www.dotdigitalgroup.com
Annual Report
and Accounts
2012/2013
Innovating SaaS Technology
and Tools for Marketers
Corporate Statement
dotDigital Group is the UK market leader in the provision of Email
Marketing software to digital marketing professionals. The group’s
fl agship product, dotMailer, is a powerful SaaS-based email marketing
automation platform used by its clients to engage with their
customers to build brand awareness, develop customer loyalty,
generate new leads and promote repeat business.
Contents
Corporate Statement
2013 Key Highlights
Chairman ‘s Statement
Chief Executive’s 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
b
IBC
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
1
2
3
12
14
16
17
18
20
25
26
26
27
28
29
30
31
31
32
IBC
2013 Key Highlights
Company Information
Directors
S Bird
P A Simmonds
I Taylor
G Fidura
R Kellett-Clarke
F Beechinor-Collins
S J Barratt (appointed 9 October 2012)
+16%
increase in
Total Group Revenues
Secretary
M Patel
Registered Offi ce
Finsgate
5-7 Cranwood Street
London
EC1V 9EE
Registered Number
06289659 (England and Wales)
Auditors
Jeff reys Henry LLP
Statutory Auditor
Continued strong
Finsgate
net cash generated from
5-7 Cranwood Street
operating activites
London
EC1V 9EE
£3.6m
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
Innovating SaaS Technology
and Tools for Marketers
Registrars
Share Registrars Limited
Suite E First Floor
9 Lion and Lamb Yard
Farnham
Surrey
GU9 7LL
Revenues in
SaaS Products up
Nomad/Broker
N+1 Singer
1 Bartholomew Lane
London
EC2N 2AX
+28%
(from £9.5m to £12.2m)
Joint Broker
Finncap
60 New Broad Street
London
EC2M 1JJ
Website
www.dotdigitalgroup.com
+21%increase in EBITDA
to £4.1m
London Bridge
6-8 Emerson Street
London
SaaS Products division
SE1 9DU
operating profit increased
T: 020 7654 8686
+41%
(from £3.2m to £4.5m)
Croydon
No. 1 Croydon
12-16 Addiscombe Road
CR0 0XT
+18%
T: 020 8662 2762
increase in profit before
Manchester
exceptionals
Pall Mall Court
61-67 King Street
Manchester
M2 4PD
Edinburgh
MWB Business Exchange
9-10 St Andrews Square
Edinburgh
EH2 2AF
T: 0131 718 6037
New York
Suite 307, 3rd fl oor
350 7th Avenue
New York,
10001
United States
Strong cash position of
T: 1-212-971-940
£6.1m
as at 30 June 2013
T: 0161 618 1070
Design and production by Philosophy
www.philosophydesign.com
Print by Moore Print
www.mooreprint.co.uk
dotDigital Group Plc
Annual Report and Accounts 2012/2013
1
www.dotdigitalgroup.com Annual Report and Accounts 2012/2013 Chairman’s Statement
Chief Executive’s Report
There has been a dramatic increase in the
number of clients signing longer-term contracts as well
as an increase in monthly spend per client.
The core SaaS Products division under the dotMailer
brand has performed strongly with revenue growth
of 28% and profit before tax growing from £3.2m to
£4.5m, an increase of 41%.
We are delighted to report that during the
2012/13 financial year dotDigital Group PLC
(“dotDigital”) has continued the success of
previous years with strong growth in our SAAS
email platform business. The Group continues
to be cash generative with no debt. There has
been a dramatic increase in the number of
clients signing longer-term contracts as well
as an increase in monthly spend per client. We
have made considerable progress in signing
larger corporate clients.
At the half year we announced that we were
reviewing our agency business and how
that sits within the Group. That review was
completed in the second half of the year. After
considering all the strategic options it was
decided that we run down the order book
and transfer some of the skills and experiences
of individuals into the core business. This
ensured that we used the opportunity to
focus management’s efforts on our core SAAS
email business. The impact of this is already
evident and reflected in our continued growth
and profitability.
The Board has recently appointed a new
Nominated Advisor and Joint Brokers and I
would like to take this opportunity to thank
Charles Stanley and Zeus Capital for their
efforts in their time as advisors to the business.
In the 2012/13 financial year, we will reinvest a
proportion of our cash (£6.1m at the year end)
to further accelerate the organic growth of the
business. We will invest a significant part of
those funds in additional sales and marketing
resource with particular emphasis on channel
sales and overseas sales development. Our
New York office is up and running and we
hope to accelerate our activities there as well
as identifying strategic channel partners in
both the UK and further afield. We will also
make further investment in our SaaS platform
and hardware infrastructure ensuring we
maintain our competitive advantage. Whilst
we have not ruled out acquisition our focus is
very much on organic growth by continued
growth in revenues from our existing
customers and signing new larger clients on
longer contracts.
On behalf of all our stakeholders, I would like
to thank our employees for their invaluable
contribution to another successful year. I
would also like to pay tribute to the executive
management team for their continued
commitment, hard work and passion in
developing the business.
Divisional Profit & Loss
Products
30.6.13
£m
Products
30.6.12
£m
Sales
Cost of Sales
Gross Profit
Administrative Exp
Profit before tax*
* Before exceptional items
12.2
0.9
11.3
6.8
4.5
9.5
0.5
9.0
5.8
3.2
Growth
%
28
Services
30.6.13
£m
Services
30.6.12
£m
Central
30.6.13
£m
Central
30.6.12
£m
Growth
%
(33)
Consolidated Consolidated
30.6.12
£m
30.6.13
£m
Growth
%
1.6
1.0
0.6
1.1
2.4
0.8
1.6
1.3
0.3
41
(0.5)
0.7
(0.7)
0.7
(0.7)
-
(275)
13.8
1.9
11.9
8.6
3.3
11.9
1.3
10.6
7.8
2.8
Frank Beechinor-Collins
Chairman
In addition to the operating loss in this
division, the Board have reviewed the goodwill
being carried from the Netcallidus acquisition
in 2009 and these results contain an
exceptional (non-cash) goodwill impairment
charge of £2.3m of which £1.3m relates to
the impairment of the consideration paid
and the balance relating to the contingent
consideration that was accured at the date
of acquisition but eventually not paid. More
detail can be found in the table on page 7.
The Company has now fully exited from the
services division with the exception of
a small number of ecommerce clients
where on-going support is being
provided, leaving trailing revenues
of c£30k per month.
Financial Overview
As announced in the trading update on
15 August , the Group delivered EBITDA
and profits, before exceptional items, ahead
of expectations.
Total revenues including discontinued
operations for the period to 30 June 2013
increased by 16% compared to the same
period in 2012 and profit before tax and
exceptional items grew by 18%.
The table above shows that performance in
the core SaaS Products division under the
dotMailer brand has performed strongly with
revenue growth of 28% and profit before
tax growing from £3.2m to £4.5m, an increase
of 41%.
The consolidated profit for this year
was however impacted by the decision,
announced at the interim stage, to exit from
the Services Division (web design and search)
where revenues charged to third parties
declined by 33% and profits fell from £0.3m
to a loss of £0.5m.
2
Frank Beechinor-Collins
Chairman
Peter Simmonds
Chief Executive and Chief Financial Officer
Growth
%
16
18
3
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013
Chief Executive’s Report continued
“I don’t think of dotMailer
as a separate organisation,
I see them as an integral
part of my communications
team, delivering a quality
service that goes far beyond
just taking in content and
sending out emails.”
o ri F olts, DHL
L
DHL
DHL required an Email Service Provider
offering a fully managed service who could
provide a streamlined solution for organising
and delivering multiple country and language
versions of their email campaigns.
In a typical sales cycle, which can last from three to
nine months, DHL can send out up to four hundred
thousand emails across three waves in five different
languages and to 40 different countries.
Along with the multiple language translations required
by DHL, they also needed an email service provider
that could react fluidly to the cultural differences of the
countries they are dealing with.
dotMailer provides DHL Americas with a complete,
centrally managed email service, including an email
template translation service into five languages.
The bespoke email template designs dotMailer
created for DHL Americas were designed to maintain
and ensure brand consistency and corporate quality
standards, whilst delivering further benefits.
Talking to Lori Folts, there is no doubt that she is
very comfortable with the relationship that
dotMailer and DHL Americas have built.
“We couldn’t have done that
without the dedication, skill and
knowledge of dotMailer’s people”.
Market Leading Provider of
Email Marketing Software
dotDigital has grown to become a leader
in the provision of intuitive Software-as-a-
Service (SaaS) products for digital marketing
professionals. Its flagship product, dotMailer,
is a powerful email and cross-channel
marketing automation platform with easy to
use tools that enable large corporations and
SME marketers to efficiently create, manage,
execute and evaluate effective targeted
campaigns. Alongside its SaaS technology,
the Group also provides expert email
marketing consultancy and services for
businesses seeking to maximise customer
acquisition, conversion and retention. The
Company is headquartered in the UK and
employed 140 staff at the end of June 2013.
Email is one of the most established online
marketing channels and has consistently year
on year been in the top performing digital
channels for return on investment (ROI), as it
can be used effectively to acquire, convert,
retain and grow customers. The DMA Email
Marketing Council’s 2013 National Client Email
report underscores this, with respondents to
a poll indicated an average ROI of £21.48 for
every £1 spent in 2012 on email marketing.
