REG - dotDigital Group plc - Interim Results
03/03/2022 07:00
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RNS Number : 4626D dotDigital Group plc 03 March 2022
3 March 2022
Dotdigital Group plc
("Dotdigital" or the "Group")
Interim results for the six months ended 31 December 2021
Dotdigital Group plc (AIM: DOTD), the leading 'SaaS' provider of an
omnichannel marketing automation and customer engagement platform, announces
its unaudited interim results for the six months ended 31 December 2021 ("H1
2022").
Financial Highlights
· Organic revenue up by 10% to £30.9m (H1 2021: £28.2m) driven by growth in
sales from both new and existing customers
- Recurring revenue as a percentage of total revenue increased to 94% (30
June 2021: 93%)
- Monthly ARPC(1) up by 19% to £1,422 per month (H1
2021: £1,196 per month)
· Adjusted EBITDA(2) grew 17% to £12.2m (H1 2021: £10.5m) and adjusted
operating profit(3) grew 17% to £8.9m (H1 2021: £7.6m)
· R&D continues to underpin Dotdigital's growth strategy, with recurring
revenues from enhanced product functionality growing by 22% to £10.8m (H1
2021: £8.9m)
· Strong net cash balance as of 31 December 2021 of £40.0m (30 June 2021:
£32.0m)
Operational Highlights
· International revenue increased by 4% to £9.7m (H1 2021: £9.3m), with
international sales representing 31% to total revenue (H1 2021: 33%)
· Strengthening of strategic partnerships in both ecommerce and CRM, with sales
through connectors increasing by 9% to £13.9m (H1 2021: £12.8m)
· Significant enhancements, such as single customer view and program analytics
and reporting, to the Dotdigital platform, driving new growth opportunities
and deepen existing customer relationships
Current Trading and Outlook
· Unwinding of customer buying behaviour in post-lockdown environment, with
reduced growth in demand for SMS, and macro headwinds affecting international
activities as previously highlighted. The Board now expects full year revenue
growth to be slower than previous expectations during the current and future
financial years
· The Group is committed to investing in its people and its culture, in an
increasingly competitive global labour market, in order to continue to achieve
year on year revenue growth
Milan Patel, CEO of Dotdigital, commented:
"The Group delivered a first half performance of strong growth and
profitability driven by new customer wins and expanded use of the platform
across the existing customer base. Our consistent strategy continues to
support our growth ambition in what is a significant market opportunity.
"Although we appear to be moving away from the worst of the pandemic, it
triggered a dramatic acceleration in organisations' adoption of digital
marketing that is set to endure, and the strength of our platform puts us in
an ideal position to benefit from that trend. Whilst we continue to navigate
through market challenges, particularly related to hiring, and adjust to a
post-lockdown environment, the Board is committed to investing in our teams in
line with the growth opportunity available, supported by a strong financial
position and recurring SaaS business model."
Investor Presentation: https://www.dotdigitalgroup.com/events-presentations/
(https://www.dotdigitalgroup.com/events-presentations/)
Live presentation to investors: Management will host a live presentation to
investors via the Investor Meet Company platform on 4 March at 4pm UK time.
Investors who already follow Dotdigital on the platform will automatically be
invited, others are invited to register in advance via the following link:
https://www.investormeetcompany.com/dotdigital-group-plc/register-investor
(https://www.investormeetcompany.com/dotdigital-group-plc/register-investor) .
Notes
(1. ARPC means Average Revenue Per Customer (including new
customers added in period and existing customers))
(2. EBITDA is earnings before interest, tax, depreciation and
amortization and adjusted for acquisition costs and share-based payments)
(3. Operating profit is adjusted for acquisition costs and
share-based payments)
For further information please contact:
Dotdigital Group plc Tel: 020 3953 3072
Milan Patel, CEO
InvestorRelations@dotdigital.com
Alma PR (Financial PR) Tel: 020 3405 0210
Hilary Buchanan dotdigital@almapr.co.uk
David Ison
Kieran Breheny
Canaccord Genuity (Nominated Advisor and Joint Broker) Tel: 020 7523 8000
Bobbie Hilliam
Georgina McCooke
Jonathan Barr, Sales
finnCap (Joint Broker) Tel: 020 7220 0500
Stuart Andrews, Corporate Finance
Alice Lane, ECM
Rhys Williams, Sales
Singer Capital Markets (Joint Broker) Tel: 020 7496 3000
Shaun Dobson, Head of Corporate Finance
Alex Bond, Corporate Finance
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO CONSTITUTE
INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE
REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS
INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
OPERATIONAL REVIEW
Introduction
For the first half period the Group delivered solid growth in a more
normalised trading environment against a strong comparative period in the
prior year. The marketing industry's march towards digital continues at pace,
and while the mix of channel usage ebbs and flows, our omnichannel offering
positions us well to capture the full range of opportunities it presents.
The focus in the first half of 2022 has been on cementing our position as one
of the leading marketing automation platforms through enhancing the
functionality of our Engagement Cloud, deepening our strategic partnerships
and hiring exciting talent to build demand across our territories among both
new and existing customers.
We continue to be trusted by household names to help them engage with and get
closer to their audiences. In the period, we signed Warner Bros, Sunderland
Football Club, and the British Dental Association as new customers, and the
pipeline for the second half remains healthy.
We continue to invest in product innovation, geographic expansion and
strategic partnerships - the three components of our growth strategy - to grow
our share of the market while protecting our strong margins. Demand for our
platform is growing globally, underpinned by a robust, pureplay SaaS model,
which provides high-quality and highly visible recurring revenues.
Current Trading and Outlook
Trading in the first half of the year, which delivered 10% growth and strong
profitability, reflects a period of more normalised trading following a spike
in one-off pandemic related SMS activity in the prior year. This trend has
continued with the emergence from lockdown in EMEA accelerating post period
end, and while our core offering has made an encouraging start to the second
half, we have seen a further softening of transactional based SMS of which we
will see the full impact next financial year.
In addition, we are seeing a lag in US growth due to the impact of a
challenging labour market on our pace of recruitment and retention. In the US
we have put in place a new management structure and team to support the
region, which will start contributing through the second half of the year.
As a result of the above, the Board anticipates revenue for the full year to
show growth in the range of 7 - 8%, slightly below current expectations.
Whilst our operating margin at the half year is higher than normal levels, we
expect this to be in the region of 20 - 22% margin by the end of the year as
we accelerate our investment in our teams due to wage inflation and strengthen
our international operations. This investment in talent and the actions taken
as described above, positions us well for continued revenue growth in the next
financial year and beyond.
We appear to be moving away from the worst of the pandemic, yet the
acceleration in organisations' adoption of digital marketing triggered is set
to endure, and the strength of our platform puts us in an ideal position to
benefit from that trend. There remain industry-wide pressures to overcome, but
they don't detract from the confidence we have in continuing to make
significant strides forward with each period that passes. We continue to grow
our presence in key territories around the world, developing a product that
meets the changing needs of marketeers while strengthening the organisational
infrastructure that underpins it.
