ANNUAL REPORT 2020/2021
CONTENT
CORPORATE STATEMENT
Strategic report
2 Chairman’s report
4
Empowering customers with intelligent
tools and people
Investment case
6
8 Key performance indicators
10 Case study – REEDS
12 Chief Executive Officer’s report and
financial review
20 Case study – Stone & Wood
22 Risks, impact and mitigations
27 Corporate social responsibility report
Governance
30 Board of Directors
32 Corporate governance report
35 Audit Committee report
36 Remuneration Committee report
41 Report of the Directors
45 Report of the independent auditor
Financial statements
52 Consolidated income statement
52 Consolidated statement of comprehensive income
53 Consolidated statement of financial position
54 Company statement of financial position
55 Consolidated statement of changes in equity
56 Company statement of changes in equity
57 Consolidated statement of cash flows
57 Company statement of cash flows
58 Notes to the consolidated financial statements
90 Company information
Dotdigital is a customer engagement platform that helps digital
marketers and developers deliver communications across the
customer journey. We harness the power of customer data,
powering engagement, conversion and loyalty for brands as they
grow and scale. Customers love our easy-to-use platform that
connects first party data across the systems, surfacing powerful
insights and automating predictive cross-channel messages.
*REVENUE
*ADJUSTED
OPERATING PROFIT
*ADJUSTED EBITDA
CASH POSITION
£58.1m £13.7m £19.8m £32.0m
23% from £47.4m
5% from £13.1m
9% from £18.2m
26% from £25.4m
* Adjusted for continuing operations.
Annual Report 2020/2021
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Strategic Report
CHAIRMAN’S REPORT
“The effectiveness of our model and the
continued desirability of our product are
evident in the numbers, but without the
hard work and adaptability of our teams,
we would not have been able to record such
a positive performance.”
“For the past six years Dotdigital has been an outstanding
marketing automation platform, It’s easy to use, fast, secure and
reliable. It has allowed us to create highly customised marketing
emails with powerful automations. Dotdigital not only makes
things easier, but also better than any other platform we have
tested, saving us enormous amounts of time. It keeps getting
better, and it’s our main tool for us to do the same.”
Andre Lopez | Email Marketing Specialist and Designer, Copa Airlines
MICHAEL O’LEARY
Non-Executive Chairman
OVERVIEW
To have delivered our strongest year to
date amid pandemic-related challenges,
while managing a pronounced increase
in the uptake of newer channels beyond
email, is testament to the exceptional
people at Dotdigital.
The effectiveness of our model and the
continued desirability of our product are
evident in the numbers, but without the
hard work and adaptability of our teams,
we would not have been able to record
such a positive performance. On behalf
of the Board, I would like to thank
everyone involved in the business for
their contributions.
After a period of disruption in Q4 of the
previous financial year, we have gone
from strength to strength, facilitated by
the acceleration of digital transformation
brought about by the pandemic. While
the mix of channel usage varied as our
customers’ circumstances changed and
evolved, we saw consistent levels of
overall demand, aided by the diversity of
sectors and locations across our customer
base. This was achieved while helping our
customers that struggled where we could.
Although restrictions are easing and
vaccination programmes are under way in
most territories, Covid-19 will continue to
be a risk factor for the foreseeable future,
and not all its after effects will be easy to
foresee. We therefore need to continue to
monitor its impact on our customer base,
and be ready to respond accordingly.
That said, we have traded well since the
onset of the pandemic, proving that the
inherent versatility of our offering means
we can help organisations, in both good
and more challenging times. As we emerge
from the worst of the pandemic and with
a robust model and strong financial
position, I am confident that if we continue
to support our customers and execute
our strategy in a measured and purposeful
way, we will remain on course to meet our
growth ambitions.
STRATEGIC PROGRESS
This financial year saw a significant increase
in appetite for our omnichannel offering,
with SMS proving particularly popular and
more and more organisations choosing
to use push messaging, social, WhatsApp
for business and live chat, in line with
the growing demand among consumers
for alternative and more personal means
of engagement.
The team has built an advanced data-led
platform that is tailored to the increasingly
sophisticated needs of the modern
marketeer and continues to do an excellent
job of penetrating international markets, with
all three of our regions demonstrating good
levels of growth in the year. Performance in
APAC was particularly strong, supplemented
by the growing conversion of pipelines in
new markets such as Japan.
Our relationships with strategic partners –
a key route to market for Dotdigital –
have deepened considerably, enabling
better collaboration in driving awareness
and ultimately sales across their
customer bases. As a result, we saw
encouraging growth in revenue from
Adobe Commerce, Shopify, BigCommerce
and Microsoft Dynamics – our four most
valuable partnerships.
On the product front, we have continued
to focus on building out our data and
personalisation capabilities, and firmly
believe we now have one of the most
powerful, feature-packed and yet easy-to-
use marketing automation platforms,
capable of delivering unparalleled insight
and strong return on investment without the
need for a high level of technical expertise.
SUSTAINABILITY
At the end of 2020, we set out to broaden
and accelerate sustainability improvements
throughout the organisation with a view
to reducing the impact of our operations
on the environment. Known internally as
the ‘dotgreen’ initiative, it marked the point
where sustainability was elevated from
being an important consideration to a
guiding principle for everything we do.
In the time since, our teams have worked
tirelessly to make our infrastructure and
working practices more environmentally
friendly. I am pleased to report that,
as a result, we can now claim to be the
world’s first carbon-neutral marketing
automation platform.
We also obtained ISO 14001, the universally
recognised certification awarded to
organisations that meet a high standard
of environmental management, became
a Corporate Member of the Woodland
Trust and, most recently, signed the Terra
Carta, a part of HRH The Prince of Wales’
Sustainable Markets Initiative that offers the
basis of a recovery plan to 2030 with nature,
people and planet at its heart.
In a relatively short space of time and
against the backdrop of a pandemic, we
have made significant, meaningful changes
to become a more responsible business.
While we are proud of our achievements,
we know there is still room for improvement,
and remain committed to driving further
change to ensure we play our part in
safeguarding the future of our planet.
PEOPLE
Our people are the lifeblood of Dotdigital.
Ensuring we have the right balance of
technological prowess, interpersonal
skills and commercial acumen across our
organisation is vital to the delivery of our
strategy, and to that end we continued to
strengthen our workforce in the period. Most
notably, our sales function grew and became
more specialised to meet the growing
demand for our product, and we bolstered
our marketing and customer care teams
with the internal promotion of a new Global
Vice President of Marketing and the external
appointment of a new Head of Customer
Success EMEA from a leading competitor.
As we move through the new financial
year, we will continue to hire high-quality
individuals that bring new skills and
experience into the Group while increasing
management bandwidth where necessary
to enable us to reach our strategic goals
more efficiently. At the same time, we will
continue to invest in our existing colleagues,
cementing Dotdigital as one of the best
places to work in the industry from both a
development and quality of life perspective.
DIVIDEND
The Board has agreed to maintain a
progressive dividend in line with Group
EBITDA growth. Therefore, subject to
approval at the AGM in December 2021,
the Board proposes that the Group will
pay a final dividend of 0.86p per ordinary
share (2020: 0.83p).
MICHAEL O’LEARY
Non-Executive Chairman
16 November 2021
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Dotdigital Group Plc
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Annual Report 2020/2021 Strategic Report
EMPOWERING CUSTOMERS WITH INTELLIGENT TOOLS AND PEOPLE
THE LEADING CUSTOMER ENGAGEMENT PLATFORM DESIGNED FOR MARKETERS
Dotdigital empowers multidisciplinary teams to plan, test, execute
and optimise cross-channel marketing campaigns. We empower
4,000+ brands across 150 countries and help marketers connect with
their target audience at scale, through engaging messages that drive
significant customer value.
