REG - dotDigital Group plc - Interim Results
19 February 2019
dotdigital Group plc
("dotdigital" or the "Company")
Interim Results for the six months ended 31 December 2018
dotdigital Group plc (AIM: DOTD), the leading 'SaaS' provider of an omnichannel marketing automation and customer engagement platform, announces its results for the six months ended 31 December 2018.
Financial Highlights
· Group revenue grew 33% to £24.9m from £18.8m in H1 2018
o Organic revenue grew 15% to £20.1m (H1 2018: £17.5m)
o Functionality revenue from advanced features now annualised at £11.3m (annualised revenue at H1 2018: £7.6m)
· Group adjusted EBITDA grew 25% to £7.1m from £5.7m in H1 2018
· Cash balance at period end of £16.7m up 59% from 31-Dec 2017
· Average revenue per customer for our Engagement Cloud platform, (previously known as dotmailer), was up by 16% to £876 per month (H1 2018: £757 per month)
Strategic Highlights
· Continued strong delivery against our three strategic pillars: product innovation, partnership development and geographic expansion
· Growing strength of platform both including enhanced data integration and powerful omnichannel capability enabling high quality data-led insights and creating more targeted customer journeys that drive better results and higher revenue for our customers
Product innovation
· Further integration of Comapi2 functionality into the Engagement Cloud, adding channels such as in-app push, SMS, Facebook Messenger, Chat, Google retargeting and Facebook audiences
· New real time reporting for our Communication Platform as a Service (CPaaS) customers and the ability to integrate with Twitter's direct messaging platform
· Engagement Cloud SMS volume delivered through the Comapi integration, was up over 100% in the period which remains a complementary channel to email
Partnership development
· Sales through strategic partners have increased by 43% to £10.3m (H1 2018: £7.2m)
· Revenue from newer connectors, (Shopify, Big Commerce and Shopware), grew 372% to £1.0m in the 6 month period. The company is seeing a strong pipeline building from these connectors.
· dotdigital named as Big Commerce's first Global Elite partner in Europe which the Directors believe is an endorsement of the platform and will help increase the addressable market
Geographic expansion
· Engagement Cloud international sales represented 30% of total sales, up from 25% in H1 2018
· Organic international revenue up by 37% to £6.0m (H1 2018: £4.4m)
· Engagement Cloud EMEA business continued to grow c.10% despite the introduction of GDPR in May, Brexit uncertainties and reduced retail consumer spend
· Revenue from the US region grew organically by 30% to $4.3m, (H1 2018: $3.3m) driven by Channel partners and system integrators for Magento and Shopify
· APAC sales, Channel team expansion and Channel partners drove revenue from the region, which grew organically by 80% to AUS$1.6m, (H1 2018: AUS$0.9m)
Post H1 2019 Events
· Dotdigital extends Magento Premier Partner status for a further 3 years
· dotmailer has been rebranded to the dotdigital Engagement Cloud
Operational Review
Our approach
dotdigital's model is based on the fact that consumers respond most positively to personalised, timely and channel-sensitive campaigns. Our technology increases engagement at every touchpoint that the end recipient has with our customers. Fundamentally, we seek to empower marketers, (our customers), to reach their customers in ways that engage them on their own terms. By allowing customers to integrate very large ecommerce and CRM data sets, and any other data they hold on their customers, into a single platform, and then using leading-edge automation/machine learning and artificial intelligence technology to support campaign development and execution, dotdigital ensures marketers can identify clear returns on their investments and ultimately drive increased revenue for their brands.
Our 'software-as-a-service' (SaaS) model provides a high-quality and highly visible revenue stream with repeatable characteristics that underpins our future growth plans. Our products are valued by our customers as evidenced by our high renewal rates, and the relationships we have with a range of industry-leading ecommerce and CRM providers indicates the level of trust that the wider marketing technology industry has in our solution.
Our strategy places organic growth at its core, which enables a virtuous cycle of product innovation, improved partner relationships and international expansion, supplemented by strategic acquisitions, which continues to drive dotdigital and the platform forward.
The Group's organic growth strategy continues to be focussed around three strategic pillars:
1. Geographic expansion;
2. Developing strategic partnerships; and
3. Product innovation and features.
In the six months to 31 December 2018, key performance highlights against these areas were:
Geographic Expansion
EMEA
Whilst Engagement Cloud international sales represented 30% of total sales, up from 25% in H1 2018, our Engagement Cloud EMEA business grew 10%. This performance demonstrates the underlying strength of our offering, as shown by our performance following the introduction of GDPR in May 2018 and the opportunities the regulatory change offers us.
We have continued to invest in customer success to help our customers get more out of the platform and ultimately assist them with achieving better ROI from their marketing campaigns. This also helps reduce churn and provides upsell opportunities.