The UK market for email marketing platforms and
services was worth £438m in 2012 and will grow
by an estimated 13% year-on-year to a value of £495m
by the end of 2013.
Source: e-Consultancy
Value of UK email marketing industry, 2004-2013
This chart shows the growth of the email marketing industry since 2004
£495m
£438m
£388m
£336m
£292m
£254m
£221m
£178m
£148m
£120m
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
(Estimated)
Source: e-Consultancy
Market Size
The UK market for email marketing platforms
and services is forecast to be worth nearly
£500m this year.
Over the last five years, continuing revenues
in the Group have grown 457% from £2.5m
to £13.8m (year to June 2013) and EBITDA has
grown from £0.8m to £4.1m June 2013. This
equates to a 5-year CAGR of 41%, which is
higher than the market growth in that time,
reflecting market share gains.
Whilst the Group has always enjoyed a high
degree of repeating revenue, much work has
been done in the last 18 months to shift its
revenues to contractual, recurring revenues
(which reduces churn), with the sales team
incentivised on total contracted value of deals
(so length of deal also a factor). This has had
the effect of increasing the overall ratio of
monthly billing under contract from 51% in
Dec 2011 (49% pay as you go) to 71% in June
2013 (29% pay as you go). In the year to June
2013, 65% of new contracts signed have
been on long-term agreements ranging
from 12-36 months.
dotMailer is a well-established product with
over 70,000 users in over 150 countries. Over
the last seven years, we have seen strong
evidence of the scalability of the Group’s
platform with monthly send volumes growing
from under 5m sends per month to currently
nearly 300m sends per month. The Company
has done significant development work on the
dotMailer platform over the years, providing
continuous innovation and functionality to its
users. This includes a highly compelling visual
drag and drop email template editor, drag
and drop segmentation and query builder,
translation of the user interface into eight
languages and responsive template toolkits
that optimises display content and layout on
mobile devices (smartphones and tablets).
The Company also has pre-built integrations
with best-in-class CRM products and
e-commerce platforms such as Salesforce,
Microsoft Dynamics, SalesLogix and Magento.
dotMailer has a broad customer base,
with the five largest clients accounting for
approximately 5% of total revenues (top
20 clients less than 15% of total revenue).
To some extent, this reflects some of the
Group’s historical success in the SME space
but increasingly, the Group is gaining solid
traction in the mid-to-large corporate market.
Example wins in this area include BBC
worldwide, e-Consultancy, Harveys, England
Hockey Board, Investec, Osprey London,
BP International, ITV, Odeon Cinemas, Ryman,
Balfour Beatty, EDF Energy, Nationwide,
Liverpool Victoria and Michael Page
International.
dotMailer’s client portfolio includes:
4
5
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013 Chief Executive’s Report continued
Spicerhaart
Spicerhaart operates through five well-known estate
agencies covering different parts of the UK, including
Haart, Spicer McColl, Haybrook, Felicity J Lord and
Chewton Rose, together with Darlows in Wales.
As well as having a strong high street presence in its
designated areas, Spicerhaart uses a wide array of ways
to attract customers. These start with the best-known
property portals, such as Rightmove and Primelocation,
and include a dozen other property portals, together
with over 100 regional newspapers, email and a range
of web-based applications including tailored apps and
social media.
“We use our database to keep track of all
the applicant details, but the way dotMailer
is configured means that it keeps track of
unsubscribes or bounced addresses, so won’t
email someone unless it knows they are
actively open to receiving emails.”
As part of the group rollout we are also building a
programme that tailors mails to the property buying
lifecycle. Matt Dale, explains,
“Email is a great way to build awareness.
Of course there are many ways people
can find out about a property, but getting
a picture of a house that perfectly suits
your requirements straight to your PC or
smartphone, even before it hits the web,
is hugely compelling.”
“Currently we average around
40% to 50% open rates, and
when we’re building a campaign,
for example, to launch a new
development we can use four
or five different messages and
easily see which features are most
attractive, whether that’s a 5%
contribution, part exchange
deals, or a choice of kitchen.”
a tt D ale, Spicerhaart
M
6
Email & Cross-Channel Marketing Automation
Services Division
On 19 March 2013, following completion of
a thorough review of the Group’s Services
Division (dotAgency Limitied which had
been providing a bespoke website design
and search engine optimisation service) the
Board announced its plans to gradually wind
down activity within this division, which had
become non-core. We have managed the exit
of this division at a cost to the Group of less
than £200k with remaining trailing revenues
of around £30k per month being managed
by a small team of support staff. As previously
disclosed, the remaining goodwill on the
acquisition of Netcallidus will be written-off
as a one-off non-cash adjustment.
Analysis of Netcallidas Acquisition
Actual consideration paid
Cumulative actual consideration paid
Purchase price recognised
in financial statement due to IFRS3
Accounting adjustments
Impairment
- Adjustment to purchase price
Finance Income
- Adjustment to contingent consideration
Impairment
- Adjustment to valuation
Profit contribution post acquisition
Cumulative profit contribution
dotMailer’s client portfolio includes:
Whilst it is disappointing to exit from this
division the additional focus within the
business on the core email marketing business
has already started to provide tangible
benefits in terms of prioritisation of resource
allocation and clarity of marketing message.
A summary of the financial impact of the
acquisition of search engine optimisation
business Netcallidus in 2010 is provided
below.
May
2010
£m
1.0
1.0
June
2012
£m
0.2
1.3
1.2
1.1
June
2010
£m
0.1
1.1
3.5
0.03
0.03
June
2011
£m
1.1
0.2
0.2
December
2012
£m
June
2013
£m
1.0
0.5
0.3
0.5
0.8
(0.2)
0.3
7
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013
Chief Executive’s Report continued
“Now we’re looking
forward to using it to bring
us closer to our supporters
by keeping them informed
of things they’re interested
in and building on that
interest to continue our
mission.”
s
e
o
r
e
n H e nson, Help for H
e
B
Help for Heroes
One of Help for Heroes (“H4H”) key tools to keep the
500,000 people who have signed up to the Charity
informed about events, merchandise and fund raising
activities is email.
Until the end of 2012, H4H had been using a different
platform to drive its campaigns, but the Charity needed
something much more dynamic to turn email from a
broadcasting tool into a means of targeting precisely
specific messages to relevant supporters.
To do this it needed a platform that offered seamless
integration with its Microsoft Dynamics CRM system.
So when they looked at an email platform the ability
to integrate seamlessly with MS Dynamics was a
key requirement.
dotMailer not only stood out as a very powerful and
easy-to-use application; it also offered a plug-in that
linked directly with MS Dynamics to create a very
precise and targetable communications tool.
Help for Heroes’ mailing content covers three principal
areas – the main Charity, where mailings are primarily
about keeping supporters informed and fund raising.
‘Retail’ covers direct sales of a range of H4H branded
merchandise that now covers over 500 items, and
‘Events and Challenges’, which as its name suggests,
encourages people to take part in and organize events
to support the Charity’s work and fundraising.
Ben Henson, IT Change Manager explains.
“Being able to refine mailings not just by
content but by targeting them directly
towards those people we know are
most likely to respond is going to have a
profoundly beneficial effect on the success
of email. We’ve already seen that the linking
of MS Dynamics and dotMailer offers huge
potential for streamlining our operations
and reducing costs.”
Balance Sheet and Cash Position
The Company continues to be strongly cash
generative from its operations with the year
end cash balance growing, yet again, at the
year end by £2.1m to £6.1m. This has also
been partly as a result of more effective and
efficient cash collection processes and a
push towards cash collection via direct debit
(approximately 50% at year end). In addition,
apart from a small number of operating leases
there is no debt finance. Together, this has led
to an even stronger balance sheet position at
the year end.
People
In October 2012, we announced the
appointment to the Board as non-Executive
Director; Simone who has a wealth of relevant
sector experience having been Managing
Director of e-Dialog UK, an eBay Group
Company, for 10 years and more recently
President of e-Dialog globally.
Focus on organic growth
During the year we evaluated a number of
potential acquisition opportunities in the
email marketing space. However, in the
opinion of the Board none of the businesses
evaluated were judged to be likely to create
long-term shareholder value when integration
risks were factored in.
Simone’s background, growing a multi-
channel marketing platform across EMEA and
APAC as well as the US, is proving invaluable
as we embark on our international expansion
programme.
Analysis of historic activities combined with
the market leading position of the dotMailer
brand has convinced the Board that there
is the potential for significant return on
investment from hiring additional sales
personnel and effective targeted marketing.
Therefore our strategy for 2013/14 will
focus on successful organic growth and as
a business we will invest in cost effective
marketing, adding more sales and account
management staff and continue to invest
in the dotMailer platform to ensure that the
significant long-term growth opportunity is
maximised.
The Board has agreed to allocate up to half
of the Group’s current cash to accelerate our
organic growth by hiring a further 20-30 sales
and account management executives and
increasing marketing spend.
