Annual Report and Accounts
2008/2009
Our mission
To provide fantastic digital
tools and services that deliver
results keeping our clients
ahead of their competition.
Contents
01 Key highlights
02 Chairman’s and
10
Chief Executive’s report
Corporate social
responsibility report
12 Our board of Directors
14 Corporate governance report
16 Audit committee report
18 Remuneration committee report
20 Report of the Directors’
26
28 Consolidated income statement
28
Independent Auditor’s report
Consolidated statement
of comprehensive income
Consolidated statement
of financial position
Company statement
of financial position
Consolidated statement
of changes in equity
Company statement
of changes in equity
Consolidated statement
of cash flows
Notes to the consolidated
financial statements
29
30
31
32
33
34
56 Company information
01
Key highlights
• Revenue increased by 91% to £4.7m* (2008: £2.5m)
• Profit after tax increased by 58% to £0.9m* (2008: £0.6m)
• Strong balance sheet position, cash at year end
increased by 145% to £1.7m (2008: £0.7m)
• Strong growth in customer numbers from 1,072
in 2008 to 2,282 in 2009. An increase of 113%*
* For a 14 month period in comparison to a 12 month period
Revenue
Profit after tax
£4,718,290
91%increase revenue
growth
58%increase in profit
after tax
£895,507
£2,474,365
£567,000
2009
2008
2009
2008
Cash position
Customer numbers
145%
Increase in cash
£1,677,902
2,282
113%
increase in
customers
£684,493
1,072
2009
2008
2009
2008
dotDigital Group Annual Report and Accounts 2008/2009
02
Chairman’s & Chief Executive’s report
The Group enjoyed a period of strong
growth driven by the success of its
leading edge internet technology for
digital marketing. Revenue grew by 91%
substantially driven by growth in client
numbers from 1,072 as at the end of April
2008 to 2,282 by the end of June 2009.
The business has shown itself to be resilient
in the face of a difficult economic climate
and has benefited from the shift in marketing
spend from traditional offline media to online
digital marketing.
The year under review saw the delivery of
many of the goals set out in a three year
plan which was initiated in 2006. We have
seen the Group transform from a niche website
design agency and email service provider,
into: one of the UKs leading full service digital
marketing agencies, a PLC on the PLUS market,
an employer of 55 staff with offices in London,
Croydon and Manchester and an email
marketing product that is highly regarded
in the marketing industry.
As well as achieving high levels of organic
growth in our email marketing business
during 2008/09 we have been making a
significant investment in product innovation
and development. April 2009 saw the launch
of our new package based e-commerce
platform (known as dotCommerce) which has
been extremely well received by prospective
clients and is starting to deliver a new and
important revenue stream for the business.
Financial overview
Delivery of three year plan
On 30 January 2009 dotDigital Group Plc
(formerly known as West End Ventures Plc)
acquired the entire issued share capital
of dotMailer Limited via a share for
share exchange.
Since 2006 dotDigital has achieved year on
year growth levels of 54%, 97% and 91%,
within a fiercely competitive and close to
saturated market place and in the face
of a recessionary environment over the
past 18 months.
To comply with international financial
reporting standards, this report is presented
as if dotMailer Limited had acquired dotDigital
Group Plc which is the substance of the
transaction even though the legal form of
the transaction was that dotDigital Group Plc
acquired dotMailer Limited.
Staff levels have increased fourfold, from 15 in
2006 to 55 by summer 2009 and the average
monthly new business acquisition rate has
more than doubled from 40 new client wins
in per month in 2007 to 85 new client wins
per month in 2009.
During the 14 month period ended 30th June
2009 revenue grew to £4.7m up from £2.47m
in the previous 12 months. Pre tax profit in the
period grew to £1.1m up from £0.7m in the
previous 12 months.
By setting and pursuing aggressive and
stretching financial goals, and focussing
single-mindedly on developing innovative
products and delivering them alongside
exceptional client support, we have:
www.dotdigitalgroup.com
This growth in profit was in line with target
and although the apparent profit percentage
has declined the headline numbers do not
take account of a change in the basis of
remunerating Directors from mainly dividend
based in 2007/08 to salary based in 2008/09.
• Seen outstanding organic growth
• Opened up important revenue channels
through cross-sell and up-sell
• Built the brand and a team capable of
growing, supporting and developing
our ever expanding customer base
We have achieved this by pursuing a highly
focussed, four-prong growth strategy which
in the Directors’ opinion, sets the Group apart
from any known competition:
1. Outstanding client care and, we feel,
over delivery on clients’ expectations.
2. Product diversification having built a
one-stop shop of products and services
to cater for every digital need.
3. No compromise recruitment resulting in our
attracting and retaining the very best talent
needed to support our growing client base.
4. Insatiable sales and marketing leaving
no stone unturned in our quest for a
better more diverse service, strengthened
thought-leadership profile, sales pipeline
and no opportunity unconverted.
A ‘full service’ offering
Although a handful of other email service
providers are able to offer some add-on
digital marketing services, and other digital
agencies offer various forms of email service,
the Directors believe that dotDigital is
uniquely placed to offer the full range of
digital marketing services with high levels
of specialism and expertise backed by over
ten years operational experience.
Our business is split into four
main brands and business units,
each with high level expertise
in four key areas:
dotMailer – In the Directors’ opinion, a
market leading email marketing platform
with exceptional features and ease of use.
It is delivered and supported by a team of
dedicated and passionate professionals.
dotCommerce – The Group’s latest
ecommerce solution considered by
the Directors to provide a unique and
compelling proposition to online sellers;
a flexible bespoke build experience, for
the cost of an off-the-shelf package.
dotEditor – The content management
system which drives clients’ websites,
enabling them to edit and manage
their own, rich content.
dotAgency – An in-house creative
agency team specialising in website
design, build, digital marketing strategy
and search engine optimisation.
03
dotDigital Group Annual Report and Accounts 2008/2009
04
Chairman’s & Chief Executive’s report continued
91% Increase in revenue
in 2009
The Group has a clear vision to continue
to develop a range of complementary
digital marketing tools and consultancy
services which can be fully integrated
with existing services.
Moreover, we continually work to build deeper
relationships with our clients and help them
realise the full potential of digital marketing
to achieve their own business objectives.
Our clients benefit from this holistic approach
which offers a trusted source and single point
of contact for a full range of marketing needs.
dotDigital’s clients
dotDigital has a range of high profile clients
including a number of blue-chip companies
and high profile organisations. However,
at a time when many of the other email
marketing agencies focus principally on
large company business, we have resolutely
maintained a principal focus on small and
mid sized companies given the huge pool
and diversity of potential clients and our
ability to bring services to them quickly and
efficiently. Moreover we take the view that our
customer mix is ideal to provide the stability
that is crucial to allow dotDigital to grow.
The argument for dotDigital rests on the
ability to provide custom made products for
the same price as the existing commoditised
products being marketed by other digital
agencies which the directors believe are
inferior in terms of features and usability.
These also fail to offer the high quality support
often needed by less experienced marketers.
With this in mind, we develop every product
and offering with the needs and requirements
of the SME in mind.
By understanding the important business
drivers and challenges which these companies
experience, dotDigital is able to create
affordable packages and solutions that work
for companies of all sizes and that are scalable
so that the product or service can grow with
the customer. Because of this scalability, it
means ultimately we can service any client
from SME through to large multi-nationals.
Our customers choose to use our organisation
because of these key factors, and because
of our propositions of outstanding client
support, a one-stop digital marketing
shop and extremely easy to use yet very
powerful products.
These products include, for example,
highly innovative online survey builder
and microsite builder tools that genuinely
enable marketers and business managers
with absolutely no experience or skills in
website design, developing or coding,
to create in minutes their own web pages,
online surveys, competitions and data
capture forms that look exactly like they
are part of their business website. Tools like
this offer genuine cost and resource savings
of many thousands of pounds to businesses.
www.dotdigitalgroup.com
05
” dotCommerce have helped us
build, launch and manage our
new e-commerce business...The
technology is straightforward to use,
and the team has been amazing.”
Somerset House
” Working with the dotAgency
team has been a very rewarding
experience... they are both
knowledgeable and imaginative.”
Fairtrade Foundation
” dotMailer design service excels,
always giving us a clear and
professional newsletter! Their self
service send and reporting facility
is simple and easy-to-use and the
reporting results provide great
feedback for analysing the success
of our mail-outs.”
Storm Models
85New client wins
per month 2009
Strategy for 2009/10
The Group has implemented plans to build
on the existing successful strategies to sustain
existing levels of growth. We plan to:
• Continue to build brand awareness and
brand reputation within the marketplace
using multi channel marketing, including
social networking sites;
• Further develop a sales culture of
referrals and word of mouth, based
on delighted clients;
• Develop new products and services
with strong recurring revenues, such as
ecommerce solutions and SEO services;
• Expand the reach of our thought leadership
message through social networking and
web 2.0 including prolific blogging and
twitter posts;
• Seeking earnings enhancing acquisitions
in complimentary sectors such as:
– SEO
– Mobile/SMS
– Word of Mouth Marketing
– Survey tools
– Analytics
– Usability testing
– Research
– Social media marketing
The Directors also plan to reorganise the
management of the business around smaller
business units thus presenting a scalable
business model with clear management focus
whilst maintaining the entrepreneurial spirit
and culture which has served the business
well for the past ten yeas.
Outlook
The marketplace for our services remains
robust as we move into the current financial
year. The Group’s customer base has continued
to grow and the response to our broadened
offering, introduced last year, encouraging.
We maintain a strong cash position and have
an eye towards an expansion of our services
through acquisition with a number of targets
already under review.
Recognition of our brand is now widespread
within the marketing sector and we believe
that the coming year will present opportunities
to expand and diversify profitably with
only incremental increase in overhead cost.
Accordingly, we look forward to the year
with confidence.
Staff
The Board thanks all of the management and
staff who have reacted to the challenge of
rapid growth in a difficult economic climate
with enthusiasm and enormous energy.
dotDigital Group Annual Report and Accounts 2008/2009
06
Chairman’s & Chief Executive’s report continued
112%
Increase in clients
in 2009
Staff continued
dotDigital places much emphasis on the
quality and cohesiveness of its staff. Building
a team that supports the work of the key
management team has been central to the
successful growth achieved to date and is
paramount in continuing this success in
the future.
The Group has an innovative approach to staff
development. The management team aims
to give each employee the space in which to
grow and the leadership ethos is very much
about giving employees the opportunities
to develop and become leaders themselves.
With this is mind, we aim to share the success
of the Group with the staff and by being open
and transparent, ensuring that every employee
understands the overall growth strategy and
is kept appraised as to our vision, objectives,
targets, progress, successes and potential
issues. The Directors are open about business
objectives and senior managers actively
engage their teams in understanding how
their efforts contribute to these numbers.
All staff are eligible for a performance and
profit related bonus scheme. Following the
Group’s recent admission as a public quoted
company to PLUS Markets, all employees are
included in an employee share issue scheme,
enabling them to benefit from and share in the
continued growth and success of the business.
The Directors strive to maintain the
‘entrepreneurial spirit’ that was fundamental
in the early days of the Company. This
is particularly important in the ‘product
development’ aspect of the Company’s
growth strategy. Allowing developers to
explore and execute their own ideas
allows an organic approach to software
development. Outside the technical teams
this is encouraged as well, with brainstorming
and development of ‘ideas’ being a crucial
stage in planning any product, service or
activity we undertake.
Board changes
In January this year, following the reverse
acquisition of West End Ventures Plc by
dotMailer Limited a number of Board changes
took place to ensure the Company was well
positioned to move forward strategically
and operationally, and also to ensure the
Group meets both the legal and practical
requirements of good Corporate Governance.
The Executive Directors of dotMailer Limited
(Peter Simmonds, Ian (“Tink”) Taylor, Simon Bird
and David Ivy) joined the Board of dotDigital
Group Plc as Executive Directors. David Pacy
was appointed Non Executive Chairman
of the Group and Nicholas Nelson became
a Non Executive Director. Shane Moloney
resigned from the Board of West End Ventures
at the date of the reverse acquisition.
www.dotdigitalgroup.com
We aim to share
the success of the
Company with
the staff...