Specifically, within the UK, dotdigital continued to focus on extending its market leading position through product development and innovation resulting in an increasing number of new customers signing up to the platform. In addition, we continued to invest in dedicated sales teams and channel managers for the EMEA region to build our future sales pipeline.
We have had notable success in the Nordics and Benelux markets, served by a dedicated sales team. We have a strong, growing pipeline, alongside an increasing number of new customer sign ups. Also as a result of our partnership with Shopware, we now have a presence in Germany, to test that market.
North America
Revenues from the region were up 30% to $4.3m (H1 2018: $3.3m), primarily driven by Magento and Shopify Channel partners and system integrators. We continue to strengthen our partnerships, increase our addressable market and improve our brand awareness in the industry. We have also recently extended our product offering by selling our integration into the Microsoft Dynamics market.
The US office employs 24 people between the East Coast and West Coast. Our continued investment into the region has led to increasing customer retention, higher average customer value and an acceleration in new business growth.
APAC
Performance during the first six months of the year was also strong as APAC sales, Channel team expansion and Channel partners drove revenue from the region up 80% to AUS$1.6m, (H1 2018: AUS$0.9m).
As the dotdigital brand and offering develops in this region, we expect to see an ongoing strengthening of our relationships with our global strategic partners. We continue to see our partnerships as key to further growth in the region.
There has been a continued investment in client services and customer success and we are now delivering account management, strategic services, customer training, project management and campaign management in the APAC region. We expect the impact to reflect in the financials over the next 12 - 18 months.
During the period, we have seen our brand strengthening in the Far East through thought leadership events and partnerships. We now have a legal entity in this market with our first employee on the ground in Singapore, who is focused on working closely with our expanding partner network in South East Asia.
Partnerships
Partnerships remain a key part of our organic growth strategy, and we saw notable advancements during the first six months of the year. Sales via strategic partners increased by 43% to £10.3m (H1 2018: £7.2m).
We are delighted that our Engagement Cloud software continues to be bundled into the latest version of the Magento Ecommerce platform, launched in November 2017 and we are seeing strong pipelines building, as well as increasing customer numbers. We now have over 715 customers using the Magento Connector, generating annualised revenue of £11.1m. We recently announced the extension of our global Premier Technology Partner status agreement with Magento, for a further three years, as our relationship continues to deepen.
During the reported period we have continued building on our partnerships with Shopify by providing a seamless solution to merchants' process automation across commerce and marketing platforms with improved personalisation of automated 'push' notifications. Pipelines for our Shopify Connector are building, and our enhanced value proposition has been well received by merchants.
Joint marketing has now started with Big Commerce, another major international ecommerce platform, and we were recently named as its first European Global Elite partner. This relationship will increase our addressable market in all our operating regions.
Product Innovation
We have added features and enhancements to our product in the last six months, including enhancing our Artificial Intelligence-based solutions such as product recommendations, to ensure that we continue to adapt to the changing market and offer a comprehensive service to our customers to ensure we maintain our leading-edge technology position.
The integration of the Comapi functionality into the Engagement Cloud platform has significantly advanced our progress towards offering a fully integrated omni-channel customer engagement platform. We also launched new artificial intelligence and machine learning capability to enable our customers to drive additional ROI from their marketing. In addition, we continue to add new customer-led functionality for our EMEA customers to help them drive enhanced customer engagement.
Research and development underpin dotdigital's growth strategy and we have been able to monetise new functionality. In the period we saw product functionality revenues grow by 50% to £5.7m, from £3.8m, an illustration of how we achieve a greater return from additional functionality in our platform.
Comapi
In addition to our organic growth strategy, we also continue to add to our offering through targeted acquisitions. Last year we completed the acquisition of Comapi which provided us with an industry-leading solution, offering a fully integrated omni-channel and conversational commerce platform to support marketers. The integration of both companies has gone well and a significant proportion of the acquired functionality is now integrated into our Engagement Cloud platform. Our focus is to accelerate our roadmap of bringing new channels of communication that will add value to our marketers.
With new channels now online, we have already seen early signs of success from our combined offering. Post integration we saw a significant increase in the volume of SMS sent by our customers. The pipeline continues to build in monetising the new channels within our existing customer base.
In the short term we did see some headwinds in Comapi's CPaaS (Communications Platform as a Service) market with revenues affected by the current challenging retail backdrop. This was due to a few large retail customers going into administration and some minor slippage in volumes from the Comapi customer base. Whilst this impacted headline revenue, with Comapi's operating margin at c.10%, there was little impact on the profitability of the overall group. In H2 2019, we plan to accelerate the next phase of integration of this business unit.
Rebrand to the Engagement Cloud
We embarked on our mission to rebrand as it was felt that the dotmailer name no longer encompassed everything that we do. When looking at the limitations of the dotmailer brand, we found a consistent problem: our name inhibited customers from discovering our diverse range of features and channels.