Market
The shift from traditional to digital marketing is a long-term trend,
dramatically accelerated by the pandemic as organisations quickly grew to rely
on digital channels from both a customer retention and acquisition
perspective. At the same time, we have seen a marked increase in demand for a
more sophisticated approach, as marketeers recognise the step change in ROI
possible from developing more targeted and personalised campaigns based on
increasingly rich data sets. This is evident in the continued adoption of
channels in addition to email, which remains the most widely used means of
engagement, and strong growth in functionality recurring revenue seen in the
period.
As a result of the pandemic and the increased frequency and depth of
engagement, organisations have grown their contact bases, and the audiences
now expect a personalised end-to-end experience; a trend that will persist
long after Covid-related restrictions ease. We have developed Dotdigital's
platform to provide marketeers with everything they need to meet these
expectations and more, from highly customisable user experiences to the most
advanced analytics on the market, ensuring every campaign and touchpoint is
memorable and feeds back data to drive continuous ROI enhancements.
We continue to see digital marketing grow as a percentage of overall revenue
spend and expect to see organisations in those industries worst affected by
the pandemic such as travel continue to increase their budgets as they ramp
back up.
As the world moves towards a point where there is acceptance of Covid as part
and parcel of normal life, organisations will adapt their strategies
accordingly, but their reliance on marketing automation will continue to grow
apace and the strength of our offering puts us in a strong position to
capitalise.
Strategy
The Group's strategy has organic growth at its core, centred around three
strategic pillars: international diversification, expanded market reach
through partnership relationships, and continuous product innovation.
Geographic expansion
Organic international revenue increased by 4% to £9.7m (H1 2021: £9.3m) in
the period, with international sales contributing 31% to total revenue (H1
2021: 33%).
EMEA
EMEA showed solid revenue growth of c.10% in the period to £23.6m (H1 2021:
£21.5m).
The Group continues to see growing demand in the region for its omnichannel
capability, as marketeers increase their focus on relevancy and
personalisation to provide the best possible customer experience. As
international travel is now opening, our teams have started to meet customers
face to face and build further pipeline through the partner and sales teams.
People was a major focus in EMEA across the period. We continued to: invest in
our customer success team, which is already having a tangible, positive impact
on retention; strengthen our partnership team to deepen relationships and
drive greater reach into their respective customer bases; and broaden our
agency and technology partner ecosystem, helping to build 'top of funnel' lead
generation demand.
North America
Revenues from North America grew organically by c.3% to $6.5m (H1 2021:
$6.3m).
The recruitment of talent and expanding the employee base is key to improving
growth rates within the region. In a challenging labour market with high
levels of wage inflation, the Directors continue to focus on strengthening the
management team in the region, most recently with the hire of a new VP of
Growth and VP of Customer Success. Whilst investment in management bandwidth
will take time to flow through to the financial results, this provides us with
the right structure to support future growth. With the addition of more
customer success specialists to support growth and consultants to help drive
increased uptake of our platform from upper-tier mid-market companies and
larger enterprises, and plans to further strengthen our senior team, our
prospects for the territory remain strong.
APAC
APAC revenue grew organically by c.27% to AUS$4.4m (H1 2021: AUS$3.5m).
The Group's Japan office is now operational and uptake of the platform in
Singapore has been encouraging. The Group has continued to develop its
presence in Australia despite the challenges posed by lockdowns. As our newest
region, the focus in APAC continues to be building our teams on the ground,
deepening relationships with strategic partners, and driving brand awareness.
The Group continues to navigate various cost pressures, particularly regarding
hiring, across all regions but is confident of actions being taken by
management to support the Group's geographic expansion strategy in the second
half and beyond.
Strategic partnerships
The Group continues to broaden and deepen its partnership relationships,
amplifying the Group's market reach beyond its direct sales channel.
A strategic technology partner for the Group is defined as a partner where our
customer using that technology integration has the potential to represent or
accounts for 10% of Group revenue. This strategic partnership model is
complemented by a broader general partner referral network which includes over
200 active global partners. A core focus of the strategic partnership network
is forging connectors into both ecommerce and CRM platforms, with the aim of
building brand awareness as we push out into international markets.
Sales through connectors into our strategic partners increased by 9% to
£13.9m (H1 2021: £12.8m). Magento connector revenue grew 6%, Shopify
connector revenue grew by 47% and MS Dynamics connector revenue grew by 3%
compared to the same period in the previous year.
While the Group works through pressures in the US, it continues to build on
its work with its strategic partners, both in the ecommerce and CRM platform
space, to drive brand awareness across their customer bases through joint go
to market plans. In H1, the Group increased its investment in adding new
channel managers into its international operations, building on the strong
relationships it has with its agency and technology partners that operate
within the ecosystem.
The pipeline continues to build as we move through the second half, with the
Group now also exploring opportunities to expand its strategic partner base
and further diversify its revenues into areas such as service clouds, as is
evident with the recent Zendesk Sell integration.
Product innovation
The Group's growth is supported by a focussed R&D investment programme
which continues to drive value for both our new and existing customers.
Recurring revenue from enhanced product functionality and upgrades increased
22% to £10.8m. The key areas of investment for the Group remain: enhancing
our customer data and experience platform capabilities; data visualisations
through reporting and analytics; deeper integrations with new and existing
technology partners; and our user experience of the platform.
During the period we invested £3.4m in R&D, underpinning management's
commitment to continuous product innovation. Our focus for product innovation
centres around the key areas of:
· Data and intelligence - joining all data together to create a single
customer view and help our customers better personalise their campaigns and be
relevant
· Marketing automation - harnessing artificial intelligence (AI) and
machine learning across targeted parts of the platform's architecture,
informed by our customers' needs and requirements to give efficiencies to
time-poor marketeers
· Building out further omni-channel functionality to Engagement Cloud
to assist businesses through the full customer journey at every touch point
they have with their customers
During the period we introduced single customer view, giving marketeers and
merchants a holistic, real-time view of their customer data and interactions.
We also released new program analytics and reporting, empowering marketeers to
optimise their customer journeys. New segment analytics provide our customers
additional insight into marketing and commerce audiences, and we were the
first to market with a toolkit to help customers mitigate the impact of iOS 15
and mail privacy protections. We also, developed new data integrations with
Zoom Webinar, Zendesk Sell, Oracle Netsuite and Shopware 6, expanding our
addressable market and providing customers with greater functionality.
M&A
To support the Group's organic growth strategy, the Board continues to
evaluate the market for complementary acquisitions, backed by the Group's
robust financial position. The Board's acquisition strategy is focused on set
criteria, being: synergy technology for new revenue streams; bolt-on
functionality to accelerate platform development, new talent acquisition and
the expansion of expertise, and extension of the customer base in strategic
territories.
People
Our success to date is solely down to the highly talented team we have built
at Dotdigital. We have built a special culture around empowering colleagues to
make decisions, recognising that everyone plays an important role in helping
us reach our growth ambitions and giving them the freedom to express
themselves. The togetherness this creates has again paid dividends in the
first half, as we continued to meet challenges head on while driving the
business forwards. On behalf of myself and the Board I would like to thank
everyone at Dotdigital for their continued hard work and dedication.
