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REG - dotDigital Group plc - Final Results

dotDigitalAnnouncement

15/10/2019 07:05

RNS Number : 8293P

dotDigital Group plc

15 October 2019

dotdigital Group plc

("dotdigital" or the "Group")

Final results

dotdigital Group plc (AIM: DOTD), a leading cross-channel marketing automation platform, announces final audited results for the year ended 30 June 2019 with strong growth in revenue and profit driven by the Group's organic growth strategy and the addition of omni-channel functionality.

Highlights

· Group revenues grew 19% to £51.3m (2018: £43.1m)

· Organic revenue from continuing operations grew by 15% to £42.5m (2018: £36.9m)

· Adjusted EBITDA¹ from continuing operations grew 24% to £14.7m (2018: £11.8m)

· Adjusted operating profit from continuing operations² grew 25% to £11.8m (2018: £9.4m)

· Adjusted EPS from continuing operations grew by 33% to 3.88p (2018: 2.91p); ahead of market expectations

· Strong cash balance at period end of £19.3m (2018: £15.0m)

· Comapi technology fully integrated and Dynmark and Donky business units being discontinued to increase focus in the core dotdigital SaaS-based marketing platform (as announced 22 May 2019)

· 19% of customers using more than one channel - demonstrating the value in the Comapi technology

· ARPU³ grew 14%, increasing from £845 per month to £966 per month

· Recurring revenue as a percentage of total revenue increased to 86% from 85%

Product innovation

· Recurring revenue increased 39% driven by enhanced product functionality

· Significant progress made in selling integrated cross-channel marketing

· Enhanced ecommerce offering with addition of RFM⁴ and automated segments

· Continued investment in AI and machined learning

Strategic partnerships

· Magento partnership shows strong revenue growth with revenue increasing 27% to £11.8m (2018: £9.3m)

· Strengthening relationships with Shopify and BigCommerce who have named dotdigital as a global elite partner

· Further investment made to develop relationship with Microsoft Dynamics where revenue grew 10% to £3.9m

Geographic expansion

· EMEA revenue delivered double digit growth despite ongoing impact of GDPR.

· USA revenue grew 27% (excluding Comapi) to $9.0m (2018: $7.1m) following strong collaborations with strategic partners and system integrators.

· APAC revenue growth of 83% (excluding Comapi) to AUS$3.8m (2018: AUS$2.1m) exceeded management expectations both by order value of clients and by the number of customers won in the year

Outlook

· Momentum has continued into the new financial year and with our high level of contracted recurring revenues in the core business; management remains confident in its expectations for 2020

Milan Patel, CEO of dotdigital, commented:

"The Group is very excited about its financial performance and our growth opportunities, driven by investment in technology innovation, geographic expansion and strategic partnerships. With the additional investments in people across all regions it sets the foundations for scalable growth in AI infused marketing and data driven cross channel Marketing Automation. The Group is especially pleased with our international performance.

Although relatively early on, Q1 of the 2019/20 financial year has started well with trading in line with expectations. With 89% of our revenues recurring, a high proportion under contract and strong client relationships we continue to have good visibility into our earnings. We are confident in delivering continued organic growth across our core organic growth pillars.

We remain focussed on delivering against our strategy and are confident for the year ahead."

For more information, please contact:

dotdigital Group Plc Milan Patel, CEO Paraag Amin, CFO	Tel: 020 3953 4445

Canaccord Genuity (Nominated Adviser and Joint Broker) Bobbie Hilliam Georgina McCooke Jonathan Barr, Sales	Tel: 020 7523 8000
finnCap (Joint Broker) Stuart Andrews, Corporate Finance Rhys Williams, Sales	Tel: 020 7220 0500
N+1 Singer (Joint Broker) Shaun Dobson, Head of Corporate Finance Alex Bond, Corporate Finance	Tel: 020 7496 3000

Prior to this announcement's release, the statement contained inside information for the purposes of Article 7 of Regulation (EU) 596/2014 (MAR) (Market Abuse Regulation).

1. Operating profit is adjusted for acquisition costs and share-based payments

2. EBITDA is earnings before interest, tax, depreciation and amortisation and adjusted for acquisition costs and share-based payments

3. ARPU means Average Revenue Per User

4. RFM means Recency, frequency and monetary

Operational Review

Total revenue increased by 19% to £51.3m, however this includes the discontinued operations of the business. Organic revenue growth from in the core business ('continuing operations') remained strong at 15%, taking revenue to £42.5m from £36.9m in 2018. This was as a direct consequence of higher value new client wins, a strong level of customer sign ups, ability to continually monetise advanced features and additional marketing channels adopted by existing clients. This was evident by revenues from enhanced functionality and monthly recurring licence fees now achieving £12.4m, a significant increase of 39%.

We have also seen substantial progress in the international markets, with revenues outside of the UK market, excluding discontinued operations, growing by 28% and now representing 29% of group revenues. The focus on international revenues continues as international expansion remains a core pillar in our overall organic growth strategy and the Group continues to invest in key geographies.

During the year, dotdigital engagement cloud's average revenue per user (ARPU) rose by 14% from £845 per month to £966 per month. This was the result of continued focus on mid-market and enterprise clients plus customers that use the Magento integration, who on average spend over £1,500 per month. Overall the volume of messages sent out by the platform increased by 11% to 16.0bn from 14.4bn in 2018, reflecting the change in demographic and increasing both the recurring revenue growth and ARPU. 86% of group revenues are now recurring, of which 90% is contracted giving good visibility on revenues.

The cash position of the Group, £19.3m at year end, remains strong with no significant debt in the business, thereby allowing us to make strategic decisions to deploy cash where we see increased returns from either further investing in our organic growth pillars or earnings enhancing acquisitions.

Market

The marketing automation market is set to expand to $25.1bn by 2023 according to Forrester Research. Currently, email marketing automation represents c.30% of the global market, closely followed by other channels such as mobile application marketing and social media marketing. According to the Forrester Research, email marketing is anticipated to dominate the marketing automation market. Due to the increased adoptions of digitalisation and the channel's status as a relatively low cost but effective marketing method.

North America, Europe and Asia is expected to lead the way with the fastest growth forecasted to be in these markets. The Group currently has 3 separate hubs that mirror each market, with a user interface translated into multiple languages and a scalable infrastructure that has in-region data processing and storage to mirror these growth areas. The Board believes the Group is therefore well placed to capture market shares in these areas.

Geographic Progress

EMEA

EMEA saw revenue growth for continued operations of 10% in the year from £30.4m to £33.5m. We still see strong double-digit growth from the region despite the ongoing impact of GDPR in the first half of the financial year. Message volume growth has also moved closer to the levels seen prior to the introduction of the new legislation in Europe.

The continued focus on the Nordics and Benelux region has resulted in stronger partnerships and a growing revenue stream in the area. Brand awareness continues to be achieved in the market within the e-commerce space through integrations into our partners' platforms. We have begun to investigate hiring local people in the region in addition to opening an office in the Netherlands to support our customers and partners in these geographies. The Benelux market has seen the strongest revenue growth outside of the UK as our strategic partners are also seeing their strongest growth.

The majority of Comapi's clients operate within the UK market and following the decision that both Dynmark and Donky businesses were non-core to the Group's operations, this business will be wound down. A small team now remains in place to support the current clients and partners.

North America

Our North American region revenue showed strong organic growth. Revenue grew 27% to $9.0m from $7.1m following strong collaborations with our strategic partners and system integrators and further raising brand awareness in the market, which has significantly enhanced this growth. Our aim to support our customers and partners in region was strengthened through the increased investment in people and through the new offices opened on both the West and East Coast to support their needs. In H2, the region also saw deeper partnerships relations and additional investment via marketing, in our Microsoft Dynamics Connector, which enabled us to increase the addressable market in North America. In order to scale up the hub in-region we have accelerated our search for a General Manager to provide both local experienced leadership and quicker decision making.

APAC

The APAC region saw the fastest growth of 83%, ahead of management expectation, albeit from a smaller base, growing from AUS$2.1m to AUS$3.8m. This was due to higher order values and customer numbers won in the year. Traction continues to be gained in the Far East through our presence in Singapore which is still a relatively new market for the Group. The addition of mobile functionality added to our core offering has helped increase the pipeline for these services, which typically tend to be a more mobile-first approach. We continue to enhance our relationships with the channel partners in region thereby assisting us in improving sales conversion rates.

Product innovation

It is our ambition to be the world's best data-driven marketing and customer engagement platform and we are therefore continually investing in developing new technology. We plan on scaling the platform and adding new features across all regions.

Our concentration remains on e-commerce companies which currently represents 50% of our customer base. During the year we have enhanced our commerce intelligence functionality though the introduction of RFM (Recency, Frequency and Monetary) reporting, together with automated segments, which are both easy to use and provide increased value and insights around their data in the platform. Further improvements were also made to Artificial Intelligence ("AI") and Machine Learning ("ML") for our product recommendations. In addition, an affinity finder solution has been built that will be launching soon, as part of our commitment to infuse the platform with AI and ML. The key differentiator with our algorithms is that it uses the customer's data to enhance the return on investment as opposed to having a generic algorithm which may not work.

Post the addition of an integrated cross-channel messaging service, we have made notable progress in customers using more than one channel in their marketing campaigns. New channels outside of email now include push messaging, chat, SMS, RCS (Rich Communication Service) plus other messaging services such as Facebook Messenger, Twitter DM and WhatsApp to name but a few.

By using this enhanced offering, our customers can now use the data they import into the platform to stay relevant and personalise thereby leading them to target the right person, with the right message, at the right time, through the right channels.