Dividend Policy
I am pleased to report that the Board has
conducted a review of the business plan
for the next three years including evaluating
the cash needs for increased investment in
organic growth and has concluded that the
business has reached the point where we
have sufficient confidence in its on-going cash
generation capabilities to commence paying a
dividend to shareholders.
Therefore, subject to approval at the AGM,
the Board proposes that the Company will
pay a maiden dividend of 0.1 pence per share,
payable at the end of January 2014.
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.
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’ Directors
questions slot, regular newsletters, and
lunches for new and existing employees with
the Board.
The Board strives to continue to offer a
competitive benefits package in order to
attract and retain the best talent, including
share option schemes and bonuses based on
the Company and individual 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.
dotMailer’s client portfolio includes:
8
www.dotdigitalgroup.com
Annual Report and Accounts 2012/2013
dotDigital Group Plc
Annual Report and Accounts 2012/2013
9
Chief Executive’s Report continued
“We didn’t just want
a technology – we wanted
a partner that could deliver
a complete email service,
and one of the first things
that stood out about
dotMailer is the company’s
service-led approach.”
b
u
l
C
l
l
a
b
t
o
o
F
e
c
a
l
a
al P
yst
M Ik e Sinnerton, Cr
Current Trading Performance and Outlook
I am pleased to report that for the first
three months of the new financial year our
new business sales and monthly recurring
revenues have been in line with our plans. The
strategy, announced in August, to invest in
hiring additional sales, account management
and marketing staff has resulted in an
increase of 12 staff over the last three months
and we will start to see the impact of their
activities over the coming months.
We recently completed an “Investors in
Customers” survey on our existing clients and
were awarded an “outstanding” rating. This
exercise helped highlight some areas where
we can continue to make improvements to
delight our clients and we will be focussing
on these areas in the coming 12 months
including aligning staff rewards to levels
of client satisfaction. It was particularly
pleasing to see that client feedback about
our underlying email marketing product
was extremely positive and the areas for
improvement lie largely in areas where
additional training and more segmented
approaches to service can be implemented
quickly and at relatively low cost.
In the first quarter we have seen some
notable new customer signings in the UK
including Heal’s, Payzone, Paperchase, DMA
and Shakespeare’s Globe and in the US we
have signed Verifone, AIP and Chromogenex
where we are also seeing average order
values significantly higher than the UK
average. In the US, dotMailer was recently
placed in the final three in the GREAT
Tech awards sponsored by the UKTI for
demonstrating potential to grow in the
US market.
As sentiment in the UK economic situation
improves we are starting to see customers
investing in new initiatives and for the first
time in some years actually talking about
increasing marketing budgets. This should
translate into increased spending from our
existing customers over the coming years
and this combined with continued new
client wins with higher average spending
patterns than the past years gives rise to
confidence about the year ahead.
P A Simmonds
Chief Executive and Chief Financial Officer
dotMailer’s client portfolio includes:
Crystal Palace Football Club
In 2010, Crystal Palace Football Club demonstrated
the power of a strong fan base when Lloyds Bank
was persuaded to sell the freehold of its ground at
Selhurst Park to a consortium of four local business
people determined to secure the Club’s future.
One of the new owners’ first moves was to build
a management team that could lead a series of
initiatives to consolidate and develop the Club’s
commercial position.
Leading that team, as Chief Executive, is Phil Alexander,
a respected figure in the Football League and the
FA, whose experience spans both the traditional and
American forms of the sport. “Fans are the heart of a
football club. They’re the people who come through
the turnstiles every week and in football, your gate
money is your second biggest revenue after TV, so
you need to make sure you build a close and two-way
relationship with them.”
“To increase that closeness we’ve developed
a number of channels that embrace the
web, social media and direct communication
through SMS and email,” he continues. “It’s
all part of building a relationship that goes
much deeper than just filling seats.”
Mike Sinnerton is the Club’s Assistant Communications
Manager, and has the day-to-day responsibility of
managing interaction with the different fan bases.
“Our record through the turnstiles for a match
so far this season is 21,000, but of course not
everyone attends regularly. So the challenge
for us is to increase our level of engagement
right across the fan base. Of course we’d like
to see this reflected in higher attendance at
matches, but there are many other ways that
people can feel part of the club.”
10
11
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013
Corporate Social Responsibility Report
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.
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.
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 are offered
to allow clients to request features and vote
on feature priority, which feeds directly into
the development schedules for our SaaS
product offerings.
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.
The Board has significantly enhanced
the training and development program
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 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’ Directors
questions slot, regular newsletters, and
lunches for new and existing employees
with the Board.
The Board strives to continue 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 complete 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
continually monitor 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.
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 feels strongly in not only giving
back to our community but the software
development industry as a whole which is
why this year we began supporting Code Club
a nationwide network of volunteer-led after
school clubs that teach children aged 9-11
computer coding skills. 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’re 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 the commitment to sponsoring
Louise Cook, the British Female Rally
Champion. Louise masterminded a unique
sponsorship program 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 within the local talent pool.
The Company continues to allow paid time
off for all employees to volunteer on a number
of programs, including local environmental
projects and fund raising events.
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.
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 presences 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 or 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 a part of the Group’s 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.
12
13
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013 Our Board of Directors
Peter Simmonds FCCA, aged 55
Chief Executive and Finance Director
Peter Simmonds FCCA 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 a cultures and structures to facilitate
entrepreneurship and growth.
14
Simon Bird, aged 37
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 in helping
create websites, intranets, extranets, content
management systems and other online
solutions.
“Tink” Ian Taylor, aged 40
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 Bureaus
E-communications Council. Tink was a judge
for the Email and Virals category at the DMA
awards 2008.
“Skip” Gorden Fidura, aged 44
Client Services Director
Skip Fidura joined the dotDigital Group in
January 2009 with a remit to build our digital
strategy services offering. Skip’s 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.
Our Non Executive Directors
Frank Beechinor, aged 49
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 $4bn NYSE listed
company, for US $25m. In notable addition,
Frank was for 5 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.
Simone Barratt, aged 53
Non-Executive Director
Simone Barratt has over 15 years’ experience
of ecommerce and online marketing.
She has grown businesses to multi $m
from incorporation. She has International
expansion experience in Europe and the
Asia Pac. She was appointed Global President
of e-Dialog Inc an Ebay company in 2011
with Income Statement responsibility for
just under $100m business across USA,
EMEA and APAC and 450 employees.
Richard Kellett-Clarke FCA, aged 58
Non-Executive Director
Richard Kellett-Clarke brings to the board
over 30 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 PLC’s 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.
Our Company Secretary
Milan Patel ACCA ACSI, aged 29
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 B.A (Hons) degree in Accounting and
Finance. Milan has over 8 years experience
in Accounting and Finance within the Digital
Media, Technology and Logistics industry.
He has been responsible for the financial
and legal aspects of the reverse acquisition
of West End Ventures PLC, admission to
Plus and the introduction to AIM. He is also
responsible for the Group’s functions in
financial management & reporting, regulatory
compliance, legal and corporate governance.
15
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013
Corporate Governance Report
Audit Committee Report
The Board have decided to provide corporate
governance disclosures in accordance
with the principles and provisions of
“The Combined Code: Principles of Good
Governance and the Code of Best Practice”
(“the Code”). As part of this process Turnbull
guidelines set out in “Guidance for Directors
on the Combined Code” have also been
reviewed and are covered under “Internal
control” below. An explanation of how
dotDigital Group Plc (the “Group”) has applied
the principles and the extent to which the
provisions in the Code have been complied
which appears below.
Compliance statement
(a) Directors
The details of the Group’s Board, together with
the audit and remuneration committees, are
set out on page14, 17 and 18.
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, two independent
Non-Executive Directors and an independent
Non-Executive Chairman.
The current constitution of the remuneration
committee and the audit committee is shown
on page 17 and 18.
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 18 and the remuneration
of the Executive Directors is determined by
the Remuneration Committee whilst that
of the Non-Executives is determined by the
whole Board. The Directors are conscious
of the importance of 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.
(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 Directors’ report on
pages 20 to 24 to present a balanced and
understandable assessment of the Group’s
position and prospects. The Directors’
responsibility for the financial statements
is described on page 24.
(ii) Internal control
The Board confirms that it has established
the procedures necessary to implement the
guidance set out in
“Internal Control: Guidance for Directors on
the Combined Code”. The process of risk
identification, evaluation and management
has been considered by the Board. It is the
intention that this will continue to be kept
under constant review and will be considered
at each board meeting in the future. The Board
is continuing to take steps to embed internal
control and risk management further into
the operations of the business and to deal
16
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 30 June 2013 and up to the date of the
Directors’ report. It has considered the major
business risks and the control environment.
Important control procedures, in addition to
the day to day supervision of the business,
include comparison of monthly management
accounts to the budget.
(iii) Audit committee and auditors
The Audit Committee comprises of 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
such other 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.
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 of 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.
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 30 June 2013.
The Committee concluded that these budgets
were both prudent and realistic in the context
of the Group’s ambitions.
The Secretary to the committee is Milan Patel,
the Company Secretary.
Main Activities of the Audit Committee
At its meeting on the 2 October 2013, the
Committee reviewed the Group’s preliminary
announcement of its results for the financial
year 30 June 2013 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.