As announced on 25 February 2022, Chief Financial Officer Paraag Amin has
informed the Board of his intention to step down as an Executive Director of
the Company, effective as of 31 March 2022. The Company has appointed Spencer
Stuart to conduct a formal search process will update shareholders in due
course. We thank Paraag for his valuable contribution and wish him well in his
future endeavours.
To continue to grow and increase our presence around the world, we need to
continue to hire and retain exceptional individuals and invest in our talent.
We have continued to bolster our product development teams and sales teams
while bringing in highly experienced customer success professionals and
continue to work hard to attract more senior talent to help us realise our
vision.
FINANCIAL REVIEW
Revenue
Revenue during the period grew 10% to £30.9m from £28.2m in H1 2021. This
performance was driven primarily by new customer wins and existing customer
growth.
Recurring revenue represents c.94% of revenues, improving visibility on future
revenues. Enhanced functionality revenue (which includes licence fees and
bolt-on functionality) grew 22% to £10.8m from £8.9m in H1 2021.
International revenue was 31% of total sales in the period, from 33% in H1
2021. Of that, revenues were up 3% in the US to $6.5m (H1 2021: $6.3m), and up
27% in APAC to AUS$4.4m (H1 2021: AUS$3.5m). EMEA revenues grew 10% in the
period to £23.6m (H1 2021: £21.5m).
During the period ARPC(3) increased by 19% to £1422 per month (H1 2021:
£1196 per month).
EBITDA
We achieved an adjusted EBITDA(1) margin of 40% and an adjusted operating
profit margin of 29% in the first half, which was in line with management
expectations. The adjustments include a share-based payment charge of £0.22m
and exceptional costs of £0.06m.
Balance Sheet & Cash Position
Dotdigital continues to generate strong cash flow from its Engagement Cloud
operations with an interim period end net cash balance of £40.0m.
The Group continues to prioritise product development and during the period
spent £3.4m on development (compared to £3.1m in H1 2021).
Dividend Policy
A dividend of 0.86p per ordinary share (2021: 0.83p) was proposed by the
Company at the time of its Final Results in November 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 22 December 2021 and paid on 31 January 2022.
The Group will continue to conduct a full dividend review at year end;
therefore, in line with previous years the Board is not proposing an interim
dividend.
Operational Highlights
· International revenue increased by 4% to £9.7m (H1 2021: £9.3m), with
international sales representing 31% to total revenue (H1 2021: 33%)
· Strengthening of strategic partnerships in both ecommerce and CRM, with sales
through connectors increasing by 9% to £13.9m (H1 2021: £12.8m)
· Significant enhancements, such as single customer view and program analytics
and reporting, to the Dotdigital platform, driving new growth opportunities
and deepen existing customer relationships
Current Trading and Outlook
· Unwinding of customer buying behaviour in post-lockdown environment, with
reduced growth in demand for SMS, and macro headwinds affecting international
activities as previously highlighted. The Board now expects full year revenue
growth to be slower than previous expectations during the current and future
financial years
· The Group is committed to investing in its people and its culture, in an
increasingly competitive global labour market, in order to continue to achieve
year on year revenue growth
Milan Patel, CEO of Dotdigital, commented:
"The Group delivered a first half performance of strong growth and
profitability driven by new customer wins and expanded use of the platform
across the existing customer base. Our consistent strategy continues to
support our growth ambition in what is a significant market opportunity.
"Although we appear to be moving away from the worst of the pandemic, it
triggered a dramatic acceleration in organisations' adoption of digital
marketing that is set to endure, and the strength of our platform puts us in
an ideal position to benefit from that trend. Whilst we continue to navigate
through market challenges, particularly related to hiring, and adjust to a
post-lockdown environment, the Board is committed to investing in our teams in
line with the growth opportunity available, supported by a strong financial
position and recurring SaaS business model."
Investor Presentation: https://www.dotdigitalgroup.com/events-presentations/
(https://www.dotdigitalgroup.com/events-presentations/)
Live presentation to investors: Management will host a live presentation to
investors via the Investor Meet Company platform on 4 March at 4pm UK time.
Investors who already follow Dotdigital on the platform will automatically be
invited, others are invited to register in advance via the following link:
https://www.investormeetcompany.com/dotdigital-group-plc/register-investor
(https://www.investormeetcompany.com/dotdigital-group-plc/register-investor) .
Notes
(1. ARPC means Average Revenue Per Customer (including new
customers added in period and existing customers))
(2. EBITDA is earnings before interest, tax, depreciation and
amortization and adjusted for acquisition costs and share-based payments)
(3. Operating profit is adjusted for acquisition costs and
share-based payments)
For further information please contact:
Dotdigital Group plc Tel: 020 3953 3072
Milan Patel, CEO
InvestorRelations@dotdigital.com
Alma PR (Financial PR) Tel: 020 3405 0210
Hilary Buchanan dotdigital@almapr.co.uk
David Ison
Kieran Breheny
Canaccord Genuity (Nominated Advisor and Joint Broker) Tel: 020 7523 8000
Bobbie Hilliam
Georgina McCooke
Jonathan Barr, Sales
finnCap (Joint Broker) Tel: 020 7220 0500
Stuart Andrews, Corporate Finance
Alice Lane, ECM
Rhys Williams, Sales
Singer Capital Markets (Joint Broker) Tel: 020 7496 3000
Shaun Dobson, Head of Corporate Finance
Alex Bond, Corporate Finance
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO CONSTITUTE
INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE
REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS
INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
OPERATIONAL REVIEW
Introduction
For the first half period the Group delivered solid growth in a more
normalised trading environment against a strong comparative period in the
prior year. The marketing industry's march towards digital continues at pace,
and while the mix of channel usage ebbs and flows, our omnichannel offering
positions us well to capture the full range of opportunities it presents.
The focus in the first half of 2022 has been on cementing our position as one
of the leading marketing automation platforms through enhancing the
functionality of our Engagement Cloud, deepening our strategic partnerships
and hiring exciting talent to build demand across our territories among both
new and existing customers.
We continue to be trusted by household names to help them engage with and get
closer to their audiences. In the period, we signed Warner Bros, Sunderland
Football Club, and the British Dental Association as new customers, and the
pipeline for the second half remains healthy.
We continue to invest in product innovation, geographic expansion and
strategic partnerships - the three components of our growth strategy - to grow
our share of the market while protecting our strong margins. Demand for our
platform is growing globally, underpinned by a robust, pureplay SaaS model,
which provides high-quality and highly visible recurring revenues.
Current Trading and Outlook
Trading in the first half of the year, which delivered 10% growth and strong
profitability, reflects a period of more normalised trading following a spike
in one-off pandemic related SMS activity in the prior year. This trend has
continued with the emergence from lockdown in EMEA accelerating post period
end, and while our core offering has made an encouraging start to the second
half, we have seen a further softening of transactional based SMS of which we
will see the full impact next financial year.