Recurring revenue from enhanced product functionality and upgrades, taken by both our existing and new customers, has increased by 39% compared with the same period last year. This shows that not only is the platform adoption increasing but marketeers are placing greater value in data and are becoming more sophisticated in their marketing strategies. We are therefore confident that we will continue to see an increase in the adoption of what we have built to date, including the new innovative features we are adding. The strongest adoption was the use of templates of drip programs to automate customers' marketing.

Therefore, we expect to see this increasing as we continue to monetise our development efforts and place greater value in the functionality. Enhanced product functionality now represents 34% (2018: 28%) of the recurring group revenues.

Strategic partnerships

Revenue from customers using our Magento integration grew 27% from £9.3m to £11.8m and brand awareness remains strong in this space. All new customers Magento adds to their own platform ships with dotdigital Engagement Cloud pre-installed, and all that is needed is to sign a contract with dotdigital to get started. As a result of our deep relationship with Magento we work together on a joint marketing strategy. Sign-up of clients across all regions remains strong with ARPU increasing from our clients, and this now stands at approximately £1,500 per month. In the year we added 219 customers bringing the total to 664 using the integration.

Our partnership with Shopify has continued to strengthen by way of building on our value proposition for e-commerce merchants through connecting into Shopify Flow. This allows customers of Shopify to seamlessly create, segment and use the engagement cloud messaging channels to create a personalised and targeted experience for their merchant's customer. This has also allowed a seamless integration of process automation between e-commerce and marketing platforms. We now have 56 clients using the Shopify connector and expect this to increase as we go into the new year.

Big Commerce in the period also named us as a global elite partner and work is ongoing in building this relationship and a joint go-to-market strategy. This should enable us to increase our addressable market across all regions.

As part of our commitment to our B2B marketing customers, we have continued to invest in our dedicated platform and channel management resource to build on our strategic relationship with Microsoft as we look to integrate our product in to Microsoft Dynamics. We have seen our revenues from the Dynamics connector grow by 10% to £3.9m with ARPUs remaining over £1,000 per month.

People

This year we focused on creating a management structure that sets the foundations for future growth as the business expands internationally. We have upskilled the senior management team as well as creating regional leaders for local decision making and control. This has enabled us to increase management bandwidth and develop new skills whilst still maintaining the culture within our business.

We have invested in sales, customer success, marketing and product development in the year, thus supporting our product innovation goals, but also allowing us to further develop our global brand awareness. The largest investment in people was made in our international hubs where we continue to see success in providing our customers with a scalable business model and support the overall business growth.

We firmly believe our people are crucially important to our business and its future; further investment will be made in the training and development of all our employees coupled with onboarding the new headcount to get up to speed as quickly as possible.

Acquisitions

In the year we completed the full integration of Comapi, however the decision was made to discontinue both the Dynmark and Donky business units. The acquisition provided the Group with:

· Extending the group's marketing automation platform to provide an industry-leading solution offering fully integrated cross-channel and conversational commerce support to marketers

· Enabling the group to deliver aligned conversational messaging across channels including email, mobile push, SMS, Facebook messenger, Apple business messenger, Twitter and live chat

· Enabling the customers to meet consumer demand for a more personalised communication experience and

· Positioning us as the most advanced platform on the market and making dotdigital more relevant in the strategic mobile first Asian market.

We will continue to investigate earnings enhancing opportunities beyond organic growth but have very strict value enhancing criteria to finding these strategic acquisitions. The areas we would consider making an acquisition in, are:

1) Companies that can help us expand into new geographic markets or allow us to grow faster in a market that we currently operate within

2) Companies that have relevant adjacent technology; and

3) Companies that can add new functionality (e.g. artificial intelligence) that will add value to our customer base within the mid- and small enterprise market.

Financial review

Revenues

The Group achieved revenue growth of 19% (15% from continuing operations; 2018: 15%), which delivered record overall revenues of £51.3m (£42.5m from continuing operations; 2018: £36.9m). The quality of the revenue growth is evidenced by continued stable recurring revenues of 86% (2018: 85%). The Group continued to grow outside of the UK with international revenues now accounting for 29% of the continuing operations' total.

Business model

The Group generates the majority of its revenues from annual message plans across multiple channels, which are recognised equally over the life of the contract. In addition, we sell upgrade packages to customers allowing them to use additional modules and features of our platform. For more sophisticated customers we offer customised functionality and integrations so that they can maximise the use of their customer data. These professional services are recognised as revenue as the work is performed and completed.

Gross margin

The gross margin for the period for continuing operations was 90%, (2018: 87%). We continue to see the value in both direct and partnership models of selling in our international regions, and hence continue to invest in building long-term annuity revenues.

Operating expenses

Adjusted operating profit from continuing operations grew by 25% from £9.4m to £11.8m. Part of this growth was due to the margin improvement achieved via our cloud infrastructure as we see the benefits of scaling. Investments made previously within product development, sales and marketing also continue to pay off.

Operating expenses from continuing operations as a percentage of revenues remained at 62%, reflecting the growth in revenue combined with the careful investment in areas which provided the best rate of return. dotdigital continues to invest in people, particularly within the areas of development, sales and marketing, with regional offices seeing the largest investment. This investment enables us to continue enhancing and adding to the product suite.

Balance sheet

There was strong cash management in the year with cash generated from continuing operations of £12.5m (2018: £11.2m). The cash balance at the end of the period was £19.3m (2018: £15.0m). The Group continues to be debt free and maintains a healthy balance sheet. A combination of a highly efficient cash collection process and an incentivisation push to move more customers onto Direct Debit and automated credit card collection helped with the year-end position.

Trade receivables have only grown by 6% in the year reflecting revenue growth and good cash management. Overall receivables have declined 6% as a result of a decrease in prepayments due to better pricing achieved for the hybrid cloud infrastructure.

The Group continues to invest heavily in the engagement cloud to increase functionality around cross-channel messaging, enhance the Artificial Intelligence and Machine Learning capabilities of the platform and improve connectors to e-commerce and CRM platforms to allow our customers to make the most of their data and provide excellent customer engagement. This continued investment is demonstrated by the increase in product development to £5.5m from £4.4m in 2018.

Goodwill

£9.1m of Goodwill reflects the acquisition of Comapi in 2017/18, for a cash consideration of £10.7m. Identifiable intangible assets included £1.2m of technology and £1.2m of customer relationships. The latter of these has been impaired as a result of discontinuing this part of the business and hence reducing the expected lifetime of the contracts from nine years to three years.

Tax

Profitability from continuing operations continues to grow, however, this is not reflected within the tax charge, which is now £0.06m (2018: £0.3m) with an effective tax rate of 0.5%, the principal reason for the continuation of the low rate being enhanced R&D tax credits.

EPS

In the year the adjusted basic EPS from continuing operations increased by 33% to 3.93p (2018: 2.95p) and adjusted diluted EPS from continuing operations increased to 3.88p (2018: 2.91p). The increase in adjusted EPS is driven by the increased profitability and the reduction in the effective tax rate to 0.5% from 2.8%.

Dividend policy

As announced last year, the Board conducted its review of its organic business plan for the following three years. This included evaluating the cash needs required for opportunities in organic growth to increase shareholder value and capital expenditure. The Board decided that it will continue to keep a progressive dividend in line with Group EBITDA growth. Therefore, subject to approval at the AGM in December 2019, the Board proposes that the Group will pay a final dividend of 0.67p per ordinary share (2018: 0.64p), subject to shareholder approval at the Company's AGM in December 2019. Further detail on the dividend timetable can be found in note 10 below.

Outlook

The Group has a strong position in changing markets and the Board remains confident about the future growth prospects, assuming that there is no adverse change in market conditions and delivery against the planned strategy.

Milan Patel

Chief Executive Officer

15 October 2019

Paraag Amin

Chief Financial Officer

15 October 2019

DOTDIGITAL GROUP PLC

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 30 JUNE 2019


				30.6.19	30.6.18
				£'000	£'000 (Restated)
			Notes
CONTINUING OPERATIONS
Revenue from contracts with customers			3	42,522	36,891
Cost of sales			7	(4,377)	(4,625)

Gross profit				38,145	32,266

Administrative expenses			7	(26,380)	(22,849)

OPERATING PROFIT FROM CONTINUING OPERATIONS PRE-SHARE BASED PAYMENTS AND EXCEPTIONAL COSTS				11,765	9,417

Share-based payments				(565)	(450)
Exceptional costs			5	(179)	(279)

OPERATING PROFIT FROM CONTINUING OPERATIONS				11,021	8,688

Finance income			6	19	9

PROFIT BEFORE INCOME TAX FROM CONTINUING OPERATIONS			7	11,040	8,697

Income tax expense			8	(58)	(683)

Profit for the year from continuing operations			12	10,982	8,014
Discontinuing operations
(Loss)/Profit for the year from discontinued operations			12	(2,457)	544

	Attributable to the owners of the parent:
	Profit for the period from continuing operations			10,982	8,014
	(Loss)/Profit for the period from discontinued operations			(2,457)	544
	Profit for the period attributable to the owners of the Company			8,525	8,558

Earnings per share from all operations (pence per share)
		Basic	11	2.86	2.88
		Diluted	11	2.82	2.85
		Adjusted Basic	11	3.36	3.16
		Adjusted Diluted	11	3.31	3.12

Earnings per share from continuing operations (pence per share)
Basic			11	3.68	2.70
Diluted			11	3.63	2.67
Adjusted Basic			11	3.93	2.95
Adjusted Diluted			11	3.88	2.91

Earnings per share from discontinued operations (pence per share)
Basic		11	(0.82)	0.18
Diluted		11	(0.81)	0.18
Adjusted Basic		11	(0.57)	0.21
Adjusted Diluted		11	(0.57)	0.21



PROFIT FOR THE YEAR			8,525	8,558

OTHER COMPREHENSIVE INCOME
Items that may be subsequently reclassified to profit and loss:
Exchange differences on translating foreign operations			(42)	(20)