CRM | ERP
CDP | DMP
ZERO & FIRST
PARTY DATA
OFFLINE
BEHAVIOUR
WHAT DOES DOTDIGITAL DO?
CONNECT
Data collection | Data capture | Deduplication | Data enrichment | Profile unification
Dotdigital is a SaaS-based customer engagement platform that harnesses the power of
customer data, powering engagement, conversion and loyalty for brands as they grow and
scale. Our technology integrates with key existing e-commerce and CRM platforms to create
a powerful and robust marketing engine that supports key insight-driven activities and
supercharges business growth.
HOW DO WE EMPOWER MARKETERS?
Customers love our easy-to-use platform that connects first party data across the systems,
surfacing powerful insights and automating predictive cross-channel messages.
Data sits at the heart of our platform because it’s the key to unlocking engagement at scale.
Users can personalise, segment and automate revenue-generating campaigns in minutes
with easy, time-saving tools. We help marketers reach time to value quickly and maximise
the returns of every channel including email which has a return on investment of £42/$51
for every £1/$1 spent.
WHY DO CUSTOMERS CHOOSE DOTDIGITAL?
We want our customers to be confident in knowing that our platform is future-proof. Our
technology is market leading, and our product managers are passionate about enhancing
Dotdigital to make it the best choice for busy marketers. We are attentive towards customer
feedback and industry practice – together they help shape our platform’s and customers’
future. Service is integral to our customers’ delight. We know that sometimes it is easier
to outsource tasks when there aren’t enough hands on deck. Our experienced professional
services team is always on hand to lend a hand – we design, code and build automated
campaigns for global brands every day.
Analys e
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Subscribed:
23 Aug 2021
Purchase phase:
Active
RFM:
Loyal
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P
AOV:
$150
Last SMS send:
4 Oct 2021
Learn
EMPOWER
Single customer view | Audience analytics | Segmentation | Lifecycle modelling | Experience orchestration
Cross-channel campaign management | Content & creative | Revenue and commerce reporting
COMMUNICATE
Email
SMS
Social
Ads
Mobile
Website
Chat
Offline
OUTCOMES
Grow
Retain
Influence
Brand
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INVESTMENT CASE
Dotdigital is a leading, global, cross-channel, SaaS and marketing
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.
“Dotdigital has demonstrated a high level of product
quality, service, performance, privacy and support in
marketing automation and plays a critical role in the
growth and success of Shopify Plus merchants globally.
We’re looking forward to another big year ahead.”
Matt O’Leary | Senior Partnerships Manager, Ecosystem, Shopify Plus
Strategy
Scalable
Growth
Independence
Leadership
Outlook
Clear and compelling strategy
Highly scalable platform and
predictable financial model
Attractive industry growth
The successful Dotdigital culture
Experienced management team
Strong growth outlook
Focused on both the B2B
Software as a service
Email marketing automation has a
and B2C digital experiences for
our customers
Rapid product innovation
supporting up and cross-sell
opportunities
International growth based on
proven blueprint
Brand success extended through
global strategic partners
Predictable and transparent
financial model
Diverse customer base
Profitable with significant cash
balances and no debt
High levels of recurring revenues
proven superior ROI for marketers
Global marketing automation
spend, according to Forrester
Research, is growing at double
digit and is predicted to reach
$25.1bn by 2023
Marketers are predicted to send
more emails in the next five years
complemented with omnichannel
features
New messaging channels as
customers create omnichannel
experiences
Highly talented and motivated
Executive team with proven track
Innovation to support marketing
people focused on customer
record of success
move to omnichannel and
success
artificial intelligence
Strong Non-Executive Board with
Creative marketing approach to
experience of scaling businesses
Ability to supplement with sensible
empower customers
of this size
technology acquisitions
Flexible, extendable and effective
Wider management team with
Attract further world-class partners
product that drives retention and
the motivation to continue the
to increase the addressable market
beats the competition
profitable growth story
New geographic markets with
Unique industry position with many
All employees aligned to the
greater potential than UK alone
competitors distracted
strategic priorities of geographic
growth, product innovation
and building strong strategic
partnerships
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KEY PERFORMANCE INDICATORS
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 every year.
FINANCIAL
Revenue (continued)
We aim to deliver double-digit
organic revenue growth from
continuing operations.
Cash position
We aim to have a strong
cash position.
£58.1m
£32.0m
£47.4m
£42.5m
£25.4m
£19.3m
Adjusted operating profit (continued)*
We aim to have strong adjusted
operating profit growth from
normal business.
£13.1m
£13.7m
£11.8m
+15%
+12%
+23%
+25%
+11%
+5%
Our non-financial KPIs provide us with an indication of our
platform’s ability and a measurement of how successful
we are in supporting our customers. Both elements
are crucial to the success of our business. Employee
remuneration is specifically linked to these KPIs.
NON-FINANCIAL KPIs
Customer Support Satisfaction score
(CSAT)
Email delivery rate
98.4% 99.0%
2021
2021
97.4%
98.0%
98.5%
98.9%
2019
2020
2021
2019
2020
2021
2019
2020
2021
2019
2020
2019
2020
STRATEGIC**
ARPC
We aim to continue to grow Average
Revenue Per Customer (ARPC).
Recurring revenue
We aim to have recurring revenues
of over 90%.
International
We aim to expand revenue from
outside the UK.
Mean email delivery time
Message sending volume
£1,251
89%
91%
93%
31%
31%
29%
26 mins
24.4bn
21.1bn
£1,083
£966
16.5bn
15 mins
13.6 mins
+14%
+12%
+16%
-32%
-42%
-9%
+11%
+28%
+15%
2019
2020
2021
2019
2020
2021
2019
2020
2021
2019
2020
2021
2019
2020
2021
*
Adjusted operating profit excludes share-based payment (note 28), exceptional costs (note 5) and amortisation of intangibles
on acquisition.
** Does not include the discontinued operations (note 12).
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CASE STUDY
CASE STUDY
A more personalised online
shopping experience results
in a 52% increase in revenue
REEDS Jewelers is the largest family-owned retail
jewellery chain in North America, selling diamonds,
watches, and a large selection of fine jewellery.
From its beginnings in 1946 as a single store
in Wilmington, North Carolina, REEDS has since
become a true American success story as a
full-service multichannel retailer with stores in
13 states and a leading e-commerce website,
REEDS.com. The company strives to make
every customer feel like family with personalised
service, close attention to detail, lasting quality,
and timeless style.
CHALLENGE
Over its 75 years in business, REEDS has developed a reputation for
delivering exceptional service to customers in more than 65 brick-
and-mortar stores. The next frontier for the jeweller was ensuring
that the personalised, detail-driven experience it was known for
providing in-store was also mirrored in the digital space.
However, as REEDS worked to further personalise their customers’
online experiences, the marketing team experienced several pain
points with their existing marketing platform. They found it to be
increasingly limiting, inflexible, and challenging for many team
members to use. But most importantly, as Colby Raker, a Digital
Analyst at REEDS explains, it was inhibiting them from taking their
efforts to the next level.
“In the luxury space, since there can be a longer consideration period
before consumers make a purchase, there’s a lot of opportunity to
nurture customers through email,” explains Colby. “That said, we felt
like we were only able to use our solution for mass communications
— and not for anything advanced. We tried to become more
confident in our ability to target customers and create segments, but
we struggled to make progress.”
