www.doTdIgITalgroup.coM
Innovating SaaS Technology
and Tools for Marketers
2011/2012
AnnuAl RepoRt And Accounts
ouR MIssIon
coMpAnY InFoRMAtIon
Empowering clients to punch above their weight by providing
the world’s best digital marketing products.
ouR VAlues
professional,
expert and fun
Fast-paced but
quality driven
awesome
is the required
standard
creative and
geeky with the
human touch
approachable,
sociable,
welcoming and
client-centric
passionate
about our
client/supplier
partnerships
corporate
but cool
Business-like,
entrepreneurial
but still a family
committed
to giving back
to staff and
society
Motivated,
inspirational,
innovative and
accomplished
Easy to use
space-age
technologies
an unhidden
agenda about
clients success
Contents
Business Summary
Key Highlights
chairman ‘s Statement
chief Executive report
corporate Social responsibility
our Board of directors
corporate governance report
audit committee report
remuneration committee report
report of the directors
report of the Independent auditors
consolidated Income Statement
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
company Statement of cash Flows
Notes to the consolidated Financial Statements
company Information
32
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34
35
36
37
37
38
IBc
1
2
4
5
18
20
22
23
24
26
31
Directors
s Bird
p A simmonds
I taylor
G Fidura
R Kellett-clarke
F Beechinor-collins
Secretary
M patel
Registered Office
Finsgate
5-7 cranwood street
london
ec1V 9ee
Registered Number
06289659 (england and Wales)
Auditors
Jeffreys Henry llp
Finsgate
5-7 cranwood street
london
ec1V 9ee
Solicitors
Bpe solicitors llp
st James House
st James square
cheltenham
Gl50 3pR
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
suite e First Floor
9 lion and lamb Yard
Farnham
surrey
Gu9 7ll
Nomad/Broker
Zeus capital
3 Ralli courts
West Riverside
Manchester
M3 5Ft
Joint Broker
charles stanley
131 Finsbury pavement
london
ec2A 1nt
Website
www.dotdigitalgroup.com
Croydon
no. 1 croydon
12-16 Addiscombe Road
cR0 0Xt
t: 020 8662 2762
Edinburgh
MWB Business exchange
9-10 st Andrews square
edinburgh
eH2 2AF
t: 0131 718 6037
London Bridge
6-8 emerson street
london
se1 9du
t: 020 7654 8686
Manchester
pall Mall court
61-67 King street
Manchester
M2 4pd
t: 0161 618 1070
design and production by philosophy
www.philosophydesign.com
print by Moore print
www.mooreprint.co.uk
1
business summary
dotDigital Group Plc, are a leading provider of intuitive Software
as a Service (“SaaS”) technology and managed services to digital
marketing professionals.
Our aim is to develop easy-to-use and visual SaaS marketing
tools, for non-technical and non-creative users, that deliver
smarter, quicker and easier design, creation and execution of
campaign workflows across every digital channel, while enabling
the use of marketing best practices and management controls.
Innovating SaaS Technology
and Tools for Marketers
Versatile, powerful &
easy-to-use Survey tool
Ecommerce Web Design & Search Marketing
Powerful and easy-to-use Email & Cross-
Channel Marketing Automation Platform
dotMailer
dotmailer is a powerful email and
cross-channel marketing automation
platform with easy-to-use tools
that enable large coporations and
sme marketers to efficiently create,
manage, execute and evaluate
effective targeted campaigns.
dotSurvey
dotsurvey is a versatile and easy-to-
use online survey tool that enables
users to create, manage and execute
fully branded interactive surveys,
competitions and web forms to
capture and evaluate data.
dotAgency
dotagency provides digital solutions
and search marketing services to
large corporations and brands.
dotagency take a strategic approach
to uX, web development and
digital marketing to achieve clients’
commercial objectives.
dotDigital Group Plc
Annual Report and Accounts 2011/2012
2
Key Highlights
2011/12
Continued strong
cash generation with
cash balances of
£4m
at year end
+34%
increase in turnover
to £12m
+31%
increase in EBITDA
to £3.4m
+25%
increase in profit before
tax and exceptionals
to £2.9m
Visit dotDigital Group Plc’s
website for latest
information and news.
www.dotdigitalgroup.com
Annual Report and Accounts 2011/2012
3
dotMailer continues
to be a significant source
of revenue growth in the
year with 1,813 new clients
being added and increased
‘corporate’ client wins
1,813
client wins including DHL,
Nationwide, BBC Worldwide,
Capita, Astra Zeneca, Esso,
Ryman, Tarmac, Nicole Farhi,
Nicky Clarke, EDF Energy,
Virgin Train and Betfair
dotSurvey the new online
survey tool only launched
in May now has over 500
paying clients and nearly
2,500 trial users
Clients in
156
countries
Continued investment
in upgrading of our IT
infrastructure and further
significant product
development
Early results from
international expansion
are encouraging with the
international sales team
being progressively built
over the next year
Strengthening of
the senior operational
management team
dotDigital Group Plc
Annual Report and Accounts 2011/2012
4
CHairman’s statement
We see our market moving toward
providing multi-channel marketing
automation solutions.
dotDigital is in very
good shape and
continues to make great
progress in delivering
value to its shareholders
and other stakeholders.
Dear Shareholder
i am pleased to report that despite the general economic climate
dotDigital has increased sales and profitability before exceptionals
in the past year. this continued strong performance is a testament to
the quality of the Company’s business model with a strong emphasis
on recurring revenue, cash generation and cost management.
i recognise that an effective board is central to the long-term
sustainable success of the Company. We have worked hard to cultivate
a strong team spirit through the on going review of the role and
effectiveness of the board combined with regular strategy reviews.
One of our non-executive Directors, nicholas nelson, left the board
on 5th January 2012 and i would like to thank nicholas for his valuable
contribution to the business. it is my intention to appoint another
non-executive Director in the coming financial year.
since joining the Company i have got to know many of our
employees and have been repeatedly impressed by their enthusiasm,
professionalism and dedication at every level of the organisation.
On behalf of all our stakeholders, i thank our employees for their
hard working contribution to another successful year.
i would also like to thank the executive management team for
their continued commitment, hard work and passion in developing
the business.
We are firmly committed to organic growth and we see a number
of areas where we can develop our business. in the coming year we
plan to increase our focus on geographic expansion, with particular
emphasis on building our client list of larger businesses, by satisfying
their demand for effective marketing automation solutions. We will
continue to assess acquisition opportunities but only act when the
board believes acquisition represents excellent value.
We continue to innovate and develop products that stand out from
the competition and the change in strategic focus on selling to larger
enterprise organisations is starting to show excellent results.
Looking at the wider global situation, we see our market moving
towards providing multi-channel marketing automation solutions and
we believe our platform is well-positioned to compete in this space.
to conclude: as you will read in this annual report, dotDigital is in very
good shape and continues to make great progress in delivering value
to its shareholders and other stakeholders. the drivers of the business
remain firmly in place. Despite current economic uncertainties, i am
confident that we will continue to benefit in the years ahead from
continued investment in our technology, our emphasis on the quality
of our people and effective management of our costs.
Frank Beechinor-Collins
Chairman
www.dotdigitalgroup.com
Annual Report and Accounts 2011/2012
CHief eXeCutiVe’s rePOrt
We will continue to focus on product
innovation, understanding our clients’
requirements and delivering return on
investment for our clients.
5
Turnover and
profits ahead
of market
expectations
Financial Overview
the Group has enjoyed another year of profitable growth with
the final outcome for revenue and profits slightly ahead of analysts’
expectations.
turnover increased from £9m to £12m, a growth of 34% in the year
and profit before tax and exceptional items grew from £2.3m to £2.9m
a growth of 25%.
year end
30.6.12
£m
12.0
2.9
3.4
year end
30.6.11
£m
9.0
2.3
2.6
turnover
Pre-tax profits*
ebitDa
*before exceptional items
% inc
34%
25%
31%
year end
30.6.10
£m
6.0
1.4
1.5
Overall the board is delighted with the progress made against plans
during the year, which reflect our continued focus on strong organic
growth through new client acquisitions and investment in new
products and services.
We have again focused on growing recurring revenues and
profitability, while continuing to invest in people and product
development to maintain future earnings. the total investment in
hardware during the year was £0.3m and £1.1m in product research
and development.
Cash Position
We continue to be strongly cash generative with cash from operations
growing in the year and cash balances at the year-end reaching £4m.
Other than small operating leases there is no debt finance.
We have continued to invest in the future of the business with
significant investment in upgrading the it infrastructure and further
significant product development.
Growth Strategy
by business unit the growth has been as follows:
saas email marketing revenues & email managed service from
£6.9m to £9.5m – up 38%.
services & search from £2.1m to £2.5m – up 19%.
Continued
strong cash
generation
Watch Proactive investors
interview of dotDigital
Group’s CeO, Peter simmonds.
Peter Simmonds
Chief Executive and and Chief Financial Officer
dotDigital Group Plc
Annual Report and Accounts 2011/2012
Companies are
continuing to shift money
from traditional marketing
to internet marketing for its
effectiveness and ability
to attribute results to
specific activity.
6
CHief eXeCutiVe’s rePOrt COntinueD
Multi-channel marketing is becoming
one of the most sought-after categories
in enterprise software/service.
Digital Landscape
Current research shows that companies are continuing to shift
money from traditional marketing to internet marketing for its
effectiveness and ability to attribute results to specific activity,
demonstrating improved rOi.
the significant increase in time being spent consuming online
media has had a direct impact on marketing spend. a 6% drop in
time spent consuming print media has seen a 29% drop in advertising
spend, where as internet has a significant 16% growth in time spent
consuming media with an ad spend growth of 22%.
We believe, it is the email’s value within the context of broader
personalised marketing programs that is bringing new value to the
channel. although unverified, sources estimate 2.9 billion email
accounts and over 100 billion subscribed email messages are being
sent daily. email’s reach is unmatched despite the rapid adoption
of alternative channels for engaging consumers online. Despite
the attention and reports surrounding social media marginalising
email, it remains the most logical centre for any multi-channel
marketing platform.
as this trend persists the board will continue to work with uK and
international partners to identify and evaluate emerging opportunities
for saas technology products across email and cross-channel online
marketing to inform its product roadmap.
www.dotdigitalgroup.com
Annual Report and Accounts 2011/2012
Email’s global reach is still unmatched despite the rapid
adoption of alternative channels for engaging consumers
Pinterest
11m
monthly visitors
Foursquare
15m
accounts
Email
2.9bn
accounts
100bn+ daily
messages
7
Facebook
845m
active monthly users
2.7bn likes &
comments/day
Twitter
300m
accounts
300m tweets/day
Instagram
27m
accounts
Google
95m
accounts
Tumblr
48m
blog accounts
Multi-channel marketing is becoming one of the most-sought
after categories in enterprise marketing software/service
multi-Channel marketing
Email Marketing
Management
Social Media
Management
Email creation and management
system driven by need to manage
user interactions and messages
across digital channels
Engagement system for social
consumer interaction
Social software leading
convergence between earning,
owned and paid channels
Traditional CRM
Customer data store
CRM system will play an
important role in powering user
level marketing campaigns
dotDigital Group Plc
Annual Report and Accounts 2011/2012
User interfaces now have the ability
to be translated into eight languages
to support international client and
partner growth plans.
dotMailer client portfolio includes:
8
CHief eXeCutiVe’s rePOrt COntinueD
Email & Cross-Channel
Marketing Automation
dotMailer
email marketing continues to perform extremely strongly both in
terms of new clients and recurring revenues from existing clients, with
dotmailer’s monthly recurring revenue now accounting for over 60%
of total revenue across the Company, which equates to approximately
38% growth year-on-year. the Group’s total recurring revenue from all
products and services, now accounts for 67% of total revenue.
new customer signups for dotmailer have continued to be a significant
source of revenue growth in the year, with 1,813 new clients being
added. Of particular note during 2011/12, is that enhancements to
the dotmailer platform and changes to the structure of the sales team
have significantly increased client wins in the ‘corporate’ segment.
Our portfolio of blue chip clients now includes names such as DHL,
nationwide, bbC Worldwide, Capita, astraZeneca, esso, ryman, tarmac,
nicole farhi, nicky Clarke, eDf energy, Virgin train and betfair.
based on historic experience the lifetime value of a corporate client
should be in excess of £40k compared to an average lifetime value
of £4k for a sme client.
the combination of flexible pricing options, ease-of-use and advanced
marketing features enables us to win clients from sme’s to global
corporates. moving forward we see growth opportunities in the mid
– large company requiring a self service provider – a niche where we
believe dotmailer can dominate.
+38%
growth in SaaS Email
Marketing Revenues
& Email Managed
Service.
Watch dotmailer’s email Drag
& Drop easy editor video
www.dotdigitalgroup.com
Annual Report and Accounts 2011/2012
9
Email & Cross-Channel Marketing Automation
dotMailer software provides users with an efficient and
effective marketing campaign management system with a
suite of interactive, powerful and easy-to-use email and cross-
channel marketing tools. Bought separately, or as part of a
comprehensive cross-channel solution, email, mobile, social,
landing page, ecommerce and survey tools can be managed
from a single point running on dotMailer’s highly secure and
robust platform and infrastructure.
Small business or corporate enterprise users can create, manage,
automate and analyse integrated digital maketing activity more
efficiently and effectively to significantly improve their customer
lead generation, conversion, and retention.
Email
Mobile
Social
Using dotMailer’s email Drag & Drop
Easy Editor and powerful administration
and reporting features, users can easily
create, manage and evaluate segmented
email campaigns to drive conversion,
retention and loyalty.
Marketers can communicate effectively in
a mobile world with easy SMS tools and
mobile-optimised templates, allowing
customer engagement anywhere at any
time to drive instant responses and actions
for maximum ROI.
Businesses can manage and moderate
social media marketing from one central
hub, getting involved with fans in
their space to build brand reputation
and personality.