Total comprehensive income attributable to:
	Owners of the parent		8,483	8,538

TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Comprehensive income from continuing operations			10,940	7,997
Comprehensive income from discontinued operations			(2,457)	541


		30.6.19	30.6.18
		£'000	£'000
	Notes
ASSETS
NON-CURRENT ASSETS
Goodwill	13	9,680	9,680
Intangible assets	14	11,702	9,787
Property, plant and equipment	15	1,037	1,046

		22,419	20,513

CURRENT ASSETS
Trade and other receivables	17	12,222	12,953
Cash and cash equivalents	18	19,320	15,005

		31,542	27,958

TOTAL ASSETS		53,961	48,471


EQUITY ATTRIBUTABLE TO THE
OWNERS OF THE PARENT
Called up share capital	19	1,490	1,490
Share premium	20	6,791	6,791
Reverse acquisition reserve	20	(4,695)	(4,695)
Other reserves	20	720	661
Retranslation reserve	20	16	(26)
Retained earnings	20	37,161	32,331

TOTAL EQUITY		41,483	36,552


LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax	24	1,377	1,697

CURRENT LIABILITIES
Trade and other payables	21	11,096	10,217
Financial liabilities - borrowings:
- Interest bearing loans		5	5

		11,101	10,222

TOTAL LIABILITIES		12,478	11,919

TOTAL EQUITY & LIABILITIES		53,961	48,471

DOTDIGITAL GROUP PLC

COMPANY STATEMENT OF FINANCIAL POSITION

30 JUNE 2019


		30.6.19	30.6.18
		£'000	£'000
	Notes
ASSETS
NON-CURRENT ASSETS
Investments	16	15,147	15,147

		15,147	15,147

CURRENT ASSETS
Trade and other receivables	17	808	882
Cash and cash equivalents	18	594	646

		1,402	1,528

TOTAL ASSETS		16,549	16,675


EQUITY ATTRIBUTABLE TO THE
OWNERS OF THE PARENT
Called up share capital	19	1,490	1,490
Share premium	20	6,791	6,791
Other reserves	20	720	661
Retained earnings	20	3,515	5,761

TOTAL EQUITY		12,516	14,703


LIABILITIES
CURRENT LIABILITIES
Trade and other payables	21	4,033	1,972

TOTAL LIABILITIES		4,033	1,972

TOTAL EQUITY & LIABILITIES		16,549	16,675

DOTDIGITAL GROUP PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2019


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

Balance as at 1 July 2017	1,481	25,306	6,290

Issue of share capital	9	-	501
Dividends	-	(1,627)	-
Transfer in reserves	-	94	-
Share-based payments	-	-	-
Transactions with owners	9	(1,533)	501

Profit for the year	-	8,558	-
Other comprehensive income	-	-	-
Total comprehensive income	-	8,558	-

Balance as at 30 June 2018	1,490	32,331	6,791

Dividends	-	(1,903)	-
IFRS 15 restatement	-	(2,837)	-
Deferred tax asset on IFRS 15	-	539	-
Transfer in reserves	-	506	-
Share-based payments	-	-	-
Transactions with owners	-	(3,695)	-

Profit for the year	-	8,525	-
Other comprehensive income	-	-	-
Total comprehensive income	-	8,525	-

Balance as at 30 June 2019	1,490	37,161	6,791

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

Balance as at 1 July 2017	(46)	(4,695)	305	28,641

Issue of share capital	-	-	-	510
Dividends	-	-	-	(1,627)
Transfer in reserves	-	-	(94)	-
Share-based payments	-	-	450	450
Transactions with owners	-	-	356	(667)

Profit for the year	-	-	-	8,558
Other comprehensive income	20	-	-	20
Total comprehensive income	20	-	-	8,578

Balance as at 30 June 2018	(26)	(4,695)	661	36,552

Dividends	-	-	-	(1,903)
IFRS 15 restatement	-	-	-	(2,837)
Deferred tax asset on IFRS 15	-	-	-	539
Transfer in reserves	-	-	(506)	-
Share-based payments	-	-	565	565
Transactions with owners	-	-	59	(3,636)

Profit for the year	-	-	-	8,525
Other comprehensive income	42	-	-	42
Total comprehensive income	42	-	-	8,567

Balance as at 30 June 2019	16	(4,695)	720	41,483

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

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

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

· Retranslation reserve relates to the retranslation of foreign subsidiaries into the functional currency of the Group.

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

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

DOTDIGITAL GROUP PLC

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2019


	Called up share	Retained	Share	Other
	capital	earnings	premium	Reserves	Total equity
	£'000	£'000	£'000	£'000	£'000

Balance as at 1 July 2017	1,481	2,239	6,290	305	10,315

Issue of share capital	9	-	501	-	510
Dividends	-	(1,627)	-	-	(1,627)
Transfer in reserves	-	94	-	(94)	-
Share-based payments	-	-	-	450	450
Transactions with owners	9	(1,533)	501	356	(667)

Profit for the year	-	5,055	-	-	5,055
Total comprehensive income	-	5,055	-	-	5,055

Balance as at 30 June 2018	1,490	5,761	6,791	661	14,703

Issue of share capital	-	-	-	-	-
Dividends	-	(1,903)	-	-	(1,903)
Transfer in reserves	-	506	-	(506)	-
Share-based payments	-	-	-	565	565
Transactions with owners	-	(1,397)	-	59	(1,338)

Profit for the year	-	(849)	-	-	(849)
Total comprehensive income	-	(849)	-	-	(849)

Balance as at 30 June 2019	1,490	3,515	6,791	720	12,516

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

· Retained earnings represents the cumulative earnings of the Company attributable to equity shareholders.

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

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

DOTDIGITAL GROUP PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2019


		30.6.19	30.6.18
		£'000	£'000
			(restated)**
	Notes
Cash flows from operating activities
Cash generated from operations	29	12,493	11,220
Tax paid		(207)	(1,010)

Net cash generated from all operating activities		12,286	10,210


Net cash generated from continuing operating activities		13,288	10,413
Net cash generated from discontinued operating activities		(1,002)	(203)
Cash flows from investing activities
Purchase of subsidiary, net of cash acquired*		-	(9,578)
Purchase of intangible fixed assets		(5,617)	(4,471)
Purchase of tangible fixed assets		(456)	(475)
Sale of tangible fixed assets		-	4
Interest received		19	9

Net cash flows used in investing activities		(6,054)	(14,511)


Net cash generated from continuing investing activities		(5,168)	(4,452)
Net cash generated from discontinued investing activities		(886)	(10,059)
Cash flows from financing activities
Equity dividends paid		(1,903)	(1,627)
Loan repayments		(14)	(5)
Share issue		-	510

Net cash flows from financing activities		(1,917)	(1,122)

Net cash generated from continuing financing activities		(1,903)	(1,117)
Net cash generated from discontinued financing activities		(14)	(5)

(Decrease)/Increase in cash and cash equivalents		4,315	(5,423)

Cash and cash equivalents at beginning of year	30	15,005	20,428

Cash and cash equivalents at end of year	30	19,320	15,005

*Cash acquired £157,884.

** The comparatives above have been restated to reflect the re-classification between the net cash flows used in investing activities and the net cash generated from operating activities and continuing and discontinuing operations.

DOTDIGITAL GROUP PLC

COMPANY STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2019


		30.6.19	30.6.18
		£'000	£'000
	Notes
Cash flows from operating activities
Cash generated from operations	29	1,851	10,909

		1,851	10,909
Net cash generated from operating activities

Cash from investing activities

Purchase of investments		-	(9,737)

Net cash flows from investing activities		-	(9,737)

Cash flows from financing activates
Equity dividends paid		(1,903)	(1,627)
Share issue		-	510

Net cash flows from financing activities		(1,903)	(1,117)


Increase in cash and cash equivalents		(52)	55

Cash and cash equivalents at beginning of year	30	646	591

Cash and cash equivalents at end of year	30	594	646

DOTDIGITAL GROUP PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2019

1. GENERAL INFORMATION

dotdigital Group Plc ("dotdigital") is a company incorporated in England and Wales and quoted on the AIM market. The address of the registered office is disclosed on the inside back cover of the financial statements. The principal activity of the Group is described on page 38.

2. ACCOUNTING POLICIES

Basis of preparation

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

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

New and amended standards adopted by the Company

The Group has applied IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers for the first time for the period commencing 1 July 2018.

Impact of initial application of IFRS 9 Financial Instruments

In the current year, the Group has applied IFRS 9 Financial Instruments (as revised in July 2014) and the related consequential amendments to other IFRS Standards that are effective for an annual period that begins on or after 1 January 2018. IFRS 9 Financial Instruments, which replaces IAS 39 Financial Instruments: Recognition and Measurement, impacts the classification and measurement of the Group's financial instruments and requires certain additional disclosures. The transition provisions of IFRS 9 allow an entity not to restate comparatives.

IFRS 9 introduced new requirements for:

1. The classification and measurement of financial assets and financial liabilities,

2. Impairment of financial assets, and

3. General hedge accounting.

IFRS 9 has not had a material impact in the presentation of the accounts of the Group.

Impact of application of IFRS 15 Revenue from Contracts with Customers

In the current year, the Group has applied IFRS 15 Revenue from Contracts with Customers (as amended in April 2016) which is effective for an annual period that begins on or after 1 January 2018. IFRS 15 introduced a 5-step approach to revenue recognition. Far more prescriptive guidance has been added in IFRS 15 to deal with specific scenarios. The Group's accounting policies for its revenue streams are disclosed in detail in note 2 below. The Group has applied IFRS 15 in accordance with the modified retrospective transitional approach. In addition to providing more extensive disclosures for the Group's revenue transactions, the application of IFRS 15 has had an impact on the financial position and/or financial performance of the Group which is disclosed in note 33.

