TIDMDOTD
RNS Number : 8595M
dotDigital Group plc
18 October 2016
The "Final Results' announcement released on 18/10/16 at 07:00
hours under RNS No 7605M has been re-released to facilitate onward
transmission by third party vendors.
The announcement is unchanged and is reproduced in full
below.
FOR IMMEDIATE RELEASE 18 OCTOBER 2016
Analyst meeting today: 9.30am start - at dotdigital's offices,
No.1 London Bridge, SE1
Please call Lisa Baderoon if you would like to attend or email:
lisa.baderoon@dotdigitalgroup.com
dotdigital's full 2016 Annual Report will be made available on
dotdigital's website today: www.dotdigitalgroup.com
dotdigital Group Plc
("dotdigital", the "Company" or the "Group")
FINAL RESULTS FOR THE YEARED 30 JUNE 2016
"Strong organic growth and continued international
expansion"
dotdigital Group Plc (AIM:DOTD), the leading provider of
intuitive software as a service ("SaaS") and managed services to
digital marketing professionals is pleased to announce its Final
Results for the year ended 30 June 2016.
2016 Highlights
Key performance indicators
-- Turnover increased by 26% to GBP26.9m (2015: GBP21.4m)
-- EBITDA of GBP8.0m, up 17% (2015: GBP6.8m)
-- Strong cash position of GBP17.3m at year end (2015:
GBP11.9m)
-- Net assets of GBP23.7m, up 29% (2015: GBP18.4m)
-- EPS up 12% to 1.83p (2015: 1.63p)
-- Recurring revenues of 78% (2015: 76%)
-- Volumes of emails sent 8.6bn (2015: 6.2bn)
-- International growth of 18% (2015: 14%)
-- Announced today: Final Dividend proposed of 0.84p per
ordinary share (2015: 0.36p), comprised of an ordinary dividend of
0.43p (2015: 0.36p) and a special dividend of 0.41p (2015: nil) -
see separate announcement
International growth
EMEA : Europe, Middle East & Africa
-- UK revenues grew 21% to GBP22.0m (2015: 18.3m)
o Over GBP4m of revenues - up 106% - attributable to increased
revenues generated by existing client upselling to new advanced
feature adoption
o Average monthly spend per client rose by approximately 29% to
circa. GBP575
o Professional services offering up from GBP2.8m to GBP3.1m with
gross margins of 60%
-- Good progress in South Africa and Middle East with high value clients signed in period
-- Good initial traction has been achieved within the Nordics,
Benelux and Netherlands through the Magento Partnership
US
-- Revenues from the US increased from US$3.0m to US$4.4m, an increase of 43%
-- New York office to be main hub across US
-- Slow start but recent new hires in sales and business
development expected to drive future growth in region
-- Alongside the Magento Partnership, new CRM sales initiatives
started with Salesforce & MS Dynamics
AsiaPac
-- Initial hub in Sydney, Australia with revenues of $0.6m AUS in first 12 months
-- Indirect sales model through Magento Connector and new
Partnerships now being signed albeit slower than planned due
primarily to these trusted new relationships taking longer to be
established
-- Good progress now being made to span more broadly from
Australia into AsiaPac region withopportunities to integrate the
dotmailer platform via a direct sales team approach
-- Strong pipeline building
Magento connector
-- dotmailer named exclusive Global premier partner for its Magentor Connector
-- Average monthly recurring revenue spend has grown by 25% to approximately GBP1,300 per month
-- Magento Version 2.1 has now been released which has started
to see a good client pipeline emerge in all regions across the
world
New clients
-- Notable client wins across UK and international in the B2B
and B2C sectors include: Vogue UK, Handelsbanken, Saville Group,
Dune, Hawes and Curtis, Paul Smith, Eurostar International, Osprey
Europe, Edcon, Mr Price and Sol Lingerie
H1 Outlook
-- Uncertain macro environment continually being assessed by the Board
-- Revenue growth in Q1 over 20%
-- Larger monthly spend commit from clients
-- Strong uptake of CRM connectors
-- Early signs promising for Benelux, Nordics and South Africa markets
Announced Today: Company Secretary Change
-- George Kasparian, dotdigital's Non-Board Finance Director,
takes over the Company Secretary role from Milan Patel, CEO, with
immediate effect
Commenting on the final results and outlook, Milan Patel, Chief
Executive Officer, said:
"2016 was a year of continued strong organic, profitable growth
for dotdigital. For 2017, our approach will be further refinement
of the partner programme and developing the strategic partnerships,
global expansion into the EMEA, North America and Asia Pacific
regions through self-service and direct sales teams and to continue
building new integrations into more ecommerce and CRM platforms
that focus on the mid-market and small enterprise space.
The Board believes that the dotmailer platform, with its
ease-of-use proposition, deep integrations, professional services,
growing list of global partners and its scalability, is well placed
to continue to generate strong organic growth not only from the
markets it currently operates in today but wider into the global
markets it is looking to enter."
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
For further enquiries please contact:
dotdigital Group Plc Tel: 020 8662 2777
Milan Patel, CEO & CFO
------------------------------------- -------------------
Financial PR and Investor Relations Tel: 07721 413 496
Lisa Baderoon
Lisa.Baderoon@dotmailer.com
------------------------------------- -------------------
N+1 Singer Tel: 020 7496 3000
Shaun Dobson, Head of Corporate
Finance
Liz Yong, Corporate Finance
------------------------------------- -------------------
finnCap Tel: 020 7220 0500
Stuart Andrews, Corporate Finance
Rhys Williams, Sales
------------------------------------- -------------------
CHAIRMAN'S REPORT
dotdigital has had a successful 2015/16 financial year. The
Group returned a profit before tax of GBP6.2m and EBITDA was
slightly ahead of market expectations. We continue to be cash
generative and ended up with cash reserves of GBP17.3m, up from
GBP11.9m at the end of the last financial year.
We continue to make good progress with how we engage with
customers and this past year has seen another rise in customer
average monthly spend, an increase of 29% on the prior year.
Activity on our platform continues to increase and customers sent
8.6 billion emails in 2015/16, up 50% since the previous year. By
evolving our range of enhanced product features, which are sold on
a recurring model, we grew this part of our business by 106% and
this past year it accounted for GBP4m of sales.
Our overseas business has continued to grow and revenue outside
the UK has increased by 58%. In January 2016 we appointed Dan
Morris to head up our US operation and in June we moved out of a
shared office into a permanent location in New York. Our US region
revenues grew by 43% from US$3.0m to US$4.3m in this past year with
particular focus on channel partner and Magento sales.
In Autumn 2015, Rohan Lock, previously Head of Sales in the UK,
moved back to his native Australia to head up our operations there.
Progress has been rather slower than we had planned as some of the
major partners we signed have taken slightly longer to deliver
their first business. Some of these partners operate across the
Asia Pacific market and will be of great assistance as we build our
customer base across the region.
dotdigital already has customers in the Middle East and we plan
to continue to build this market. During the second half of this
financial year we have also started to market to potential clients
in the Nordic and Benelux regions and we have had some good
success.
Our services business has continued to grow in the past year,
achieving 11% growth on the previous year with healthy margins. We
have continued to invest considerably in our infrastructure
ensuring that the business has the ability to offer the service
expected by our customers as our business expands in both the
volume of emails we send and the geographical markets in which we
operate. To this end we moved our platform to the Cloud in America
and Europe with Australia going live early 2017.
Our policy on acquisitions continues as previously: our main
focus is on organic growth but we will consider acquisition
opportunities, should they arise, and only if they allow us to
accelerate growth in a market or provide us with a technical
advantage.
In December 2015 we received devastating news that Simone
Barratt required surgery. She stepped away from the business to
focus on her treatment and Milan Patel was appointed interim CEO.
Thankfully Simone's treatment went well but on 20 July 2016 we
announced that she was not returning to the business in her role as
CEO and she was also stepping down from the Board. We also
announced at that time that Milan was appointed as the new
permanent CEO. I would like to take this opportunity to thank
Simone for her time in the business, initially as a Non-Executive
Director and laterally as CEO, and wish her well as she returns to
full health.
Milan Patel will continue as CFO until we appoint a new
candidate for that role. A search process is currently underway and
in the interim Milan is supported by George Kasparian (Non-Board
Finance Director), Tink Taylor and Peter Simmonds, who has
committed extra days in the business until the new appointment is
made.