07
dotDigital Group Annual Report and Accounts 2008/2009
08
Chairman’s & Chief Executive’s report continued
It was with regret that we had to announce
the resignation of Dave Ivy as a Director of the
Company in September 2009. Dave, who was
one of the co-founders of the Company and
played an important role in its development,
decided that his passion remains with early
stage development of a business and with
this in mind, wishes to pursue new early stage
technology based projects outside the scope
of digital marketing.
Dave’s current role in developing the agency
business will be taken on by Gordon (“Skip”)
Fidura. Skip was appointed to the Board earlier
this year and has a wealth of digital marketing
expertise and senior industry experience, most
recently from OgilvyOne Worldwide in London.
Skip has been in marketing for over fourteen
years, having worked in contact centres, direct
marketing, customer analysis and digital
marketing. Most recently Skip was Email Partner
at OgilvyOne London and prior to that he
was the Director of European Operations for
Acxiom Digital. A frequent speaker at industry
events in the UK, Europe and the US, Skip is also
Vice-Chairman of the UK DMA Email Marketing
Council, was listed by Revolution Magazine as
one of the 50 most influential people in new
media and has judged numerous industry
awards including the 2009 DMAs.
Business description and philosophy
With our full range of platforms and services,
dotDigital has the unquestioned ability to
supply any business with a suite of integrated,
scalable marketing tools that will enable them
to use digital marketing to help meet their
business objectives: from lead generation
and relationship management through
to website conversion, SEO, online
merchandising, and post-sale follow-up.
Our deep and strong relationships with
existing clients, built around outstanding client
support, put us in a position of great strength
to mine the potential of the existing client
base. We have a unique opportunity widely to
cross sell and up-sell our suite of products and
services along with our strategic consultancy
services (which in turn help to generate further
product and service sales).
The unique, overarching characteristic of the
Group’s range of products is the fact that they
are sophisticated and feature rich, but also
extremely intuitive and easy to use. We pride
ourselves on offering the equivalent of ‘NASA
technology, with a ‘fisher-price®’ interface’.
A commitment to exceptional
client support
Certain competitors within the email service
provision sector, provide either basic client
support, i.e. online FAQs, email support,
webinars; or they provide a premium priced
‘managed service’ level of support reserved
only for very high spending corporate clients.
Skip Fidura 40,
Digital Director
www.dotdigitalgroup.com
09
‘ Our deep and strong relationships
with existing clients, built around
outstanding client support, put us
in a position of great strength...’
Accordingly, the Directors believe that it is
inappropriate to propose a dividend based
on this commitment to investing in growth.
However, as soon as it becomes commercially
prudent to join the dividend list and subject to
the future availability of sufficient distributable
reserves, then the Board will announce a
sustainable dividend policy.
David Pacy
Chairman
Peter Simmonds
Chief Executive
To help us differentiate we maintain a five
tier client support structure for our email
marketing clients that is dedicated to
providing outstanding support, care
and consultancy:
• A dedicated account management team
to ensure that clients have a named,
dedicated account support contact
who understands their needs and their
challenges and can help them on a
consultative level with both every day
queries and tactical and best practice
guidance;
• Our account management team is
incentivised to be proactive in their
approach to clients, ensuring they
contact their account contacts regularly
to make sure they are happy with the
service and to find out if there are
further ways we can advise or help them.
• This enables us to very effectively cross-sell
and up-sell clients across our full range
of products and services, whilst providing
a very positive experience for the client;
• A frontline technical support team working
alongside the account management team,
made up of our Technical Support Manager
and Technical Support Executives. This
team handles any technical queries clients
may have, such as editing their email
campaigns, dealing with spam filters and
briefing bespoke email template designs;
• A backline development support team
made up of highly experienced developers
able to respond to client feedback
and build enhancements, fixes and
new features into the dotMailer email
marketing system in response to this;
• A strategic consultancy team was
created to provide higher level
consultancy including guidance on
overall email marketing strategy, overall
digital marketing strategy, and successful
integration of these into our clients’
business models and marketing mix.
This team is made up of Tink Taylor
and Skip Fidura. Both are elected
members of the Direct Marketing
Association Email Marketing Council.
Dividend policy
It is the Directors’ strategy to achieve capital
growth on the strength of a consistently cash
generative trading performance.
During the last financial year our cash
reserves grew significantly as a result of
a strong cash flow and the amalgamation
of the funds within West End Ventures Plc
at the date of the reverse acquisition. It is
the intention of the Board to utilise this
cash to invest in new revenue generating
opportunities for the business and to seek
earnings enhancing acquisitions.
dotDigital Group Annual Report and Accounts 2008/2009
10
Corporate social responsibility
The Group is committed to achieving
a long-term successful and sustainable
business as a leading provider of digital
marketing solutions.
dotDigital’s products
are used by hundreds
of charities worldwide
who have enjoyed our
special charity rates.
Community
dotDigital was conceived, founded and
continues to operate in the Borough of
Croydon. The Company continues to work
closely with local communities and sees its role
as a leading business in the area to encourage
and promote corporate growth. In terms of
recruitment, local talent is always a focus.
Workplace
dotDigital is also committed to talent
development through its work experience and
graduate recruitment schemes. The Company
has complied with all applicable legislation
and has not been subject to sanctions or
fines for environmental, health and safety
or other infringements.
Equal opportunities
dotDigital is committed to an equal
opportunities policy as part of its ethical
and social responsibility.
We believe in the importance of corporate
social responsibility and sustainability within
our business. A responsible approach to
the environment, health and safety and fair
treatment of our people, our customers,
our suppliers, our local communities and
other key stakeholders is embedded in
our Group culture and values. In a nutshell,
dotDigital recognises its obligations to all
those with whom it has dealings and our
good reputation is vital to instil confidence
in all who do business with us.
The UK charity sector has always been
a key focus for the business. dotDigital has
a pre-determined pricing model for registered
charities and has worked with some of the
country’s leading charities including Fairtrade,
Wateraid and WRC. dotDigital is committed
to providing the very highest possible
services and quality products to charities
at an affordable rate.
Environment
dotDigital has been quick to accentuate
the environmentally friendly role of digital
marketing in its thought leadership and
media outreach. As the online answer to
direct mail, email is quickly being seen as
an environmentally-friendly alternative.
dotDigital has worked with both the DMA
and IAB to promote this message.
www.dotdigitalgroup.com
WaterAid – “Thank you so much. The new website
is a truly outstanding piece of work that we are
very happy with. Well done all of you”.
www.wateraid.org/uk
11
Fairtrade Foundation – Launched to coincide
with Fairtrade Fortnight the Foundation’s site
has powerful functionality, intuitive navigation
and brand-enhancing design.
www.fairtrade.org.uk
women’s resource centre – We set out to give
WRC not only a very strong and distinctive
online brand. We also created a highly effective
information portal for all their users who need
to find information quickly and easily.
www.wrc.org.uk
dotDigital Group Annual Report and Accounts 2008/2009
12
Our board of Directors
Peter Simmonds FCCA, aged 51,
Chief Executive and Finance Director
Simon Bird, aged 34,
Technical Director
Tink Taylor, aged 37,
Business Development Director
Peter Simmonds commenced his career in
1976 as a trainee accountant with Unilever Plc
and has over 20 years of experience at senior
management and board level, principally
in the areas of banking, insurance, finance,
I.T. and outsourcing. He has considerable
business entrepreneurial experience having
been involved in the start up or early stage
of a number of companies in various industry
sectors including consultancy services, vehicle
leasing, computer software and internet
solutions sectors.
Peter also has experience of business
acquisition and post acquisition integration
and management of businesses.
Simon is a founding Director of dotDigital with
a strong technical bias. His technical expertise
stretches back to the beginning of his career
when he was integral to the formation of
a major internet access provider. Passionate
about web software engineering, he strives
to ensure the Group is always ahead of the
technology game enabling dotDigital to build
world class products for its customers.
Tink Taylor a founding Director has many
years experience in the field of interactive
electronic communications. Tink has wide
ranging experience in introducing the concept
of digital marketing to companies large and
small. He is an elected member of the
Direct Marketing Association’s Email Marketing
Council and also a member of the Internet
Advertising Bureaus E-communications
Council. Tink is a judge for the Emails and
Virals category at the DMA awards.
www.dotdigitalgroup.com
13
David Pacy aged 66,
Non Executive Chairman
Nicholas Nelson aged 44,
Non Executive Director
Nicholas Nelson commenced his career
in 1985 as a trainee dealer on the floor of
the London Stock Exchange accumulating
approximately thirteen years experience as
both dealer and investment manager. He has
for the past ten years continued his City career,
working in corporate communications during
which time he has assisted on many PLUS
and AIM floatations. He is currently Managing
Partner of Haggie Nelson LLP, a City of London
based financial public relations consultancy.
David Pacy founded MetroVideo Group in
1979, which was sold to WPP Group Plc in
1986 in addition to subsequently setting up
Stockroom Archive Management Limited
which specialises in the storage and retrieval
of film and video material.
David was also a Founder of DigiReels, one of
the UK’s earliest commercially available video
on demand services, a joint venture between
WPP Group Plc and Cable and Wireless Plc.
He subsequently became a founder Director
of ChillBean Limited, the digital asset
management company hosting SohoSoho.tv,
created specifically for the media world.
David is a Director of Clockwork Capital a
joint venture with WPP involved in equipment
finance for the television industry.
dotDigital Group Annual Report and Accounts 2008/2009
14
Corporate governance report
The Board have decided to provide corporate
governance disclosures in accordance with the
principles and provisions of “The Combined
Code: Principles of Good Governance and
the Code of Best Practice” (“the Code”).
As part of this process Turnbull guidelines
set out in “Guidance for Directors on the
Combined Code” have also been reviewed
and are covered under “Internal control” below.
An explanation of how dotDigital Group Plc
(the “Group”) has applied the principles and
the extent to which the provisions in the Code
have been complied with appears below.
Compliance statement
(a) Directors
The details of the Group’s Board, together
with the Audit and Remuneration Committees,
are set out on pages 16 and 18 respectively.
The Board meets monthly and is responsible
for strategy, performance, approval of major
capital projects and the framework of internal
controls. The Board has a formal schedule
of matters reserved for specific review and
decision. To enable the Board to discharge
its duties, all Directors receive appropriate
and timely information. Briefing papers are
distributed to all Directors in advance of Board
meetings. All Directors have access to the
advice and services of the Company Secretary,
who is responsible for ensuring that Board
procedures are followed and that applicable
rules and regulations are complied with. At the
period end there were four Executive Directors,
one independent Non Executive Director and
an independent Non Executive Chairman.
The current constitution of the Audit and
Remuneration Committees are shown
on pages 16 and 18 respectively.
Appointments to the Board are
nominated by an Executive Director
and then considered by the full Board.
(b) Director’s remuneration
As set out on pages 18 and 19,
the remuneration of the Executive
Directors is determined by the
Remuneration Committee whilst that
of the Non Executives is determined
by the whole Board. The Directors are
conscious of the importance of the
performance related incentives and
bonuses are paid based on performance
as deemed appropriate by the
Remuneration Committee.
(c) Relations with shareholders
The Group encourages two-way
communications with all its shareholders
and responds quickly to all requests or queries
received. All Shareholders have at least twenty
one working days’ notice of the Annual General
Meeting at which all of the Directors and the
Chairman are normally available for questions.
Comments and questions are encouraged
from the Shareholders at the meeting.
(d) Accountability and audit
(i) Financial reporting
Detailed reviews of the performance
and financial position of the Group are
included in the Chairman’s and Chief
Executive’s statement.
” We selected dotMailer’s email
marketing software as it combined
an easy email design user interface
with excellent data capture and
reporting capabilities.”
EDF Energy
www.dotdigitalgroup.com
15
(iii) Audit Committee and Auditors
The Audit Committee comprises Tink Taylor
and David Pacy and is chaired by Nicholas
Nelson. The Auditors of the Group may
also attend part or all of each meeting
and they have direct access to the
committee for independent discussions,
without the presence of the Executive
Director if required. The Audit Committee
may examine any matters relating to the
financial affairs of the Group, and to the
Group’s audit. This includes reviews of
the annual accounts and announcements,
accounting policies, compliance with
accounting standards, the appointment
and fees of auditors and such other related
functions as the Board may require.