In addition, we are seeing a lag in US growth due to the impact of a
challenging labour market on our pace of recruitment and retention. In the US
we have put in place a new management structure and team to support the
region, which will start contributing through the second half of the year.
As a result of the above, the Board anticipates revenue for the full year to
show growth in the range of 7 - 8%, slightly below current expectations.
Whilst our operating margin at the half year is higher than normal levels, we
expect this to be in the region of 20 - 22% margin by the end of the year as
we accelerate our investment in our teams due to wage inflation and strengthen
our international operations. This investment in talent and the actions taken
as described above, positions us well for continued revenue growth in the next
financial year and beyond.
We appear to be moving away from the worst of the pandemic, yet the
acceleration in organisations' adoption of digital marketing triggered is set
to endure, and the strength of our platform puts us in an ideal position to
benefit from that trend. There remain industry-wide pressures to overcome, but
they don't detract from the confidence we have in continuing to make
significant strides forward with each period that passes. We continue to grow
our presence in key territories around the world, developing a product that
meets the changing needs of marketeers while strengthening the organisational
infrastructure that underpins it.
Market
The shift from traditional to digital marketing is a long-term trend,
dramatically accelerated by the pandemic as organisations quickly grew to rely
on digital channels from both a customer retention and acquisition
perspective. At the same time, we have seen a marked increase in demand for a
more sophisticated approach, as marketeers recognise the step change in ROI
possible from developing more targeted and personalised campaigns based on
increasingly rich data sets. This is evident in the continued adoption of
channels in addition to email, which remains the most widely used means of
engagement, and strong growth in functionality recurring revenue seen in the
period.
As a result of the pandemic and the increased frequency and depth of
engagement, organisations have grown their contact bases, and the audiences
now expect a personalised end-to-end experience; a trend that will persist
long after Covid-related restrictions ease. We have developed Dotdigital's
platform to provide marketeers with everything they need to meet these
expectations and more, from highly customisable user experiences to the most
advanced analytics on the market, ensuring every campaign and touchpoint is
memorable and feeds back data to drive continuous ROI enhancements.
We continue to see digital marketing grow as a percentage of overall revenue
spend and expect to see organisations in those industries worst affected by
the pandemic such as travel continue to increase their budgets as they ramp
back up.
As the world moves towards a point where there is acceptance of Covid as part
and parcel of normal life, organisations will adapt their strategies
accordingly, but their reliance on marketing automation will continue to grow
apace and the strength of our offering puts us in a strong position to
capitalise.
Strategy
The Group's strategy has organic growth at its core, centred around three
strategic pillars: international diversification, expanded market reach
through partnership relationships, and continuous product innovation.
Geographic expansion
Organic international revenue increased by 4% to £9.7m (H1 2021: £9.3m) in
the period, with international sales contributing 31% to total revenue (H1
2021: 33%).
EMEA
EMEA showed solid revenue growth of c.10% in the period to £23.6m (H1 2021:
£21.5m).
The Group continues to see growing demand in the region for its omnichannel
capability, as marketeers increase their focus on relevancy and
personalisation to provide the best possible customer experience. As
international travel is now opening, our teams have started to meet customers
face to face and build further pipeline through the partner and sales teams.
People was a major focus in EMEA across the period. We continued to: invest in
our customer success team, which is already having a tangible, positive impact
on retention; strengthen our partnership team to deepen relationships and
drive greater reach into their respective customer bases; and broaden our
agency and technology partner ecosystem, helping to build 'top of funnel' lead
generation demand.
North America
Revenues from North America grew organically by c.3% to $6.5m (H1 2021:
$6.3m).
The recruitment of talent and expanding the employee base is key to improving
growth rates within the region. In a challenging labour market with high
levels of wage inflation, the Directors continue to focus on strengthening the
management team in the region, most recently with the hire of a new VP of
Growth and VP of Customer Success. Whilst investment in management bandwidth
will take time to flow through to the financial results, this provides us with
the right structure to support future growth. With the addition of more
customer success specialists to support growth and consultants to help drive
increased uptake of our platform from upper-tier mid-market companies and
larger enterprises, and plans to further strengthen our senior team, our
prospects for the territory remain strong.
APAC
APAC revenue grew organically by c.27% to AUS$4.4m (H1 2021: AUS$3.5m).
The Group's Japan office is now operational and uptake of the platform in
Singapore has been encouraging. The Group has continued to develop its
presence in Australia despite the challenges posed by lockdowns. As our newest
region, the focus in APAC continues to be building our teams on the ground,
deepening relationships with strategic partners, and driving brand awareness.
The Group continues to navigate various cost pressures, particularly regarding
hiring, across all regions but is confident of actions being taken by
management to support the Group's geographic expansion strategy in the second
half and beyond.
Strategic partnerships
The Group continues to broaden and deepen its partnership relationships,
amplifying the Group's market reach beyond its direct sales channel.
A strategic technology partner for the Group is defined as a partner where our
customer using that technology integration has the potential to represent or
accounts for 10% of Group revenue. This strategic partnership model is
complemented by a broader general partner referral network which includes over
200 active global partners. A core focus of the strategic partnership network
is forging connectors into both ecommerce and CRM platforms, with the aim of
building brand awareness as we push out into international markets.
Sales through connectors into our strategic partners increased by 9% to
£13.9m (H1 2021: £12.8m). Magento connector revenue grew 6%, Shopify
connector revenue grew by 47% and MS Dynamics connector revenue grew by 3%
compared to the same period in the previous year.
While the Group works through pressures in the US, it continues to build on
its work with its strategic partners, both in the ecommerce and CRM platform
space, to drive brand awareness across their customer bases through joint go
to market plans. In H1, the Group increased its investment in adding new
channel managers into its international operations, building on the strong
relationships it has with its agency and technology partners that operate
within the ecosystem.
The pipeline continues to build as we move through the second half, with the
Group now also exploring opportunities to expand its strategic partner base
and further diversify its revenues into areas such as service clouds, as is
evident with the recent Zendesk Sell integration.
Product innovation
The Group's growth is supported by a focussed R&D investment programme
which continues to drive value for both our new and existing customers.
Recurring revenue from enhanced product functionality and upgrades increased
22% to £10.8m. The key areas of investment for the Group remain: enhancing
our customer data and experience platform capabilities; data visualisations
through reporting and analytics; deeper integrations with new and existing
technology partners; and our user experience of the platform.
During the period we invested £3.4m in R&D, underpinning management's
commitment to continuous product innovation. Our focus for product innovation
centres around the key areas of:
· Data and intelligence - joining all data together to create a single
customer view and help our customers better personalise their campaigns and be
relevant
· Marketing automation - harnessing artificial intelligence (AI) and
machine learning across targeted parts of the platform's architecture,
informed by our customers' needs and requirements to give efficiencies to
time-poor marketeers
· Building out further omni-channel functionality to Engagement Cloud
to assist businesses through the full customer journey at every touch point
they have with their customers
During the period we introduced single customer view, giving marketeers and
merchants a holistic, real-time view of their customer data and interactions.