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

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 July 2018 and have not been early adopted. The full impact of their adoption has not yet been fully assessed; however, management do not expect the changes to have a material effect on the Financial Statements unless otherwise indicated:

Reference		Title	Summary	Application date of standard	Application date of Group

IAS 1 and IAS 8		Definition of material	Clarifies the definition of 'material' and align the definition used in the Conceptual Framework and the standards.	Periods beginning on or after 1 Jan 2020	1 July 2020
IAS 19		Plan Amendment, Curtailment or Settlement	Amendments in Plan Amendment, Curtailment or Settlement	Periods beginning on or after 1 January 2019	1 July 2019
IAS 28		Investment in Associates and Joint Ventures	Clarifies that an entity applies IFRS 9 Financial Instruments to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied.	Periods beginning on or after 1 January 2019	1 July 2019
IFRS 9	Financial Instruments	Amendment regarding termination rights in order to allow measurement at amortised cost even in the case of negative compensation payments.	Periods beginning on or after 1 January 2019		1 July 2019
IFRS 3, IFRS 11, IAS 12 and IAS 23		Annual Improvements to IFRS Standards 2015-2017 Cycle	Annual improvements	Periods beginning on or after 1 January 2019	1 July 2019
IFRS 16	Leases	Original issue	Periods beginning on or after 1 January 2019		1 July 2019

New Standards and interpretations not yet adopted

IFRS 16 Leases was issued in January 2016 but is not mandatory for the year ending 30 June 2019 and has not been adopted early by the Group. As a consequence of this new standard, this will result in all leases being recognised on the balance sheet by lessees, as the distinction between operating and finance leases is removed. Thereby resulting in an asset and a financial liability to pay rentals being recognised on the Statement of Financial Position.

As at the reporting date, the Group has non-cancellable operating lease commitments of £5.4m (see note 22), which will be recognised on a straight-line basis as an expense in the income statement. At the date of transition, being 1 July 2019, and in the year after transition, there will be an impact on the Group's consolidated income statement where the fixed rental expense (currently recognised within administrative expenses) is replaced by a depreciation charge and an interest expense. This will lead to a reduction in operating profit as a result of removing the operating lease expense net of the new leased asset depreciation charge. The Group expects to recognise right-of-use assets of approximately £5.5m and lease liabilities of £5.5m (after adjustments for prepayments and accrued lease payments recognised as at 30 June 2019). The Group expects a reduction in operating cost of approximately £1.1m with a corresponding increase in depreciation of £1.1m and an increase of £0.5m in finance costs, resulting in an overall reduction in profit after tax by approximately by £0.5m for the year ended 30 June 2020 as a result of adopting the new rules.

Changes in Accounting Policies and Disclosures

(a) New and amended standards adopted by the Group

The Group has applied any applicable new standards, amendments to standards and interpretations that are mandatory for the financial year beginning on or after 1 January 2018. However, none of them has a material impact on the Group's Consolidated Financial Statements.

(b) Impact of IFRS 15 - Revenue from contracts with customers

The Group's accounting policies for its revenue streams are disclosed in detail in note 2 below. The Group has applied IFRS 15 in accordance with the modified retrospective transitional approach. Apart from providing more extensive disclosures for the Group's revenue transactions, the application of IFRS 15 has not had a significant impact on the current financial position and/or financial performance of the Group. However, via the implementation of the modified retrospective transitional approach this did have a significant impact on the financial position of the Group. Further details can be seen in Note 33.

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

Basis of consolidation

In the period ended 2009 the Company acquired via a share for share exchange the entire issued share capital of dotdigital EMEA Limited (previously dotmailer Limited), whose principal activity is that of providing SaaS via a leading cross-channel marketing automation platform and managed services to digital marketing professionals.

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

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

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

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

- Comparative numbers are prepared on the same basis.

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

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

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

Subsidiaries

A subsidiary is an entity whose operating and financing policies are controlled by the Group. Subsidiaries are consolidated from the date on which control was transferred to the Group. Subsidiaries cease to be consolidated from

the date the Group no longer has control. Intercompany transactions, balances and unrealised gains on transactions between Group companies have been eliminated on consolidation.

The Group applies the acquisition method to account for business combinations. In the statement of financial position, the acquiree's identifiable assets and liabilities are initially recognised at their fair values at the acquisition date.

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

Revenue recognition

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

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

The Group sells cross-channel marketing services to other businesses, and services are either provided on a usage basis or fixed price bespoke contract. All revenue is from contracts signed with new customers and upgrades and additional functional recurring revenue sold to existing contracted clients. Revenue from contracts is recognised under percentage of completion method based on a percentage of services performed to date as a percentage of the total services to be performed.

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. 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.

Prepaid contracts: The Group sells 12-, 24- and 36-month contracts to its customers. This revenue is recognised monthly over the period of the contract. Where a customer prepays their contract, this is 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 but is invoiced in the month where the service agreement is signed. The revenue is then recognised over the period of the contract irrespective of materiality.

Going concern

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

Operating profit

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

Dividends

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

Goodwill

Goodwill represents the excess of the fair value of the consideration over the fair values of the identifiable net tangible and intangible assets acquired and is allocated to cash generating units.

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

Investments in subsidiaries

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

Intangible assets

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

Intangible assets are reviewed for impairment annually. Impairment is measured by determining the recoverable amount of an asset or cash generating unit (CGU) which is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or

CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.

- Domain names

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

- Software

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

- Product development

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

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

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

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

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

- There is an ability to use or sell the intangible asset;

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

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

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

- Technology

Technology represents the cost that would be incurred to build the entire Comapi platform had the acquisition not occurred. The useful life of this intangible asset is assessed to have a finite life of 10 years. Amortisation is charged on assets with finite lives, and until economic benefit can be received and recognised, this expense is taken to the income statement and useful lives are reviewed on an annual basis. Amortisation is charged from the point when the asset is available for use.

- Customer relationships

This represents the value of high-value customer contracts within Comapi. The useful life of this intangible asset is assessed to have a finite life of three years. Amortisation is charged on assets with finite lives, and until economic benefit can be received and recognised, this expense is taken to the income statement and useful lives are reviewed on an annual basis. Amortisation is charged from the point when the asset is available for use.

Impairment of non-financial assets (excluding goodwill)

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

Property, plant and equipment

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

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

Short leasehold: over the term of the lease

Fixtures and fittings: 25% on cost

Computer equipment: 25% on cost

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

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

Capital risk management

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

Taxation

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

Current tax

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

Deferred taxation

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

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

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

Operating leases

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

Financial instruments

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

profit or loss are recognised immediately in the income statement.

- Financial assets

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

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

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

Financial assets are classified into the following specified categories: financial assets at FVPL, 'amortised cost' or 'fair value through other comprehensive income' ('FVOCI'). The classification depends on the nature and purpose of the financial assets and is determined at the time of recognition.

Financial assets are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.

For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually, the Group recognises lifetime expected credit losses ('ECL') when there has been a significant increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECL.

Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.

- Cash and cash equivalents

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

- Trade receivables

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

- Financial liabilities and equity

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

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

- Trade payables

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

Foreign currency risk

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

The results and ﬁnancial position of all the Group entities (none of which has the currency of a hyper-inﬂationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
(a) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
(b) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
(c) all resulting exchange differences are recognised in other comprehensive income.

Equity

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

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

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

The reverse acquisition reserve relates to the adjustment required by accounting for the reverse acquisition in accordance with IFRS 3 'Business combinations'.

Other reserves relate to the charge for share-based payments in accordance with IFRS 2 'Share-based Payments'.

Share-based payments

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

Functional currency translation

- Functional and presentation currency

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

- Transaction and balances

Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

Employee benefit costs

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

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments as identified by the Board of Directors.

Critical accounting estimates and judgements

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

Judgements

(a) Capitalisation of development costs

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

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

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

(b) Valuation of intangibles

The recognition of business combinations requires the excess of the purchase price of acquisitions over the net book value of assets acquired to be allocated to the assets and liabilities of the acquired entity. The Group makes judgements and estimates in relation to the fair value allocation of the purchase price. If any unallocated portion is positive it is recognised as goodwill and if negative, it is recognised in the consolidated income statement.

Judgement is required in determining the fair value of identifiable assets, liabilities and contingent assets and liabilities assumed in a business combination and the fair value of the consideration payable. Calculating the fair values involves the use of significant estimates and assumptions, including expectations about future cash flows, discount rates and the lives of assets following purchase.

Estimates and assumptions

(a) Estimated impairment of goodwill

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

Further details on the estimates and assumptions we make in our annual impairment testing of goodwill are included in note 13 to the Financial Statements. At the period end, based on the assumptions, there was no indication of impairment to the carrying value of goodwill.

(b) Share-based compensation

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

-Selection of a valuation model

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

i. expected life

ii. expected volatility

iii. expected dividend yield

iv. interest rate

Further detail on the estimates and assumptions we make in our share-based compensation are included in note 28 to the financial statements. The charge made to income statement for period is also disclosed here.

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

(d) Bad debt provision

The Group performs ongoing credit evaluations of its customers and grant credit based upon past payment history, financial condition and anticipated industry conditions. Customer payments are regularly monitored and the Group recognises lifetime expected credit losses ("ECL") when there has been a significant credit risk since initial recognition based upon specific situations and overall industry conditions. However, if the credit risk on the trade receivables has not increased significantly since initial recognition, the Group measures the loss allowance at an amount equal to 12-month ECL. Hence the provision is maintained for potential credit losses based upon management's assessment of the expected collectability of all accounts receivable. In making this assessment, management take into consideration (i) any circumstances of which we are aware regarding a customer's inability to meet its financial obligations and (ii) our judgements as to potential prevailing economic conditions in the industry and their potential impact on the Group's customers.