(iv) Going concern basis
After making enquiries, the Directors
have formed a judgement, at the time
of approving the financial statements,
that there is a reasonable expectation
that the Group has adequate resources
to continue in operational existence for
the foreseeable future. For this reason
the Directors continue to adopt the
going concern basis in preparing the
financial statements.
The Board uses this and the Directors’ report
on pages 20 to 24 to present a balanced and
understandable assessment of the Group’s
position and prospects. The Directors’
responsibility for the financial statements
is described on page 24.
(ii) Internal control
The Board confirms that it has established
the procedures necessary to implement
the guidance set out in “Internal Control:
Guidance for Directors on the Combined
Code”. The process of risk identification,
evaluation and management has been
considered by the Board. It is the intention
that this will continue to be kept under
constant review and will be considered
at each Board meeting in the future. The
Board is continuing to take steps to embed
internal control and risk management
further into the operations of the business
and to deal with areas of improvement
which come to management and the
Board’s attention.
The Directors acknowledge their
responsibilities for the Group’s system
of internal financial control. Such a system
can provide reasonable but not absolute
assurance against material misstatement
or loss. The Board confirms that the
procedures necessary to comply with
the provisions of the code, including the
guidance of Turnbull, have been in place
throughout the period ended 30 June 2009
and up to the date of the Directors’ report.
It has considered the major business risks
and the control environment. Important
control procedures, in addition to the day
to day supervision of the business, include
comparison of monthly management
accounts to the budget.
dotDigital Group Annual Report and Accounts 2008/2009
16
Audit Committee report
” I’d tried two other providers before
I found dotCommerce. The flexible
ecommerce site they delivered has
helped Fastfix to become the UK’s
leading online supplier in our sector.
Use them.”
Fastfixdirect.co.uk
The role of the Audit Committee
Composition of the Audit Committee
The Audit Committee is a sub-committee
of the Board whose responsibilities include:
• Reviewing the half-yearly and full year
accounts and results announcements
of the Company and any other formal
announcements relating to the Company’s
financial performance and recommending
them to the Board for approval;
The Audit Committee comprises the two
independent Non Executive Directors,
Nicholas Nelson and David Pacy and an
Executive Director, Ian (“Tink”) Taylor. The
Chairman of the Audit Committee is Nicholas
Nelson. The Committee meets separately with
the external Auditors without management
being present. The Company Secretary
is secretary to the Audit Committee.
• Reviewing the Group’s systems for internal
financial control and risk management;
Main activities of the Audit Committee
• Monitoring and reviewing the effectiveness
of the Group’s internal accounting function
and considering regular reports which arise;
• Considering the appointment of the external
Auditors, overseeing the process for their
selection and making recommendations
to the Board in relation to their appointment
to be put to Shareholders for approval at a
general meeting;
• Monitoring and reviewing the effectiveness
and independence of the external Auditors,
agreeing the nature and scope of their
audit, agreeing their remuneration, and
considering their reports on the Group’s
accounts, reports to Shareholders and
their evaluation of the systems of internal
financial control and risk management.
At its meeting on the 15 October 2009 the
Committee reviewed the Group’s preliminary
announcement of its results for the financial
year 30 June 2009 and the draft report
and accounts for that year. The Committee
received reports from the external Auditors
on the conduct of their audit, their review
of the accounts, including accounting policies
and areas of judgement, and their comments
on risk management and control matters.
The Group’s corporate social responsibility
reporting arrangements and procedures
were also reviewed.
The external Auditors also presented their
proposed fees and scope for the forthcoming
year’s audit. The Committee also reviewed the
performance of both the internal accounting
function and external Auditors. The review of
the external Auditors was used to confirm the
appropriateness of their reappointment and
included assessment of their independence,
qualification, expertise and resources, and
effectiveness of their audit process.
www.dotdigitalgroup.com
17
Internal management accounting
The Audit Committee reviewed the
performance of the internal accounting
function, the department’s resource
requirements and also approved the internal
budgets for the year ending 30 June 2010
which appeared both prudent and realistic
in the context of the Group’s ambitions.
Approved by the Audit Committee
Signed on its behalf by:
Nicholas Nelson
Chairman of the Audit Committee
” dotMailer’s customer orientation
is key to our partnership: it is a
two way communication that is
constantly developing. We look
for new solutions for DHL’s
requirements, that can also benefit
other dotMailer customers.”
DHL European Headquarters
The Audit Committee also reviewed the
effectiveness of the Company’s systems for
internal financial control and risk management.
The Committee reviewed the Group’s credit
control procedures and risks concerning
IT controls.
Independence of external Auditors
Both the Board and the external Auditors have
safeguards in place to avoid the possibility that
the Auditors’ objectivity and independence
could be compromised. Our policy in respect
of services provided by the external Auditors
is as follows:
• Audit related services – the external
Auditors are invited to provide services
which, in their position as Auditors,
they must or are best placed to undertake.
This includes formalities relating to
borrowings Shareholders’ and other circulars,
various other regulatory reports and work
in respect of acquisitions and disposals;
• Tax consulting – in cases where they are
best suited, we use the external Auditors.
All other significant tax consulting work
is put out to tender;
• General consulting – in recognition
of public concern over the effect
of consulting services in Auditors’
independence, our policy is that the
external Auditors are not invited to
tender for general consulting work.
dotDigital Group Annual Report and Accounts 2008/2009
18
Remuneration Committee report
The Remuneration Committee
Directors’ emoluments
The Remuneration Committee was established
to keep under review the remuneration and
terms of employment of Executive Directors
and to recommend such remuneration and
terms and changes thereof to the Board.
The Committee’s composition, responsibilities
and operation comply with the Combined
Code. In forming its remuneration policy,
the Committee confirms that it has complied
with the Combined Code. The Committee
comprised of Nicholas Nelson (Chairman),
David Pacy and Peter Simmonds. Peter
Simmonds being an Executive Director
cannot comment upon his own remuneration.
Executive Director’s
P. Simmonds
I. Taylor
S. Bird
D. Ivy
Executive Director’s
P. Simmonds
I. Taylor
S. Bird
D. Ivy
Directors’ interests
Executive Director
Frank Nominees Ltd *
I. Taylor
S. Bird
D. Ivy
Remuneration policy
The Group’s executive remuneration policy
objectives are:
(a) To ensure that individual rewards and
incentives are directly aligned with the
performance of the Group and that of
the interests of the Shareholders; and
(b) To maintain a competitive program which
enables the Group to attract and retain
high caliber Executives.
www.dotdigitalgroup.com
14 month period ended 30 June 2009
Salary/Fees
102,667
98,380
98,380
98,380
397,807
Benefits
13,356
–
–
–
13,356
Bonus
25,000
20,000
20,000
20,000
85,000
Pension
3,667
7,269
7,269
7,269
Total
144,690
125,649
125,649
125,649
25,474 521,637
12 month period ended 30 April 2008
Salary/Fees
7,333
18,000
18,000
18,000
61,333
Benefits
1,156
–
–
–
1,156
Bonus
–
–
–
–
–
Pension
–
4,035
4,035
4,035
12,105
Total
8,489
22,035
22,035
22,035
74,594
Number of Shares
held as at 30.6.09
65,300,000
304,300,000
304,300,000
304,300,000
978,200,000
%
holding
5.05
23.36
23.36
23.36
75.13
* Frank Nominees Limited acts as nominee for Alliance Trust Pensions Limited, which is the
trustee of a SIPP established by Peter Anthony Simmonds. Frank Nominees is the vehicle used
by Kleinwort Benson Limited to hold securities for clients, trusts, SIPP’s etc. The beneficiary of
the SIPP is Peter Anthony Simmonds.
Directors’ interests in Share Options
Executive Director
P. Simmonds
Number of
Share Option
Grant date
granted
1.4.2008 41,667,667
Option
price
(pence)
0.24
Date
first
exercisable
Expiry
date
1.6.08 31.12.2012
19
Service contracts
Employee Incentive Schemes
On 7 January 2009, the Executive Directors
each entered into a service contract with
the Group, the terms of which commenced
upon Admission to PLUS Markets on the
2 February 2009. Each appointment runs for
one year from that date and is terminable by
six months’ notice by either party to expire at
the end of that year or at any time thereafter.
The agreement contains restrictive covenants.
Upon termination, no benefits (other than
those accruing during the notice period)
are due to the Director.
The Group has awarded share options
under EMI, approved share option schemes
to key employees who had completed
their probation period at the date of the
reverse acquisition. The Board considers the
performance of staff in conjunction with the
Group during the, bi-annual review process.
Discretionary bonuses are awarded based
on individual and Group performance.
Approved by the Remuneration Committee.
Signed on its behalf by:
” I first started using dotMailer
seven years ago. I was tasked with
identifying the most cost-effective,
creative and efficient solution to our
email marketing and chose dotMailer.”
B Commercial Limited
Directors’ interests
The respective interests, all of which are
beneficial, in the shares of the Company
for the members of the Board at the year
end and subsequent to that date are stated
in the table opposite:
Directors’ interests in Share Options
Under the Group’s executive share option
scheme the following Directors have the
right to acquire Ordinary Shares.
The options that were originally granted on
1 April 2008 which were for Ordinary Shares
in dotMailer Limited have been converted
on 1 February 2009 upon the reverse
acquisition of dotDigital Group PLC (formerly
known as West End Ventures PLC) and are
exercisable on or before 31 December 2012.
See table opposite.
Nicholas Nelson
Chairman of Remuneration Committee
” I’m so impressed with your
commitment in helping to
get us started, and with all the
things dotMailer can do.”
Strutt & Parker LLP
dotDigital Group Annual Report and Accounts 2008/2009
20
Report of the Directors’
The Directors present their report with
the financial statements of the Company
and the Group for the period 1 May 2008
to 30 June 2009.
Change of name
The Group passed a special resolution on
30 January 2009 changing its name from
West End Ventures Plc to dotDigital Group Plc.
Principal activity
The principal activity of the Group in
the period under review was that of
digital marketing.
Business review and future developments
On 30 January 2009 the dotDigital Group Plc
completed a reverse takeover of dotMailer
Limited. dotMailer’s core business was that
of digital marketing consisting of a numerous
brands that dealt with email marketing,
web design, development, consultancy and
content management systems.
Prior to the reverse takeover the dotDigital
Group Plc was known as West End Ventures Plc
who’s principle activity was that of being an
investment vehicle in the media industry.
During 2008/09 the business has shown
itself being resilient in the face of the current
economic climate and has benefited from
traditional marketing spend being on offline
media to online digital marketing.
During the period, the Group has shown
significant growth with the success of its
leading edge internet technology achieving
an increase in revenue of 91% from £2.47m
in 2008 to £4.72m in 2009 and a pre tax
profit of £1.08m showing an increase of 45%
to prior year.
An event resulting in a hosting centre going
off-line for any significant period of time or
the termination of provision of services by
one of those hosting centres for any reason
may result in significant loss of revenues and
therefore materially harm the Group’s business,
operating results and financial condition.
Key performance indicators
The operations as a whole and the individual
business units are managed and controlled
using a variety of key performance indicators
appropriate to the goals they have
been set. Examples of key performance
indicators include:
• New client wins;
• Sales targets by individual and business unit;
• Management of costs against budget;
• Customer satisfaction;
• Growth in headcount;
• Renewal and retention rate of customers;
• Product features released;
• Control of working capital.
Similarly, events preventing or obstructing
the servers from communicating over the
internet, such as the future availability of a
finite number of IP addresses, may restrict the
capacity of the business.
(ii) ISP reputation related risks
A significant proportion of the Group’s revenue
is currently derived by charging a price per
email for sending marketing emails on behalf
of commercial marketing departments.
The largest volume senders of emails tend
to be companies sending to consumers.
Consequently some of dotMailer’s largest
customers send large numbers of emails
to consumers.
Key risks and uncertainties
(i) Supplier, computer hardware
and internet reliability related risks
The Group rents space for its servers located
at hosting centers and purchases bandwidth
from service providers in the UK to run the
software and services it supplies. Although,
it spreads the risk of computer hardware failure
across multiple servers in multiple hosting
centers and, to date, there have been no
significant failures, there is no assurance
of continuity of supply.