Our challenge was to find a new brand that was streamlined and futureproof, to make it easier for others to understand our full capabilities, whilst carrying over the recognition that the dotmailer brand had built across the MarTech industry.
Our company name is now dotdigital and our platform is now the Engagement Cloud.
Financial Review
Revenue
Group revenue during the period grew 33% to £24.9m from £18.8m in H1 2018. This performance was driven primarily by new direct customer wins and through our partnerships. Recurring revenue now represents c.80% of Engagement Cloud revenues, enhancing visibility on future revenues.
Organic revenue grew 15% to £20.1m (H1 2018: £17.5m), in line with management expectations, with enhanced functionality revenue (which includes license fees and bolt-on functionality), now annualised at £11.3m.
The geographic split of revenues continued to diversify, with Engagement Cloud international sales representing 30% of total sales in the period, up from 25% in H1 2018. Of that, revenues were up 30% in the US to $4.3m (H1 2018: $3.3m), and up 80% in APAC to AUS$1.6m (H1 2018 AUS$0.9m).
EBITDA
Group adjusted EBITDA grew 25% to £7.1m from £5.7m in H1 2018, which was in line with management expectations. Adjusted EBITDA excludes a one-off charge of £0.05m for the acquisition of Comapi, a share-based payment charge of £0.5m and amortisation of acquired intangibles of £0.1m. We continued to maintain an Engagement Cloud EBITDA margin of over 30%.
Balance Sheet & Cash Position
· dotdigital continues to generate strong cash flow from its Engagement Cloud operations with an interim end net cash balance of £16.7m.
· dotdigital continues to prioritise product development and during the period spent £2.6m on development (compared to £1.7m in H1 2018). The Group continues to maintain a strong balance sheet with gross assets of £50.6m and zero debt.
Dividend Policy
· A dividend of 0.64p per ordinary share (an increase of 16% on the prior period, up from 0.55p) was proposed by the Company at the time of its Final Results in October last year, demonstrating a commitment from the Board to deliver value by focusing on total shareholder return.
· This dividend was approved by shareholders at the Annual General Meeting on 18 December 2018 and paid on 31 January 2019.
· The Group will continue to conduct a full review of dividends at year end, therefore the Board is not proposing an interim dividend.
Summary & Outlook
· The first half of 2019 showed strong progress against all three of our organic pillars, with revenue from strategic partners, functionality of product-related revenue and international revenue all showing strong growth.
· Historically, the business built strong foundations in email and has now, via the technology integration of omni-channel, (through the Comapi acquisition), and the rebrand from dotmailer to the dotdigital Engagement Cloud, given us strong foundations to position our business as a leading omni-channel customer engagement platform.
· Based on the strong performance seen by the Group in H1 2019, the Board remains confident in its expectations for the full year.
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO CONSTITUTE INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
1 Consensus adjusted EBITDA as at 18 February 2019, for the year ending 30 June 2019, is approx. £16.2 million. EBITDA means earnings before interest, tax, depreciation, amortisation, and before restructuring, other non-recurring costs and certain non-cash items.
2 Comapi was acquired in November 2017
For further information please contact:
dotdigital Group Plc
Milan Patel, CEO
Paraag Amin, CFOTel: 020 3770 1502
Canaccord Genuity (Nominated Adviser and Joint Broker)
Bobbie Hilliam, Corporate FinanceGeorgina McCooke, Corporate Finance
Jonathan Barr, Sales
Tel: 020 7523 8000
finnCap (Joint Broker)
Stuart Andrews, Corporate Finance
Rhys Williams, SalesTel: 020 7220 0500
N+1 Singer (Joint Broker)
Shaun Dobson, Corporate Finance
Alex Bond, Corporate Finance
Rachel Hayes, Corporate BrokingTel: 020 7496 3000
Dotdigital Group Plc
Condensed Consolidated Income Statement
For the six months ended 31 December 2018
6 months
6 months
12 months
to 31 Dec 2018
to 31 Dec 2017
to 30 June 2018
Unaudited
Unaudited