3. SEGMENTAL REPORTING

dotdigital's single line of business remains the provision of data-driven cross-channel marketing automation. The chief operating decisionmaker considers the Group's segments to be by geographical location, this being EMEA, US and APAC operations and by business activity, this being core Engagement Cloud and CPaaS as shown below:

Geographical revenue and results

	30.6.2019
	EMEA	US	APAC	Total
	£'000	£'000	£'000	£'000
Income statement
Revenue	42,215	6,957	2,113	51,285
Gross profit	32,039	6,099	1,926	40,064
Profit before income tax	5,672	2,812	389	8,873
Total comprehensive income attributable to the owners of the parent	5,441	2,657	385	8,483

Financial position
Total assets	52,100	1,717	144	53,961
Net current assets	16,771	2,938	732	20,441

Revenue from external customers is attributed to the geographical segments noted above based on the customers' location. There were no customers who account for more than 10% revenue (2018: none).

All revenue is from contracts signed with new customers and upgrades and additional functional recurring revenue sold to existing contracted clients. Revenue from contracts is recognised under percentage of completion method based on a percentage of services performed to date as a percentage of the total services to be performed.

	30.6.2018
	EMEA	US	APAC	Total
	£'000	£'000	£'000	£'000
Income statement
Revenue	36,563	5,257	1,274	43,094
Gross profit	28,224	4,578	1,218	34,020
Profit before income tax	7,993	1,877	(627)	9,243
Total comprehensive income attributable to the owners of the parent	7,450	1,738	(650)	8,538

Financial position
Total assets	45,497	2,130	844	48,471
Net current assets	15,280	1,804	652	17,736

Business activity revenue and results
	30.6.2019
		Core	CPaaS*	Total
		£'000	£'000	£'000
Income statement
Revenue		42,522	8,763	51,285
Gross profit		38,145	1,919	40,064
Profit before income tax		11,040	(2,167)	8,873
Total comprehensive income attributable to the owners of the parent		10,940	(2,457)	8,483

Financial position
Total assets		52,263	1,698	53,961
Net current assets/(liabilities)		21,177	(736)	20,441

	30.6.2018
		Dotmailer	Comapi*	Total
		£'000	£'000	£'000
Income statement
Revenue		36,891	6,203	43,094
Gross profit		32,266	1,754	34,020
Profit before income tax		8,697	546	9,243
Total comprehensive income attributable to the owners of the parent		7,997	541	8,538

Financial position
Total assets		44,612	3,859	48,471
Net current assets		17,944	(208)	17,736

*The numbers included within Comapi are from the date of acquisition - 21 November 2017.

4. EMPLOYEES AND DIRECTORS

			30.6.19	30.6.18
			£'000	£'000

		Wages and salaries	17,029	14,149
		Social security costs	1,728	1,562
		Other pension costs	354	291

			19,111	16,002

The average monthly number of employees during the year is as follows:

			30.6.19	30.6.18

		Directors	6	5
		Sales and Marketing product	177	150
		Development and system engineers	100	71
		Administration	63	53

			346	279

	During the year the Group also capitalised staff-related costs of £4,924,505 (2018: £4,023,222) in relation to internally generated development costs.

5. EXCEPTIONAL COSTS
Continuing exceptional costs incurred in the year relate to the ongoing acquisition costs of Comapi of £58,824 (2018: £208,805) and amortisation of acquired intangibles of £120,000 (2018: £70,000). Discontinued exceptional costs in the year relate to the amortisation of acquired intangibles of £401,709 (2018: £78,110) and impairment of acquired intangibles of £344,235 (2018: Nil)
6. NET FINANCE INCOME
			30.6.19	30.6.18
			£'000	£'000
		Finance income:
		Deposit account interest	19	9

			19	9

7. OPERATING PROFIT

Costs by nature
Profit from continuing operations has been arrived after charging:-
		30.6.19		30.6.18
		£'000		£'000

Direct marketing			2,625		2,482
Outsourcing and other costs			1,752		2,143

	Total cost of sales		4,377		4,625


			30.6.19		30.6.18
			£'000		£'000

Staff related costs (inc Directors emoluments)			17,374		15,232
Operating leases: Land and buildings			1,162		886
Operating lease: Other			39		38
Audit remuneration			42		59
Amortisation of intangibles			2,520		1,934
Depreciation charge			436		482
Legal, professional and consultancy fees			386		423
	Computer expenditure		2,364		2,031
Bad debts			753		22
Foreign exchange losses			15		117
Travel and subsistence costs			576		481
Office running			75		109
Staff welfare			454		396
Other costs			982		639
Management charge			(798)		-

Total administration costs			26,380		22,849

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

	30.6.19		30.6.18
	£'000		£'000

Fees payable to the Company's auditor for the audit of Parent Company and consolidated financial statements		20		8
Fees payable to the Company's auditor for other services		47		37
- audit of Company subsidiaries
- non-audit fees: Tax and review of interim accounts		5		4

		72		49

8. INCOME TAX EXPENSE

Analysis of the tax charge from continuing operations:
	30.6.19		30.6.18
	£'000		£'000

Current tax on profits for the year		129		259
Deferred tax on origination and reversal of timing differences		(71)		426

		58		685


Tax charge from continuing operations		58		683
Tax charge from discontinued operations		290		2
		348		685

Factors affecting the tax charge:
		30.6.19		30.6.18
		£'000		£'000

Profit on ordinary activities before tax		8,873		9,243
Profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 19% (2018: 19%)		1,686		1,756
Effects of:
Expenses not deductible		151		137
Research and development enhanced claim		(2,327)		(1,908)
Expenditure permitted on exercising options		-		(217)
Overseas tax losses		(70)		72
Capital allowances in excess of depreciation		689		419

Total income tax		129		259

Deferred tax was calculated using the rate 19% (2018: 19%). For further details on deferred tax see note 24.

Taxation for each region is calculated at the rates prevailing in the respective jurisdiction.

A reduction in the UK corporation tax rate to 19% (effective from 1 April 2017) and to 18% (effective 1 April 2020) were substantively enacted on 26 October 2015, and an additional reduction to 17% (effective 1 April 2020) was substantively enacted on 6 September 2016. This will reduce the Company's future current tax charge accordingly.

UK deferred tax assets and liabilities have been recognised at the rate applying in the period they are expected to unwind.

9. PROFIT OF PARENT COMPANY

As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the parent Company is not presented as part of these financial statements. The parent Company's loss for the financial year was £848,539 (2018: profit: £5,055,276)

10. DIVIDENDS

Amounts recognised as distributions to equity holders in the period
	30.6.19		30.6.18
	£'000		£'000

Paid dividend for year end 30 June 2019 of 0.64p (2018: 0.505p) per share		1,903	1,505

Proposed dividend for the year end 30 June 2019 of 0.67p (2018: 0.64p) per share		1,997	1,907
The Board of the Company has proposed a final dividend of 0.67 pence per ordinary share (2018: 0.64 pence), subject to shareholder approval at the Company's AGM in December 2019. The Board confirms the timetable in respect of its final dividend. If approved at the AGM, it is intended that the dividend will be paid on 31 January 2020 to all shareholders on the register at close of business on 14 January 2020. The ex-dividend date will be 13 January 2020. As the proposed final dividend is subject to approval by the shareholders at the Annual General Meeting, it has not been included as a liability in these financial statements.

11. EARNINGS PER SHARE

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

Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential ordinary shares. Adjusted earnings per share is based on the consolidated profit deducting the acquisition related exceptional costs and share-based payment.

A number of non-IFRS adjusted profit measures are used in this annual report and financial statements. Adjusting items are excluded from our headline performance measures by virtue of their size and nature, in order to reflect management's view of the performance of the Group. Summarised below is a reconciliation between statutory results to adjusted results. The Group believes that alternative performance measures such as adjusted EBITDA are commonly reported by companies in the markets in which it competes and are widely used by investors in comparing performance on a consistent basis without regard to factors such as depreciation and amortisation, which can vary significantly depending upon accounting methods (particularly when acquisitions have occurred), or based on factors which do not reflect the underlying performance of the business. The adjusted profit after tax earnings measure is also used for the purpose of calculating adjusted earnings per share.

Reconciliations to earnings figures used in arriving at adjusted earnings per share are as follows:

		30.6.19	30.6.18
From all operations		£'000	£'000

Profit for the year attributable to the owners of the parent	8,525		8,558
Impairment of acquisition-related intangible fixed asset (see note 14)	344		-
Amortisation of acquisition-related intangible fixed asset (see note 14)	522		148
Other exceptional costs	59		209
Share-based payment	565		450
Adjusted profit for the year attributable to the owners of the parent	10,015		9,365
Adjusted profit for the year attributable to the owners of the parent for continuing operations	11,726		8,743
Adjusted profit for the year attributable to the owners of the parent for discontinuing operations	(1,711)		622

Management does not consider the above adjustments to reflect the underlying business performance. The other exceptional costs relate to ongoing acquisition costs of Comapi.