Landing Page Builder
Shop
Survey
Non-technical professionals can easily
build microsites and landing pages
so campaigns convert more, ensuring
fully integrated campaigns by
creating dedicated landing pages
for each offering.
Shop builder makes it easy for small
businesses to build and manage a successful
ecommerce store, allowing users to get
selling straight away with this quick shop
and focus on sales, not the technical side
of web design.
Marketers can create branded surveys,
questionnaires, competitions and web
forms in moments, enhancing databases
and easily discovering more about
customers, markets or employees.
Interface
image
Uniquely scalable, powerful and easy-to-use
campaign creation & management system
for small, midsize and corporate businesses
Powerful integrations creating new sales channels
Bonjour
Guten Tag
Hello
Easy translation and white labelling technology for
international client and partner growth
New responsive design that optimises
campaigns for mobile
dotDigital Group Plc
Annual Report and Accounts 2011/2012
10
CHief eXeCutiVe’s rePOrt COntinueD
Versatile, Powerful and
Easy-To-Use Online Survey Tool
dotSurvey launched
and marketed to
existing client base
in May 2012, now
has over 500 paying
clients and 2,500
trial users.
dotSurvey’s client portfolio includes:
dotSurvey
dotsurvey our new online survey tool was launched from beta at the
beginning of may and although only marketed initially to existing
clients has now over 500 paying clients and nearly 2,500 trial users.
the board recognises the enormous potential of this division as can
be demonstrated by growth in the sector. although marketing spend
is crucial to the strategy of scaling this business, the board believes
the quality of the product will soon develop a brand to equal others
in the market.
dotSurvey – perfectly branded
online surveys, created in minutes
with our latest online survey tool.
Built for total usability, dotSurvey
makes it fantastically easy for users
to create fully branded, professional
online surveys and web forms that
look just like they’re part of their
website.
Watch dotsurvey’s
introduction video.
www.dotdigitalgroup.com
Annual Report and Accounts 2011/2012
11
Versatile, Powerful and Easy-To-Use Online Survey Tool
With the versatility and power of dotSurvey, users can take this
tool way beyond your average survey tool. With everything
in the app editable and customisable, users can create highly
professional forms, surveys, invitations, preference centres
and much more.
Customer Feedback
Employee Satisfaction
Market Research
dotSurvey enables users to gather
valuable insight and feedback from
customers, helping them to highlight
successes and weaknesses within
their business.
Employees are any businesses most
valuable asset, so carrying out regular
satisfaction surveys with dotSurvey helps
businesses ensure employees are happy
and moving the business forward.
Using dotSurvey, businesses with a
new product or idea that require initial
customer or market feedback and
insights can easily build, collect and
report without any outside help.
Contact Forms
Events Management
Competitions
dotSurvey enables businesses to create
website sign-up forms for visitors to
register for more information or contact
them. This data can be mapped into
dotMailer to automate email campaigns.
dotSurvey, with the power of dotMailer,
allows businesses to manage and
coordinate events, handling RSVPs,
capturing special dietary requests,
and tracking automated follow-up,
confirmation and post-event emails.
dotSurvey allows businesses to set up
and manage competitions to grow
or cleanse their customer database.
Qualifying questions are sent out and
responses received through email, social
media or via a website.
Versatile, powerful and easy-to-use template
creation and management system for small, midsize
and corporate businesses
Uses dotMailer integration for deliverability
and management creating upsell opportunity
dotDigital Group Plc
Annual Report and Accounts 2011/2012
The agency
services and search
division, accounts
for around 20% of
total revenue.
dotAgency’s client portfolio Includes:
12
CHief eXeCutiVe’s rePOrt COntinueD
Ecommerce Web Design
and Search Marketing
Services - Agency and Search
the agency services and search division, which accounts for just
under 20% of total revenue, grew revenues in the year by 19%.
We have appointed a new management team to head the combined
search and agency team and strengthened the team in both search
marketing and agency services.
While the growth in the search division was behind management’s
expectations, we believe the organisational changes which have been
made to this business during the second half of the year will enable
us to deliver performance in line with revised plans during 2012/13.
early signs are that these changes are being rewarded with some
significantly higher-value client wins.
as a result of algorithm changes made by the major search engine
during this period we have modified some of the search marketing
methodologies, targeted different client profiles and recruited a new
Head of search strategy. During June the sywell office was closed
and operations were transferred to the London office to improve
knowledge sharing and fully integrate teams. following the move of
the search marketing team to London we have merged the agency
services and search marketing team and created an operational
management board to run this business unit.
the final deferred consideration for the purchase of the search
marketing business, dotsearch (previously netcallidus), was made in
november 2011. the accounts contain further non-cash ifrs3 based
accounting adjustments in the final accounts to unwind the impact
of contingent consideration that was estimated on the acquisition
in may 2009 but that was not paid to the vendors.
We have appointed a new
management team to strengthen
and head the combined search and
agency team.
www.dotdigitalgroup.com
Annual Report and Accounts 2011/2012
13
Ecommerce Web Design & Search Marketing
dotAgency provide digital solutions and search marketing
services to large corporations and brands. dotAgency take
a strategic approach to UX, web development and digital
marketing to achieve our clients’ commercial objectives.
dotAgency are Magento silver-certified partners who have
proven creative, technical and project management skills.
We deliver superior solutions on desktop machines, mobiles
and tablets. Our relationship with dotMailer ensures we always
adopt best practice when it comes to automated email marketing
and triggered campaigns to help customer acquisition, retention
and recommendation.
Our approach to search marketing blends organic with paid and
social marketing, to help our clients avoid dips in their traffic so
their online business stays at peak performance. We help drive
traffic to clients’ sites to maximise cross-selling and up-selling.
Digital Strategy
Search Marketing
We don’t just build websites, we help clients build online
business. Through data, research and experience we give clients
a complete, integrated digital marketing service that is perfectly
suited to their brand and brief. We work on clients’ entire digital
strategy; analysing end user’s journey through email campaigns
as well as web and mobile use (including social media) to
measure and share the actions they are taking so they can be
used to underpin a successful digital strategy.
Our dedicated search team – dotSearch – create effective
campaigns ensuring premium search engine positions attract
the visitors who are of most value. To stay in tune with consumer
behaviour, each client benefits from a tailored SEO plan which is
continually reviewed and developed to ensure they achieve the
best possible return on investment through the right strategy,
key words, activity and language.
Creative Design
Paid Search
Visitors don’t stay on a website for long if it looks ugly and
is hard to navigate. At dotAgency, we work with our clients
to create a site that suits their brand and keeps their visitors
coming back. Our team of strategists, designers, UX researchers,
user interface architects and HTML and JavaScript experts work
in collaboration to build the site. Each of our website designs is
tailored to suit its individual purpose.
We help our clients stay ahead of the competition by buying
real estate on well-known search engines such as Google. Paid
search campaigns can focus on brand protection or increasing
market share. They can use behavioural targeting and localised
PPC, or be tactical, reactive or trend-driven. Our Google
Analytics-certified consultants recognise patterns in your site
data and know exactly where to look to solve the cause of
specific problems and convert more visits into revenue.
Ecommerce and CMS
Social Media
Our professional team understands ecommerce and will work
with our clients to create a website that meets all project
requirements. Using Magento and Umbraco open source
platforms, our project managers and technical teams build
robust, high-performing sites while our account managers
continue to make sites profitable long into the future.
Social media websites are accessed by four out of five web
users, and by creating effective online social media campaigns
we help our clients benefit from this traffic.
Developing powerful
and measurable traffic
driving campaigns
Cross-sales of dotMailer
integration improve
customer engagement
and data management
Continued focus and success
across winning and servicing large
corporations and brands
dotDigital Group Plc
Annual Report and Accounts 2011/2012
14
CHief eXeCutiVe’s rePOrt COntinueD
The Company
invested over
£250k
in new hardware
Investment in Hardware and Product R&D
Over the year, the Company, invested over £250k in new hardware
for the technical infrastructure which supports its products, and
in september 2012 moved to new offices to provide capacity for
further growth.
the primary purpose of this investment was to provide greater
capacity and scalability across all products, thereby ensuring that
the Company can service its clients effectively, while continuing to
grow the business. the hardware architecture has been configured
with this future growth in mind, in that the layers upgraded can now
be scaled out at a relatively low capital cost as the business requires
it. the hardware acquired, is also the first phase of a larger technical
implementation which will allow the Company to release several new
major product features in the coming years. there was an immediate
additional benefit; as well as providing the platform for future growth,
many existing workloads are now processed faster, providing direct
performance benefits to customers.
significant development work on the dotmailer platform has been
completed in the year, including integration with several major Crm
products (including Dynamics and salesforce), integration with the
ebay X-Commerce fabric, translation of the user interface into eight
languages and development of a new visual drag & drop email
template editor. each of these initiatives endorses our development
spend and demonstrates that we are proactive in extending our
offering to clients which boosts our capacity to increase client wins
and grow revenues.
Full integration with the major CRM platforms
Bonjour
Guten Tag
Hello
Easy translation technology developed for
international client and partner growth
Watch dotmailer’s salesforce
integration video.
dotMailer’s Drag & Drop EasyEditor allows
everyone to be an email designer with no HTML,
coding or web design skills
www.dotdigitalgroup.com Annual Report and Accounts 2011/2012 15
There has been considerable focus in the period
on the strengthening of the senior operational
management group who manage the on going
business.
People
as part of the board’s strategy to position the business for further
sustained growth, there has been a considerable investment in people
during the year, with a key focus on adding experience and depth to
the senior management of the business.
the appointment of frank beechinor-Collins as Chairman and richard
Kellett-Clarke fCa as senior independent Director in spring 2011 has
significantly strengthened the experience and working of the board
during the year.
both richard and frank bring CeO-level experience of running an
aim business in related sectors. richard has been appointed chair of
the remuneration committee and audit committee during the year.
it is the intention of the Directors to add a further non-executive
Director during 2012/13, subject to identifying a candidate with the
requisite experience, skills and industry knowledge.
in 2011, the board had identified a number of key business areas
where additional skills and experience would be an essential element
of delivering on the growth strategy. new key hires have been made
in the following areas:
employee engagement
Head of Hr
systems integration
& scaling
senior systems architect,
Head of Product integration
business Development
business Operations
Director of Channel Development,
Director of marketing Communications
Head of Process Change,
Director of search & agency Operations,
Head of seO strategies
With ambitious growth plans for the future, the board believes that
hiring the best people and providing a culture where all staff are
engaged in the business, is vital to the continued success, albeit this
will have a short impact on cost/income ratios.
as part of the strategy to ensure the business has the talent and
culture to maintain growth the board took the decision to enter
the ‘sunday times 100 best Companies to Work for’ competition.
although we were just outside the top 100 this year, we were
delighted to receive a star rating and a good understanding of
areas for improvement in coming years. as part of the maturing
of the business, the board have committed to further investment
in training, development and mentoring with the aim of attracting
and retaining the best people.
During the year, the Company significantly enhanced the training
and development programmes available and has provided all
employees with access to bespoke key skills training, as well as
continuing specific niche skills development across industry and
professional skills development. the Group has seen a greater
percentage of employees than ever before studying towards and
achieving professional qualifications, equipping themselves and
the business with specialist expertise.
the board’s commitment to an open and honest working environment
continues with clear communication of business progress through
weekly Company meetings; including an anonymous ‘ask the board’
questions slot, regular newsletters, and lunches for new and existing
employees with the board.
the board strives to offer a competitive benefits package in order to
attract and retain the best talent, including share option schemes and
bonuses based on Company and individuals’ performances. total reward
statements are now available to all employees to provide complete
visibility into the total value of salaries, benefits and rewards earned
through the year.
i would like to take this opportunity to thank all our staff for their
tremendous commitment and performance over the past year.
Being voted as dotDigital’s Employee of the
Year by my colleagues is an incredible honour,
especially as the business employs so
many talented people.
Wayne Parker, 2011/12 Employee
of the Year Celebration
dotDigital Group Plc Annual Report and Accounts 2011/2012
16
CHief eXeCutiVe’s rePOrt COntinueD
2012/13 the
year ahead...
Early results from our
international expansion
are encouraging and
we expect to build the
international sales team.
Watch Proactive investors
interview of dotDigital
Group’s COO, tink taylor
and CtO, simon bird.
We will continue to
develop powerful and
easy-to-use tools that
enable non-technical
users to plan, design,
execute and evaluate
multi-channel
campaigns.
Outlook for the Year Ahead
During 2012/13 we anticipate that changes to the dotmailer platform
and the reorganisation within the sales and client services teams will
further improve sales in the corporate sector. recent client wins in
this sector suggest that ease-of-use combined with powerful features,
effective integrations and marketing automation is providing a good
ratio of client wins from pitches attended. the recent addition of
multiple language user interface options together with, a soon to be
launched, social broadcast capability are also expected to help open
opportunities with global organisations.
early results from our international expansion are encouraging and
we expect to build the international sales team progressively during
2012/13 where we see growth opportunities.
initial feedback on the newly launched dotsurvey has been extremely
positive and in quarter one of the new financial year we plan to run
trial marketing campaigns to establish the customer acquisition costs
of various digital marketing channels. based on the results of this trial,
the board will agree a plan for significant focused marketing of this
product both in the uK and globally.
During the year, we evaluated a number of potential acquisition
opportunities of email marketing businesses. However, given that we
would effectively be acquiring clients, and not the brand, the software
platform or the management, in the opinion of the Directors none of
the businesses evaluated were judged to be value enhancing when
predicted future revenues and profits were compared to asking prices.
although, we will continue to proactively seek and evaluate
acquisitions, our strategy will focus upon successful organic growth
and as a business we need to invest in cost-effective marketing
to ensure the growth is maintained. With a product like the new
online survey tool, the income is annuity-based and one of the key
decisions required will be to determine the level of upfront marketing
investment to generate future annuity income streams.
to maintain our record of strong organic growth we will continue to
focus on product innovation, understanding our clients’ requirements
and delivering return on investment for our clients. We will also
continue to selectively expand our international activities.
www.dotdigitalgroup.com Annual Report and Accounts 2011/2012 17
The Future
the product roadmap for the business will be based around the
vision of a saas (cloud) based digital marketing automation platform,
built to enable marketers to define prospect and client engagement
communications in a highly visual way, to define triggered messages
via multiple channels, where the content delivered is segmented,
timely and relevant to the recipient, eg. the platform will deliver
triggered messages for events such as shopping cart abandonment
or web page bounce automatically and in real time.