Following the announcement of Brexit on 24 June we have assessed
the impact of the vote to leave the EU. Our initial view is that
the outcome, thus far, has not had any immediate effect on our
business.
Email marketing continues to offer the best value and marketing
return on investment. In addition, the fact we are continuing to
grow our business outside the UK will also help mitigate against
any slowdown in UK economy resulting from leaving the EU. The Board
will keep the impact of Brexit under review.
I would like to take opportunity thank the team at dotdigital
for their fantastic contribution to yet another successful year. I
would like to say a special thank you to Milan for 'stepping up to
the plate' during Simone's illness and for his continued hard work
as he settles into the role of CEO.
Notwithstanding any unforeseen economic impact of Brexit and the
forthcoming US elections, the outlook for the dotdigital business
over the coming years continues to be very promising. We will
continue to look for business with interesting opportunities both
in the UK and in overseas markets. We plan to continue to grow our
business in new geographies both through direct sales and using our
strategic partners. Under Milan's stewardship and a strong
operating Board I have every confidence we will continue to grow
our business and look forward to another successful year ahead.
Frank Beechinor-Collins
Non-Executive Chairman
17 October 2016
CHIEF EXECUTIVE'S REPORT
Introduction
I am pleased to announce that the Group delivered strong organic
revenue growth of 26%, which was in line with market expectations.
Our earnings before interest, tax, depreciation and amortisation
(EBITDA) and profit before tax were both GBP0.3m ahead of the
consensus market forecasts.
This performance is a result of continued strong organic growth,
high margins and long-term recurring revenues generated from the
dotmailer marketing automation product.
Financial highlights
Revenues up 26% to GBP26.9m (2015: GBP21.4m). EBITDA of GBP8.0m,
an increase of 17% (2015: GBP6.8m). Net assets grew by 29% to
GBP23.7m (2015: 18.4m) with EPS of 1.83p, an increase of 12% (2015:
1.63p).
Review of 2015/16
Revenue performance which grew organically by 26%, was driven by
strong growth from both the UK and the international markets. UK
grew by 21% from GBP18.3m to GBP22.0m through a combination of
higher value new client wins and continually being able to monetise
the advanced feature adoption by our existing clients through them
incrementally building their own marketing cloud. This is evidenced
by revenues from functionality related monthly recurring charges
now achieving over GBP4m which is an increase of 106%. We continue
to make progress within the international markets with revenues
outside of the UK increasing by 58% to GBP4.9m. This remains a
focus for the coming year.
The Group has added notable clients across its markets both
locally and internationally in the B2B and B2C sectors. Some of
these include: Vogue UK, Handelsbanken, Saville Group, Dune, Hawes
and Curtis, Paul Smith, Eurostar International, Osprey Europe,
Edcon, Mr Price and Sol Lingerie.
In addition, we have seen a strong performance from our enabling
professional services offerings, with an increase in revenue from
GBP2.8m to approximately GBP3.1m, which delivers gross margins in
the region of 60%.
During the year, the Group's average monthly spend per client
rose by 29% to spend levels of circa GBP575 per month. This is as a
result of continued focus on mid-market, enterprise clients and the
Magento connector clients who spend on average of over GBP1,300 per
month.
EMEA (Europe, Middle East & Africa)
EMEA has performed strongly, with growth in the UK of 21% driven
by continuing to upsell the advanced functionality to our existing
client base and a reasonable number of new client sign ups in the
UK with a high spend level. We have also seen good traction within
South Africa and Middle East, with high value clients being signed.
In building the dotmailer brand within EMEA, we have seen an
increased number of leads and traffic to the site in Western
Europe. Senior management with the support of the Board of
Directors, are investigating both the potential and benefit of
implementing a self-serve model to take advantage of the traffic
being seen outside of the UK in the markets where we do not
currently operate. The end goal being to test the market
proposition with a relatively low investment.
Through the partnership with Magento and the joint marketing
efforts, we are increasingly seeing partnership referrals from both
system integrators and technology partners in both the Nordics and
Benelux regions. Encouragingly there has been an increase in the
number of clients coming on board from the Netherlands.
Although it is too early to tell, the dotmailer proposition has
also been well received within United Arab Emirates and South
Africa, where we have seen numerous client signups in this
financial year. Our aim is to continue to market into both these
regions and assess our sales strategy in the coming period.
North America
Our US region has continued to perform well with revenues
growing by 43% from $3.0m USD to $4.3m although this was slightly
slower than originally anticipated because of delayed progress in
recruiting good talent in the US market. During the year we hired
new leadership that is business development focused and invested in
key new hires within services to help support future growth of this
region and we expect this to start to drive growth late in the
2016/17 financial year.
Additionally the pricing and bundles strategy has been adapted
through the learnings we took operating within the US to be more
competitive, by moving away from pricing on a monthly commitment to
volume of messages to pricing based on number of contacts stored.
Early response to this change is showing good signs of acceptance
by the prospects.
A key decision made in the year was to postpone the opening of
the West Coast and mid-US office for now and this will be
reassessed once the pricing and leadership have seen demand build.
Therefore the plan going forward is to continue to sell and service
these regions from our East Coast office.
In the year we were in search of a Channel Director to build our
channel strategy to take advantage of new partners and indirect
relationships. However due to the competitive environment, as an
alternative we engaged a consultancy to assist us in building a
channel partner programme which has now been implemented and is
being controlled by the new General Manager for the North American
region.
Asia Pacific
We initially entered the Asia Pacific market through creating a
hub from Australia and using an indirect channel model focused on
sales on our Magento connector. When we entered into the Asia
Pacific market, we chose to work with partners that already had a
solid client base in the region. This strategy was slow to gain
traction in the beginning, however relationships are now very
strong. In June we took the decision, through the feedback we
received to build a team which is selling directly into both
Australia and the broader Asia Pacific region. Early signs have
been promising. We have seen revenues of $0.6m AUS in the first 12
months of establishing our Sydney office.
Connectors
Further recruitment was made into the platform engineering team
combined with an increased emphasis on enhancing our Microsoft
Dynamics, Salesforce and Magento connectors. As part of our
continued commitment to scalability, we have put these connectors
into our cloud hosting environment and plan to add additional
functionality to further penetrate this opportunity.
CRM
There has been an increased uptake of our CRM connectors with
new prospects starting with some form of integration to make the
data synchronisation process painless. We have recently partnered
with ORO CRM which targets midsize B2B ecommerce. The development
of the connector has started and is scheduled to be complete in
early January 2017. It is expected that we will continue to devote
further resources to CRM integrations in 2017.
E-commerce
In the year, dotmailer was named the exclusive global premier
partner for its Magento connector in the marketing automation
space. We are proud to have our connector endorsed by Magento who
are the market leaders for midmarket ecommerce solutions. However,
uptake to Magento enterprise's Version 2 platform has been slower
than anticipated due to ecommerce clients being risk averse and
waiting for Version 2.1. This has now been released by Magento,
which has started to see strong pipeline of this version in all
regions across the world.
Going forward, our aim is to continue to build and develop
strong relationships with Magento and its system integrators. In
the period, monthly recurring revenues from this connector have
continued to show strong growth of 25% year-on-year spend, with the
average monthly client spend being considerably higher at GBP1,300
per
month compared to GBP575 per month for the entire client base.
At the same time there has been a rise in other ecommerce
platforms such as Woo Commerce, and Shopify + within the mid-market
segment, so we are evaluating the opportunity of building
connectors into these platforms
Technology, product development and support
Throughout this year we have rearchitected the dotmailer system
with the use of Hybrid cloud infrastructure, which is a very
innovative way of building scale. The data processing and storage
is now done through using Microsoft Azure cloud technology. We
currently have both North America and Europe covered, with the plan
of deploying Asiapac early 2017. This will give dotmailer a unique
selling point by having the ability to process data, in three
separate continents, from a data privacy, latency and redundancy
perspectives. With the move to the cloud another added advantage is
that it provides burst for processing and storage during seasonal
demands such as Christmas, Black Friday and Cyber Monday as opposed
to having to invest further in hardware.