Audited
Note
£'000s
£'000s
£'000s
Continuing operations
Revenue
4
24,901
18,767
43,094
Cost of sales
(5,722)
(3,163)
(9,074)
Gross profit
4
19,179
15,604
34,020
Administrative expenses
(13,624)
(11,034)
(23,979)
Share based payments
(450)
(26)
(450)
Exceptional costs
(178)
(199)
(357)
Operating profit
4,927
4,345
9,234
Finance income
10
3
9
Profit before income tax
4,937
4,348
9,243
Income tax expense
(657)
(356)
(685)
Profit for the period attributable to the owners of the parent
4,280
3,992
8,558
Earnings per share from continuing operations
(pence per share)
Basic
6
1.44
1.35
2.89
Diluted
6
1.42
1.34
2.85
Adjusted basic
6
1.65
1.42
3.16
Adjusted diluted
6
1.63
1.42
3.12
Dotdigital Group Plc
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 31 December 2018
6 months
6 months
12 months
to 31 Dec 2018
to 31 Dec 2017
to 30 June 2018
Unaudited
Unaudited
Audited
note
£'000s
£'000s
£'000s
Profit for the period
4,280
3,992
8,558
Other comprehensive income
Items that may be subsequently reclassified to
profit and loss:
Exchange differences on translating foreign operations
(25)
(6)
20
Total comprehensive income attributable to:
Owners of the parent
4
4,255
3,986
8,578
Dotdigital Group Plc
Condensed Consolidated Statement of Financial Position
For the six months ended 31 December 2018
Note
6 months
6 months
12 months
to 31 Dec 2018
to 31 Dec 2017
to 30 June 2018
Unaudited
Unaudited
Audited
£'000s
£'000s
£'000s
Assets
Non-current assets
Goodwill
9,680
12,140
9,680
Intangible assets
10,790
5,105
9,787
Property, plant and equipment
1,035
1,404
1,046
21,505
18,649
20,513
Current assets
Trade and other receivables
12,411
11,106
12,953
Cash and cash equivalents
16,677
10,497
15,005
29,088
21,603
27,958
Total assets
4
50,593
40,252
48,471
Equity attributable to the owners of the parent
Called up share capital
8
1,490
1,482
1,490
Share premium
6,791
6,321
6,791
Reverse acquisition reserve
(4,695)
(4,695)
(4,695)
Other reserves
1,111
331
661
Retranslation reserve
(51)
(52)
(26)
Retained earnings
33,775
29,298
32,331
Total equity
38,421
32,685
36,552
Dotdigital Group Plc
Condensed Consolidated Statement of Financial Position
For the six months ended 31 December 2018
to 31 Dec 2018
to 31 Dec 2017
to 30 June 2018
Unaudited
Unaudited
Audited
note
£'000s
£'000s
£'000s
Liabilities
Non-current liabilities
Financial instruments
-
17
-
Deferred tax
1,924
767
1,697
1,924
784
1,697
Current liabilities
Trade and other payables
10,248
6,532
10,217
Financial liabilities - interest baring loans
-
-
5
Current tax payable
-
251
-
10,248
6,783
10,222
Total liabilities
12,172
7,567
11,919
Total equity and liabilities
50,593
40,252
48,471
Dotdigital Group Plc
Condensed Consolidated Statement of Changes in Equity
For the six months ended 31 December 2018
Share
Share
Retained
Other
Reverse
Re-translation
Total
capital
premium
Earnings
reserves
acquisition
Reserve
reserve
£'000s
£'000s
£'000s
£'000s
£'000s
£'000s
£'000s
As at 1 July 2017
1,481
6,290
25,306
305
(4,695)
(46)
28,641
Profit for the period
-
-
3,992
-
-
-
3,992
Retranslation reserve
-
-
-
-
-
(6)
(6)
Issue of share capital
1
31
-
-
-
-
32
Reserve transfer
-
-
-
-
-
-
-
Share based payments
-
-
-
26
-
-
26
As at 31 December 2017
1,482
6,321
29,298
331
(4,695)
(52)
32,685
As at 1 January 2018
1,482
6,321
29,298
331
(4,695)
(52)
32,685
Profit for the period
-
-
4,566
-
-
-
4,566
Dividends
-
-
(1,627)
-
-
-
(1,627)
Issue of share capital
8
470
-
-
-
-
478
Reserve transfer
-
-
94
(94)
-
-
-
Retranslation reserve
-
-
-
-
-
26
26
Share based payments
-
-
-
424
-
-
78
As at 30 June 2018
1,490
6,791
32,331
661
(4,695)
(26)
36,552
As at 1 July 2018
1,490
6,791
32,331
661
(4,695)
(26)
36,552
Profit for the period
-
-
4,280
-
-
-
4,280
Retranslation reserve
-
-
-
-
-
(25)
(25)
Issue of share capital
-
-
-
-
-
-
-
IFRS 15 restatement (note 9)
-
-
(2,836)
-
-
-
(2,836)
Share based payments
-
-
-
450
-
-
450
As at 31 December 2018
1,490
6,791
33,775
1,111
(4,695)
(51)
38,421
Dotdigital Group Plc
Condensed Consolidated Statement of Changes in Equity
For the six months ended 31 December 2018
- Share capital is the amount subscribed for shares at nominal value.
- Share premium represents the excess of the amount subscribed for Share Capital over the nominal value net of the share issue expenses.