Knowing that tools like segmentation and personalisation were key
to improving engagement and loyalty among their customers, Colby
and her team set out to find a provider that would help them as they
strived to aim higher and set clearer marketing goals.
SOLUTION
When REEDS representatives, along with their e-commerce solution
partner, Kadro, began considering Dotdigital, they were impressed
by the many possibilities that the platform opened up — such as its
ease of use, supportive team, and ability to seamlessly integrate
with their e-commerce platform Adobe Commerce.
“We went through a long evaluation process with REEDS to
determine which solutions made the most sense, and eventually we
chose Dotdigital,” says Malcolm Allen, Chief Technology Officer and
Owner of Kadro. “The biggest selling features for us were the tight
integration with Adobe Commerce and how easy it was to send all
the various types of data into their platform — not to mention how
friendly and available everyone was.”
After selecting Dotdigital as their new marketing provider, the REEDS
team began the implementation process in May 2020 — and just a
few weeks later, it was fully up and running.
“We were pretty much transitioned to all marketing communications
on Dotdigital by August, so it was an incredibly efficient process,”
Colby said. “The migration was a big deal, but it didn’t feel taxing
or daunting because we had such great support from the
Dotdigital team.”
“REEDS already had a lot of email programmes with their previous
service provider,” Malcolm adds. “Dotdigital helped recreate
that and improve it in their platform. It was very smooth for such
a large integration.”
REEDS worked with Dotdigital to unlock single customer view
capabilities that integrated data from its point of sale and online
subscriber data, allowing the team to build a 360-degree view of
an individual shopper. This insight was then overlaid with
behavioural data feeds based on a customer’s online browsing
behaviour, which was used to build automated emails based on
omnichannel buying intent.
RESULTS
REEDS has had tremendous success since their Dotdigital
partnership began. By sending personalised, targeted email
campaigns to customers based on what they’re browsing online,
they’ve seen higher engagement — which has led to a 52% increase
in revenues and average order value uplift of 18%.
As Colby notes, REEDS has also been able to expand their use
of triggered messaging. “Before, we were sending about 95%
marketing messages and 5% triggered messages,” Colby says.
“That’s greatly improved with Dotdigital. We’re now able to target
more cart abandoners and browse abandoners, and send more
communications than we were ever able to before.”
REEDS has also discovered ways to optimise each customer’s
journey and deliver real value through their emails. For instance, their
strategy enabled them to build personalised post-purchase aftercare
into their engagement plan — with educational campaigns on how to
care for, clean, and maintain jewellery so that it looks as sparkling as
the day it was bought.
“REEDS has focused on putting its customers front and centre
of its business for over 75 years, so we were delighted to help
them extend that highly personalised, one-to-one customer service
strategy into their digital marketing capabilities,” says Tink Taylor,
founder and president of Dotdigital Group. “With a single view
of the customer across its channels, it can now elevate
personalisation even further to drive not only sales, but long-term
customer loyalty too.”
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CHIEF EXECUTIVE OFFICER’S REPORT AND FINANCIAL REVIEW
“Our powerful data-driven platform is
delivering results at scale, supported
by a diversified customer base with broad
sector exposure and providing us with
a significant opportunity to continue
our growth ambitions.”
MILAN PATEL
Chief Executive Officer
OVERVIEW
I am pleased to report on a record year for
Dotdigital, delivering our strongest financial
performance to date and demonstrating the
solidification of our transformation to an
omnichannel platform.
This positive performance has been
achieved in what has been a turbulent
environment as a result of the Covid-19
pandemic, testing both our customers
and our own resilience. We are the strong
business we are today because of our
passionate team who continued to
innovate and stay motivated, supporting
our customers through difficult times and
taking our business forward to new heights.
Backed by our solid financial footing, we
did not have any staff on furlough and we
continued to add to our teams across our
regional operations.
During the year we saw increased uptake
of our digital marketing platform, from both
new and existing customers, resulting in
organic revenue growth of 23% to £58.1m
(2020: £47.4m) and adjusted EBITDA
growth of 9% to £19.8m (2020: £18.2m).
The translation of this financial performance
into platform volume growth demonstrates
the scale of the Group’s reach: 24 billion
messages were sent via the platform, an
increase of 15% YoY, complemented by
an increased uptake of other channels
including mobile messages, with a strong
28% YoY uplift in SMS, taking the total
number of SMS sent to 665 million
(2020: 520 million).
Underpinning this growth is the Group’s
recurring SaaS model, with 93% of total
revenue comprising of recurring revenue.
The Group is cash generative and maintains
a strong balance sheet, with no debt and net
cash balances of £32.0m at year end (2020:
£25.4m), giving the Group visibility and
scope to continue to invest in order to
drive long-term, sustainable growth.
We continued to enhance our platform
functionality during the year with a focus
on driving greater data and automation
capabilities. Recurring revenues derived
from enhanced product functionality
grew by 31% to £18.9m (2020: £14.4m),
demonstrating the value derived from our
customer-centric R&D programme.
We remain committed to our responsibility
and sustainability ethos by ensuring that
all our stakeholders, including employees,
partners and the broader community, are
central to our decision making. We have
made significant strides against this
agenda, recognising that we will always
be pushing for better.
The digital transformation of marketing
operations across all sectors is happening
at pace, and we saw an acceleration of this
during the year as businesses turned to
digital as the primary means of engaging
with existing and prospective customers.
Our powerful data-driven platform is
delivering results at scale, supported by a
diversified customer base with broad sector
exposure and providing us with a significant
opportunity to continue our growth
ambitions.
BUSINESS REVIEW
Dotdigital is focused on empowering
marketers to connect with customers
through its powerful automation platform
that unifies all digital channels. Our
Dotdigital platform provides the tools to
allow marketing teams to launch highly
targeted and relevant campaigns to
customers and prospects with personalised
engagement at every touchpoint – the
right message, at the right time, through
the right channel. The result is faster
and more effective marketing campaigns
with increased engagement and
demonstrable ROI.
The use cases of the Group’s offering are
wide and global, however the Group remains
focused on mid-market and enterprise
clients across target verticals including
retail, non-profit, education, financial
KEY HIGHLIGHTS
Group revenue
(Continuing & Discontinued)
Revenue (Continuing)
Adjusted operating profit
(Continuing)*
Adjusted EBITDA
(Continuing)**
Net assets
Cash
30.06.21
(£m)
30.06.20
(£m)
60.6
58.1
13.7
19.8
60.9
32.0
54.9
47.4
13.1
18.2
51.1
25.4
%
10%
23%
5%
9%
19%
26%
* Adjusted operating profit excludes share-based payment, exceptional costs and amortisation of intangibles on acquisition.
** Adjusted EBITDA excludes share-based payment, exceptional costs and amortisation of intangibles on acquisition.
services and travel. The Group’s foundations
and particular strengths are in email and
deep integrations into strategic partners
within e-commerce and CRM.
MARKET
The digital transformation of the marketing
industry continues to progress, with digital
marketing budgets increasingly taking
share of overall marketing budgets. The
pace of this transition accelerated in the
lockdown environment as organisations
had no alternative but to engage with their
end users via digital channels. As we move
through various stages of lockdown easing
across our global operations, the allocation
of channels varies but the overall shift
continues its course.
With the rise of digital marketing, the
sophistication of marketeers has also
increased. We’ve seen a greater emphasis
on data and personalisation by our
customers and our platform is assisting
in reducing the gap between marketeers’
aspirations and the reality of what they can
achieve through our platform. One result
is an increasing trend towards direct-
to-consumer engagement. Through our
platform, brands can devise more informed
marketing strategies with actionable
insights and analytics that help them
develop a deeper understanding of their end
customer and drive a positive ROI.