The tenets of our product development strategy remain 'Ease of
Use' and 'Ease of Intergration'. Our highly skilled developers
continue to create functionality that makes it easy for marketers
to understand, deliver complex marketing processes and integrate
with best-of-breed platforms they already use. The product steering
team are now looking to build further functionality that matches
our tenets and fits the sweet spot characteristics of our
customers.
We have continued to invest in our support team, as we have
started to build more of an international presence, with highly
skilled in-region teams, which help and support our connectors,
solve complex support issues and provide round-the-clock assistance
to all our customers.
People
After a six month term as Interim Chief Executive Officer
following Simone's departure from the business, I have taken over
this position permanently as of July 2016. Throughout the interim
period we continued to deliver on the original organic strategy set
by Simone at the beginning of the year.
We have also made some changes in the senior management team
which looks after the day-to-day management of the business. The
main area of change is within sales and operations.
The Global EVP of sales has been replaced by the Chief Marketing
Officer, who is now responsible for both sales and marketing teams
in the UK, to allow closer alignment and to give more transparency
on the end-to-end sales funnel management. This has allowed us to
create local sales leaders in every region.
Following the year end, the COO departed and the Board has taken
the decision to split the responsibilities amongst the senior team
with customer success being a core CEO focus. This will also allow
the direct reports to ensure prioritisation for client experience
in the short term.
We believe our people are so important for our business and its
future and therefore further investment will be made in the
training and development of all our employees. We are also looking
to appoint a CFO who will be able to mentor the Finance Director
and support me with the day-to-day needs.
Cash generation
The business continues to be highly cash generative, with cash
at the end of the period standing at GBP17.3m, which represents an
increase of 45% on the prior year (2015: GBP11.9m) after capital
expenditure and product development of GBP2.1m. The Group continues
to be debt free and maintains a healthy balance sheet. Highly
efficient cash collection processes, along with over 40% of the
monthly UK recurring revenue being collected by Direct Debit,
combined with the implementation of enhanced global strategies
through ACH collection and a global card payment processor have
contributed to the Group's strong cash position at the year
end.
Dividend policy
I am pleased to announce that the Board has conducted its review
of its business plan for the next three years. This included
evaluating the cash needs required for opportunities in organic
growth to increase shareholder value, capital expenditure and any
possible future acquisitions that could be earnings enhancing. It
has decided that it will keep a progressive dividend policy in line
with EBITDA growth, supplemented by special dividends from time to
time.
Therefore, subject to approval at the AGM in December 2016, the
Board proposes that the Group will pay a regular dividend of 0.43
pence per ordinary share; and in addition, for this reporting
period and also proposes a special dividend of 0.41 pence per
ordinary share both to be payable at the end of January 2017.
Growth strategy
During the year we evaluated a number of potential acquisition
opportunities in the email marketing space. However, as in prior
years, none of the businesses evaluated would create long-term
shareholder value when integration risks and migration of clients
was factored in. We will continue to consider acquisition
opportunities of bolt-on technologies, whitelabels of our product
and other email service providers.
We anticipate further organic growth by focussing on the
following three key areas:
1. Geographic expansion
International expansion investment will be higher to gain wider
brand awareness and market presence within EMEA, North America and
Asia Pacific. We will continue to test the market appetite and
proposition in these regions to understand which will generate the
highest returns for our modest spend in sales and marketing. As we
start to gain traction and see opportunities in any specific
territory, we will adapt our model for these markets. Following
this we could offer initially a self-serve product followed by or
combined with a direct sales team. The infrastructure for this will
be the three main hubs in the UK, US and Australia.
2. Product Innovation
We will continue to diversify our revenues by integrating with
new technologies within the ecommerce and CRM space plus any other
technology platforms that make it easier for our midmarket
customers to achieve an increased return on investment from their
marketing campaigns. To date we have been able to monetise the
functionality that we build through incremental recurring
functionality charges which are sold onto our new and existing
customers as and when they need them. This will continue to remain
a very high priority for me.
3. Strategic partnerships
We will continue to work closely with Magento on joint marketing
efforts for more sign-ups to the Magento Version 2.1 and
subsequently increasing the use within that community of the
dotmailer platform. We have also started to develop further
partnerships with PayPal to bring a one click purchase offering for
our ecommerce clients.
Looking forward
With the combination of both a self-serve model and the direct
sales team approach, we will be able to penetrate further into the
EMEA, North American and Asia Pacific regions. Early indications
are encouraging although as expected it will take some time to
increase the brand presence in those markets. We have seen
increased numbers of customers from Netherlands, South Africa, UAE
and parts of Western Europe combined with the core UK market seeing
growth in digital marketing budgets.
In readiness for an increased focus on international revenue
growth, we now have a platform that is globally scalable both from
an infrastructure and global payments solution perspective. The
self-serve model will start to be deployed during the second
quarter of the new financial year. By the third quarter we expect
to have data processing and storage within the three central hub
regions, which will be a unique selling point for prospects and
clients especially in the Australian region.
After the initial venture into the Australian region, we have
now put in a direct sales team and support network for them
following the learnings from being there for 12 months. As a direct
consequence, early signs indicate an increased number of sign-ups
from customers and early pipeline build-up from the Asian
markets.
Magento Version 2.1 pipeline is accelerating globally, which is
encouraging for us as we try to take advantage of both an existing
client migration from Version 1 to 2 perspective and a new
ecommerce installation within the mid-market and small enterprise
space. We will continue to build and develop our relationship to
take advantage of this. We will also continue to build new
strategic relationships with the technology partners that we
integrate with.
With the increased focus last year on building the partner
programme by the use of an outside consultancy firm, we have seen
good growth in the international partner network building and the
existing relationships will strengthen as we go into the new
financial year.
The ongoing investment in CRM connectors and other advanced
functionality development has helped the Group continue to increase
functionality based recurring charges which should lower attrition
levels in our customer base. We will continue to add new
integrations with best-of-breed technology platforms that target
the mid-market and small enterprise space as a high priority for
the platform engineering team.
The Board will continue to assess the impact of Brexit and
macro-economic uncertainty over the coming year.
In summary, our approach for 2017 will be further refinement of
the partner programme and developing the strategic partnerships,
global expansion into the EMEA, North America and Asia Pacific
regions through self-serve and direct sales teams and to continue
building new integrations into more ecommerce and CRM platforms
that focus on the mid-market and small enterprise space.
The Board believes that the dotmailer platform, with its
ease-of-use proposition, deep integrations, professional services,
growing list of global partners and its scalability, is well placed
to continue to generate strong organic growth not only from the
markets it currently operates in today but wider into the global
markets it is looking to enter.