Our passion for ease of use and visual tools for non-technical users
will enable the design, creation, and execution of campaign workflows
across every digital channel while enabling the use of marketing best
practices and management controls.
The product roadmap for the
business will be based around
the vision of a SaaS (cloud) based
digital marketing automation
platform, built to enable marketers
to define prospect and client
engagement communications in
a highly visual way via multiple
channels, where the content
delivered is segmented, timely
and relevant to the recipient.
P A Simmonds
Chief Executive and Chief Financial Officer
dotMailer Platform Product Roadmap
CRM
Integrations
Shop
Marketing
Automation
Administrator
Interface
Survey
Translation
Social Media
Management
Email
SMS/
Mobile
Drag & Drop
Visual Editor
Landing
Page
Builder
h
t
w
o
r
g
r
o
f
n
o
i
t
a
v
o
n
n
i
t
c
u
d
o
r
P
2000
Now
dotDigital Group Plc Annual Report and Accounts 2011/2012
18
COrPOrate sOCiaL resPOnsibiLity rePOrt
The Board strives to offer a competitive benefits
package in order to attract and retain the best
talent, including share option schemes and
bonuses based on Company and individuals’
performance.
During the past year, the Group continued with its on-going
commitment to social responsibility in the market in which it operates,
to its employees, suppliers and to the broader environment.
Clients
the Company prides itself on ensuring that our products and services
are designed to meet the expectations of our clients and their
customers. feature forums allow clients to request features and
vote on feature priority, feeding directly into the development
schedules for our saas product offerings. dotagency services are
designed and delivered against a best-fit model; delivering projects
that provide maximum return on investment for clients, on time and
on budget.
the Group is committed to complete transparency with our clients,
providing pricing structures that are clear, and offering packages that
allow clients to deliver successful campaigns. a pricing calculator is
provided for dotmailer licenses and packages to allow clients and
potential clients to cost their campaigns, and our experienced sales
team are able to assist clients in pricing guidance across all our
products and services. dotmailer is also offered with a money-back
guarantee to give clients maximum confidence in our products and
services.
dotDigital products and services are supported by an expert team;
giving access to support via email, telephone and live chat. We also
provide additional managed services for our products, enabling our
clients to deliver successful campaigns and projects.
Employees
the Group has continued to invest in the development of our
people across the Group thus underpinning the critical role that our
employees play in the success of the business.
the board has significantly enhanced the training and development
programme available, to provide all employees with access to bespoke
key skills training, as well as continuing specific skills development
in areas relating to the industry we operate in and, in addition,
professional skills development. the Group now has a greater
percentage of employees than ever before studying towards and
achieving professional qualifications, equipping themselves and the
business with specialist expertise.
the board’s commitment to an open and honest working environment
continues with clear communication of business progress through
weekly Company meetings; including an anonymous ‘ask the board’
questions slot, regular newsletters, and lunches for new and existing
employees with the board.
the board strives to offer a competitive benefits package in order to
attract and retain the best talent, including share option schemes and
bonuses based on Company and individuals’ performance. total reward
statements are now available to all employees to provide completely
visibility into the total value of salaries, benefits and rewards earned
through the year.
it is the policy of the Group to ensure that at all times there are equal
opportunities for all employees with no discrimination on account
of race, age, gender, sexual orientation, disability and political or
religious beliefs. Our philosophy is to ensure that ability, contribution
to the business and potential to develop are the determining factors
in the selection, training, career development and promotion of all
employees.
investment in our offices continues, ensuring both a pleasant and
safe working environment for all employees. above all, the board work
continually to ensure that our work places are safe and comply with
all relevant legislation; the Group has not been subject to sanctions or
fines for environmental, health and safety or other infringements.
dotDigital adopts a charity each year;
this year the Board elected to continue
our partnership with Macmillan Cancer
Support through our Big Pink campaign.
www.dotdigitalgroup.com Annual Report and Accounts 2011/2012 19
This year the Board
has increased the
commitment to
sponsoring Louise
Cook, the British
Female Rally
Champion.
Risks
the board is cognisant of the need to monitor potential threats to
the business and our workforce. to this end the board has established
a risk Committee consisting of both non-executive Directors and
management. this committee meets regularly to evaluate on
going risks to the business and this includes risks posed both to our
employees and any potential risks to the business from suppliers and
partners. any recommendations by this committee are put directly
to the board for further discussion and implementation.
Community
Our roots within our community are very important. the board are
committed to working with our local and wider communities across
our various sites to continue to build the connections that have been
developed over the years.
dotDigital adopts a charity each year; this year the board elected to
continue our partnership with macmillan Cancer support through
our big Pink campaign. some of the activities we supported in the
past year included the board pledging donations in conjunction with
our entry to the sunday times 100 best Companies and donating gifts
at Christmas time to this charity.
the Group also offers its products and services to all charities at
preferential rates, and we are very proud of our strong client base of
charitable organisations including the Disabilities trust, the fairtrade
foundation and seeability. this year, the board has increased its
commitment to sponsoring Louise Cook, the british female rally
Champion. Louise masterminded a unique sponsorship programme to
allow her to race and the board are delighted to be able to support
her on going successes on the rallying circuit.
Within our local communities, the Company provides work experience
and internship opportunities for local students, and we actively
recruit from the local talent pool. this year, we also introduced a new
volunteering scheme which allows paid time off for all employees to
volunteer on a number of programmes, including local environmental
projects and fundraising events.
Environment
the very nature of dotDigital business activities works to move our
clients away from traditional paper-based marketing methods by
providing digital marketing channels, through email marketing, online
surveys and by enhancing digital presence through websites and other
online profile drivers.
Our modern offices are optimised to deliver an environmentally-
friendly working environment, from power saving lights that are
linked to motion sensors to low energy modern equipment. Our
on going investment in our it infrastructure means that the Group
is continuously improving upon our environmental impact. extensive
recycling facilities are provided and along side day-to-day waste
recycling, we also ensure old furniture and it equipment are recycled
or reused.
the Group actively aims to reduce the amount of consumables
used and source our products responsibly, for example, our cleaning
suppliers use eco-friendly cleaning consumables. Our employees are
encouraged to travel for business by public transport where possible
to reduce transportation emissions.
Suppliers
as part of the Groups’ strong commitment to our local community,
we aim to source local suppliers wherever possible. this is underlined
by the fact that a number of our suppliers have been with the
Company for many years and we consider our key suppliers as
partners. dotDigital aims to work with partners and suppliers with
similar ethical standards and values. at dotDigital, we understand
the importance or fair and equal treatment, and particularly drive
towards transparent and fair payment terms and processes.
dotDigital Group Plc Annual Report and Accounts 2011/2012 20
Our bOarD Of DireC tOrs
Peter Simmonds FCCA, aged 54
Chief Executive and Chief Financial Officer
Peter simmonds commenced his career in 1976 as a trainee
accountant with unilever PLC and has over 30 years of experience
at senior management and board level, principally in the areas of
banking, insurance, finance, it, outsourcing and software. as well
as large company experience, he has considerable entrepreneurial
experience having been involved at start-up or early stage of a number
of companies in various industry sectors including consultancy
services, vehicle leasing, software and internet solutions.
as well as being an experienced finance professional, Peter has
considerable experience of acquisitions, disposals, post-acquisition
integration, change management and creating cultures and structures
to facilitate entrepreneurship and growth.
Simon Bird, aged 36
Chief Technical Officer
simon bird has developed an in-depth technical
knowledge of the internet and its applications. Prior
to co-founding dotDigital Group, he assisted in the
development of a major internet access provider.
He has provided services to a number of well-known
companies and organisations helping create websites,
intranets, extranets, content management systems
and other online solutions.
“Tink “ Ian Taylor, aged 39
Chief Operating Officer
tink taylor 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 bureau’s e-communications Council. tink was
a judge for the email and Virals category at the Dma awards.
“Skip” Gordon Fidura, aged 43
Client Services Director
skip fidura joined the dotDigital Group in January 2009 with a remit to
build our digital strategy services offering. skip has been in marketing
for over 14 years, most recently as email Partner at OgilvyOne London
and prior to that as the Director of european Operations for acxiom
Digital. He has worked with clients such as bt, Kodak, hp, intel, and
travelocity.co.uk. skip is also Vice-Chairman of the uK Dma email
marketing Council and was listed by revolution magazine as one
of the 50 most influential people in new media.
www.dotdigitalgroup.com Annual Report and Accounts 2011/2012 21
Frank Beechinor-Collins, aged 48
Non-Executive Chairman
frank beechinor, was for 11 years, CeO of One Click Hr, an
aim quoted it/Human resources business of which he was
a co-founder. the Company operated in the uK and north
america and had around 200 employees. frank oversaw
the successful sale of the business to aDP, a us$4bn nyse
listed company, for us$25m. in notable addition, frank was
for five years, Operations Director of GmCs, part of Grand
metropolitan, a uK-based training services provider, with
several thousand employees. frank brings a great deal of
corporate experience to the board, gained over 25 years
of working for and running public and private companies.
frank has a strong track record in m&a and brings with him a
quality network of contacts in the fields of managed services
and software as a service (saas).
Richard Kellett-Clarke FCA, aged 57
Non-Executive Director
richard Kellett-Clarke brings to the board over 25 years
of management experience in the turn round and
strategic repositioning and recovery of creative businesses
in CmCG, media, electronics and software industries.
He was a founder of afX neWs Limited, now part of
thomson reuters, and sealed media, now owned by
Oracle. He has held numerous CfO roles in subsidiaries
of large PLCs as well as the role of it Director at financial
times information. He was part of the team as CfO which
brought Picwick Group PLC to the main market and
brady PLC to aim. He is currently the CeO of idox PLC
an aim-listed specialist software, solutions and Km
consultancy business.
Milan Patel ACCA ACSI, aged 28
Company Secretary & Financial Controller
milan joined the Company in 2007 and was appointed
Group Company secretary in 2009. milan is a member of
the association of Chartered Certified accountants, an
associate member of the Chartered institute of securities and
investments and holds a ba (Hons) degree in accounting and
finance. milan has over seven years experience in accounting
and finance within the media and logistics industry. He has
been responsible for the financial and legal aspects of the
reverse acquisition of West end Ventures PLC, acquisition of
netcallidus, admission to Plus and the introduction to aim.
He is also responsible for the Group’s functions in financial
management and reporting, regulatory compliance, legal
and corporate governance.
dotDigital Group Plc Annual Report and Accounts 2011/2012
22
COrPOrate GOVernanCe rePOrt
the board has 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 in the
‘internal Control’ section. 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.
(d) Accountability and Audit
(i) Financial Reporting
Detailed reviews of the performance and financial position of the Group
are included in the Chief executive’s statement. the board uses this and
the report of the Directors’ on pages 26 to 30 to present a balanced and
understandable assessment of the Group’s position and prospects. the
Directors’ responsibilities for the financial statements is described on
page 30.
Compliance Statement
(a) Directors
the details of the Group’s board, together with the audit and
remuneration Committees, are set out on pages 23 and 24.
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 year end, there were four executive Directors, one independent
non-executive Director and an independent non-executive Chairman.
the current constitution of the remuneration Committee and the audit
Committee is shown on pages 23 and 24.
appointments to the board are nominated by an executive Director
and then considered by the full board.
the service contracts of the executive Directors are less than one year
and determinable by six months’ notice.
(b) Directors’ Remuneration
as set out on page 25, the remuneration of the executive Directors is
determined by the remuneration Committee while that of the non-
executives is determined by the whole board. the Directors are conscious
of the importance of performance-related incentives and bonuses are
paid based on performance as deemed appropriate by the remuneration
Committee. the remuneration Committee use both financial and non-
financial benchmarks to determine the executive Director bonuses.
(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.
(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 year ended 30th June 2012 and up to the date of the
report of the Directors’ . 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.
(iii) Audit Committee and Auditors
the audit Committee comprises frank beechinor-Collins and is
chaired by richard Kellett-Clarke. 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 other such
related functions as the board may require.
(iv) Going Concern Basis
after making enquiries, the Directors have formed a judgment, 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.
www.dotdigitalgroup.com Annual Report and Accounts 2011/2012 auDit COmmittee rePOrt
23
the audit Committee is a sub-committee of the board. the
responsibilities of the committee 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;
• reviewing the Group’s systems for internal financial control and risk
management;
• 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.
Composition of the Audit Committee
the audit Committee comprises frank beechinor-Collins and richard
Kellett-Clarke. the Chairman of the audit Committee is richard Kellett-
Clarke. the Committee meets separately with the external auditors
without management being present.
the secretary to the committee is milan Patel, the Company secretary.
Main Activities of the Audit Committee
at its meeting on the 2nd October 2012, the Committee reviewed
the Group’s preliminary announcement of its results for the financial
year 30th June 2012 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 judgment, 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.
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 on auditors’ independence, our policy
is that the external auditors are not invited to tender for general
consulting work.
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 ended 30th June 2012.
the Committee concluded that these budgets were both prudent and
realistic in the context of the Group’s ambitions.
Richard Kellett-Clarke
Chairman of the Audit Committee
dotDigital Group Plc Annual Report and Accounts 2011/2012 24
remuneratiOn COmmittee rePOrt
The Remuneration Committee
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 comprises frank beechinor-Collins and richard
Kellett-Clarke (Chairman).
Service Contracts
On 7th 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 2nd of 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 secretary to the committee is milan Patel, the Company secretary.
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;
Employee Incentive Schemes
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 grant. 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.