We also released new program analytics and reporting, empowering marketeers to
optimise their customer journeys. New segment analytics provide our customers
additional insight into marketing and commerce audiences, and we were the
first to market with a toolkit to help customers mitigate the impact of iOS 15
and mail privacy protections. We also, developed new data integrations with
Zoom Webinar, Zendesk Sell, Oracle Netsuite and Shopware 6, expanding our
addressable market and providing customers with greater functionality.
M&A
To support the Group's organic growth strategy, the Board continues to
evaluate the market for complementary acquisitions, backed by the Group's
robust financial position. The Board's acquisition strategy is focused on set
criteria, being: synergy technology for new revenue streams; bolt-on
functionality to accelerate platform development, new talent acquisition and
the expansion of expertise, and extension of the customer base in strategic
territories.
People
Our success to date is solely down to the highly talented team we have built
at Dotdigital. We have built a special culture around empowering colleagues to
make decisions, recognising that everyone plays an important role in helping
us reach our growth ambitions and giving them the freedom to express
themselves. The togetherness this creates has again paid dividends in the
first half, as we continued to meet challenges head on while driving the
business forwards. On behalf of myself and the Board I would like to thank
everyone at Dotdigital for their continued hard work and dedication.
As announced on 25 February 2022, Chief Financial Officer Paraag Amin has
informed the Board of his intention to step down as an Executive Director of
the Company, effective as of 31 March 2022. The Company has appointed Spencer
Stuart to conduct a formal search process will update shareholders in due
course. We thank Paraag for his valuable contribution and wish him well in his
future endeavours.
To continue to grow and increase our presence around the world, we need to
continue to hire and retain exceptional individuals and invest in our talent.
We have continued to bolster our product development teams and sales teams
while bringing in highly experienced customer success professionals and
continue to work hard to attract more senior talent to help us realise our
vision.
FINANCIAL REVIEW
Revenue
Revenue during the period grew 10% to £30.9m from £28.2m in H1 2021. This
performance was driven primarily by new customer wins and existing customer
growth.
Recurring revenue represents c.94% of revenues, improving visibility on future
revenues. Enhanced functionality revenue (which includes licence fees and
bolt-on functionality) grew 22% to £10.8m from £8.9m in H1 2021.
International revenue was 31% of total sales in the period, from 33% in H1
2021. Of that, revenues were up 3% in the US to $6.5m (H1 2021: $6.3m), and up
27% in APAC to AUS$4.4m (H1 2021: AUS$3.5m). EMEA revenues grew 10% in the
period to £23.6m (H1 2021: £21.5m).
During the period ARPC(3) increased by 19% to £1422 per month (H1 2021:
£1196 per month).
EBITDA
We achieved an adjusted EBITDA(1) margin of 40% and an adjusted operating
profit margin of 29% in the first half, which was in line with management
expectations. The adjustments include a share-based payment charge of £0.22m
and exceptional costs of £0.06m.
Balance Sheet & Cash Position
Dotdigital continues to generate strong cash flow from its Engagement Cloud
operations with an interim period end net cash balance of £40.0m.
The Group continues to prioritise product development and during the period
spent £3.4m on development (compared to £3.1m in H1 2021).
Dividend Policy
A dividend of 0.86p per ordinary share (2021: 0.83p) was proposed by the
Company at the time of its Final Results in November 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 22 December 2021 and paid on 31 January 2022.
The Group will continue to conduct a full dividend review at year end;
therefore, in line with previous years the Board is not proposing an interim
dividend.
Dotdigital Group Plc
Consolidated Income Statement
For the six months ended 31 December 2021
Restated*
6 months 6 months 12 months
to 31 Dec 2021 to 31 Dec 2020 to 30 June 2021
Unaudited Unaudited Audited
Note £'000s £'000s £'000s
Continuing operations
Revenue from contracts with customers 4 30,911 28,226 58,124
Cost of sales (5,541) (5,067) (10,356)
Gross profit 4 25,370 23,159 47,768
Administrative expenses (16,470) (15,583) (34,089)
Share based payments (222) (344) (625)
Exceptional costs** (60) (68) (188)
Operating profit from continuing operations 8,618 7,164 12,866
Finance income 16 16 20
Finance costs (30) (41) (74)
Profit before income tax from continuing operations 8,604 7,139 12,812
Income tax expense (1,825) (815) (1,322)
Profit for the period from continuing operations 6,779 6,324 11,490
Discontinuing operations
Loss for the period from discontinued operations - (424) (899)
Profit for the period attributable to the owners of the Company 6,779 5,900 10,591
Earnings per share from all operations (pence per share)
Basic 6 2.27 1.98 3.55
Diluted 6 2.23 1.95 3.50
Adjusted basic 6 2.36 2.11 3.82
Adjusted diluted 6 2.32 2.08 3.76
* Restated see note 11
** The exceptional costs relate to amortisation of technology and in
the prior year to amortisation of technology and acquisition costs of Comapi.
Dotdigital Group Plc
Consolidated Statement of Comprehensive Income
For the six months ended 31 December 2021
6 months Restated* 12 months
6months
to 31 Dec 2021 to 31 Dec 2020 to 30 June 2021
Unaudited Unaudited Audited
Note £'000s £'000s £'000s
Earnings per share from continuing operations (pence per share)
Basic 6 2.27 2.12 3.85
Diluted 6 2.23 2.09 3.79
Adjusted basic 6 2.36 2.26 4.12
Adjusted diluted 6 2.32 2.22 4.06
Earnings per share from discontinued operations (pence per share)
Basic 6 - (0.14) (0.30)
Diluted 6 - (0.14) (0.30)
Adjusted basic 6 - (0.14) (0.30)
Adjusted diluted 6 - (0.14) (0.30)
Earnings per share from continuing operations (pence per share)
Basic
6
2.27
2.12
3.85
Diluted
6
2.23
2.09
3.79
Adjusted basic
6
2.36
2.26
4.12
Adjusted diluted
6
2.32
2.22
4.06
Earnings per share from discontinued operations (pence per share)
Basic
6
-
(0.14)
(0.30)
Diluted
6
-
(0.14)
(0.30)
Adjusted basic