Our core growth strategies
1
Geographic
?
2
3
Product
innovation
Strategic
partnerships
GROWTH STRATEGY
Dotdigital’s organic growth strategy
continues to be focused around its three
core pillars: geographic, product innovation
and strategic partnerships.
Three Growth Pillars
1. Geographic progress
Despite the wider economic impact of
Covid-19, all key global regions achieved
strong revenue growth in the period,
continuing Dotdigital’s diversification
of international exposure. This growth
continues to be evident in that revenue
from outside the UK was 31% of Group
revenue for the year. We expect to continue
this growth as we invest further in our key
international regions.
International expansion is a key tenet of our
growth strategy and has been a significant
area of investment in the period. We have
strengthened our presence and enhanced
our prospects across our key territories
as reflected in the growth across our key
international regions. We expect to further
build on this momentum and continue
organic growth as we move into FY22 and
beyond.
EMEA
Revenues were up by 23% to £44.6m
compared to £36.3m for the same period
in FY20. We saw a normalisation of sales
cycles in the region, particularly in the
second half of the year, as pandemic
restrictions broadly began to ease in this
region. We have also seen an uptick in
momentum both from a pipeline and sales
conversion perspective and expect to see
this trend continue as lockdown measures
across the region continue to ease.
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CHIEF EXECUTIVE OFFICER’S REPORT AND FINANCIAL REVIEW CONTINUED
GLOBAL OFFICE NETWORK
“One of the great things that I love about both Adobe
Commerce and Dotdigital is that we can capture all of
our customers’ data which flows into Dotdigital with
the Adobe Commerce connector.”
Julie Mathers | CEO and Founder, Flora & Fauna
Take-up of omnichannel marketing solutions
was strong in this region, particularly with
SMS, driven by strong demand from our
customers in the education and healthcare
sectors as they accelerated their adoption
of online tools to engage with their customer
base during the pandemic.
North America
Revenues for North America were up 19% to
$12.5m compared to $10.5m for FY20. This
was driven by new customer wins, reflecting
our growing brand awareness in this region.
North America presents the largest market
opportunity for the Group, and we expect
to increase our investment in this region to
solidify our foundations to capture more
opportunities. Our focus remains on growing
and cementing relationships with partners
and customers to help us build our presence
while increasing brand awareness. In
addition, we will invest in strengthening
the customer facing teams and bolster
the management structure in this region
through creating an additional layer to
create bandwidth and scale.
APAC
The APAC region delivered the highest
growth in revenue in the year, albeit from
a smaller base, as revenues were up 47%
to $7.7m vs $5.2m in FY20, evidencing
Dotdigital’s increasing presence in this
region and reflecting previous periods of
investment. We increased our investment in
this market in the period through expanding
the team further into Asia. We remain
mindful of the ongoing challenges in the
region as a result of the Covid-19 lockdown
which presents a degree of uncertainty
for our end customers, however we see a
strong pipeline of opportunities in Japan
and the Far East, through our team based
in Singapore.
• Marketing automation – harnessing
artificial intelligence and machine
learning across targeted parts of
the platform’s architecture. This
included the launch of sector-tailored
product packages for commerce
customers and enhanced product
recommendations capabilities.
• Building out further omnichannel
functionality – to assist businesses
through the full customer journey at
every touch point. This included the
launch of a new live chat solution
through the Dotigital platform and
additional SMS capabilities, with an
increase in take-up of both in the period.
3. Developing strategic partnerships
We have continued to invest in all our
strategic partner relationships, which are
a key aspect of our growth strategy as they
help us to raise brand awareness in the
regions and verticals in which we operate.
Revenue through connectors into strategic
partners was up 14% to £25.4m vs £22.2m
in FY20, evidencing the progress we have
made in developing our relationships with
strategic partners and refining our joint
go-to-market strategies.
Continued growth in the Adobe Commerce
space was driven by enhanced brand
awareness, coupled with the additional
functionality that we have developed
for e-commerce merchants. Sign-up of
customers in all regions remains strong,
with a net new 66 Adobe Commerce
customers joining the platform in the period,
taking the total number to 782. Revenue
from Adobe Commerce customers grew
11% to £14.3m from £13.0m in FY20 and we
look forward to the continued collaboration
between our respective teams to advance
our joint marketing strategy and to enhance
development of our integration.
2. Product innovation
The rate at which the platform is developing
means it continues to be at the forefront
of the customer engagement category.
Recurring revenue from enhanced product
functionality and upgrades, taken by both
existing and new customers, increased
by 31% to £18.9m in the period vs £14.4m
in FY20, illustrating continued growth in
the number of customers using our
enhanced functionality, including an
increasing number of data connectors
through our IPaaS (Integrations Platform
as a Service) capabilities.
We have continued to educate the market
through live online sessions and digital
marketing content on how to adopt new
features to enhance messaging. The
platform continues to go from strength
to strength, differentiated by our offering
of an in-house platform and automation
tools across all channels. The competitive
advantage of our offering and our ability
to deliver on the needs of our customers
is evidenced in our strong performance
this year and the increased uptake of
multichannel solutions by existing and new
customers alike. As we go into the new
financial year the focus will be on platform
adoption from the additional functionality
added in the period.
Customer-centred R&D investment in
the period was £6.8m compared to £6.5m
in FY20, consistent with management
expectations. We continued to execute
against our product strategy and our
roadmap has continued to develop
as anticipated.
Our focused areas of innovation are:
• Data and intelligence – joining all
data together to create a single
customer view and help our customers
better target their campaigns from a
personalisation perspective. We have
dedicated a great deal of resource
to this in response to increasingly
sophisticated customer requirements
and will continue to do so with further
upgrades to the platform.
UK
London, Cheltenham
and Manchester
Canada
Vancouver
North Americas
New York
Europe
Netherlands, Minsk
and Warsaw
Asia
Singapore
Australia
Sydney
Africa
Cape Town
Australia
Melbourne
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CHIEF EXECUTIVE OFFICER’S REPORT AND FINANCIAL REVIEW CONTINUED
GROWTH STRATEGY
Our strong financial position and management team
mean we are ideally placed to add growth by acquisition
Expand our
product suite:
providing
organic growth
Focus on
cross-selling:
deeper customer
relationships
Globalising
our talent:
organisational
strength and
capabilities
Grow our
customer base:
increasing our
global market
presence
Organic
growth
Deepening
our strategic
partnerships:
building new
connectors
Growth by
acquisition
Expand
geographical
coverage
Adjacent
relevant
technology
Deeper
functionality
with our
core USP
“Our team was wowed by the solution. It didn’t require any
technical knowledge, and Dotdigital ensured that all emails
were responsive, regardless of the browser or device.”
Lee Prutsman | Marketing Manager, Visit KC
At the end of the financial year, we had
132 customers using the Shopify connector
compared to 83 this time last year,
supporting the continued strength of our
relationship with this partner. Revenue
from Shopify customers grew 79% to
£2.1m from £1.2m last year as we saw
an increasing pipeline of new customers
from the integration, built with Shopify
Flow, which allows e-commerce merchants
a seamless connection to easily deploy
campaigns from the Dotdigital platform.
We saw a 249% increase in revenue from
BigCommerce connected customers
in the year to £0.4m from £0.1m. As
BigCommerce’s global elite partner
through the period, we continue to deepen
our strategic relationship, formulating a
joint go-to-market plan through offers for
e-commerce merchants, and joint efforts to
the user. This plan will enable us to increase
our addressable market across all regions,
and we are already seeing an increasing
demand to use the integration as a result.