Milan Patel
Chief Executive Office
17 October 2016
DOTDIGITAL GROUP PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 30 JUNE 2016
30.6.16 30.6.15
GBP'000 GBP'000
Notes
CONTINUING OPERATIONS
Revenue 26,926 21,366
Cost of sales (3,395) (2,292)
Gross profit 23,531 19,074
Administrative expenses 6 (17,367) (13,858)
OPERATING PROFIT 6,164 5,216
Finance income 5 51 27
PROFIT BEFORE INCOME TAX 6 6,215 5,243
Income tax expense 7 (847) (587)
Profit for the year from continuing operations 5,368 4,656
Profit for the year attributable to the owners of the parent 5,368 4,656
Earnings per share from continuing operations (pence per share)
Basic 10 1.83 1.63
Diluted 10 1.83 1.61
========= =========
DOTDIGITAL GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 JUNE 2016
30.6.16 30.6.15
GBP'000 GBP'000
Notes
PROFIT FOR THE YEAR 5,368 4,656
OTHER COMPREHENSIVE INCOME
Items that may be subsequently reclassified to profit and loss:
Exchange differences on translating foreign operations 11 3
-------- --------
Total comprehensive income attributable to:
Owners of the parent 5,379 4,659
======== ========
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Comprehensive income from continuing operations 5,379 4,659
======== ========
DOTDIGITAL GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 JUNE 2016
30.6.16 30.6.15
GBP'000 GBP'000
Notes
ASSETS
NON-CURRENT ASSETS
Goodwill 11 609 609
Intangible assets 12 3,684 3,444
Property, plant and equipment 13 1,142 1,097
--------- ----------
5,435 5,150
--------- ----------
CURRENT ASSETS
Trade and other receivables 15 6,206 5,328
Cash and cash equivalents 16 17,313 11,932
--------- ----------
23,519 17,260
--------- ----------
TOTAL ASSETS 28,954 22,410
========= ==========
EQUITY ATTRIBUTABLE TO THE
OWNERS OF THE PARENT
Called up share capital 17 1,473 1,435
Share premium 18 6,138 5,382
Reverse acquisition reserve 18 (4,695) (4,695)
Other reserves 18 174 (25)
Retranslation reserve 18 8 (3)
Retained earnings 18 20,611 16,297
--------- ----------
TOTAL EQUITY 23,709 18,391
LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax 22 716 383
--------- ----------
CURRENT LIABILITIES
Trade and other payables 19 4,151 3,437
Current tax payable 378 199
--------- ----------
4,529 3,636
--------- ----------
TOTAL LIABILITIES 5,245 4,019
--------- ----------
TOTAL EQUITY & LIABILITIES 28,954 22,410
========= ==========
DOTDIGITAL GROUP PLC
COMPANY STATEMENT OF FINANCIAL POSITION
30 JUNE 2016
30.6.16 30.6.15
GBP'000 GBP'000
Notes
ASSETS
NON-CURRENT ASSETS
Investments 14 5,186 5,186
--------- -----------
5,186 5,186
--------- -----------
CURRENT ASSETS
Trade and other receivables 15 7,102 3,124
Cash and cash equivalents 16 639 166
--------- -----------
7,741 3,290
--------- -----------
TOTAL ASSETS 12,927 8,476
========= ===========
EQUITY ATTRIBUTABLE TO THE
OWNERS OF THE PARENT
Called up share capital 17 1,473 1,435
Share premium 18 6,138 5,382
Other reserves 18 174 (25)
Retained earnings 18 5,080 1,534
--------- -----------
TOTAL EQUITY 12,865 8,326
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 19 62 150
TOTAL LIABILITIES 62 150
--------- -----------
TOTAL EQUITY & LIABILITIES 12,927 8,476
========= ===========
DOTDIGITAL GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2016
Called Retained Share
up share
capital earnings premium
GBP'000 GBP'000 GBP'000
Balance as at 1 July 2014 1,414 12,211 5,147
Issue of share capital 21 - 235
Share repurchase - - -
Dividends - (570) -
Share-based payment - - -
---------- ---------- -------------
Transactions with owners 21 (570) 235
---------- ---------- -------------
Profit for the year - 4,656 -
Other comprehensive income - - -
Total comprehensive income - 4,656 -
---------- ---------- -------------
Balance as at 30 June 2015 1,435 16,297 5,382
Issue of share capital 38 - 756
Dividends - (1,054) -
Share-based payment - - -
---------- ---------- -------------
Transactions with owners 38 (1,054) 756
---------- ---------- -------------
Profit for the year - 5,368 -
Other comprehensive income - - -
---------- ---------- -------------
Total comprehensive income - 5,368 -
---------- ---------- -------------
Balance as at 30 June 2016 1,473 20,611 6,138
========== ========== =============
DOTDIGITAL GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2016
Reverse Total
Retranslation acquisition Other equity
reserve reserve reserves
GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1 July 2014 (6) (4,695) 82 14,153
Issue of share capital - - - 256
Share repurchase - - (213) (213)
Dividends - - - (570)
Share-based payments - - 106 106
Transactions with owners - - (107) (421)
-------------- ------------- --------- -------------
Profit for the year - - - 4,656
Other comprehensive income 3 - - 3
-------------- ------------- --------- -------------
Total comprehensive income 3 - - 4,659
-------------- ------------- --------- -------------
Balance as at 30 June 2015 (3) (4,695) (25) 18,391
Issue of share capital - - - 794
Dividends - - - (1,054)
Share-based payments - - 199 199
Transactions with owners - - 199 (61)
-------------- ------------- --------- -------------
Profit for the year - - - 5,368
Other comprehensive income 11 - - 11
-------------- ------------- --------- -------------
Total comprehensive income 11 - - 5,379
-------------- ------------- --------- -------------
Balance as at 30 June 2016 8 (4,695) 174 23,709
============== ============= ========= =============
-- 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 of the net 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 relates 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 YEARED 30 JUNE 2016
Called Retained Share Other
up share
capital earnings premium Reserves Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1 July
2014 1,414 2,423 5,147 82 9,066
Issue of share capital 21 - 235 - 256
Dividends - (570) - - (570)
Share repurchase - - - (213) (213)
Share-based payments - - - 106 106
---------- ---------- -------- ------------ -------------
Transactions with
owners 21 (570) 235 (107) (421)
---------- ---------- -------- ------------ -------------
Loss for the year - (319) - - (319)
Total comprehensive
income - (319) - - (319)
---------- ---------- -------- ------------ -------------
Balance as at 30
June 2015 1,435 1,534 5,382 (25) 8,326
Issue of share capital 38 - 756 - 794
Dividends - (1,054) - - (1,054)
Share-based payments - - - 199 199
---------- ---------- -------- ------------ -------------
Transactions with
owners 38 (1,054) 756 199 (61)
---------- ---------- -------- ------------ -------------
Profit for the year - 4,600 - - 4,600
Total comprehensive
income - 4,600 - - 4,600
---------- ---------- -------- ------------ -------------
Balance as at 30
June 2016 1,473 5,080 6,138 174 12,865
========== ========== ======== ============ =============
-- 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 of the net share issue
expenses.
-- Other reserves relates to the charge for the share-based
payment in accordance with International Financial Reporting
Standard 2. 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 YEARED 30 JUNE 2016
30.6.16 30.6.15
GBP'000 GBP'000
Notes
Cash flows from operating activities
Cash generated from operations 27 7,997 5,667
Tax paid (335) (263)
-------- --------
Net cash generated from operating activities 7,662 5,404
-------- --------
Cash flows from investing activities
Purchase of intangible fixed assets (1,570) (1,612)
Purchase of tangible fixed assets (502) (667)
Sale of tangible fixed assets - 1
Interest received 51 27
-------- --------
Net cash flows used in investing activities (2,021) (2,251)
-------- --------
Cash flows from financing activates
Equity dividends paid (1,054) (570)
Share issue 794 256
Share repurchase - (213)
-------- --------
Net cash flows (used)/from financing activities (260) (527)
-------- --------
Increase in cash and cash equivalents 5,381 2,626
Cash and cash equivalents at beginning of year 28 11,932 9,306
-------- --------
Cash and cash equivalents at end of year 28 17,313 11,932
======== ========
DOTDIGITAL GROUP PLC
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2016
30.6.16 30.6.15
GBP'000 GBP'000
Notes
Cash flows from operating activities
Cash generated from operations 27 733 584
--------- ---------
733 584
--------- ---------
Net cash generated from operating activities
Cash flows from financing activates
Equity dividends paid (1,054) (570)
Share issue 794 256
Share repurchase - (213)
--------- ---------
Net cash flows (used)/from financing activities (260) (527)
--------- ---------
Increase in cash and cash equivalents 473 57
Cash and cash equivalents at beginning of year 28 166 109
--------- ---------
Cash and cash equivalents at end of year 28 639 166
========= =========
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
1. GENERAL INFORMATION
dotdigital Group Plc ("dotdigital") is a company incorporated in
England and Wales and quoted on the AIM Market.
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 Group
There are no IFRSs or IFRIC interpretations that are effective
for the first time for the financial year beginning on or after 1
July 2015 that would be expected to have a material impact on the
Group.