- Retained earnings represents the cumulative earnings of the Group attributable to equity shareholders.
- The reverse acquisition reserve relates to the adjustment required to account the reverse acquisition in accordance with International Financial Reporting Standards.
- Other reserves relate to the charge for the share based payments in accordance with International Financial Reporting Standard 2.
- Retranslation reserve relates to the retranslation of a foreign subsidiary into the functional currency of the Group.
Dotdigital Group Plc
Condensed Consolidated Statement of Cash Flows
For the six months ended 31 December 2018
6 months
6 months
12 months
to 31 Dec 2018
to 31 Dec 2017
to 30 June 2018
Unaudited
Unaudited
Audited
note
£'000s
£'000s
£'000s
Cash flow from operating activities
7
4,778
3,192
13,129
Tax paid
(308)
(591)
(501)
Net cash generated from operating activities
4,470
2,601
12,628
Cash flow from investing activities
Purchase of subsidiary
-
(9,578)
(9,578)
Purchase of intangible fixed assets
(2,597)
(1,718)
(6,876)
Purchase of tangible fixed assets
(206)
(327)
(475)
Interest received
10
3
9
Net cash used in investing activities
(2,793)
(11,620)
(16,920)
Cash flows from financing activities
Equity dividends paid
-
-
(1,627)
Loan repayment in relation to acquisition
(5)
(942)
-
Loan repayment
-
(2)
(14)
Share issue
-
32
510
Net cash generated from financing activities
(5)
(912)
(1,131)
(Decrease)/Increase in cash and cash equivalents
1,672
(9,931)
(5,423)
Cash and cash equivalents at beginning of period
15,005
20,428
20,428
Cash and cash equivalents at end of period.
16,677
10,497
15,005
The above does not include the effect of foreign exchange rate changes on cash and cash equivalents
due to its immaterial nature.
Dotdigital Group Plc
Notes to condensed interim financial statements
For the six months ended 31 December 2018
1. GENERAL INFORMATION
Dotdigital Group Plc is a company incorporated in England and Wales and quoted on the AIM market.
2. BASIS OF INFORMATION
These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and on a historical basis, using the accounting policies which are consistent with those set out in the Group's annual report and accounts for the year ended 30 June 2018. The interim financial information for the six months to 31 December 2018, which complies with IAS 34 'Interim Financial Reporting' has been approved by the Board of Directors on 19 February 2019.
The unaudited condensed interim financial information for the period ended 31 December 2018 does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. The comparative figures for the year ended 30 June 2018 are extracted from the statutory financial statements which have been filed with the Registrar of Companies and contain an unqualified audit report and did not contain statements under Section 498 to 502 of the Companies Act 2006.
3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies applied are consistent with those of the annual financial statements for the year ended 30 June 2018, as described in those financial statements.
New accounting standards
IFRS 15 "Revenue from contracts with customers" requires the Group to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a contract with a customer. Application of the standard is mandatory for annual reporting periods starting from 1 January 2018 onwards and therefore has be utilised in reporting the figures for the period ended 31 December 2018.
The adoption of this standard under the modified retrospective transition method permits its introduction without the requirement to restate the figures for the previously reported periods and in note 9 to the condensed interim financial statements details of the impact of the change from the previous accounting policy for comparative purposes. The adoption has also required a restatement of the Group's retained reserves which can be noted in the consolidated statement of changes in equity.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total earnings.
With respect to IFRS 15 implementation, the most significant ways that dotdigital generates income from its customers are as follows:
- Professional services - the customer pays a one-off amount for professional services. Revenue is currently recognised when the service occurs which is unchanged under IFRS 15. The Group occasionally offers some professional services at no cost as part of the contract. Revenue for these services were not recognised as they were fully discounted. Under IFRS 15, the services provided for no charge are recognised 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.
- Software as a Service ("SaaS") recurring revenue - the customer pays a regular fixed amount for the right to access the software and other recurring services purchased. Revenue is currently recognised over the life of the contact term, which is unchanged under IFRS 15.
- CPaaS services - the customer pays monthly for their usage or buys credit in advance for using the platform. Revenue is currently recognised in the month of usage, which is unchanged under IFRS 15.