The EU anti-spam regulations and US
CAN_SPAM laws place restrictions on what
and when companies are allowed to send
marketing emails to consumers. dotMailer
rents the use of its software and servers for
clients to upload their own email lists and
send their email marketing campaigns.
dotMailer does not own lists or provide third
people’s data and is therefore not directly
liable for any breaches of the EU or US anti-
spam regulations. However, where clients are
considered by email recipients to be sending
unwanted emails, there is an inherent
www.dotdigitalgroup.com
21
‘ During the period, the Group has shown
significant growth with the success of its
leading edge internet technology achieving
a pre tax profit of £1.08m showing an
increase of 45% to prior year.’
mechanism within most email clients to make
a complaint against the sender. The level or
number of complaints is recorded by the
larger ISP’s (Hotmail, Yahoo, AOL etc) against
the IP address of the server sending the email;
this complaint rate record establishes the
reputation of each IP address. An IP address
with a poor reputation may not get a high
level of delivery of emails.
dotMailer closely audits the complaint rates
for each of its clients and reacts quickly
and accordingly to stop rogue campaigns.
However, if too many new clients create
and send campaigns which attracted high
complaint rates, the reputation of dotMailer’s
sending IP addresses could be diminished.
This diminished reputation could affect
dotMailer’s ability to win or retain new clients
and therefore could significantly affect its
planned growth in revenues.
dotMailer also faces risks from commercial
and non-commercial anti spam services.
There are a number of organisations who
provide a service to individuals and companies
to help them reduce spam in their inbox
examples include Spamhaus and Spamcop.
These organisations allow individuals to report
an email as spam. This reporting can rapidly
propagate the blacklisting of an IP address or
domain used to send the reported email. This
could impact on dotMailer’s ability to deliver
emails on behalf of other clients which could
in turn impact on revenues.
It is also to be noted that as the ISP
communities adopt ever tougher measures
to deal with the problem of spam, there is
a risk that genuine marketing emails could
be falsely labelled as spam and do not get
delivered to the intended recipients.
(iii) Hacking & information security
In the opinion of the Group’s Directors, the
technical team take sensible precautions
against intrusions and loss of data. dotMailer
employs a security manager to mitigate this
risk. However, there always is a possible risk
that a hacking attack could result in a denial
of service or loss of data.
(iv) Competitive environment
Although, the Group’s revenues
have consistently grown year on year,
it competes in a competitive sector.
Some of its competitors and potential
competitors may have advantages over
it in terms of financial backing, business
size, broader brand recognition and
globally in terms of coverage of geographic
markets. Their capacity to leverage their
marketing expenditures across a broader
range of potential customers, form
relationships with brand owners or make
acquisitions of complimentary products
inherently increases the risk to the Group‘s
business model.
(v) Hire and retain key personnel
The Group depends on the continued
contributions of the Group’s senior
management and other key personnel.
The loss of the services of any of these
Executive Officers or other key employees
could harm the Group’s business.
The future success of the Group also depends
on its ability to identify, attract and retain
highly skilled technical, managerial and
sales personnel.
The Group faces intense competition
for qualified individuals from numerous
technology and marketing companies
(vi) Development of products
The digital marketing industry is a fast paced
and rapidly adopts developing technologies.
In order to stay competitive the Group needs to
deploy resources to research and development
activity and to constantly innovate.
Whilst the Group will continue to strive
to ensure it is able to deliver products and
services that meet the needs of its target
clients there is a risk that competitors may
be first to the market with products that entice
clients away from dotMailer.
The Group’s growth will depend upon
the development, commercialisation and
marketing of new products. If this is not done
successfully, then the growth of the Group may
be impaired. There is also a risk that this activity
may not result in leading edge or competitive
products being brought to market in time to
maintain a competitive advantage.
dotDigital Group Annual Report and Accounts 2008/2009
22
Report of the Directors’ continued
Future outlook
Directors’ interests
The marketplace for our services has remained
robust as we move into the current financial
year. The Group’s customer base has continued
to grow and the response to our broadened
offering, introduced last year, encouraging.
The Directors who served during the period
and their beneficial interests in the shares
of the Group as recorded in the register of
Directors’ interests at 30 June 2009 are as
presented in Table A opposite.
The Directors who served during the period
and their beneficial interests in share options
in the Group, as recorded in the register of
Directors’ interests as at 30 June 2009 are
presented in Table B opposite.
Substantial interests
On 10 October 2009, the following parties
outlined in Table C, had notified the Group of
a beneficial interest that represents 5% or more
of the Group’s issued share capital at that date.
Group’s policy on payment of creditors
The Group does not have a formal code that
it follows with regard to payments to suppliers.
It agrees payments terms with its suppliers
at the time it enters in to binding purchasing
contracts for the supply of goods and services.
The Company seeks to abide by these
payment terms whenever if is satisfied that the
supplier has provided the goods or services in
accordance with agreed terms and conditions.
The average days credit for the year is 25 (2008:
18 days).
We maintain a strong cash position and have
an eye towards an expansion of our services
through acquisition with a number of targets
already under review.
Recognition of our brand is now widespread
within the marketing sector and we believe
that the coming year will present opportunities
to expand and diversify profitably with
only incremental increase in overhead cost.
Accordingly, we look forward to the year
with confidence.
Dividends
The total distribution of dividends for the
period ended 30 June 2009 was £118,800.
These dividends were distributed prior to
the reverse acquisition.
Directors
The Directors during the period under
review were:
S. Bird
D. Ivy
N. Nelson
D. Pacy
P. Simmonds
I. Taylor
S. Moloney
G. Fidura
appointed 30.1.09
appointed 30.1.09
(and resigned 10.9.09)
–
–
appointed 30.1.09
appointed 30.1.09
resigned 9.2.09
appointed 1.7.09
” I am so pleased. It does everything
I need it to and the results I am
getting are brilliant. It’s just fantastic.”
Sophos Plc
www.dotdigitalgroup.com
23
Table A
Directors
S. Bird
D. Ivy
I. Taylor
P. Simmonds*
N. Nelson**
D. Pacy
S. Moloney***
As at 30.6.09 Shareholding As at 30.6.08 Shareholding
Number
%
%
–
–
23.36
–
–
23.36
–
–
23.36
–
5.01
–
9.13
2.12 27,625,000
12.40
2.88 37,500,000
4.13
0.43 12.500,000
Number
304,300,000
304,300,000
304,300,000
65,300,000
27,625,000
37,500,000
5,500,000
*
**
Peter Simmonds is beneficially entitled to 65,300,000 Ordinary Shares which are owned by
Alliance Trust Pension Limited.
Nicholas Nelson is beneficially entitled to 2,625,000 Ordinary Shares which are owned by
The Thames Investment Club.
Table B
Executive Director
P. Simmonds
As at 30.6.09 Shareholding As at 30.6.08 Shareholding
%
%
–
3.10*
Number
41,666,667
Number
–
* Percentage shareholding represents the percentage of the shares issued should be no more
than the existing shares and those exercisable at the balance sheet date.
Table C
Shareholders
Frank Nominees Ltd*
I. Taylor
S. Bird
D. Ivy
Pershings Nominees Limited
Number of Shares
65,300,000
304,300,000
304,300,000
304,300,000
64,796,429
% holding
5.01
23.36
23.36
23.36
5.00
* Frank Nominees Limited acts as nominee for Alliance Trust Pensions Limited, which is the
trustee of a SIPP established by Peter Anthony Simmonds. Frank Nominees is the vehicle used
by Kleinwort Benson Limited to hold securities for clients, trusts, SIPP’s etc. The beneficially of
the SIPP is Peter Anthony Simmonds.
dotDigital Group Annual Report and Accounts 2008/2009
24
Report of the Directors’ continued
Publication of accounts on
Company website
Auditors
The Auditors, Jeffreys Henry LLP, will be
proposed for re-appointment at the
forthcoming Annual General Meeting.
Statement of Directors’ responsibilities
The Directors are responsible for preparing
the Report of the Directors’ and the financial
statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare
financial statements for each financial year.
Under that law the Directors have elected to
prepare the financial statements in accordance
with International Financial Reporting
Standards as adopted for use in the European
Union. Under Company law the Directors must
not approve the financial statements unless
they are satisfied that they give a true and fair
view of the state of affairs of the Company and
the Group and of the profit or loss of the Group
for that period. In preparing these financial
statements, the Directors are required to:
• Select suitable accounting policies and
then apply them consistently;
• Make judgements and accounting
estimates that are reasonable and prudent;
• Prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Company will continue in business;
Financial statements are published on the
Company’s website. The maintenance and
integrity of the website is the responsibility
of the Directors. The Directors’ responsibility
also extends to the financial statements
contained therein.
Indemnity of Officers
The Group may purchase and maintain,
for any Director or Officer, insurance against
any liability and the Group does maintain
appropriate insurance cover against
legal action bought against its Directors
and Officers.
Financial instruments
Details of the Group’s risk management
objectives and policies together with its
exposure to financial risk are set out in
note 21 to the financial statements.
The purpose of the policies is to ensure that
adequate cost effective funding is available
to the Group and exposure to financial
risk – interest rate, liquidity and credit risk –
is minimised.
Going concern
After making appropriate enquiries, the
Directors consider that the Company and the
Group has adequate resources to continue
in operational existence for the foreseeable
future. For this reason they continue to adopt
the going concern basis in preparing the
financial statements.
www.dotdigitalgroup.com
• State whether the Group and parent
Company financial statements have been
prepared in accordance with IFRSs as
adopted by the European Union subject
to any material departures disclosed and
explained in the financial statements.
The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the Company’s
and the Group’s transactions and disclose with
reasonable accuracy at any time the financial
position of the Company and the Group and
enable them to ensure that the financial
statements comply with the Companies Act
2006 and as regards to the Group financial
statements, Article 4 of the IAS regulation. They
are also responsible for safeguarding the assets
of the Company and the Group and hence for
taking reasonable steps for the prevention and
detection of fraud and other irregularities.
Statement as to disclosure
of information to Auditors
So far as the Directors are aware, there is no
relevant audit information (as defined by
Section 418 of the Companies Act 2006) of
which the Group’s Auditors are unaware, and
each Director has taken all the steps that he
ought to have taken as a Director in order
to make himself aware of any relevant audit
information and to establish that the Group’s
Auditors are aware of that information.
On behalf of the Board:
Peter Simmonds
Director
15 October 2009
25
dotDigital Group Annual Report and Accounts 2008/2009
26
Independent Auditors’ Report
We have audited the Group and Company
financial statements of dotDigital Group Plc
for the period ended 30 June 2009 which
comprise of the consolidated statement
of comprehensive income, consolidated
statement of financial position, consolidated
statement of changes in equity, statement
of changes in equity, consolidated cash flows
and the related notes on pages 28 to 55.
The financial reporting framework that has
been applied in their preparation is applicable
law and International Financial Reporting
Standards (IFRSs) as adopted for use in the
European Union, and as regards the parent
Company financial statements, as applied
in accordance with the provisions of the
Companies Act 2006.
This report is made solely to the Company’s
members, as a body, in accordance with
Sections 495 and 496 of the Companies Act
2006. Our audit work has been undertaken
so that we might state to the Company’s
members those matters we are required to
state to them in a Report of the Auditors
and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume
responsibility to anyone other than the
company and the Company’s members as
a body, for our audit work, for this report,
or for the opinions we have formed.
Respective responsibilities of Directors
and Auditors
As explained more fully in the Statement
of Directors’ Responsibilities set out on
page 24, the Directors are responsible for the
preparation of the financial statements and
for being satisfied that they give a true and fair
view. Our responsibility is to audit the financial
statements in accordance with applicable
law and International Standards on Auditing
(UK and Ireland). Those standards require us
to comply with the Auditing Practices Board’s
Ethical Standards for Auditors.
Scope of the audit of the financial
statements
An audit involves obtaining evidence about
the amounts and disclosures in the financial
statements sufficient to give reasonable
assurance that the financial statements are
free from material misstatement, whether
caused by fraud or error. This includes an
assessment of: whether the accounting
policies are appropriate to the Group’s and
the parent Company’s circumstances and
have been consistently applied and adequately
disclosed; the reasonableness of significant
accounting estimates made by the Directors;
and the overall presentation of the
financial statements.
www.dotdigitalgroup.com
27
Opinion on financial statements
In our opinion:
• The financial statements give a true and
fair view of the state of the Group’s and the
parent Company’s affairs as at 30 June 2009
and of the Group’s profit for the period
then ended;
• The Group financial statements have been
properly prepared in accordance with IFRSs
as adopted for use in the European Union;
• The parent Company financial
statements have been properly prepared
in accordance with IFRSs as adopted for
use in the European Union and as applied
in accordance with the provisions of the
Companies Act 2006; and
• The financial statements have been
prepared in accordance with the
requirements of the Companies Act
2006 and as regards the Group financial
statements, Article 4 of the IAS regulation.