As evidence of our commitment to our B2B
marketing customers, we hired a partner
manager to build our strategic relationship
with Microsoft for our integration into
Dynamics 365 in North America. Revenues
from customers using our Dynamics
connector increased 12% to £4.3m in the
year vs £3.8m in FY20; we believe that
this significant opportunity to develop a
meaningful partnership with a major North
American player has only begun to be
recognised and we look forward to building
on this relationship in future.
Building on our integration success, we
have created a repeatable blueprint
for building integrations into the wider
connected ecosystem faster and more
agile than before. Most recently, we
launched integrations into Shopware 6,
Google Sheets, Eventbrite and Typeform,
with more planned on the roadmap for 2022.
M&A
To support the Group’s organic growth
strategy, the Board continues to evaluate
the market for complementary acquisitions,
backed by the Group’s robust financial
position. The Board’s acquisition strategy
is focused on set criteria, being: synergy
technology for new revenue streams;
bolt-on functionality to accelerate platform
development, new talent acquisition and
expansion of expertise, and the extension
of the customer base in strategic territories.
FINANCIAL REVIEW
Revenues
The Group achieved continuing operations
revenue growth of 23% (2020: 12%), which
delivered record overall revenues of £58.1m,
driven in particular by an increased volume
of ARN (alerts, reminders and notifications)
SMS messaging, as the effects of the
pandemic continued throughout our
financial year. Recurring revenues comprise
93% of the total, whilst international
revenues continue to account for 31%
of the total (2020: 31%).
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. We also have
professional services contracts which
are recognised as revenue as the work is
performed. Over the past year we have
built other messaging channels into our
core platform, including SMS and Live
Chat, and access to these channels are
sold separately.
Gross margin
The gross margin for the period for
continuing operations was 82% (2020:
92%). Whilst the gross margin for email
and standard channels remained above
90%, the decline in overall group gross
margin comes from the growth of premium
messaging channels, (routing purchased
via a third party on a per message basis),
such as SMS.
Operating expenses
Adjusted operating profit from continuing
operations grew by 5% from £13.1m
to £13.7m. Operating expenses as a
percentage of revenues dropped from 64%
to 59%, reflecting some investment back
into the business. The Group continues to
invest in people in the areas of development,
sales and marketing, particularly within the
high-growth regional offices, to continue
enhancing and adding to the product suite.
Balance sheet
There was strong cash management in
the year with net cash generated from
continuing operations of £20.7m (2020:
£18.2m). The cash balance at the end of
the period was £32.0m (2020: £25.4m).
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 other automated
payment collection methods helped
with the year-end position.
Trade receivables have only grown by 5%
in the year, reflecting revenue growth and
good cash management. Overall receivables
have grown 3% due to the deferment of
marketing expenditure such as trade
shows and conferences, which have
been postponed due to the pandemic,
and related deferred commission on the
sale of our products.
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CHIEF EXECUTIVE OFFICER’S REPORT AND FINANCIAL REVIEW CONTINUED
“Dotdigital has empowered us to cultivate personal,
player-focused experience journeys at scale.”
Hannah Whyte | CRM Manager, MrQ
The Dotdigital difference
The Group continues to invest heavily
in the platform to increase functionality
around marketing automation, increasing
the number of messaging channels and
surfacing data and providing insights for
our customers to provide excellent customer
engagement. This continued investment is
demonstrated by the increase in product
development to £6.8m (2020: £6.5m).
Tax
Profitability from continuing operations
continues to grow. This is reflected within
the tax charge, which is now £1.0m with
an effective tax rate of 8%, with a lower
than standard rate due to enhanced R&D
tax credits.
EPS
In the year the continued operations
adjusted basic EPS increased to 4.12p
(2020: 3.95p) and adjusted diluted
EPS increased to 4.06p (2020: 3.90p),
despite the higher effective tax rate of
8%, (2020: 5%). Basic EPS also increased
to 3.85p (2020: 3.68p).
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 Group EBITDA growth. Therefore,
subject to approval at the AGM in December
2021, the Board proposes that the Group
will pay a final dividend of 0.86 pence per
ordinary share (2020: 0.83p), to be payable
at the end of January 2022.
CURRENT TRADING AND OUTLOOK
During the year the Group has significantly
advanced its omnichannel marketing
platform vision with strategic progress
against all tenants of our growth strategy,
delivering a record financial performance.
We have progressed our geographic
expansion with stronger market presence
in North America, EMEA and APAC; our
strategic partner relations have deepened
with better collaboration in driving brand
awareness to our end markets; and we’ve
added new capabilities to our platform
to drive broader customer engagement.
The focus remains in driving an increased
adoption of functionality within the platform.
As we enter the new year, we do so within
a more normalised trading environment
as our end markets transition out of the
immediate implications from the pandemic.
Trading remains in line with management
expectation and our technology platform
is uniquely positioned to capture the
transition to online marketing across the
mid-tier enterprise space. Whilst we remain
mindful of the wider economic uncertainty,
our healthy balance sheet, strong recurring
revenues and cash generation provides the
flexibility to invest in our growth strategy.
The Board is therefore confident in the
Group’s long-term growth prospects.
MILAN PATEL
Chief Executive Officer
16 November 2021
PARAAG AMIN
Chief Financial Officer
16 November 2021
Trusted
Over 4,000 of the world’s leading organisations trust Dotdigital
as their partner of choice for delivering exceptional customer
experiences, thanks to our uncompromising commitment to
service and support. Whether you’re a fast-growing business or
an established global brand, we provide best-in-class solutions to
enhance marketing effectiveness, helping you connect the dots
between customer success and business outcomes.
Future-proof
You’re constantly thinking about “what’s next?”, and so are we.
Future-proof your marketing engagements and drive revenue with a
platform designed for scale. Dotdigital empowers marketing teams
to make data-driven decisions by providing a single customer view,
helping you to gain a 360-understanding of your customer’s journey.
Connected
When it comes to engaging your audiences, we know there’s no
one-size-fits-all solution. That’s why our marketing platform is
designed to service market-specific and global needs, backed by a
dedicated support team to help connect you with your customers
no matter where they are. We believe in connected systems. The
Dotdigital platform is extensible via integrations, giving you solutions
that deliver cross-channel experiences and keep your data in sync.
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CASE STUDY
CASE STUDY
CASE STUDY
Australia-based brewing company Stone &
Wood amplifies online customer engagement
with Dotdigital automated campaigns
Established in 2008, and based in Byron Bay in
Australia, Stone & Wood was started by three
mates – Brad, Ross, and Jamie. It was a dream
with a simple idea of a ‘village brewery’ – a brewery
producing quality beer while giving back to the
wider community. Founded in a modest shed within
Byron Bay’s industrial estate, Stone & Wood began
its journey with a vision to create a conscious local
business. Over the past 10 years, Stone & Wood has
come to be known as a lifestyle brand, gradually
becoming synonymous with Byron Bay and the local
Byron vibe.
CHALLENGE
A few years back, the Stone & Wood team realised they had
outgrown their existing one-size-fits-all approach to email
marketing. It was becoming increasingly important for them to
be able to segment different types of customers and be more
targeted with relevant content through the right channels. In
response to both the growth of their customer base and the
shifting marketplace, Stone & Wood decided to beef up their
customer engagement, especially through email. As a result,
they started looking around for a marketing automation solution
provider to help them increase customer loyalty and engagement.