Richard Kellett-Clarke
Chairman of the Audit Committee
17
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013 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 comprised Richard Kellett-Clarke
(Chairman) and Frank Beechinor-Collins.
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;
(b) To maintain a competitive program which
enables the Group to attract and retain
high calibre executives; and
(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
• Aligned to total reward structure for all
employees;
• Provided on a market competitive basis.
Annual Bonus Scheme
• Group PBT with an individual performance
element linked to object delivery;
• Drive profitability and strategic change
across the Group;
• Delivery of the overall business strategy.
Service Contracts
On 7 January 2009, the Executive Directors
each entered into a service contract with
the Group, the terms of which commenced
upon Admission to PLUS Markets on the
2 February 2009. Each appointment runs for
one year from that date and is terminable by
six months’ notice by either party to expire at
the end of that year or at any time thereafter.
The agreement contains restrictive covenants.
Upon termination, no benefits (other than
those accruing during the notice period) are
due to the Director.
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.
Approved by the Remuneration Committee
Signed on its behalf by
Directors’ Emoluments
Executive Director
P Simmonds
I Taylor
S Bird
G Fidura
Non Executive Directors
F Beechinor-Collins
R Kellett-Clarke
S J Barrett
Executive Director
P Simmonds
I Taylor
S Bird
G Fidura
Non Executive Directors
F Beechinor-Collins
R Kellett-Clarke
N Nelson
Salary/Fees
£’000
12 month period ended 30.6.13
Bonus
£’000
Benefits
£’000
Pension
£’000
Mean Remuneration
of AIM profitable
companies*
£’000
Total
£’000
306
120
111
111
80
422
11
7
7
4
29
50
50
50
-
150
11
11
11
2
35
Salary/Fees
£’000
Benefits
£’000
Bonus
£’000
Pension
£’000
35
30
23
88
-
-
-
-
-
-
-
-
-
-
-
-
192
179
179
86
636
Total
£’000
35
30
23
88
Salary/Fees
£’000
12 month period ended 30.6.12
Bonus
£’000
Benefits
£’000
Pension
£’000
Mean Remuneration
of AIM profitable
companies*
£’000
Total
£’000
281
110
110
110
77
407
Salary/Fees
£’000
35
32
18
85
5
7
7
4
23
Benefits
£’000
-
-
-
-
40
40
40
12
132
Bonus
£’000
-
-
-
-
11
11
11
2
35
Pension
£’000
-
-
-
-
166
168
168
95
597
Total
£’000
35
32
18
85
* Mean remuneration for AIM profitable companies is based on Vitesse Media Research report of Directors’ Pay 2013
Director Interests
The respective interests, all of which are beneficial, in the shares of the Company for the members of the Board at the year end and subsequent to
that date are stated below:
Richard Kellett-Clarke
Chairman of Remuneration Committee
Director
P Simmonds*
I Taylor
S Bird
F Beechinor-Collins
S J Barratt
No. of Shares held
as at 30.6.13
% Holding
16,073,841
49,876,667
41,876,667
674,194
215,000
108,716,369
5.79
17.98
15.09
0.24
0.08
39.18
* 3.27% 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, SIPP’s etc. The beneficiary of the SIPP is Peter Anthony Simmonds.
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
5.000
5.125
7.250
01/07/2010
01/02/2019
01/05/2012
31/12/2015
01/05/2013
01/02/2016
19
18
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013
Report of the Directors
The Directors present their report with the
financial statements of the Company and the
Group for the year ended 30 June 2013.
Principal Activity
The principal activity of the Group in the year
under review was that of providing intuitive
software as a service (“SaaS”) and managed
services to digital Marketing professionals.
Review of Business
During the year the Group has shown
significant growth from continuing operations
in customer numbers, sales, and profits.
Revenues grew from £9.5m in the year ended
June 2012 to £12.2m for the year ended June
2013, an increase of 28%.
Pre-tax profits grew from £2.4m in 12 months
to June 2012 to £4.0m for the year ended June
2013; an increase of 67%.
On 19 March 2013, following completion of
a thorough review of the Group’s Services
Division, dotAgency, the Board announced its
plans to gradually wind down activity within
this division, which had become non-core.
We have managed the exit of this division at
a cost to the Group of less than £200k with
remaining trailing revenues of around £30k
per month being managed by a small team
of support staff. As previously disclosed, the
remaining goodwill on the acquisition of
Netcallidus will be written-off as a one-off
non-cash adjustment.
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 from
the Group are:
Revenue
EBITDA
Volume of Sends
Recurring revenue as a %
2013
£m
13.8
4.1
2,645
75
2012
£m
12.0
3.4
1,828
70
% Increase
16%
21%
45%
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 provide
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 create
and send campaigns which attracted high
complaint rates, the reputation of dotMailer’s
sending IP addresses could be diminished.
This diminished reputation could affect
dotMailer’s ability to win or retain new clients
and therefore could significantly affect its
planned growth in revenues.
dotMailer also faces risks from commercial
and non-commercial anti spam services.
There are a number of organisations
who provide a service to individuals and
companies to help them reduce spam in
their inbox; examples include Spamhaus
and Spamcop. These organisations allow
individuals to report an email as spam.
This reporting can rapidly propagate the
blacklisting of an IP address or domain used to
send the reported email. This could impact on
dotMailer’s ability to deliver emails on behalf
of other clients which could in turn impact
on revenues.It is also to be noted that as the
ISP communities adopt ever tougher 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 & 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.Whilst the
Group will continue to strive to ensure it is
able to deliver products and services that
meet the needs of its target clients, there is
a risk that competitors may be first to the
market with products that entice clients
away from dotMailer.
(v) 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, 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.
20
21
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013
Report of the Directors continued
(v) Evolving Technology and customer
requirements
Failure to respond to evolving technological
and customer requirements or to introduce
competitive enhancements and new features,
our SaaS solutions could become less
competitive.
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
The Board recommend the payment of
a final dividend of 0.1p per ordinary share.
The Board’s dividend policy will be
reviewed annually in line with ensuring
there is adequate cash within the business
to maintain high growth strategy.
Future Outlook
The Group provides email and cross-channel
marketing technology and services. 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 will continue
to present opportunities to expand and
diversify profitability in the coming year.
Directors
The Directors shown below have held office
during the whole of the period from 1 July
2012 to the date of this report.
• S Bird
• P A Simmonds
•
I Taylor
• G Fidura
• R Kellett-Clarke
• F Beechinor-Collins
• S J Barratt (appointed 9 October 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.
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.
Listing
The Group’s ordinary shares have been traded
on London Alternative Investment Market
(AIM) since 29 March 2011. N+1 Singer are
the Group’s nominated advisors and together
with Finncap are the joint brokers. The closing
mid market share price at 30 June 2013 was
14.875p (2012: 11.25p).
22
The Directors who served during the period and their beneficial interests in the shares of the Group as recorded in the Register of Directors’
interests at 30 June 2013 are as follows:-
Directors
S Bird
I Taylor
P Simmonds
G Fidura
F Beecher-Collins
S Barratt
R Kellett-Clarke
30.6.13
Number of
shares held
Percentage
Shareholding
%
30.6.12
Number of
shares held
Percentage
Shareholding
%
41,876,667
49,876,667
16,073,841*
-
674,194**
215,000
-
15.09
17.98
45,860,000
53,876,667
5.79
19,959,999*
-
0.24
0.08
-
-
674,194**
-
-
16.25
19.57
7.25
-
0.20
-
-
* Frank Nominees Limited holds 3.27% 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
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 30 June 2013 are as follows:-
Executive Directors
G Fidura
30.6.13
Number of
options held
30.6.12
Number of
options held
2,137,930
2,137,930
Substantial Interests
On 10 October 2013, 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
Legal and General Group PLC
Investec
P Simmonds
Lion Trust
Newedge Group SA
2013
Number of
shares held
Percentage
Shareholding
%
49,876,667
41,876,667
19,192,000
22,000,000
16,073,841
14,101,527
11,361,000
17.98
15.09
6.92
7.93
5.79
5.08
4.09
23
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013
Report of the Directors continued
Report of the Independent Auditors
Auditors
The auditors, Jeffreys Henry LLP, will be
proposed for re-appointment at the
forthcoming Annual General Meeting.
On behalf of the Board
P A Simmonds
Director
14 October 2013
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:
• select suitable accounting policies and
then apply them consistently;
• make judgements and accounting
estimates that are reasonable 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.
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.
We have audited the financial statements
of dotDigital Group Plc for the year ended
30 June 2013, 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 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 Directors’ report 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 30 June 2013 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.