Opinion on other matter prescribed
by the Companies Act 2006
Matters on which we are required
to report by exception
We have nothing to report in respect of
the following matters where the Companies
Act 2006 requires us to report to you if,
in our opinion:
• Adequate accounting records have not
been kept by the parent Company, or
returns adequate for audit have not been
received from branches not visited by us; or
• The parent Company financial statements
are not in agreement with the accounting
records and returns; or
• Certain disclosures of Directors’ remuneration
specified by law are not made; or
• We have not received all the information
and explanations we require for our audit.
Sanjay Parmar
Senior Statutory Auditor
For and behalf of Jeffreys Henry LLP
• The information given in the Report of the
Directors’ for the financial year for which
the financial statements are prepared is
consistent with the financial statements.
Finsgate, 5-7 Cranwood Street
London
EC1V 9EE
15 October 2009
dotDigital Group Annual Report and Accounts 2008/2009
28
Consolidated income statement
Consolidated income statement
for the period 1 May 2008 to 30 June 2009
for the period 1 May 2008 to 30 June 2009
Continuing operations
Revenue
Administrative expenses
Operating profit
Finance costs
Finance income
Profit from continuing operations
before income tax
Income tax
Profit after income tax
Profit attributable to:
Owners of the parent
Earnings per share expressed
in pence per share:
Basic
Diluted
Consolidated statement of comprehensive income
for the period 1 May 2008 to 30 June 2009
Profit for the period
Other comprehensive income
Total comprehensive income for the period
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interests
www.dotdigitalgroup.com
Period
1.5.08 to
30.6.09
£
Year ended
30.4.08
£
Note
2
5
4
4
5
6
9
4,718,290
(3,652,199)
2,474,365
(1,748,228)
1,066,091
726,137
(864)
15,088
(3,332)
24,578
1,080,315
(184,808)
747,383
(180,383)
895,507
567,000
895,507
567,000
0.14
0.13
0.19
0.19
Note
Period
1.5.08 to
30.6.09
£
895,507
–
895,507
Year ended
30.4.08
£
567,000
–
567,000
895,507
–
567,000
–
Consolidated statement of financial position
Consolidated statement of financial position
30 June 2009
30 June 2009
Assets
Non-current assets
Goodwill
Intangible assets
Property, plant and equipment
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity
Shareholders’ equity
Called up share capital
Share premium
Reverse acquisition reserve
Other reserves
Retained earnings
Total equity
Liabilities
Non-current liabilities
Financial liabilities – borrowings
Interest bearing loans and borrowings
Current liabilities
Trade and other payables
Financial liabilities – borrowings
Interest bearing loans and borrowings
Tax payable
Total liabilities
Total equity and liabilities
29
Period
1.5.08 to
30.6.09
£
Year ended
30.4.08
£
Note
10
11
12
14
15
16
17
17
17
17
19
18
19
608,503
259,675
119,052
–
12,282
125,861
987,230
138,143
655,304
1,677,902
444,668
684,493
2,333,206
1,129,161
3,320,436
1,267,304
1,292,500
4,533,754
(4,695,465)
5,302
1,552,372
292,500
533,754
(826,162)
–
775,665
2,688,463
775,757
18,228
–
416,811
304,225
12,152
184,782
613,745
6,939
180,383
491,547
631,973
491,547
3,320,436
1,267,304
The financial statements were approved by the Board of Directors on 15 October 2009 and were signed on its behalf by:
Peter Simmonds
Director
Company registration number – 06289659 (England and Wales)
dotDigital Group Annual Report and Accounts 2008/2009
30
Company statement of financial position continued
30 June 2009
Assets
Non-current assets
Investments
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity
Shareholders’ equity
Called up share capital
Share premium
Other reserves
Retained losses
Total equity
Liabilities
Current liabilities
Trade and other payables
Total liabilities
Total equity and liabilities
Note
30.6.09
£
30.6.08
£
13
5,183,488
5,183,488
–
–
14
15
16
17
17
17
18
2,712
564,531
567,243
10,803
821,557
832,360
5,750,731
832,360
1,292,500
4,533,754
5,302
(148,728)
292,500
533,754
–
(85,372)
5,682,828
740,882
67,903
67,903
91,478
91,478
5,750,731
832,360
The financial statements were approved by the Board of Directors on 15 October 2009 and were signed on its behalf by:
Peter Simmonds
Director
Company registration number – 06289659 (England and Wales)
www.dotdigitalgroup.com
Consolidated statement of changes in equity
for the period 1 May 2008 to 30 June 2009
Balance at 1 May 2007
Changes in equity
Issue of share capital
Dividends
Total comprehensive income
Reverse acquisition
Balance at 30 April 2008
Changes in equity
Issue of share capital
Dividends
Total comprehensive income
Balance at 30 June 2009
Balance at 1 May 2007
Changes in equity
Issue of share capital
Dividends
Total comprehensive income
Reverse acquisition
Balance at 30 April 2008
Changes in equity
Issue of share capital
Dividends
Total comprehensive income
Reverse acquisition
Share option adjustment
Balance at 30 June 2009
31
Share
capital
£
–
292,500
–
–
–
292,500
1,000,000
–
–
Called up
retained
earnings
£
546,465
–
(337,800)
567,000
–
775,665
–
(118,800)
895,507
Share
premium
£
–
533,754
–
–
–
533,754
4,000,000
–
–
1,292,500
1,552,372
4,533,754
Reverse
acquisition
reserve
£
–
–
–
–
(826,162)
(826,162)
–
–
–
(3,869,303)
–
Other
reserves
£
–
–
–
–
–
–
Total
equity
£
546,465
826,254
(337,800)
567,000
(826,162)
775,757
–
–
–
–
5,302
5,000,000
(118,800)
895,507
(3,869,303)
5,302
(4,695,465)
5,302
2,688,463
Share capital is the amount subscribed for shares at nominal value.
Share premium represents the excess of the amount subscribed for share capital over the nominal value of the respective shares net of share
issue expenses.
Retained earnings represents the cumulative earnings of the Group attributable to equity Shareholders.
The reverse acquisition reserve relate to the adjustment required by accounting for the reverse acquisition in accordance with
International Financial Reporting Standard 3.
Other reserves relate to the charge for share-based payment in accordance with the International Financial Reporting Standard 2.
dotDigital Group Annual Report and Accounts 2008/2009
32
Company statement of changes in equity
for the period 1 May 2008 to 30 June 2009
Balance at 1 July 2007
Changes in equity
Issue of share capital
Total comprehensive income
Balance at 30 June 2008
Changes in equity
Issue of share capital
Total comprehensive income
Share option adjustment
Balance at 30 June 2009
Called up
share
capital
£
–
292,500
–
292,500
1,000,000
–
–
Retained
losses
£
–
–
(85,372)
(85,372)
–
(63,356)
–
Share
premium
£
–
533,754
–
533,754
Other
reserves
£
–
–
–
–
Total
equity
£
–
826,254
(85,372)
740,882
4,000,000
–
–
–
–
5,302
5,000,000
(63,356)
5,302
1,292,500
(148,728)
4,533,754
5,302
5,682,828
Share capital is the amount subscribed for shares at nominal value.
Share premium represents the excess of the amount subscribed for share capital over the nominal value of the respective shares net
of share issue expenses.
Retained losses represents the cumulative losses of the Company attributable to equity Shareholders.
Other reserves relate to the charge for share-based payment in accordance with the International Financial Reporting Standard.
www.dotdigitalgroup.com
Consolidated statement of cash flows
for the period 1 May 2008 to 30 June 2009
Cash flows from operating activities
Cash generated from operations
Interest paid
Tax paid
Net cash from operating activities
Cash flows from investing activities
Purchase of goodwill
Purchase of intangible fixed assets
Purchase of tangible fixed assets
Interest received
Funds acquired from acquisition
Net cash from investing activities
Cash flows from financing activities
New loans in year
Amount introduced by directors
Amount repaid to directors
Equity dividends paid
Net cash from financing activities
33
Note
26
Period
1.5.08 to
30.6.09
£
948,297
(864)
(180,435)
Year ended
30.4.08
£
729,605
(3,332)
(67,598)
766,998
658,675
(39,183)
(295,670)
(62,371)
15,088
765,105
–
–
(76,182)
24,578
–
382,969
(51,604)
23,441
–
(61,199)
(118,800)
1,253
64,167
–
(337,800)
(156,558)
(272,380)
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
993,409
684,493
1,677,902
27
27
334,691
349,802
684,493
dotDigital Group Annual Report and Accounts 2008/2009
34
Notes to the consolidated financial statements
for the period 1 May 2008 to 30 June 2009
General information
dotDigital Group Plc (“dotDigital”) is a
Company incorporated in England and Wales
and quoted on the PLUS Markets. The address
of the registered office is disclosed on page
56 of the financial statements. The principal
activity of the Group is described on page 20.
The Company changed to its present name on
30 January 2009 upon the successful reverse
acquisition of dotMailer Limited.
1. Accounting policies
Basis of preparation
These financial statements have been prepared
in accordance with International Financial
Reporting Standards and IFRIC interpretations
and with those parts of the 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.
The financial statements are presented in
Sterling (£), rounded to the nearest pound.
Issued International Financial
Reporting Standards (IFRS’s) and
interpretations (IFRICS) not relevant
to Company operations.
The following interpretations to published
standards is mandatory for accounting periods
beginning on or after 1 May 2008 but are not
relevant to the Group’s operations:
• IFRS 1, IAS 27 (Amendment)– Consolidated
and separate financial statements (effective
from 1 July 2009). The amendment allows
first time adopters of IFRS to use a deemed
cost of either fair value or the carrying
amount under previous accounting practice
to measure the initial cost of investments
in, jointly controlled subsidiaries entities
and associates in the separate financial
statements of the investor. This is not
relevant for the Group as it has already
adopted IFRS.
• IFRS 7 ‘Financial instruments: Disclosures’
and the complementary amendment to
IAS 1 ‘Presentation of financial statements
– Capital disclosures’. IFRS 7 introduces new
disclosure relating to financial instruments.
The standard does not have any impact
on the classification and valuation of the
Group’s financial instruments.
• IAS 32 ‘Financial instruments: Presentation’
and IAS 1 ‘Presentation of financial
statements. Puttable financial instruments
and obligations arising on liquidation’.
Amendments to the standards improve
the accounting for particular types
of financial instruments that have
characteristics similar to ordinary shares
but are at present classified as financial
liabilities for accounting periods on or
after 1 January 2009.
• IAS 39 ‘Financial instruments: Recognition
and measurement’ provide additional
guidance on what can be designated
as a hedge item for accounting periods
beginning on or after 1 July 2009.
• IFRIC 9 ‘Reassement of embedded
derivatives’ and IAS 39 ‘Financial instruments:
Recognition and measurement’.
Amendments clarify the accounting
treatment of embedded derivatives for
entities that make use of the reclassification
amendment issued by the IASB in October
2008 for accounting periods beginning on
or after 30 June 2009.
• IFRIC 11 ‘Group and treasury share
transactions’ (effective from annual
periods beginning on or after March 2007).
The interpretation provides guidance
on whether share based transactions
involving treasury shares or involving
Group entities (for example, options over
parent’s shares) should be accounted for
as equity-settled or cash-settled share based
payment transactions in the parent and
Group accounts.
• IFRIC 16 ‘Hedges of a net investment in a
foreign operation’. This clarifies the following:
a) whether risk arises from foreign currency
exposure to the functional currencies
of a foreign operation, or from foreign
currency exposure to functional currency
of a foreign operation.
b) how an entity should determine the
amounts to be reclassified from equity
to profit and loss for both the hedging
instrument and the hedged item when
an entity disposes the investment.