According to, Steve Blick, Direct to Drinker & E-commerce Leader
at Stone & Wood, “We started doing some research. We looked at
Emarsys, Klaviyo and Dotdigital, and for us, Dotdigital ended up
being the best option.”
SOLUTION
Stone & Wood partnered with Dotdigital in September 2019
to integrate different automated programmes. “The journey
over the past 18 months with Dotdigital has been great. The
key element that differentiates Dotdigital is the way they treat
their customers,” said Steve. “Their hands-on customer service,
continuous support, and working as a partner made them our
best choice.”
“Last year was a challenging one for obvious reasons. We never
could have seen Covid-19 coming, but we were super lucky to be
prepared beforehand. Dotdigital allowed us to make the most of
online shopping by helping the team target audiences through
personalised content, great offers, and explore some great ways
to connect with our customers,” added Steve.
The welcome series, post-purchase follow-up, and ‘Beer Club’
campaign are the three top successful campaigns currently
running on the Dotdigital platform.
“The Dotdigital platform has helped us bring the different
strategies that we envisioned to life, allowing us to effectively
engage with our drinkers and help grow the customer database.
By utilising the platform to run personalisation, automation,
and tailor-made marketing campaigns, we have been able to
engage with our audience not only at a transactional level but at
a non-transactional mode as well. This has resulted in increased
audience engagement which is unbelievable,” commented Steve.
The post-purchase follow-up campaign has been a real triumph
by giving customers the opportunity to make repeat purchases
online. Post-purchase, customers are targeted with personalised
and tailored content that consists of tasting notes and the story
behind their preferred choice of beer to educate them further.
Another successful campaign has been the ‘Beer Club’
newsletter campaign. The Stone & Wood Beer Club is a monthly
membership, giving members guaranteed access to limited
releases, exclusive content, and exclusive merchandise, along
with discounted access to events and tastings.
RESULTS
Since partnering with Dotdigital 18 months ago, Stone & Wood’s
customer database has grown by 350%. While the welcome
series has a 50% open rate and a click-through open rate (CTO)
of 12:32%, the ‘Beer Club’ newsletter campaign witnessed an 80%
open rate with a 37.15% click-through open rate (CTO). Moreover,
email marketing accounted for 21.17% of the total revenue
generated over the past 12 months.
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RISKS, IMPACT AND MITIGATIONS
Our risk management framework enables
a consistent approach to the identification,
management and oversight of risks. This
consistency is valuable as it allows us to
take a holistic approach to risk management
and to make meaningful comparisons
of the risks we face and how we manage
them across the globe, which is essential
to achieve our strategic objectives.
Using our risk management framework,
the Group identifies the risks that could
affect the strategy and operations in
order to implement risk mitigation plans.
Departments within the organisation identify
the risks that could affect their strategic and
operational plans. The consolidated risks
are consolidated under a single group-wide
risk register. These risks are scored based
on impact and likelihood and reviewed on
a regular basis. Principal risks scored over
a threshold are highlighted and reviewed
by the Group’s Risk Committee. Members
of the Risk Committee are assigned to
principal risks and these become executive
owners responsible for confirming that
adequate controls are in place and the
necessary action plans are implemented.
The Chairman of the Risk Committee
(Steve Shaw, Group CPO/CTO) reports on
the principal risks to the CFO (Paraag Amin,
Group CFO) who in turn reports these to
the Group’s Board.
KEY IMPROVEMENTS
• Risk Committee and ISO framework
management reviews have been merged
for operational efficiency enabling
oversite of the management system’s
risk mitigation performance.
•
Increased accreditations, which now
consist of ISO 27001 (Information
Security Management), ISO 27701
(Privacy Information Management)
and ISO 14001 (Environmental
Management).
• Further expansion of our Integrated
Management System (IMS) to include
Privacy Information Management.
• Greater cadence of risk register review
by key members of the risk committee
for risk rating recommendations.
STRATEGIC
FINANCIAL
TECHNOLOGICAL
OPERATIONAL
The influence of stakeholders
and industry on our business
Our financial status, standing
and continued growth
The platform, technology and
systems that support our
business and the data they hold
The ability to achieve our
optimal business model
RISK AREA
IMPACT
MITIGATION OF RISK
Global economic
disruption
Financial
Movement:
Decreased
Geography-specific
market and political
environments
Financial
Movement:
Stable
Disruption caused by global external
events, such as pandemics and economic
downturns have the potential to impact our
financial performance.
• Continued building of recurring contracted revenue stream
• Sufficient liquidity resources so that we can cope for prolonged
periods of time without accessing the capital markets
•
Increasing flexibility for customers around payment terms
• Quickly executable scenario plans reviewed to prepare for varying
levels of financial impact to reserves
• Continued investment into Business Continuity planning to enable
staff availability, building accessibility and for hardware failure.
Reliance on revenues and resources relating
to a single region increases the risk to our
financial performance if that region were to
experience an economic decline or political
unrest.
• Continual increase in international revenues outside of the UK
• Successful exploration into options relating to geographic expansion
above and beyond the UK, US and Australia - specifically Singapore and
Netherlands
• Constant review by the executive team for growth opportunities in
additional territories including LATAM
• Monitoring of the market conditions and political environment in
regions we have offices, staff, target prospects and customers
• Continue to distribute critical staff and engineering teams across
regions for resilience.
RISK AREA
IMPACT
MITIGATION OF RISK
Optimising and
growing high-
performance teams
Failure to attract, hire, develop, support and
retain high-performing individuals will reduce
the ability to achieve our goals.
• Delivery of a comprehensive programme of formal and informal
learning and development opportunities aligned to the needs and
goals of the business
Operational
Movement:
Stable
Data privacy
Operational
Movement:
Increased
• Company-wide roll out of a new learning content platform
• Deployment of a new integrated people management platform
for performance reviews, management self-service and
employee engagement
•
Investment into flexible working arrangements, home office
environments and wellbeing programmes to support our staff
through global events, such as pandemics
• Continued commitment to organisational structures, internal
communication tools and processes to enable cross-team
collaboration
• Regular evaluation of staff benefits to ensure market competitiveness
• Expansion of staff engagement programmes. Our dotvoice programme
now consists of four core pillars, dotgreen, dotcommunty, dotDEI
and dotwellbeing. Creating a listening culture, one of openness
where staff can discuss all types of issues whether, social, political
and environmental
• Expansion into new territories increases accessible talent pools
we can hire in.
• 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. We actively contribute 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
• Ongoing monitoring of processes and policies in compliance with local
laws and regulations (including GDPR, the California Consumer Privacy
Act (“CCPA”) and Singapore’s Personal Data Protection Act (“PDPA”))
• Ongoing monitoring of the regulatory environment, including any
guidance from supervisory authorities or compliance actions made
under local laws (such as the adoption of new EU Standard Contractual
Clauses, the UK’s proposed International Data Transfer Agreement, the
EU’s data adequacy decision for the UK and the impact of the Schrems
II case on international data transfers)
•
Implementation of an ISO 27701 certified Privacy Information
Management System (PIMS)
• Continued privacy and data protection staff awareness and training.
Certain laws and regulations (such as the UK
& EU General Data Protection Regulations
(“GDPR”)) require or may require us and our
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 or limit
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 regulation
changes could restrict customers’ ability
to collect and use email addresses, web
browsing data and personal information,
which may reduce demand for its products.