Dotdigital Group Plc
Notes to condensed interim financial statements
For the six months ended 31 December 2018
4. SEGMENTAL REPORTING
The Group's two lines of business is the provision of data-driven omni-channel marketing automation ("SaaS") and omni-channel messaging and cloud communication("CPaaS"). The chief operating decision maker considers the Group's reportable segments to be by geographical location this being UK, US and rest of the world("RoW") operations and by business activity, this being SaaS and CPaaS as shown below:
Geographical revenue and results
6 months to 31 December 2018
UK
US
RoW
Adjustments
Operations
Operations
Operations
Total
due to IFRS 15
Total
£'000s
£'000s
£'000s
£'000s
£'000s
£'000s
Income statement
Revenue
18,841
3,402
2,707
24,950
(49)
24,901
Gross profit
13,734
3,056
2,438
19,228
(49)
19,179
Profit before income tax
1,844
1,495
1,647
4,986
(49)
4,937
Total comprehensive income attributable to the owners of the parent
1,602
1,123
1,579
4,304
(49)
4,255
Financial position
Total assets
46,503
3,093
997
50,593
-
50,593
Net current assets
18,266
2,659
751
21,676
(2,836)
18,840
6 months to 31 December 2017
UK
US
RoW
Adjustments
Operations
Operations
Operations
Total
due to IFRS 15
Total
£'000s
£'000s
£'000s
£'000s
£'000s
£'000s
Income statement
Revenue
14,403
2,516
1,848
18,767
-
18,767
Gross profit
11,909
2,082
1,613
15,604
-
15,604
Profit before income tax
2,423
828
1,097
4,348
-
4,348
Total comprehensive income attributable to the owners of the parent
2,345
526
1,115
3,986
-
3,986
Financial position
Total assets
37,378
2,166
708
40,252
-
40,252
Net current assets
12,607
1,726
487
14,820
-
14,820
Dotdigital Group Plc
Notes to condensed interim financial statements
For the six months ended 31 December 2018
4. SEGMENTAL REPORTING (CONTINUED…)
12 months to 30 June 2018
UK
US
RoW
Adjustments
Operations
Operations
Operations
Total
due to IFRS 15
Total
£'000s
£'000s
£'000s
£'000s
£'000s
£'000s
Income statement
Revenue
33,471
5,257
4,366
43,094
-
43,094
Gross profit
25,412
4,578
4,030
34,020
-
34,020
Profit before income tax
5,180
1,877
2,186
9,243
-
9,243
Total comprehensive income
attributable to the owners of the parent
4,640
1,752
2,186
8,578
-
8,578
Financial position
Total assets
45,346
2,183
942
48,471
-
48,471
Net current assets
15,260
1,804
672
17,736
-
17,736
Business activity revenue and results
6 months to 31 December 2018
Adjustments
SaaS
CPaaS
Total
due to IFRS 15
Total
£'000s
£'000s
£'000s
£'000s
£'000s
Income statement
Revenue
20,195
4,755
24,950
(49)
24,901
Gross profit
17,845
1,383
19,228
(49)
19,179
Profit before income tax
4,741
245
4,986
(49)
4,937
Total comprehensive income attributable to the owners of the parent
4,061
243
4,304
(49)
4,255
Financial position
Total assets
46,375
4,218
50,593
-
50,593
Net current assets
22,003
(327)
21,676
(2,836)
18,840
Dotdigital Group Plc
Notes to condensed interim financial statements
For the six months ended 31 December 2018
4. SEGMENTAL REPORTING (CONTINUED…)
6 months to 31 December 2017
Adjustments
SaaS
CPaaS
Total
due to IFRS 15
Total
£'000s
£'000s
£'000s
£'000s
£'000s
Income statement
Revenue
17,499
1,268
18,767
-
18,767
Gross profit
15,269
335
15,604
-
15,604
Profit before income tax
4,198
150
4,348
-
4,348
Total comprehensive income attributable to the owners of the parent
3,838
148
3,986
-
3,986
Financial position
Total assets
37,839
2,413
40,252
-
40,252
Net current assets
15,241
(421)
14,820
-
14,820
12 months to 30 June 2018
Adjustments
SaaS
CPaaS
Total
due to IFRS 15
Total
£'000s
£'000s
£'000s
£'000s
£'000s
Income statement
Revenue
36,891
6,203
43,094
-
43,094
Gross profit
32,266
1,754
34,020
-
34,020
Profit before income tax
8,619
624
9,243
-
9,243
Total comprehensive income attributable to the owners of the parent
7,936
642
8,578
-
8,578
Financial position
Total assets
44,623
3,848
48,471
-
48,471
Net current assets
17,944
(208)
17,736
-
17,736
5. DIVIDENDS
The proposed final dividend of £1,903,171 for the year ended 30 June 2018 of 0.64p per share was paid on the 31 January 2019.
Dotdigital Group Plc
Notes to condensed interim financial statements
For the six months ended 31 December 2018
6. 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:
31.12.18
31.12.17
30.06.18
From continuing operations
£'000
£'000
£'000
Profit for the year attributable to the owners of the parent
4,280
3,992
8,558
Amortisation of acquisition-related intangible fixed asset
127
-
148
Other exceptional costs
51
199
209
Share-based payment
450
26
450
Adjusted profit for the year attributable to the owners of the parent
4,908
4,217
9,365
Management does not consider the above adjustments to reflect the underlying business performance.