• IFRIC 17 ‘Distributions of non cash assets
to owners’. Standardises practice in the
measurement of distributions of non cash
assets to owners for accounting periods
beginning on or after 1 July 2009.
• IFRIC 18 ‘Transfers of assets from customers’.
This clarifies the requirements of IFRS’s for
the agreements in which an entity receives
from a customer an item of property, plant
and equipment that the entity must then
use either to connect the customer to
network or to provide the customer with
on going access to a supply of goods or
services. This applies to transfers of assets
from customers received on or after
1 July 2009.
Issued International Financial Reporting
Standards (IFRS’s) and interpretations
(IFRICS) that are not yet effective.
At the date of authorisation of these financial
statements, the following Standards and
Interpretations were in issue, mandatory for
the Company’s accounting periods beginning
on or after 1 May 2009 but not early adopted:
• IFRS 2 (Amendment) ‘Share based
payments’ (effective from 1 May 2009).
The amendment considers vesting
conditions and cancellations. It clarifies that
vesting conditions are service conditions
and performance conditions only.
www.dotdigitalgroup.com
35
Other features of a share based payment
are not vesting conditions. As such these
features would need to be included in the
grant date fair value for transactions with
employees and others providing similar
services, that is, these features would not
impact the number of awards expected
to vest or valuation thereof subsequent
to grant date. It also specifies that all
cancellations, whether by the entity or
by other parties, should receive the same
accounting treatment.
• IFRS 3 (Revised), ‘Business combinations’
(effective from 1 July 2009). The revised
standard continues to apply the acquisition
method to business combinations, with
some significant changes. For example, all
payments to purchase a business are to be
recorded at fair value at the acquisition date,
with contingent payments classified as debt
subsequently re-measured through the
income statement. There is a choice on an
acquisition-by-acquisition basis to measure
the non-controlling interest in the acquiree
either at fair value or at the non-controlling
interest’s proportionate share of the
acquiree’s net assets. All acquisition-related
costs should be expensed. The Group will
apply IFRS 3 (Revised) prospectively to all
business combinations from 1 January 2010.
• IFRS 5 (Amendment), ‘Non-current assets
held-for-sale and discontinued operations’
(and consequential amendment to IFRS 1,
‘First-time adoption’) (effective from 1 July
2009). The amendment is part of the IASB’s
annual improvements project published
in May 2008. The amendment clarifies that
all of a subsidiary’s assets and liabilities are
classified as held for sale if a partial disposal
sale plan results in loss of control. Relevant
disclosure should be made for this subsidiary
if the definition of a discontinued operation
is met. A consequential amendment to
IFRS 1 states that these amendments are
applied prospectively from the date of
transition to IFRSs. The Group will apply
the IFRS 5 (Amendment) prospectively
to all partial disposals of subsidiaries from
1 January 2010.
• IFRIC 12 ‘Service concession arrangements’.
IFRS12 applies to contractual agreements
whereby a private sector operator
participates in the development, financing,
operation and maintenance of infrastructure
for public sector services for example under
PFI contracts.
• IFRIC 13 ‘Customer loyalty programmes’ .
This clarify that where goods are sold
together with a customer loyalty incentive
the arrangement is a multiple element
arrangement and the consideration
receivable from the customer should
be allocated between the components
of the arrangement in proportion to their
fair values.
• IFRIC 14, IAS 19 ‘the limit on defined asset,
minimum funding requirements and their
integration’ . This provides guidance on
assessing the limit in IAS 19 ‘Employee
benefits’ on the amount of the defined
benefit plan surplus that can be recognised
as an asset. It also explains how the
pension asset or liability may be affected
by a statutory or contractual minimum
funding requirement.
• IFRIC 15 ‘Agreements for the construction
of real estates’ . The interpretation clarifies
which standard should be applied to
particular transactions pertaining to
construction of real estates.
• IFRS 8 (Revised) ‘Operating segments’
(effective from 1 January 2009). IFRS
8 replaces IAS 14 and aligns segment
reporting with the requirements of the
US standard SFAS 131, “Disclosures about
segments of an enterprise and related
information”. The new standard requires
a “management approach”, under which
segment information is presented on
the same basis as that used for internal
reporting purposes.
The expected impact is still being assessed
in detail by management, but it appears
likely that the number of reportable
segments, as well as the manner in which
segments are reported, will change in a
manner that is consistent with the internal
reporting provided to the chief operating
decision-maker.
• IAS 23 (Revised) ‘Borrowing costs’ (effective
1 May 2009). The main change from the
previous version is the removal of the option
of immediately recognising as an expense
borrowing costs that relate to assets that
take a substantial period of time to get ready
for use or sale.
Issued International Financial Reporting
Standards (IFRS’s) and interpretations
(IFRICS) relevant to Company operations.
The following interpretations to published
standards is mandatory for accounting periods
beginning on or after 1 May 2008 but have
been adopted early.
• IAS 1 (Revised) ‘Presentation of financial
statements’. Key changes include, the
requirement to aggregate information
in the financial statements on the basis
of shared characteristics, the introduction
of a Statement of Comprehensive Income
and changes in titles of some of the
financial statements.
a) Preparers of financial statements will
have the option of presenting income
and expense and components of other
comprehensive income either in a single
statement or in two separate statements
(a separate income statement followed by
a statement of comprehensive income).
b) The new titles for the financial
statements (for example ‘statement
of financial position’ instead of balance
sheet) will be used in the accounting
standards but are not mandatory for
use in financial statements.
dotDigital Group Annual Report and Accounts 2008/2009
36
Notes to the consolidated financial statements continued
for the period 1 May 2008 to 30 June 2009
c) The expected impact is still being
assessed in detail by management as the
IASB is involved in discussions to examine
more fundamental questions about the
presentation of information in financial
statements.
• 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;
Subsidiaries
A subsidiary is an entity whose operating and
financing policies are controlled by the Group.
Subsidiaries are consolidated from the date on
which control was transferred to the Group.
Basis of consolidation
On 30 January 2009 the Company acquired
via a share for share exchange the entire
issued share capital of dotMailer Limited,
whose principle 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
reflect the retained reserves of dotMailer
Limited to 30 April 2008. However,
in accordance with IFRS 3 ‘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;
• Comparative numbers are based upon the
consolidated financial statements of the
legal subsidiary, dotMailer Limited for the
year ended 30 April 2008 apart from the
equity structure which reflects that of the
parent; and
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.
• dotMailer Limited reported under IFRS
for the year ended 30 April 2008 and such
no reconciliation is provided between UK
GAAP and IFRS;
• 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 then the fair value of
the net assets of the subsidiary acquired,
the difference is recognised directly in the
income statement.
As a result of applying reverse acquisition
accounting, the consolidated IFRS financial
information of dotDigital Group Plc is a
continuation of the financial information
of dotMailer Limited. The retained earnings
shown on the consolidated balance sheet
are those for dotMailer Limited and a
reverse acquisition reserve of £4,695,465
has been created.
Revenue recognition
In making their judgement, the Board of
Directors have considered the detailed criteria
for the recognition of revenue from the sale
of products and services outlined in IAS 18
Revenue, and in particular where the Company
has transferred to the customer the significant
risk and rewards of the ownership of the
products or service. The Board of Directors are
satisfied that recognition of all such revenue
in the current year is appropriate, and that the
significant risks and rewards attached to such
services have been transferred to the buyer.
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.
www.dotdigitalgroup.com
37
Intangible assets (other than goodwill)
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 (five years), with the charge
included in administrative expenses in the
income statement.
Intangible assets are reviewed for
impairment annually.
a) Domain names
Acquired domain names are shown at
historical cost. Domain names have a
finite useful life and are carried at cost
less accumulated amortisation. Amortisation
is calculated using the straight-line method
to allocate the cost of domain names over
their estimated useful lives.
Domain names
25% on cost
(b) Software
Acquired software and websites are shown
at historical cost. They have a finite useful
life and are carried at cost less accumulated
amortisation. Amortisation is calculated
using the straight-line method to allocate
the cost of software and website over their
estimated useful lives.
Computer software 25% on cost
(c) 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
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 finite life. Amortisation is charged
on assets with finite lives, this expense is
taken to the income statement. Useful lives
are also reviewed on an annual basis.
Amortisation is provided at the following
annual rates commencing from the date the
asset are developed to a stage at which the
Company can receive economic benefits
from the asset.
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.
Development costs 20% on cost
Property, plant and equipment
Trade payables
Tangible non-current assets are stated at
historical cost less depreciation. Historical
cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the assets
carrying amount or recognised as a separate
asset, as appropriate, only when it is probable
that future economic benefits 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
annual rates in order to write off each asset
over its estimated useful life.
Short leasehold
Fixtures and fittings
Computer equipment
- 25% on cost
- 25% on cost
- 25% on cost
The asset’s residual values and useful
economic lives are reviewed, and adjusted
if appropriate, at each balance sheet 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.
When revalued assets are sold, the amounts
included in other reserves are transferred to
retained earnings.
Trade payables are recognised initially at
fair value and subsequently measured at
amortised cost using the effective interest
method.
Borrowings
Borrowings are recognised at their fair value
net of transaction costs incurred. They are
classified as current liabilities unless the
Group has an unconditional right to defer the
settlement of the liability of at least 12 months
after the balance sheet date.
Borrowing costs are recognised in the income
statement in the period in which they are
incurred.
Taxation
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 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 they related deferred
income asset is realised or deferred income
tax liability is settled.
dotDigital Group Annual Report and Accounts 2008/2009
38
Notes to the consolidated financial statements continued
for the period 1 May 2008 to 30 June 2009
Research and development
Operating leases
Pension contributions
Rentals paid under operating leases are
charged to the income statement on a straight
line basis over the period of the lease.
Functional currency translation
The Group operates a defined contribution
pension scheme. Contributions payable to
the Group’s pension scheme are charged to
the income statement in the period to which
they relate.
i) Functional and presentation currency
Use of estimates and judgements
Research expenditure is recognised as an
expense when incurred. 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
of 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;
• 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.
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 its useful life.
Items included in the financial statements
of the Company are measured using
the currency of the primary economic
environment in which the entity operates
(the functional currency), which is mainly
Pounds Sterling (£). The financial statements
are presented in Pounds Sterling (£), which
is the Company’s presentation currency.
ii) Transactions and balances
Foreign currency transactions are translated
into the presentational 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 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.
Share capital
Segment reporting
Ordinary Shares are classified as equity in
the balance sheet and are recorded at the
proceeds received net of the direct issue costs.
A business segment is a Group of assets and
operations engaged in providing products or
services that are subject to risks and returns
that are different from those of other business
segments. A geographical segment is engaged
in providing products or services within a
particular economic environment that are
subject to risks and returns that are different
from those of segments operating in other
economic environments.
www.dotdigitalgroup.com
The Group makes judgements, estimates and
assumptions that effect the application of
policies and reported amounts of assets and
liabilities, income and expenses. The
resulting accounting estimates calculated
using these judgements and assumptions
will, by definition, seldom equal the related
actual results but are based on historical
experience and expectations of future events.
The estimates and underlying assumptions
are reviewed on a ongoing basis. Revisions
to accounting estimates are recognised in
the period in which the estimate is revised
if the revision effects only that period, or
in the period of revision and future periods
if the revision affects both current and
future periods.
The estimates and assumptions which
have a significant risk of causing a material
adjustment to the carrying amount of assets
and liabilities are discussed below:
(a) Impairment of goodwill
The Group is required to test, at least
annually, whether goodwill has suffered
any impairment. The recoverable amount
is determined based on value in use
calculations. The use of this method
requires the estimation of future cash
flows and the choice of a suitable discount
rate in order to calculate the present
value of these cash flows. Actual
outcomes could vary.
39
(b) Impairment of intangibles
(other than goodwill)
Intangible assets are reviewed for
impairment if events or changes in
circumstances indicate that the carrying
amount may not be recoverable. When a
review for impairment is conducted, the
recoverable amount is determined based
on value in use calculations prepared on
the basis of management’s assumptions
and estimates.
(c) Impairment of property,
plant and equipment
Property, plant and equipment are reviewed
for impairment if events or changes in
circumstances indicate that the carrying
amount may not be recoverable. When a
review for impairment is conducted, the
recoverable amount is determined based
on value in use calculations prepared on
the basis of management’s assumptions
and estimates.