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Strategy Report
RISKS, IMPACT AND MITIGATIONS CONTINUED
RISK AREA
IMPACT
MITIGATION OF RISK
RISK AREA
IMPACT
MITIGATION OF RISK
Environmental
Operational
Movement:
Stable
As awareness on the climate challenge
increases, it is expected there will be
increasing legislation and customer pressure
to provide sustainable business operations
• The group has set targets to become net zero by 2035
• An ISO 14001 certified Environmental Management System (EMS) has
been implemented, and is managed by a committee (dotgreen) made
up of representatives from around the business
• A newly created role of Sustainability Lead has been created to
ensure adequate resource is available to drive the EMS forward
with continual improvement
• Using the Oxford Offsetting Principles, we continue to develop our
carbon offsetting and mitigation strategy. We operate carbon neutral
and we have included further scopes in our carbon offsetting which
now includes GHG emission scopes 1, 2 and 3 (business travel, data
centres, remote workers, worker commuting and transmission and
distribution losses related to office electricity)
• Marketing and promotion of our sustainability achievements,
including the creation of a new dedicated sustainability area on the
corporate website. Various initiatives and events held to continue to
foster a green culture both internally and externally with customers
and partners.
• Remaining a credible provider of customer engagement SaaS solutions
through constant investment in development and monetisation of new
solutions, partnerships and enhancements
•
Implementation of a strong product vision to deliver unique selling
points, adding customer value and solving customer problems
• A product roadmap that facilitates the implementation of rapidly
changing technologies, new enhancements and maintaining the
existing products to a high standard both for new business acquisition
and retention
• Dedication to continuing to remain relevant in maturing B2C
commerce, B2C non-commerce and D2C verticals, reducing risk
through the relevancy of the platform to the challenges these
customer face
• Continued focus on combining marketing and automation capabilities
with the market-driven need for supporting more conversational
channels and leveraging customer data, machine learning and
orchestration to drive decisions
• Continued evaluation and optimisation of product performance in
the technology landscape to reduce maintenance overheads
• A constant focus on enabling customer growth through the breadth,
ease of use and flexibility of our integrations. The launch of our
Integration Hub and new integration development strategy enabling
rapid development of new integrations (including to third party
platforms such as Eventbrite, Zoom, Typeform and Google Docs)
• Review technology acquisition opportunities that can further
strengthen our go-to-market.
• Continually evaluate the maturity curve of our market to be ahead of
the competition and develop products that add differentiation and
offerings for markets that are less mature
•
Investment in new product features, best-in-class 24/7 customer
support and service offerings, enhanced brand recognition and
improved service delivery
• A global marketing presence and PR strategy to attract new customers
• Further improvement of the products’ renowned user experience
• Continued focus on increasing content, delivery and personalisation
capabilities across established and emerging messaging channels
• Continued investment on our data, AI, reporting and machine learning
capabilities and applying these to surprise and delight existing and
prospective customers
• Continuing to listen to our customers and the market to solve real
customer problems in an intuitive way.
Evolving technology
and customer
requirements
Operational
Movement:
Stable
Failure to anticipate, respond to evolving
messaging channels and customer
requirements, to introduce competitive
enhancements or maintain existing products
may impact growth and customer retention.
Competitive
environment
Strategic
Movement:
Increased
The sector we operate in is competitive. The
impact of competitors having more features,
new solutions, increased financial backing,
lower pricing, better brand recognition and
better global coverage increases the risk
to our business. The increasing number of
competitors adds further risk.
We focus on customers operating across
different verticals - e.g. retail, commerce,
higher education, not for profit, charities
and D2C – by definition make for a large
competitive landscape.
Internet service
providers (ISPs),
reputation and
internet browser-
related risks
Strategic
Movement:
Stable
As a large proportion of our 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.
If manufacturers of computing devices,
internet browsers or operating system
software make changes to consumer privacy
functionality it could negatively affect the
ability for our products to perform the
originally designed service.
Key platform
integrations
Strategic
Movement:
Stable
Loss of a strategic
partnership
Strategic
Movement:
Stable
We are increasingly investing in integration
with third-party platforms to provide an
enhanced product feature set – for example
WhatsApp, Facebook, Twitter and Google.
These platforms all have various contractual
bases for access and we maintain our
obligations carefully. However, any future
change in the terms granting access may
impact our continued ability to integrate our
product with these platforms.
Revenues could be impacted if a strategic
technology partner was acquired, changed
contractual terms, had lost market share
or their customers en masse. On such an
event, customers may re-platform to a
technology partner who we do not have
a integration with.
If a strategic technology partner significantly
changed partner terms, blocked access
to or no longer accepted a connection
to our products, there is also the risk
that customers may leave or migrate
to a competitor who has a connection,
rather than re-platforming away from the
technology partner.
• Provision of, and investment into, platform functionality to help
customers comply with industry best practice, EU, Asia Pacific or
US anti-spam regulations
• Demonstration of commitment to anti-abuse through admittance to
various industry groups, such as the Messaging, Malware and Mobile
Anti-Abuse Working Group (M3AAWG) and the Email Sender and
Provider Coalition (ESPC)
• Continued investment into technology that can proactively block
trial account sign-ups and automated bots
• Development of a risk-based vetting approach of prospective
customers and their data acquisition practices
• Continued investment in a deliverability, anti-abuse and compliance
team, under the leadership of the deliverability and compliance
functions. With swift handling of abuse complaints generated by
customer messaging, including where necessary account suspension
and agreement termination
• Explore and implement alternative message routes for upstream
providers for channels that this is supported e.g. SMS
• Continued investment into our technology to enable customers
to on-board faster, speeding up their time-to-value but without
compromise to message delivery and sending reputation
• Continued investment in understanding engagement tracking
correlated to message deliverability and how industry change
impacts the measurement of success
• Ongoing monitoring of changes to the technology landscape impacting
privacy (such as Apple’s proposed Mail Privacy Protection and Hide
My Email features in the upcoming iOS15 update, Google Chrome and
Apple Safari’s change to block third-party cookies). Putting in place risk
mitigations, changes to our products or educating our customers on
the changes where necessary.
• Maintain strong relationships with these platforms
• Ensuring our platform policies align with the third parties
• Continuous review of competing functionality from other vendors
• Continued investment into the capabilities of each key integration,
to ensure continued relevancy for customers and compliance with
any third party or statutory changes.
• Dedicated resources for strategic partnerships, development of our
partner strategy and programme
• Delivery of a new service and technology partner programme to
support a partner-first approach
• Renewal of agreements with all key strategic partners
• A product and development strategy that continues to build connectors
into leading market share e-commerce and CRM platforms, to reduce
reliance on a single strategic technology partner
• Services and functionality to enable customers to migrate between
different technology partners, as well as out of the box connectors
they can use
• Continued work with new and emerging partners about providing
connector functionality to their products.
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Strategy Report
RISKS, IMPACT AND MITIGATIONS CONTINUED
CORPORATE SOCIAL RESPONSIBILITY REPORT
RISK AREA
IMPACT
MITIGATION OF RISK
Use of public cloud
service suppliers
Technological
Movement:
Decreased
We utilise public cloud suppliers to host
our platforms and products. An event
resulting in multiple cloud data centre failing,
for any significant period, or termination of
services by a cloud supplier, may negatively
impact our business, operating results and
financial condition.
•
•
Informed choice of best-of-breed cloud computing suppliers (we have
selected Microsoft Azure, CloudFlare, Amazon AWS, and Google Cloud
Platform), the architecture and contracts of which facilitates high
uptime SLAs and a quick recovery in the event of a single region failure
Implementation of resilient global instances of the platform to serve
local customers and avoid global customer impact in the event of a
regional outage
This year saw a continuation of our investment in our
people, customers and communities with sustained
investment in learning and development across the board.
