Powering
Customer
Engagement
Annual Report
2017/2018
G RO UP
PLC
Corporate statement
dotmailer is the SaaS platform of
the dotdigital Group Plc (LSE: DOTD).
The platform empowers marketers
in over 150 countries to use data to drive
omni-channel automation campaigns
that deliver superior results.
dotmailer User Conference
London, April 2018
Investment case
Contents
Strategic report
2 Chairman’s report
4
6 Empowering customers with intelligent tools and people
8 Thoughts of the Chief Executive Officer
10 Chief Executive Officer’s report and financial review
17 Key Performance Indicators
18 Risks, impact and mitigations
21 Corporate social responsibility report
Governance
22 Board of Directors
24 Corporate governance report
27 Audit Committee report
28 Remuneration Committee report
33 Report of the Directors
36 Report of the independent auditor
Financial statements
42 Consolidated income statement
42 Consolidated statement of comprehensive income
43 Consolidated statement of financial position
44 Company statement of financial position
45 Consolidated statement of changes in equity
46 Company statement of changes in equity
47 Consolidated statement of cash flows
47 Company statement of cash flows
48 Notes to the consolidated financial statements
70 Company information
h
35%
£43.1m
Revenue
Up 35% from £32.0m
h
22%
£12.5m
Adjusted EBITDA
Up 22% from £10.3m
h
28%
3.16p
Adjusted earnings per share
Up 28% from 2.47p
h
27%
£15.0m*
Cash position
As at 30 June 2018
* After spending £10.7m on the acquisition of Comapi from cash reserves.
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dotdigital Group PlcAnnual Report 2017/2018 dotmailer User Conference
London, April 2018
STRATEGIC REPORT
Chairman’s report
Frank Beechinor-Collins
Non-Executive Chairman
Introduction
We have had another strong year with revenues of £43.1m up
from £32.0m in 2017. Profitability has also increased in the period
from £7.1m in 2017 to £8.6m in 2018. Cash at the year-end was
just over £15.0m.
We have seen good progress against the three key strategic
initiatives we highlighted in last year’s annual report: geographical
expansion, product innovation and wider strategic partnerships.
Our return on investment in these initiatives is reflected in our
continuing strong financial performance.
The business continues to deliver strong sales growth and we have
made considerable progress in our international markets. We have
seen continued growth in new customers as well as an increase
in the average revenue we achieve from each customer (ARPU).
Sales in the APAC region grew by 85% in the past year whilst
organic growth in the US was 43%.
The most significant corporate event in the past financial year
was the acquisition of the Comapi group of companies (“Comapi”)
which was completed in late 2017. Comapi continues to trade well
and is now fully integrated into the Group. Our technical teams have
worked hard to integrate the Comapi omni-channel functionality into
dotmailer. We announced this functionality at our user conference
in April and it was very well received. This acquisition was central to
our strategy of becoming a data-driven omni-channel platform.
Our software development team has continued to make good
progress. Our agile approach to development allows us to deliver
three substantial product releases a year, where the focus has
been on automation and personalisation. We have accelerated
our investment in AI and machine learning, as this becomes more
important to our clients in their engagement with their customers.
Partnerships with e-commerce platforms remain a cornerstone
to our sales strategy and our most significant relationship is with
Magento. During the year we announced that dotmailer functionality
is now embedded in the latest generation of the Magento platform,
M2. You may have noted the news over the summer that Magento
has been acquired by Adobe. This announcement does not impact
our existing partnership agreement and we have continued to
see strong sales from Magento e-commerce clients. As disclosed
previously we have strategic partnerships with other e-commerce
vendors and we continue to develop these relationships in all our
markets. We expect to see growth from partners in Big Commerce,
Shopify and Shopware.
We did benefit from GDPR as clients increased activity in the run-in to
the introduction of the legislation. Then we saw a small slow-down in
sends volumes after GDPR came into effect. This was due to customers
reducing their email lists as they attempted to conform with the new
legislation. The impact of this was short lived and, at time of writing
this, after the period end, clients have already been quickly rebuilding
their lists. We were well prepared for GDPR, ensuring our platform
was compliant, which, in turn, made it easy for our clients to comply.
Anecdotal evidence indicates that many of our competitors were not
as well prepared and lost customers as a result.
As our community of customers grows we continue to engage with
them to ensure that we maintain our competitiveness. One example
of this community is the dotmailer user conference which took place
in London in April this year. There were over 1000 attendees from
around the globe and they were able to engage with our technical
and sales teams as well seeing the new functionality for the first
time. Our marketing team is already well advanced in planning
the 2019 conference which, I am informed, will be even larger
than the 2018 event.
Phillip Blundell, who had joined the business as interim CFO, left
the business in January 2018. He has been replaced by Paraag
Amin as permanent CFO. Paraag has settled in well and has quickly
established himself as a key member of both the Plc Board and
Operations Board.
The Board proposes a dividend of 0.64p per share, an increase
from last year when the dividend was 0.55p per share.
The operational objectives for this coming year are not too dissimilar
to last year. We will continue to invest in developing our product,
optimise our sales and customer success teams to maximise new
business wins as well as capitalising on cross-sell opportunities
across our existing user-base. We will also continue to drive
expansion in other geographic markets.
I would like to take this opportunity to thank our Chief Executive
Officer, Milan Patel, the Operational Board and our colleagues in the
business for delivering another strong year of growth. Behind the
scenes the beating heart of this business is a team of exceptional
and energetic employees who continue to take dotdigital from
strength to strength.
The business continues
to deliver strong sales
growth
Corporate governance
In order to fully comply with the QCA Code, the Nominations
Committee is evaluating the balance of the Board going forwards;
however, we believe the Board is appropriate for the business in
its current stage of evolution.
The Board believes it is appropriate to have a senior independent
Non-Executive Director and Richard Kellett-Clarke currently fulfils this
role. Richard is available to shareholders where concerns have not
been resolved through the normal channels of communication with
the Board and for when such contact would be inappropriate.
The Board has sufficient members to contain the appropriate balance
of skills and experience to effectively operate and control the business.
The Board carries out an evaluation of its performance annually,
taking into account the Financial Reporting Council’s Guidance
on Board Effectiveness.
Outlook
As we transition to becoming an AI-driven, omni-channel platform
we are even better placed to capitalise on the opportunity of
an £8.8bn global market for marketing automation. This market
is growing at 14% a year and is expected to be valued at £19.3bn
in 2023, according to the latest Forrester Research.
Further penetration of the e-commerce market remains a key
objective for us and our connectors to these platforms are well
received by customers. Our investment in technology and the
acquisition of Comapi leaves us well positioned to capitalise
on the market for ‘conversational commerce’ supporting a
two-way dialogue between our clients and their customers.
All in all, we foresee another strong year ahead.
Frank Beechinor-Collins
Non-Executive Chairman
15 October 2018
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Investment case
dotdigital is a leading, global, omni-channel, SaaS and
communications automation platform, that enables our
clients to communicate with their customers at the right
time, with the right message, to the right person through
the right channel.
A continued focus on our
initiatives provides a solid
foundation for growth
Strategy
Scalable
Growth
Independence
Leadership
Outlook
Clear and compelling strategy
Highly scalable platform
Attractive industry growth
The successful dotmailer culture
Experienced management team
Superior growth outlook
Focused only on two complimentary
markets – e-commerce and B2B
Rapid product innovation supporting
up and cross-sell opportunities
International growth based on
proven blueprint
Brand success extended through
global strategic partners and more
on the way
Software sold as a service
Predictable financial model
Very diverse customer base
with no customer accounting
for more than 1% of revenue
Profitable with significant
cash balances
85% recurring revenues
Email marketing automation has a
proven superior ROI for marketers
Global market for marketing
automation, according to Forrester
Research, is growing double
digit and predicted to be
£19.3bn by 2023
Marketers are predicted to
send more emails in next five
years complemented with omni-
channel features
E-commerce the biggest sector
for email, expected to double in
next five years
Highly talented and motivated people
focused on customer success
Non-Executive Board steeped in
the marketing automation story
Innovation to support marketing
move to omni-channel and AI
Creative marketing approach to
empower customers
Executive team with proven track
record of success
Ability to supplement with sensible
technology acquisitions
Flexible, extendable and effective
product that drives retention and
beats the competition
Wider management team with the
motivation to continue the profitable
growth story
Unique industry position with many
competitors distracted
Completely aligned to the strategic
priorities of geographic growth,
product innovation and building
strong strategic partnerships
Attract further world-class partners
to increase the addressable market
New geographical markets with
greater potential than UK alone
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Empowering customers with intelligent tools and people
The dotmailer platform allows teams of all sizes and specialisms
to plan, execute and optimise omni-channel engagement
campaigns. And with Comapi as part of the dotdigital Group,
the power of programmable communication APIs is now
at the fingertips of our customers.
What does the dotmailer platform do?
dotmailer is a SaaS marketing platform that enables companies to
create, test and send data-driven automated campaigns, including
email. Our technology integrates with key business systems such
as e-commerce platforms and CRMs, providing access to rich
insights in real time – a powerful advantage in today’s customer-
centric market.
What does the Comapi platform do?
The Comapi platform allows customers access to a suite of
programmable APIs so they can integrate communications
programs into existing platforms and send messages at scale
in real time across multiple channels. Like dotmailer, they have
a team of domain experts supporting customers and ensuring
project success.
How do we empower marketers?
There’s a good reason why email is still one of the most popular
marketing channels: it delivers a return on investment of £39/$40
for every £1/$1 spent. The dotmailer platform has been built in a
way that enables SMEs to maximise returns and scale quickly. We
don’t tie people down with tools they will not use and that is why
every customer has access to our directory of partner apps which
can be plugged in and changed as their company evolves.
Why do customers choose dotmailer and Comapi?
The platform is designed to make light work of advanced marketing
automation. Campaign creation – whether it’s a newsletter or an
automated programme – is fast and uncomplicated thanks to slick
‘drag and drop’ functionality. Our customers love that they can
measure and report on the success of their campaigns in real time,
and have access to dedicated account management and support
when they need it.
We encourage our customers to keep developing and growing,
and they trust us to keep developing too. We publish our product
roadmap for everyone to see and our next exciting landmark is
omni-channel functionality.
As an international brand, dotmailer
allows us to handle multiple languages.
We’re operating in seven countries
currently and this is going to expand
over the coming years.
Doug Taylor
CRM Manager, Slendertone
Engagement Cloud
Connecting data to channels
via intelligent tools
Empowerment layer
Better control and use of data combined with smart features
helps customers achieve their desired outcomes
Insight
+
Automation
Data
Our AI and machine
learning makes data more
actionable
Features
Our fast and easy-to-use
features enable advanced
marketing
Data
Our addressable market
increases with quality and
quantity of data inputs
Strategic Partners
Magento
Shopify
Dynamics
Other CRM systems
Other e-commerce
Integrations
Data capture
Channels
Increased number of
outputs maximises the
usefulness and reach
Email
Website
Mobile
Social
CPaaS
APIs
Comapi Technical
buyers
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Thoughts of the Chief Executive Officer
Milan Patel
Chief Executive Officer
It is with great pleasure that I share with you my thoughts on the
past 12 months. In a time of changing regulations within a rapidly
evolving environment, we have accelerated innovation through
the addition of Comapi to the Group, which takes us further into
the omni-channel sphere.
We have continued to deliver on my vision of expanding our
geographic footprint and increasing the addressable market
through the integrations we build into our strategic partners.
This year we completed the acquisition of Comapi, which is
now fully integrated into the Group. This has allowed dotdigital
to expand its messaging channels capability and provide our
customers with a platform that delivers across more channels,
as they focus on personalisation and relevancy based on the
data they hold on their target customers.
As part of our commitment to our B2B marketing customers,
we added new functionality and continue to build our relationships
with Microsoft for our integration into Microsoft Dynamics CRM and
Salesforce. These connectors are now used by over 503 clients
and generate annualised recurring revenues of more than £6m.
Our sales and customer success process has also been optimised,
listening to our customers, investing in people to support
their needs, educating our customers on GDPR and building
functionality within the platform that assists customers with their
compliance. The platform has evolved through our combined
development efforts and integration of Comapi functionality,
which continues to empower customers on their marketing and
transactional-based messaging.
We have made great progress on the continuous investment in
our international regions both from adding people in the regions,
to supporting our clients to address their requirements, alongside
investing in and strengthening relationships with strategic
partners in the e-commerce and CRM space. This has led to an
acceleration in our international organic growth, across all regions.
A year of continued
delivery against our
strategic growth pillars
The strengthening in foundations of the business, both from a
platform and people perspective, sets us in a strong position
to take available opportunities for long-term growth. With the
leadership training and development programmes set up to
support growth in our people, we are confident about the future
of the business and the direction we are travelling. This year, we
opened an office in Los Angeles, as we continue to work with
our partners to expand market share in North America and entered
directly into Germany to help bolster our brand awareness and
cultivate and cement partnerships within the market.
Whilst our customers were embedding regulation changes
and implementing new data privacy policies, there was a slight
slowdown in organic growth in the EMEA region. Following the
implementation date (25 May 2018), we saw a strong quarter
four, both in new customer sign-ups and growth in spend. This
was only made possible through our marketing of specific GDPR
functionality built to support customers and prospects and
continued education to our existing customers.
I hope that you enjoy reading more about our strategic progress
within this annual report.
We are empowering our
customers through our
commitment to platform
innovation and investment
in international growth
Artificial Intelligence
Our task-orientated AI reduces the
strain of repetitive tasks whilst increasing
engagement rates
Product recommendations
Built using Google BigQuery,
at the click of a button we turn
product and order data into
product recommendations
Send-time optimisation
Send campaigns at the time
most likely to be read by every
individual. It’s self-learning,
constantly refining, giving
you time back
Data watchdog
Data watchdog automatically
quarantines ‘high risk’ files to
predict and prevent you from
complaints and issues
Automated Reputation
Manager (ARM)
ARM works tirelessly in the
background to protect the
reputation of our customers
and improve deliverability rates
Native Artifical Intelligence baked into dotmailer
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Chief Executive Officer’s report and financial review
USA & Canada
New York
UK
London, Cheltenham,
EC and Manchester
Europe
Germany, Minsk
and Warsaw
Revenues outside of the
core UK market excluding
the Comapi acquisition
grew by 33%
%
increase/
(decrease)
35%
22%
28%
28%
(27%)
During the year, dotmailer’s average revenue per user rose by 18%
from £715 per month to £845 per month. This was the result of
continued focus on mid-market, enterprise clients and customers
that use the Magento integration spending on average over £1,500
per month. dotmailer saw an increase of 26% in new customers
signing up which represents circa. 680 clients. Overall volume of
messages sent out by dotmailer increased by 21% to 14.4bn from
11.9bn, reflecting the change in demographic but also increasing
the recurring revenue growth and adding to the increasing ARPU.
The other area adding to the expansion is the new channels that
are being sold following the integration of Comapi.
Milan Patel
Chief Executive Officer
Key Highlights
Revenue
Adjusted EBITDA
Net Assets
Adjusted EPS (p)
Cash*
30.06.18
(£m)
30.06.17
(£m)
43.1
12.5
36.6
3.16
15.0
32.0
10.3
28.6
2.47
20.4
* After spending £10.7m on the acquisition of Comapi
from cash reserves.
Operational Review
Total revenue in the year grew by 35% to £43.1m, of which organic
revenue growth was 15% and the remainder as a result of the
Comapi acquisition, which contributed £6.2m for a period of seven
and a half months, from mid-November 2017. We saw double-
digit growth in the EMEA region (excluding Comapi) of 11%, from
£27.3m to £30.4m, despite regulatory change in the European
market. This growth was also helped through a combination of
higher value new client wins, an increase in the number of new
customers (we saw a 26% increase in new customers signed up),
our ability to continually monetise advanced features alongside
the additional marketing channels adopted by existing clients.
This is evident by revenues from enhanced functionality and licence
fees monthly recurring charges now achieving £8.9m, which is an
increase of 41%.
We have seen substantial progress in the international markets,
with revenues outside of the core UK market (excluding the
Comapi acquisition) growing by 33% and now represent 26%
of the Group’s revenues. International expansion remains a core
pillar in our organic growth strategy. The Group has added
notable clients across its market both locally and internationally.
In addition, we have continued to see strong growth from a
professional service offering (excluding Comapi) which is adding
value to our customers, with the revenues growing 24% to £4.1m.
We saw double-digit growth from the UK market, which was
slightly impacted by regulation change. GDPR caused slight delays
in monthly message revenue coming through following sign-up to
the dotmailer platform, whilst customers got ready for their own
compliance in the necessary departments that needed to get
involved to validate the technology chosen (typically legal and IT).
As we went past the implementation date in May, we have seen
sales cycles normalising. In the year, we have also refocused on
a customer success strategy that is even more attentive and
value focused. This has resulted in improved customer satisfaction
and retention.
Market
The marketing automation market is set to expand from £8.8bn
in 2017 to £19.3bn by 2023, which shows a global compound
annual growth rate (CAGR) of approximately 14% according
to Forrester Research. Currently email marketing automation
represents 30% of the global market, closely followed by other
channels such as mobile application marketing and social
media marketing. According to the research, email marketing is
anticipated to govern the marketing automation market. This is
due to the increased adoptions of digitalisation and the channel’s
status as a relatively low cost but effective marketing method.
The retail segment is anticipated to lead the marketing automation
space, and this supports dotdigital’s strategy to continue
integrating with e-commerce platforms in order to increase
the addressable market in this space.
USA & South America
Los Angeles
A Global
Company
Asia
Vietnam
Africa
Cape Town
Australia
Melbourne
Australia
Sydney
North America, Europe and Asia will lead with the fastest growth
across those markets. The Group currently has three separate
hubs that mirror these markets, with a user interface translated
into multiple languages and a scalable infrastructure that has
in-region data processing and storage to mirror these growth
areas. The Group is therefore well placed to capture market
share in those areas.
Geographic Progress
North America
Revenue in our North American region accelerated. It grew by
43% (excluding Comapi) to $7.1m following the successful
changes and investment through the period. Changes that were
made in the period were to strengthen the channel management
team and increase the number of people within the region to
support our customers. The e-commerce connectors that have
been built and enhanced in the year have also helped expand the
addressable market in the region. We continue to invest in the
region with the opening of the West Coast office that will allow
closer client and partner interaction in the region and continue
to build a strong pipeline in the market.
APAC
Growth from the APAC region of 85% (excluding Comapi) saw
revenues increasing from AUS$1.2m to AUS$2.1m, partly due
to the continuous relationships with the channel partners and the
increase in conversion of prospects to clients by our direct sales
team. For the best customer experience in APAC, we continue
to invest in our support, customer success and the sales teams.
Strong relationships are building in Far East Asia to help raise brand
awareness and thought leadership. Early signs are good with the
introduction of our omni-channel strategy, with Asia being heavily
focused on mobile marketing.
EMEA
EMEA saw revenue growth of 11% (excluding Comapi) from
£27.3m to £30.4m. We still see strong double-digit growth from
the region. EMEA revenue were slightly impacted in the first half of
the financial year by delays, in customer spending, ahead of GDPR
implementation. As anticipated, the region’s sales cycles have
normalised post GDPR. The region saw an increase in the number of
customers signed up following the changes made in the training and
development program for the sales and customer success teams.
The continued focus on the Nordics and Benelux region has
resulted in stronger partnerships and growing revenue stream in
the region. With the early success in the market, we continue to
add to the dedicated channel managers and sales teams that
sell into the EMEA market as the pipeline builds. We have started
to test the German market with employees in-region as our
partnership with Shopware strengthens. Shopware is the largest
e-commerce platform in Germany for mid-market clients. We
continue to develop stronger partnerships with system integrators
and raise brand awareness in that market.
During the period, we withdrew the self-service offering from the
South African market and some of the early learnings we took from
the test was that the platform was well placed to serve the needs
of mid-market and enterprise clients which will only transact with
us through the direct sales team in the EMEA region.