(d) Amortisation of intangibles
Amortisation is provided so as to write
down the assets to their residual values
over their estimated useful lives as set
out above. The selection of these residual
values and estimated lives requires the
exercise of management judgement.
(e) Depreciation of property,
plant and equipment
Depreciation is provided so as to write
down the assets to their residual values
over their estimated useful lives as set
out above. The selection of these residual
values and estimated lives requires the
exercise of management judgement.
(f) Share-based compensation
The fair value of options and warrants
are determined by reference to the fair
value of the options granted, excluding
the impact of any non-market vesting
conditions (for example, profitability and
sales growth targets). Non-market vesting
conditions are included in assumptions
about the number of options that are
expected to vest. At each balance sheet
date, the entity revises its estimates
of the number of options that are expected
to vest. It recognises the impact of the
revision to original estimates, if any, in the
income statement, with a corresponding
adjustment to equity.
Share based payments
For equity settled share based payment
transactions the Company in accordance with
IFRS 2 “Share Based Payments” measuring
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 are expected to vest and
the fair value of those financial instruments
at the date of grant. If the equity instruments
granted vested immediately, the expense is
recognised in full.
The assumptions on the expected life of share
options, volatility of shares and risk free yield
to maturity and expected dividend yield on
shares are used in the fair value calculation of
the share options outstanding at the balance
sheet date (see note 25).
dotDigital Group Annual Report and Accounts 2008/2009
40
Notes to the consolidated financial statements continued
for the period 1 May 2008 to 30 June 2009
2. Segmental reporting
The Group’s primary reporting format is business segments and its secondary format is geographical segments.
The Group only operates in a single business and geographical segment. The Group’s single line of business is the provision of web based marketing
services, whilst the geographical segment in which it operates is currently restricted to the UK.
Accordingly no segmental information for business segment or geographical segment is required.
3. Employees and Directors
Directors’ fees
Wages and salaries
Social security costs
Other pension costs
Information regarding directors’ emoluments are as follows:
Directors’ fees
Salaries
Other benefits
Pension costs
Period
1.5.08 to
30.6.09
£
16,665
2,028,398
220,437
63,843
Year ended
30.4.08
£
–
919,758
94,891
13,773
2,329,343
1,028,422
Period
1.5.08 to
30.6.09
£
16,665
482,807
13,356
25,474
Year ended
30.4.08
£
–
61,333
1,156
12,105
538,302
74,594
The number of Directors for whom retirement benefits are accruing under the money purchased pension schemes amounted to 4 (2008 – 3).
The average monthly number of employees during the period was as follows:
Period
1.5.08 to
30.6.09
£
6
12
12
25
55
Year ended
30.4.08
£
4
10
15
9
38
Directors (Executive & Non Executive)
Sales
Web designers and developers
Administration
A subsidiary Company operates a defined contribution pension scheme.
www.dotdigitalgroup.com
41
Period
1.5.08 to
30.6.09
£
127,667
3,667
13,356
144,690
Year ended
30.4.08
£
7,333
–
1,156
8,489
Period
1.5.08 to
30.6.09
£
Year ended
30.4.08
£
15,088
24,578
192
672
864
–
3,332
3,332
14,224
21,246
Period
1.5.08 to
30.6.09
£
2,452,525
169,242
12,183
16,000
48,276
69,180
138,381
136,657
20,842
275,932
312,981
Year ended
30.4.08
£
948,077
73,263
–
5,100
–
43,463
113,665
63,600
178,900
161,825
160,335
3,652,199
1,748,228
Information regarding the highest paid Director for the period ended 30 June 2009 is as follows:
Remuneration
Pension contributions
Other benefits
Emoluments
4. Net finance income
Finance income:
Deposit account interest
Finance costs:
Bank loan interest
Loan
Net finance income
5. Profit before income tax
Costs by nature
Profit from continuing operations has been arrived at after charging/(crediting):-
Staff related costs (including Directors emoluments)
Operating leases: Land and buildings
Operating leases: Other
Audit remuneration
Amortisation of intangibles
Depreciation charge
Legal and professional fees
Computer expenditure
Research costs
Marketing costs
Other costs
Total administration expenses
dotDigital Group Annual Report and Accounts 2008/2009
42
Notes to the consolidated financial statements continued
for the period 1 May 2008 to 30 June 2009
5. Profit before income tax continued
Audit remuneration
During the year period the Group obtained the following services from the Group’s Auditor at costs detailed below:
Fees payable to Company’s Auditor for the audit
of parent Company and consolidated financial statements
Fees payable to the Company’s Auditor and its associates for other services
– The audit of Company’s subsidiaries pursuant to legislation
– Other services
6. Income tax
Analysis of the tax charge
Current tax:
Tax
Total tax charge in income statement
Period
1.5.08 to
30.6.09
£
5,000
11,000
–
16,000
Year ended
30.4.08
£
–
5,100
1,200
6,300
Period
1.5.08 to
30.6.09
£
184,808
184,808
Year ended
30.4.08
£
180,383
180,383
Factors affecting the tax charge
The tax assessed for the period is lower than the standard rate of corporation tax in the UK. The difference is explained below:
Profit on ordinary activities before tax
Profit on ordinary activities
multiplied by the standard rate of corporation tax
in the UK of 28% (2008: 30%)
Effects of:
Expenses not deductible
Research and development enhanced claim
Effect of profits within marginal rate of tax
Capital allowances in excess of depreciation
Total income tax
www.dotdigitalgroup.com
Period
1.5.08 to
30.6.09
£
1,080,315
Year ended
30.4.08
£
747,383
302,488
224,215
5,095
(118,947)
(3,546)
(282)
(117,681)
7,608
(26,850)
(21,312)
(3,278)
(43,832)
184,808
180,383
43
7. Loss of parent Company
As permitted by Section 408 of the Companies Act 2006, the income statement of the parent Company is not presented as part of these financial
statements. The parent Company’s loss for the financial year was £(63,356) (2008: £(85,372)).
8. Dividends
Ordinary Shares of £0.01 each
Interim
Period
1.5.08 to
30.6.09
£
Year ended
30.4.08
£
118,800
337,800
Reserves distributed during the period were paid before the reverse acquisition was undertaken, specific payment dates are outlined in the
Directors’ report.
9. Earnings per share
Earnings per share data is based on the consolidated profit using reverse accounting principals 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 set out below.
Basic EPS
Earnings attributable to Ordinary Shareholders
Effect of dilutive securities
Options & Warrants
Diluted EPS
Adjusted earnings
Basic EPS
Earnings attributable to Ordinary Shareholders
Effect of dilutive securities
Options
Diluted EPS
Adjusted earnings
30.6.09
Weighted
average
number of
shares
Earnings
£
895,507
643,318,750
–
55,121,118
895,507 698,439,868
30.4.08
Weighted
average
number of
shares
Earnings
£
Per share
amount
pence
0.14
–
0.13
Per share
amount
pence
567,000
292,500,000
0.19
–
3,424,658
567,000 295,924,658
0.19
dotDigital Group Annual Report and Accounts 2008/2009
44
Notes to the consolidated financial statements continued
for the period 1 May 2008 to 30 June 2009
10. Goodwill
Group
Cost
Additions
At 30 June 2009
Net book value
At 30 June 2009
Group
£
608,503
608,503
608,503
On 30 January 2009, the controlling interest in the parent Company was exchanged for the entire share capital of dotMailer Limited, a company
registered in England and Wales, under the rules of a reverse acquisition as prescribed by IFRS 3 “Business Combinations”. Under this standard and
for accounting purposes the subsidiary dotMailer Limited (the legal parent), has been deemed to have acquired the parent, dotDigital Group Plc
(the legal subsidiary). The net assets of dotDigital Plc have been recognised at their pre combination carrying amounts and the goodwill arising
has been recognised.
The net assets of the acquired and the goodwill are as follows:
Purchased consideration:
Fair value of the shares issued
Costs attributable to business combination
Total consideration
Fair value of net assets acquired
Goodwill acquired
The fair value of assets and liabilities as of 30 January 2009 arising from the acquisition are as follows:
Fixed asset investment
Trade and other receivables
Deposits, cash and cash equivalents
VAT repayable
Trade and other payables
Net assets
www.dotdigitalgroup.com
£
1,130,696
181,488
1,312,184
703,681
608,503
Book and fair
value
£
142,305
10,803
740,856
24,141
(214,424)
703,681
45
Goodwill is allocated to the Group’s single cash generating unit identified, that being dotMailer Limited.
The recoverable amount of a cash generating unit is determined based on value in use calculations. These calculations use pre tax cash flow
projections based on financial budgets approved by management covering the five year period to 30 June 2014.
Group
The key assumptions use to prepare the financial budgets are as follows:
dotMailer Limited
Revenue growth rates:
Pre tax discount rate:
Income tax rate:
2010
2011
2012
2013
2014
All years
All years
45.00%
37.00%
25.00%
25.00%
25.00%
8.33%
28.00%
The key assumptions used to prepare the financial budgets are based on a combination of historical experience and current industry knowledge
and trends.
The cash flow forecasts used in the value in use calculations have not been extended beyond the five year period covered by management’s
financial budgets.
11. Intangible assets
Group
Cost
At 1 May 2008
Additions
At 30 June 2009
Amortisation
Amortisation for period
At 30 June 2009
Net book value
At 30 June 2009
Computer
softwares
£
Development
costs
£
6,407
50,649
57,056
12,407
12,407
–
242,060
242,060
33,624
33,624
Domain
name
£
5,875
2,961
8,836
2,246
2,246
Totals
£
12,282
295,670
307,952
48,277
48,277
44,649
208,436
6,590
259,675
dotDigital Group Annual Report and Accounts 2008/2009
46
Notes to the consolidated financial statements continued
for the period 1 May 2008 to 30 June 2009
11. Intangible assets continued
Cost
Reclassification from property, plant and equipment
At 30 April 2008
Net book value
At 30 April 2008
Group
Computer
software
£
6,407
6,407
Domain
name
£
5,875
5,875
Total
£
12,282
12,282
6,407
5,875
12,282
Development cost additions represents resources the Group have invested in the development of unique computer programming with the
intention of re sale once complete.
During the 14 month period ended 30 June 2009, certain software which had previously been classified as property, plant and equipment
was transferred to intangible assets in compliance with IAS 38 ‘Intangible assets’. The reclassification of software as intangible assets have been
accounted for retrospectively. Accordingly, certain comparative figures have been reclassified as disclosed in note 29.
Short
leasehold
£
8,398
3,477
Fixtures
and
fittings
£
93,760
27,230
Computer
equipment
£
Total
£
167,210
31,664
269,368
62,371
11,875
120,990
198,874
331,739
3,738
2,422
6,160
40,852
26,603
67,455
98,917
40,155
139,072
143,507
69,180
212,687
5,715
53,535
59,802
119,052
12. Property, plant and equipment
Group
Cost
At 1 May 2008
Additions
At 30 June 2009
Depreciation
At 1 May 2008
Charge for period
At 30 June 2009
Net book value
At 30 June 2009
www.dotdigitalgroup.com
47
Short
leasehold
£
8,398
–
–
8,398
1,662
2,076
3,738
Fixtures
and
fittings
£
78,125
15,635
–
93,760
22,373
18,479
40,852
Computer
equipment
£
118,945
60,547
(12,282)
167,210
76,009
22,908
98,917
Total
£
205,468
76,182
(12,282)
269,368
100,044
43,463
143,507
4,660
52,908
68,293
125,861
Company
Shares in
Group
undertakings
£
5,183,488
5,183,488
5,183,488
Cost
At 1 May 2007
Additions
Reclassification to intangibles
At 30 April 2008
Depreciation
At 1 May 2007
Charge for year
At 30 April 2008
Net book value
At 30 April 2008
13. Investments
Cost
Additions
At 30 June 2009
Net book value
At 30 June 2009
Included in the above is the following investment undertaken:
On 30 January 2009 the Company acquired via a share for share exchange the entire issued share capital of dotMailer Limited, a company
registered in England and Wales. Details of the purchase consideration and fair values of the assets acquired are outlined below and been
calculated using the Group’s accounting policies.