		30.6.19
			Weighted
			average	Per share
From all operations	Earnings		number of	Amount
	£’000		shares	Pence

Basic EPS
Profit for the year attributable to the owners of the parent	8,525		298,030,565	2.86

Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the parent	10,015		298,030,565	3.36

Options and warrants	-		4,390,083	-

Diluted EPS
Profit for the year attributable to the owners of the parent	8,525		302,420,648	3.82

Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the parent	10,015		302,420,648	3.31

				30.6.19
			Weighted
			average		Per share
From continuing operations	Earnings		number of		Amount
		£’000	shares		Pence

Basic EPS
Profit for the year attributable to the owners of the parent		10,982	298,030,565		3.68

Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the parent		11,726	298,030,565		3.93

Options and Warrants		-	4,390,083		-

Diluted EPS
Profit for the year attributable to the owners of the parent		10,982	302,420,648		3.63

Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the parent		11,726	302,420,648		3.88

			30.6.19
		Weighted
		average		Per share
From discontinued operations	Earnings	number of		Amount
	£’000	shares		Pence

Basic EPS
Loss for the year attributable to the owners of the parent	(2,457)	298,030,565		(0.82)

Adjusted Basic EPS
Adjusted loss for the year attributable to the owners of the parent	(1,711)	298,030,565		(0.57)

Options and warrants	-	4,390,083		-

Diluted EPS
Loss for the year attributable to the owners of the parent	(2,457)	302,420,648		(0.81)

Adjusted Diluted EPS
Adjusted loss for the year attributable to the owners of the parent	(1,711)	302,420,648		(0.57)

		30.6.18
			Weighted
			average	Per share
From all operations	Earnings		number of	Amount
	£’000		shares	Pence

Basic EPS
Profit for the year attributable to the owners of the parent	8,558		296,596,304	2.88

Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the parent	9,365		296,596,304	3.16

Options and Warrants	-		3,728,052	-

Diluted EPS
Profit for the year attributable to the owners of the parent	8,558		300,324,356	2.85

Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the parent	9,365		300,324,356	3.12

		30.6.18
			Weighted
			average	Per share
From continuing operations	Earnings		number of	Amount
	£’000		shares	Pence

Basic EPS
Profit for the year attributable to the owners of the parent	8,014		296,596,304	2.70

Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the parent	8,743		296,596,304	2.95

Options and warrants	-		3,728,052	-

Diluted EPS
Profit for the year attributable to the owners of the parent	8,014		300,324,356	2.67

Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the parent	8,743		300,324,356	2.91

	30.6.18
		Weighted
		average	Per share
From discontinued operations	Earnings	number of	Amount
	£'000	shares	Pence

Basic EPS
Profit for the year attributable to the owners of the parent	544	296,596,304	0.18

Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the parent	622	296,596,304	0.21

Options and Warrants	-	3,728,052	-

Diluted EPS
Profit for the year attributable to the owners of the parent	544	300,324,356	0.18

Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the parent	622	300,324,356	0.21

Weighted average number of shares

	30.6.19	30.6.18
	Shares	Shares

Basic EPS	298,030,565	296,596,304

Diluted EPS	302,420,648	300,324,356

12. CONTINUING AND DISCONTINUED OPERATIONS

The analysis between continuing and discontinued operation is as follows:

Year ended 30 June 2019

	Continuing operations	Discontinuing operations	TOTAL

	£'000	£'000	£'000

Revenue	42,522	8,763	51,285
Cost of sales	(4,377)	(6,844)	(11,221)

Gross profit	38,145	1,919	40,064

Administrative expense	(26,380)	(3,340)	(29,720)
Share-based payments	(565)	-	(565)
Exceptional costs	(179)	(746)	(925)

OPERATING PROFIT	11,021	(2,167)	8,854

Finance income	19	-	19

PROFIT BEFORE INCOME TAX	11,040	(2,167)	8,873

Income tax expense	(58)	(290)	(348)

PROFIT FOR THE YEAR	10,982	(2,457)	8,525

Year ended 30 June 2018

	Continuing operations	Discontinuing operations*	TOTAL

	£'000	£'000	£'000

Revenue	36,891	6,203	43,094
Cost of sales	(4,625)	(4,449)	(9,074)

Gross profit	32,266	1,754	34,020

Administrative expense	(22,849)	(1,130)	(23,979)
Share-based payments	(450)	-	(450)
Exceptional costs	(279)	(78)	(357)

OPERATING PROFIT	8,688	546	9,234

Finance income	9	-	9

PROFIT BEFORE INCOME TAX	8,697	546	9,243

Income tax expense	(683)	(2)	(685)

PROFIT FOR THE YEAR	8,014	544	8,558

*The numbers included within discontinued operations relate to Comapi from the date of acquisition being 21 November 2017.

13. GOODWILL

Group
	30.6.19	30.6.18
COST	£'000	£'000
At 1 July	13,192	4,121
Additions	-	9,071
At 30 June	13,192	13,192

AMORTISATION
At 1 July	3,512	3,512
Impairment	-	-

At 30 June	3,512	3,512

NET BOOK VALUE	9,680	9,680

On 21 November 2017, the Group acquired all the voting rights of Comapi for a cash consideration of £10.7m (which includes the payment of loans in Comapi) in exchange for all Comapi shares, with a potential consideration of £1.2m in share options for the management team, dependent on them achieving specific performance targets over a two-year post acquisition period and remaining with the business. Comapi's business is the provision of omni-channel messaging and cloud communication.

The Directors believe the acquisition will:

• Extend dotdigital's marketing automation platform to provide an industry-leading solution offering fully integrated cross-channel and conversational commerce support to marketers

• Enable dotdigital to deliver aligned conversational messaging across channels including email, mobile push, SMS, Facebook messenger, Apple business messenger, Twitter and live chat

• Enable dotdigital customers to meet consumer demand for a more personalised communication experience and

• Position dotdigital as the most advanced platform on the market and make dotdigital more relevant in the strategic mobile-first Asian market.

Goodwill of £9.1m was recognised on the acquisition, being the excess of the purchase consideration over the provisional fair value of net assets acquired as set out below and represents Comapi's platform, key customer relationships, employee knowledge and skills and the acceleration of bringing the technology to our platform rather than building in-house.

Goodwill is allocated to the Group's two cash generating units identified, that being Core and CPaaS. The goodwill addition in the year ended 30 June 2018 relates to the acquisition of Comapi and the goodwill at the beginning of the period relates to dotdigital.

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

The carrying amount of goodwill relates to the Group's two trading activities and business segments. This has been tested for impairment during the current period by comparison with the recoverable amounts of the CGU. Recoverable amounts for CGUs are based on the higher of value in use and fair value less costs to sell. The recoverable amounts of the CGU have been determined from value in use calculations. These calculations use pre-tax cash flow projections based on financial budgets approved by management covering a five-year period. The key assumptions for the value in use calculations are those regarding discount rates, growth rates, and expected changes in margins. Management estimates discount rates using pre-tax rates that reflect the current market assessment of the time value of money and the risks specific to the CGUs. Changes in income and expenditure are based on past experience and expectations of the future changes in the market. The pre-tax discount rate used to calculate the value in use is 6.2% (2018: 10%). The valuations indicate sufficient headroom such that a reasonably possible change in key assumptions would not result in impairment of goodwill.

14. INTANGIBLE ASSETS

Group

	Customer
	relationships	Technology
	£'000	£'000
COST
At 1 July 2018	1,205	1,200
Additions	-	-

At 30 June 2019	1,205	1,200

AMORTISATION
At 1 July 2018	78	70
Amortisation for the year	402	120
Impairment for the year	344	-

At 30 June 2019	824	190

NET BOOK VALUE At 30 June 2019	381	1,010

Group

		Computer	Internally generated development	Domain
		software	costs	names		Totals
		£'000	£'000	£'000		£'000
COST
At 1 July 2018		806	15,286	37		18,534
Additions		105	5,508	4		5,617

At 30 June 2019		911	20,794	41		24,151

AMORTISATION
At 1 July 2018		611	7,957	31		8,747
Amortisation for the year		86	2,749	1		3,358
Impairment for the year		-	-	-		344

At 30 June 2019		697	10,706	32		12,449

NET BOOK VALUE At 30 June 2019	214		10,088	9		11,702


					Customer
					relationships		Technology
					£'000		£'000
COST
At 1 July 2017					-		-
Introduced on acquisition					1,205		1200

At 30 June 2018					1,205		1,200

AMORTISATION
At 1 July 2017					-		-
Introduced on acquisition					78		70

At 30 June 2018					78		70

NET BOOK VALUE At 30 June 2018					1,127		1,130

	Computer	Internally generated development	Domain
	software	costs	names	Totals
	£'000	£'000	£'000	£'000
COST
At 1 July 2017	497	10,351	16	10,864
Additions	94	4,377	-	4,471
Introduced on acquisition	215	558	21	3,199

At 30 June 2018	806	15,286	37	18,534

AMORTISATION
At 1 July 2017	320	6,009	16	6,345
Amortisation for the year	76	1,891	4	1,971
Introduced on acquisition	215	57	11	431

At 30 June 2018	611	7,957	31	8,747

NET BOOK VALUE At 30 June 2018	195	7,329	6	9,787

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

Technology represents the cost that would be incurred to build the entire Comapi platform had the acquisition not occurred. Customer relationships represent the value of high-value customer contracts within Comapi. At the year-end an impairment review was conducted on both whereby it was found that technology required no impairment due to the full integration of Comapi. However, customer relationships did result in an impairment due to a reduction in the anticipated lifetime of the contracts.