Product innovation
We continue to invest in research and development of our
technology, aiming to be the world’s best data-driven marketing
and customer engagement platform. In the year we’ve continued
to scale the platform across all regions. The acquisition of Comapi
that was completed in November 2017 has accelerated the
platform development with new omni-channel features being
integrated into the platform for upsell opportunities to existing
customers and attracting more marketeers that are sophisticated
in the digital marketing strategies. The move into omni-channel,
although early days, has proved to be successful and puts us in
a unique position against our competitors.
There were many enhancements made to connectors with the
introduction of a Salesforce Commerce Cloud and Shopware
solutions. With the premium integrations that we have built into
e-commerce platforms, this now allows us to address at least
50% of midmarket e-commerce merchants globally.
As part of a continued commitment to accelerating functionality
progress, we continue to add globally to our development teams.
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Milan Patel
Chief Executive Officer
STRATEGIC REPORT
Chief Executive Officer’s report and financial review continued
dotmailer’s omni-channel world
With the acquisition of Comapi, we have broadened
our channels, added two-way conversations and enhanced
the quality of data
f
Originally we were
Single Channel
We evolved to be
Multi-Channel
We’ve now entered
Omni-channel
This has helped diversify revenue streams and
drive better results for customers
These teams will allow us to continue innovating our technology
which will give us a stronger competitive advantage. Next year
will also see an acceleration in development within the artificial
intelligence and machine learning space. We have released
significant features that take us into this space. The data science
team has also been added to our product development teams.
The recurring revenues from our enhanced functionality increased
by 41% (excluding Comapi) compared to the previous year and
now represent £8.9m of the Group’s revenues.
Strategic partnerships
Magento: We continue to enhance the connector to make it easy
for our customers to attribute better ROI from their digital marketing
campaigns from the value proposition we provide. We have
continued to deepen our relationship with the release of Magento
bundling in November 2017, where the platform ships with the core
codebase to their customers using Magento version 2.2 or newer.
Magento was recently acquired by Adobe and, after speaking to
their senior executives, we are pleased to report that it is business
as usual with our partnership. The connector is now used by over
670 clients and generating annualised recurring revenues of more
than £9.2m. We continue to see strong pipelines building and good
level of take-up from the Magento customer base. The average
revenue per month from Magento customers increased by 7%
to £1,512 per month.
Shopify: The Shopify connector now serves over 40 clients.
We continue to add new functionality that helps the retailer build
out their digital marketing strategies. Average monthly recurring
revenues from these clients is £1,032 per month. The pipeline
and partnership continue to build, and we feel optimistic in growth
from this partnership in the next financial year.
Big Commerce: It is still early days with the Big Commerce
connector which we continue to enhance. dotmailer has been
named as the first Europe-based Elite partner which will help
in endorsing our connector. Both companies continue to work
on the go to market strategies and promotion of the dotmailer
platform to their e-commerce merchants.
Other e-commerce connectors: We have continued to develop
relationships with the like of Shopware and Salesforce Commerce
cloud including adding new e-commerce integration partners
globally. We will maintain this development as we move into the
next financial year.
As part of our commitment to our B2B marketing customers, we
added new functionality and continue to build our relationships
with Microsoft for our integration into Microsoft Dynamics CRM
and Salesforce. These connectors are now used by over 503
clients and generate annualised recurring revenues of more than
£6m. As there is more value being put in data by our customers
for personalisation and targeting we see a good upsell opportunity
and attracting more integrated clients. We have seen our significant
growth in ARPUs from the Dynamics connector clients increasing
42% to £1,405 per month.
People
We have continued to strengthen and develop the senior
management team that look after the day-to-day running of the
business, both by adding new members to the leadership team,
and promoting from within through our learning and development
programme. This has strengthened the foundations in place –
from a management bandwidth and skills perspective.
We invested in sales, customer success, marketing and product
development in the year to continue supporting our product
innovation goals, but also allow us to further develop global
brand awareness. With the continued success of international
markets, we added another 41 people to allow us to provide our
customers with a scalable business model and to support overall
business growth. We believe our people are crucially important to
our business and its future; further investment will be made in the
training and development of all our employees.
We also welcome Paraag Amin as Chief Financial Officer for the
business, who is supporting me with the day-to-day responsibilities.
Paraag brings with him a wealth of experience in financial and
operational analysis and comes with a broad experience in the
industry and public markets. He also has experience in several
departments through the business he founded.
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Chief Executive Officer’s report and financial review continued
Milan Patel
Chief Executive Officer
Acquisitions
In the year, we completed the acquisition of Comapi, which
was a business focused on omni-channel messaging and cloud
communications market for a cash consideration of £10.7m
(which includes the payment of loans in Comapi), with a potential
consideration of £1.2m in share options for the management team
dependent on them achieving specific performance targets over a
two-year post-acquisition period and remaining with the business.
The acquisition will:
• Extend dotdigital’s marketing automation platform to provide
an industry-leading solution offering fully integrated omni-
channel and conversational commerce support to marketers
• Enable dotdigital to deliver aligned conversational messaging
across channels including email, mobile push, SMS, Facebook
messenger, Apple business messenger, Twitter and live chat
• Enable dotdigital customers to meet consumer demand for a
more personalised communication experience and
• Position dotdigital as the most advanced platform on the
market and make dotdigital more relevant in the strategic
mobile-first Asian market.
We continue to investigate opportunities beyond organic
growth. We do have very strict value-enhancing criteria to finding
strategic acquisitions. The areas in which we consider making
an acquisition are:
1)
2)
Companies that can help us expand into new geographic
markets or allow us to grow faster in a market that we currently
operate within;
Companies that can allow us to build on our multi-channel
capabilities, beginning initially in the mobile and social
marketing space; and
3) Companies that can bring new functionality (e.g. artificial
intelligence) that will add value to our customer base within
the mid- and small enterprise market.
Financial review
Revenues
The Group achieved revenue growth of 35% (15% excluding
Comapi; 2017: 19%), which delivered record overall revenues
of £43.1m. The quality of the revenue growth is evidenced by
stable recurring revenues of 85%. The Group continued to grow
internationally with revenues accounting for 22% of the Group’s
total (26% excluding Comapi). Comapi contributed £6.2m of
revenue in the seven and half months that it has been part of
the Group.
Business model
The Group generates the majority of its revenues from annual
message plans which are recognised equally over the life of the
contract. In addition, we sell upgrade packages to customers
allowing them to use additional modules and features of our
platform. For more sophisticated customers we offer customised
functionality and integrations so that they can maximise the use
of their customer data. These professional services contracts
are recognised as revenue as the work is performed.
Gross margins
The gross margin for the period was 79%, impacted by the
consolidation of Comapi (87% excluding Comapi; 2017: 86%).
We continue to see value in both the direct and indirect models
of selling in our international regions, and hence continue to
invest in building long-term annuity revenues.
Operating expenses
Adjusted EBITDA grew by 22% from £10.3m to £12.5m. Part of
this growth was due to the improvement in margins from moving
the infrastructure into the cloud last year and hence seeing the
full benefit this year. Investments that have been made in previous
years in product development and sales and marketing are also
paying off.
Operating expenses as a percentage of revenues dropped
from 61% to 56%, reflecting the growth in revenue. dotdigital
continues to invest in people in the areas of development, sales
and marketing, particularly within the regional offices, to continue
enhancing and adding to the product suite.
It’s hard for me to say how much easier my job has
become since coming onboard with dotmailer. The
platform’s ease of use has enabled me to share my email
responsibility with the wider team; they’re now more
empowered than ever to create highly engaging content.
Shaun Munoz
Virgin Active
Growth Strategy
Our strong financial position and management team
mean we’re ideally placed to add growth by acquisition
Expand our
product suite:
providing
organic growth
Focus on
cross-selling:
deeper customer
relationships
Expand
geographical
coverage
Grow our
customer base:
increasing our global
market presence
Organic
growth
Growth by
acquisition
Extend
multi-channel
capabilities
Deepening
our strategic
partnerships:
building new
connectors
Globalising
our talent:
organisational
strength and
capabilities
Deeper
functionalty with
our core USP
14
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Chief Executive Officer’s report and financial review continued
Key Performance Indicators
We’re at the very start of our
relationship with dotmailer but
I’m already hugely impressed.
Richard Jones
Head of CRM, T. M. Lewin
We use our key performance indicators (KPIs) to
measure our business. These indicators provide
us with the visibility of both our strategic and
financial performance which is set by the Board
at the start of the year. Employee remuneration
is specifically linked to these KPIs.
Balance sheet
There was strong cash management in the year with cash
generated from operations of £13.1m (2017: £8.8m). The cash
at the end of the period was standing at £15.0m (2017: £20.4m),
despite the acquisition of Comapi for a cash consideration of
£10.7m. The Group continues to be debt free and maintains a
healthy balance sheet. A combination of a highly efficient cash
collection process and an incentivisation push to move more
customers onto direct debit and automated credit card collection
helped with the year-end position.
Dividend policy
As announced last year, the Board conducted its review of its
organic business plan for the following three years. This included
evaluating the cash needs required for opportunities in organic
growth to increase shareholder value and capital expenditure. The
Board decided that it will continue to keep a progressive dividend
in line with EBITDA growth. Therefore, subject to approval at the
AGM in December 2018, the Board proposes that the Group will
pay a final dividend of 0.64 pence per ordinary share (2017: 0.55p);
to be payable at the end of January 2019.
Trade receivables have only grown by 12% (excluding Comapi) in
the year reflecting revenue growth and good cash management.
Overall receivables have grown 40% (excluding Comapi) as a result
of a large increase in prepayments due to the move to the hybrid
cloud infrastructure and deferred commission.
The Group continues to invest heavily in the software platform to
increase functionality around marketing automation, and in building
connectors to e-commerce and CRM platforms to allow our
customers to make the most of their data and provide excellent
customer engagement. This continued investment is demonstrated
by the increase in product development of £2.1m.
Goodwill
£9.1m of Goodwill reflects the acquisition of Comapi in the year,
for a cash consideration of £10.7m. Identifiable intangible assets
included £1.2m of technology and £1.2m customer relationships
which will be amortised over 10 and 9 years respectively.
Tax
The Group continues to grow its profitability; however this is
not reflected within the tax charge, which is now £0.7m with an
effective tax rate of 2.8%, the reason being enhanced R&D tax
credits and favourable movement in share-based payments.
EPS
In the year the adjusted basic EPS increased by 28% to 3.16p
(2017: 2.47p) and adjusted diluted EPS has increased to 3.12p
(2017: 2.46p). The increase in adjusted EPS is driven by the
increased profitability and the reduction in the effective tax rate to
2.8% from 10.5%.
Outlook
The first few months of the new financial year have started very
well and in line with our plan. There has been an increase in the
customer numbers across all regions compared to the previous
year. As we look ahead we continue to invest in both our people
and the product, to further strengthen our position as an innovator
as the platform continues to evolve to be a data-driven, omni-
channel marketing automation platform with artificial intelligence
and machine learning, which empowers our customers to get
a return on investment from their digital marketing. The market
continues its very strong growth which puts us in an advantageous
position to capitalise on our organic growth strategy.
The Group has a strong position in changing markets and the
Board remains confident about the future growth prospects,
assuming that there is no adverse change in market conditions and
delivery against the planned strategy.
Milan Patel
Chief Executive Officer
15 October 2018
Paraag Amin
Chief Financial Officer
15 October 2018
Financial
Revenue
We aim to deliver double-digit
organic revenue growth from
continuing operations.
£43.1m
+35%
£32.0m
+19%
£26.9m
+26%
Cash position
We aim to have a strong
cash position.
£20.4m
£17.3m
Adjusted EBITDA
We aim to have double-digit earnings
before interest, tax, depreciation and
amortisation (EBITDA) growth from
normal business.
£12.5m
+22%
£10.3m
+26%
£15.0m*
£8.2m
+18%
2016
2017
2018
2016
2017
2018
2016
2017
2018
Strategic**
ARPU
We aim to continue to grow Average
Revenue Per User (ARPU) per month.
Recurring revenue
We aim to have recurring revenues
of over 70%.
International
We aim to expand international revenue
to over 33% from outside the UK.
£845
+18%
£715
+24%
£575
+29%
78%
81%
85%
26%
23%
18%
16
dotdigital Group Plc
Annual Report 2017/2018
2016
2017
2018
2016
2017
2018
2016
2017
2018
* After spending £10.7m on the acquisition of Comapi, paid in full using cash resources
** Does not include the acquisition of Comapi
dotdigital Group Plc
Annual Report 2017/2018
17
STRATEGIC REPORT
Risks, impact and mitigations
Risk area
Impact
Mitigation of risk
Risk area
Impact
Mitigation of risk
Data privacy
Implementation
of cloud service
providers
Supplier,
computer
hardware and
internet reliability-
related risks
Certain laws and regulations such as the
General Data Protection Regulation (“GDPR”)
require or may require the Group and its
customers 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 proposed legislation could 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 an in-email link. Such
laws and regulations could restrict customers’
ability to collect and use email addresses, web
browsing data and personal information, which
may reduce demand for its products.
The Group utilises public cloud providers to
host its platforms and products. An event
resulting in multiple cloud data centre failing,
for any significant period, or termination of
services by a cloud provider, may negatively
impact the Group’s business, operating results
and financial condition.
The nature of cloud computing means that
the majority of the platforms are on a shared
infrastructure that is more of a target for
cyber-attacks.
An event resulting in a loss of functionality
at, or a total loss of, a data centre that hosts
message send components for a prolonged
period will result in sub-optimal service,
potentially leading to a loss in revenues. In
addition, events preventing or obstructing the
platform’s communication abilities, such as the
blacklisting of IP addresses at major internet
service providers, will incur revenue loss.
The Group relies on a range of upstream
providers to deliver SMS messages; a change
in relationship with one or more of these
providers, or one or more of these providers
no longer being able to operate, could impact
the Group’s profitability.
• Operation of an open-door policy, including the sharing of
policies relating to security, compliance and data privacy.
• Maintenance of a public-facing Trust Centre communicating
important information.
• Research into the impact of new or altered legislation
to inform free resources. The Group actively contributes to
the digital marketing and messaging space to advocate best
practice and make sure its customers’ needs are represented.
• Provisioning of global instances of the platforms, allowing
customers in certain regions to overcome data sovereignty
constraints.
•
Introduction of new processes and policies in compliance
with GDPR.
• Ongoing monitoring of the regulatory environment, including
any initial compliance actions made under GDPR and
developments of the California Consumer Privacy Act and
e-Privacy Regulation.
•
Informed choice of best-of-breed cloud computing providers
(the Group has selected Microsoft Azure, Amazon AWS, and
Google Cloud Platform), the architecture of which facilitates
quick recovery in the event of a single data region failure.
• Development and implementation of resilient global instances
of the platform to serve local customers and avoid global
customer impact in the event of a regional outage.
•
Inheritance of economies of scale and pioneering technology
from aforementioned providers, including computing power,
bandwidth, and security.
• The platforms are architected with resilience to cater for
single points of failure.
• Continual evaluation of suppliers and technologies with
the prioritisation of send volume, scalability and resiliency,
and business continuity.
• Continual investment in and maintenance of the Group’s
currently owned IP addresses to ensure global reputability
and use optimisation.
• Frequently reviewing the most profitable upstream provider
routing options, and negotiating contracts regularly based
on current and anticipated volume.
18
Information
security and
cyber-risks
Internet service
providers (ISPs),
reputation and
internet browser
related risks
Risks related
to key platform
integrations
Brexit
Maximise
investment in
growing high-
performance
teams
The ever-evolving, sophisticated nature of the
cyber threat landscape poses an ongoing risk
to the Group. Revenue depends on the
availability of computer systems, an attack
against which could significantly impact the
Group’s ability to function.
An attack impacting the confidentiality, integrity,
or availability of systems and data would negatively
impact the Group’s reputation and therefore its
ability to retain and attract new customers.
• Continual investment in all aspects of cyber-security
under the guidance of the Group’s dedicated information
security function.
• Attainment of the UK government-backed Cyber Essentials
Plus Certification, implementation of regular vulnerability
scanning, third-party penetration testing, and security update
schedules to proactively detect and remediate against the
latest threats.
• The continual promotion of a security culture within
the business via various awareness initiatives.
• Provision of, and investment into, many core platform
services to filter known or bad data that may not comply
with EU, Asia Pacific or US anti-spam regulations.
• Development of the Group’s deliverability team and
consultancy services for customers focused on email
delivery, data quality and legislative compliance.
• Demonstration of commitment to anti-abuse through
admittance to various industry groups, such as the
Messaging, Malware and Mobile Anti-Abuse Working Group
(M3AAWG), the Email Sender and Provider Coalition (ESPC).
• Proactive handling of abuse complaints generated by
customer messaging, including account suspension
and agreement termination.
• Creation and maintenance of strong relationships
with these platforms.
• Where possible, creation of revenue-sharing arrangements
so there is mutual commercial benefit.
• Continuous review of competing functionality from
other vendors.
• Ensuring our platform policies align with the third parties.
•
Internal HR team reviewing strategies for dealing with
EU staff, depending on Brexit negotiation outcomes.
• Research and monitoring of legislative environment,
particularly in relation to data transfers between the UK
and EU and vice-versa.
•
Internal departments reviewing strategies to address
data storage and transfer, depending on Brexit negotiations
outcomes.
As a large proportion of the Group’s revenue
is derived by charging a price per message
for sending emails and SMS on behalf of
customers, the impact of not being able
to deliver these or deliver these without
engagement tracking for any reason is
significant. If internet browsers detect
hyperlinks as a phishing threat, abuse
complaints from providers are not dealt with
properly, bad customer data generates multiple
complaints through ISPs or third-party spam
are blacklisted, these impact the platform’s
overall ability to effectively deliver messages.
The Group is increasingly investing in integration
with third-party platforms to provide an enhanced
product feature set – for example, Shopify,
Facebook, and Google. These platforms all have
various contractual bases for access and the
Group maintains its obligations carefully. However,
any future change in the terms granting the
Group access may impact our continued ability
to integrate our product with these platforms.
The Group has a large business footprint within the
United Kingdom; both in terms of staff headcount,
and in terms of the customer base. Brexit (the
expected departure of the United Kingdom from
the European Union at the end of March 2019)
still has a number of unknowns and these present
some amount of risk with regards to the Group.
Many of our UK-based staff are citizens from
other EU countries; at the time of this report being
released, there is not yet a full understanding of
their right to work in the UK post-Brexit. In addition,
a changing legislative environment between a post-
Brexit UK, and EU, may place additional regulatory
burdens on the Group which make it harder to
operate with EU-based companies.
Failure to attract, hire, develop and retain high-
performing individuals will reduce the ability to
achieve the Group’s goals.
• Commitment to the delivery of a comprehensive programme
of formal and informal learning and development
opportunities aligned to the needs and goals of the business.
• Regular evaluation of the benefits to ensure market
competitiveness.
• Expansion into new territories increases accessible talent
pools the Group can hire in.
19
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STRATEGIC REPORT
Risks, impact and mitigations continued
Corporate social responsibility report
Risk area
Impact
Mitigation of risk
Competitive
environment
The sector the Group operates in is
competitive. The impact of competitors having
more features, increased financial backing,
better brand recognition and better global
coverage increases the risk to the Group’s
business.
• Continual revenue growth year-on-year and reinvestment in
new product features, best-in-class customer support and
service offerings, enhanced brand recognition and improved
service delivery.
• A global marketing presence to attract new customers.
• Further improvement of the products’ renowned user
experience, including hiring dedicated user experience
professionals.
•
Increased tighter integration of the Group’s newly acquired
business unit Comapi, in order to provide a broader and
more competitive product feature set.
International
expansion
Reliance on revenues relating to a single region
increases the risk of revenue loss if that region
were to experience an economic decline.
• Continual increase in international revenues.
• Successful exploration into options relating to geographic
expansion above and beyond the UK, US and APAC.
Further, the Group’s geographic expansion
increases the risk of certain successful UK
policies and practices proving less successful
and providing a poorer level of service and
assurance in new territories.
• Constant review by the executive team for growth
opportunities in additional territories.
• Proactive hiring of senior individuals in new regions who are
experienced in developing successful international business
models alongside quality local hires to deliver impeccable
region-specific services.
Development and
maintenance of
products
There is a possible risk that without continued
investment into new products, maintenance
and enhancement of old products and
expansion into new sectors, the growth of the
Group will be impaired.