Value of equity released in exchange for the entire equity of dotMailer Limited
Costs directly attributable to the business combination
The fair value of assets and liabilities as of 30 January 2009 arising from the acquisition are set out in note 10.
Consideration
value
£
5,000,000
181,488
5,181,488
dotDigital Group Annual Report and Accounts 2008/2009
48
Notes to the consolidated financial statements continued
for the period 1 May 2008 to 30 June 2009
The Group or the Company’s investments at the balance sheet date in the share capital of companies include the following:
13. Investments continued
Subsidiary
dotMailer Limited
Nature of business: Web and email based marketing
Class of shares:
Ordinary
Ordinary
Aggregate capital and reserves
Profit for the period/year
dotAgency Limited
Nature of business: Dormant
Class of shares:
Ordinary
Ordinary
Aggregate capital and reserves
Profit for the period/year
The Company subscribed to 1,000 shares of £1 each on 25 September 2008 with a paid up share capital of £1,000
dotCommerce Limited
Nature of business: Dormant
Class of shares:
Ordinary
Ordinary
Aggregate capital and reserves
Profit for the period/year
The Company subscribed to 1,000 shares of £1 each on 19 June 2009 with a paid up share capital of £1,000.
www.dotdigitalgroup.com
%
holding
100.00
100.00
30.4.08
£
775,757
567,000
%
holding
100.00
100.00
30.4.08
£
–
–
%
holding
100.00
100.00
30.4.08
£
–
–
30.6.09
£
1,594,418
937,461
30.6.09
£
1,000
–
30.6.09
£
1,000
–
49
Group
Company
30.6.09
£
30.4.08
£
591,199
4,098
–
60,007
424,471
168
–
20,029
655,304
444,668
30.6.09
£
–
–
650
2,062
2,712
30.6.08
£
–
–
–
10,803
10,803
Group
Company
30.6.09
£
30.4.08
£
30.6.09
£
30.6.08
£
1,677,902
684,493
564,531
821,557
Class:
Ordinary
Nominal
value:
£0.001
30.6.09
£
1,292,500
1,292,500
30.6.08
£
292,500
292,500
14.Trade and other receivables
Current:
Trade receivables
Other receivables
VAT
Prepayments and accrued income
15. Cash and cash equivalents
Bank accounts
16. Called up share capital
Allotted, issued and fully paid:
Number:
1,292,500,000
1,000,000,000 Ordinary Shares of £0.001 each were allotted as fully paid at a premium of £0.005 per share during the period.
As part of the reverse acquisition undertaken in the period, the 92 Ordinary Shares, with a nominal value of £1 each, in existence in dotMailer
Limited at the beginning of the period were exchanged for 1,000,000,000 newly issued Ordinary Shares in the parent, dotDigital Group Plc, which
hold a nominal value of £0.001 per share. The deemed premium paid on the exchange was £4,000,000 which equates to £0.004 per share.
dotDigital Group Annual Report and Accounts 2008/2009
50
Notes to the consolidated financial statements continued
for the period 1 May 2008 to 30 June 2009
Retained
earnings
£
775,665
895,507
(118,800)
–
–
Share
premium
£
Reverse
acquisition
reserve
£
533,754
(826,162)
4,000,000
–
(3,869,303)
–
Other
reserves
£
–
–
5,302
Total
£
483,257
895,507
(118,800)
130,697
5,302
1,552,372
4,533,754
(4,695,465)
5,302
1,395,963
Retained
losses
£
(85,372)
(63,356)
–
–
Share
premium
£
533,754
4,000,000
–
Other
reserves
£
–
–
5,302
Total
£
448,382
(63,356)
4,000,000
5,302
(148,728)
4,533,754
5,302
4,390,328
Group
Company
30.6.09
£
30.4.08
£
114,813
–
139,878
8,069
68,210
3,304
82,537
35,126
–
39,381
1,042
59,232
64,503
104,941
30.6.09
£
35,543
23,638
–
–
8,722
–
–
30.6.08
£
79,698
–
–
–
11,780
–
–
416,811
304,225
67,903
91,478
17. Reserves
Group
At 1 May 2008
Profit for the period
Dividends
Reverse acquisition
Share option fair value adjustment
At 30 June 2009
Company
At 1 July 2008
Deficit for the period
Reverse acquisition
Share option fair value adjustment
At 30 June 2009
18. Trade and other payables
Current:
Trade payables
Amounts owed to group undertakings
Social security and other taxes
Other payables
Accruals and deferred income
Directors’ current accounts
VAT
www.dotdigitalgroup.com
19. Financial liabilities – borrowings
Current:
Bank loans
Non-current:
Bank loans – 1-5 years
Terms and debt repayment schedule.
Group
Bank loans
The above loans are unsecured.
20. Leasing agreements
The non-cancellable operating leases are as follows:
Group
Within one year
Between one and five years
Within one year
Between one and five years
51
Group
30.6.09
£
30.4.08
£
12,152
6,939
Group
30.6.09
£
30.4.08
£
18,228
–
1 year or
less
£
12,152
1-2 years
£
12,152
2-5 years
£
6,076
Total
£
30,380
Land and
buildings
£
109,207
167,745
276,952
Land and
buildings
£
109,207
276,608
30.6.09
Others
£
22,833
27,960
50,793
30.4.08
Others
£
3,862
965
385,815 4,827
Total
£
132,040
195,705
327,745
Total
£
113,069
277,573
390,642
dotDigital Group Annual Report and Accounts 2008/2009
52
Notes to the consolidated financial statements continued
for the period 1 May 2008 to 30 June 2009
21. Financial instruments
The Group’s activities exposes it to a number of financial risks that include credit risk, liquidity risk and cash flow interest rate risk. These risks, and
the Group’s policies for managing them have been applied consistently throughout the year, 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.
Liquidity risk
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.
Credit risk
Credit risk arises principally from the Group’s trade receivables which comprise of amounts due from customers. Prior to accepting new customers
a credit check is obtained. As at 30 June 2009 there were no significant debts pass their due period which had not been provided for.
The credit risk on liquid funds is low as the counterparties are banks with high credit ratings assigned by international credit rating agencies.
Details as to maximum fair values the Groups financial assets and liabilities can be found in the consolidated statement of financial position
(see page 29).
22. Capital commitments
The Company has no capital commitments as at the period end.
23. Transactions with Directors
The following transactions were carried out with the Directors of the Company:-
Loans from Directors:-
Beginning of the period
Loans advanced in the year
Loans repaid in the year
End of period
30.06.09
£
30.04.08
£
64,503
–
61,199
3,304
336
64,167
–
64,503
The above loans are provided to the Company on a interest free basis and repayable within 12 months of the balance sheet date.
www.dotdigitalgroup.com
53
24. Ultimate controlling party
As at the year end there was no ultimate controlling party.
25. 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 is recognised for share based payments made during the year is £5,302 (2008: £Nil)
As at 1 February 2009 unexercised share options in dotMailer Limited were exchanged for the equivalent share options in the Group at the
prevailing share exchange coefficient at the time of the Group’s formation. The ultimate beneficiary of the options is Mr Peter Simmonds.
Also on 1 February 2009 the Board of Directors also granted 7,600,000 options to employees of the Group exercisable on or after 1 July 2010
until 1 February 2019. 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
Outstanding at the beginning of the period
Granted during the year
Forfeited/cancelled during the period
Exchanged for options in subsidiary
Outstanding at the end of the period
Exercisable at the end of the period
2009
No of options
25,000,000
7,600,000
Nil
41,666,667
74,266,667
Nil
WAEP
0.10p
1.00p
0.24p
0.27p
2008
No of options
25,000,000
Nil
Nil
Nil
25,000,000
Nil
WAEP
0.10p
0.10p
Of the 74,266,667 options outstanding at the end of the year 25,000,000 (2008: 25,000,000) represent share warrants exercisable on or before
27 June 2012.
The fair value of the options granted in the year have been calculated using the Black Scholes model assuming the inputs shown below:
– Grant date
– Number of options granted
– Share price at grant date
– Exercise price at grant date
– Risk free rate
– Option life
– Expected volatility
– Expected dividend yield
– Fair value of option
01 February 2009
7,600,000
1.00p
1.00p
2.55%
10 years
51%
0%
0.34p
In accordance with IFRS 2 ‘Share based payments’ the Group incurred a £5,302 charge representing the fair value of share options granted and
therefore not expected to be repeated in coming financial periods.
dotDigital Group Annual Report and Accounts 2008/2009
54
Notes to the consolidated financial statements continued
for the period 1 May 2008 to 30 June 2009
26. Reconciliation of profit before income tax to cash generated from operations
Profit before income tax
Depreciation and amortisation charges
Share options
Finance costs
Finance income
Increase in trade and other receivables
(Decrease)/Increase in trade and other payables
Cash generated from operations
27. Cash and cash equivalents
Period
1.5.08 to
30.6.09
£
1,080,315
117,456
5,302
864
(15,088)
1,188,849
(199,833)
(40,719)
Year ended
30.4.08
£
747,383
43,463
–
3,332
(24,578)
769,600
(193,774)
153,779
948,297
729,605
The amounts disclosed on the cash flow statement in respect of cash and cash equivalents are in respect of these statement of financial
position amounts:
Period ended 30 June 2009
Cash and cash equivalents
Year ended 30 April 2008
Cash and cash equivalents
Bank overdrafts
28. Research & development
30.6.09
£
1.5.08
£
1,677,902
684,493
30.4.08
£
684,493
–
1.5.07
£
362,147
(12,345)
During the period the Group have incurred £20,842 (2008: £179,000) in research costs and £242,060 (2008: £Nil) in development investments.
All resources utilised in research and development has been categorised as outline in the accounting policy governing this area.
www.dotdigitalgroup.com
55
29. Comparative restatement
Certain comparative figures have been reclassified in accordance with IAS 38 ‘Intangible assets’, as mentioned in note 11. The reclassification is
summarised as follows:
As previously
stated
from IAS 38
30.04.2008
£
Reclassification
arising
as restated
30.04.2008
£
30.04.2008
£
–
138,143
12,282
(12,282)
12,282
125,861
Statement of financial position:
Intangible assets
Property, plant & equipment
There were no effects on the Income Statement for the 14 month period ended 30 June 2009.
30. Related party transactions
The following transactions were carried out with related parties during the period:
Purchase of services
Accountancy and tax support
Financial public relations
Supplier
Shipleys LLP
Haggie Financial LLP
30.6.09
£
25,000
6,064
30.4.08
£
23,000
10,000
S Moloney, a former Director, is also a Principal of Shipleys LLP. At the period end, there was no outstanding fee owed to Shipleys LLP.
N Nelson, a Director, is a partner of Haggie Financial LLP. At the period end, £2,278 of fees was owed by the Company to Haggie Financial LLP.
dotDigital Group Annual Report and Accounts 2008/2009
56
Company information
for the period 1 May 2008 to 30 June 2009
Solicitors
Lawrence Stephens
Morley House
26 Holborn Viaduct
London
EC1A 2AT
Principal bankers
National Westminster Bank plc
Charing Cross, London Branch
PO Box 113
Cavell House
2a Charing Cross Road
London
WC2H 0PD
Registrars
Share Registrars Limited
Craven House
West Street
Farnham
Surrey
GU9 7EN
Website
www.dotdigitalgroup.com
Directors
S Bird
N C P Nelson
D J Pacy
P A Simmonds
I Taylor
G Fidura
Secretary
M Patel
Registered office
Finsgate
5-7 Cranwood Street
London
EC1V 9EE
Registered number
06289659 (England and Wales)
Corporate adviser
Alfred Henry Corporate Finance Limited
Finsgate
5-7 Cranwood Street
London
EC1V 9EE
Auditors
Jeffreys Henry LLP
Finsgate
5-7 Cranwood Street
London
EC1V 9EE
www.dotdigitalgroup.com
dotDigital Group plc
Croydon
No. 1 Croydon
12-16 Addiscombe Road
CR0 0XT
T: 020 8662 2762
Manchester
Pall Mall Court
61-67 King Street
Manchester
M2 4PD
T: 0161 618 1070
London Bridge
6-8 Emerson Street
London
SE1 9DU
T: 020 7654 8686
Design and production by Philosophy
www.philosophydesign.com
Photography by Layton Bennett
Print by Moore print
www.mooreprint.co.uk
www.dotdigitalgroup.com