Jonthan Isaacs
Senior Statutory Auditor
For and on behalf of Jeffreys Henry LLP
(Statutory Auditors)
Finsgate 5-7 Cranwood Street
London EC1V 9EE
14 October 2013
24
25
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013 Consolidated Income Statement
For the year ended 30 June 2013
Consolidated Statement of Financial Position
For the year ended 30 June 2013
Continuing operations
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Finance costs
Finance income
Profit before corporation tax
Corporation tax
Profit for the year from continuing operations
Discontinued operations
(Loss)/profit for the period from discontinuing operations
Profit/(loss) for the period
Attributable to the owners of the parent:
Profit for the period from continuing operations
(Loss)/profit for the period from discontinuing operations
Profit for the period attributable to the owners of the Company
Earnings per share from continuous operations expressed in pence per share
Basic
Diluted
Earnings per share from continuing and discontinued operations expressed in pence per share
Basic
Diluted
Adjusted excluding exceptional items
Adjusted
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2013
Profit for the year
Exchange differences on translating foreign operations
Total comprehensive income for the year
Total comprehensive income attributable to :
Owners of the parent
Notes
7
6
6
8
4
4
10
10
10
10
Notes
30.6.13
£’000
12,197
(887)
11,310
(7,338)
3,972
-
13
3,985
(220)
3,765
(3,023)
(3,023)
3,765
(3,023)
742
1.36
1.32
0.27
0.26
1.11
1.07
30.6.12
£’000
(restated)
9,547
(576)
8,971
(6,532)
2,439
(1)
8
2,446
(260)
2,186
281
281
2,186
281
2,467
0.79
0.77
0.90
0.88
0.94
0.92
30.6.13
£’000
742
(2)
740
740
30.6.12
£’000
(restated)
2,467
-
2,467
2,467
Assets
Non-current assets
Goodwill
Intangible assets
Property, plant and machinery
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
Retranslation reserve
Retained earnings
Total equity
Liabilities
Non-Current Liabilities
Deferred Tax
Current liabilities
Trade and other payables
Tax payable
Total liabilities
Total equity & liabilities
Notes
30.6.13
£’000
30.6.12
£’000
11
12
13
15
16
17
18
18
18
18
18
22
19
609
2,449
472
3,530
2,893
6,072
8,965
2,934
1,753
404
5,091
2,198
4,021
6,219
12,495
11,310
1,387
4,863
(4,695)
13
(2)
9,071
10,637
1,377
4,755
(4,695)
127
-
8,202
9,766
14
25
1,681
163
1,844
1,858
1,335
184
1,519
1,544
12,495
11,310
The financial statements were approved and authorised for issue by the Board of Directors on 14 October 2013 and were signed on its behalf by
P A Simmonds
Director
Company registration number: 06289659 (England and Wales)
26
27
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013
Company Statement of Financial Position
For the year ended 30 June 2013
Consolidated Statement of Changes in Equity
For the year ended 30 June 2013
Assets
Non-current assists
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
current liabilities
Trade and other payables
Total liabilities
Total equity & liabilities
Notes
30.6.13
£’000
30.6.12
£’000
14
15
16
17
18
18
18
19
5,186
5,186
5,423
70
5,493
10,679
1,387
4,863
13
3,065
9,328
1,351
1,351
1,351
10,679
7,511
7,511
13
83
96
7,607
1,377
4,755
127
129
6,388
1,219
1,219
1,219
7,607
The financial statements were approved and authorised for issue by the Board of Directors on 14 October 2013 and were signed on its behalf by
P A Simmonds
Director
Company registration number: 06289659 (England and Wales)
Balance as at 1 July 2011
Issue of share capital
Transactions with owners
Profit for the year
Total comprehensive income
Balance as at 30 June 2012
Issue of share capital
Reclassification of reserves
Transactions with owners
Profit for the year
Total comprehensive income
Balance as at 30 June 2013
Balance as at 1 July 2011
Issue of share capital
Share based payments
Transactions with owners
Profit for the year
Total comprehensive income
Balance as at 30 June 2012
Issue of share capital
Reclassification of reserves
Share based payments
Retranslation reserve
Transactions with owners
Profit for the year
Total comprehensive income
Balance as at 30 June 2013
Called up share
capital
£’000
Retained
earnings
£’000
1,375
2
2
-
-
1,377
10
-
10
-
-
5,735
-
-
2,467
2,467
8,202
-
127
127
742
742
Share
premium
£’000
4,737
18
18
-
-
4,755
108
-
108
-
-
1,387
9,071
4,863
Retranslation
reserve
£’000
-
-
-
-
-
-
-
-
-
-
(2)
(2)
-
-
(2)
Reverse
acquisition
reserve
£’000
(4,695)
-
-
-
-
-
(4,695)
-
-
-
-
-
-
-
(4,695)
Other
reserves
£’000
70
-
57
57
-
-
127
-
(127)
13
-
(114)
-
-
13
Total
equity
£’000
7,222
20
57
77
2,467
2,467
9,766
118
-
13
(2)
129
742
742
10,637
• 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.
• 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.
• Retranslation reserve relates to the retranslation of a foreign subsidiary into the functional currency of the Group.
28
29
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013
Company Statement of Changes in Equity
For the year ended 30 June 2013
Consolidated Statement of Cash Flows
For the year ended 30 June 2013
Balance as at 1 July 2011
Issue of share capital
Transactions with owners
Profit for the year
Total comprehensive income
Balance as at 30 June 2012
Issue of share capital
Reclassification of reserves
Transactions with owners
Profit for the year
Total comprehensive income
Balance as at 30 June 2013
Balance as at 1 July 2011
Issue of share capital
Share based payments
Transactions with owners
Profit for the year
Total comprehensive income
Balance as at 30 June 2012
Issue of share capital
Reclassification of reserves
Share based payments
Transactions with owners
Profit for the year
Total comprehensive income
Balance as at 30 June 2013
Called up share
capital
£’000
Retained
earnings
£’000
1,375
2
2
-
-
1,377
10
-
10
-
-
1,387
498
-
-
(369)
(369)
129
-
127
127
2,809
2,809
3,065
Other
reserves
£’000
70
-
57
57
-
-
127
-
(127)
13
(114)
-
-
13
Share
premium
£’000
4,737
18
18
-
-
4,755
108
108
-
-
4,863
Total
equity
£’000
6,680
20
57
77
(369)
(369)
6,388
118
-
13
131
2,809
2,809
9,328
• 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.
• Other reserves relate to the charge for the share based payment in accordance with International Financial Reporting Standard 2.
Cash flows from operating activities
Cash generated from operations
Interest paid
Corporation 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 flows used in investing activities
Cash flows from financing activates
Loan repayments in period
Share issue
Net cash flows 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
Increase in cash and cash equivalents from continuing operations
Increase in cash and cash equivalents from discontinuing operations
Increase in cash and cash equivalents
Company Statement of Cash Flows
For the year ended 30 June 2013
Cash flows from operating activities
Cash generated from operations
Cash flows from investing activities
Net cash generated from operating activities
Contingent consideration on acquisition of subsidiary
Net cash flows used in investing activities
Cash flows from financing activates
Loan from Group companies
Share issue
Net cash flows 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
30
Notes
27
28
28
Notes
27
28
28
30.6.13
£’000
3,817
-
(253)
3,564
-
(1,352)
(292)
-
13
(1,631)
-
118
118
2,051
4,021
6,072
2,076
(25)
2,051
30.6.13
£’000
(273)
(273)
-
-
142
118
260
(13)
83
70
30.6.12
£’000
3,275
(1)
(192)
3,082
(164)
(1,173)
(315)
1
8
(1,643)
(6)
20
14
1,453
2,568
4,021
1,424
29
1,453
30.6.12
£’000
(236)
(236)
(164)
(164)
228
20
248
(152)
235
83
31
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013
Notes to the Consolidated Financial Statements
For the year ended 30 June 2013
• The assets and liabilities of the legal
subsidiary, dotMailer Limited are
recognised and measured in the
consolidated financial statements at
their pre combination carrying amounts,
without restatement to their fair value;
• The retained reserves recognised in the
consolidated financial statements for the
beginning of the prior period reflect the
retained reserves of dotMailer Limited to
30 April 2008. However, in accordance with
IFRS3 ‘Business combinations’ the equity
structure appearing in the consolidated
financial statements reflects the equity
structure of the legal parent dotDigital Plc,
including the equity instruments issued
under the share exchange to effect the
business combination;
• A reverse acquisition reserve has been
created to enable the presentation of
a consolidated balance sheet which
combines the equity structure of the legal
parent with the non statutory reserves of
the legal subsidiary;
• Comparative numbers are prepared on the
same basis.
• The following accounting treatment has
been applied in respect of the acquisition
of dotDigital 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.
• The cost of an acquisition is measured
as the fair value of the assets given,
equity instruments issued and liabilities
incurred or assumed at the date of
exchange, plus costs directly attributable
to the acquisition. Identifiable assets
acquired and liabilities assumed in a
business combination are measured
initially at their fair values at the date of
acquisition, irrespective of the extent of
any minority interest. The excess of the
cost of acquisition over the fair value of the
Group’s share of the identifiable net assets
acquired is recorded as goodwill. If the cost
of acquisition is less than the fair value of
the net assets of the subsidiary acquired,
the difference is recognised directly in the
income statement.
Subsidiaries
A subsidiary is an entity whose operating and
financing policies are controlled by the Group.
Subsidiaries are consolidated from the date on
which control was transferred to the Group.
Subsidiaries cease to be consolidated from
the date the Group no longer has control.
Intercompany transactions, balances and
unrealised gains on transactions between
Group companies have been eliminated on
consolidation.
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.
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 20.
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 thousand.
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.
New standards, amendments and
interpretations issued but not effective
There are no IFRSs or IFRIC interpretations 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:
32
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 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.