• Continued realisation of revenue growth from product investment.
•
Innovation and increased development of new core product
offerings in the omni-channel customer engagement space,
facilitating new revenue opportunities and increasing the
average recurring revenue of the Group’s existing customers.
Evolving
technology
and customer
requirements
Failure to anticipate or respond to evolving
technological channels and customer
requirements or to introduce competitive
enhancements and new features may
impact growth and customer retention.
The introduction of new solutions by
competitors potentially makes the Group’s
solutions less competitive.
• A constant focus on enabling unrestrained customer
growth through the ease and flexibility of the Group’s
best-of-breed integrations.
• Continued evaluation and optimisation of product
performance in the technology landscape to reduce
maintenance overheads.
• Remaining a credible provider of omni-channel customer
engagement SaaS solutions through constant investment
in and development of new solutions, partnerships and
enhancements.
• Development of a strategy that facilitates the implementation
of rapidly changing technologies, anticipating client
requirements and frequent product enhancements.
• Dedication to remaining relevant to both the B2B and
B2C verticals, reducing risk through the breadth of the
platform’s solutions.
• Continued emphasis on recruiting and retaining leading experts.
• Continued focus on combining email marketing and
automation capabilities with the market-driven need for
supporting more conversational channels and leveraging
data to drive decisions.
Loss of a
strategic
partnership
If a strategic partner no longer allowed a
dotmailer connector, there is a risk that our
customer may not migrate onto another
platform to which we have a connector.
• We have built connectors into dotmailer for all major
e-commerce and CRM platforms, such that if our customer
migrates onto another platform, we would be able to
accommodate the switch.
dotdigital continues to invest time and
resource into Corporate Social Responsibility
(CSR), ensuring employees, partners and the
broader communities are both considered
and supported.
Clients
Focusing on customer success has allowed us to understand
our clients’ needs to even greater degree, ensuring our products
and services are a match for marketing requirements of our clients,
partners and prospects. Investing in processes and internal
systems ensures our clients have full clarity around the costs
of partnering with dotdigital.
Charitable support
Our dotCommunity group support all our employees in charitable
activities. From quiz nights to bake sales, a host of local and
national charities have been supported.
We are proud to have the Macmillan Cancer Support team visit our
most recent bake sale, which raised awareness and engagement
in the support of this deserving cause.
Employees
Employee engagement remains a key focus and measure of the
Group’s success. Retaining and developing our employees and
providing opportunities for growth is a key attribute of the Group.
We are delighted and proud that in excess of 28% of the positions
filled were internal moves and promotions.
As the Group has expanded, we have ensured that all the benefits
and opportunities are shared and made available across all parts
of the Group and all office locations. This is an important factor
in harnessing the global employee collective.
Community and business partnership
The Group’s support for local organisations continues to be a
strong part of our ethos. Building on the support and chairmanship
of the Good Employer Charter and a public advocate for support
of the London Living Wage, we are proud to have been able to
support local authority programmes such as the ‘Summer Reading
Challenge’ which encourages children’s engagement with learning
and reading. We look forward to presenting the prize to the
Croydon Winner of this competition.
The Group has strong ties to the LGBT community. Its members
are committed to creating a more inclusive workplace where
all staff can feel comfortable about who they are. As a Group,
we celebrate the incredible diversity of all our employees. For
the second year in a row, we are proud to have marched at
London Pride.
Environmental partnership
Our tried and tested adoption of Reduce, Reuse, Recycle runs
through all our offices. As a digital business we continue to strive
to reduce printing and waste and increase the levels of recycling
wherever possible.
Our office hot-desking arrangements and flexible approach to
appropriate telecommuting ensure we avoid unnecessary travel
whenever possible.
Ensuring we work with data centre and cloud partners and
hardware for our employees that set industry standards in energy
efficiency ensures we minimise our energy footprint.
Strategic report
The strategic report was approved by a duly authorised committee
of the Board of Directors on 15 October 2018 and signed on its
behalf by:
Milan Patel
Chief Executive Officer
15 October 2018
20
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dotdigital Group PlcAnnual Report 2017/2018dotdigital Group PlcAnnual Report 2017/2018 GOVERNANCE
Board of Directors
Milan Patel FCCA ACSI
Chief Executive Officer
Paraag Amin CFA
Chief Financial Officer
Milan joined the Company in 2007 and was appointed Group
Company Secretary in 2009, CFO in 2015 and CEO in 2016.
Milan is a fellow member of the Association of Chartered Certified
Accountants and an associate member of the Chartered Institute
of Securities and Investments. He has been responsible for the
Group’s admission to ISDX and the introduction to AIM.
Paraag was appointed to the Board in February 2018. He
has significant public market experience having held senior
roles at a number of investment banks within equity asset
management, research and specialist sales, totalling 15 years,
as well as previously founding his own business in the
digital marketing space.
He was responsible for the Group’s functions in financial
management and reporting, regulatory compliance, legal and
corporate governance for the business prior to being made
permanent CEO of the Group. He also brings substantial strategic
financial and commercial experience to the Board. As well as
financial acumen, he has developed a broad range of operational
competencies, a grasp of strategic objectives, clear leadership,
international business development, mergers and acquisitions,
and strong decisive management skills.
Milan is now responsible for leading the executive team, vision
and growth strategy for the business. More specifically Milan is
leading our international growth strategy, accelerated product
innovation, developing strategic partnerships and investigation
of potential acquisitions. He has a strong track record of delivery
of performance against plan.
Paraag qualified as a Chartered Financial Analyst in 2004 with
Goldman Sachs. He also held senior roles within equities at Citi,
ABN Amro, RBS, Credit Suisse, Peel Hunt and Canaccord Genuity.
He is responsible for the Group’s functions in financial management
and reporting, regulatory compliance and legal and corporate
governance for the business. He also brings substantial strategic,
financial and commercial experience to the Board and has been
appointed to assist Milan in taking the Group to the next level.
Frank Beechinor-Collins
Non-Executive Chairman
Richard Kellett-Clarke CA CMA
Non-Executive Director
Frank was for 11 years CEO of One Click HR, an AIM-quoted
technology business of which he was a co-founder. Frank oversaw
the successful sale of the business to ADP, a $4bn NYSE-
listed company in 2011. 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. From 2014 to July 2018 he was
Chairman of Redstone Connect plc, an AIM-quoted smart building
infrastructure business. Following a restructuring Redstone
Connect was rebranded SmartSpace Software Plc and Frank
stepped into the role of CEO. He is co-founder of Cadence
Performance Ltd, a chain of specialist cycling performance centres
and is Chairman at Food Choice at Work ltd, a spin-out business
from University College Cork.
Richard has 40-plus years of experience in a variety of finance, IT
and operational roles with PLC and PE businesses, all involved
in either the expansion through acquisition or the turnaround and
strategic repositioning and recovery of creative, businesses in
FMCG, media, electronics, and software.
He was a founder and later CEO of a global news business and
a digital rights software business. He is currently a non-executive
director of Idox PLC and the senior independent director to the
Group and a consultant to a number of SMEs.
Peter Simmonds FCCA
Non-Executive Director
‘Tink’ Ian Taylor
Founder & President
Peter was Chief Executive Officer of dotmailer and then dotdigital
Group plc for eight years from 2007 to 2015. Following his
retirement in June 2015 he stepped down into the role of Non-
Executive Director.
Tink is Founder and President of dotmailer and dotdigital Group Plc
(founded in 1999). He has 20 years’ experience in the field
of digital communications and has introduced digital marketing
to companies large and small.
Peter is FCCA qualified and currently also holds board positions
in the role of Chairman at Cloudcall Group plc and D4T4 Solutions
plc (both AIM-quoted companies). In July 2016 he was appointed
as a non-executive director of Eckoh plc and in October 2016
he was appointed as a board member of The Quoted Companies
Alliance. Peter resigned from the board of Ecko plc as at
14 December due to a recommendation made by a proxy
advisory firm prior to the dotdigital Group AGM in December 2017.
Tink has been pivotal in the development of digital marketing since
its outset in both the UK and the US, serving as an elected and
influential member of the UK Direct Marketing Association’s Email
Marketing Council and chairing the partnership and deliverability
working parties. Tink has judged and later chaired the Email,
Mobile & Agency categories at the UK DMA’s awards for over half a
decade. He has also served on the Email Marketing Council at UK
Internet Advertising Bureau since 2006.
In 2014, Tink was elected to the Board of the US Direct Marketing
Association’s Email Experience Council (EEC). He chairs the
nomination committee and has since 2016 acted as a judge
for the EEC email marketing awards.
He first launched dotmailer in the US at the back end of 2012
and later took dotmailer to APAC in 2015. He is currently a
strategic advisor to dotmailer and the Plc Board. Tink constantly
strives to help individual organisations, and the industry as a
whole, to develop and progress, acting as a serial tech advisor
and investor outside of dotmailer.
22
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Corporate governance report
As an AIM-quoted company, we recognise the importance of applying
sound governance principles in the successful running of the Group.
The Board has elected to comply with the Quoted Companies
Alliance (QCA) Corporate Governance Code and will report annually
on our compliance with the code and any exceptions.
Compliance statement
1.
Establish a strategy and business model which promotes
long-term value for shareholders (fully complies)
The strategy and business operations of the Group are set out
in the Strategic Report on pages 2 to 21 of the Group’s annual
report. The risk section of the annual report are on pages 18 to
20 and deals with the challenges the business faces and how
these challenges are mitigated/addressed.
The Chief Executive Officer is responsible for the leadership
and day-to-day management of the Group. This includes
formulating and recommending the Group’s strategy for Board
approval and then executing the approved strategy. You can
find a full description of the roles of the Board and the founder
at www.dotdigitalgroup.co.uk.
Our simple and transparent business model has consistently
delivered value to our shareholders.
2. Seek to understand and meet shareholders’ needs and
expectations (fully complies)
`The Group seeks regular dialogue with both existing and
potential new shareholders either through the management
team, investor relations or through the Company analysts,
ensuring its strategy, business model and performance are
clearly understood as well as to understand the needs and
expectations of shareholders.
The Chief Executive Officer and Chief Finance Officer meet
regularly with investors and analysts via investor roadshows,
attend investor conferences and carry out capital markets
days to provide them with updates on the Group’s business
and obtain feedback regarding the market’s expectations
of the Group through the brokers or direct feedback to the
management team.
The Board invites communication from its private investors
and encourages participation by them at the Annual
General Meeting (AGM). All Board members are present
at the AGM and are available to answer questions from
shareholders. Notice of the AGM is at the least 21 clear days
and the business of the meeting is conducted with separate
resolutions, voted by proxy and with the result of the voting
being clearly indicated throughout the meeting. The results
of the AGM are subsequently published on the Company’s
corporate website and are announced through a regulatory
information service.
Our Senior Independent Director, Richard Kellett-Clarke, is
available to shareholders where concerns have not been
resolved through the normal channels of communication with
the Board and for when such contact would be inappropriate.
The Board believes that they have successfully engaged
with their shareholders in the past and will continue to do
so going forward.
3. Take into account wider stakeholder and social responsibilities
and their implications for long-term success (fully complies)
We are committed to meeting with customers to seek their
regular feedback to ensure a high level of customer service
and to improve our platform. We have various channels for
customers and prospects to communicate with the Group
whether it be through the messaging channels or the customer
success executives. The feedback is then reviewed on a
regular basis by senior management team of the Group.
The Group is mindful of its corporate social responsibilities and
the need to build and maintain strong relationships across a
range of stakeholder groups. As a Company, we regard this
as a key principle in what we do. The Group has established
a Social Committee that consists of employees across all
departments and seniority levels to engage with stakeholders
to help enrich communities. The corporate social responsibility
report can be found on page 21.
The Group is fully committed to encouraging the ‘employee
voice’ and acting on the feedback we receive. Whether by
informal discussion or by our annual employee satisfaction
survey, the opinion and feedback provided by our employees
is vital to shaping the business. Our employees are at the heart
of our business and we consistently strive to train and develop
them for career progression.
The Board closely monitors the results of the Company’s
Employee Engagement Survey to address where possible
any concerns raised and ensure the alignment of interests
between the Company and its employees. This alignment is
vital to shaping the business. An example of this has been the
successful roll-out of a new benefit programme for all staff as
a result of staff feedback.
4. Embed effective risk management, considering both
opportunities and threats, throughout the organisation
(fully complies).
The Group’s system of internal controls, identification of
significant risks and reviewing its effectiveness are the
responsibility of the Board. These systems are designed to
mitigate the risk of failure to achieve the business objectives.
These systems can only provide reasonable, but not absolute,
assurance against material misstatement or loss.
There is an ongoing process for identifying, evaluating and
managing the Group’s significant risks and this is regularly
reviewed by the Risk Committee and the Board. The Group
also keeps an active risk register which is also formally
reviewed by the Committee on a quarterly basis.
The internal control procedures are delegated to Executive
Directors and senior management in the Group, operating
within clearly defined terms set by the Risk Committee. The
Board regularly reviews the internal control procedures in light
of the ongoing assessment of the Group’s significant risks and
is reviewed on a quarterly basis.
On a monthly basis, the management accounts, including a
comprehensive financial report, are reviewed by the Board in
order to provide effective monitoring of financial performance.
Board
Audit
Committee
Risk
Committee
Remuneration
Committee
Nomination
Committee
Attended
Total
Attended
Total
Attended
Total
Attended
Total
Attended
Total
Executive Directors
Milan Patel
Philip Blundell
Paraag Amin
Non-Executive Directors
Frank Beechinor-Collins
Richard Kellett-Clarke
Peter Simmonds
Tink Taylor
Simon Bird
12
12
6
5
12
12
12
11
7
6
5
12
12
12
12
12
2
1
1
2
1
1
1
1
1
1
2
2
2
2
1
1
1
1
1
1
A summary of the principal risks and uncertainties facing
the Group, as well as mitigating actions, are set out on
pages 18 to 20.
The Board has sufficient members to contain the appropriate
balance of skills and experience to effectively operate and
control the business.
5. Maintain the Board as a well-functioning, balanced team led
by the Chair (partially complies)
The Group is managed by a Board of Directors chaired by
Frank Beechinor-Collins. The Board is responsible for taking all
major strategic decisions and also addressing any significant
operational matters. In addition, the Board reviews the risk
profile along with the Risk Committee of the Group and
ensures that an adequate system of internal control is in place.
Management information systems are in place to enable the
Board to make informed decisions to properly discharge their
duties. A formal schedule of Matters Reserved for the Board
was adopted as at the Board on 25 September 2018 and
will be reviewed annually.
The Board currently consists of two Executive Directors,
one Founder and two Independent Non-Executive Directors
and one Non-Executive Director who does not meet the
independent criteria set out by the QCA code on Corporate
Governance. Each of the Non-Executives spends a minimum
of two days a month on dotdigital Group business matters.
Both the Independent Non-Executive Directors are considered
by the Board to be independent of management and free
from any business or other relationship that could materially
interfere with the exercise of their independent judgement in
accordance with the QCA Code. In order to fully comply by
this principle, the Nominations Committee is evaluating the
balance of the Board, however the Board is appropriate for the
business in its current stage of growth.
The Board believes it is appropriate to have a Senior
Independent Non-Executive Director and Richard Kellett-Clarke
currently fulfils this role. Richard is available to shareholders
where concerns have not been resolved through the normal
channels of communication with the Board and for when such
contact would be inappropriate.
Roles of the Chairman and the Chief Executive are separate,
with their roles and responsibilities clearly defined and set out
in writing. The Chairman’s main responsibility is the leadership
and management of the Board and its governance. He meets
regularly and separately with the Chief Executive and the Non-
Executive Directors to discuss matters for the Board.
The Chief Executive is responsible for the leadership and day-
to-day management of the Group. This includes formulating
and recommending the Group’s strategy for Board approval
and executing the approved strategy.
The Board meets monthly, at least 12 times a year, and more
frequently if necessary. In addition to this the Board attends an
annual strategy meeting which also includes senior Directors
outside of the Board. The table above shows attendance for
the period July 2017 to June 2018.
6. Ensure that, between them, the directors have the necessary
up-to-date experience, skills and capabilities (partially complies)
The Board considers its current composition and overall size
to be both appropriate and suitable with the adequate skills,
experience and capabilities to make informed decisions,
evaluate performance and constructively criticise strategy.
The composition of the Board is reviewed annually basis by
the Nomination Committee, which is currently evaluating the
gender composition of the Board. The Board is fully committed
to the appointment of the right skills that are required to grow
shareholder value. One third of the directors retire at the
AGM in rotation in accordance with the Company’s Articles
of Association, thereby providing shareholders the ability to
decide on the election of the Company’s Board. Non-Executive
Directors that do not meet the independence criteria will also
stand for election annually, which will allow shareholders to
voice their opinion. Their biographical details can be found on
pages 22 and 23.
24
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GOVERNANCE
Corporate governance report continued
Audit Committee report
9. Maintain governance structures and processes that are fit
for purpose and support good decision-making by the Board
(fully comply)
The Board is supported by a Remuneration Committee,
Audit Committee and Nomination Committee. Any matters
that fall outside the responsibility of these committees are then
dealt with by the Board. The role and responsibilities of the
Chairman, Chief Executive and other Directors can be found
separately. The details of the Committee are contained within
their written terms of reference which can be found on the
Group’s website.
Throughout the year the Chairman of each committee
feeds back to the Board any issues which require further
consideration by the Board. Each of the Board committees has
the ability to use external advisors as they see fit in furtherance
of the duties which are at the Company’s expense. Further
details of the composition and meetings of these committees
can be found within the annual report.
10. Communicate how the Group is governed and is performing
by maintaining a dialogue with shareholders and other relevant
stakeholders (fully comply)
The Company is committed to open communication with
all its shareholders. Communications with shareholders is
predominantly through the Annual Report and AGM. The
last AGM results can be found on the Group’s website.
Other communications are in the form of full-year and
half-year announcements, periodic market announcements
(as appropriate), one-to-one meetings and investor road
shows. The Remuneration Committee report is included on
pages 28 to 32.
The Group’s website www.dotdigitalgroup.co.uk is regularly
updated and users can register to be alerted via email
when announcements or details of presentations and events
are posted on the website. Annual reports and notices of
meetings for at least the last five years can be found on the
Group’s website.
The Nomination Committee through a thorough evaluation
of the skills, knowledge and experiences of a proposed new
Director makes recommendations to the Board who then
make the final decision on the appointment of a new member.
Throughout the year, the Directors receive updates on
corporate governance matters from either the Company
Secretary or the Company’s Nominated Advisors.
To ensure that the Board continue to develop their skills
and keep up to date with market developments they have
access to independent professional advice which will be at
the expense of the Company. In addition, all members of the
Board have access to the support and advice of the Company
Secretary who is responsible for the induction programme of
new members.
7. Evaluate Board performance based on clear and relevant
objectives, seeking continuous improvement (partially complies)
The Nominations Committee is responsible for Board
evaluation. The Committee in the past has carried out informal
Board performance evaluations but has now embarked on
this formal process for the Board and questionnaires have
been circulated to ensure they comply with this principle. The
learnings from this process will be addressed in the coming
months. The Committee intends to conduct an internal
evaluation on an annual basis, and that process will be
repeated for each of the Committees of the Board. The results
will be used by the Nominations Committee for its approach to
succession planning.
8. Promote a corporate culture that is based on ethical values
and behaviours (fully comply)
We are committed to acting ethically and with integrity in all our
business relationships. The Company recognises the benefits
of a diverse workforce and is committed to providing a working
environment that is free from discrimination. The Company
seeks to promote the principles of equality and diversity in all
its dealings with employees, workers, job applicants, clients,
customers, suppliers, contractors, agencies and the public.
Our people are the difference – hence we aim to hire, keep
and train the best. We continue to encourage our unique and
supportive culture, which we believe sets us apart from other
companies. Our comprehensive set of policies and procedures
cover all of our operations. They are constantly updated and
communicated to relevant employees. We also within the
organisation have numerous policies that are communicated
to all employees that have been adopted by the Group for us
to be compliant with our ethical and cultural values that we
promote within the business.