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 2015 and have not been early
adopted:
Reference Title Summary Application date of Application date of
standard Group
---------- ------------------------- ------------------------- ------------------------- -------------------------
IFRS 2 Share-based Payment Classification and Periods beginning on or 1 July 2018
measurement of after 1 January 2018
share-based payment
transactions
---------- ------------------------- ------------------------- ------------------------- -------------------------
IFRS 7 Financial Instruments: Deferral of mandatory Periods beginning on or 1 July 2015
Disclosures effective date of IFRS9 after 1 January 2015
and amendments to
transition disclosures
---------- ------------------------- ------------------------- ------------------------- -------------------------
IFRS 9 Financial Instruments Finalised version, Periods beginning on or 1 July 2018
incorporating after 1 January 2018.
requirements for
classification and
measurement, impairment,
general hedge accounting
and derecognition
---------- ------------------------- ------------------------- ------------------------- -------------------------
IFRS 10 Consolidated financial Amendments regarding the Periods beginning on or 1 July 2016
statements application of the after 1 January 2016
consolidation exceptions
---------- ------------------------- ------------------------- ------------------------- -------------------------
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
2. ACCOUNTING POLICIES - continued
IFRS 12 Disclosure of interest in Amendments regarding the Periods beginning on or after 1 July 2016
other entities application of the 1 January 2016
consolidation exceptions
-------- ------------------------------ ------------------------------ ------------------------------ ------------
IFRS 14 Regulatory deferral accounts Original issue of standard Periods beginning on or after 1 July 2016
1 January 2016
-------- ------------------------------ ------------------------------ ------------------------------ ------------
IFRS 15 Revenue from contracts with Original issue of standard Periods beginning on or after 1 July 2018
customers 1 January 2018
-------- ------------------------------ ------------------------------ ------------------------------ ------------
IFRS 16 Leases Original issue of standard Periods beginning on or after 1 July 2019
1 January 2019
-------- ------------------------------ ------------------------------ ------------------------------ ------------
IAS 1 Presentation of financial Amendments resulting from the Periods beginning on or after 1 July 2016
statements disclosure initiative 1 January 2016
-------- ------------------------------ ------------------------------ ------------------------------ ------------
IAS 7 Statement of cash flows Disclosure initiatives Periods beginning on or after 1 July 2017
1 January 2017
-------- ------------------------------ ------------------------------ ------------------------------ ------------
IAS 12 Income taxes Amendments regarding the Periods beginning on or after 1 July 2017
Recognition of deferred tax 1 January 2017
assets for unrealised losses
-------- ------------------------------ ------------------------------ ------------------------------ ------------
IAS 27 Separate financial statements Amendments reinstating the Periods beginning on or after 1 July 2016
equity method as an 1 January 2016
accounting option for
investments in subsidiaries,
joint ventures and associates
in an entity's separate
financial statements
-------- ------------------------------ ------------------------------ ------------------------------ ------------
IAS 28 Investments in associates and Amendments regarding the sale Periods beginning on or after 1 July 2016
joint ventures or contribution of assets 1 January 2016
between investor and its
associate
or joint venture.
Amendments regarding the
application of the
consolidation exceptions
-------- ------------------------------ ------------------------------ ------------------------------ ------------
IAS 38 Intangible assets Amendments regarding the Periods beginning on or after 1 July 2016
clarification of acceptable 1 January 2016
methods of depreciation and
amortisation
-------- ------------------------------ ------------------------------ ------------------------------ ------------
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
2. ACCOUNTING POLICIES - continued
IAS 16 Property, Plant and Equipment Amendments regarding the Periods beginning on or after 1 July 2016
clarification of acceptable 1 January 2016
methods of depreciation and
amortisation
------- ------------------------------ ------------------------------ ------------------------------- ------------
IAS 19 Employee benefits Amendments resulting from Periods beginning on or after 1 July 2016
September 2014 Annual 1 January 2016
Improvements to IFRSs
------- ------------------------------ ------------------------------ ------------------------------- ------------
The Directors anticipate that the adoption of these standards
and the interpretations in future periods will have no material
impact on the financial statements of the Group.
The financial statements are presented in sterling (GBP),
rounded to the nearest thousand pound.
Basis of consolidation
In the period ended 2009 the Company acquired via a share for
share exchange the entire issued share capital of dotmailer
Limited, whose principal activity is that of web and email-based
marketing.
Under IFRS 3 'Business combinations' the 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, dotmailer Limited. The following accounting treatment
has been applied in respect of the reverse acquisition:
- The assets and liabilities of the legal subsidiary, 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 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
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
2. ACCOUNTING POLICIES - continued
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.
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 dotmailer Limited.
Revenue recognition
Revenue comprises the fair value of the consideration received
or receivable for the sale of goods and 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 web-based marketing services to other businesses
and services are either provided on a usage basis or fixed price
bespoke contract. Revenue from contracts are 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.
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 Business review.
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.
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 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
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
2. ACCOUNTING POLICIES - continued
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 CGU.
- 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. Development costs
previously recognised as an expense are not recognised as an asset
in a subsequent period. 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 assets;
- 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.
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
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
2. ACCOUNTING POLICIES - continued
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.
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
2. ACCOUNTING POLICIES - continued
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 ('FVTPL'), which are initially measured at fair value.
Financial assets are classified into the following specified
categories: financial assets at FVTPL, 'held-to-maturity'
investments, 'available for sale' (AFS) financial assets and loans
and receivables. The classification depends on the nature and
purpose of the financial assets and is determined at the time of
recognition.
Derecognition of financial assets occurs when the rights to
receive cash flows from the investments expire or are transferred
and substantially all of the risks and rewards of ownership have
been transferred.
At each reporting date, financial assets are reviewed to assess
whether there is objective evidence of impairment. If any such
evidence exists, impairment loss is determined and recognised based
on the classification of the financial asset.
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
2. ACCOUNTING POLICIES - continued
Loans and receivables (including trade receivables, prepayments,
deposits and other receivables, cash and bank balances) are
non-derivative financial assets with fixed or determinable payments
that are not quoted on an active market. At each reporting date
subsequent to initial recognition, loans and receivables are
carried at amortised cost using the effective interest method, less
any identified impairment losses. An impairment loss is recognised
in the statement of comprehensive income when there is objective
evidence that the asset is impaired, and is measured as the
difference between the asset's carrying amount and the present
value of estimated future cash flows discounted at the original
effective interest rate. Impairment losses are reversed in
subsequent periods when an increase in the asset's recoverable
amount can be related objectively to an event occurring after the
impairment was recognised, subject to a restriction that the
carrying amount of the asset at the date the impairment is reversed
does not exceed what the amortised cost would have been had the
impairment not been recognised.
- 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 nancial position of all the Group entities (none
of which has the currency of a hyper-in ationary 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.
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
2. ACCOUNTING POLICIES - continued
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 IFRS3 'Business combinations'.
Other reserves relate to the charge for share-based payments in
accordance with IFRS2 '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 (GBP) 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 adjustments
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 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
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2014
2. ACCOUNTING POLICIES - continued
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.
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 11 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 below:
-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 26 to the financial
statements. The charge made to income statement for period is also
disclosed here.
(c) Depreciation and amortisation
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
We perform ongoing credit evaluations of our customers and grant
credit based upon past payment history, financial condition and
anticipated industry conditions. Customer payments are regularly
monitored and a provision for doubtful accounts is established
based upon specific situations and overall industry conditions.
Hence the provision is maintained for potential credit losses based
upon management's assessment of the expected collectability of all
accounts receivable. In making this assessment, management take
into consideration (i) any circumstances of which we are aware
regarding a customer's inability to meet its financial obligations
and (ii) our judgements as to potential prevailing economic
conditions in the industry and their potential impact on the
Group's customers.
-
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
3. SEGMENTAL REPORTING
The Group's single line of business is the provision of
web-based marketing services. The chief operating decision-maker
considers the Group's only reportable segment to be by geographical
location, this being UK, US and rest of the world ("RoW")
operations as shown below:
30.06.2016
--------------------------------------
UK US RoW Total
GBP'000 GBP'000 GBP'000 GBP'000
Income statement
Revenue 22,056 3,022 1,848 26,926
Gross profits 19,298 2,565 1,668 23,531
Profit before income
tax 4,244 504 1,467 6,215
Total comprehensive
income attributable
to the owners of the
parent 3,398 539 1,442 5,379
======== ======== ======== ========
Financial position
Total assets 27,410 1,014 530 28,954
Net current assets 17,791 756 443 18,990
======== ======== ======== ========
Revenue from external customers is attributed to the
geographical segments noted above based on the customers' location.
There was no customers who account for more than 10% revenue (2015:
none).
30.06.2015
--------------------------------------
UK US RoW Total
GBP'000 GBP'000 GBP'000 GBP'000
Income statement
Revenue 18,274 1,860 1,232 21,366
Gross profits 16,676 1,602 796 19,074
Profit before income
tax 3,476 971 796 5,243
Total comprehensive
income attributable
to the owners of the
parent 2,895 968 796 4,656
======== ======== ======== ========
Financial position
Total assets 21,591 819 - 22,410
Net current assets 12,964 660 - 13,624
======== ======== ======== ========
In the year ending 30 June 2016, revenue from the US has been
disclosed separately as it exceeded 10% of the Group's revenue. The
comparatives have thus been restated.