The other exceptional costs relate to one-off acquisition costs of Comapi.
Dotdigital Group Plc
Notes to condensed interim financial statements
For the six months ended 31 December 2018
6. EARNINGS PER SHARE (CONTINUED…)
6 months
6 months
12 months
to 31 Dec 2018
to 31 Dec 2017
to 30 June 2018
Unaudited
Unaudited
Audited
Continuing operations
Earnings per Ordinary share:
Basic (pence)
1.44
1.35
2.89
Diluted (pence)
1.42
1.34
2.85
Adjusted basic (pence)
1.65
1.42
3.16
Adjusted diluted (pence)
1.63
1.42
3.12
6 months
6 months
12 months
to 31 Dec 2018
to 31 Dec 2017
to 30 June 2018
Unaudited
Unaudited
Audited
£'000s
£'000s
£'000s
Profit for the period from continuing
operations for the purpose of earnings
per share:
Basic
Adjusted
4,280
4,908
3,992
4,217
8,558
9,365
Weighted average number of shares in issue as follows:
6 months
6 months
12 months
to 31 Dec
2018
to 31 Dec 2017
to 30 June 2018
Unaudited
Unaudited
Audited
Weighted average number
Basic
298,030,565
296,283,322
296,596,304
Diluted
301,511,219
297,924,652
300,324,356
The adjusted profit for the period, adjusted basic earnings per ordinary share and adjusted diluted earnings per ordinary share exclude exceptional costs relating to share based payments £450,370 (2017: £26,126, 2018: £449,923), one-off acquisition costs of Comapi £50,967 (2017: £199,941, 2018: £ 208,805) and amortisation of acquired intangibles £126,951 (2017: £nil, 2018: £148,110).
Dotdigital Group Plc
Notes to condensed interim financial statements
For the six months ended 31 December 2018
7. RECONCILIATION OF PROFIT BEFORE CORPORATION TAX TO NET CASH GENERATED FROM OPERATIONS
6 months
6 months
12 months
to 31 Dec
2018
to 31 Dec 2017
to 30 June 2018
Unaudited
Unaudited
Audited
£'000s
£'000s
£'000s
Profit before income tax from all operations
4,937
4,348
9,243
Adjustments for:
Depreciation and amortisation
1,705
1,124
2,614
Loss on disposal of fixed assets
99
3
2
Share based payments
450
26
450
Finance income
(10)
(3)
(9)
Currency revaluation
(25)
(4)
20
Decrease/(Increase) in trade and other receivables
507
(2,103)
(4,794)
Increase/(Decrease) in trade and other payables
(2,885)
(199)
5,603
Net cash from operations
4,778
3,192
13,129
8. CALLED UP SHARE CAPITAL
No shares were issued during the period ended 31 December 2018.
Dotdigital Group Plc
Notes to condensed interim financial statements
For the six months ended 31 December 2018
9. RETAINED EARNINGS: IFRS 15 RESTATEMENT
The Group has adopted IFRS 15 as at 1 July 2018 and applied the modified retrospective approach. Comparatives for the 6 months ending 31 December 2017 and 12 months ending 30 June 2018 have not been restated and the cumulative impact of adoption has been recognised as a decrease to retained earnings with a corresponding decrease in current liabilities at 1 July 2018 as follows:
1 July 2018
£'000s
Retained earnings
Revenue
(2,836)
Total impact at 1 July 2018
(2,836)
Current liabilities
Trade and other liabilities
2,836
Total impact at 1 July 2018
2,836
IFRS 15 has had an impact on retained earnings as outlined below.
Professional services at no charge: The Group sells professional services to its customers and there are occasions when these services are provided at no cost as part of the contract sold. Historically, the Group did not recognise these services as they were fully discounted. Under IFRS 15, the services provided for no charge are recognised 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. This revised treatment in respect of professional services provided at no cost has accelerated the recognition of revenue and resulted in lower deferred income at adoption on 1 July 2018.
Prepaid contracts: The Group sells 12, 24 and 36 month contracts to its customers. This revenue is normally recognised monthly over the period of the contract. Historically there have been instances where a customer prepays their contract and due to its immaterial nature, the revenue was recognised at the date of invoice. Under IFRS 15, the prepaid contracts are recognised over the period of the contract irrespective of materiality.
Term Contract billing: The Group raises the first invoice to its new customers when the service agreement is signed. Occasionally, the service does not start in the same month as when the service agreement is signed. Historically, the Group has recognised the revenue in the month invoiced due to its immaterial nature. Under IFRS 15, the upfront billing is recognised over the period of the contract irrespective of materiality.