(b) to maintain a competitive programme which enables the Group to
approved by the remuneration Committee
attract and retain high calibre executives; and
signed on its behalf by
Richard Kellett-Clark
Chairman of Remuneration Committee
(c) to determine the terms of employment and remuneration for
executive Directors.
Key Elements of Remuneration for Executive Directors
the Committee considers the key elements in total to ensure there is
the right balance between reward for short-term success and long-
term growth. for executive Directors, this is summarised as follows:
Base Pay
Reviewed against:
• salary levels in comparable sized companies listed on aim;
• market conditions and Company performance;
• Level of pay awards in rest of the business;
• role and responsibility of the individual Director.
Benefits
Reviewed against:
• total reward structure for all employees; and
• Provided on a market competitive basis.
Annual Bonus Scheme
Reviewed against:
• Group profit before tax (Pbt) with an individual performance
element linked to object delivery;
• Drive profitability and strategic change across the group;
• Delivery of the overall business strategy.
www.dotdigitalgroup.com Annual Report and Accounts 2011/2012 Directors’ Emoluments
executive Director
P simmonds
i taylor
s bird
G fidura
executive Director
P simmonds
i taylor
s bird
G fidura
salary/fees
benefits
12m period ended 30.6.12
23,338
132,000
12m period ended 30.6.11
salary/fees
benefits
5,452
6,843
6,843
4,200
5,523
6,757
6,757
4,200
bonus
40,000
40,000
40,000
12,000
bonus
60,000
45,000
55,000
21,000
Pension
11,000
11,000
11,000
2,310
35,310
Pension
10,817
10,458
10,458
2,280
34,013
110,000
110,000
110,000
77,000
407,000
100,834
102,500
102,500
76,000
381,834
23,237
181,000
* median remuneration for aim profitable companies is based on a Vitesse media research report of Directors’ pay 2012.
non-executive Director
f beechinor-Collins
r Kellet-Clarke
n nelson
non-executive Director
f beechinor-Collins
r Kellet-Clarke
n nelson
D Pacy
salary/fees
benefits
bonus
Pension
12m period ended 30.6.12
35,000
31,591
18,214
84,805
salary/fees
benefits
bonus
Pension
12m period ended 30.6.11
5,833
2,917
27,500
6,667
42,917
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25
median
remuneration of
aim profitable
companies*
280,773
181,267
181,267
total
166,452
167,843
167,843
95,510
597,648
total
177,174
164,715
174,715
103,480
620,084
total
35,000
31,591
18,214
84,805
total
5,833
2,917
27,500
6,667
42,917
Directors’ Interests
the respective interests in the shares of the Company for the members of the board at the year end and subsequent to that date are stated below:
Director
P simmonds*
i taylor
s bird
f beechinor-Collins**
no. of shares held
as at 30.6.12
19,959,999
53,876,667
45,860,000
674,194
% Holding
7.25%
19.57%
16.65%
0.24%
120,370,860
43.71%
* 4.74% of Peter simmonds holdings/voting rights has been held by frank nominees Limited who acts as the 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, siPPs etc. the beneficiary of the siPP is Peter anthony simmonds.
** the 674,194 shares shown as being held by mr beechinor-Collins are owned by Curra trust, a trust established for the benefit of his children and
in which he has no beneficial interest.
Directors’ Interest in Share Options
under the Group’s executive share option scheme the following Directors have the right to acquire Ordinary shares.
executive Director
G fidura
Grant Date
22/10/2009
11/11/2010
13/10/2011
no. of share
options granted
Option Price
(Pence)
Date first
exercisable
expiry Date
800,000
800,000
537,932
5.0
01/07/2010
01/02/2019
5.125
01/05/2012
31/12/2015
7.25
01/05/2012
01/02/2016
dotDigital Group Plc Annual Report and Accounts 2011/2012
26
rePOrt Of tHe DireC tOrs
the Directors present their report with the financial statements of the
Company and the Group for the year ended 30th June 2012.
Principal Activity
the principal activity of the Group in the year under review was that
of software as a service for marketing.
Review of Business
During the year, the Group has shown significant growth in customer
numbers, sales, and profits. revenues grew from £9m in the year ended
June 2011 to £12m for the year ended June 2012, an increase of 34%.
Post-tax profits grew from £1.91m in 12 months to June 2011 to
£2.62m (excluding exceptional items) for the year ended June 2012;
an increase of 37%.
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 are:
2012
2011
% increase
revenue
ebitDa
11,986,930
8,952,488
3,429,893
2,626,311
Volume of sends
1,828,276,324 1,031,625,067
new Clients
recurring revenue as a %
1,813
70.4
1,433
68.4
33.9%
30.6%
77.2%
26.5%
Key Risks & Uncertainties
(i) Supplier, Computer Hardware and Internet Reliability
Related Risks
the Group rents space for its servers located at hosting centres
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 centres and to date, there have been no significant failures,
there is no assurance of continuity of supply. 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. 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.
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 acts as the data processor in
all instances and neither owns lists nor provides third parties with
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
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 monitors the complaint rates for each of its clients
and reacts quickly and accordingly to stop rogue campaigns. However,
if too many new clients were to 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.
www.dotdigitalgroup.com Annual Report and Accounts 2011/2012
27
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
measure 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 and Information Security
although in the opinion of the Group’s Directors, the technical team
at the Group takes sensible precautions against intrusions and loss of
data and dotmailer employs a security manager to mitigate this risk,
there 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 coverage of
other geographic markets globally. 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 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.
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 a leading edge or
competitive products being brought to market in time to maintain
a competitive advantage. the Group may be unsuccessful in its efforts
to develop products.
While 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.
(vii) Data Privacy
evolving data privacy regulations around the world may restrict our
clients’ ability to collect, process, disclose and use personal information
for marketing purposes which may impact on the use of digital
marketing or its effectiveness.
Governments and supervising authorities have enacted, and may
in the future enact, laws and regulations concerning the solicitation,
collection, processing, disclosure or use of consumers’ personal
information. evolving and changing regulations regarding personal
data and personal information, both within the european union and
elsewhere, especially relating to classification of iP addresses, machine
identification, location data and other information, may impact our
business. such laws and regulations require or may require us and our
clients to implement privacy and security policies, permit consumers
to access, correct or delete personal information stored or maintained
by such companies, inform individuals of security incidents that affect
their personal information, and, in some cases, obtain consent to use
personal information for certain purposes. Other possible legislation
could, if enacted, impose additional requirements and prohibit the use
of certain technologies, such as those that track individuals’ activities
on web pages or record when individuals click on a link contained in
an email message. such laws and regulations could restrict our clients’
ability to collect and use email addresses, web browsing data and
personal information, which may reduce demand for our solutions.
(viii) Evolving Technology and Customer Requirements
failure to respond to evolving technological and customer
requirements or to introduce competitive enhancements and new
features, may mean our saas solutions could become less competitive.
dotDigital Group Plc Annual Report and Accounts 2011/2012 28
rePOrt Of tHe DireC tOrs COntinueD
to remain a credible provider of multi-channel marketing saas
solutions, we must continue to invest in research and development
of new solutions and enhancements to our platform. the process of
developing new technologies, products and services is complex and
expensive and requires highly-skilled and talented software engineers
and marketing expertise. saas development requires implementation
of rapidly changing technologies, adhering to standards and
regulations, anticipating client requirements and frequent product
enhancements. the introduction of new solutions by competitors
potentially makes our solutions less attractive or easy to sell. the
success of our planned enhancements and new solutions depend
on many factors, including user interface design, quality assurance
testing, customer acceptance and training and good marketing
communication. failure to anticipate client requirements and
successfully develop new solutions or features may impact growth
and retention of existing clients.
Dividends
no dividends will be distributed for the year ended 30th June 2012.
it is the Directors’ strategy to achieve capital growth on the strength
of a consistency cash generative trading performance. During the
last financial year, cash reserves grew as a result of strong trading
performance. accordingly, the Directors believe that it is inappropriate
to propose a dividend based on this strategy to invest in further
growth.
Future Outlook
the Group provides digital marketing services across a range of areas.
each of these areas have shown market growth significantly above
that of the uK economy. the board believes that our widespread
brand recognition and strong product range will continue to present
opportunities to expand and diversify profitability in the coming year.
Directors
except as noted, the Directors shown below have held office during
the period from 1st July 2011 to the date of this report.
• s bird
• P a simmonds
•
i taylor
• G fidura
• r Kellett-Clarke
• f beechinor-Collins
• n nelson (resigned 5th January 2012)
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 into a binding contract for the supply of goods
and services. the Company seeks to abide by these payment terms
whenever it is satisfied that the supplier has provided the goods or
services in accordance with the agreed terms. the average creditor
day for the year is 25 (2011- 25 days).
Publication of Accounts on Company Website
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 purchases Directors’ and Officers’ insurance against their
costs in defending themselves in legal proceedings taken against
them in that capacity, and in respect of damages resulting from the
unsuccessful defence of any proceedings.
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.
Research and Development
in the markets in which the Group operates, effective research and
development is vital to maintaining competitive advantage and
securing future income streams.
Going Concern
after making appropriate enquires, 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 preparing the financial
statements.
Events after the Reporting Period
there are no events after the date of this report or the date the
financial statements were approved by the board of Directors which
impact on the figures as presented.
www.dotdigitalgroup.com Annual Report and Accounts 2011/2012 29
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 30th June 2012 are as follows:
Directors
s bird
i taylor
P simmonds
n nelson
f beechinor-Collins
30.6.12
number of
shares held
Percentage
shareholding
%
30.6.11
number of
shares held
Percentage
shareholding
%
45,860,000
53,876,667
19,959,999*
375,000
674,194**
16.65
19.57
7.25
0.14
0.24
52,860,000
60,860,000
19,943,333*
4,075,000
674,194**
19.22
22.13
7.25
2.73
0.25
* frank nominees Limited holds 4.74% in respect of Peter simmonds holding/voting rights act as nominee for trust alliance Pensions Limited.
frank nominees is a vehicle used by Kleinwort benson Limited to hold securities for clients, trusts, siPPs etc. the beneficiary of the siPP is Peter
anthony simmonds.
** the 674,194 share shown as being held by mr beechinor-Collins are owned by Curra trust, a trust established for the benefit of his children
and in which he has no beneficial interest.
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 30th June 2012 are as follows:
executive Directors
G fidura
30.6.12
number of
options held
30.6.11
number of
options held
2,137,930
1,600,000
Substantial Interests
On 26th september 2012, the following parties had notified the Group of a beneficial interest that represents 3% or more of the Group’s issued
share capital at that date:
shareholders
i taylor
s bird
newedge Group sa
blackrock inc.
P simmonds
Legal and General Group PLC
blackrock smaller Companies trust PLC
2012
number of
shares held
Percentage
shareholding
%
53,876,667
45,860,000
30,300,000
30,085,218
19,959,999
19,192,000
10,275,494
19.57
16.25
11.00
10.93
7.25
6.97
3.73
dotDigital Group Plc Annual Report and Accounts 2011/2012
30
rePOrt Of tHe DireC tOrs COntinueD
Listing
the Group’s Ordinary shares have been traded on London alternative
investment market (aim) since 29 march 2011. Zeus Capital are
the Group’s nominated advisors and together with Charles stanley
securities are the joint brokers. the closing mid market share price at
30th June 2012 was 11.25p (2011: 7.125p).
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.
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 by 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:
Auditors
the auditors, Jeffreys Henry LLP, will be proposed for re-appointment
at the forthcoming annual General meeting.
On behalf of the Board
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are reasonable
P A Simmonds
Director
8th October 2012
and prudent;
• state whether the Group and Parent Company financial statements
have been prepared in accordance with ifrs’s as adopted by the
european union subject to any materials departures disclosed and
explained in the financial statements;
• prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the Company will continue in
business.
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. 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.
the Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website. Legislation in the united Kingdom governing the preparation
and dissemination of financial statements may differ from legislation in
other jurisdictions.
www.dotdigitalgroup.com Annual Report and Accounts 2011/2012 rePOrt Of tHe inDePenDent auDit Ors
31
We have audited the financial statements of dotDigital Group Plc
for the year ended 30th June 2012, which comprise the consolidated
income statement, consolidated statement of comprehensive income,
consolidated statement of changes of equity, company statement
of changes in equity, consolidated statement of financial position,
company statement of financial position, consolidated statement of
cash flows, company statement of cash flows and the related notes.
the financial reporting framework that has been applied in their
preparation is applicable law and international financial reporting
standards (ifrss) as adopted by 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 Chapter 3 of Part 16 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 an auditors report 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,
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 and express an opinion on 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
presentation of the financial statements. in addition, we read all the
financial and non-financial information in the Chairman’s and Chief
executive’s report, Corporate social responsibility report, Corporate
Governance report, audit Committee report, remuneration
Committee report and report of the Directors to identify material
inconsistencies with the audited financial statements. if we become
aware of any apparent material misstatements or inconsistencies we
consider the implications for our report.
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 30th June 2012 and of the Group’s profit and
Group’s and Parent Company’s cash flow for the year then ended;
• have been properly prepared in accordance with ifrss as adopted
by the european union;
•
•
the Parent Company financial statements have been properly
prepared in accordance with ifrss as adopted by the european
union and as applies 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.
Opinion on other matter prescribed by the Companies Act 2006
in our opinion 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.