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
4. EMPLOYEES AND DIRECTORS
30.6.16 30.6.15
GBP'000 GBP'000
Wages and salaries 9,667 7,711
Social security costs 1,036 871
Other pension costs 243 221
--------------- ---------------
10,946 8,803
=============== ===============
The average monthly number of employees during the year is as follows
30.6.16 30.6.15
Directors 7 7
Sales and Marketing product 100 84
Development and system engineers 43 48
Administration 54 47
--------------- ---------------
204 186
=============== ===============
During the year the Group also capitalised staff-related costs of GBP1,338,915 (2015: GBP1,549,066)
in relation to internally generated development costs.
5. NET FINANCE INCOME
30.6.16 30.6.15
GBP'000 GBP'000
Finance income:
Deposit account interest 51 27
--------------- ---------------
51 27
=============== ===============
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
6. OPERATING PROFIT
Costs by nature
Profit from continuing operations has been arrived after charging/(crediting):-
30.6.16 30.6.15
GBP'000 GBP'000
Direct marketing 1,984 1,516
Outsourcing 172 415
Other costs 1,239 361
--------- ---------
Total cost of sales 3,395 2,292
========= =========
30.6.16 30.6.15
GBP'000 GBP'000
Staff related costs (inc Directors emoluments) - note 4 10,946 8,803
Operating leases: Land and buildings 865 834
Operating lease: Other 48 44
Audit remuneration 37 38
Amortisation of intangibles 1,330 1,159
Depreciation charge 450 397
Legal, professional and consultancy fees 289 417
Computer expenditure 1,236 828
Bad debts 801 103
Foreign exchange (gains)/losses (246) 61
Travelling 471 351
Office running 174 217
Other costs 966 606
--------- ---------
Total administration costs 17,367 13,858
========= =========
During the year the Group obtained the following services from the Group's auditor at costs
detailed below:
30.6.16 30.6.15
GBP'000 GBP'000
Fees payable to the Company's auditor for the audit of Parent Company and
consolidated financial
statements 8 7
Fees payable to the Company's auditor for other services 25 27
* audit of Company subsidiaries
* non-audit fees: Tax and review of interim accounts 4 4
---------- ----------
37 38
========== ==========
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
7. INCOME TAX EXPENSE
Analysis of the tax charge from continuing operations:
30.6.16 30.6.15
GBP'000 GBP'000
Current tax on profits for the year 514 262
Deferred tax on origination and reversal of timing differences 333 325
--------- ---------
847 587
Factors affecting the tax charge:
30.6.16 30.6.15
GBP'000 GBP'000
Profit on ordinary activities before tax 6,215 5,243
========= =========
Profit on ordinary activities multiplied by the standard rate of corporation
tax in the UK
of 20.00% (2015: 20.75%) 1,243 1,088
Effects of:
Expenses not deductible 164 20
Research and development enhanced claim (670) (747)
Expenditure permitted on exercising options (465) (238)
Overseas tax (profits)/losses (15) (46)
Capital allowances in excess of depreciation 257 185
--------- ---------
Total income tax 514 262
========= =========
Deferred tax was calculated using the rate 19.75% (2015: 20%).
For further details on deferred tax see note 22.
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
8. PROFIT/(LOSS) 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 profit
before exceptional items for the financial year was GBP4,601,353
(2015: loss GBP318,852).
9. DIVIDS
Amounts recognised as distributions to equity holders in the period
30.6.16 30.6.15
GBP'000 GBP'000
Final dividend for year end 30 June 2016 of 0.357p (2015: 0.2p) per share 1,054 570
======== ========
Proposed dividend for the year end 30 June 2016 of 0.84p (2015: 0.36p) per share 2,476 1,041
======== ========
The proposed final dividend is subject to approval by the shareholders at the Annual General
Meeting and has not been included as a liability in these financial statements. The 0.84p
is broken down between a general dividend of 0.43p and a special dividend of 0.41p.
10. 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.
Reconciliations are as follows:-
30.6.16
--------- ------------ ----------
Weighted
average Per share
From continuing operations Earnings number Amount
of
GBP'000 shares Pence
Basic EPS
Profit for the year attributable
to the owners of the parent 5,368 293,095,257 1.83
Options and warrants - 977,555 -
--------- ------------ ----------
Diluted EPS
Profit for the year attributable
to the owners of the parent 5,368 294,072,812 1.83
========= ============ ==========
There was no difference in the weighted average number of shares
used in the calculation of basic and diluted earnings per share as
the effect of notionally dilutive shares were anti-dilutive.
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
10. EARNINGS PER SHARE continued........
30.6.15
--------- -------------- ---------
Weighted
average Per
share
From continuing operations Earnings number Amount
of
GBP'000 shares Pence
Basic EPS
Profit for the year attributable
to the owners of the parent 4,656 284,804,914 1.63
Options and Warrants - 5,001,766 -
--------- -------------- ---------
Diluted EPS
Profit for the year attributable
to the owners of the parent 4,656 289,806,680 1.61
========= ============== =========
Weighted average number of shares
30.6.16 30.6.15
Shares Shares
Basic EPS 293,095,257 284,804,914
============ ============
Diluted EPS 294,072,812 289,806,680
============ ============
11. GOODWILL
Group
30.6.16 30.6.15
COST GBP'000 GBP'000
At 1 July
At 30 June 4,121 4,121
-------- --------
AMORTISATION
At 1 July 3,512 3,512
Impairment - -
-------- --------
At 30 June 3,512 3,512
-------- --------
NET BOOK VALUE 609 609
======== ========
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 wholly to the Group's
single trading activity and business segment. This has been tested
for impairment during the current financial year by comparison with
the recoverable amounts of the CGU.
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
11. GOODWILL continued........
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 10% (2015 - 10%). The valuations
indicate sufficient headroom such that a reasonably possible change
in key assumptions would not result in impairment of goodwill.
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
12. INTANGIBLE ASSETS
Group
Internally
generated
Computer development Domain
software costs names Totals
GBP'000 GBP'000 GBP'000 GBP'000
COST
At 1 July 2015 274 6,625 16 6,915
Additions 88 1,482 - 1,570
--------- ------------- -------- --------
At 30 June 2016 362 8,107 16 8,485
--------- ------------- -------- --------
AMORTISATION
At 1 July 2015 228 3,227 16 3,471
Amortisation for the year 36 1,294 - 1,330
--------- ------------- -------- --------
At 30 June 2016 264 4,521 16 4,801
--------- ------------- -------- --------
NET BOOK VALUE
At 30 June 2016 98 3,586 - 3,684
========= ============= ======== ========
Computer Internally Domain
generated
development
software costs names Totals
GBP'000 GBP'000 GBP'000 GBP'000
COST
At 1 July 2014 274 5,013 16 5,303
Additions - 1,612 - 1,612
---------- ------------- -------- --------
At 30 June 2015 274 6,625 16 6,915
---------- ------------- -------- --------
AMORTISATION
At 1 July 2014 195 2,102 15 2,312
Amortisation for the year 33 1,125 1 1,159
---------- ------------- -------- --------
At 30 June 2015 228 3,227 16 3,471
---------- ------------- -------- --------
NET BOOK VALUE
At 30 June 2015 46 3,398 - 3,444
========== ============= ======== ========
Development cost additions represents resources the Group have
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.