Dotdigital Group Plc
Notes to condensed interim financial statements
For the six months ended 31 December 2018
9. RETAINED EARNINGS: IFRS 15 RESTATEMENT (CONTINUED…)
6 months to 31 December 2018
Amounts pre
Transition
In period
Amounts as
IFRS 15
Adjustment
adjustment
reported
£'000s
£'000s
£'000s
£'000s
Continuing operations
Revenue
24,950
-
(49)
24,901
Cost of sales
(5,722)
-
-
(5,722)
Gross profit
19,228
-
(49)
19,179
Administrative expenses
(13,624)
-
-
(13,624)
Share based payments
(450)
-
-
(450)
Exceptional costs
(178)
-
-
(178)
Operating profit
4,976
-
(49)
4,927
Finance income
10
-
-
10
Profit before income tax
4,986
-
(49)
4,937
Income tax expense
(666)
-
9
(657)
Profit for the period attributable to the owners of the parent
4,320
-
(40)
4,280
Dotdigital Group Plc
Notes to condensed interim financial statements
For the six months ended 31 December 2018
9. RETAINED EARNINGS: IFRS 15 RESTATEMENT (CONTINUED…)
6 months to 31 December 2018
Amounts pre
Transition
In period
Amounts as
IFRS 15
Adjustment
adjustment
reported
£'000s
£'000s
£'000s
£'000s
Assets
Non-current assets
Goodwill
9,680
-
-
9,680
Intangible assets
10,790
-
-
10,790
Property, plant and equipment
1,035
-
-
1,035
21,505
-
-
21,505
Current assets
Trade and other receivables
12,402
-
9
12,411
Cash and cash equivalents
16,677
-
-
16,677
29,079
-
9
29,088
Total assets
50,584
-
9
50,593
Equity attributable to the owners of the parent
Called up share capital
1,490
-
-
1,490
Share premium
6,791
-
-
6,791
Reverse acquisition reserve
(4,695)
-
-
(4,695)
Other reserves
1,111
-
-
1,111
Retranslation reserve
(51)
-
-
(51)
Retained earnings
36,651
(2,836)
(40)
33,775
Total equity
41,297
(2,836)
(40)
38,421
Dotdigital Group Plc
Notes to condensed interim financial statements
For the six months ended 31 December 2018
9. RETAINED EARNINGS: IFRS 15 RESTATEMENT (CONTINUED…)
6 months to 31 December 2018
Amounts pre
Transition
In period
Amounts as
IFRS 15
Adjustment
adjustment
reported
£'000s
£'000s
£'000s
£'000s
Liabilities
Non-current liabilities
Deferred tax
1,924
-
-
1,924
1,924
-
-
1,924
Current liabilities
Trade and other payables
7,363
2,836
49
10,248
7,363
2,836
49
10,248
Total liabilities
9,287
2,836
49
12,172
Total equity and liabilities
50,584
-
9
50,593
Had the Group been applying IFRS 15 during the year ended 30 June 2018, it is estimated that both sales and profit before tax would have been £0.9m lower for the full year with the balance sheet impact at the beginning and end of the year being similar.
Dotdigital Group Plc
Notes to condensed interim financial statements
For the six months ended 31 December 2018
10. RELATED PARTY NOTE
Transactions between the company and its subsidiaries, who are related parties, have been eliminated on
consolidation and are not disclosed in this note.
Key management remuneration:
Key management include Directors and non-executive Directors
The remuneration paid for key management for employee services are as follows:
6 months
6 months
12 months
to 31 Dec 2018
to 31 Dec 2017
to 30 June 2018
Unaudited
Unaudited
Audited
£'000s
£'000s
£'000s
Remuneration and other short-term benefits
304
346
701
Ex-gratia payment
-
-
40
Share based payments
169
-
145
Pension cost
11
17
26
484
363
912
6 months
6 months
12 months
to 31 Dec 2018
to 31 Dec 2017
to 30 June 2018
Unaudited
Unaudited
Audited
£'000s
£'000s
£'000s
The following transactions were carried out with related parties
Sale of services
Entities controlled by non - executive director of the Group:
Cloudcall - Email marketing services
4
9
16
Cadence Performance Ltd - Email marketing services
1
1
2
5
10
18
Year end balances arising from the sale of services
Entities controlled by non-executive directors of the Group:
Cloudcall - Email marketing services
-
-
16
-
-
16
Dotdigital Group Plc
Notes to condensed interim financial statements
For the six months ended 31 December 2018
11. SUBSEQUENT EVENTS TO 31 DECEMBER 2018
As at the date of these statements and the date they were approved by the Board of Directors there were no such events to report.
Copies of this interim statement are available form the Company at its registered office at, No 1 London Bridge London, SE1 9BG. The interim financial information document will also be available on the Company's website www.dotdigitalgroup.com.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.ENDIR XVLFFKLFXBBF
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