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 Group and any other formal
announcements relating to the Group’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, CA CMA. The Committee meets
separately with the external auditors without management
being present.
The Secretary to the committee is Company Secretary
George Kasparian.
Main activities of the Audit Committee
At its meeting on 4 October 2018 the Committee reviewed the
Group’s preliminary announcement of its results for the financial
year to 30 June 2018 and the draft report and accounts for that
year. The Committee received reports from the external auditors
on the conduct of their audit, their review of the accounts, including
accounting policies and areas of judgement, and their comments
on risk management and control matters.
and external auditors. The review of the external auditors was used
to confirm the appropriateness of their reappointment and
included assessment of their independence, qualification,
expertise and resources, and effectiveness of their audit process.
The Audit Committee also reviewed the effectiveness of the
Company’s systems for internal financial control and risk
management. The Committee reviewed the Group’s credit
control procedures and risks concerning IT controls.
Independence of external auditors
Both the Board and the external auditors have safeguards in
place to avoid the possibility that the auditors’ objectivity and
independence could be compromised. Our policy in respect of
services provided by the external auditors is as follows:
• Audit-related services – the external auditors are invited to
provide services which, in their position as auditors, they must
or are best placed to undertake. This includes formalities
relating to borrowings, shareholders and other circulars, various
other regulatory reports and work in respect of acquisitions and
disposals;
• Tax consulting – in cases where they are best suited, we use
the external auditors. All other significant tax consulting work is
put out to tender;
• General consulting – in recognition of public concern over the
effect of consulting services on auditors’ independence, our
policy is that the external auditors are not invited to tender for
general consulting work.
Internal management accounting
The Audit Committee reviewed the performance of the internal
accounting function, the department’s resource requirements and
also approved the internal budgets for the year ending 30 June
2019. The Committee concluded that these budgets were both
prudent and realistic in the context of the Group’s ambitions.
Whistleblowing
The Group has in place a whistleblowing policy which sets out
the formal process by which an employee of the Group may, in
confidence, raise concerns about possible improprieties in financial
reporting or other matters.
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
Approval
This report was approved by the Board on 4 October 2018 and
sign on its behalf by:
Richard Kellett-Clarke
Chairman of the Remuneration Committee
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Remuneration Committee report
Statement from the Chairman of the
Remuneration Committee
I am pleased to present the Remuneration Committee Report for
2018, which sets out the remuneration earned and paid to the
Directors in the year ended 30 June 2018.
As an AIM-listed company, dotdigital Group Plc is not required to
comply with the remuneration reporting requirements applicable
to fully listed companies in the UK. However, the Committee has
taken into account these regulations in the preparation of this
report for the year as a matter of best practice.
The Committee remains committed to a fair and responsible
approach to executive pay whilst ensuring it remains in line with
best practice and appropriately incentivises Executive Directors
over the longer term to deliver the Group’s strategy. The Board
remains focused on ensuring that the Group retains and develops
the talents needed to deliver on its growth targets.
Accordingly, the Committee determined it was appropriate to
award the Chief Executive Officer a salary increase in the year to
closely align the base pay to bring them closer to the median pay
of similar size profitable companies.
Outlook for 2019
A key focus in the year will be the new governance requirements
for AIM-listed companies and how these will be applied to both the
remuneration and Corporate Governance of the business.
It is intended that an annual review of the effectiveness of the
Committee by both the Board and the Committee itself is
underway and changes will be made as a result of feedback
from the review.
A Share Incentive Plan will also be established for employees to be
able to own shares in the Group which closer aligns them with the
shareholder value creation and will increase employee retention.
On behalf of the Board
Richard Kellett-Clarke
Chairman of the Remuneration Committee
15 October 2018
The Committee operates under a defined set of Terms of
Reference, which were approved and adopted at year end and
which can be found at https://www.dotdigitalgroup.com/wp-
content/uploads/2018/09/Remmuneration-committee-Terms-
of-Reference.pdf. It is intended that these will be kept under
continuous review to ensure they remain appropriate and reflect
any changes in legislation, regulation or best practice.
The annual report on remuneration provides details of the amounts
earned in respect of the year ended 30 June 2018 and how the
directors’ remuneration policy has operated.
The annual report on remuneration, detailed on pages 28 to 32,
is subject to an advisory shareholder vote at the 2019 AGM.
Review of the year ended 30 June 2018
During the year, the Committee worked to embed the Long-Term
Incentive Plan (LTIP) into the Group incentive mechanism for the
Executive and Senior Directors in the Group. The first awards
under the LTIP were granted following shareholder approval at
the 2017 AGM.
During the year, dotdigital announced the appointment of Paraag
Amin as Chief Financial Officer. The Committee carefully considered
the salary and agreed a base of £164,000. This decision is in line
with our policy of preferring the salary of new appointees to be
brought gradually up to the market median level over time, subject
to the demonstrated performance of the individual in the role over
the period.
As described earlier in the annual report the Group has performed
well during the year, delivering strong revenue of £43.1m and
total profit before tax excluding exceptional costs of £10.0m.
Consequently, the Executive Directors earned an annual cash
bonus equivalent to 26% of salaries.
Directors’ Remuneration Policy
This section sets out the Directors’ remuneration policy. The Committee considers the remuneration policy annually to ensure that it
continues to underpin the Group’s strategy.
Key principles
The main aim of the Group’s policy is to align the interests of Executive Directors with the Group’s growth strategy and long-term
creation of shareholder value. The policy is designed to remunerate the Executive Directors competitively and appropriately and
allows them to share in this success and the value delivered to shareholders.
The policy is based on the following principles:
• Promote shareholder value creation and support the business growth strategy;
• Ensure that the interests of the Directors are aligned with the long-term interests of shareholders;
• Deliver a competitive level of pay for the Directors sufficient to attract, retain and motivate individuals; and
• Ensure that an appropriate proportion of the package is determined by targets linked to the Group’s performance.
Executive Directors’ Remuneration Policy
Component Purpose and link to strategy
Operation
Maximum
Reviewed annually against
salary surveys for market rate,
Group performance, role and
experience.
No overall maximum has
been set however they
are reviewed in the wider
context of the Group.
Performance measure
Not applicable
Base
salary
Fixed remuneration to
provide a competitive base
salary to attract, motivate
and retain directors with the
experience and capabilities
to achieve the strategic
aims.
Benefits
To provide market-
competitive benefits
package.
Pension
To provide an appropriate
level of retirement benefit.
Annual
bonus
Rewards performance
against annual targets
which supports the strategic
direction of Group.
Receive benefits in line with
market practice, these include
company car/allowance, private
medical, income protection &
death in service insurance.
Executive Directors are eligible
to participate in the Group’s
pension plan.
Awards are based on annual
performance.
Amount paid out is determined
by the Committee after the year
end based on performance
against targets.
Any bonus earned is paid
in cash
Set a level deemed
appropriate by the
Remuneration Committee.
Not applicable
Pension contributions are
up to a maximum of 5% of
base salary and are paid in
addition to base salary.
The maximum annual
bonus opportunity is
100% of base salary.
The normal maximum LTIP
opportunity is 150% of the
individual’s base salary
where annual grants are to
be made or 450% of salary
where end-to-end awards,
rather than annual grants.
Not applicable
Performance measures
are set at the start of the
year annually and are
aligned with key financial,
strategic and/or personal
targets. Currently 100%
of the bonus is based on
total profit before tax (PBT)
performance.
Relevant performance
measures are set that
reflect underlying business
performance. For awards
granted in 2017, the vesting
of awards will be subject to
three years cumulative total
shareholder return. Stretching
targets are required for
maximum pay-out.
LTIP
To drive and reward the
achievement of longer term
objectives, support retention
and promote share ownership
for Executive Directors.
The Company has adopted
a new LTIP.
Awards can be made over
conditional shares and/or nil
cost or nominal cost share
options.
Vesting will be subject to the
achievement of specified
performance conditions over
a period of three years.
Awards may be subject to malus
provisions at the discretion of
the Committee.
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GOVERNANCE
Remuneration Committee report continued
Explanation of performance measures
Performance measures are selected that are aligned with the performance of the Group and the interests of shareholders. Stretching
performance targets are set each year for the annual bonus and long-term incentive awards. When setting these performance targets,
the Committee will consider several different reference points, which may include the Group’s business plan and strategy and the
economic environment.
The annual bonus is based on PBT performance which is a key financial performance metric of the Group.
The LTIP is based on total shareholder return performance as the Committee considers this to be a key measure of long-term business
performance.
The Committee retains the ability to adjust or set different performance measures if events occur which cause the Committee to
determine that the measures are no longer appropriate, and that amendment is required so that they can achieve their original purpose.
Awards and options may be adjusted in the event of a variation of share capital in accordance with the rules of the LTIP.
Employee incentive schemes
The Group has awarded share options under Enterprise Management Incentive (EMI), an approved share option scheme, 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 annual review process. Discretionary bonuses are awarded based on individual and Group performance.
Non-Executive Directors’ Remuneration Policy
The remuneration policy for the Non-Executive Directors is to pay fees necessary to attract an individual of the talent required, taking into
consideration the size of the business and the time commitment of the role.
Details are set out in the table below:
Approach to setting fees
Basis of fees
Other Items
The fees of the Non-Executive Directors
are agreed by the Chairman and Chief
Executive. Fees are reviewed annually.
Fees are set taking into account the
level of responsibility, relevant experience
and specialist knowledge of each Non-
Executive Director.
Fees may include a basic fee and additional
fees for further responsibilities. Fees are
paid in cash.
Non-Executive Directors do not receive
any benefits or pension contributions.
Travel and other reasonable expenses
incurred in the course of performing their
duties are reimbursed.
Details of current Executive Directors’ contracts
The Executive Directors each entered into a service contract with the Group. 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.
Statement of consideration of shareholder views
The Committee considers shareholder feedback received on remuneration matters, including issues raised at the AGM as well as any
additional comments received during any other meetings with shareholders.
Remuneration
The Directors’ emoluments for the year ended 30 June 2018 are as follows:
Executive Directors
P Amin
S Bird
P Blundell
M Patel
I Taylor
Salary/Fees
£’000
Benefits
£’000
Bonus
£’000
Ex-gratia
payment
£’000
Pension
£’000
Share-based
payment*
£’000
12-month period to 30.06.18
70
22
67
265
125
549
–
–
–
12
2
14
10
–
–
130
–
140
–
–
40
–
–
40
4
1
5
13
3
26
–
–
–
145
–
145
Total
£‘000
84
23
112
Number of
outstanding
options
–
–
–
565 1,375,000
130
–
914 1,375,000
*Share-based payment charge relates to the outstanding end-to-end LTIP options that were approved at the AGM on 19 December
2017 at the year end.
Non-Executive Directors
F Beechinor-Collins
R Kellet-Clarke
P Simmonds
Executive Directors
S J Barratt
S Bird
M Patel
I Taylor
Non-Executive Directors
F Beechinor-Collins
R Kellet-Clarke
P Simmonds
Salary/Fees
£’000
Benefits
£’000
Bonus
£’000
Ex-gratia
payment
£’000
Pension
£’000
Share-based
payment
£’000
41
35
45
121
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Salary/Fees
£’000
Benefits
£’000
Bonus
£’000
Ex-gratia
payment
£’000
Pension
£’000
Share-based
payment
£’000
12-month period to 30.06.17
24
6
247
120
397
-
6
10
20
36
-
-
125
-
125
-
-
-
-
-
-
12
25
13
50
123
-
-
-
123
Salary/Fees
£’000
Benefits
£’000
Bonus
£’000
Ex-gratia
payment
£’000
Pension
£’000
Share-based
payment
£’000
39
33
66
138
–
–
3
3
–
–
–
–
–
–
–
–
1
–
–
1
–
–
–
–
Total
£‘000
41
35
45
121
Total
£‘000
147
24
407
153
731
Total
£‘000
40
33
69
142
Number of
outstanding
options
–
–
–
–
Number of
outstanding
options
-
-
-
-
-
Number of
outstanding
options
–
–
–
–
30
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GOVERNANCE
Remuneration Committee report continued
Report of the Directors
Directors’ interests
The respective interests, all of which are beneficial, in the shares of the Company for the members of the Board at the year-end stated below:
The Directors present their report with the financial statements of
the Company and the Group for the year ended 30 June 2018.
Strategic report
The strategic report covers pages 2 to 21.
F Beechinor-Collins**
S Bird
R Kellett-Clarke
M Patel
P. Simmonds*
I Taylor
No of
shares
held
%
Holding
199,194
13,558,996
390,000
1,575,927
2,491,470
29,776,667
0.07
4.55
0.13
0.53
0.84
9.99
47,992,254
16.10
* 1,477,972 of Peter Simmonds’ holdings/voting rights have been held by Frank Nominees Limited which acts as the nominee for
Alliance Trust Pensions Limited, which is the trustee of a SIPP established by Peter Anthony Simmonds. Frank Nominees is the
vehicle used by Kleinwort Benson Limited to hold securities for clients, trusts, SIPPs etc. The beneficiary of the SIPP is Peter Anthony
Simmonds.
** The 199,194 shares shown as being held by Frank Beechinor-Collins are owned by Curra Trust, a trust established for the benefit of his
children and in which he has no beneficial interest.
Directors’ interest in share options
Under the Group’s executive share option scheme, the following Director has the right to acquire ordinary shares:
Director
M Patel
Grant
date
19/12/17
No. of share
options granted
1,375,000
Option
price (pence)
0.5
Date first
exercisable
18/12/20
Expiry date
18/12/22
Composition of the Remuneration Committee
The Remuneration Committee comprises independent Non-Executive Directors, namely Richard Kellett-Clarke (Chairman) and Frank
Beechinor-Collins. The Committee makes recommendations to the Board on Executive Directors’ service agreements and remuneration.
In doing so it has undertaken relevant research to ensure that remuneration levels are competitive with the industry average. The
Committee met two times during the year.
The Chief Executive attends meetings and provides information and support as requested. He is not present when his own remuneration
package is considered.
Advisors
During the year, the Committee did not receive any external advice.
Approval
This report was approved by the Board on 15 October 2018 and signed on its behalf by:
Richard Kellett-Clarke
Chairman of Remuneration Committee
Information relating to principal activity, review of business, key
performance indicators and future outlook is included within the
strategic report.
Principal activity
The principal activity of the Group in the year under review
was that of providing intuitive software as a service (“SaaS”)
via a leading omni-channel marketing automation platform 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 £32.0m in the year ended June 2017 to
£43.1m for the year ended June 2018, an increase of 35%.
Operating profit grew from £8.1m in the 12 months to June 2017
to £9.2m for the year ended June 2018, an increase of 14%.
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
Adjusted
EBITDA
ARPU
2018
2017
£43.1m
£32.0m
%
increase
35%
£12.5m
£10.3m
£845
£715
22%
18%
Dividends
The Board proposes a dividend payment of £1,907,396 comprising
an ordinary dividend of 0.64p per ordinary share (2017: £1,629,312
ordinary dividend of 0.55p per ordinary share) to be distributed to
shareholders in respect of the Group’s reported performance.
The Board’s dividend policy will be reviewed annually in line with
the cash needs required for opportunities in organic growth to
increase shareholder value and capital expenditure.
Highest paid Director
The Companies Act 2006 requires certain disclosures about
the remuneration of the highest paid Director taking into account
emoluments, gains on exercise of share options and amounts
receivable under long-term incentive schemes. On this basis,
the highest paid Director in the year was Milan Patel and
details of his remuneration are disclosed in the Remuneration
Committee Report.
Supplier payment policy
The Group’s policy is to settle the terms of payment with suppliers
when agreeing the terms of each transaction and to ensure that
suppliers are made aware of the terms of payment and to abide by
the terms of payment. The average trade creditors for the Group,
expressed as a number of days, were 249 days (2017: 98 days).
Directors’ interests
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 2018 are as follows:
Director
F Beechinor-
Collins
30.06.18
30.06.17
Number of
shares held
Percentage
shareholding
%
Number of
shares held
Percentage
shareholding
%
199,194**
0.07
199,194**
0.07
5.96
0.13
0.53
0.84
S Bird
13,558,996
4.55 17,558,996
R Kellett-Clarke
390,000
0.13
390,000
M Patel
1,575,927
0.53
1,575,972
P Simmonds
2,491,470*
0.84 2,491,470*
I Taylor
29,776,667
9.99 29,776,667
10.05
* Frank Nominees Limited holds 1,477,972 shares in respect of
Peter Simmonds holding/voting rights acting as nominee for
Alliance Trust 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 199,194 shares shown as being held by Frank Beechinor-Collins
are owned by Curra Trust, a trust established for the benefit of his
children and in which he has no beneficial interest.
The Directors who served during the period and their beneficial
interests in share options in the Group, as recorded in the Register
of Directors’ interests as at 30 June 2018 are as follows:
Director
M Patel
30.6.18
Number of
options held
1,375,000
30.6.17
Number of
options held
–
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Auditors
The auditors, Jeffreys Henry LLP, will be proposed for
reappointment at the forthcoming Annual General Meeting.
On behalf of the board:
Milan Patel
Chief Executive Officer
15 October 2018
GOVERNANCE
Report of the Directors continued
Substantial interests
On 30 September 2018, 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:
Product development
In the markets in which the Group operates, effective development
is vital to maintaining competitive advantage and securing future
income streams.
Shareholder
Number of
shares held
Percentage
shareholding
%
Lion Trust Asset Management
57,395,147
19.30
Ian ‘Tink’ Taylor,
Founder & President
29,776,667
10.01
Slater Investments Ltd
Simon Bird
17,544,272
13,558,996
Highclere International Investors
11,669,575
Franklin Templeton
Fund Management
9,775,000
J O Hambro Capital Management
9,137,865
5.90
4.56
3.92
3.29
3.07
Future outlook
The Group provides omni-channel marketing technology
and services. Each of these areas has 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 period
from 1 July 2017 to the date of this report.
P Amin (appointed 15 February 2018)
F Beechinor-Collins
S Bird (resigned 9 August 2018)
P Blundell (resigned 30 January 2018)
R Kellett-Clarke
M Patel
P A Simmonds
I Taylor
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 22
to the financial statements.
The purpose of the policies is to ensure that adequate cost-
effective funding is available to the Group and exposure to financial
risk – interest rate, liquidity and credit risk – is minimised.
Going concern
After making appropriate enquiries, the Directors consider that the
Company and the Group has adequate resources to continue in
operational existence for the foreseeable future. For this reason,
they continue to adopt the going concern basis in preparing the
financial statements.
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 advisor and together with
Finncap are the joint brokers. The closing mid-market share price
at 30 June 2018 was 75.0p (2017: 67.5p).
Related party transactions
Disclosures relating to related party transactions are set out in
note 25 to the consolidated financial statements.
Charitable and polictal donations
No charitable or political donations were made by the Company.
Charitable donations made by the Group in the year were £1,694
(2017: £1,598).
Employees
The number of employees and their remuneration is set out in note 4.
Applications for employment by disabled persons are always
fully considered, bearing in mind the aptitudes of the applicant
concerned. In the event of members of staff becoming disabled
every effort is made to ensure that their employment with the
Group continues and that appropriate training is arranged. It is
the policy of the Group that the training, career development
and promotion of disabled persons should, as far as possible,
be identical to that of other employees.
The Group complies with all applicable labour laws in the
respective jurisdictions in which it operates.
Statement of Directors’ responsibilities
The Directors are responsible for preparing the annual 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 IFRSs
as adopted by the European Union subject to any material
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.
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GOVERNANCE
Report of the independent auditor
Opinion
We have audited the financial statements of dotdigital Group
Plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for
the year ended 30 June 2018 which comprise the consolidated
income statement, consolidated statement of comprehensive
income, consolidated statement of changes in 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 notes to the financial statements, including a summary of
significant accounting policies. The financial reporting framework
that has been applied in the preparation of the Group financial
statements is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union. The financial
reporting framework that has been applied in the preparation of
the Parent Company financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted
by the European Union, as applied in accordance with the
provision of the Companies House Act 2006.