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
13. PROPERTY, PLANT AND EQUIPMENT
Group
Short Fixtures Computer
&
leasehold fittings equipment Totals
GBP'000 GBP'000 GBP'000 GBP'000
COST
At 1 July 2015 395 401 1,354 2,150
Additions 49 47 406 502
At 30 June 2016 444 448 1,760 2,652
---------- --------- ---------- --------
DEPRECIATION
At 1 July 2015 95 203 755 1,053
Depreciation for
the year 52 90 315 457
At 30 June 2016 147 293 1,070 1,510
---------- --------- ---------- --------
NET BOOK VALUE
At 30 June 2016 297 155 690 1,142
========== ========= ========== ========
Short Fixtures Computer
&
leasehold fittings equipment Totals
GBP'000 GBP'000 GBP'000 GBP'000
COST
At 1 July 2014 288 308 888 1,484
Additions 107 93 467 667
Disposals - - (1) (1)
---------- --------- ---------- --------
At 30 June 2015 395 401 1,354 2,150
---------- --------- ---------- --------
DEPRECIATION
At 1 July 2014 47 112 498 657
Depreciation for
the year 48 91 258 397
Eliminated on disposal - - (1) (1)
---------- --------- ---------- --------
At 30 June 2015 95 203 755 1,053
---------- --------- ---------- --------
NET BOOK VALUE
At 30 June 2015 300 198 599 1,097
========== ========= ========== ========
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
14. INVESTMENTS
Company
Shares in Shares in
Group Group
undertakings undertakings
30.6.16 30.6.15
COST GBP'000 GBP'000
At 1 July and 30 June 8,705 8,705
AMORTISATION
At 1 July and 30 June 3,519 3,519
NET BOOK VALUE
At 30 June 5,186 5,186
============= =============
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 %:
dotmailer Limited Web and email-based Ordinary 100
marketing Ordinary A 100
dotsurvey Limited Dormant Ordinary 100
dotsearch Europe Limited Branch company Ordinary 100
dotcommerce Limited Dormant Ordinary 100
doteditor Limited Dormant Ordinary 100
dotSEO Limited Dormant Ordinary 100
dotagency Limited Dormant Ordinary 100
dotmailer Inc Web and email- based Ordinary 100
marketing
dotmailer Pty Limited Web and email- based Ordinary 100
marketing
All of the above subsidiaries have been included within the
consolidated results
All the above companies with the exception of dotmailer Inc and
dotmailer Pty Limited were incorporated in England and Wales.
dotmailer Inc was incorporated in Delaware (US) and dotmailer Pty
Limited was incorporated in New South Wales (Australia).
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
15. TRADE AND OTHER RECEIVABLES
Group Company
30.6.16 30.6.15 30.6.16 30.6.15
GBP'000 GBP'000 GBP'000 GBP'000
Current:
Trade receivables 5,559 4,589 - -
Less: Provision for impairment
of trade receivables (824) (343) - -
-------- -------- -------- --------
Trade receivables - net 4,735 4,246 - -
Other receivables 137 39 - -
Amounts owed by Group
undertakings - - 7,080 3,108
VAT - - 9 7
Prepayments and accrued
income 1,334 1,043 13 9
-------- -------- -------- --------
6,206 5,328 7,102 3,124
======== ======== ======== ========
Further details on the above can be found in note 21.
Included within prepayments is an amount of GBP271,680 (2015:
GBP121,998) in relation to deferred commission which is considered
to be long-term.
16. CASH AND CASH EQUIVALENTS
Group Company
30.6.16 30.6.15 30.6.16 30.6.15
GBP'000 GBP'000 GBP'000 GBP'000
Bank accounts 17,313 11,932 639 166
17,313 11,932 639 166
======== ======== ======== ========
Further details on the above can be found in note 21.
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
17. CALLED UP SHARE CAPITAL
Allotted, issued, fully paid Nominal 30.6.16 30.6.15
number value GBP'000 GBP'000
294,784,789 (2015: 287,002,065) GBP0.005 1,473 1,435
-------- --------
1,473 1,435
======== ========
During the reporting period the Company undertook the following
transactions involving the issuing and reclassifying of issued
share capital:
On 17 July 2015 a number of employees exercised their share
options increasing the issued share capital by 1,510,000 shares at
a premium price of between 5p and 7.5p.
On 7 August 2015 a number of employees exercised their share
options increasing the issued share capital by 1,200,000 shares at
a premium price of between 5p and 7.5p.
On 6 November 2015 a number of employees exercised their share
options increasing the issued share capital by 1,887,397 shares at
a premium price of between 5p and 18.15p.
On 20 November 2015 a number of employees exercised their share
options increasing the issued share capital by 1,027,397 shares at
a premium price of 18.15p.
On 9 December 2015 a number of employees exercised their share
options increasing the issued share capital by 1,557,930 shares at
a premium price of between 5p and 7.5p.
On 6 June 2016 a number of employees exercised their share
options increasing the issued share capital by 600,000 shares at a
premium price of between 5p and 18.15p.
18. RESERVES
Group
Reverse
Retained Share acquisition
earnings premium reserve
GBP'000 GBP'000 GBP'000
As at 1 July 2015 16,297 5,382 (4,695)
Issue of share capital - 756 -
Dividends (1,054) - -
Profit for the year 5,368 - -
Other comprehensive income: - - -
Currency translation
Share-based payment - - -
--------- -------- -------------
Balance as at 30 June 2016 20,611 6,138 (4,695)
========= ======== =============
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
18. RESERVES - continued
Retranslation Other
Reserve reserves Totals
GBP'000 GBP'000 GBP'000
As at 1 July 2015 (3) (25) 16,956
Issue of share capital - - 756
Dividends - - (1,054)
Profit for the year - - 5,368
Other comprehensive income:
Currency translation 11 11
Share-based payment - 199 199
-------------- --------- --------
Balance as at 30 June 2016 8 174 22,236
============== ========= ========
Group
Reverse
Retained Share acquisition
earnings premium reserve
GBP'000 GBP'000 GBP'000
As at 1 July 2014 12,211 5,147 (4,695)
Issue of share capital - 235 -
Share repurchase - - -
Dividends (570) - -
Profit for the year 4,656 - -
Other comprehensive income: - - -
Currency translation
Share-based payment - - -
--------- -------- -------------
Balance as at 30 June 2015 16,297 5,382 (4,695)
========= ======== =============
Retranslation Other
reserve reserves Totals
GBP'000 GBP'000 GBP'000
As at 1 July 2014 (6) 82 12,739
Issue of share capital - - 235
Share repurchase - (213) (213)
Dividends - - (570)
Profit for the year - - 4,656
Currency translation 3 - 3
Share-based payment - 106 106
-------------- --------- --------
Balance as at 30 June 2015 (3) (25) 16,956
============== ========= ========
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
18. RESERVES - continued
Company Share
Retained Share based
earnings premium payments Totals
GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 2015 1,534 5,382 (25) 6,891
Issue of share capital - 756 - 756
Dividends (1,054) - - (1,054)
Profit for the year 4,600 - - 4,600
Share-based payment - - 199 199
--------- -------- --------- --------
At 30 June 2016 5,080 6,138 174 11,392
========= ======== ========= ========
Company
Retained Share Other
earnings premium Reserves Totals
GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 2014 2,423 5,147 82 7,652
Issue of share capital - 235 - 235
Share repurchase - - (213) (213)
Dividends (570) - - (570)
Loss for the year (319) - - (319)
Share-based payment - - 106 106
--------- -------- --------- --------
At 30 June 2015 1,534 5,382 (25) 6,891
========= ======== ========= ========
19. TRADE AND OTHER PAYABLES
Group Company
30.6.16 30.6.15 30.6.16 30.6.15
GBP'000 GBP'000 GBP'000 GBP'000
Current:
Trade payables 1,351 853 11 16
Amounts owed to Group
undertakings - - 4 4
Social security and other
taxes 571 498 - -
Other payables 222 349 1 91
VAT 710 574 - -
Accruals and deferred
income 1,297 1,163 46 39
4,151 3,437 62 150
======== ======== ======== ========
Further details on liquidity and interest rate risk can be found
in note 21.
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2015
20. LEASING AGREEMENTS
Minimum lease payments under non-cancellable operating leases
fall due as follows:
30.06.16
Land &
Buildings Others Totals
GBP'000 GBP'000 GBP'000
Within one year 374 46 420
Between two to five years 1,118 39 1,157
---------- -------- --------
1,492 85 1,577
========== ======== ========
30.06.15
Land &
Buildings Others Totals
GBP'000 GBP'000 GBP'000
Within one year 232 19 251
Between two to five years 1,490 12 1,502
---------- -------- --------
1,722 31 1,753
========== ======== ========
Operating leases represent rents payable by the Group for its
office properties. 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.