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 our 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 on behalf of Jeffreys Henry LLP (statutory auditors)
finsgate 5-7 Cranwood street, London, eC1V 9ee
8th October 2012
dotDigital Group Plc Annual Report and Accounts 2011/2012 32
COnsOLiDateD inCOme statement
fOr tHe year enDeD 30tH June 2012
Continuing operations
revenue
Cost of sales
Gross profit
administrative expenses
Operating profit before exceptional items
exceptional items: Cost relating to listing on aim
exceptional items: impairment of goodwill due to adjustment to contingent consideration
Operating profit
finance costs
finance income including exceptional items
Profit before income tax
income tax expense
Profit for the year
Profit attributable to:
Owners of the parent
earnings per share expressed in pence per share:
basic
Diluted
adjusted excluding exceptional items
adjusted diluted excluding exceptional items
COnsOLiDateD statement Of COmPreHensiVe inCOme
fOr tHe year enDeD 30tH June 2012
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Total comprehensive income attributable to:
Owners of the parent
notes
30.6.12
£
30.6.11
(restated)
£
11,986,930
(874,718)
8,952,488
(647,142)
11,112,212
8,305,346
(8,239,391)
(6,000,351)
2,872,821
2,304,995
-
(1,186,516)
(119,826)
-
1,686,305
2,185,169
(682)
1,087,837
(1,468)
1,127,862
2,773,460
3,311,563
(305,985)
(273,743)
2,467,475
3,037,820
2,467,475
3,037,820
0.90
0.88
0.94
0.92
1.16
1.07
0.78
0.72
5
5
6
7
9
30.6.12
£
30.6.11
£
2,467,475
3,037,820
-
-
2,467,475
3,037,820
2,467,475
3,037,820
www.dotdigitalgroup.com Annual Report and Accounts 2011/2012
COnsOLiDateD statement Of finanCiaL POsitiOn
fOr tHe year enDeD 30tH June 2012
Assets
Non-current assets
Goodwill
intangible assets
Property, plant and equipment
Current assets
trade and other receivables
Cash and cash equivalents
Total assets
Equity attributable to the owners of the parent
Called up share capital
share premium
reverse acquisition reserve
Other reserves
retained earnings
Total equity
Liabilities
Non-current liabilities
financial liabilities
financial instruments
Deferred tax
Current liabilities
trade and other payables
financial liabilities - borrowings
interest bearing loans and borrowings
tax payable
Total liabilities
Total equity and liabilities
33
notes
30.6.12
£
30.6.11
£
10
11
12
14
15
16
17
17
17
17
19
22
18
19
2,934,045
1,753,057
404,395
4,120,561
990,557
238,124
5,091,497
5,349,242
2,198,292
4,020,349
1,658,044
2,568,265
6,218,641
4,226,309
11,310,138
9,575,551
1,376,811
4,754,853
(4,695,465)
127,343
8,201,817
1,374,861
4,737,053
(4,695,465)
70,160
5,734,342
9,765,359
7,220,951
-
24,616
1,243,492
-
1,334,581
1,007,743
-
185,582
6,076
97,289
1,520,163
1,111,108
1,544,779
2,354,600
11,310,138
9,575,551
the financial statements were approved and authorised for issue by the board of Directors on 8th October 2012 and were signed on its behalf by
P A Simmonds
Director
Company registration number: 06289659 (england and Wales)
dotDigital Group Plc Annual Report and Accounts 2011/2012
34
COmPany statement Of finanCiaL POsitiOn
fOr tHe year enDeD 30tH June 2012
Assets
Non-current assets
investments
Current assets
trade and other receivables
Cash and cash equivalents
Total assets
Equity attributable to the owners of the parent
Called up share capital
share premium
Other reserves
retained earnings
Total equity
Liabilities
Non-current liabilities
financial liabilities - borrowings
interest bearing loans and borrowings
Current liabilities
trade and other payables
Total liabilities
Total equity and liabilities
notes
30.6.12
£
30.6.11
£
13
7,511,030
8,704,468
7,511,030
8,704,468
14
15
16
17
17
17
19
18
12,684
83,293
95,977
25,746
235,274
261,020
7,607,007
8,965,488
1,376,811
4,754,853
127,343
129,063
1,374,861
4,737,053
70,160
498,060
6,388,070
6,680,134
-
1,243,492
1,218,937
1,041,862
1,218,937
2,285,354
7,607,007
8,965,488
the financial statements were approved and authorised for issue by the board of Directors on 8th October 2012 and were signed on its behalf by
P A Simmonds
Director
Company registration number: 06289659 (england and Wales)
www.dotdigitalgroup.com Annual Report and Accounts 2011/2012
COnsOLiDateD statement Of CHanGes in equity
fOr tHe year enDeD 30tH June 2012
Balance at 1st July 2010
issue of share capital
reclassification of equity
transactions with owners
Profit for the year
transactions with owners
Balance at 30th June 2011
issue of share capital
transactions with owners
Profit for the year
total comprehensive income
Balance at 30th June 2012
Balance at 1st July 2010
issue of share capital
share based payment
reclassification of equity
transactions with owners
Profit for the year
total comprehensive income
Balance as at 30th June 2011
issue of share capital
share based payment
transactions with owners
Profit for the year
total comprehensive income
Balance at 30th June 2012
35
share
premium
£
4,533,754
65,533
137,766
203,299
-
-
share
capital
£
1,292,500
67,467
14,894
82,361
-
-
retained
earnings
£
2,696,522
-
-
-
3,037,820
3,037,820
1,374,861
5,734,342
4,737,053
1,950
1,950
-
-
17,800
17,800
-
-
2,467,475
2,467,475
-
-
1,376,811
8,201,817
4,754,853
unissued
share
capital
£
152,660
-
-
(152,660)
(152,660)
-
-
-
-
-
-
-
-
-
reverse
acquisition
reserve
£
(4,695,465)
-
-
-
-
-
-
Other
reserves
£
29,493
-
40,667
-
40,667
-
total
equity
£
4,009,464
133,000
40,667
-
173,667
3,037,820
-
3,037,820
(4,695,465)
70,160
7,220,951
-
-
-
-
-
-
57,183
57,183
-
19,750
57,183
76,933
2,467,475
-
2,467,475
(4,695,465)
127,343
9,765,359
• 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 net share issue expenses.
• retained earnings represents the cumulative earnings of the Group attributable to equity shareholders.
•
unissued share capital relate to the shares due to be issued in relation to the acquisition of dotsearch Limited (previously known as
netcallidus Limited).
•
the reverse acquisition reserve relates to the adjustment required to account the reverse acquisition in accordance with international
financial reporting standards.
• Other reserves relate to the charge for the share based payment in accordance with international financial reporting standard 2.
dotDigital Group Plc Annual Report and Accounts 2011/2012
36
COmPany statement Of CHanGes in equity
fOr tHe year enDeD 30tH June 2012
Balance at 30th June 2010
issue of share capital
reclassification of equity
transactions with owners
Profit for the year
total comprehensive income
Balance at 30th June 2011
issue of share capital
transactions with owners
Profit for the year
total comprehensive income
Balance at 30th June 2012
Balance at 1st July 2010
issue of share capital
reclassification of equity
share based payment
transactions with owners
Profit for the year
total comprehensive income
Balance at 30th June 2011
issue of share capital
share based payment
transactions with owners
Profit for the year
total comprehensive income
Balance at 30th June 2012
share
capital
£
1,292,500
67,467
14,894
82,361
-
-
retained
earnings
£
(329,205)
-
-
-
827,265
827,265
share
premium
£
4,533,754
65,533
137,766
203,299
-
-
1,374,861
498,060
4,737,053
1,950
1,950
-
-
-
-
(368,997)
(368,997)
17,800
17,800
-
-
1,376,811
129,063
4,754,853
unpaid
share
capital
£
152,660
-
(152,660)
-
(152,660)
-
-
-
-
-
-
-
-
-
Other
reserves
£
29,493
-
-
40,667
40,667
-
-
total
equity
£
5,679,202
133,000
-
40,667
173,667
827,265
827,265
70,160
6,680,134
-
57,183
57,183
-
-
19,750
57,183
76,933
(368,997)
(368,997)
127,343
6,388,070
• 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 net share issue expenses.
• retained earnings represents the cumulative earnings of the Group attributable to equity shareholders.
• unissued share capital relate to the shares due to be issued in relation to the acquisition of dotsearch Limited (previously known as
netcallidus Limited)
• Other reserves relate to the charge for the share based payment in accordance with international financial reporting standard 2.
www.dotdigitalgroup.com Annual Report and Accounts 2011/2012
COnsOLiDateD statement Of CasH fLOWs
fOr tHe year enDeD 30tH June 2012
Cash flows from operating activities
Cash generated from operations
interest paid
tax paid
Net cash generated from operating activities
Cash flows from investing activities
Contingent consideration on acquisition of subsidiary
Purchase of intangible fixed assets
Purchase of tangible fixed assets
sale of tangible fixed assets
interest received
Net cash used in investing activities
Cash flows from financing activities
Loan repayments in period
share issues
Net cash generated from financing activities
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
COmPany statement Of CasH fLOWs
fOr tHe year enDeD 30tH June 2012
Cash flows from operating activities
Cash generated from operations
Net cash from operating activities
Cash flows from investing activities
Contingent consideration on acquisition of subsidiary
Net cash from investing activities
Cash flows from financing activities
Loan from/(to) Group companies
share issue
Net cash from financing activities
Decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
notes
26
37
30.6.12
£
30.6.11
£
3,274,841
(682)
(193,076)
2,462,734
(1,468)
(478,461)
3,081,083
1,982,805
(164,100)
(1,172,867)
(314,788)
637
8,445
-
(657,172)
(160,624)
-
5,034
(1,642,673)
(812,762)
(6,076)
19,750
13,674
(12,395)
133,000
120,605
1,452,084
1,290,648
2,568,265
1,277,617
4,020,349
2,568,265
27
27
30.6.12
£
30.6.11
£
28
(236,478)
(257,589)
(236,478)
(257,589)
(164,100)
(164,100)
228,847
19,750
248,597
-
-
(25,469)
133,000
107,531
(151,981)
(150,058)
29
29
235,274
83,293
385,332
235,274
dotDigital Group Plc Annual Report and Accounts 2011/2012
38
nOtes tO tHe COnsOLiD ateD finanCiaL statements
fOr tHe year enDeD 30tH June 2012
1. General Information
dotDigital Group Plc (“dotDigital”) is a Company incorporated in
england and Wales and quoted on the aim market. the address of the
registered office is disclosed on the inside back cover of the financial
statements. the principal activity of the Group is described on page 26.
• the following accounting treatment has been applied in respect of
the acquisition of dotDigital Plc:
• the assets and liabilities of dotDigital Plc are recognised and
measured in the consolidated financial statements at their fair value
at the date of acquisition.
2. 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.
New and Amended Standards Adopted by the Company
there are no ifrss or ifriC interpretations that are effective for the first
time in this financial period that would be expected to have a material
impact on the Group.
Standards, Interpretations and Amendments to Published Standards
that are not yet Effective
there are no other ifrss or ifriC interpretation that are not yet effective
that would be expected to have a material impact on the group.
Basis of Consolidation
in the period ended 2009, the Company acquired via a share for share
exchange the entire issued share capital of dotmailer Limited, whose
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 for the beginning of the prior period reflect the retained
reserves of dotmailer Limited to 30th april 2008. However, in
accordance with ifrs3 ‘business combinations’ the equity structure
appearing in the consolidated financial statements reflects the
equity structure of the legal parent dotDigital Plc, including the
equity instruments issued under the share exchange to effect the
business combination;
• a reverse acquisition reserve has been created to enable the
presentation of a consolidated balance sheet which combines the
equity structure of the legal parent with the non statutory reserves
of the legal subsidiary;
• Comparative numbers are based upon the consolidated financial
statements of the legal subsidiary, dotmailer Limited for the year
ended 30th June 2009 apart from the equity structure which
reflects that of the parent.
• the cost of an acquisition is measured as the fair value of the assets
given, equity instruments issued and liabilities incurred or assumed
at the date of exchange, plus costs directly attributable to the
acquisition. identifiable assets acquired and liabilities assumed in
a business combination are measured initially at their fair values at
the date of acquisition, irrespective of the extent of any minority
interest. the excess of the cost of acquisition over the fair value of
the Group’s share of the identifiable net assets acquired is recorded
as goodwill. if the cost of acquisition is less than the fair value of the
net assets of the subsidiary acquired, the difference is recognised
directly in the income statement.
Subsidiaries
a subsidiary is an entity whose operating and financing policies are
controlled by the Group. subsidiaries are consolidated from the date
on which control was transferred to the Group. subsidiaries cease to
be consolidated from the date the Group no longer has control. inter
Company transactions, balances and unrealised gains on transactions
between Group companies have been eliminated on consolidation.
as a result of applying reverse acquisition accounting in the prior
period, the consolidated ifrs financial information of dotDigital Group
Plc is a continuation of the financial information of dotmailer Limited.
Revenue Recognition
revenue comprises the fair value of the consideration received or
receivable for the sale of goods and services in the ordinary course of
the Group’s activities. revenue is shown net of value added tax returns,
rebates and discounts after eliminating sales within the Group.
the Group recognises revenue when the amount of revenue can be
reliably measured and it is probable that the future economic benefits
will flow to the entity. the Group bases it’s estimates on historical
results, taking in to consideration the type of customer, the type of
transaction and the specifics of each arrangement.
the Group sells web based marketing services to other businesses and
services are either provided on a usage basis or fixed price bespoke
contract. revenue from contracts are recognised under percentage of
completion method based on a percentage of services performed to
date as a percentage of the total services to be performed.
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.
Intangible Assets
intangible assets are recorded as separately identifiable assets and
recognised at historical cost less any accumulated amortisation. these
assets are amortised over their useful economic lives 4-5 years, with the
charge included in administrative expenses in the income statement.
intangible assets are reviewed for impairment annually. impairment
is measured by determining the recoverable amount of an asset
or cash generating unit (CGu) which is the greater of its value in
use and its fair value less costs to sell. in assessing value in use, the
estimated future cash flows are discounted to their present value
www.dotdigitalgroup.com Annual Report and Accounts 2011/2012 39
using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset or CGu.
for the purpose of impairment testing, assets that cannot be tested
individually are grouped together into the smallest group of assets
that generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or CGu.
• Domain Names
acquired domain names are shown at historical cost. Domain
names have a finite life and are carried at cost less accumulated
amortisation. amortisation is calculated using straight line method
to allocate the cost of domain names over their useful lives of
four years.