33
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013 Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2013
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.
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.
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)
• Plant and equipment, intangible assets &
impairment of 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.
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.
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
10%. The cash flow projections are based
on the assumption that the Group can
realise projected sales. A prudent approach
has been applied with no residual value
being factored. 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.
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.
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.
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.
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.
34
35
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013 Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2013
4. Discontinued Operations
Analysis of continuing and discontinued operations is as follows:
Year ended 30 June 2013
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit /(loss) before exceptional items
Exceptional item: Impairment of goodwill
Finance income
Corporation tax
Profit for the year attributable to owners
Year ended 30 June 2012
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit before exceptional items
Exceptional item: Impairment to goodwill
Finance costs
Finance income including exceptional items
Corporation tax
Profit for the year attributable to owners
Continuing
operations
30.6.13
£’000
Discontinued
operations
30.6.13
£’000
12,197
(887)
11,310
(7,338)
3,972
-
13
(220)
3,765
1,651
(1,033)
618
(1,315)
(697)
(2,326)
-
-
(3,023)
Continuing
operations
30.6.12
(restated)
£’000
Discontinued
operations
30.6.12
(restated)
£’000
9,547
(576)
8,971
(6,532)
2,439
-
(1)
8
(260)
2,186
2,440
(692)
1,748
(1,314)
434
(1,187)
-
1,079
(45)
281
The exceptional item outlined above for the year ended 30 June 2012 under finance income relates to the revision of the contingent
consideration due in relation to the acquisition of dotAgency Limited (previously known as dotSearch Limited) in 2011. IFRS 3 relating to business
combinations directed that any revaluations to the consideration should be credited to the income statement as financial income. See note 14 for
further details.
5. Employees and Directors
Wages and salaries
Social security costs
Other pension costs
The average monthly number of employees during the year are as follows
Directors
Sales
Web designers, SEO and developers
Administration
36
30.6.13
£’000
4,445
556
97
5,098
30.6.12
£’000
4,234
461
78
4,773
30.6.13
30.6.12
7
60
46
41
154
6
48
66
41
161
6. Net Finance Income
Finance income:
Deposit account interest
Finance costs:
Loan
7. Operating Profit before Exceptional Items
Costs by nature
Profit from continuing operations has been arrived after charging/(crediting):-
Direct marketing
Outsourcing
Other costs
Total cost of sales
Staff related costs (inc Directors emoluments)
Operating leases: Land and buildings
Operating lease: 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 costs
During the year the Group obtained the following services from the Group’s auditor at costs detailed below:
30.6.13
£’000
30.6.12
£’000
13
13
-
-
30.6.13
£’000
474
376
37
887
30.6.13
£’000
4,715
353
63
25
655
209
336
282
138
(3)
187
153
225
8
8
1
1
30.6.12
£’000
(restated)
358
200
18
576
30.6.12
£’000
(restated)
3,858
338
64
25
410
145
416
407
200
(3)
182
173
317
7,338
6,532
30.6.13
£’000
30.6.12
£’000
Fees payable to the Company’s auditor for audit of Parent Company and consolidated financial statements
Fees payable to the Company’s auditor for other services:
-
- Non audit fees: All other services
The audit of Company’s subsidiaries
7
26
5
38
7
25
5
37
37
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2013
8. Corporation Tax
Analysis of the tax charge from continuing operations:
Current tax:
Tax
Deferred tax
Analysis of the tax charge from discontinued operations:
Current tax:
Tax
Tax charge from continuing operations
Tax charge from discontinued operations
Factors affecting the tax charge:
Profit on ordinary activities before tax
Profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 23.75% (2012: 25%)
Effects of:
Expenses not deductable
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 corporation tax
30.6.13
£’000
231
(11)
220
-
-
220
-
220
30.6.13
£’000
962
218
52
(716)
(8)
(45)
-
552
-
167
220
30.6.12
£’000
236
24
260
45
45
260
45
305
30.6.12
£’000
2,773
693
113
(560)
(6)
-
16
297
(270)
(2)
281
9. Profit/(Loss) of Parent Company
As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the Parent Company is not presented as part of these
financial statements. The Parent Company’s profit for the financial year was £2,808,521 (2012: loss £368,977).
10. Earnings per Share
Earnings per share data is based on the consolidated profit using and the weighted average number of shares in issue of the Parent Company.
Basic earnings per share are calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of
ordinary shares outstanding during the period.
Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential
ordinary shares.
Reconciliations are as follows:-
From continuing operations
Basic EPS
Net income attributable to the owners of the parent
Diluted EPS
Net income attributable to the owners of the parent
Adjusted EPS
Effect of exceptional items:
Impairment of goodwill
-
Adjusted earnings
Effect of dilutive shares
Options and Warrants
Adjusted diluted EPS
Adjusted earnings
From discontinued operations
Basic EPS
Diluted EPS
Both the EPS and the diluted EPS are same due to the anti-dilutive effect.
Basic EPS
Net income attributable to the owners of the parent
Diluted EPS
Net income attributable to the owners of the parent
Adjusted EPS
Effect of exceptional items:
-
-
Impairment of goodwill
Reversal of financial instrument
Adjusted earnings
Effect of dilutive shares
Options and Warrants
Adjusted diluted EPS
Adjusted earnings
30.6.13
Weighted
average
number of
shares
Earnings
£’000
742
275,839,565
742
285,687,852
2,326
-
3,068
275,839,565
-
9,848,287
Per share
amount
pence
0.27
0.26
-
1.11
-
3,068
285,687,852
1.07
30.6.13
Per share
amount pence
30.6.12
Per share
amount pence
(0.01)
(0.01)
0.001
0.001
30.6.12
Weighted
average
number of
shares
Earnings
£’000
2,467
275,019,565
2,467
281,111,611
1,187
(1,079)
-
-
2,575
275,019,565
-
6,092,046
Per share
amount
pence
0.90
0.88
-
-
0.94
-
2,575
281,111,611
0.92
38
39
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2013
11. Goodwill
Group
Cost
At 1 July
And 30 July
Amortisation
At 1 July 2012
Impairment
At 30 June 2013
Net Book Value
30.6.13
£’000
30.6.12
£’000
4,121
4,121
1,187
2,326
3,512
609
-
1,187
1,187
2,934
The Board took the decision in the year to wind down the operations of dotAgency Limited resulting in the full impairment of the remaining
goodwill arising from the acquisition of Netcallidus Limited now known as dotAgency Limited.
Goodwill acquired in a business combination is allocated, at acquisition, to cash generating units (CGUs) that are expected to benefit from that
business combination. The carrying amount of goodwill relates wholly to the Group’s single trading activity and business segment.
The recoverable amounts of the CGUs have been determined from value in use calculations. These calculations use post-tax cash flow projections
based on financial budgets approved by management covering a five-year period.
A discount factor of 10% to reflect the time value of money has been applied in these calculations.
12. Intangible Assets
Group
Cost
At 1 July 2012
Additions
At 30 June 2013
Amortisation
At 1 July 2012
Amortisation for the year
At 30 June 2013
Net Book Value
At 30 June 2013
Cost
At 1 July 2011
Additions
At 30 June 2012
Amortisation
At 1 July 2011
Amortisation for the year
At 30 June 2012
Net Book Value
At 30 June 2012
Computer
software
£’000
Internally
generated
development
costs
£’000
Domain
names
£’000
199
12
211
112
43
155
56
2,328
1,340
3,668
668
610
1,278
2,390
16
-
16
11
2
13
3
Computer
software
£’000
Internally
generated
development
costs
£’000
Domain
names
£’000
148
51
199
65
47
112
87
1,210
1,119
2,329
308
360
668
1,661
13
3
16
7
4
11
5
Totals
£’000
2,543
1,352
3,895
791
655
1,446
2,449
Totals
£’000
1,371
1,173
2,544
380
411
791
1,753
Development cost additions represents resources the Group have invested in the development of new innovative and ground breaking
technology products for marketing professionals. This platform allows them to create, send and automate marketing campaigns. Following
development of the products the Group intends to licence the use of the platform.
13. Property, plant and equipment
Group
Cost
At 1 July 2012
Additions
Disposals
At 30 June 2013
Amortisation
At 1 July 2012
Amortisation for the year
Eliminated on disposal
At 30 June 2013
Net Book Value
At 30 June 2013
Cost
At 1 July 2011
Additions
Disposals
At 30 June 2012
Amortisation
At 1 July 2011
Amortisation for the year
Eliminated on disposal
At 30 June 2012
Net Book Value
At 30 June 2012
14. Investments
Company
Cost
At 1 July
Inter group transfer
At 30 July
Amortisation
At 1 July 2012
Impairment
At 30 June 2013
Net Book Value
At 30 June 2013
Short
leasehold
£’000
Plant and
machinery
£’000
Fixtures
and
fittings
£’000
Computer
equipment
£’000
12
95
-
107
11
14
-
25
82
3
-
(3)
-
2
-
(2)
-
-
192
85
(122)
155
144
42
(122)
64
91
716
112
(208)
620
361
163
(203)
321
299
Short
leasehold
£’‘000
Plant and
machinery
£’000
Fixtures
and
fittings
£’000
Computer
equipment
£’000
12
-
-
12
10
1
-
11
1
9
-
(6)
3
3
2
(4)
1
2
175
17
-
192
120
25
-
145
47
419
297
-
716
243
119
-
362
354
Totals
£’000
923
292
(333)
882
518
219
(327)
410
472
Totals
615
314
(6)
923
376
147
(4)
519
404
Shares in
Group
Undertakings
30.6.13
£’000
Shares in
Group
undertakings
30.6.12
£’000
8,704
1
8,705
1,193
2,326
3,519
8,704
-
8,704
-
1,193
1,193
5,186
7,511
The board took the decision in the year to wind down the operations of dotAgency Limited resulting in the full impairment of the remaining
investment arising from the acquisition of Netcallidus Limited now known as dotAgency Limited.
