60% 52.60% 52.70% 52.70% 50.30% 50.30%
Expected dividend yield 0% 0% 0% 0% 0% 0%
Fair value of options 92.54p 71.0p 83.45p 60.0p 95.2p 68.0p
19 December 24 October 14 December 15 December 12 April
2017 2018 2020 2021 2022
Number of options granted 1,375,000 2,305,000 535,920 567,300 91,127
Share price at grant date 85.95p 77.5p 148.0p 181.0p 86.4p
Exercise price 0.50p 0.50p 147.5p 181.2p 0.50p
Option life in years 5 years 5 years 10 years 10 years 5 years
Risk-free rate 1.33% 1.23% (0.01)% 0.54% 1.65%
Expected volatility 30.0% 30.0% 34.3% 35.5% 53.2%
Expected dividend yield 1% 1% 0.56% 0.46% 1%
Fair value of options 65.3p 52.7p 47.0p 62.0p 80.5p
22 December 12 April 5 March 21 March
14 April
2022 2022 2023 2024 2024
Number of options granted 1,367,547 35,149 85,264 250,393 1,957,821
Share price at grant date 90.0p 83.9p 91.8p 95.2p 87.3p
Exercise price 86.5p 85.35p 0.50p 0.50p 87.6p
Option life in years 10 years 5 years 5 years 1 year 5 years
Risk-free rate 1.68% 3.55% 3.40% 4.63% 3.78%
Expected volatility 50.3% 60.7% 58.3% 57.9% 57.9%
Expected dividend yield 0.96% 1.03% 1.07% 1.05% 1.15%
Fair value of options 42.0p 46.56p 85.25p 93.7p 46.8p
Expected volatility was determined by calculating the historical volatility of
the Group's share price over a 3-year/6.5-year period prior to the date of
grant. 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, 22 December 2020, 23 September
2021, 24 December 2021, 8 December 2022, 24 December 2022 and 5 December 2023
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.
30. GROUP RECONCILIATION OF PROFIT BEFORE CORPORATION TAX TO CASH GENERATED FROM
OPERATIONS
Group Company
Restated
30.06.24 30.06.23 30.06.24 30.06.23
£'000 £'000 £'000 £'000
Current:
Profit/(loss) before tax from all operations 13,183 14,386 (1,815) 4,459
Amortisation 9,142 6,578 - -
Depreciation 985 1,035 4 4
Finance lease non-cash movement 265 326 - -
Loss on disposal of fixed assets - 38 - -
Finance Income (1,351) (895) - -
Share-based payments 1,197 721 - -
Impairment on investment - - 970 36
Finance expense 88 57 - -
23,509 22,246 (841) 4,499
(Increase)/decrease in trade receivables (1,941) (2,236) 4,088 (3,527)
Increase in trade payables 1,644 1,975 18,970 2,193
Cash generated from operations 23,212 21,985 22,217 3,165
31. 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 Company
£'000 £'000
As at 1 July 2022 43,919 163
As at 30 June 2023 52,676 396
As at 30 June 2024 42,160 724
32. ADJUSTED PROFIT BEFORE TAX
30.6.24 30.6.23
£'000 £'000
Profit before income tax 13,183 14,386
Amortisation of acquired intangibles (see note 13) 1,462 120
Professional acquisition costs(see note 5) 389 100
Other exceptional costs (see note 5) 584 14
Share-based payment (see note 29) 1,219 736
Adjusted profit before income tax 16,837 15,356
33. PROJECT DEVELOPMENT
During the year the Group incurred £9,690,448 (2023: £8,729,106) in
development investments. All resources utilised in development have been
capitalised as outlined in the accounting policy governing this area.
34. 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.
35. PRIOR YEAR RESTATEMENT
During the year, the Company discovered that the intercompany balance with a
subsidiary had erroneously been shown as a net balance. There has been no
impact on the prior year's Company shareholder funds, however current assets
increased by £2,133,000 and current liabilities increased by £2,133,000.
Company statement of financial position
30 June 2023 As previously reported
Adjustments As restated
£'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment 9 - 9
Investments 19,047 - 19,047
19,056 - 19,056
Current assets
Trade and other receivables 2,939 2,133 5,072
Cash and cash equivalents 396 - 396
3,335 2,133 5,468
Total assets 22,391 2,133 24,524
Equity attributable to the owners of the parent
Called up share capital 1,496 - 1,496
Share premium 7,124 - 7,124
Share-based payment reserves 2,600 - 2,600
Retained earnings 10,969 - 10,969
22,189 - 22,189
Liabilities
Current Liabilities
Trade and other payables 202 2,133 2,335
202 2,133 2,335
Total equity and liabilities 22,391 2,133 24,524
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