15. PROPERTY, PLANT AND EQUIPMENT

Group

	Short	Fixtures &	Computer
	leasehold	fittings	equipment	Totals
	£'000	£'000	£'000	£'000
COST
At 1 July 2018	612	643	2,000	3,255
Additions	32	133	291	456
Exchange differences	2	3	3	8

At 30 June 2019	646	779	2,294	3,719

DEPRECIATION
At 1 July 2018	340	481	1,388	2,209
Depreciation for the year	61	71	333	465
Exchange differences	1	2	5	8

At 30 June 2019	402	554	1,726	2,682

NET BOOK VALUE
At 30 June 2019	244	225	568	1,037


	Short	Fixtures &	Computer
	leasehold	fittings	equipment	Totals
	£'000	£'000	£'000	£'000
COST
At 1 July 2017	499	534	1,393	2,426
Additions	46	88	341	475
Disposals	-	(28)	(18)	(46)
Introduced on acquisition	68	50	284	402
Exchange differences	(1)	(1)	-	(2)

At 30 June 2018	612	643	2,000	3,255

DEPRECIATION
At 1 July 2017	214	379	800	1,393
Depreciation for the year	62	91	342	495
Eliminated on disposal	-	(24)	(17)	(41)
Introduced on acquisition	64	34	264	362
Exchange differences	-	1	(1)	-


At 30 June 2018	340	481	1,388	2,209

NET BOOK VALUE
At 30 June 2018	272	162	612	1,046

16. INVESTMENTS

Company

	Shares in	Shares in
	Group	Group
	undertakings	undertakings
	30.6.19	30.6.18
COST	£'000	£'000

As at 1 July Additions	18,666 -	8,706 9,960
As at 30 June	18,666	18,666

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

NET BOOK VALUE
As at 30 June	15,147	15,147

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


Subsidiaries	Nature of business	Class of share	Proportion of
			voting power
			held %
dotdigital EMEA Limited	Cross-channel marketing	Ordinary	100
	automation	Ordinary A	100
dotsurvey Limited	Dormant	Ordinary	100
dotsearch Europe Limited	Development hub	Ordinary	100
dotcommerce Limited	Dormant	Ordinary	100
doteditor Limited	Dormant	Ordinary	100
dotSEO Limited	Dormant	Ordinary	100
dotagency Limited	Dormant	Ordinary	100
dotdigital Inc	Cross-Channel marketing automation	Ordinary	100
dotdigital APAC Pty Limited	Cross-channel marketing automation	Ordinary	100
dotmailer Development Ltd	Holding company	Ordinary	100
dotmailer SA Pty	Development hub	Ordinary	100
dotmailer LLC	Development hub	Ordinary	100
dotdigital SG Pte Limited	Cross-channel marketing automation	Ordinary	100
Dynmark International Ltd	Omnichannel communication platform	Ordinary	100
Dynmark S.p z.o.o	Omnichannel communication platform	Ordinary	100
Donky Networks Ltd	Omnichannel communication platform	Ordinary	100

All of the above subsidiaries have been included within the consolidated results. All the above companies with the exception of dotdigital Inc, dotmailer SA Pty, dotmailer LLC, dotdigital APAC Pty Limited, dotdigital SG Pte. Limited and Dynmark S.p. z.o.o were incorporated in England and Wales. dotdigital Inc was incorporated in Delaware (US), dotdigital APAC Pty Limited was incorporated in New South Wales (Australia), dotmailer SA Pty was incorporated in South Africa, dotdigital SG Pte. Limited was incorporated in Singapore, dotmailer LLC was incorporated in the Republic of Belarus and Dynmark S.p. z.o.o. was incorporated in Poland.

17. TRADE AND OTHER RECEIVABLES

	Group		Company
	30.6.19	30.6.18	30.6.19	30.6.18
	£'000	£'000	£'000	£'000 (Restated)
Current:
Trade receivables	9,155	8,677	-	-
Less: Provision for impairment of trade receivables	(999)	(403)	-	-

Trade receivables - net	8,156	8,274	-	-
Other receivables	218	151	-	-
Amounts owed by Group undertakings	-	-	692	743
VAT	-	-	14	12
Tax receivable	392	312	-	-
Prepayments and contract income	3,456	4,216	102	127

	12,222	12,953	808	882

Further details on the above can be found in note 23.

Included within prepayments is an amount of £662,912 (2018: £852,504) in relation to deferred commission which is considered to be long term.

18. CASH AND CASH EQUIVALENTS

	Group		Company
	30.6.19	30.6.18	30.6.19	30.6.18
	£'000	£'000	£'000	£'000

Bank accounts	19,320	15,005	594	646

	19,320	15,005	594	646

Further details on the above can be found in note 23.

19. CALLED UP SHARE CAPITAL

Allotted, issued, fully paid	Nominal	30.6.19	30.6.18
number	value	£'000	£'000

298,030,565 (2018: 298,030,565)	£0.005	1,490	1,490

		1,490	1,490

20. RESERVES

Group

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

As at 1 July 2018	32,331	6,791	(4,695)

Dividends	(1,903)	-	-
Profit for the year	8,525	-	-
Transfer of reserves	506	-	-
IFRS 15 reclassification	(2,837)
IFRS 15 Deferred tax adjustment	539	-	-
Other comprehensive income: Currency translation	-	-	-
Share-based payments	-	-	-

Balance as at 30 June 2019	37,161	6,791	(4,695)

	Retranslation	Other
	Reserve	reserves	Totals
	£'000	£'000	£'000

As at 1 July 2018	(26)	661	35,062

Dividends	-	-	(1,903)
Profit for the year	-	-	8,525
Transfer of reserves	-	(506)	-
IFRS 15 reclassification	-	-	(2,837)
IFRS 15 Deferred tax adjustment	-	-	539
Other comprehensive income: Currency translation	42	-	42
Share-based payments	-	565	565

Balance as at 30 June 2019	16	720	39,993

Group

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

As at 1 July 2017		25,306		6,290		(4,695)

Issue of share capital		-		501		-
Dividends		(1,627)		-		-
Profit for the year		8,558		-		-
Transfer of reserves		94
Other comprehensive income: Currency translation		-		-		-
Share-based payments		-		-		-

Balance as at 30 June 2018		32,331		6,791		(4,695)

	Retranslation	Other
	reserve	reserves	Totals
	£'000	£'000	£'000

As at 1 July 2017	(46)	305	27,160

Issue of share capital	-	-	501
Dividends	-	-	(1,627)
Profit for the year	-	-	8,558
Transfer of reserves		(94)	-
Other comprehensive income: Currency translation	20	-	20
Share-based payments	-	450	450

Balance as at 30 June 2018	(26)	661	35,062

Company
	Retained	Share	Other
	earnings	premium	Reserves	Totals
	£'000	£'000	£'000	£'000

As at 1 July 2018	5,761	6,791	661	13,213

Issue of share capital	-	-	-	-
Dividends	(1,903)	-	-	(1,903)
Loss for the year	(849)	-	-	(849)
Transfer of reserves	506	-	(506)	-
Share-based payments	-	-	565	565

As at 30 June 2019	3,515	6,791	720	11,026


Company
	Retained	Share	Other
	earnings	premium	Reserves	Totals
	£'000	£'000	£'000	£'000

As at 1 July 2017	2,239	6,290	305	8,834

Issue of share capital	-	501	-	501
Dividends	(1,627)	-	-	(1,627)
Profit for the year	5,055	-	-	5,055
Transfer of reserves	94	-	(94)	-
Share-based payments	-	-	450	450

As at 30 June 2018	5,761	6,791	661	13,213

21. TRADE AND OTHER PAYABLES

	Group		Company
	30.6.19	30.6.18	30.6.19	30.6.18
	£'000	£'000	£'000	£'000
Current:
Trade payables	3,975	6,184	59	15
Amounts owed to Group undertakings	-	-	3,932	1,913
Social security and other taxes	81	480	-	-
Other payables	150	60	-	-
VAT	1,162	989	-	-
Accruals and contract liabilities	5,728	2,504	42	44

	11,096	10,217	4,033	1,972

Further details on liquidity and interest rate risk can be found in note 23.

22. LEASING AGREEMENTS

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

	30.6.19
	Land &
	Buildings	Others	Totals
	£'000	£'000	£'000

Within one year	1,243	44	1,287
Between two to five years	4,052	31	4,083

	5,295	75	5,370

	30.6.18
	Land &
	Buildings	Others	Totals
	£'000	£'000	£'000

Within one year	1,094	45	1,139
Between two to five years	1,310	55	1,365

	2,404	100	2,504

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

23. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

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

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

Principal financial instruments

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

-Trade receivables

-Cash and cash equivalents

-Trade and other payables

Financial instruments by category

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

	Group		Company
	30.6.19	30.6.18	30.6.19	30.6.18
	£'000	£'000	£'000	£'000
Financial assets
Trade and other receivables	12,222	12,953	808	882
Bank balances	19,320	15,005	594	646

	31,542	27,958	1,402	1,528

Financial liabilities
Trade payables	3,975	6,184	59	15
Amounts owed to group undertakings	-	-	3,932	1,913
Accrued liabilities and other payables	7,121	4,033	42	44

	11,096	10,217	4,033	1,972

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

General objectives, policies and processes

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

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

Interest rate risk

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

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

Liquidity risk

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

Trade and other payables of £5,287,000 (2018: £7,233,000) are expected to mature in less than a year.

Credit risk

Credit risk arises principally from the Group's trade receivables, as there are no trade receivables within the Company, which comprise amounts due from customers. Prior to accepting new customers, a credit check is obtained. As at 30 June 2019 there were no significant debts past their due period which had not been provided for. The maturity of the Group's trade receivables is as follows:


	30.6.19	30.6.18
	£'000	£'000

0-30 days	6,408	6,172
30-60 days	521	720
More than 60 days	2,226	1,785

	9,155	8,677

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

	30.6.19	30.6.18
	£'000	£'000

0-30 days	27	-
30-60 days	-	-
More than 60 days	972	403

	999	403

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

	30.6.19	30.6.18
	£'000	£'000

As at 1 July	403	502

Provision for impairment	621	40
Receivable written off in the year	(5)	(72)
Unused amount reversed	(20)	(67)

As at 30 June	999	403

The Group minimises its credit risk by profiling all new customers and monitoring existing customers of the Group for changes in their initial profile. The level of trade receivables older than the average collection period consisted of a value of £2,053,528 (2018: £2,041,922) of which £972,221 (2018: £402,985) was provided for. The Group felt that the remainder would be collected post year end as they were with long-standing relationships, and the risk of default is considered to be low and write-offs due to bad debts are extremely low. The Group has no significant concentration of credit risk, with the exposure spread over a large number of customers.