6
-
(0.14)
(0.30)
Adjusted diluted
6
-
(0.14)
(0.30)
Dotdigital Group Plc
Consolidated Statement of Comprehensive Income
For the six months ended 31 December 2021
6 months Restated* 12 months
6 months
to 31 Dec 2021 to 31 Dec 2020 to 30 June 2021
Unaudited Unaudited Audited
note £'000s £'000s £'000s
Profit for the period 6,779 5,900 10,591
Other comprehensive income
Items that may be subsequently reclassified to
profit and loss:
Exchange differences on translating foreign operations 29 (79) (87)
Total comprehensive income attributable to:
Owners of the parent 4 6,808 5,821 10,504
Total comprehensive income for the year
6,808 6,245 11,403
Comprehensive income from continuing operations
Comprehensive income from discontinued operations - (424) (899)
Dotdigital Group Plc
Consolidated Statement of Financial Position
For the six months ended 31 December 2021
Restated*
Note As at As at As at
31 Dec 2021 31 Dec 30 June
2020 2021
Unaudited Unaudited Audited
£'000s £'000s £'000s
Assets
Non-current assets
Goodwill 9,680 9,680 9,680
Intangible assets 16,749 14,893 16,134
Property, plant and equipment 639 722 649
Right-of-use asset 2,983 3,805 3,323
30,051 29,100 29,786
Current assets
Trade and other receivables 12,838 13,253 13,350
Cash and cash equivalents 40,035 27,556 31,951
52,873 40,809 45,301
Total assets 4 82,924 69,909 75,087
Equity attributable to the owners of the parent
Called up share capital 8 1,494 1,493 1,494
Share premium 7,124 6,967 7,124
Reverse acquisition reserve (4,695) (4,695) (4,695)
Other reserves 3,829 2,087 3,066
Retranslation reserve (8) (29) (37)
Retained earnings 60,863 50,883 54,081
Total equity 68,607 56,706 61,033
Dotdigital Group Plc
Consolidated Statement of Financial Position
For the six months ended 31 December 2021
Restated*
As at As at As at
31 Dec 2021 31 Dec 2020 30 June 2021
Unaudited Unaudited Audited
£'000s £'000s £'000s
Liabilities
Non-current liabilities
Lease liabilities 2,174 2,885 2,489
Deferred tax 1,451 1,365 1,207
3,625 4,250 3,696
Current liabilities
Trade and other payables 9,739 7,830 9,334
Lease liabilities 902 1,031 934
Current tax payable 51 92 90
10,692 8,953 10,358
Total liabilities 14,317 13,203 14,054
Total equity and liabilities 82,924 69,909 75,087
Dotdigital Group Plc
Consolidated Statement of Changes in Equity
For the six months ended 31 December 2021
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 2020 as previously stated 1,493 6,967 45,514 1,372 (4,695) 50 50,701
Impact of correction of errors (note 11) - - 141 228 - - 369
Restated as at 1 July 2020 1,493 6,967 45,655 1,600 (4,695) 50 51,070
Profit for the period - - 5,900 - - - 5,900
Retranslation reserve - - - - - (79) (79)
Dividends - - (950) - - - (950)
Reserve Transfer - - 278 - -
(278) -
Deferred tax on share options - - - 421 - 421
-
Share based payments - - - 344 - - 344
As at 31 December 2020 1,493 6,967 50,883 2,087 (4,695) (29) 56,706
As at 1 January 2021 1,493 6,967 50,883 2,087 (4,695) (29) 56,706
Profit for the period - - 4,691 - - - 4,691
Dividends - - (1,522) - - - (1,522)
Retranslation reserve - - - - - (8) (8)
Issue of share capital 1 157 - - - - 158
Reserve Transfer - - 29 (29) - - -
Deferred tax on share options - - - 727 - - 727
Share based payments - - - 281 - - 281
As at 30 June 2021 1,494 7,124 54,081 3,066 (4,695) (37) 61,033
As at 1 July 2021 1,494 7,124 54,081 3,066 (4,695) (37) 61,033
Profit for the period - - 6,779 - - - 6,779
Dividends - - - - - - -
Retranslation reserve - - - - - 29 29
Reserve transfer - - 3 (3) - - -
Deferred tax on share options - - - 544 - - 544
Share based payments - - - 222 - - 222
As at 31 December 2021 1,494 7,124 60,863 3,829 (4,695) (8) 68,607
Dotdigital Group Plc
Consolidated Statement of Changes in Equity
For the six months ended 31 December 2021
- 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. The reserve
transfer in the period relates to lapsed share options.
- Retranslation reserve relates to the retranslation of a foreign subsidiary
into the functional currency of the Group.
Dotdigital Group Plc
Consolidated Statement of Cash Flows
For the six months ended 31 December 2021
6 months 6 months 12 months
to 31 Dec 2021 to 31 Dec 2020 to 30 June 2021
Unaudited Unaudited Audited
note £'000s £'000s £'000s
Cash flow from operating activities 7 13,258 7,944 17,969
Tax paid (1,075) (982) (975)
Net cash generated from operating activities 12,183 6,962 16,994
Net cash used in continuing operating activities 12,183 7,534 20,710
Net cash used in discontinuing operating activities - (572) (3,716)
Cash flow from investing activities
Purchase of intangible fixed assets (3,439) (3,147) (6,870)
Purchase of property, plant and equipment (162) (57) (169)
Proceeds from sale of property, plant and equipment - - 2
Interest received 16 16 20
Net cash used in investing activities (3,585) (3,188) (7,017)
(3,585) (3,188) (7,017)
Net cash used in continuing investing activities
Net cash used in discontinuing investing activities - - -
Cash flows from financing activities
Equity dividends paid - (950) (2,472)
Payment of leasing liabilities (543) (572) (1,182)
Proceeds from share issues - - 158
Net cash used in financing activities (543) (1,522) (3,496)
(543) (1,492) (3,446)
Net cash used in continuing financing activities
Net cash used in discontinuing financing activities - (30) (50)
Increase in cash and cash equivalents 8,055 2,252 6,481
Cash and cash equivalents at beginning of period 31,951 25,383 25,383
Effect of foreign exchange rate changes 29 (79) 87
Cash and cash equivalents at end of period. 40,035 27,556 31,951
Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021
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 consolidated interim financial statements have been prepared in
accordance with International Financial Reporting Standards ("IFRS") as
adopted by the UK 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 2021. The interim financial information
for the six months to 31 December 2021, which complies with IAS 34 'Interim
Financial Reporting' has been approved by the Board of Directors on 3 March
2022.
The unaudited interim financial information for the period ended 31 December
2021 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
2021 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 2021, as described in those
financial statements.
Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021
4. SEGMENTAL REPORTING
The Group's single line of business is the provision of data-driven
omnichannel marketing automation. The chief operating decision maker considers
the Group's reportable segments to be by geographical location this being
EMEA, US and APAC operations and by business activity, this being core
Dotdigital and CPaaS as shown below:
Geographical revenue and results (from all operations)
6 months to 31 December 2021
EMEA US APAC
Operations Operations Operations Total
£'000s £'000s £'000s £'000s
Income statement
Revenue 23,644 4,885 2,382 30,911
Gross profit 18,927 4,367 2,076 25,370
Profit/(Loss) before income tax 8,774 96 (266) 8,604
Total comprehensive income attributable to the owners of the parent 7,046 13 (251) 6,808
Financial position
Total assets 75,743 4,670 2,511 82,924
Net current assets 36,957 3,727 1,497 42,181
Restated 6 months to 31 December 2020
EMEA US APAC
Operations Operations Operations Total
£'000s £'000s £'000s £'000s
Income statement
Revenue 22,973 4,842 1,933 29,748
Gross profit (restated see note 11) 17,251 4,354 1,775 23,380
Profit before income tax 6,386 425 (96) 6,715
Total comprehensive income attributable to the owners of the parent (restated 5,576 362 (117) 5,821
see note 11)
Financial position
Total assets 63,279 4,629 2,001 69,909
Net current assets (restated see note 11) 26,757 3,623 1,476 31,856
Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021
4. SEGMENTAL REPORTING (CONTINUED…)
Restated 6 months to 31 December 2020
EMEA US APAC
Operations Operations Operations Total
£'000s £'000s £'000s £'000s
Income statement
Revenue 22,973 4,842 1,933 29,748
Gross profit (restated see note 11) 17,251 4,354 1,775 23,380
Profit before income tax 6,386 425 (96) 6,715
Total comprehensive income attributable to the owners of the parent (restated 5,576 362 (117) 5,821
see note 11)
Financial position
Total assets 63,279 4,629 2,001 69,909
Net current assets (restated see note 11) 26,757 3,623 1,476 31,856
Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021
4. SEGMENTAL REPORTING (CONTINUED…)
12 months to 30 June 2021
EMEA US APAC
Operations Operations Operations Total
£'000s £'000s £'000s £'000s
Income statement
Revenue 47,024 9,264 4,262 60,550
Gross profit 36,878 8,241 3,864 48,983
Profit/(Loss) before income tax 11,699 609 (294) 12,014
Total comprehensive income
attributable to the owners of the parent 10,436 379 (311) 10,504
Financial position
Total assets 71,566 3,098 423 75,087
Net current assets/(liabilities) 33,942 1,387 (386) 34,943
Business activity revenue and results from all operations
6 months to 31 December 2021
Core CPaaS Total
£'000s £'000s £'000s
Income statement
Revenue 30,911 - 30,911
Gross profit 25,370 - 25,370
Profit/(Loss) before income tax 8,604 - 8,604
Total comprehensive income attributable to the owners of the parent 6,808 - 6,808
Financial position
Total assets 82,882 42 82,924
Net current assets/(liabilities) 42,213 (32) 42,181
Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021
4. SEGMENTAL REPORTING (CONTINUED…)
Restated 6 months to 31 December 2020
Core CPaaS Total
£'000s £'000s £'000s
Income statement
Revenue 28,226 1,522 29,748
Gross profit (restated see note 11) 23,159 221 23,380
Profit/(Loss) before income tax 7,139 (424) 6,715
Total comprehensive income attributable to the owners of the parent (restated 6,245 (424) 5,821
see note 11)
Financial position
Total assets 67,069 2,840 69,909
Net current assets (restated see note 11) 31,088 768 31,856
12 months to 30 June 2021
Core CPaaS Total
£'000s £'000s £'000s
Income statement
Revenue 58,124 2,426 60,550
Gross profit 47,768 1,215 48,983
Profit/(Loss) before income tax 12,812 (798) 12,014
Total comprehensive income attributable to the owners of the parent 11,403 (899) 10,504
Financial position
Total assets 74,976 111 75,087
Net current assets 34,974 (31) 34,943
5. DIVIDENDS
The proposed final dividend of £2,563,819 for the year ended 30 June 2021 of
0.86p per share was paid on the 31 January 2022.
Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021
6. EARNINGS PER SHARE
Earnings per share data is based on the consolidated profit using 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 the annual report
and financial statements and in these interim 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 6 months to 31 December 2021 6 months 12 months to 30 June 2021
share are as follows:
to 31 December 2020
From all operations £'000s £'000s £'000s
Profit for the year attributable to the owners of the parent 6,779 5,900 10,591
Amortisation of acquisition-related intangible fixed asset 60 60 120
Other exceptional costs - 8 68
Share-based payment 222 344 625
Adjusted profit for the year attributable to the owners of the parent 7,061 6,312 11,404
Adjusted profit for the year attributable to the owners of the parent from:
Continuing operations: 7,061 6,736 12,303
Discontinuing operations: - (424) (899)
7,061 6,312 11,404
Management does not consider the above adjustments to reflect the underlying
business performance.
Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021
6. EARNINGS PER SHARE (CONTINUED…)
6 months 6 months 12 months
to 31 Dec 2021 to 31 Dec 2020 to 30 June 2021
Unaudited Unaudited Audited
All operations
Earnings per Ordinary share:
Basic (pence) 2.27 1.98 3.55
Diluted (pence) 2.23 1.95 3.50
Adjusted basic (pence) 2.36 2.11 3.82
Adjusted diluted (pence) 2.32 2.08 3.76
Continuing operations
Earnings per Ordinary share:
Basic (pence) 2.27 2.12 3.85
Diluted (pence) 2.23 2.09 3.79
Adjusted basic (pence) 2.36 2.26 4.12
Adjusted diluted (pence) 2.32 2.22 4.06
Discontinued operations
Earnings per Ordinary share:
Basic (pence) - (0.14) (0.30)
Diluted (pence) - (0.14) (0.30)
Adjusted basic (pence) - (0.14) (0.30)
Adjusted diluted (pence) - (0.14) (0.30)
Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021
6. EARNINGS PER SHARE (CONTINUED…)
6 months 12 months
6 months
to 31 Dec 2021 to 31 Dec 2020 to 30 June 2021
Unaudited Unaudited Audited
£'000s £'000s £'000s
Profit for the period from all
operations for the purpose of earnings
per share: 6,779 5,900 10,591
Basic 7,061 6,312 11,404
Adjusted
Profit for the period from continuing
operations for the purpose of earnings
per share: 6,779 6,324 11,490
Basic 7,061 6,736 12,303
Adjusted
Profit for the period from discontinued
operations for the purpose of earnings
per share: - (424) (899)
Basic - (424) (899)
Adjusted
Weighted average number of shares in issue as follows:
6 months 6 months 12 months
to 31 Dec to 31 Dec 2020 to 30 June 2021
2021
Unaudited Unaudited Audited
Weighted average number
Basic 298,778,630 298,547,645 298,598,459
Diluted 304,006,513 303,231,752 302,921,327
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 £221,767 (2020: £343,920, 2021: £624,881),
ongoing acquisition costs of Comapi £nil (2020: £7,857, 2021: £68,095) and
amortisation of acquired intangibles £60,000 (2020: £60,000, 2021:
£120,000).
Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021
7. RECONCILIATION OF PROFIT BEFORE CORPORATION TAX TO NET CASH GENERATED FROM
OPERATIONS
6 months 6 months 12 months
to 31 Dec to 31 Dec 2020 to 30 June 2021
2021
Unaudited Unaudited Audited
£'000s £'000s £'000s
Profit before income tax from all operations 8,604 6,715 12,014
Adjustments for:
Depreciation 565 651 1,267
Amortisation 2,824 2,314 4,795
Exceptional costs - 8 68
Gain on disposal of fixed assets - - (2)
Share-based payments 222 344 625
Finance lease non-cash movement 96 140 (48)
Finance expense 30 41 75
Decrease/ (increase) in trade and other receivables 512 (266) (363)
Increase/(decrease) in trade and other payables 405 (2,003) (462)
Net cash from operations 13,258 7,944 17,969
8. CALLED UP SHARE CAPITAL
During the period no shares were issued.
Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021
9. 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:
12 months
6 months 6 months to 30 June 2021
to 31 Dec 2021
to 31 Dec 2020
Unaudited Unaudited Audited
£'000s £'000s £'000s
Aggregate emoluments 312 285 1,136
Share-based payments on the LTIP options granted 133 220 347
Company contributions to money purchase pension scheme 13 13 26
458 518 1,509
The end-to-end awards granted to Milan Patel and to Paraag Amin can only be
exercised at the end of a 3-year vesting period, based on challenging absolute
total shareholder return performance targets. Under IFRS 2 Share-based
payments, the Group must provide an estimate for the costs based on a Black
Scholes model valuation each year, as if they fully paid out at the end of the
performance period in December 2020 to Milan Patel and October 2021 for Paraag
Amin. To fully vest, the Group must achieve an annual compounded TSR of 35%
over a c.3 year period. In the period, part of the end-to-end share options
awarded to Milan vested and the remainder lapsed. A new grant was made by the
remuneration committee under the long-term incentive program with performance
measures that are based on the company's total shareholder return and earnings
per share in 2024.
Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021
9.RELATED PARTY NOTE (CONTINUED...)
6 months 6 months 12 months
to 31 Dec 2021 to 31 Dec 2020 to 30 June 2021
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:
Ipswich Town Football Club 5 - 4
Epwin Group Plc - Email marketing services 3 3 6
Cadence Performance Ltd - Email marketing services - 1 -
8 4 10
Year end balances arising from the sale of services
Entities controlled by non-executive directors of the Group:
Ipswich Town Football Club - - 1
Epwin Group Plc - Email marketing services - 1 1
- 1 2
10. SUBSEQUENT EVENTS TO 31 DECEMBER 2021
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.
Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021
11. PRIOR YEAR RESTATEMENT NOTE
11. PRIOR YEAR RESTATEMENT NOTE
During the year ended 30 June 2021, the Group made the decision to modify the
classification of direct marketing from cost of sales to administrative
expenses and tech infrastructure from under administrative expenses to cost of
sales, to reflect more appropriately gross profit and gross profit margin plus
also administrative expenses under continuing operations. Comparative amounts
in the 6 months ended 31 December 2020 in the Consolidated Income Statement
have been reclassified for consistency. As a result, £66,111 was reclassified
from administrative expenses to cost of sales. There has been no impact on the
profit for the 6 months ended 31 December 2020 however gross profit has
decreased from £23,225,000 to £23,159,000 and administrative expenses
decreased from £15,649,000 to £15,583,000.
During the year ended 30 June 2021, the Group discovered that the share-based
payment arrangement had been erroneously recognised in Dotdigital Group PLC
instead of being recognised in the subsidiaries in which the employees are
employed. Under IFRS 2 Share-based payments, when a parent grants rights to
it's equity instruments to employees of its subsidiaries this arrangement
should be accounted for as equity-settled in the consolidated financial
statements but results in an investment being created in the parent's own
statement of financial position. Therefore, the subsidiaries should in their
own separate financial statements, measure the services received from its
employees in accordance with the requirements of IFRS 2 applicable to
equity-settled share-based payment transactions. Thereby resulting in a
corresponding increase recognised in equity as a capital contribution from the
parent. There was no impact on the Group profit for the 6 months ended 31
December 2020.
At the year end, the Group discovered on the calculation of deferred tax on
the share options and the internally generated development costs that this had
been misallocated and miscalculated respectively. On the misallocation of the
deferred tax on the share option under IFRS 2 Share based payment, where the
final deferred tax calculation exceeds the cumulative amount recognised as a
share-based expense in the Income statement, the maximum amount of deferred
tax income that can be recognised in the Income Statement can only equal the
total share-based payment expense. Any excess deferred tax is recognised
directly in reserves.
As for the miscalculation of deferred tax on the internally generated
development costs this is with respect to the identification and calculation
of the net book value for internally generated development costs qualifying
for research and development, thereby impacting the deferred tax liability.
Both adjustments have impacted the prior year's profit for the 6 months
ended 31 December 2020 where this has decreased from £6,656,000 to
£6,324,000. Net assets as per the consolidated of financial position have
increased from £56,248,000 to £56,706,000.
Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021
11. PRIOR YEAR RESTATEMENT NOTE continued
Consolidated Income Statement for the 6 months ended 31 December 2020
As previously reported Adjustments As restated
£'000s £'000s £'000s
Continuing operations
Revenue from contracts with customers 28,226 - 28,226
Cost of sales (5,001) (66) (5,067)
Gross profit 23,225 (66) 23,159
Administrative expenses (15,649) 66 (15,583)
Share based payments (344) - (344)
Exceptional costs (68) - (68)
Operating profit from continuing operations 7,164 - 7,164
Finance income 16 - 16
Finance costs (41) - (41)
Profit before income tax from continuing operations 7,139 - 7,139
Income tax expense (483) (332) (815)
Profit for the period from continuing operations 6,656 (332) 6,324
Discontinuing operations
Loss for the year from discontinued operations (424) - (424)
Profit for the period attributable to the owners of the Company 6,232 (332) 5,900
Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021
11. PRIOR YEAR RESTATEMENT NOTE continued
Consolidated Statement of Comprehensive Income for the 6 months ended 31
December 2020
As previously reported Adjustments As restated
Unaudited Unaudited Unaudited
£'000s £'000s £'000s
Profit for the period 6,232 (332) 5,900
Other comprehensive income
Items that may be subsequently reclassified to
profit and loss:
Exchange differences on translating foreign operations (79) - (79)
Total comprehensive income attributable to:
Owners of the parent 6,153 (332) 5,821
Total comprehensive income for the year
6,577 (332) 6,245
Comprehensive income from continuing operations
Comprehensive income from discontinued operations (424) - (424)
Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021
11. PRIOR YEAR RESTATEMENT NOTE continued
Consolidated Statement of Financial Position as at 31 December 2020
As previously reported Adjustments As restated
£'000s £'000s £'000s
Assets
Non-current assets 9,680 - 9,680
Goodwill
Intangible assets 14,893 - 14,893
Property, plant and equipment 4,527 - 4,527
29,100 - 29,100
Current assets
Trade and other receivables 13,253 - 13,253
Cash and cash equivalents 27,556 - 27,556
40,809 - 40,809
Total assets 69,909 - 69,909
Equity attributable to the owners of the parent
Called up share capital 1,493 - 1,493
Share premium 6,967 - 6,967
Reverse acquisition reserve (4,695) - (4,695)
Other reserves 1,438 649 2,087
Retranslation reserve (29) - (29)
Retained earnings 51,074 (191) 50,883
Total equity 56,248 458 56,706
Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021
11. PRIOR YEAR RESTATEMENT NOTE continued
Consolidated Statement of Financial Position as at 31 December 2020
As previously reported Adjustments As restated
£'000s £'000s £'000s
Liabilities
Non-current liabilities 2,885 - 2,885
Lease liabilities
Deferred tax 1,904 (539) 1,365
4,789 (539) 4,250
Current liabilities
Trade and other payables 7,830 - 7,830
Lease liabilities 1,031 - 1,031
Current tax payable 11 81 92
8,872 81 8,953
Total liabilities 13,661 (458) 13,203
Total equity and liabilities 69,909 - 69,909
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