40
41
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2013
14. Investments continued
The Group or the Company’s investments at the balance sheet date in the share capital of companies include the following:
dotAgency (previously known as dotSearch) Limited
Nature of business: Internet and website services
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
dotSurvey (previously known as dotAgency) Limited
Nature of business: Dormant
Class of shares:
Ordinary
Aggregate capital and reserves
dotCommerce Limited
Nature of business: Dormant
Class of shares:
Ordinary
Aggregate capital and reserves
dotEditor Limited
Nature of business: Dormant
Class of shares:
Ordinary
Aggregate capital and reserves
dotSEO LImited
Nature of business: Dormant
Class of shares:
Ordinary
Aggregate capital and reserves
42
Proportion of voting
power held %
100.00
100.00
30.6.12
£’000
7,531
2,658
30.6.13
£’000
6,042
3,990
Proportion of voting
power held %
100.00
30.6.12
£’000
1
30.6.13
£’000
1
Proportion of voting
power held %
100.00
30.6.12
£’000
1
30.6.13
£’000
1
Proportion of voting
power held %
100.00
30.6.12
£’000
1
30.6.13
£’000
1
Proportion of voting
power held %
100.00
30.6.12
£’000
1
30.6.13
£’000
1
Class of shares:
Ordinary, B, C & D
Aggregate capital and reserves
Profit/(loss) for the year
dotMailer Inc
Nature of business: Web and email based marketing
Incorporated: US
Class of shares:
Ordinary
Aggregate capital and reserves
Loss for the year
dotSearch Europe Limited
Nature of business: Branch company
Class of shares:
Ordinary
Aggregate capital and reserves
Loss for the year
Proportion of voting
power held %
100.00
30.6.12
£’000
500
202
30.6.13
£’000
(73)
(573)
Proportion of voting
power held %
100.00
30.6.12
£’000
-
-
30.6.13
£’000
(119)
(117)
Proportion of voting
power held %
100.00
30.6.12
£’000
(33)
(30)
30.6.13
£’000
(38)
(4)
On 17 May 2011, the Group acquired the entire share capital of dotAgency (previously known as dotSearch) Limited a company registered in
England and Wales for an initial consideration of £1,152,660 and 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 dotAgency (previously known as dotSearch)
Limited allows the Group to incorporate the customer base in to its own while providing additional expertise to further develop and market it’s
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
£’000
1,000
153
1,153
The number of shares issued in respect of the consideration transferred was based on per share pre consolidation which was the mid-market
price as at 30 June 2010.
43
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2013
14. Investments continued
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
£’000
45
3
88
41
(84)
(41)
52
£’000
3,519
52
3,467
45
3,512
The contingent consideration arrangement required the Group to pay the former owners of dotAgency (previously known as dotSearch) 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 30 June 2012
less any amounts that had been paid previously.
On 24 November 2011 the Board of Directors presented an early settlement package to the pre-existing shareholders of dotAgency (previously
known as dotSearch) 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 £1,079,824 was 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 30 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 resulted in an impairment to the value of goodwill generated on the
acquisition of £1,186,516 which was charged to the income statement.
The net effect on the income statement of both the financial income and the impairment of the investment resulted in a charge of £106,692.
15. Trade and Other Receivables
Current:
Trade receivables
Less: provision for impairment of trade receivables
Trade receivables - net
Amounts owed by Group undertakings
Other receivables
VAT
Prepayments and accrued income
Group
Company
30.6.13
£’000
2,572
(249)
2,323
-
56
-
514
30.6.12
£’000
2,161
(211)
1,950
-
18
-
230
30.6.13
£’000
-
-
5,400
-
9
14
2,893
2,198
5,423
30.6.12
£’000
-
-
-
-
-
13
13
16. Cash and Cash Equivalents
Bank accounts
17. Called up Share Capital
Allotted, issued, fully paid
277,472,065
(2012: 275,362,065)
Group
Company
30.6.13
£’000
6,072
6,072
30.6.12
£’000
4,021
4,021
30.6.13
£’000
30.6.12
£’000
70
70
83
83
Nominal
value
£0.005
30.6.13
£’000
1,387
30.6.12
£’000
1,377
1,387
1,377
During the reporting period the Company undertook the following transactions involving the issuing and reclassifying issued share capital:
On 15 November 2012 a number of employees exercised their share options increasing the issued share capital by 570,000 shares.
On 21 March 2013 a number of employees exercised their share options increasing the issued share capital by 580,000 shares.
On 18 June 2013 a number of employees exercised their share options increasing the issued share capital by 960,000 shares.
18. Reserves
Group
As at 1 July 2012
Issue of share capital
Reclassification of reserves
Profit for the year
Balance as at 30 June 2013
As at 1 July 2012
Issue of share capital
Reclassification of reserves
Profit for the year
Currency translation
Share based payment
Balance as at 30 June 2013
Retained
earnings
£’000
8,202
-
127
742
Share
premium
£’000
4,755
108
-
-
Reverse
acquisition
reserve
£’000
(4,695)
-
-
-
9,071
4,863
(4,695)
Retranslation
reserve
£’000
Other
reserves
£’000
-
-
-
-
(2)
-
(2)
127
-
(127)
-
-
13
13
Totals
£’000
8,389
108
-
742
(2)
13
9,250
44
45
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2013
18. Reserves continued
Group
As at 1 July 2011
Issue of share capital
Profit for the year
Balance as at 30 June 2012
As at 1 July 2011
Issue of share capital
Profit for the year
Share based payment
Balance as at 30 June 2012
Company
At 1 July 2012
Issue of share capital
Reclassification of reserves
Profit for the year
Share based payment
At 30 June 2013
At 1 July 2011
Issue of share capital
Loss for the year
Share based payment
At 30 June 2012
19. Trade and Other Payables
Current:
Trade payables
Amounts owed to Group undertakings
Social security and other taxes
Other payables
Accruals and deferred income
Retained
earnings
£’000
5,735
-
2,467
8,202
Share
premium
£’000
4,737
18
-
Reverse
acquisition
reserve
£’000
(4,695)
-
-
4,755
(4,695)
Share based
Payments
£’000
70
-
-
57
127
Share
based
payments
£’000
127
-
(127)
-
13
13
Share
based
payments
£’000
70
-
-
57
127
Retained
earnings
£’000
129
-
127
2,809
-
3,065
Retained
earnings
£’000
498
-
(369)
-
129
Share
premium
£’000
4,755
108
-
-
-
4,863
Share
premium
£’000
4,737
18
-
-
4,755
Group
Company
30.6.13
£’000
30.6.12
£’000
367
-
873
171
270
224
-
808
142
161
1,681
1,335
30.6.13
£’000
22
1,298
-
-
31
1,351
Totals
£’000
5,847
18
2,467
57
8,389
Totals
£’000
5,011
108
-
2,809
13
7,941
Totals
£’000
5,305
18
(369)
57
5,011
30.6.12
£’000
27
1,155
-
-
37
1,219
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 &
Buildings
£’000
312
806
1,118
Land &
Buildings
£’000
66
-
66
30.6.13
Others
£’000
21
12
33
30.6.12
Others
£’000
40
26
66
Totals
£’000
333
818
1,151
Totals
£’000
106
26
132
21. Financial Instruments and Financial Risk Management
The Group’s activities expose it to a number of financial risks that include credit risk, development risk, liquidity risk, market and other regulatory
risk and 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.
Development risks
There is no assurance that the Group’s product development activities will be successful. Accordingly, the Group seeks to reduce this risk be
reviewing the level of investment made in each product, as well as engaging qualified personnel to undertake detailed assessments of the
products under development.
Market and other regulatory risks
Existing and possible future legislation, regulations and actions could cause additional expense, capital expenditures, delay and further product
development work, the extent of which cannot be predicted. The Group takes a responsibility for ensuring that all relevant legislation is met.
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 30 June 2013 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:
46
47
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2013
21. Financial Instruments and Financial Risk Management continued
24. Related Party Disclosures
The credit risk on liquid funds is low as the counterparts are banks with high credit ratings assigned by international credit ratings.
Purchase of services
0-30 days
30-60 days
More than 60 days
As at
30.6.13
£’000
1,808
65
699
2,572
As at
30.6.12
£’000
1,425
20
716
2,161
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 £763,628 of which £250,269 was provided for. The
Group felt that the remainder would be collected post 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.
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 (2012: £nil) 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
As at 1 July
Current year provision
Release of provision
23. Capital Commitments
The Company and Group have no capital commitments as at the year end.