In our opinion:
• The financial statements give a true and fair view of the state
of the Group’s and of the Parent Company’s affairs as at
30 June 2018 and of the Group’s profit for the year then
ended;
• The Group financial statements 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 as applied in accordance with the provisions
of the Companies Act 2006; and
Conclusions relating to going concern
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you where:
• The Directors’ use of the going concern basis of accounting in
the preparation of the financial statements is not appropriate;
or
• The Directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the Group’s or the Parent Company’s ability to
continue
to adopt the going concern basis of accounting for a period of
at least 12 months from the date when the financial statements
are authorised for issue.
Our audit approach
Overview
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters. This is
not a complete list of all risks identified by our audit.
• Capitalisation of Development costs
• Valuation of investments and intangible assets
• The financial statements have been prepared in accordance
• Share-based payment charges
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor’s responsibilities for the audit of the financial statements
section of our report. We are independent of the Company in
accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC’s Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
• Accounting for the acquisition of Comapi
These are explained in more detail below.
Audit scope
• We conducted audits of the complete financial information
of dotdigital Group plc, dotmailer Limited, dotmailer Inc.,
dotsearch Europe Limited, dotmailer Pty Limited, dotmailer SA
Pty Limited, dotmailer Development Limited, dotmailer LLC,
Dynmark International Ltd, Donky Networks Ltd and Dynmark
S.p. z.o.o.
• We performed specified procedures over certain account
balances and transaction classes at other Group companies.
• Taken together, the Group companies over which we
performed our audit procedures accounted for 100% of the
absolute profit before tax (i.e. the sum of the numerical values
without regard to whether they were profits or losses for the
relevant reporting units) and 100% of revenue.
Key audit matters
Key audit matter
Capitalisation of Development costs
During the year the Group capitalised internally generated
development costs of £4,376,645 (30 June 2017 – £2,243,687).
These capitalised costs are being amortised over five years.
The development cost additions represents resources the Group
has invested in the development of new innovative technology
products for marketing professionals.
As part of the Comapi acquisition, Technology additions
introduced on acquisition of £1,200,000 represents the cost
that would be incurred to build the entire Comapi platform had
the acquisition not occurred. The useful life of this intangible
asset is assessed to have a finite life of 10 years. The Customer
Relationships introduced on acquisition of £1,205,126 represents
the value of high value customer contracts within Comapi. The
useful life of this intangible asset is assessed to have a finite life
of 9 years.
The adjusted consolidated profit before tax, which is considered
by management to be a key metric and is discussed in their
discussion of KPIs, is directly impacted by the amount of costs
capitalised and the amounts included in the reconciliation of the
adjusted income measures.
The Directors have assessed whether the costs meet the
criteria for capitalisation and whether there are any indicators
of impairment.
Investments / Intangibles carrying value
The Company had investments of £14,923,115 at the year
ended 30 June 2018 (30 June 2017: £5,186,604).
The Group had intangible assets of £9,787,354 at the year
ended 30 June 2018 (30 June 2017: £4,518,312).
Impairment of assets (“IAS 36”) states that assets must be
assessed for indicators of impairment at each reporting period,
for all cash-generating units (“CGUs”). Should such indicators
exist the recoverable amount of the asset will be compared to the
carrying value, and if the carrying value exceeds the recoverable
amount, the difference is recorded as an impairment loss.
The Company had goodwill of £9,679,608 at the year ended
30 June 2018 (30 June 2017: £608,503). The goodwill on
acquisition of Comapi is £9,070,398.
How our audit addressed the key audit matter
We focused on whether the costs capitalised met the criteria
for capitalisation and whether those costs were classified as
ongoing projects or process improvements costs.
We considered whether the nature of the costs met the criteria
for the costs to be capitalised. We vouched a sample of the
costs capitalised that relate to specific projects and created
add-on functions with the system. We agreed a sample of the
internal staff costs capitalised to supporting calculations, time
records and payroll calculations.
In both cases, we considered whether the nature of the
costs met the criteria for the costs to be capitalised.
We considered whether the Directors’ policy for the treatment
of such costs was reasonable and, on a sample basis,
assessed whether the costs included in the reconciliation
were in line with the Directors’ policy.
We assessed the assumptions made by management in
deriving the valuation of the Technology additions from the
Comapi acquisition. We reviewed the workings provided
by management and considered the reasonableness. We
compared the useful life of 10 years and benchmarked this
against industry standards.
We reviewed the workings on the Customer Relationship
addition and assessed the key inputs deriving the customer
churn.
The net assets of the main subsidiary exceeds that of the
investment carrying value, supported by robust performance
with no going concern issues.
The analysis work undertaken by the Directors shows that the
Group is expected to remain cash generative and profitable
based on their technology. We have understood and assessed
methodology used by the Directors in this analysis and
determined it to be reasonable.
Intangibles are only assessed for impairment when indicators
of impairment exist. We have considered the life cycle, public
perception through the share price of the Company and the
fair value of intangibles held by the Company.
As all the capitalised intangibles relate to products that the
combined dotmailer and Comapi entity are using to enhance its
product we consider it reasonable that no impairment has been
recognised in the period.
Management preformed a separate impairment review for
Comapi to consider if any impairments were required. The
key model inputs have been assessed.
We tested management’s assumption that no impairment
existed by carrying out sensitivity analysis through changing
the assumptions used and re-running the cash flow forecast.
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dotdigital Group PlcAnnual Report 2017/2018dotdigital Group PlcAnnual Report 2017/2018 GOVERNANCE
Report of the independent auditor continued
Key audit matters continued
Key audit matter
Share-based payment charge
The charge for the year is made up as follows:
Options granted £449,923
All share options and warrants that vest in the period have been
reviewed for the purpose of calculating an appropriate share-
based payment charge. The Black-Scholes model has been used
to value the options and warrants at the grant date.
Options have estimated vesting periods based on management’s
assumptions and the share-based payment is spread evenly over
this period from the date of grant.
Warrants vested on the grant date and the share-based payment
was fully charged to the profit and loss during the year.
There is therefore judgment in the valuation of share-based
payments, owing to the estimation uncertainty that exists around
future vesting periods.
Accounting for the acquisition of Comapi
In November 2017 the Group acquired Comapi. The total
consideration is £10.7m paid in cash. The acquisition has resulted
in the recognition of goodwill of £9.1m and intangible assets
of £2.9m. Judgement has been applied by management in
determining these amounts.
Management are required to determine the fair value of the
acquired assets and liabilities, including intangibles. The key
assumptions in valuing the intangible assets include the selection
of valuation methodology, estimates of customer churn and
forecast cash flows.
In respect of this acquisition, we identified the key risk as the
valuation of acquired intangible assets.
How our audit addressed the key audit matter
We have understood and assessed the methodology utilised
to estimate the Company’s share-based payment charge
calculations and checked that the calculation of the provision
was mathematically accurate.
We have audited the share-based payment by reviewing the
key inputs used in the model for reasonableness. The key input
most subjective is that of expected future volatility. We have
reviewed management’s calculation of the expected volatility.
We have also reviewed the volatility of dotdigitial Group’s share
price and assessed for reasonableness.
We have reviewed the Group’s methodology for acquisition
accounting and assessed whether it has been performed in
accordance with IFRS 3 Business Combinations in respect
of the fair value of intangible assets.
We have performed an assessment on the appropriateness
of key assumptions of customer churn and asset replacement
costs, as well as the assumptions used in order to derive the
forecast cash flows and discount rate.
We have performed sensitivity analysis on the customer
churn and the forecast cash flows.
Our application of materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit
procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually
and in aggregate on the financial statements as a whole.
Based on our professional judgment, we determined materiality for the financial statements as a whole as follows:
Overall materiality
£545,000 (30 June 2017: £460,000).
£172,000 (30 June 2017: £71,000).
Group financial statements
Company financial statements
How we determined it
Based on the average of 10% of profit before tax,
1% of gross assets and 1% of revenue.
Based on the average of 10% of loss before tax and
1% of gross assets.
Rationale for
benchmark applied
We believe that profit before tax is a primary
measure used by shareholders in assessing the
performance of the Group whilst gross asset values
and revenue are a representation of the size of
the Group; both are generally accepted auditing
benchmarks.
We believe that loss before tax is a primary measure
used by shareholders in assessing the performance
of the Company whilst gross asset values are a
representation of the size of the Company; both are
generally accepted auditing benchmarks.
For each component in the scope of our Group audit, we
allocated a materiality that is less than our overall Group materiality.
The range of materiality allocated across components was
between £2,000 and £485,000.
We agreed with the Audit Committee that we would report to
them misstatements identified during our audit above £27,250
(Group audit) (30 June 2017: £23,000) and £8,600 (Company
audit) (30 June 2017: £3,550) as well as misstatements
below those amounts that, in our view, warranted reporting for
qualitative reasons.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the Directors
made subjective judgments, for example in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all
of our audits we also addressed the risk of management override
of internal controls, including evaluating whether there was
evidence of bias by the Directors that represented a risk of
material misstatement due to fraud.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
Group and the Company, the accounting processes and controls,
and the industry in which they operate.
The Group financial statements are a consolidation of 11 reporting
units, comprising the Group’s operating businesses and holding
companies.
We performed audits of the complete financial information of
dotdigital Group plc, dotmailer Limited, dotmailer Inc., dotsearch
Europe Limited, dotmailer Pty Limited, dotmailer SA Pty Limited,
dotmailer Development Limited, dotmailer LLC, Dynmark
International Ltd, Dynmark S.p z.o.o., and Donky Networks Ltd
reporting units, which were individually financially significant and
accounted for 100% of the Group’s revenue and 100% of the
Group’s absolute profit before tax (i.e. the sum of the numerical
values without regard to whether they were profits or losses for
the relevant reporting units). We also performed specified audit
procedures over goodwill and other intangible assets, as well as
certain account balances and transaction classes that we regarded
as material to the Group at the 11 reporting units, one based in
the United States of America, one in Australia, one in Belarus
and another in South Africa.
Other information
The Directors are responsible for the other information. The other
information comprises the information included in the annual
report, other than the financial statements and our auditor’s report
thereon. Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we identify
such material inconsistencies or apparent material misstatements,
we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement
of the other information. If, based on the work we have performed,
we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing
to report in this regard.
Opinions on other matters prescribed by the Companies
Act 2006
In our opinion, based on the work undertaken in the course
of the audit:
•
•
the information given in the strategic report and the Directors’
report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
the strategic report and the Directors’ report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and
Parent Company and its environment obtained in the course of the
audit, we have not identified material misstatements in the strategic
report or the Directors’ report.
We have nothing to report in respect of the following matters in
relation to which 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.
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GOVERNANCE
FINANCIAL STATEMENTS
Report of the independent auditor continued
Use of this report
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 auditor’s 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.
Financial
Statements
Sanjay Parmar
Senior Statutory Auditor
For and on behalf of
Jeffreys Henry LLP, Statutory Auditor
Finsgate
5-7 Cranwood Street
London EC1V 9EE
15 October 2018
Contents
Financial statements
42 Consolidated income statement
42 Consolidated statement of comprehensive income
43 Consolidated statement of financial position
44 Company statement of financial position
45 Consolidated statement of changes in equity
46 Company statement of changes in equity
47 Consolidated statement of cash flows
47 Company statement of cash flows
48 Notes to the consolidated financial statements
70 Company information
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement
set out on page 35, the Directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control as
the Directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Directors are responsible
for assessing the Group’s and Parent Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting
unless the Directors either intend to liquidate the Group or the
Parent Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of the
financial statements is located on the Financial Reporting Council’s
website at:
www.frc.org.uk/auditorsresponsibilities
This description forms part of our auditor’s report.
Other matters which we are required to address
The non-audit services prohibited by the FRC’s Ethical Standard
were not provided to the Group or the Parent Company and we
remain independent of the Group and the Parent Company in
conducting our audit.
Our audit opinion is consistent with the additional report to the
audit committee.
40
dotdigital Group Plc
Annual Report 2017/2018
41
dotdigital Group PlcAnnual Report 2017/2018 Consolidated income statement
For the year ended 30 June 2018
Continuing operations
Revenue
Cost of sales
Gross profit
Administrative expenses
Share based payments
Exceptional costs
Operating profit
Finance income
Profit before income tax
Income tax expense
Profit for the year from continuing operations
Profit for the year attributable to the owners of the parent
Earnings per share from continuing operations (pence per share)
Basic
Diluted
Adjusted Basic
Adjusted Diluted
Notes
30.6.18
£’000
30.6.17
£’000
7
7
5
6
7
8
11
11
11
11
43,094
(9,074)
34,020
(23,979)
(450)
(357)
9,234
9
9,243
(685)
8,558
8,558
2.89
2.85
3.16
3.12
31,966
(4,459)
27,507
(19,269)
(162)
–
8,076
15
8,091
(945)
7,146
7,146
2.42
2.41
2.47
2.46
Consolidated statement of comprehensive income
For the year ended 30 June 2018
Profit for the year
Other comprehensive income
Items that may be subsequently reclassified to profit and loss:
Exchange differences on translating foreign operations
Total comprehensive income attributable to:
Owners of the parent
Total comprehensive income for the year
Comprehensive income from continuing operations
Notes
30.6.18
£’000
8,558
30.6.17
£’000
7,146
20
(54)
8,578
7,092
8,578
7,092
Consolidated statement of financial position
For the year ended 30 June 2018
Assets
Non-current assets
Goodwill
Intangible assets
Property, plant and equipment
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity attributable to the owners of the parent
Called up share capital
Share premium
Reverse acquisition reserve
Other reserves
Retranslation reserve
Retained earnings
Total equity
Liabilities
Non-current liabilities
Deferred tax
Current liabilities
Trade and other payables
Financial liabilities – borrowings
– Interest bearing loans
Current tax payable
Total liabilities
Total equity & liabilities
Notes
30.6.18
£’000
30.6.17
£’000
12
13
14
16
17
18
19
19
19
19
19
23
20
9,680
9,787
1,046
20,513
12,953
15,005
27,958
48,471
1,490
6,791
(4,695)
661
(26)
32,331
36,552
609
4,519
1,033
6,161
7,847
20,428
28,275
34,436
1,481
6,290
(4,695)
305
(46)
25,306
28,641
1,697
814
10,217
4,440
5
–
10,222
11,919
48,471
–
541
4,981
5,795
34,436
The financial statements were approved and authorised for issue by the Board of Directors on 15 October 2018 and were
signed on its behalf by:
Milan Patel
Director
Company registration number: 06289659 (England and Wales)
42
43
dotdigital Group PlcAnnual Report 2017/2018dotdigital Group PlcAnnual Report 2017/2018FINANCIAL STATEMENTS Company statement of financial position
For the year ended 30 June 2018
Consolidated statement of changes in equity
For the year ended 30 June 2018
Assets
Non-current assets
Investments
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity attributable to the owners of the parent
Called up share capital
Share premium
Other reserves
Retained earnings
Total equity
Liabilities
Current liabilities
Trade and other payables
Total liabilities
Total equity & liabilities
Notes
30.6.18
£’000
30.6.17
£’000
15
16
17
18
19
19
19
20
14,924
14,924
1,105
646
1,751
16,675
1,490
6,791
661
5,761
14,703
1,972
1,972
16,675
5,187
5,187
4,633
591
5,224
10,411
1,481
6,290
305
2,239
10,315
96
96
10,411
The financial statements were approved and authorised for issue by the Board of Directors on 15 October 2018 and were
signed on its behalf by:
Milan Patel
Director
Company registration number: 06289659 (England and Wales)
Balance as at 1 July 2016
Issue of share capital
Dividends
Transfer in reserves
Share-based payment
Transactions with owners
Profit for the year
Other comprehensive income
Total comprehensive income
Balance as at 30 June 2017
Issue of share capital
Dividends
Transfer in reserves
Share-based payment
Transactions with owners
Profit for the year
Other comprehensive income
Total comprehensive income
Balance as at 30 June 2018
Balance as at 1 July 2016
Issue of share capital
Dividends
Transfer in reserves
Share-based payments
Transactions with owners
Profit for the year
Other comprehensive income
Total comprehensive income
Balance as at 30 June 2017
Issue of share capital
Dividends
Transfer in reserves
Share-based payments
Transactions with owners
Profit for the year
Other comprehensive income
Total comprehensive income
Balance as at 30 June 2018
Called up
share capital
£’000
1,473
8
–
–
–
8
–
–
–
1,481
9
–
–
–
9
–
–
–
1,490
Retranslation
reserve
£’000
Reverse
acquisition
reserve
£’000
8
-
-
-
-
-
-
(54)
(54)
(46)
-
-
-
-
-
-
20
20
(26)
(4,695)
-
-
-
-
-
-
-
-
(4,695)
-
-
-
-
-
-
-
-
(4,695)
Retained
earnings
£’000
20,611
–
(2,479)
28
–
(2,451)
7,146
–
7,146
25,306
-
(1,627)
94
–
(1,533)
8,558
–
8,558
32,331
Other
reserves
£’000
174
(3)
-
(28)
162
131
-
-
-
305
-
-
(94)
450
356
-
-
-
661
Share
premium
£’000
6,138
152
–
–
–
152
–
–
–
6,290
501
–
–
–
501
–
–
–
6,791
Total equity
£’000
23,709
157
(2,479)
-
162
(2,160)
7,146
(54)
7,092
28,641
510
(1,627)
–
450
(667)
8,558
20
8,578
36,552
Share capital is the amount subscribed for shares at nominal value.
Retained earnings represents the cumulative earnings of the Group attributable to equity shareholders.
Share premium represents the excess of the amount subscribed for share capital over the nominal value net of the share
issue expenses.
Retranslation reserve relates to the retranslation of foreign subsidiaries into the functional currency of the Group.
The reverse acquisition reserve relates to the adjustment required to account for the reverse acquisition in accordance with
International Financial Reporting Standards.
Other reserves relate to the charge for the share-based payment in accordance with International Financial Reporting
Standard 2 and shares repurchased in the year classified as treasury shares.
44
45
dotdigital Group PlcAnnual Report 2017/2018dotdigital Group PlcAnnual Report 2017/2018FINANCIAL STATEMENTS Company statement of changes in equity
For the year ended 30 June 2018
Consolidated statement of cash flows
For the year ended 30 June 2018
Balance as at 1 July 2016
Issue of share capital
Dividends
Transfer in reserves
Share-based payments
Transactions with owners
Profit for the year
Total comprehensive income
Balance as at 30 June 2017
Issue of share capital
Dividends
Transfer in reserves
Share-based payments
Transactions with owners
Profit for the year
Total comprehensive income
Balance as at 30 June 2018
Called up
share capital
£’000
1,473
Retained
earnings
£’000
5,080
Share
premium
£’000
6,138
Other
reserves
£’000
174
8
–
–
–
8
–
–
1,481
9
–
–
–
9
–
–
1,490
–
(2,479)
28
–
(2,451)
(390)
(390)
2,239
–
(1,627)
94
–
(1,533)
5,055
5,055
5,761
152
–
–
–
152
–
–
6,290
501
–
–
–
501
–
–
6,791
(3)
–
(28)
162
131
–
–
305
–
–
(94)
450
356
–
–
661
Total
equity
£’000
12,865
157
(2,479)
–
162
(2,160)
(390)
(390)
10,315
510
(1,627)
–
450
(667)
5,055
5,055
14,703
Share capital is the amount subscribed for shares at nominal value.
Retained earnings represents the cumulative earnings of the Company attributable to equity shareholders.
Share premium represents the excess of the amount subscribed for share capital over the nominal value net of the share
issue expenses.
Other reserves relate to the charge for the share-based payment in accordance with International Financial Reporting
Standard 2 and shares repurchased in the year classified as treasury shares.
Cash flows from operating activities
Cash generated from operations
Tax paid
Net cash generated from operating activities
Cash flows from investing activities
Purchase of subsidiary, net of cash acquired*
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 activities
Equity dividends paid
Loan repayments
Share issue
Net cash flows from financing activities
(Decrease)/Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
* Cash acquired £157,884, please refer to note 12.