• Software
acquired software and websites are shown at historical cost.
they have a finite life and are carried at cost less accumulated
amortisation. amortisation is calculated using straight line method
to allocate the cost of software and websites over their useful lives
of four years.
• Product Development
Product development expenditure is capitalised when it is
considered that there is a commercially and viable technically
product, the related expenditure is separable identifiable and there
is a reasonable expectation that the related expenditure will be
exceeded by future revenues. following initial recognition, product
developments are carried at cost less any accumulated amortisation
and any accumulated impairment losses. the useful lives of these
intangible assets are assessed to have a finite life of five years.
amortisation is charged on assets with finite lives, this expense is
taken to the income statement and useful lives are reviewed on an
annual basis. amortisation is provided at the following annual rates’
commencing from the date the asset is developed to a stage at
which the Company can receive economic benefits from the asset.
Property, Plant and Equipment
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 are associated with the item will flow
to the Company and the cost of the item can be measured reliably.
the carrying amount of the replaced part is derecognised. all other
repairs and maintenance are charged to the income statement
during the financial period in which they are incurred. Depreciation is
provided at the following rates in order to write off each asset over its
estimated useful life and are based on the cost of assets less residual
value. significant components of individual assets are assessed and if a
component has a useful life that is different from the remainder of that
asset, that component is depreciated separately.
short leasehold:
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 then 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 devalued assets are
sold, the amounts included in other reserves are transferred to retained
earnings.
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.
Capital Risk Management
the Group manages it’s capital to ensure it is able to continue as a
going concern while maximising the return to stakeholders through
the optimisation of the debt and equity balance. the capital structure
of the Group consists of, cash and cash equivalents, short term finance
and equity attributable to the owners of the parent as disclosed in the
statement of Changes in equity.
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 Taxation
Deferred income tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements.
Deferred income tax assets are recognised to the extent that it is
probable that future taxable profit will be available against which the
temporary difference will be utilised.
Deferred income tax is determined using tax rates that have been
enacted or substantially enacted by the balance sheet date and are
expected to apply when they related deferred income asset is realised
or deferred income tax liability is settled.
Research and Development
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.
dotDigital Group Plc Annual Report and Accounts 2011/2012
40
nOtes tO tHe COnsOLiD ateD finanCiaL statements COntinueD
fOr tHe year enDeD 30tH June 2012
2. Accounting Policies continued
Operating Leases
Leases in terms of which the Group assumes substantially all the
risks and rewards of ownership are classified as finance leases. upon
initial recognition the leased asset is measured at an amount equal
to the lower of its fair value and present value of the minimum lease
payments. subsequent to initial recognition, the asset is accounted for
in accordance the accounting policy applicable to that asset.
intangible assets excluding goodwill and plant and equipment
are amortised or depreciated over their useful lives. useful lives are
based on management’s estimates of the period that the assets will
generate revenue, which are periodically reviewed for continued
appropriateness. Changes to the estimates used can result in
significant variations in the carrying value.
• Plant and Equipment, Intangible Assets & Impairment of Goodwill
Other leases are operating leases and are not recognised in the Group’s
statement of financial position on a straight line basis over the term of
the lease. Lease incentives received are recognised as an integral part
of the total expense, over the term of the lease.
Use of Estimates and Judgements
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:
•
Impairment of Non Financial Assets (excluding Goodwill)
at each balance sheet date, the Group reviews the carrying
amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered
an impairment loss. if any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs. an intangible asset with an indefinite
useful life is tested for impairment annually and whenever there is
an indication that the asset may be impaired.
recoverable amount is the higher of fair value less costs to sell and
value in use. in assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of
money and the risks specific to the asset for which the estimates of
future cash flows have not been adjusted.
if the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its
recoverable amount. an impairment loss is recognised as an
expense immediately, unless the relevant asset is carried at a re-
valued amount, in which case the impairment loss is treated as a
revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the revised
estimate of its recoverable amount, but so that the increased carrying
amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset
(cash-generating unit) in prior years. a reversal of an impairment
loss is recognised as income immediately, unless the relevant asset
is carried at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase.
the Group assesses the impairment of plant and equipment and
intangible assets subject to amortisation or depreciation whenever
events or changes in circumstances indicate that the carrying value
may not be recoverable.
additionally, goodwill arising on acquisitions is subject to
impairment review. the Group’s management undertakes an
impairment review of goodwill annually or more frequently if
events or changes in circumstances indicate that the carrying value
may not be recoverable.
the complexity of the estimation process and issues related to the
assumptions, risks and uncertainties inherent in the application
of the Group’s accounting estimates in relation to plant and
equipment and intangible assets affect the amounts reported in the
financial statements, especially the estimates of the expected useful
economic lives and the carrying values of those assets. if business
conditions were different, or if different assumptions were used in
the application of this and other accounting estimates, it is likely
that materially different amounts could be reported in the Group’s
financial statements.
the Directors have carried out a detailed impairment review in
respect of goodwill. the Group assesses at each reporting date
whether there is an indication that an asset may be impaired,
by considering the net present value of discounted cash flows
forecasts which have been discounted at 6.67%. the cash flow
projections are based on the assumption that the Group can realise
projected sales. a prudent approach has been applied with no
residual value being factored. at the period end, based on these
assumptions there was an indication of impairment of the value of
goodwill for dotsearch. see note 10 for details.
However, if the projected sales do not materialise there is a risk that
the value of the intangible assets shown above would be impaired.
• 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 corresponding adjustment to equity.
• Contingent Considerations
the future consideration payable to the vendors of Dotsearch
(previously known as netcallidus) in respect to the contingent
consideration (earnouts) is based on the Directors’ best estimate of
future obligations which are dependent on the future anticipated
profits after tax. it is assumed that the operating Company improves
profits in line with the Directors’ estimates. When earnouts are to be
settled by both cash and equity consideration, the fair value of the
consideration is obtained by discounting the amounts expected
to be payable in the future to their present value. reviews of the
fair values are undertaken at each period end with any resulting
adjustments being made through the Group’s income statement.
www.dotdigitalgroup.com Annual Report and Accounts 2011/2012 41
Employee Benefit Costs
the Group operates a defined contribution pension scheme.
Contributions payable by the Group’s pension scheme are charged
to the income statement in the period in which they relate.
Segment Reporting
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
environment.
2. Accounting Policies continued
Contingent Consideration
Contingent consideration is measured at fair value at the time of the
acquisition. if the amount of the contingent consideration changes as
a result of a post acquisition event (such as meeting profit targets) the
accounting for the change in consideration depends on whether the
additional consideration is in cash or equity. if it is in equity the original
amount is not recalculated but if the change is in cash or other assets
the change is recorded in the income statement.
Trade Receivables
trade receivables are recognised initially at the lower of their original
invoiced value and recoverable amount. a provision is made when
it is likely that the balance will not be recovered in full. terms on
receivables range from 30 to 90 days.
Equity
share capital is the amount subscribed for shares at their nominal
value.
share premium represents the excess of the amount subscribed for
the share capital over the nominal value of the respective shares net
of share issue expenses.
retained earnings represent the cumulative earnings of the Group
attributable to equity shareholders.
the reverse acquisition reserve relates to the adjustment required
by accounting for the reverse acquisition in accordance with ifrs3
‘business Combinations’.
Other reserves relate to the charge for share based payments in
accordance with ifrs2 ‘share based Payments’.
Share Based Payments
for equity settled share based payment transactions the Group, in
accordance with ifrs 2 “share based Payments” 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 is 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 year end (see note 26).
Trade Payables
trade payables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method. terms
on accounts payables range from 10 to 90 days.
Functional Currency Translation
• Functional and Presentation Currency
items included in the financial statements if the Company
are measured using the currency of the primary economic
environment in which the entity operates (functional currency),
which is mainly pounds sterling (£) and it this currency the financial
statements are presented in.
• Transaction and Balances
foreign currency transactions are translated in to the presentation
currency using exchange rates prevailing at the dates of the
transactions. foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at the year
end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in the income statement.
dotDigital Group Plc Annual Report and Accounts 2011/2012 42
nOtes tO tHe COnsOLiD ateD finanCiaL statements COntinueD
fOr tHe year enDeD 30tH June 2012
3. Segmental Reporting
the Groups’ primary reporting format is business segments and its second 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.
4. Employees and Directors
Wages and salaries
social security costs
Other pension costs
the average monthly number of employees during the year was as follows:
Directors
sales
Web designers and developers
administration
5. Net Finance Income
finance income:
exceptional item (see note 13)
Deposit account interest
finance costs:
Loan
interest payable
Net finance income
30.6.12
£
5,603,058
644,961
89,152
30.6.11
£
3,964,709
460,752
36,178
6,337171
4,461,639
30.6.12
30.6.11
7
49
77
41
174
6
27
88
12
133
30.6.12
£
30.6.11
£
1,079,392
8,445
1,122,828
5,034
1,087,837
1,127,862
682
-
682
1,125
343
1,468
1,087,155
1,126,394
the exceptional item outlined above under finance income relates to the revision of the contingent consideration due in relation to the
acquisition of dotsearch Limited (previously known as netcallidus Limited) in 2011. ifrs 3 relating to business combinations directs that any
revaluations to the consideration should be credited to the income statement as financial income. see note 13 for further details.
6. Operating Profit before Exceptional Items
Costs by Nature
Profit from continuing operations has been arrived at after charging/(crediting):-
Direct marketing
Outsourcing
Other Costs
total cost of sales
30.6.12
£
380,391
475,926
18,401
874,718
30.6.11
£
365,399
255,630
26,113
647,142
www.dotdigitalgroup.com Annual Report and Accounts 2011/2012
6. Operating Profit before Exceptional Items continued
staff related costs (inc Directors emoluments)
Operating leases: Land and buildings
Operating leases: Other
audit remuneration
amortisation of intangibles
Depreciation charge
Legal, professional and consultancy fees
Computer expenditure
bad debts
foreign exchange gains
travelling
Office running
Other costs
total administration expenses
Audit Remuneration
During the year the Group obtained the following services from the Group’s auditor at costs detailed below:
fees payable to the Group’s auditor of annual accounts
under provision of fees paid to Groups auditor in relation to the previous year
non audit fees: all other services
Income Tax
7.
Analysis of the Tax Charge
Current tax:
tax
Deferred tax
Total tax charge in income statement
43
30.06.11
(restated )
£
4,020,736
321,463
42,795
59,878
225,697
95,621
312,713
201,207
142,268
(18,035)
131,037
109,978
354,993
30.06.12
£
5,426,918
354,533
67,936
31,537
410,367
146,705
505,236
409,007
202,220
(2,368)
207,656
182,790
296,854
8,239,391
6,000,351
30.6.12
£
31,537
-
5,343
36,880
30.6.11
£
35,000
18,000
6,787
59,787
30.6.12
£
30.6.11
£
281,369
24,616
305,985
273,743
-
273,743
Factors affecting the tax charge
the tax assessed for the year 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 25% (2011 - 28%)
effects of:
expenses not deductible
research and development enhanced claim
effect of profits within marginal rate
expenditure permitted on exercising options
Prior year under provision
exceptional item: impairment of goodwill
exceptional item: adjustment to contingent consideration
Capital allowances in excess of depreciation
Total income tax
30.6.12
£
2,773,460
693,365
30.6.11
£
3,311,563
927,238
112,686
(559,640)
(6,114)
-
15,792
296,629
(269,848)
(1,501)
108,816
(291,397)
(9,314)
(136,184)
-
-
(314,392)
(11,024)
281,369
273,743
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44
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fOr tHe year enDeD 30tH June 2012
8. Profit/(Loss) of Parent Company
as permitted by section 408 of the Companies act 2006, the profit and loss account of the parent company is not presented as part of these
financial statements. the parent company’s loss for the financial year was £368,997 (2011: profit of £827,265).
9. Earnings per Share
earnings per share data is based on the consolidated profit and the weighted average number of shares in issue of the parent company. basic
earnings per share are calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary
shares outstanding during the period.
Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential
Ordinary shares.
reconciliations are as follows:-
Basic EPS
net income attributable to owners of the parent
Diluted EPS
net income attributable to owners of the parent
Adjusted EPS
effect of exceptional items:
impairment of goodwill
-
reversal of financial instrument (see note 13)
-
Adjusted earnings
effect of dilutive shares
Options & Warrants
Adjusted Diluted EPS
adjusted earnings
Basic EPS
net income attributable to owners of the parent
Diluted EPS
net income attributable to owners of the parent
Adjusted EPS
effect of exceptional items:
- Cost relating to listing on aim
-
release of financial instrument (see note 13)
Adjusted earnings
effect of dilutive shares
Options & Warrants
Adjusted Diluted EPS
adjusted earnings
30.6.12
Weighted
average
number of
shares
earnings
£
2,467,475
275,019,565
2,467,475
281,111,611
1,186,516
(1,079,392)
-
-
Per share
amount
pence
0.90
0.88
-
-
2,574,599
275,019,565
0.94
-
6,092,046
-
2,574,599
281,111,611
0.92
30.6.11
Weighted
average
number of
shares
earnings
£
3,037,820
261,891,138
3,037,820
284,159,360
119,862
(1,122,828)
-
-
Per share
amount
pence
1.16
1.07
-
-
2,034,854
261,891,138
0.78
-
22,268,222
-
2,034,854
284,159,360
0.72
www.dotdigitalgroup.com Annual Report and Accounts 2011/2012
10. Goodwill
Group
Cost
at 1st July 2011
and 30th June 2012
Amortisation
impairment (see note 13)
at 30th June 2012
Net book value
At 30th June 2012
Cost
at 1st July 2010
and 30th June 2011
Net book value
At 30th June 2011
45
£
4,120,561
1,186,516
1,186,516
2,934,045
4,120,561
4,120,561
Group
Impairment test for goodwill
Goodwill is allocated to the Group’s single cash generating units identified, that being dotmailer Limited and dotsearch (previously known as
netcallidus) Limited.