21. 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 listed in this note. It's 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
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
21. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - continued
Financial instruments by category
The following table sets out the financial instruments as at the
reporting date:
Group Company
30.6.16 30.6.15 30.6.16 30.6.15
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Trade and other receivables 6,206 5,328 22 16
Bank balances 17,313 11,932 639 166
23,519 17,260 661 182
======== ======== ======== ========
Financial liabilities
Trade payables 1,351 853 11 16
Accrued liabilities and
other payables 2,800 2,584 47 130
4,151 3,437 58 146
====== ====== === ====
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 monthly 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 Groups 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 GBP2,283,000 (2015: GBP2,365,000)
are expected to mature in less than a year.
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
21. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - continued
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 2016 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:
30.6.16 30.6.15
GBP'000 GBP'000
0-30 days 2,795 2,311
30-60 days 1,243 813
More than 60 days 1,521 1,465
5,559 4,589
======== ========
The maturity of the Group's provision for impairment is as
follows:
30.6.16 30.6.15
GBP'000 GBP'000
0-30 days 6 2
30-60 days 87 2
More than 60 days 731 339
824 343
======== ========
The movement in the provision for the impairment is as
follows:
30.06.16 30.6.15
GBP'000 GBP'000
As at 1 July 343 336
Provision for impairment 789 103
Receivable written off in
the year (259) (47)
Unused amount reversed (49) (49)
---------
As at 30 June 824 343
========= ========
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
GBP1,541,197 (2015: GBP1,486,597) of which GBP730,350 (2015:
GBP339,962) was provided for. The Group felt that the remainder
would be collected post year end as they were with long-standing
relationships, 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
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
21. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - continued
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
GBPnil (2015: GBPnil) and amounts payable over one year are nil
(2015: GBPnil). 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 re-align
the capital structure, the Group may adjust when dividends are paid
to shareholders, return capital to shareholders, issue new shares
or borrow from lenders.
22. DEFERRED TAX
30.6.16 30.6.15
GBP'000 GBP'000
As at 1 July 383 58
Current year provision 333 325
716 383
======== ========
The deferred tax liability above comprises the following
temporary differences:
30.6.16 30.6.15
GBP'000 GBP'000
Capital allowances in excess of depreciation 91 103
R&D relief in excess
of amortisation 708 679
Share option relief (83) (399)
716 383
======== ========
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.
23. CAPITAL COMMITMENTS
The Company and Group have no capital commitments as at the year
end.
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
24. 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
30.6.16 30.6.15
GBP'000 GBP'000
Sale of services
Email
Redstone Connect Entity under common marketing
Plc directorship services - 4
Email
Entity under common marketing
Cadence Performance directorship services 2 3
2 7
======== ========
Sales of services are based on the price lists in force and at
terms that would be available to third parties
30.6.16 30.6.15
GBP'000 GBP'000
Purchase of services
Barratts of Entity under common Consultancy
Old Ltd directorship services* - 8
- 8
============= ========
*Consultancy services to assist with the international expansion
and development of channel sales strategy.
Directors
30.6.16 30.6.15
GBP'000 GBP'000
Aggregate emoluments 858 1,002
Ex-gratia payment 137 -
Company contributions to money purchase pension
scheme 46 60
Share-based payments 114 20
1,155 1,082
======== ========
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
24. RELATED PARTY DISCLOSURES continued.....
Information in relation to the highest paid Director is as
follows:
30.6.16 30.6.15
GBP'000 GBP'000
Salaries 183 234
Ex-gratia payment 137 -
Other benefits 3 11
Pension costs - 15
Share-based payments 114 20
437 280
======== ========
The highest paid Director did not exercise any share options in
the year (2015: 660,000).
Company
The following transactions were carried out with related
parties
30.06.16 30.06.15
GBP'000 GBP'000
Year end balances arising
from sales/purchase of services
dotmailer Limited Subsidiary Payables (5,338) (3,280)
(5,338) (3,280)
========= =========
The receivables and payables are unrestricted in nature and bear
no interest. No provisions are held against receivables from
related parties.
Loans to related parties
30.6.16 30.6.15
GBP'000 GBP'000
dotmailer Limited Subsidiary
As at 1 July 6,388 5,681
Loans advanced 6,069 751
Loans repaid (40) (44)
12,417 6,388
======== ========
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
25. ULTIMATE CONTROLLING PARTY
There is no ultimate controlling party of the Group. dotdigital
Group PLC acts as the parent Company to dotmailer Limited, ,
dotsearch Europe Limited, dotmailer Inc, dotmailer Pty Limited,
dotagency Limited (Dormant), dotsurvey Limited (Dormant), dotSEO
Limited (Dormant), dotcommerce Limited (Dormant) and doteditor
Limited (Dormant).
26. 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 GBP199,600 (2015: GBP106,000).
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 2016 had a WAEP of 26.69p (2015:
14.43p) and a weighted average contracted life of 3.2 years (2015:
2.1 years) and their exercise prices ranged from 0p to 44.50p. All
share options are settled in form of equity issued.
30.06.16 30.6.15
No of options WAEP No of options WAEP
Outstanding at the beginning
of the period 10,938,790 14.83p 13,923,790 8.82p
Granted during the year 1,439,029 29.02p 2,275,000 29.53p
Forfeited/cancelled during
the period 491,066 21.46p 1,040,000 16.56p
Exchanged for shares 7,782,724 10.22p 4,220,000 6.06p
---------- -------- ---------- ------
Outstanding at the end
of the period 4,104,029 26.69p 10,938,790 14.43p
---------- -------- ---------- ------
Exercisable at the end
of the period 1,063,409 8.00p 8,462,724 10.44p
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARED 30 JUNE 2016
26. SHARE-BASED PAYMENT TRANSACTIONS - continued
The weighted average share price at the date of the exercise for share
options exercised during the period was 40.32p (2015: 30.52p).
20 June 26 25 November 10 28 18 October
2016 April 2015 April November 2013
2016 2015 2014
Number of options
granted 423,409* 206,460 809,160 750,000 1,525,000 3,554,794
Share price at
grant date 44.25p 45.00p 40.50p 31.50p 29.00p 17.82p
Exercise price Nil 44.50p 40.25p 31.50p 28.50p 18.25p
Option life in 5 years 5 years 5 years 5 5 years 5 years
years years
Risk free rate 1.33% 1.33% 1.33% 1.33% 1.35% 1.40%
Expected volatility 30% 30% 30% 30% 30% 30%
Expected dividend
yield 1.7% 1% 1% 0% 0.% 0.4%
Fair value of 29.26p 7.23p 6.46p 5.64p 5.33p 3.31p
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 issued on the 20 June 2016 were to Simone Barratt
as part of her remuneration package during her time as CEO of the Group
and were based on her achieving certain performance criteria. These
share options were granted as an unapproved share option scheme at a
GBPnil exercise price and were released immediately upon her being a
good leaver as per the share option scheme agreed at the AGM on 15 December
2015.
27. GROUP RECONCILIATION OF PROFIT BEFORE CORPORATION TAX TO CASH GENERATED
FROM OPERATIONS
Group Company
30.6.16 30.6.15 30.6.16 30.6.15
GBP'000 GBP'000 GBP'000 GBP'000
Current:
Profit before tax from all
operations 6,215 5,243 4,600 (319)
Currency revaluation 11 3 - -
Depreciation 1,787 1,556 - -
Loss on disposal of fixed - (1) - -
assets
Share-based payments 199 106 199 106
Finance income (51) (27) - -
-------- -------- -------- --------
8,161 6,880 4,799 (213)
(Increase)/decrease in trade
receivables (878) (1,666) (3,978) 721
Increase/(decrease) in trade
payables 714 453 (88) 76
-------- -------- -------- --------
Cash generated from operations 7,997 5,667 733 584
======== ======== ======== ========
DOTDIGITAL GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 30 JUNE 2016
28. 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
GBP'000 GBP'000
As at 1 July 2014 9,306 109
======== ========
As at 30 June 2015 11,932 166
======== ========
As at 30 June 2016 17,313 639
======== ========
29. PROJECT DEVELOPMENT
During the period the Group incurred GBP1,482,558 (2015:
GBP1,611,929) in development investments. All resources utilised in
development have been capitalised as outlined in the accounting
policy governing this area.
30. POST BALANCE SHEET EVENTS
There are no post balance sheet events which impact the Group's
financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR ZMMMGZRDGVZM
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October 18, 2016 13:14 ET (17:14 GMT)
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