Company statement of cash flows
For the year ended 30 June 2018
Cash flows from operating activities
Cash generated from operations
Net cash generated from operating activities
Cash from investing activities
Purchase of investments
Net cash flows from investing activities
Cash flows from financing activities
Equity dividends paid
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
Notes
28
29
29
Notes
28
29
29
30.6.18
£’000
30.6.17
£’000
13,129
(501)
12,628
(9,578)
(6,876)
(475)
–
9
(16,920)
(1,627)
(14)
510
(1,131)
(5,423)
20,428
15,005
8,813
(685)
8,128
–
(2,379)
(375)
48
15
(2,691)
(2,479)
–
157
(2,322)
3,115
17,313
20,428
30.6.18
£’000
30.6.17
£’000
10,909
10,909
(9,737)
(9,737)
(1,627)
510
(1,117)
55
591
646
2,274
2,274
–
–
(2,479)
157
(2,322)
(48)
639
591
46
47
dotdigital Group PlcAnnual Report 2017/2018dotdigital Group PlcAnnual Report 2017/2018FINANCIAL STATEMENTS Notes to the consolidated financial statements
For the year ended 30 June 2018
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 33.
2. Accounting policies
Basis of preparation
These financial statements have been prepared in
accordance with International Financial Reporting Standards
as adopted by the European Union (IFRSs as adopted by
the EU) and those parts of Companies Act 2006 applicable
to companies reporting under IFRS. The financial statements
have been prepared under the historical cost convention.
The Group has applied all accounting standards and
interpretations issued by the International Accountancy
Standards Board and International Accounting Interpretations
Committee effective at the time of preparing the financial
statements.
New and amended standards adopted by the Company
There are no IFRSs or IFRIC interpretations that are effective
for the first time in the financial year beginning on or after
1 July 2017 that would be expected to have a material impact
on the Company.
Standards, interpretations and amendments to published
standards that are not yet effective
The following new standards, amendments to standards
and interpretations have been issued, but are not effective
for the financial year beginning 1 July 2017 and have not
been early adopted.
Reference
IFRS 2
IFRS 3
Title
Share Based
Payments
Summary
Amendments to clarify the classification
and measurement of share based
transactions
Application date
of standard
Periods beginning on
or after 1 January 2018
Business
Combinations
Amendments resulting from the annual
review cycle
Periods beginning on
or after 1 January 2019
IFRS 4
Insurance Contracts
Amendments regarding the interaction
of IFRS 4 and IFRS9
Periods beginning on
or after 1 January 2018
IFRS 9
Financial Instruments Amendments regarding the interaction
of IFRS 4 and IFRS9
IFRS 9
Financial Instruments Amendments regarding prepayment
features with negative compensation
and modifications of financial liabilities
Periods beginning on
or after 1 January 2018
Periods beginning on
or after 1 January 2019
IFRS 11
Joint Arrangements
Amendments resulting from the annual
review cycle
Periods beginning on
or after 1 January 2019
IFRS 15
Revenue from
Contracts with
Customers
Original issue
Periods beginning on
or after 1 January 2018
Amendments to defer the effective date Periods beginning on
or after 1 January 2018
Clarifications to IFRS
Periods beginning on
or after 1 January 2018
IAS 40
Investment Property
Amendments to clarify transfers or
property to, or from, investment property.
Periods beginning on
or after 1 January 2018
Application
date of Group
1 July 2018
1 July 2019
1 July 2018
1 July 2018
1 July 2019
1 July 2019
1 July 2018
1 July 2018
1 July 2018
1 July 2018
IFRS 1, IFRS 2,
IAS 28
Annual improvements
2014-2016 Cycle
Amendments resulting
IFRS 16
Leases
Original issue
Amendments
to IFRIC 22
Foreign Currency
Transactions
and Advance
Consideration
Amendments to clarify the accounting
for transactions that include the receipt
or payment of advance consideration
in a foreign currency
Annual periods beginning
on and after 1 January 2018
1 July 2018
Annual periods beginning
on or after 1 January 2019
1 July 2019
Annual periods beginning
on or after 1 January 2019
1 July 2019
IFRIC 23
Uncertainty over
Income Tax Treatment
Address how to reflect uncertainty
in accounting for income tax
Annual periods beginning
on or after 1 January 2019
1 July 2019
The Directors anticipate that the adoption of these Standards
and the Interpretations in future periods will have no material
impact on the financial statements of the Group. The Group
does not intend to apply any of these pronouncements
early. In regard to IFRS 15, the Board has initiated a project
to assess the likely impact ahead of its implementation and
expects this to have an immaterial impact on the financial
statements for the year ended 30 June 2018 of circa £500k
on revenue.
The financial statements are presented in sterling (£), rounded
to the nearest thousand pounds.
Basis of consolidation
In the period ended 2009, the Company acquired via a share
for share exchange the entire issued share capital of dotmailer
Limited, whose principal activity is that of providing SaaS via
a leading omni-channel marketing automation platform and
managed services to digital marketing professionals.
Under IFRS 3 ‘Business combinations’ the dotmailer Limited
share exchange has been accounted for as a reverse
acquisition. Although these consolidated financial statements
have been issued in the name of the legal parent, the
Company it represents in substance is a continuation of the
financial information of the legal subsidiary, dotmailer Limited.
The following accounting treatment has been applied in
respect of the reverse acquisition:
•
•
The assets and liabilities of the legal subsidiary, dotmailer
Limited, are recognised and measured in the consolidated
financial statements at their pre-combination carrying
amounts, without restatement to their fair value;
The retained reserves recognised in the consolidated
financial statements for the beginning of the prior period
reflect the retained reserves of dotmailer Limited to 30
April 2008. However, in accordance with IFRS3 ‘Business
combinations’, the equity structure appearing in the
consolidated financial statements reflects the equity
structure of the legal parent dotdigital Group Plc, including
the equity instruments issued under the share exchange
to effect the business combination;
• A reverse acquisition reserve has been created to enable
the presentation of a consolidated balance sheet which
combines the equity structure of the legal parent with the
non-statutory reserves of the legal subsidiary;
• Comparative numbers are prepared on the same basis.
The following accounting treatment has been applied in
respect of the acquisition of dotdigital Group Plc:
• The assets and liabilities of dotdigital Group Plc are
recognised and measured in the consolidated financial
statements at their fair value at the date of acquisition.
• The cost of an acquisition is measured as the fair value of
the assets given, equity instruments issued and liabilities
incurred or assumed at the date of exchange, plus
costs directly attributable to the acquisition. Identifiable
assets acquired and liabilities assumed in a business
combination are measured initially at their fair values at
the date of acquisition, irrespective of the extent of any
minority interest. The excess of the cost of acquisition
over the fair value of the Group’s share of the identifiable
net assets acquired is recorded as goodwill. If the cost
of acquisition is less than the fair value of the net assets
of the subsidiary acquired, the difference is recognised
directly in the income statement.
Subsidiaries
A subsidiary is an entity whose operating and financing
policies are controlled by the Group. Subsidiaries are
consolidated from the date on which control was transferred
to the Group. Subsidiaries cease to be consolidated from
the date the Group no longer has control. Intercompany
transactions, balances and unrealised gains on transactions
between Group companies have been eliminated on
consolidation.
The Group applies the acquisition method to account for
business combinations. In the statement of financial position,
the acquiree’s identifiable assets and liabilities are initially
recognised at their fair values at the acquisition date.
As a result of applying reverse acquisition accounting since
30 January 2009, the consolidated IFRS financial information
of dotdigital Group Plc is a continuation of the financial
information of dotmailer Limited.
Revenue recognition
Revenue comprises the fair value of the consideration
received or receivable for the sale of goods and services in
the ordinary course of the Group’s activities. Revenue is
shown net of value added tax returns, rebates and discounts
after eliminating sales within the Group.
The Group recognises revenue when the amount of revenue
can be reliably measured and it is probable that the future
economic benefits will flow to the entity. The Group bases its
estimates on historical results, taking into consideration the
type of customer, the type of transaction and the specifics
of each arrangement.
The Group sells omni-channel marketing services to other
businesses, and services are either provided on a usage basis
or fixed price bespoke contract. Revenue from contracts is
recognised under percentage of completion method based on
a percentage of services performed to date as a percentage
of the total services to be performed.
Going concern
The Directors, at the time of approving the financial
statements, have a reasonable expectation that the Company
and the Group have adequate resources to continue in
operational existence for the foreseeable future. Thus they
continue to adopt the going concern basis of accounting in
preparing the financial statements. Further detail is contained
in the Directors’ report.
Operating profit
Operating profit is stated after charging operating expenses
but before finance costs.
48
49
dotdigital Group PlcAnnual Report 2017/2018dotdigital Group PlcAnnual Report 2017/2018FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
For the year ended 30 June 2018
2. Accounting policies continued
• Product development
Dividends
Final dividend distributions to the Company’s shareholders
are recognised as a liability in the financial statements in the
period in which the dividends are approved by the Company’s
shareholders while interim dividends distributions are
recognised in the period in which the dividends are declared
and paid.
Goodwill
Goodwill represents the excess of the fair value of the
consideration over the fair values of the identifiable net
tangible and intangible assets acquired and is allocated to
cash generating units.
Under IFRS 3 “Business Combinations”, goodwill arising on
acquisitions is not subject to amortisation but is subject to annual
impairment testing. Any impairment is recognised immediately in
the income statement and not subsequently reversed.
Investments in subsidiaries
Investments are held as non-current assets at cost less any
provision for impairment. Where the recoverable amount of
the investment is less than the carrying amount, impairment
is recognised.
Intangible assets
Intangible assets are recorded as separately identifiable
assets and recognised at historical cost less any accumulated
amortisation. These assets are amortised over their useful
economic lives of four to five years, with the charge included
in administrative expenses in the income statement.
Intangible assets are reviewed for impairment annually.
Impairment is measured by determining the recoverable
amount of an asset or cash generating unit (CGU) which is
the greater of its value in use and its fair value less costs to
sell. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value
of money and the risks specific to the asset or CGU. For the
purpose of impairment testing, assets that cannot be tested
individually are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or 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 expenditure is capitalised when it
is considered that there is a commercially and technically
viable product, the related expenditure is separately
identifiable and there is a reasonable expectation that the
related expenditure will be exceeded by future revenues.
Following initial recognition, product developments are
carried at cost less any accumulated amortisation and
any accumulated impairment losses. The useful lives of
these intangible assets are assessed to have a finite life
of five years. Amortisation is charged on assets with finite
lives, and until economic benefit can be received and
recognised, this expense is taken to the income statement
and useful lives are reviewed on an annual basis.
Amortisation is charged from the point when the asset
is available for use.
Other development expenditures that do not meet
these criteria are recognised as an expense as incurred.
Capitalised development costs are recorded as intangible
assets and amortised from the point at which they are
ready for use on a straight-line basis over their useful life.
Costs incurred on development projects (relating to the
design and testing of new or improved products) are
recognised as intangible assets when the following criteria
are fulfilled:
–
–
–
–
–
–
It is technically feasible to complete the intangible
asset so that it will be available for use or resale;
Management intends to complete the intangible
asset and use or sell it;
There is an ability to use or sell the intangible asset;
It can be demonstrated how the intangible asset
will generate possible future economic benefits;
Adequate technical, financial and other resource
to complete the development and to use or sell
the intangible asset are available; and
The expenditure attributable to the intangible asset
during its development can be reliably measured.
• Technology
Technology represents the cost that would be incurred
to build the entire Comapi platform had the acquisition
not occurred. The useful life of this intangible asset is
assessed to have a finite life of 10 years. Amortisation is
charged on assets with finite lives, and until economic
benefit can be received and recognised, this expense
is taken to the income statement and useful lives are
reviewed on an annual basis. Amortisation is charged
from the point when the asset is available for use.
Customer relationships
This represents the value of high-value customer contracts
within Comapi. The useful life of this intangible asset is
assessed to have a finite life of nine years. Amortisation
is charged on assets with finite lives, and until economic
benefit can be received and recognised, this expense
is taken to the income statement and useful lives are
reviewed on an annual basis. Amortisation is charged from
the point when the asset is available for use.
•
Impairment of non-financial assets (excluding goodwill)
At each balance sheet date, the Group reviews the
carrying amounts of its tangible and intangible assets
to determine whether there is any indication that those
assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of the
impairment loss (if any). Where the asset does not
generate cash flows that are independent from other
assets, the Group estimates the recoverable amount of
the cash generating unit to which the asset belongs. An
intangible asset with an indefinite useful life is tested for
impairment annually and whenever there is an indication
that the asset may be impaired.
Current tax
Current taxes are based on the results shown in the financial
statements and are calculated according to local tax rules,
using tax rates enacted or substantially enacted by the
balance sheet date.
Deferred taxation
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in
the financial statements.
Deferred income tax assets are recognised to the extent that
it is probable that future taxable profit will be available against
which the temporary difference will be utilised.
Property, plant and equipment
Tangible non-current assets are stated at historical cost less
accumulated depreciation. Historical cost includes expenditure
that is directly attributable to the acquisition of the items.
Deferred income tax is determined using tax rates that have been
enacted or substantially enacted by the balance sheet date and
are expected to apply when the related deferred income asset is
realised or deferred income tax liability is settled.
Subsequent costs are included in the assets’ carrying amount
or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits are associated
with the item will flow to the Company and the cost of
the item can be measured reliably. The carrying amount
of the replaced part is derecognised. All other repairs and
maintenance are charged to the income statement during
the financial period in which they are incurred. Depreciation
is provided at the following rates in order to write off each
asset over its estimated useful life and is based on the cost of
assets less residual value. Significant components of individual
assets are assessed and if a component has a useful life that
is different from the remainder of that asset, that component is
depreciated separately.
Short leasehold:
over the term of the lease
Fixtures and fittings:
25% on cost
Computer equipment:
25% on cost
The assets’ residual values and useful economic lives are
reviewed and adjusted, if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable value.
Gains and losses on disposals are determined by comparing
the proceeds with the carrying amount and are recognised
within other (losses) or gains in the income statement.
Capital risk management
The Group manages its capital to ensure it is able to
continue as a going concern while maximising the return to
stakeholders through the optimisation of the debt and equity
balance. The capital structure of the Group consists of cash
equivalents and equity attributable to the owners of the parent
as disclosed in the statement of changes in equity.
Taxation
The tax expense for the year comprises current and deferred tax.
Tax is recognised in the income statement, to the extent that it
relates to items recognised in other comprehensive income or
directly in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.
Operating leases
Rent payable under operating leases is not recognised in
the Group’s statement of financial position. Such costs are
expensed on a straight-line basis over the term of the lease.
Lease incentives received are recognised as an integral part
of the total expense, over the term of the lease.
Financial instruments
Financial assets and financial liabilities are recognised on
the statement of financial position when an entity becomes
a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured
at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial liabilities at
fair value through profit or loss) are added to or deducted from
the fair value of the financial assets or financial liabilities, as
appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognised
immediately in the income statement.
• Financial assets
The Group’s accounting policies for financial assets are
set out below.
Management determine the classification of its financial
assets at initial recognition depending on the purpose
for which the financial assets were acquired and, where
allowed and appropriate, revaluate this designation at
every reporting date.
All financial assets are recognised on a trade date when,
and only when, the Group becomes a party to the
contractual provisions of an instrument. When financial
assets are recognised initially, they are measured at fair
value plus transaction costs, except for those finance
assets classified as at fair value through profit or loss
(‘FVTPL’), which are initially measured at fair value.
50
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dotdigital Group PlcAnnual Report 2017/2018dotdigital Group PlcAnnual Report 2017/2018FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
For the year ended 30 June 2018
2. Accounting policies continued
Financial assets are classified into the following specified
categories: financial assets at FVTPL, ‘held-to-maturity’
investments, ‘available for sale’ (AFS) financial assets
and loans and receivables. The classification depends
on the nature and purpose of the financial assets and is
determined at the time of recognition.
Derecognition of financial assets occurs when the rights
to receive cash flows from the investments expire or are
transferred and substantially all of the risks and rewards of
ownership have been transferred.
At each reporting date, financial assets are reviewed to
assess whether there is objective evidence of impairment. If
any such evidence exists, impairment loss is determined and
recognised based on the classification of the financial asset.
Loans and receivables (including trade receivables,
prepayments, deposits and other receivables, cash and
bank balances) are non-derivative financial assets with
fixed or determinable payments that are not quoted on
an active market. At each reporting date subsequent
to initial recognition, loans and receivables are carried
at amortised cost using the effective interest method,
less any identified impairment losses. An impairment
loss is recognised in the statement of comprehensive
income when there is objective evidence that the asset
is impaired, and is measured as the difference between
the asset’s carrying amount and the present value of
estimated future cash flows discounted at the original
effective interest rate. Impairment losses are reversed
in subsequent periods when an increase in the asset’s
recoverable amount can be related objectively to an event
occurring after the impairment was recognised, subject to
a restriction that the carrying amount of the asset at the
date the impairment is reversed does not exceed what the
amortised cost would have been had the impairment not
been recognised.
• Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and
on hand, demand deposits with banks and other financial
institutions, and short-term, highly liquid investments
that are readily convertible into known amounts of cash
and which are subject to an insignificant risk of changes
in value, having been within three months of maturity
at acquisition. Bank overdrafts that are repayable on
demand and form an integral part of the Group’s cash
management are also included as a component of cash
and cash equivalents for the purpose of the consolidated
statement of cash flows
• Trade receivables
Trade receivables are recognised initially at the lower of
their original invoiced value and recoverable amount. A
provision is made when it is likely that the balance will not
be recovered in full. Terms on receivables range from 30
to 90 days.
• Financial liabilities and equity
Financial liabilities and equity are recognised on the
Group’s statement of financial position when the Group
becomes a party to a contractual provision of an
instrument. Financial liabilities and equity instruments
issued by the Group are classified according to the
substance of the contractual arrangements entered into
and the definitions of a financial liability and an equity
instrument. An equity instrument is any contract that
evidences a residual interest in the assets of the Group
after deducting all of its liabilities. Equity instruments
issued by the Group are recognised at the proceeds
received, net of transaction costs.
The Group’s financial liabilities include trade payables
and accrued liabilities.
• Trade payables
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the
effective interest method. Terms on accounts payable
range from 10 to 90 days.
Foreign currency risk
Currency risk is the risk that the holding of foreign currencies
will affect the Group’s position as a result of a change in
foreign currency exchange rates. The Group has no significant
foreign currency risk as most of the Group’s financial assets
and liabilities are denominated in functional currencies of
relevant Group entities. Accordingly, no quantitative market
risk disclosures or sensitivity analysis for currency risks have
been prepared.
The results and financial position of all the Group entities
(none of which has the currency of a hyper-inflationary
economy) that have a functional currency different from the
presentation currency are translated into the presentation
currency as follows:
(a) assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance
sheet;
(b) income and expenses for each income statement are
translated at average exchange rates (unless this average
is not a reasonable approximation of the cumulative effect
of the rates prevailing on the transaction dates, in which
case income and expenses are translated at the rate on
the dates of the transactions); and
(c) all resulting exchange differences are recognised in other
comprehensive income.
Equity
Share capital is the amount subscribed for shares at their
nominal value.
Share premium represents the excess of the amount
subscribed for the share capital over the nominal value
of the respective shares net of share issue expenses.
Retained earnings represent the cumulative earnings
of the Group attributable to equity shareholders.
The reverse acquisition reserve relates to the adjustment
required by accounting for the reverse acquisition in
accordance with IFRS 3 ‘Business combinations’.
Other reserves relate to the charge for share-based payments
in accordance with IFRS 2 ‘Share-Based Payments’.
Share-based payments
For equity-settled share-based payment transactions the
Group, in accordance with IFRS 2 ‘Share-Based Payments’
measures their value, and the corresponding increase in
equity, indirectly, by reference to the fair value of the equity
instruments granted. The fair value of those equity instruments
is measured at the grant date using the trinomial method. The
expense is apportioned over the vesting period of the financial
instrument and is based on the number which is expected
to vest and the fair value of those financial instruments at
the date of grant. If the equity instruments granted vest
immediately, the expense is recognised in full.
Functional currency translation
–
Functional and presentation currency
Items included in the financial statements of the Company
are measured using the currency of the primary economic
environment in which the entity operates (functional
currency), which is mainly pounds sterling (£) and it is this
currency the financial statements are presented in.
–
Transaction and balances
Foreign currency transactions are translated into the
functional currency using exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and
losses resulting from the settlement of such transactions
and from the translation at the year end exchange rates
of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement.