The credit risk on liquid funds is low as the counterparts are banks with high credit ratings assigned by international credit rating bodies. The majority of the Company's cash holdings are held at NatWest Bank which has a BBB+ credit rating.

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

Capital policy

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

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

During the year the Group had a short-term loan balance of £nil (2018: £nil) and amounts payable over one year are nil (2018: £nil). The Group had a strong cash reserve to utilise for any short-term capital requirements that were needed by the Group.

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

24. DEFERRED TAX

	30.6.19	30.6.18
	£'000	£'000

As at 1 July	1,697	814
IFRS 15 adjustment	(539)
Current year provision	219	426
Provision on recognition of intangibles on acquisition	-	457

	1,377	1,697

The deferred tax liability above comprises the following temporary differences:

	30.6.19	30.6.18
	£'000	£'000

Acquired intangibles	264	429
Capital allowances in excess of depreciation	65	178
R&D relief in excess of amortisation	1,919	1,204
Share option relief	(332)	(114)
IFRS 15 prior year deferred tax	(539)	-

	1,377	1,697

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

25. CAPITAL COMMITMENTS

The Company and Group have no capital commitments as at the year end.

26. RELATED PARTY DISCLOSURES

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

Group

The following transactions were carried out with related parties

			30.6.19	30.6.18
			£'000	£'000
Sale of services
Cadence Performance	Entity under common directorship (up to 31 March 2019)	Email marketing services	2	2
Cloudcall Group Plc	Entity under common directorship (up to 31 March 2019)	Email marketing and cross-channel services	12	16

			14	18

Year end balances arising from sale of services
Cloudcall Group Plc	Entity under common directorship (up to 31 March 2019)	Email marketing and cross-channel services	1	16

			1	16

Directors

	30.6.19	30.6.18
	£'000	£'000

Aggregate emoluments	835	701
Ex-gratia payment	-	40
Company contributions to money purchase pension scheme	21	26
Share-based payments from the LTIP options granted	389	145

	1,245	912

Directors' pay summary does not include Non-Executive Directors.

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

	30.6.19	30.6.18
	£'000	£'000

Salaries	435	395
Other benefits	12	12
Pension costs	13	13
Share-based payments on the LTIP options granted	289	145

	749	565

Company

The following transactions were carried out with related parties

			30.06.19	30.06.18
			£'000	£'000
Year end balances arising from sales/purchase of services

dotdigital EMEA Limited	Subsidiary	Payables	651	(5,350)

			651	(5,350)

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

Loans to/from related parties

		30.6.19	30.6.18
		£'000	£'000
dotdigital EMEA Limited	Subsidiary
As at 1 July		(2,559)	9,950
Loans advanced		51	97
Loans repaid		(2,072)	(12,606)

		(4,580)	(2,559)

27. ULTIMATE CONTROLLING PARTY

There is no ultimate controlling party of the Group. dotdigital Group Plc acts as the parent Company to dotdigital EMEA Limited, dotsearch Europe Limited, dotdigital Inc, dotdigital APAC Pty Limited, dotagency Limited (Dormant), dotsurvey Limited (Dormant), dotSEO Limited (Dormant), dotcommerce Limited (Dormant), doteditor Limited (Dormant), dotmailer Developments Limited, dotmailer SA Pty, dotmailer LLC, dotdigital SG Pte. Limited, Dynmark International Ltd, Dynmark S.p. z.o.o. and Donky Networks Ltd.

28. SHARE-BASED PAYMENT TRANSACTIONS

The measurement requirements of IFRS 2 have been implemented in respect of share options that were granted after 7 November 2002. The expense recognised for share-based payment made during the year is £565,000 (2018: £450,000).

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

Movement in issued share options during the year

The table illustrates the number and weighted average exercise price (WAEP) of, and movements in, share options during the period. The options outstanding at 30 June 2019 had a WAEP of 49.16p (2018: 9.43p) and a weighted average contracted life of 3.66 years (2018: 4.16 years) and their exercise prices ranged from 28.5p to 68.50p. All share options are settled in form of equity issued.

	30.06.19		30.6.18
	No of options	WAEP	No of options	WAEP

Outstanding at the beginning of the period	3,732,262	9.43p	2,540,145	33.35p
Granted during the year	2,305,000	50p	2,984,197	0.5p
Forfeited/cancelled during the period	(1,609,198)	50p	-	0p
Exchanged for shares	-	0p	(1,792,080)	28.46p
Outstanding at the end of the period	4,428,064	49.16p	3,732,262	9.43p
Exercisable at the end of the period	748,065	45.05p	517,080	34.57p

The weighted average share price at the date of the exercise for share options exercised during the period was £nil (2018: 28.46p).

20 June

2017

25 November 2015

28 November 2014

Number of options granted

230,985

809,160

1,525,000

Share price at grant date

68.50p

40.50p

29.00p

Exercise price

68.50p

40.25p

28.50

Option life in years

5 years

Risk-free rate

1.33%

1.35%

Expected volatility

30%

Expected dividend yield

0.4%

Fair value of

12.04p

6.46p

5.33p

options/warrants

24 October 2018

19 December 2017

Number of options granted

2,305,000

1,375,000

Share price at grant date

77.50p

85.95p

Exercise price

0.50p

Option life in years

5 years

Risk-free rate

1.23%

1.33%

Expected volatility

30%

Expected dividend yield

Fair value of

52.70p

65.03p

options/warrants

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

The share options granted on 24 October 2018 were following the approval of the LTIP scheme at the AGM on 19 December 2017 and the end-to-end awards that were granted to key personnel.

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

	Group		Company
	30.6.19	30.6.18	30.6.19	30.6.18
	£'000	£'000	£'000	£'000
		(restated)
Current:
Profit before tax from all operations	8,873	9,243	(849)	5,055
Currency revaluation	42	20	-	-
Amortisation	3,358	1,971
Depreciation Exceptional costs	465 344	495 148	- -	- -
Finance lease non-cash movement	12	-	-	-
IFRS 15 reclassification	(2,837)	-	-	-
Gain/(loss) on disposal of fixed assets	-	3	-	-
Share-based payments	565	450	565	450
Finance income	(19)	(9)	-	-

	10,803	12,321	(284)	5,505

(Increase)/decrease in trade receivables	811	(3,638)	74	3,528
Increase/(decrease) in trade payables	879	2,537	2,061	1,876

Cash generated from operations	12,493	11,220	1,851	10,909

30. GROUP CASH AND CASH EQUIVALENTS

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

	Group	Company
	£'000	£'000

As at 1 July 2017	20,428	591

As at 30 June 2018	15,005	646

As at 30 June 2019	19,320	594

31. PROJECT DEVELOPMENT

During the period the Group incurred £5,507,539 (2018: £4,376,645) in development investments. All resources utilised in development have been capitalised as outlined in the accounting policy governing this area.

32. POST BALANCE SHEET EVENTS

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

33. IFRS 15 RESTATEMENT

The Group has adopted IFRS 15 as at 1 July 2018 and applied the modified retrospective approach. Comparatives for the 12 months ended 30 June 2018 have not been restated and the cumulative impact on adoption has been recognised as a decrease to retained earnings with the corresponding increase in current liabilities at 1 July 2018 as follows:

								01.07.18
								£'000s

Retained earnings:
Revenue								2,837
Deferred tax reserve								(539)

Total impact at 01 July 2018								2,298

Current liabilities:
Trade and other payables								2,837
Non-current liabilities:
Deferred tax								(539)

Total impact at 01 July 2018								2,298

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.

	Year ended 30 June 2019
	Amounts pre	Transition	In period	Amounts as
	IFRS 15	Adjustment	adjustment	reported
	£'000s	£'000s	£'000s	£'000s
All operations
Revenue	51,422	-	(137)	51,285
Cost of sales	(11,221)	-	-	(11,221)

Gross profit	40,201	-	(137)	40,064

Administrative expenses	(29,720)	-	-	(29,720)
Share-based payments	(565)	-	-	(565)
Exceptional costs	(925)	-	-	(925)

Operating profit from all operations	8,991	-	(137)	8,854

Finance income	19	-	-	19

Profit before income tax from all operations	9,010	-	(137)	8,873

Income tax expense	(374)	-	26	(348)

Profit for the year from continuing operations	11,093	-	(111)	10,982
Profit for the year from discontinuing operations	(2,457)	-	-	(2,457)
Profit for the period attributable to the owners of the parent	8,636	-	(111)	8,525

	Year ended 30 June 2019
	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	11,702	-	-	11,702
Property, plant and equipment	1,037	-	-	1,037

	22,419	-	-	22,419

Current assets
Trade and other receivables	12,196	-	26	12,222
Cash and cash equivalents	19,320	-	-	19,320

	31,516	-	26	31,542

Total assets	53,935	-	26	53,961

Equity attributable to the owners of the parent
Called up share capital	1,490	-	-	1,490
Share premium	6,791	-	-	6,791
Reverse acquisition reserve	(4,695)	-	-	(4,695)
Other reserves	720	-	-	720
Retranslation reserve	16	-	-	16
Retained earnings	39,570	(2,298)	(111)	37,161

Total equity	43,892	(2,298)	(111)	41,483

	Year ended 30 June 2019
	Amounts pre	Transition	In period	Amounts as
	IFRS 15	Adjustment	adjustment	reported
	£'000s	£'000s	£'000s	£'000s
Liabilities
Non-current liabilities
Deferred tax	1,916	(539)	-	1,377

	1,916	(539)	-	1,377

Current liabilities
Trade and other payables	8,122	2,837	137	11,096
Financial liabilities - borrowings:
- Interest bearing loans	5	-	-	5

	8,127	2,837	137	11,101

Total liabilities	10,043	2,298	137	12,478

Total equity and liabilities	53,935	-	26	53,961

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.

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