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 30th June 2017.
the key assumptions use to prepare the financial budgets are as follows:
revenue growth rates:
Pre tax discount rate:
income tax rate:
2013
2014
2015
2016
2017
all years
all years
11.00%
30.00%
30.00%
30.00%
30.00%
6.67%
25.00%
the key assumptions used to prepare the financial budgets are based on a combination of historical experience and current industry knowledge
and trends.
dotSearch (previously known as Netcallidus) Limited
revenue growth rates:
Pre tax discount rate:
income tax rate:
2013
2014
2015
2016
2017
all years
all years
(18.00)%
53.00%
20.00%
20.00%
20.00%
6.67%
25.00%
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.
incorporating the above assumptions the value of the expected goodwill to be realised in future periods has diminished to the effect of
£1,186,516 (2011: nil) and therefore this has been reflected in the value of goodwill carried forward by way of an impairment. see note 13 for
further details.
dotDigital Group Plc Annual Report and Accounts 2011/2012
46
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fOr tHe year enDeD 30tH June 2012
11. Intangible Assets
Group
Cost
at 1st July 2011
additions
At 30th June 2012
Amortisation
at 1st July 2011
amortisation for year
At 30th June 2012
Net book value
At 30th June 2012
Cost
at 1st July 2010
additions
At 30th June 2011
Amortisation
at 1st July 2010
amortisation for year
At 30th June 2011
Net book value
At 30th June 2011
Computer
software
£
Development
costs
£
Domain
names
£
totals
£
147,955
51,329
1,209,923
1,118,538
12,971
3,000
1,370,849
1,172,867
199,284
2,328,461
15,971
2,543,716
65,180
46,766
111,946
307,715
360,192
667,907
7,397
3,409
10,806
380,292
410,367
790,659
87,338
1,660,554
5,165
1,753,057
Computer
software
£
Development
costs
£
125,301
22,654
579,540
630,383
Domain
names
£
8,836
4,135
totals
£
713,677
657,172
147,955
1,209,923
12,971
1,370,849
32,825
32,355
65,180
117,280
190,435
307,715
4,490
2,907
7,397
154,595
225,697
380,292
82,775
902,208
5,574
990,557
Development cost additions represents resources the Group have invested in the development of new innovative and ground breaking
technology products for marketing professionals. this platform allows marketing professionals to create, send and automate marketing
campaigns. following development of the products the Group intends to licence the use of the platform.
12. Property, Plant and Equipment
Group
Cost
at 1st July 2011
additions
Disposals
At 30th June 2012
Depreciation
at 1st July 2011
Charge for year
eliminated on disposal
At 30th June 2012
Net book value
At 30th June 2012
short
leasehold
£
Plant and
machinery
£
11,875
-
-
11,875
10,126
864
-
10,990
8,536
-
(5,794)
2,742
3,482
2,026
(3,982)
1,526
fixtures
and
fittings
£
174,945
17,321
-
192,266
119,726
24,573
-
144,299
Computer
equipment
£
418,140
297,467
-
715,607
242,038
119,242
-
361,280
totals
£
613,496
314,788
(5,794)
922,490
375,372
146,705
(3,982)
518,095
885
1,216
47,967
354,327
404,395
www.dotdigitalgroup.com Annual Report and Accounts 2011/2012
12. Property, Plant and Equipment continued
Cost
at 1st July 2010
additions
At 30th June 2011
Depreciation
at 1st July 2010
Charge for year
At 30th June 2011
Net book value
At 30th June 2011
13. Investments
Company
Cost
at 1st July 2011
Amortisation
impairment (see note 13)
At 30th June 2012
Net book value
At 30th June 2012
Cost
at 1st July 2010
and 30th June 2011
Net book value
At 30th June 2011
at 30th June 2010
short
leasehold
£
Plant and
machinery
£
11,875
-
11,875
9,100
1,026
10,126
5,577
2,959
8,536
1,719
1,763
3,482
fixtures
and
fittings
£
144,974
29,971
174,945
93,719
26,007
119,726
Computer
equipment
£
290,446
127,694
418,140
175,215
66,823
242,038
47
totals
£
452,872
160,624
613,496
279,753
95,619
375,372
1,749
5,054
55,219
176,102
238,124
shares in
Group
undertakings
£
8,704,468
1,193,438
1,193,438
7,511,030
shares in
Group
undertakings
£
8,704,468
8,704,468
8,704,468
the Group or the Company’s investments at the balance sheet date in the share capital of companies include the following:
Subsidiaries
dotMailer Limited
nature of business: Web and email based marketing
Class of shares:
Ordinary
Ordinary a
aggregate capital and reserves
Profit for the year
Proportion of voting
power held %
100.00
100.00
30.6.12
£
7,530,683
2,658,071
30.6.11
£
4,872,612
2,008,026
dotDigital Group Plc Annual Report and Accounts 2011/2012
48
nOtes tO tHe COnsOLiD ateD finanCiaL statements COntinueD
fOr tHe year enDeD 30tH June 2012
13. Investments continued
dotAgency Limited
nature of business: Dormant
Class of shares:
Ordinary
aggregate capital and reserves
Company
dotCommerce Limited
nature of business: Dormant
Class of shares:
Ordinary
aggregate capital and reserves
dotEditor
nature of business: Dormant
Class of shares:
Ordinary
aggregate capital and reserves
dotSEO
nature of business: Dormant
Class of shares:
Ordinary
aggregate capital and reserves
dotSearch (previously known as Netcallidus) Limited
nature of business: internet and website services
Class of shares:
Ordinary, b, C & D
aggregate capital and reserves
Profit for the year
Proportion of voting
power held %
100.00
30.6.12
£
1,000
30.6.11
£
1,000
Proportion of voting
power held %
100.00
30.6.12
£
1,000
30.6.11
£
1,000
Proportion of voting
power held %
100.00
30.6.12
£
1,000
30.6.11
£
1,000
Proportion of voting
power held %
100.00
30.6.12
£
1,000
30.6.11
£
1,000
Proportion of voting
power held %
100.00
30.6.12
£
499,549
201,872
30.6.11
£
297,677
207,095
www.dotdigitalgroup.com Annual Report and Accounts 2011/2012
13. Investments continued
below are the Parent Company’s indirect holdings:
Indirect Holding
dotSearch Europe (previously known as Netcallidus Europe) Limited
Country of incorporation: england and Wales
nature of business: branch Company
Class of shares:
Ordinary
aggregate capital and reserves
Profit for the year
49
Proportion of voting
power held %
100.00
30.6.11
£
(3,566)
(4,566)
30.6.12
£
(33,275)
(29,709)
On 17th may 2010 the Group acquired the entire share capital of dotsearch (previously known as netcallidus) Limited a company registered
in england and Wales for an initial consideration of £1,152,660 and which had an additional contingent consideration of £2,366,320 totalling
£3,518,980. the Group’s principal activity is the provision of internet and website services. Obtaining control of dotsearch (previously known as
netcallidus) Limited allows the Group to incorporate the customer base in to its own while providing additional expertise to further develop and
market its seO products.
the following summarises the major classes of consideration transferred and the recognised amounts of assets and liabilities assumed at the
acquisition date:
Consideration transferred:
Cash
equity instruments (14,200,930 shares)
Discounted
fair value
£
1,000,000
152,660
1,152,660
the number of shares issued in respect of the consideration transferred was based on 1.075p per share* which was the mid-market price as at
30th June 2010.
* Pre 1 for 5 share consolidation in february 2011.
identifiable assets acquired and liabilities assumed:
Goodwill
Property, plant and equipment
trade and other receivables
Deposits, cash and cash equivalents
taxation
trade and other payables
Net assets
Goodwill:
Purchase consideration:
fair value of net assets acquired
Goodwill acquired
Goodwill acquired from purchase of subsidiary
book and fair
Value
£
45,000
2,532
88,349
41,407
(84,598)
(40,768)
51,922
£
3,518,980
51,922
3,467,058
45,000
3,512,058
the acquisition related costs related to external legal fees and due diligence fees totalling £66,163 have been included in administrative expenses
in the consolidated statement of comprehensive income for the previous reporting period.
the contingent consideration arrangement required the Group to pay the former owners of dotsearch (previously known as netcallidus) Limited
additional consideration in a combination of cash and equity in the Group. as made reference to in the previous year’s financial statements an
interim payment was due to be made on finalising the profit after tax figures based on 4 times the profit after tax in the year ended 30th June
2012 less any amounts that had been paid previously.
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50
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fOr tHe year enDeD 30tH June 2012
13. Investments continued
On 24th november 2011, the board of Directors presented an early settlement package to the pre-existing shareholders of dotsearch (previously
known as netcallidus) Limited which consisted of the payments made previously and an additional cash settlement of £164,100 which was
accepted unanimously. With the acceptance of the package all remaining contingent consideration previously provided for in the financial
statements, totalling £1,079,392 has been written to the income statement as finance income in accordance with ifrs 3 regarding business
combinations.
the level of after tax profits generated from this investment as at the date above and as at 30th June 2012, was lower than expected based on
the Vendor’s forecast at the time of the acquisition which needed to be used under ifrs 3 to determine the contingent consideration that may
have been payable, under the conditions of accounting standard ias38 it has resulted in an impairment to the value of goodwill generated on the
acquisition of £1,186,516 which also has been charged to the income statement.
the net effect on the income statement of both the financial income and the impairment of the investment has resulted in a charge of £107,124.
14. Trade and Other Receivables
Current:
trade receivables
Other receivables
Vat
Prepayments and accrued income
15. Cash and Cash Equivalents
Cash in hand
bank accounts
16. Called up Share Capital
allotted, issued and fully paid
275,362,065
(2011: 274,972,065)
Group
Company
30.6.12
£
30.6.11
£
1,950,066
18,054
-
230,172
1,452,776
34,630
-
170,638
2,198,292
1,658,044
30.6.12
£
-
-
-
12,684
12,684
30.6.11
£
-
-
11,739
14,007
25,746
Group
Company
30.6.12
£
43
30.6.11
£
394
4,020,306
2,567,871
4,020,349
2,568,265
30.6.12
£
-
83,293
83,293
30.6.11
£
-
235,274
235,274
Class
number
nominal
value
30.6.12
£
30.6.11
£
Ordinary
£0.005
1,376,811
1,374,861
1,376,811
1,374,861
the holders of Ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings
of the Company.
During the reporting period the Company undertook the following transactions involving the issuing and reclassifying issued share capital:
On 13th march 2012 a number of employees exercised their share options increasing the issued share capital by 190,000 shares issued at
premium price of 5p.
On 22nd June 2012 a number of employees exercised their share options increasing the issued share capital by 200,000 shares issued at premium
price of 5p.
www.dotdigitalgroup.com Annual Report and Accounts 2011/2012
17. Reserves
Group
at 1st July 2011
Profit for the year
Cash share issue
share based payment
At 30th June 2012
Group
at 1st July 2010
Profit for the year
Cash share issue
reclassification of equity
At 30th June 2011
Group
at 1st July 2010
Profit for the year
Cash share issue
share based payment
reclassification of equity
At 30th June 2011
Company
at 1st July 2011
Profit for the year
Cash share issue
share based payment
reclassification of equity
At 30th June 2012
18. Trade and Other Payables
Current:
trade payables
amounts due to related parties (see note 24)
social security and other taxes
Other payables
accruals and deferred income
Vat
51
retained
earnings
£
5,734,342
2,467,475
-
-
share
premium
£
4,737,053
-
17,800
-
revaluation
reserve
£
(4,695,465)
-
-
-
Other
reserves
£
70,160
-
-
57,183
totals
£
5,846,090
2,467,475
17,800
57,183
8,201,817
4,754,853
(4,695,465)
127,343
8,388,548
retained
earnings
£
2,696,522
3,037,820
-
-
share
premium
£
4,533,754
-
65,533
137,766
5,734,342
4,737,053
unissued
share
capital
£
152,660
-
-
(152,660)
-
reverse
acquisition
reserve
£
(4,695,465)
-
-
-
Other
reserves
£
29,493
-
40,667
-
totals
£
2,716,964
3,037,820
65,533
40,667
(14,894)
(4,695,465)
70,160
5,846,090
retained
earnings
£
498,060
(368,997)
-
-
-
share
premium
£
4,737,053
-
17,800
-
-
Other
reserves
£
70,160
-
-
57,183
-
totals
£
5,305,273
(368,997)
17,800
57,183
-
129,063
4,754,853
127,343
5,011,259
Group
Company
30.6.12
£
30.6.11
£
30.6.12
£
30.6.11
£
224,097
-
328,828
141,582
160,740
479,334
204,894
-
272,669
33,404
183,042
313,734
27,326
1,155,443
-
-
34,000
2,168
71,516
926,596
-
43,750
-
1,334,581
1,007,743
1,218,937
1,041,862
dotDigital Group Plc Annual Report and Accounts 2011/2012
52
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fOr tHe year enDeD 30tH June 2012
19. Financial Liabilities - Borrowings
Current
bank loans
non-current:
Contingent consideration
Group
Company
30.6.12
£
-
-
-
-
30.6.11
£
6,076
6,076
1,243,492
1,243,492
30.6.12
£
30.6.11
£
-
-
-
-
-
-
1,243,492
1,243,492
included in the prior year non-current other financial liabilities is the present value of the contingent consideration due on the purchase of
the entire share capital of dotsearch (previously known as netcallidus) Limited. During the year the pre-existing share holders of dotsearch
(previously known as netcallidus) Limited accepted a final cash settlement of £164,100 resulting in an excess contingent consideration provision
of £1,079,392 which has been take to the income statement as an exceptional item, see note 13 for further information.