Employee benefit costs
The Group operates a defined contribution pension scheme.
Contributions payable by the Group’s pension scheme
are charged to the income statement in the period in which
they relate.
Segment reporting
Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating
decision-maker, who is responsible for allocating resources
and assessing performance of the operating segments as
identified by the Board of Directors.
Critical accounting estimates and judgements
The Group makes certain estimates and assumptions
regarding the future. Estimates and judgements are continually
evaluated based on historical experience and other factors,
including expectations of future events that are believed to
be reasonable under the circumstances. In the future, actual
experience may differ from these estimates and assumptions.
The estimates and assumptions that have a significant risk
of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are
discussed below:
Judgements
(a) Capitalisation of development costs
Our business model is underpinned by our email and
data-driven omni-channel marketing automation platform,
dotmailer. Internal activities are continually undertaken
to enhance and maintain the product in a bid to stay
ahead of our competition. Management review the
work of developers during the period and make the
following judgements:
–
–
Internal work relating to product development is
reviewed against IAS 38 criteria and will be capitalised
if management feel the criteria have been met.
Internal work relating to the maintenance of existing
products is expensed to the income statement and
accounted for in payroll costs.
(b) Valuation of intangibles
The recognition of business combinations requires
the excess of the purchase price of acquisitions over
the net book value of assets acquired to be allocated
to the assets and liabilities of the acquired entity. The
Group makes judgements and estimates in relation to
the fair value allocation of the purchase price. If any
unallocated portion is positive it is recognised as goodwill
and if negative, it is recognised in the consolidated
income statement.
Judgement is required in determining the fair value
of identifiable assets, liabilities and contingent assets
and liabilities assumed in a business combination and
the fair value of the consideration payable. Calculating
the fair values involves the use of significant estimates
and assumptions, including expectations about future
cash flows, discount rates and the lives of assets
following purchase.
Estimates and assumptions
(a) Estimated impairment of goodwill
The Directors have carried out a detailed impairment
review in respect of goodwill. The Group assesses at
each reporting date whether there is an indication that an
asset may be impaired, by considering the net present
value of discounted cash flow forecasts which have been
discounted at 10%. The cash flow projections are based
on the assumption that the Group can realise projected
sales. A prudent approach has been applied with no
residual value being factored.
Further details on the estimates and assumptions we
make in our annual impairment testing of goodwill are
included in note 12 to the Financial Statements. At the
period end, based on the assumptions, there was no
indication of impairment to the carrying value of goodwill.
(b) Share-based compensation
Key management believe that there will not be only one
acceptable choice for estimating the fair value of share-
based payment arrangements. The judgements and
estimates that management apply in determination of the
share-based compensation are summarised below:
–
–
Selection of a valuation model
Making assumptions used in determining the variables
used in a valuation model
i
expected life
ii expected volatility
iii expected dividend yield
iv
interest rate
52
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dotdigital Group PlcAnnual Report 2017/2018dotdigital Group PlcAnnual Report 2017/2018FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
For the year ended 30 June 2018
2. Accounting policies continued
(d) Bad debt provision
Business activity revenue and results
Further detail on the estimates and assumptions we make
in our share-based compensation are included in note 27
to the financial statements. The charge made to income
statement for period is also disclosed here.
(c) Depreciation and amortisation
The Group depreciates short leasehold, fixtures and
fittings, computer equipment and amortises computer
software, internally generated development costs and
domain names on a straight-line method over the
estimated useful lives. The estimated useful lives reflect
the Directors’ estimate of the periods that the Group
intends to derive future economic benefits from the use of
the Group’s short leasehold fixtures and fittings, computer
equipment, computer software, internally generated
development costs and domain names.
We perform ongoing credit evaluations of our customers
and grant credit based upon past payment history,
financial condition and anticipated industry conditions.
Customer payments are regularly monitored and a
provision for doubtful accounts is established based upon
specific situations and overall industry conditions. Hence
the provision is maintained for potential credit losses
based upon management’s assessment of the expected
collectability of all accounts receivable. In making this
assessment, management take into consideration (i)
any circumstances of which we are aware regarding a
customer’s inability to meet its financial obligations and
(ii) our judgements as to potential prevailing economic
conditions in the industry and their potential impact on
the Group’s customers.
3. Segmental reporting
On the 21 November 2017, the Group completed the acquisition of Comapi whose line of business is the provision of omni-
channel messaging and cloud communication. dotmailer’s single line of business remains the provision of data-driven omni-
channel marketing automation. The chief operating decision-maker considers the Group’s segments to be by geographical
location, this being UK, US and rest of the world (“RoW”) operations and by business activity, this being dotmailer and Comapi
as shown below:
Geographical revenue and results
Income statement
Revenue
Gross profit
Profit before income tax
Total comprehensive income attributable
to the owners of the parent
Financial position
Total assets
Net current assets
UK
£’000
33,471
25,412
5,180
4,640
45,136
15,260
30.6.2018
US
£’000
RoW
£’000
Total
£’000
5,257
4,578
1,877
1,732
2,183
1,804
4,366
4,030
2,186
2,186
43,094
34,020
9,243
8,558
942
672
48,261
17,736
Revenue from external customers is attributed to the geographical segments noted above based on the customers’ location.
There were no customers who account for more than 10% revenue (2017: none).
Income statement
Revenue
Gross profit
Profit before income tax
Total comprehensive income attributable
to the owners of the parent
Financial position
Total assets
Net current assets
UK
£’000
24,743
21,291
4,779
3,929
32,578
21,961
30.6.2017
US
£’000
3,907
3,293
1,062
967
1,556
1,120
RoW
£’000
3,316
2,923
2,250
2,250
Total
£’000
31,966
27,507
8,091
7,146
302
213
34,436
23,294
Income statement
Revenue
Gross profit
Profit before income tax
Total comprehensive income attributable
to the owners of the parent
Financial position
Total assets
Net current assets/(liabilities)
Income statement
Revenue
Gross profit
Profit before income tax
Total comprehensive income attributable
to the owners of the parent
Financial position
Total assets
Net current assets
Dotmailer
£’000
36,891
32,266
8,619
7,936
44,413
17,944
Dotmailer
£’000
31,966
27,507
8,091
7,146
34,436
23,294
*The numbers included within Comapi are from the date of acquisition being 21 November 2017.
4. Employees and Directors
Wages and salaries
Social security costs
Other pension costs
The average monthly number of employees during the year is as follows
Directors
Sales and Marketing product
Development and system engineers
Administration
30.6.2018
Comapi*
£’000
6,203
1,754
624
622
Total
£’000
43,094
34,020
9,243
8,558
3,848
(208)
48,261
17,736
30.6.2017
Comapi*
£’000
–
–
–
–
–
–
30.6.18
£’000
14,149
1,562
291
16,002
Total
£’000
31,966
27,507
8,091
7,146
34,436
23,294
30.6.17
£’000
11,217
1,146
252
12,615
30.6.18
30.6.17
5
150
71
53
279
6
120
56
56
238
During the year the Group also capitalised staff-related costs of £4,023,222 (2017: £2,072,417) in relation to internally
generated development costs.
5. Exceptional costs
Exceptional costs incurred in the year relate to the one-off acquisition costs of Comapi of £208,805 (2017: £nil) and
amortisation of acquired intangibles of £148,110 (2017: £nil).
54
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dotdigital Group PlcAnnual Report 2017/2018dotdigital Group PlcAnnual Report 2017/2018FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
For the year ended 30 June 2018
6. Net finance income
Finance income:
Deposit account interest
7. Operating profit
Costs by nature
Profit from continuing operations has been arrived after charging/(crediting):
30.6.18
£’000
30.6.17
£’000
9
9
15
15
Direct marketing
Outsourcing
Other costs
Total cost of sales
Staff-related costs (inc Directors emoluments) – note 4
Operating leases: Land and buildings
Operating leases: Other
Audit remuneration
Amortisation of intangibles
Depreciation charge
Legal, professional and consultancy fees
Computer expenditure
Bad debts
Foreign exchange (gains)/losses
Travel and subsistence costs
Office running
Staff welfare
Other costs
Total administration costs
30.6.18
£’000
4,586
2,121
2,367
9,074
30.6.18
£’000
16,002
937
38
49
1,971
495
518
2,161
22
124
501
152
406
603
23,979
During the year the Group obtained the following services from the Group’s auditor at costs detailed below:
Fees payable to the Company’s auditor for the audit of Parent Company
and consolidated financial statements
Fees payable to the Company’s auditor for other services
– audit of Company subsidiaries
– non-audit fees: Tax and review of interim accounts
8. Income tax expense
Analysis of the tax charge from continuing operations:
Current tax on profits for the year
Deferred tax on origination and reversal of timing differences
30.6.17
£’000
2,073
186
2,200
4,459
30.6.17
£’000
12,615
954
43
40
1,544
494
424
1,809
8
(21)
425
158
301
475
19,269
30.6.17
£’000
8
28
4
40
30.6.18
£’000
8
37
4
49
30.6.18
£’000
30.6.17
£’000
259
426
685
847
98
945
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 19% (2017: 19.75%)
Effects of:
Expenses not deductible
Research and development enhanced claim
Expenditure permitted on exercising options
Overseas tax losses
Capital allowances in excess of depreciation
Total income tax
30.6.18
£’000
9,243
1,756
137
(1,908)
(217)
72
419
259
30.6.17
£’000
8,091
1,598
12
(1,004)
(141)
64
318
847
Deferred tax was calculated using the rate 19% (2017: 19.75%). For further details on deferred tax see note 23.
Taxation for each region is calculated at the rates prevailing in the respective jurisdiction
A reduction in the UK corporation tax rate to 19% (effective from 1 April 2017) and to 18% (effective 1 April 2020) were
substantively enacted on 26 October 2015, and an additional reduction to 17% (effective 1 April 2020) was substantively
enacted on 6 September 2016. This will reduce the Company’s future current tax charge accordingly. UK deferred tax
assets and liabilities have been recognised at the rate applying in the period they are expected to unwind.
9. Profit of Parent Company
As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the Parent Company is not
presented as part of these financial statements. The Parent Company’s profit before exceptional items for the financial
year was £5,055,276 (2017: loss: £390,345)
10. Dividends
Amounts recognised as distributions to equity holders in the period.
Paid dividend for year end 30 June 2018 of 0.505p (2017: 0.857p) per share
Proposed dividend for the year end 30 June 2018 of 0.64p (2017: 0.55p) per share
30.6.18
£’000
1,505
1,907
30.6.17
£’000
2,449
1,629
The proposed final dividend is subject to approval by the shareholders at the Annual General Meeting and has not been
included as a liability in these financial statements.
11. Earnings per share
Earnings per share data is based on the consolidated profit using and the weighted average number of shares in issue of
the Parent Company. Basic earnings per share are calculated by dividing the earnings attributable to ordinary shareholders
by the weighted average number of ordinary shares outstanding during the period.
Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion
of all dilutive potential ordinary shares.
Adjusted earnings per share is based on the consolidated profit deducting the acquisition related exceptional costs and
share-based payment.
A number of non-IFRS adjusted profit measures are used in this annual report and financial statements. Adjusting items
are excluded from our headline performance measures by virtue of their size and nature, in order to reflect management’s
view of the performance of the Group. Summarised below is a reconciliation between statutory results to adjusted
results. The Group believes that alternative performance measures such as adjusted EBITDA are commonly reported
by companies in the markets in which it competes and are widely used by investors in comparing performance on a
consistent basis without regard to factors such as depreciation and amortisation, which can vary significantly depending
upon accounting methods (particularly when acquisitions have occurred), or based on factors which do not reflect the
underlying performance of the business. The adjusted profit after tax earnings measure is also used for the purpose of
calculating adjusted earnings per share.
56
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dotdigital Group PlcAnnual Report 2017/2018dotdigital Group PlcAnnual Report 2017/2018FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
For the year ended 30 June 2018
11. Earnings per share continued
Reconciliations to earnings figures used in arriving at adjusted earnings per share are as follows:
From continuing operations
Profit for the year attributable to the owners of the parent
Amortisation of acquisition-related intangible fixed asset (see note 13)
Other exceptional costs
Share-based payment
Adjusted profit for the year attributable to the owners of the parent
30.6.18
£’000
30.6.17
£’000
8,558
148
209
450
9,365
7,146
–
–
162
7,308
Management does not consider the above adjustments to reflect the underlying business performance.
The other exceptional costs relate to one-off acquisition costs of Comapi.
From continuing operations
Basic EPS
Profit for the year attributable to the owners of the parent
Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the parent
Options and warrants
Diluted EPS
Profit for the year attributable to the owners of the parent
Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the parent
From continuing operations
Basic EPS
Profit for the year attributable to the owners of the parent
Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the parent
Options and warrants
Diluted EPS
Profit for the year attributable to the owners of the parent
Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the parent
Weighted average number of shares
Basic EPS
Diluted EPS
12. Goodwill
Group
Cost
At 1 July
Additions
At 30 June
Amortisation
At 1 July
Impairment
At 30 June
Net book value
58
30.6.18
Weighted
average
number of
shares
Per share
Amount
Pence
Earnings
£’000
8,558 296,596,304
9,365 296,596,304
3,728,052
–
8,558 300,324,356
9,365 300,324,356
2.89
3.16
–
2.85
3.12
30.6.17
Weighted
average
number of
shares
Per share
Amount
Pence
Earnings
£’000
7,146 295,457,101
7,308 295,457,101
1,061,738
–
7,146 296,518,839
7,308
296,518,839
2.42
2.47
–
2.41
2.46
30.6.18
Shares
30.6.17
Shares
296,596,304 295,457,101
300,324,356 296,518,839
30.6.18
£’000
4,121
9,071
13,192
3,512
–
3,512
9,680
30.6.17
£’000
4,121
–
4,121
3,512
–
3,512
609
On 21 November 2017, the Group acquired all the voting rights of Comapi for a cash consideration of £10.7m (which includes
the payment of loans in Comapi) in exchange for all Comapi shares, with a potential consideration of £1.2m in share options for
the management team, dependent on them achieving specific performance targets over a two-year post-acquisition period and
remaining with the business. Comapi’s business is the provision of omni-channel messaging and cloud communication.
The Directors believe the acquisition will:
• Extend dotdigital’s marketing automation platform to provide an industry-leading solution offering fully integrated omni-
channel and conversational commerce support to marketers
• Enable dotdigital to deliver aligned conversational messaging across channels including email, mobile push, SMS,
Facebook messenger, Apple business messenger, Twitter and live chat
• Enable dotdigital customers to meet consumer demand for a more personalised communication experience and
• Position dotdigital as the most advanced platform on the market and make dotdigital more relevant in the strategic
mobile-first Asian market.
Goodwill of £9.1m was recognised on the acquisition, being the excess of the purchase consideration over the provisional
fair value of net assets acquired as set out below and represents Comapi’s platform, key customer relationships, employee
knowledge and skills and the acceleration of bringing the technology to our platform rather than building in-house.
Provisional Fair value of assets acquired
Net assets acquired
Identifiable intangible assets
Technology
Customer relationships
Deferred tax recognised on identifiable intangible assets
Technology
Customer relationships
Development costs
Property, plant and equipment
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Tax payable
Net identifiable assets acquired
Goodwill
Total consideration
Purchase consideration
Cash acquired
Consideration of net cash acquired
£’000s
1,205
1,200
(228)
(229)
501
42
1,156
158
(2,497)
(643)
665
9,071
9,736
9,736
(158)
9,578
The results of the acquired entity which have been consolidated in the income statement from 22 November 2017 contributed
£6.2m of revenues and a profit of £0.6m to the profit attributable to equity shareholders of the Group during the year. Had
Comapi been acquired at the start of the year, the contribution would have been £10.0m of revenue and a profit of £0.4m.
Goodwill is allocated to the Group’s two cash generating units identified, that being dotmailer and Comapi. The goodwill
addition in the year ended 30 June 2018 relates to the acquisition of Comapi and the goodwill at the beginning of the period
relates to dotmailer.
Goodwill arising on business combinations is not amortised but is reviewed for impairment on an annual basis, or more
frequently if there are indications that goodwill may be impaired. Goodwill acquired in a business combination is allocated,
at acquisition, to cash generating units (CGUs) that are expected to benefit from that business combination.
The carrying amount of goodwill relates to the Group’s two trading activities and business segments. This has been tested
for impairment during the current period by comparison with the recoverable amounts of the CGU. Recoverable amounts
for CGUs are based on the higher of value in use and fair value less costs to sell. The recoverable amounts of the CGU have
been determined from value in use calculations. These calculations use pre-tax cash flow projections based on financial
budgets approved by management covering a five-year period. The key assumptions for the value in use calculations are those
regarding discount rates, growth rates, and expected changes in margins. Management estimates discount rates using pre-
tax rates that reflect the current market assessment of the time value of money and the risks specific to the CGUs. Changes
in income and expenditure are based on past experience and expectations of the future changes in the market. The pre-tax
discount rate used to calculate the value in use is 10% (2017: 10%). The valuations indicate sufficient headroom such that a
reasonably possible change in key assumptions would not result in impairment of goodwill.
59
dotdigital Group PlcAnnual Report 2017/2018dotdigital Group PlcAnnual Report 2017/2018FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
For the year ended 30 June 2018
13. Intangible assets
Group
Cost
At 1 July 2017
Additions
Introduced on acquisition
At 30 June 2018
Amortisation
At 1 July 2017
Amortisation for the year
Introduced on acquisition
At 30 June 2018
Net book value
At 30 June 2018
Group
Cost
At 1 July 2017
Additions
Introduced on acquisition
At 30 June 2018
Amortisation
At 1 July 2017
Amortisation for the year
Introduced on acquisition
At 30 June 2018
Net book value
At 30 June 2018
Cost
At 1 July 2016
Additions
At 30 June 2017
Amortisation
At 1 July 2016
Amortisation for the year
At 30 June 2017
Net book value
At 30 June 2017
Customer
relationships
£’000
Technology
£’000
–
–
1,205
1,205
–
–
78
78
–
–
1,200
1,200
–
–
70
70
1,127
1,130
Computer
software
£’000
Internally
generated
development
costs
£’000
Domain
names
£’000
497
94
215
806
320
76
215
611
195
10,351
4,377
558
15,286
6,009
1,891
57
7,957
7,329
16
-
21
37
16
4
11
31
6
Computer
software
£’000
Internally
generated
development
costs
£’000
Domain
names
£’000
362
135
497
264
56
320
177
8,107
2,244
10,351
4,521
1,488
6,009
4,342
16
–
16
16
–
16
–
Totals
£’000
10,864
4,471
3,199
18,534
6,345
1,971
431
8,747
9,787
Totals
£’000
8,485
2,379
10,864
4,801
1,544
6,345
4,519
Development cost additions represents resources the Group has invested in the development of new, innovative and ground-
breaking technology products for marketing professionals. This platform allows them to create, send and automate marketing
campaigns. Following development of the products the Group intends to licence the use of the platform.
Technology represents the cost that would be incurred to build the entire Comapi platform had the acquisition not occurred.
Customer relationships represent the value of high-value customer contracts within Comapi.