30.6.13
£’000
30.6.12
£’000
25
-
(11)
14
-
25
-
25
48
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in
this note.
Group
The following transactions were carried out with related parties
Sale of services
Cadence 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
F-Beechinor-Collins*
Entity under common directorship
Barratts of Old Limited
Entity under common directorship
Consultancy services
Consultancy services
*Consultancy services to assist with the international expansion and development of channel sales strategy.
Year end balances arising from sales/purchase of services
F-Beechinor-Collins*
Entity under common directorship
Payables
30.6.13
£’000
1
1
30.6.13
£’000
6
12
18
30.6.13
£’000
-
-
30.6.12
£’000
-
-
30.6.12
£’000
54
-
54
30.6.12
£’000
(3)
(3)
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
Company contributions to money purchase pension scheme
Information in relation to the highest paid Director is as follows:
Salaries
Other benefits
Pension costs
30.6.13
£’000
931
-
931
30.6.13
£’000
588
38
626
30.6.13
£’000
176
1
11
188
30.6.12
£’000
911
10
921
30.6.12
£’000
602
48
650
30.6.12
£’000
156
-
11
167
49
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2013
24. Related Party Disclosures continued
Company
The following transactions were carried out with related parties
Year end balances arising from sales/purchase of services
Barratts of Old Limited
Entity under common directorship
dotMailer Limited
Subsidiary
dotAgency (previously known
as dotSearch) Limited
Subsidiary
Receivables
Payables
Receivables
30.6.13
£’000
30.6.12
£’000
-
-
(1,303)
(1,166)
9
10
(1,294)
(1,156)
The receivables and payables are unrestricted in nature and bear no interest. No provision’s are held against receivables from related parties.
Loans to related parties
dotMailer Limited
Subsidiary
At 1 July
Loans advanced in year
30.6.13
£’000
30.6.12
£’000
-
5,400
5,400
-
-
-
The loan to subsidiary company dotMailer Limited is unsecured and is made on an interest free basis.
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
30.6.13
£’000
88
88
30.6.13
£’000
88
88
30.6.12
£’000
85
85
30.6.12
£’000
85
85
25. Ultimate Controlling Party
There is no ultimate controlling party of the Group. dotDigital Group PLC acts as the Parent Company to dotMailer Limited, dotAgency Limited
(previously known as dotSearch Limited), dotSearch Europe Limited, dotMailer Inc, dotSurvey (previously known as dotAgency) Limited
(Dormant), dotSEO Limited (Dormant), dotCommerce Limited (Dormant) and dotEditor Limited (Dormant).
50
26. Share-Based Payment Transactions
The measurement requirements of IFRS 2 have been implemented in respect of share options that were granted after 7 November 2002.
The expense is recognised for share based a payment made during the year is £13,190 (2012: £57,183)
Also on 9 November 2012 the Board of Directors also granted 1,500,000 (2012: 8,177,930) options to employees of the Group exercisable
on or after 1 December 2014 until 30 November 2017. 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
17,909,930
1,500,000
1,922,222
2,109,778
15,377,930
Nil
30.06.13
30.06.12
WAEP
No of options
7.25p
13.00p
7.25p
6.34p
11,722,000
8,177,930
1,600,000
390,000
17,909,930
Nil
WAEP
5.00p
6.54p
6.54p
7.25p
The weighted average exercise price (WAEP) in regards to the comparatives have been restated to reflect the share consolidation undertaken in
February 2010. The options outstanding at 30 June 2013 had a weighted average price of 6.34p (2012: 7.25p), and a weighted average remaining
contractual life of 3.5 years.
Number of options granted
Share price at grant date
Exercise price
Option life in years
Risk free rate
Expected volatility
Expected dividend yield
Fair value of option/warrant
9 November 2012
13 October 2011 11 November 2010
20 October 2009
1 February 2009
1,500,000
8,177,930
6,800,000
21,250,000
7,600,000
12.95p
13.00p
6 years
2.05%
30%
0%
2.72p
6.53p
7.25p
5.13p
5.13p
1.00p
1.00p
1.00p
1.00p
4.25 years
4.5 years
8.67 years
10 years
2.43%
7.83%
0%
0.33p
2.43%
7.83%
0%
0.25p
2.55%
12%
0%
0.7p
2.55%
51%
0%
0.34p
The fair value of the options granted in the year have been calculated using the Black Scholes model assuming the inputs shown below:
Expected volatility was determined by calculating the historical volatility of the Group’s share price from the date it listed to the grant date of
the share option. The expected life used in the model is based on management’s best estimate, for the effects of non-transferability, exercise
restrictions and behavioural considerations.
Number in options detailed above and the respective comparisons have been restated for the share consolidation undertaken, see note 16 for
further details.
27. Group Reconciliation of Profit Before Corporation Tax to Cash Generated from Operations
Group
Company
Current:
Profit before tax from all operations
Currency revaluation
Exceptional item: Impairment of goodwill
Depreciation
Loss on disposal of fixed assets
Share based payments
Finance costs
Finance income
Increase in trade receivables
Increase in trade payables
Cash generated from operations
30.6.13
£’000
962
(2)
2,326
831
50
13
-
(13)
4,167
(696)
346
3,817
30.6.12
£’000
2,773
-
1,187
557
1
57
1
(1,088)
3,488
(540)
327
3,275
30.6.13
£’000
2,809
-
2,326
-
-
13
-
-
5,148
(5,410)
(11)
(273)
30.6.12
£’000
(369)
-
1,193
-
-
57
-
(1,079)
(198)
1
(39)
(236)
51
dotDigital Group Plc Annual Report and Accounts 2012/2013www.dotdigitalgroup.com Annual Report and Accounts 2012/2013
Corporate Statement
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2013
dotDigital Group is the UK market leader in the provision of Email
Marketing software to digital marketing professionals. The group’s
28. Group Cash and Cash Equivalents
fl agship product, dotMailer, is a powerful SaaS-based email marketing
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:
automation platform used by its clients to engage with their
customers to build brand awareness, develop customer loyalty,
generate new leads and promote repeat business.
As at 01 July 2011
Group
£’000
2,568
As at 31 July 2012
4,021
As at 31 July 2013
29. Net Cash Flows from Discontinued Operations
Net cash generated from operating activities
Net cash generated from investing activities
Net cash used in financing activities
6,072
30.6.13
£’000
(148)
1
-
Company
£’000
235
83
70
30.6.12
£’000
420
-
(207)
30. Research & Development
During the period the Group incurred nil (2012: nil) in research costs and £1,339,730 (2012: £1,118,538) in development investments. All resources
utilised in research and development has been categorised as outline in the accounting policy governing this area.
31. Post Balance Sheet Events
There are no post balance sheet events which impact the Groups financial statements.
32. Prior Period Adjustment
On 1 July 2012 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:
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit before exceptional items
Profit for the year
Contents
Corporate Statement
2013 Key Highlights
Chairman ‘s Statement
Chief Executive’s 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
www.dotdigitalgroup.com
Annual Report and Accounts 2012/2013
52
30.6.12
£’000
11,987
(875)
11,112
(8,240)
2,872
2,467
Continuing
operations
30.6.12
(restated)
£’000
Discontinued
operations
30.6.12
(restated)
£’000
9,547
(576)
8,971
(6,532)
2,439
2,187
2,440
(693)
1,747
(1,314)
433
281
Effect of
change
£’000
-
(394)
(394)
394
-
-
IBC
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
1
2
3
12
14
16
17
18
20
25
26
26
27
28
29
30
31
31
32
IBC
Company Information
Directors
S Bird
P A Simmonds
I Taylor
G Fidura
R Kellett-Clarke
F Beechinor-Collins
S J Barratt (appointed 9 October 2012)
Secretary
M Patel
Registered Offi ce
Finsgate
5-7 Cranwood Street
London
EC1V 9EE
Registered Number
06289659 (England and Wales)
Auditors
Jeff reys Henry LLP
Statutory Auditor
Finsgate
5-7 Cranwood Street
London
EC1V 9EE
Solicitors
BPE Solicitors LLP
St James House
St James Square
Cheltenham
GL50 3PR
Croydon
No. 1 Croydon
12-16 Addiscombe Road
CR0 0XT
T: 020 8662 2762
Manchester
Pall Mall Court
61-67 King Street
Manchester
M2 4PD
T: 0161 618 1070
Design and production by Philosophy
www.philosophydesign.com
Print by Moore Print
www.mooreprint.co.uk
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
N+1 Singer
1 Bartholomew Lane
London
EC2N 2AX
Joint Broker
Finncap
60 New Broad Street
London
EC2M 1JJ
Website
www.dotdigitalgroup.com
London Bridge
6-8 Emerson Street
London
SE1 9DU
T: 020 7654 8686
Edinburgh
MWB Business Exchange
9-10 St Andrews Square
Edinburgh
EH2 2AF
T: 0131 718 6037
New York
Suite 307, 3rd fl oor
350 7th Avenue
New York,
10001
United States
T: 1-212-971-940
www.dotdigitalgroup.com
Annual Report
and Accounts
2012/2013
Innovating SaaS Technology
and Tools for Marketers