20. Leasing Agreements
minimum lease payments under non cancellable operating leases fall due as follows
Within one year
between two to five years
Within one year
between two to five years
Land and buildings
£
66,496
-
66,496
Land and buildings
£
134,928
33,155
168,083
30.6.12
Other
£
40,465
26,293
66,758
30.6.11
Other
£
39,774
27,928
67,702
total
£
106,961
26,293
133,254
total
£
174,702
61,083
235,785
21. Financial Instruments
the Group’s activities expose 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 and are set out below:
the Group hold no financial or non other financial instruments other than those utilised in the working operations of the Group and that listed in
this note.
Interest Rate Risk
the Group’s interest rate risk arises from interest bearing assets and liabilities. the Group has in place a policy of maximising finance income by
ensuring that cash balances earn a market rate of interest; offsetting where possible, cash balances and by forecasting and financing its working
capital requirements. as at the end of the reporting period the Group was not exposed to any movement in interest rates in regard to loans and
achieved less than 1% interest on cash holdings.
the term “shares” indicates the value of ordinary share capital to be issued should targets be met and discount factors not change. any changes
resulting in revaluations of the consideration due in following reporting periods will be charged to the income statement.
the Group’s working capital requirements are managed through regular monitoring of the overall cash position and regularly updated cash flow
forecasts to ensure there are sufficient funds available for its operations.
Liquidity Risk
the Group’s working capital requirements are managed through regular monitoring of the overall position and regularly updated cash flow
forecasts to ensure there are funds available for its operations. management forecasts indicate no new borrowing facilities will be required in the
upcoming financial period.
Credit Risk
Credit risk arises principally from the Group’s trade receivables which comprise amounts due from customers. Prior to accepting new customers a
credit check is obtained. as at 30th June 2012 there were no significant debts pass their due period which had not been provided for. the maturity
of the Groups trade receivables is as follows:
www.dotdigitalgroup.com Annual Report and Accounts 2011/2012
21. Financial Instruments continued
0-30 days
30-60 days
more than 60 days
53
as at
30.06.12
£
as at
30.06.11
£
1,424,999
1,030,966
20,306
504,761
268,425
188,475
1,950,066
1,487,866
the Group minimises its credit risk by profiling all new customers and monitoring existing client of the Group for changes in their initial profile. the level
of trade receivables passed due the average collection period consisted of a value of £522,814 of which £211,333 was provided for. the Group felt that the
remainder would be collected post year end as they were with long standing relationships, the risk of default is considered to be low and write offs due to
bad debts are extremely low. the Group has no significant concentration of credit risk, with the exposure spread over a large number of customers.
the credit risk on liquid funds is low as the counterparts are banks with high credit ratings assigned by international credit ratings.
Details as to maximum fair values the Group’s financial assets and liabilities can be found in the consolidated statement of financial position.
Capital Policy
the Group’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide optimal returns
for shareholders and to maintain an efficient capital structure to reduce the cost of capital.
in doing so the Group’s strategy is to maintain a capital structure commensurate with a strong credit rating and to retain appropriate levels of
liquidity headroom to ensure financial stability and flexibility. to achieve this, the Group monitors key credit metrics, risk and fixed charge cover
to maintain this position. in addition the Group ensures a combination of appropriate short term and long term liquidity headroom.
During the year the Group had a short term loan balance of £nil (2011- £6,072) and amounts payable over one year are nil. the Group had a
strong cash reserve to utilise for any short term capital requirements that were needed by the Group.
the Group has continued to look for a further long term investments or acquisitions and therefore to maintain or re-align the capital structure,
the Group may adjust when dividends are paid to shareholders, return capital to shareholders, issue new shares or borrow from lenders.
22. Deferred Tax
at 30th June 2011
Current year provision
At 30th June 2012
23. Capital Commitments
the Company and Group have no capital commitments as at the year end.
24. Related Party Disclosures
Group
the following transactions were carried out with related parties
Sale of services
Codence performance
entity
under common
directorship
email
marketing
services
sales of services are based on the price lists in force and at terms that would be available to third parties.
Purchase of services
Haggie financial LLP*
nexus financial LLP*
entity under common directorship
entity under common directorship
Hansard Communications Ltd*
entity under common directorship
financial Pr
financial Pr
financial Pr
f beechinor-Collins**
entity under common directorship
Consultancy services
30.6.12
£
-
24,616
24,616
30.06.12
£
30.06.11
£
42
42
-
-
30.06.12
£
-
-
-
53,913
53,913
30.06.11
£
5,155
20,709
2,621
-
28,485
* n nelson a non-executive Director of the Group had interests in the above companies. these companies provide financial public relation services to the Group.
** Consultancy services to assist with international expansion and development of channel sales strategy.
dotDigital Group Plc Annual Report and Accounts 2011/2012
54
nOtes tO tHe COnsOLiD ateD finanCiaL statements COntinueD
fOr tHe year enDeD 30tH June 2012
24. Related Party Disclosures continued
Year end balances arising from sales/purchases of services
Hansard Communications Ltd
entity under common directorship
f beechinor- Collins
entity under common directorship
Payables
Payables
30.06.12
£
-
(2,656)
30.06.11
£
2,261
-
the receivables and payables are unrestricted in nature and bear no interest. no provision’s are held against receivables from related parties.
Key management compensation
Key management includes directors, non-executive directors and the Company secretary. the compensation paid for key management for
employee services are shown below
remuneration and other short term employee benefits
share-based payments
Directors
aggregate emoluments
aggregate gains on exercise of share options
Company contributions to money purchase pension scheme
information in relation to the highest paid Director is as follows:
salaries
Other benefits
Pension costs
Company
the following transactions were carried out with related parties
Purchase of services
Haggie financial LLP*
nexus financial LLP*
entity under common directorship
entity under common directorship
Hansard Communications Ltd*
entity under common directorship
financial Pr
financial Pr
financial Pr
30.06.12
£
911,113
10,168
921,281
30.06.12
£
602,290
-
47,510
30.06.11
£
842,523
7,821
850,344
30.06.11
£
778,988
483,333
34,013
649,800
1,296,334
30.06.12
£
156,000
843
11,000
167,843
30.06.12
£
-
-
-
-
30.06.11
£
163,500
757
10,458
174,715
30.06.11
£
5,155
20,709
2,621
28,485
* n nelson a non-executive Director of the Group had interests in the above companies. these companies provide financial public relation services to the Group.
Year end balances arising from sales/purchases of services
Hansard Communications Ltd
entity under common directorship
dotmailer Limited
dotsearch Limited
subsidiary
subsidiary
30.06.12
£
-
30.06.11
£
2,261
1,165,930
926,596
Payables
Payables
receivable
10,217
-
the receivables and payables are unrestricted in nature and bear no interest. no provision’s are held against receivables from related parties.
Key Management Compensation
Key management includes Directors, non-executive Directors and the Company secretary. the compensation paid for key management for
employee services are shown below
remuneration and other short term employee benefits
Directors
aggregate emoluments
30.06.12
£
84,805
84,805
30.06.12
£
84,805
84,805
30.06.11
£
42,917
42,917
30.06.11
£
42,917
42,917
www.dotdigitalgroup.com Annual Report and Accounts 2011/2012
55
25. Ultimate Controlling Party
there is no ultimate controlling party of the Group. dotDigital Group PLC acts as the Parent Company to dotmailer Limited, dotsearch (previously
known as netcallidus) Limited, dotagency Limited (Dormant), dotseO Limited (Dormant), dotCommerce Limited (Dormant) & doteditor Limited
(Dormant). the Company also indirectly controls dotsearch europe (previously known as netcallidus europe) Limited.
26. Share-based Payment Transactions
the measurement requirements of ifrs 2 have been implemented in respect of share options that were granted after 7th november 2002. the
expense is recognised for share based payments made during the year is £57,183 (2011- £40,667)
also on 13th October 2011 the board of Directors also granted 8,177,930 (2011: 6,800,000) options to employees of the Group exercisable on or
after 1st may 2012 until 1st february 2016. 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 shares
Outstanding at the end of the period
exercisable at the end of the period
no of options
11,722,000
8,177,930
1,600,000
390,0 00
17,909,930
nil
30.6.12
30.6.11
WaeP
no of options
5.00p
6.54p
6.54p
7.25p
18,785,333
6,800,000
370,000
13,493,333
11,722,000
nil
WaeP
1.35p
5.00p
5.00p
4.22p
the weighted average exercise price (WaeP) in regards to the comparatives have been restated to reflect the share consolidation undertaken in
february 2010.
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
27. Group Reconciliation of Profit before Income Tax to Cash Generated from Operations
Profit before income tax
exceptional item: impairment of goodwill
Depreciation charges
Loss on disposal of fixed assets
share based payment
finance costs
finance income
increase in trade and other receivables
increase in trade and other payables
Cash generated from operations
13th October 2011
8,177,930
6.53p
7.25p
2.43%
4.25
7.83%
0%
0.33p
30.6.12
£
2,773,460
1,186,516
557,072
1,175
57,183
682
(1,087,837)
30.6.11
£
3,311,563
-
321,318
-
40,667
1,468
(1,127,862)
3,488,251
2,547,154
(540,248)
326,838
(423,399)
338,979
3,274,841
2,462,734
dotDigital Group Plc Annual Report and Accounts 2011/2012
56
nOtes tO tHe COnsOLiD ateD finanCiaL statements COntinueD
fOr tHe year enDeD 30tH June 2012
28. Group Cash and Cash Equivalents
the amounts disclosed on the statement of cash flow in respect of cash and cash equivalents are in respect of these statement of financial
position amounts:
Year ended 30th June 2012
Cash and cash equivalents
Year ended 30th June 2011
Cash and cash equivalents
29. Company Reconciliation of Profit/(Loss) before Income Tax to Cash Generated from Operations
Profit /(Loss) before income tax
exceptional item: impairment of goodwill
share options
finance income
increase in trade and other receivables
increase in trade and other payables
Cash generated from operations
30.6.12
£
1.7.11
£
4,020,349
2,568,265
4,020,349
2,568,265
30.6.11
£
1.7.10
£
2,568,265
1,277,617
30.6.12
£
30.6.11
£
(368,977)
827,265
1,193,438
57,183
-
40,667
(1,079,392)
(1,122,828)
(197,768)
(254,896)
1,323
(40,033)
(9,181)
6,488
(236,478)
(257,589)
30. Company Cash and Cash Equivalents
the amounts disclosed on the statement of cash flow in respect of cash and cash equivalents are in respect of this statement of financial position
amounts:
Year ended 30th June 2012
Cash and cash equivalents
Year ended 30th June 2011
Cash and cash equivalents
30.6.12
£
83,293
30.6.11
£
1.7.11
£
235,274
1.7.10
£
235,274
385,332
31. Research & Development
During the period the Group incurred nil (2011: nil) in research costs and £1,118,538 (2011- £630,383) in development investments. all resources
utilised in research and development has been categorised as outlined in the accounting policy governing this area.
32. Post balance Sheet Events
there are no post balance sheet events which impact the Group’s financial statements.
33. Prior Period Adjustment
On 1st July 2011 the board of Directors re categorised the nature of some expenditure items from administrative to cost of sales. the impact of this
on the comparative figures on the income statement are as follows:
Continuing operations
revenue
Cost of sales
Gross profit
administrative expenses
Operating profit before exceptional items
Profit for the year
30.06.11
£
effect of
change
£
30.06.11
(restated)
£
8,952,488
-
8,952,488
-
(647,142)
(647,142)
8,952,488
-
8,305,346
(6,647,493)
647,142
(6,000,351)
2,304,995
3,037,820
-
-
2,304,995
3,037,820
www.dotdigitalgroup.com Annual Report and Accounts 2011/2012
ouR MIssIon
coMpAnY InFoRMAtIon
Empowering clients to punch above their weight by providing
the world’s best digital marketing products.
ouR VAlues
professional,
expert and fun
Fast-paced but
quality driven
awesome
is the required
standard
creative and
geeky with the
human touch
approachable,
sociable,
welcoming and
client-centric
passionate
about our
client/supplier
partnerships
corporate
but cool
Business-like,
entrepreneurial
but still a family
committed
to giving back
to staff and
society
Motivated,
inspirational,
innovative and
accomplished
Easy to use
space-age
technologies
an unhidden
agenda about
clients success
Contents
Business Summary
Key Highlights
chairman ‘s Statement
chief Executive report
corporate Social responsibility
our Board of directors
corporate governance report
audit committee report
remuneration committee report
report of the directors
report of the Independent auditors
consolidated Income Statement
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
company Statement of cash Flows
Notes to the consolidated Financial Statements
company Information
32
32
33
34
35
36
37
37
38
IBc
1
2
4
5
18
20
22
23
24
26
31
Directors
s Bird
p A simmonds
I taylor
G Fidura
R Kellett-clarke
F Beechinor-collins
Secretary
M patel
Registered Office
Finsgate
5-7 cranwood street
london
ec1V 9ee
Registered Number
06289659 (england and Wales)
Auditors
Jeffreys Henry llp
Finsgate
5-7 cranwood street
london
ec1V 9ee
Solicitors
Bpe solicitors llp
st James House
st James square
cheltenham
Gl50 3pR
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
suite e First Floor
9 lion and lamb Yard
Farnham
surrey
Gu9 7ll
Nomad/Broker
Zeus capital
3 Ralli courts
West Riverside
Manchester
M3 5Ft
Joint Broker
charles stanley
131 Finsbury pavement
london
ec2A 1nt
Website
www.dotdigitalgroup.com
Croydon
no. 1 croydon
12-16 Addiscombe Road
cR0 0Xt
t: 020 8662 2762
Edinburgh
MWB Business exchange
9-10 st Andrews square
edinburgh
eH2 2AF
t: 0131 718 6037
London Bridge
6-8 emerson street
london
se1 9du
t: 020 7654 8686
Manchester
pall Mall court
61-67 King street
Manchester
M2 4pd
t: 0161 618 1070
design and production by philosophy
www.philosophydesign.com
print by Moore print
www.mooreprint.co.uk
www.doTdIgITalgroup.coM
Innovating SaaS Technology
and Tools for Marketers
2011/2012
AnnuAl RepoRt And Accounts