14. Property, plant and equipment
Group
Short
leasehold
£’000
Fixtures &
fittings
£’000
Computer
equipment
£’000
Cost
At 1 July 2017
Additions
Disposals
Introduced on acquisition
Exchange differences
At 30 June 2018
Depreciation
At 1 July 2017
Depreciation for the year
Eliminated on disposals
Introduced on acquisition
Exchange differences
At 30 June 2018
Net book value
At 30 June 2018
Cost
At 1 July 2016
Additions
Disposals
At 30 June 2017
Depreciation
At 1 July 2016
Depreciation for the year
Eliminated on disposal
At 30 June 2017
Net book value
At 30 June 2017
15. Investments
Company
Cost
At 1 July 2017
Additions
At 30 June 2018
Amortisation
At 1 July and 30 June
Net book value
At 30 June
499
46
–
68
(1)
612
214
62
–
64
–
340
272
534
88
(28)
50
(1)
643
379
91
(24)
34
1
481
162
444
55
–
499
147
67
–
214
285
448
86
–
534
293
86
–
379
155
1,393
341
(18)
284
–
2,000
800
342
(17)
264
(1)
1,388
1,760
234
(601)
1,393
1,070
341
(611)
800
612
1,046
Short
leasehold
£’000
Fixtures &
fittings
£’000
Computer
equipment
£’000
Totals
£’000
2,426
475
(46)
402
(2)
3,255
1,393
495
(41)
362
–
2,209
Totals
£’000
2,652
375
(601)
2,426
1,510
494
(611)
1,393
593
1,033
Shares in
Group
undertakings
30.6.18
£’000
Shares in
Group
undertakings
30.6.17
£’000
8,706
9,737
18,443
8,705
1
8,706
3,519
3,519
14,924
5,187
60
61
dotdigital Group PlcAnnual Report 2017/2018dotdigital Group PlcAnnual Report 2017/2018FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
For the year ended 30 June 2018
15. Investments continued
The Group’s or the Company’s investments at the balance sheet date in the share capital of companies include
the following:
Subsidiaries
dotmailer Limited
Nature of business
Web and email-based marketing
dotsurvey Limited
dotsearch Europe Limited
dotcommerce Limited
doteditor Limited
dotSEO Limited
dotagency Limited
dotmailer Inc
dotmailer Pty Limited
dotmailer Development Ltd
dotmailer SA Pty
dotmailer LLC
Dynmark International Ltd
Dynmark S.p z.o.o
Donky Networks Ltd
Dormant
Branch company
Dormant
Dormant
Dormant
Dormant
Web and email-based marketing
Web and email-based marketing
Holding company
Development hub
Development hub
Omni-channel communication platform
Omni-channel communication platform
Omni-channel communication platform
Class of share
Proportion of
voting power
held %
Ordinary
Ordinary A
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
All of the above subsidiaries have been included within the consolidated results. All the above companies with the exception
of dotmailer Inc, dotmailer SA Pty, dotmailer LLC, dotmailer Pty Limited and Dynmark S.p. z.o.o were incorporated in England
and Wales. dotmailer Inc was incorporated in Delaware (US), dotmailer Pty Limited was incorporated in New South Wales
(Australia), dotmailer SA Pty was incorporated in South Africa, dotmailer LLC was incorporated in the Republic of Belarus and
Dynmark S.p. z.o.o. was incorporated in Poland.
16. Trade and other receivables
Current:
Trade receivables
Less: Provision for impairment of trade receivables
Trade receivables – net
Other receivables
Amounts owed by Group undertakings
VAT
Tax receivables
Prepayments and accrued income
Group
Company
30.6.18
£’000
30.6.17
£’000
30.6.18
£’000
30.6.17
£’000
8,677
(403)
8,274
151
-
-
312
4,216
12,953
6,425
(502)
5,923
111
-
-
-
1,813
7,847
–
–
-
-
966
12
-
127
1,105
–
–
-
-
4,609
14
-
10
4,633
Further details on the above can be found in note 22.
Included within prepayments is an amount of £852,504 (2017: £621,065) in relation to deferred commission which is
considered to be long-term.
17. Cash and cash equivalents
Bank accounts
Further details on the above can be found in note 22.
18. Called up share capital
Allotted, issued, fully paid number
298,030,565 (2017: 296,238,485)
Group
Company
30.6.18
£’000
15,005
15,005
30.6.17
£’000
20,428
20,428
Nominal
value
£0.005
30.6.18
£’000
646
646
30.6.18
£’000
1,490
1,490
During the reporting period the Company undertook the following transactions involving the issuing and reclassifying
of issued share capital:
On 28 November 2017, a number of employees exercised their share options, increasing the issued share capital by
250,000 shares at a premium price of 95.5p.
On 11 May 2018, a number of employees exercised their share options, increasing the issued share capital by
1,542,080 shares at a premium price of 91.5p.
19. Reserves
Group
As at 1 July 2017
Issue of share capital
Dividends
Profit for the year
Transfer of reserves
Other comprehensive income:
Currency translation
Share-based payment
Balance as at 30 June 2018
Group
As at 1 July 2016
Issue of share capital
Dividends
Profit for the year
Transfer in reserves
Other comprehensive income:
Currency translation
Share-based payment
Balance as at 30 June 2017
Retained
earnings
£’000
25,306
–
(1,627)
8,558
94
–
–
32,331
Retained
earnings
£’000
20,611
–
(2,479)
7,146
28
–
–
25,306
Share
premium
£’000
6,290
501
–
–
–
–
–
6,791
Share
premium
£’000
6,138
152
–
–
–
–
–
6,290
Reverse
acquisition
reserve
£’000
(4,695)
–
–
–
–
–
–
(4,695)
Reverse
acquisition
reserve
£’000
(4,695)
–
–
–
–
–
–
(4,695)
Retranslation
reserve
£’000
Other
reserves
£’000
(46)
–
–
–
–
20
–
(26)
305
–
–
–
(94)
–
450
661
Retranslation
reserve
£’000
Other
reserves
£’000
8
–
–
–
–
(54)
–
(46)
174
(3)
–
–
(28)
–
162
305
30.6.17
£’000
591
591
30.6.17
£’000
1,481
1,481
Totals
£’000
27,160
501
(1,627)
8,558
–
20
450
35,062
Totals
£’000
22,236
149
(2,479)
7,146
–
(54)
162
27,160
62
63
dotdigital Group PlcAnnual Report 2017/2018dotdigital Group PlcAnnual Report 2017/2018FINANCIAL STATEMENTS Notes to the consolidated financial statements continued
For the year ended 30 June 2018
19. Reserves continued
Company
As at 1 July 2017
Issue of share capital
Dividends
Profit for the year
Transfer of reserves
Share-based payment
As at 30 June 2018
As at 1 July 2016
Issue of share capital
Dividends
Profit for the year
Transfer of reserves
Share-based payment
As at 30 June 2017
20. Trade and other payables
Current:
Trade payables
Amounts owed to Group undertakings
Social security and other taxes
Other payables
VAT
Accruals and deferred income
Further details on liquidity and interest rate risk can be found in note 22.
21. 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
Retained
earnings
£’000
2,239
-
(1,627)
5,055
94
–
5,761
Retained
earnings
£’000
5,080
–
(2,479)
(390)
28
–
2,239
Share
premium
£’000
Share-based
payments
£’000
6,290
501
–
–
–
–
6,791
305
–
–
–
(94)
450
661
Share
premium
£’000
Other
reserves
£’000
6,138
152
–
–
–
–
6,290
174
(3)
–
–
(28)
162
305
Totals
£’000
8,834
501
(1,627)
5,055
–
450
13,213
Totals
£’000
11,392
149
(2,479)
(390)
–
162
8,834
Group
Company
30.6.18
£’000
30.6.17
£’000
30.6.18
£’000
30.6.17
£’000
6,184
-
480
60
989
2,504
10,217
1,194
-
415
32
830
1,969
4,440
Land &
buildings
£’000
1,094
1,310
2,404
Land &
buildings
£’000
591
3,024
3,615
15
1,913
-
-
-
44
1,972
30.06.18
Others
£’000
45
55
100
30.06.17
Others
£’000
27
7
34
52
-
-
-
-
44
96
Totals
£’000
1,139
1,365
2,504
Totals
£’000
618
3,031
3,649
22. Financial instruments and risk management
The Group’s activities expose it to a number of financial risks that include credit risk, liquidity risk, currency risk and interest
rate risk. These risks and the Group’s policies for managing them have been applied consistently during the year and are set
out below.
The Group holds no financial or other non-financial instruments other than those utilised in the working operations of the
Group and that are listed in this note. It’s the Group’s policy not to trade in derivative contracts.
Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument rate risk arises, are as follows:
– Trade receivables
– Cash and cash equivalents
– Trade and other payables
Financial instruments by category
The following table sets out the financial instruments as at the reporting date:
Financial assets
Trade and other receivables
Bank balances
Financial liabilities
Trade payables
Amounts owed to Group undertakings
Accrued liabilities and other payables
Group
Company
30.6.18
£’000
30.6.17
£’000
30.6.18
£’000
30.6.17
£’000
12,953
15,005
27,958
6,184
-
4,033
10,217
7,847
20,428
28,275
1,194
-
3,246
4,440
139
646
785
15
1,913
44
1,972
24
591
615
52
-
44
96
The fair value of the financial assets and financial liabilities is equal to their carrying values. All financial assets are categorised as
loans and receivables and all financial liabilities are categorised as financial liabilities at amortised costs.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and whilst
retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the Group’s Risk Committee. The Board receives quarterly reports
from the Risk Committee through which it reviews the effectiveness of the processes put in place and the appropriateness of
the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the
Company’s competitiveness and flexibility. Further details regarding these policies are set out below:
Interest rate risk
The Group’s interest rate risk arises from interest-bearing assets and liabilities. The Group has in place a policy of maximising
finance income by ensuring that cash balances earn a market rate of interest offsetting where possible cash balances, and
by forecasting and financing its working capital requirements. As at the reporting date the Group was not exposed to any
movement in interest rates as it has no external borrowings and therefore is not exposed to interest rate risk. No sensitivity
analysis has been prepared.
The Group’s working capital requirements are managed through regular monitoring of the overall cash position and regularly
updated cash flow forecasts to ensure there are sufficient funds available for its operations.
Liquidity risk
The Group’s working capital requirements are managed through regular monitoring of the overall position and regularly updated
cash flow forecasts to ensure there are funds available for its operations. Management forecasts indicate no new borrowing
facilities will be required in the upcoming financial period.
Trade and other payables of £7,233,000 (2017: £2,056,000) are expected to mature in less than a year.
Operating leases represent rents payable by the Group for its office properties and car leases. Leases are negotiated for
an average term of five years and rentals are fixed on an average of two years with the option to extend for a further five
years at the prevailing market rate at the time.
64
65
dotdigital Group PlcAnnual Report 2017/2018dotdigital Group PlcAnnual Report 2017/2018FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
For the year ended 30 June 2018
22. Financial instruments and risk management continued
Credit risk
Credit risk arises principally from the Group’s trade receivables, as there are no trade receivables within the Company, which
comprise amounts due from customers. Prior to accepting new customers a credit check is obtained. As at 30 June 2018
there were no significant debts past their due period which had not been provided for. The maturity of the Group’s trade
receivables is as follows:
0-30 days
30-60 days
More than 60 days
The maturity of the Group’s provision for impairment is as follows:
0-30 days
30-60 days
More than 60 days
The movement in the provision for the impairment is as follows:
As at 1 July
Provision for impairment
Receivable written off in the year
Unused amount reversed
As at 30 June
30.6.18
£’000
6,172
720
1,785
8,677
30.6.17
£’000
4,845
67
1,513
6,425
30.6.18
£’000
30.6.17
£’000
-
-
403
403
8
8
486
502
30.6.18
£’000
30.6.17
£’000
502
40
(72)
(67)
403
824
82
(65)
(339)
502
The Group minimises its credit risk by profiling all new customers and monitoring existing customers of the Group for
changes in their initial profile. The level of trade receivables older than the average collection period consisted of a value of
£2,041,922 (2017: £1,581,391) of which £402,985 (2017: £460,837) was provided for. The Group felt that the remainder
would be collected post year end as they were with long-standing relationships, and the risk of default is considered to be
low and write-offs due to bad debts are extremely low. The Group has no significant concentration of credit risk, with the
exposure spread over a large number of customers.
The credit risk on liquid funds is low as the counterparts are banks with high credit ratings assigned by international credit
rating bodies. The majority of the Company’s cash holdings are held at NatWest Bank which has a BBB+ credit rating.
The carrying value of both financial assets and liabilities approximates to fair value.
Capital policy
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide
optimal returns for shareholders and to maintain an efficient capital structure to reduce the cost of capital.
In doing so the Group’s strategy is to maintain a capital structure commensurate with a strong credit rating and to retain
appropriate levels of liquidity headroom to ensure financial stability and flexibility. To achieve this, the Group monitors key
credit metrics, risk and fixed charge cover to maintain this position. In addition the Group ensures a combination
of appropriate short-term and long-term liquidity headroom.
During the year the Group had a short-term loan balance of £nil (2017: £nil) and amounts payable over one year are
nil (2017: £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.
23. Deferred tax
As at 1 July
Current year provision
Provision on recognition of intangibles on acquisition
The deferred tax liability above comprises the following temporary differences:
Capital allowances in excess of depreciation
R&D relief in excess of amortisation
Share option relief
30.6.18
£’000
814
426
457
1,697
30.6.18
£’000
607
1,204
(114)
1,697
30.6.17
£’000
716
98
–
814
30.6.17
£’000
113
858
(157)
814
Deferred tax provision relates to taxes to be levied by the same authority on the same entity expected to be settled at the
same time. As such deferred tax assets and liabilities have been offset.
24. Capital commitments
The Company and Group have no capital commitments as at the year end.
25. Related party disclosures
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation
and are not disclosed in this note.
Group
The following transactions were carried out with related parties:
Sale of services
Cadence Performance
Entity under common directorship
Cloudcall Group Plc
Entity under common directorship
Year end balances arising from sale of services
Cloudcall Group Plc
Entity under common directorship
Email marketing
services
Email marketing
services
Email marketing
services
Directors
Aggregate emoluments
Ex-gratia payment
Company contributions to money purchase pension scheme
Share-based payments from the LTIP options granted
Directors’ pay summary does not include Non-Executive Directors.
30.6.18
£’000
30.6.17
£’000
2
16
18
16
16
2
–
2
–
–
30.6.18
£’000
30.6.17
£’000
701
40
26
145
912
558
–
50
123
731
66
67
dotdigital Group PlcAnnual Report 2017/2018dotdigital Group PlcAnnual Report 2017/2018FINANCIAL STATEMENTS Notes to the consolidated financial statements continued
For the year ended 30 June 2018
25. Related party disclosures continued
Information in relation to the highest paid Director is as follows:
Salaries
Other benefits
Pension costs
Share-based payments on the LTIP options granted
Company
The following transactions were carried out with related parties:
Year end balances arising from sales/purchase of services
dotmailer Limited
Subsidiary
Payables
30.6.18
£’000
30.6.17
£’000
395
12
13
145
565
372
10
25
–
407
30.6.18
£’000
(5,350)
(5,350)
30.6.17
£’000
(5,338)
(5,338)
The receivables and payables are unrestricted in nature and bear no interest. No provisions are held against receivables from
related parties.
Loans to/from related parties
Subsidiary
dotmailer Limited
As at 1 July
Loans advanced
Loans repaid
26. Ultimate controlling party
30.6.18
£’000
30.6.17
£’000
9,950
97
(12,606)
(2,559)
12,417
40
(2,507)
9,950
There is no ultimate controlling party of the Group. dotdigital Group Plc acts as the Parent Company to dotmailer Limited,
dotsearch Europe Limited, dotmailer Inc, dotmailer Pty Limited, dotagency Limited (Dormant), dotsurvey Limited (Dormant),
dotSEO Limited (Dormant), dotcommerce Limited (Dormant), doteditor Limited (Dormant), dotmailer Developments Limited,
dotmailer SA Pty, dotmailer LLC, Dynmark International Ltd, Dynmark S.p. z.o.o. and Donky Networks Ltd.
27. Share-based payment transactions
The measurement requirements of IFRS 2 have been implemented in respect of share options that were granted after
7 November 2002. The expense recognised for share-based payment made during the year is £450,000 (2017: £162,000).
Vesting conditions of the options dictate that employees must remain in the employment of the Group for the whole
period to qualify.
Movement in issued share options during the year
The table illustrates the number and weighted average exercise price (WAEP) of, and movements in, share options during the
period. The options outstanding at 30 June 2018 had a WAEP of 9.43p (2017: 33.35p) and a weighted average contracted
life of 4.16 years (2017: 2.67 years) and their exercise prices ranged from 0.5p to 68.50p. All share options are settled in form
of equity issued.
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
30.06.18
30.6.17
No of options
WAEP
No of options
2,540,145
2,984,197
–
1,792,080
3,732,262
517,080
33.35p
0.5p
0p
28.46p
9.43p
34.57p
4,101,029
230,985
706,460
1,088,409
2,540,145
500,000
WAEP
26.69p
68.50p
35.30p
694.91p
33.35p
15.63p
The weighted average share price at the date of the exercise for share options exercised during the period was
28.46p (2017: 694.91p).
19 December
2017
21 November
2017
20 June
2017
25 November
2015
28 November
2014
18 October
2013
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 options/warrants
1,375,000
85.95p
0.50p
5 years
1.33%
30%
1%
81p
1,609,197
78.30p
0.50p
5 years
1.33%
30%
1%
74p
230,985
68.50p
68.50p
5 years
1.33%
30%
1%
12.04p
809,160
40.50p
40.25p
5 years
1.33%
30%
1%
6.46p
1,525,000
29.00p
28.50p
5 years
1.35%
30%
0%
5.33p
3,554,794
17.82p
18.25p
5 years
1.40%
30%
0.4%
3.31p
Expected volatility was determined by calculating the historical volatility of the Group’s share price from the date it listed to
the grant date of the share option. The expected life used in the model is based on management’s best estimate, for the
effects of non-transferability, exercise restrictions and behavioural considerations.
The share options granted on 21 November 2017 were in respect of the acquisition of Comapi to the management team for
retention and performance post acquisition.
The share options granted on 19 December 2017 were following the approval of the LTIP scheme at the AGM on
19 December 2017 and the end-to-end awards that were granted to the Chief Executive Officer.
28. Group reconciliation of profit before corporation tax to cash generated from operations
Current
Profit before tax from all operations
Currency revaluation
Depreciation
Gain/(loss) on disposal of fixed assets
Share-based payments
Finance income
(Increase)/decrease in trade receivables
Increase/(decrease) in trade payables
Cash generated from operations
29. Group cash and cash equivalents
Group
Company
30.6.18
£’000
30.6.17
£’000
30.6.18
£’000
30.6.17
£’000
9,243
20
2,614
2
450
(9)
12,320
(4,794)
5,603
13,129
8,091
(54)
2,038
(58)
162
(15)
10,164
(1,641)
290
8,813
5,055
–
–
–
450
–
5,505
3,528
1,876
10,909
(390)
–
–
–
162
–
(228)
2,469
33
2,274
The amounts disclosed in the statement of cash flow in respect of cash and cash equivalents are in respect of these
statements of financial position amounts:
As at 1 July 2016
As at 30 June 2017
As at 30 June 2018
30. Project development
Group
£’000
17,313
20,428
15,005
Company
£’000
639
591
646
During the period the Group incurred £4,376,645 (2017: £2,243,687) in development investments. All resources utilised
in development have been capitalised as outlined in the accounting policy governing this area.
31. Post balance sheet events
There are no post balance sheet events which impact the Group’s financial statements.
68
69
dotdigital Group PlcAnnual Report 2017/2018dotdigital Group PlcAnnual Report 2017/2018FINANCIAL STATEMENTS Company information
For the year ended 30 June 2018
OUR CLIENTS
Directors:
P Amin
F Beechinor-Collins
R Kellett-Clarke
M Patel
P A Simmonds
I Taylor
Company Secretary:
G Kasparian
Auditors:
Jeffreys Henry LLP
Statutory Auditor
Finsgate 5-7 Cranwood Street
London
EC1V 9EE
Registered office:
No. 1 London Bridge
London
SE1 9BG
Registered number:
06289659 (England and Wales)
Nomad/broker:
N+1 Singer
1 Bartholomew Lane
London
EC2N 2AX
Joint broker:
Finncap
60 New Broad Street
London
EC2M 1JJ
Solicitors:
BPE Solicitors LLP
St James House
St James Square
Cheltenham
GL50 3PR
70
71
dotdigital Group PlcAnnual Report 2017/2018dotdigital Group PlcAnnual Report 2017/2018FINANCIAL STATEMENTS
www.dotdigitalgroup.com
London
No.1 London Bridge
London
SE1 9BG
United Kingdom
New York
333 7th Avenue
Floor 18
New York
NY 10001
USA
Sydney
Suite 1404
167 Macquarie Street
Level 14
Sydney, 2000
Australia
Cape Town
Floor number 6
Suite 602, No. 2
76 Regent Road
The Point Centre
Sea Point
Cape Town 8060
South Africa