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.
Supplier and
computer hardware
related risks
Technological
Movement:
Stable
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.
We rely on a range of upstream suppliers
to deliver SMS messages; a change in
relationship with one or more of these
suppliers, or one or more of these suppliers
no longer being able to operate, could impact
our profitability.
• Regular simulation of Disaster Recovery plans to recover computing
resources in secondary facilities located hundreds of miles away from
the primary
•
In addition to data being backed up to the secondary facilities, it is now
also replicated to hot stand-by databases; resulting is improvements in
the platform Recovery Time Objective (RTO)
• Migration to modern and platform agnostic technologies; allowing for
easier migration paths to different cloud service providers
• Due diligence, and ongoing monitoring of cloud computing supplier
security and incident handling processes, penetration testing results,
change management and security and privacy accreditations.
• Three separate instances of the sending infrastructure exist,
meaning that an issue affecting one region would not impact the
ability to send messages from the other regions
• The infrastructure is architected with resilience to cater for single
points of failure, including having multiple upstream and internet
suppliers in each region; which can keep delivering messages in
the event a single supplier fails
• A working proof of concept for the migration of the message send
components to a highly resilient cloud infrastructure has been
developed. The migration of message sending infrastructure is
anticipated to begin early 2022.
• Tracking of message metrics regular reviewed and monitored
by the executive team
• 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 groups sending
IP address ranges by a dedicated messaging operations team;
ensuring global reputability and use optimisation
• Strong relationships with Internet Service Providers and industry
groups have been developed allowing for speedy containment and
recovery of IP reputation issues
• The Group has significantly increased the number upstream SMS
providers, reducing the impact of an issue with individual providers.
In addition to this, the group frequently reviews the most profitable
upstream supplier routing options, and negotiating contracts regularly
based on current and anticipated volume.
Information security
and cyber risks
Technological
Movement:
Stable
The ever-evolving, sophisticated nature of
the cyber threat landscape poses an ongoing
risk to the group. The brand reputation
and financial performance depends on the
protection of the confidentiality, integrity,
availability of data and computer systems.
A successful cyber-attack against our
information assets could significantly impact
our ability to function, retain and attract
business, as well as potential financial
penalties from regulators.
Similarly, the risk of an “Insider threat” possess
an equal impact to the business, with misuse
of systems and data potentially leading to
reputation damage, and regulatory fines.
• An established Security function is in place to manage an ISO 27001
certified Information Security Management System (ISMS) across the
whole business
• The Group continues to invest in preventative, detective, and
corrective controls to minimise the likelihood and impact of security
vulnerabilities and incidents
• Attainment of the UK government-backed Cyber Essentials Plus
Certification, in addition to the implementation of further technical
controls such as regular vulnerability scanning, third-party penetration
testing, Intrusion Detection/Protection, Web Application Firewalls and
DDoS protection to proactively detect and remediate against the
latest threats
• The continual promotion of a security culture within the business
via various awareness initiatives
• The transference of some risk by the introduction of Cyber Insurance.
UDEMY – ACCESS TO L&D FOR ALL
As part of Dotdigital’s ongoing commitment
to the development of our employees
we have provided access for all to the
popular online learning platform, Udemy.
This ensures that every single employee
is able to access a broad range of content
to support their professional and personal
learning journey.
OFFICE READINESS – SUPPORTIVE
APPROACH
Throughout the pandemic we’ve been able
to support all our employees to work from
home, providing equipment allowances
and flexibility where it was needed. We’re
taking the same approach with our return
to office working, by opening up offices in
regions that allow office working again and
offering a flexible approach to returning
while employees establish a new routine
in ever-changing conditions.
DOTVOICE
Employee Voice is a well-recognised
aspect of high-performing teams. Building
on our dotgreen (environmental) and
dotcommunity groups, we have now
launched dotdiversity and dotwellbeing.
These four groups are all run by volunteer
employees, and each group benefits from
an exec sponsor from the leadership team.
The remit and goals for each group are
summarised below:
DOTWELLBEING
Mission: : To encourage wellbeing
initiatives and open discussion, provide
support and education and seek to provide
employees with the tools to manage their
own wellbeing.
• Four areas of wellbeing: mental,
physical, emotional/social, financial
• Focus on wellbeing initiatives, speakers,
workshops etc
• Providing tools for employees to use
for their wellbeing
• Working with partner charities such
as Mind and Lord Mayor’s This is Me
campaign.
DOTDIVERSITY & INCLUSION
Mission: To create a diverse, inclusive and
respectful workplace through education,
awareness and conversation.
• Focus on all aspects of diversity and
inclusion, for example LGBTQ+, women,
ethnic minority groups, menopause,
working parents, neurodiversity etc
• Focus on education, raising awareness
and increasing the diversity of the
business and creating an inclusive
workplace.
EMPLOYEE WELLBEING DAYS
Recognising that our employees benefit
from being able to support their own
wellbeing, their families, dependents or
indeed outside communities, organisations
and charities, we are proud that we have
made available two days each year for
employees to decide how they best
support any or all the above.
Examples of how our employees use this
extra paid time off include quality time
with families, wellbeing sessions, fitness
activities, volunteering at charities and
community activities. We believe this is
so important that we offer this support
each year not just as a single event.
WELLBEING REWARD
Continuing the theme of employee
wellbeing, Dotdigital remains committed
to providing an annual allowance of £100
each year which is designed to promote
and support wellbeing activities.
Examples of how this allowance is used
by our employees include fitness classes,
running shoes, gym equipment, yoga
classes and equipment. We are delighted
our employees continue to enjoy this
innovative wellbeing support.
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Annual Report 2020/2021
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Strategy Report
CORPORATE SOCIAL RESPONSIBILITY REPORT CONTINUED
“We recognise that every business needs to play their part in combating
climate change and it was important to our staff and customers that we led
by example. Our customers have more choice than ever on what technology
they consume; we are the greener, more sustainable choice of cross-channel
marketing technology for growing brands.”
Steve Shaw | Chief Product & Technology Officer, Dotdigital
SUPPORTING OUR CLIENTS
Dotdigital customers continue to be at the
center of Dotdigital’s strategy, whether it
be our own platform users or enabling our
customers to better serve their customers.
This year we have maintained focus on
delivering quarterly product releases to
enhance customer experience and drive
revenue for our brands.
We have focused on telling customer
stories, populating our website with case
studies that highlight how our customers
are leveraging the Dotdigital platform
to drive engagement and sales for their
organisations.
We launched an inaugural user group in the
Americas to bring customers together for
networking and solution sharing, driven by a
desire for customers to connect in the midst
of extended lockdowns.
SUPPORTING OUR COMMUNITIES
dotgreen
Mission: To create an environmentally
friendly workplace and provide ideas and
information for employees to do the same.
• Focus on eco friendly initiatives and
improving the Dotdigital carbon footprint
• Educate employees on environmental
topics and encourage eco friendly
behaviour
• Work with client partner charities
to demonstrate our support for
key organisations.
dotcommunity
Mission: To work on and organise internal
events, focus on improving corporate
social responsibility and social mobility by
organising fundraising events, partnering
with charities and organising volunteering
days for employees.
• Organise business social events
including Christmas and Summer
parties
• Relationships with partner charities
such as The Girls Network and
The Brokerage
• Organise volunteering days and
fundraising events for employees
to partake in.
“We try to the best of our ability to align with the most sustainable
suppliers out there. Dotdigital made perfect sense for us with their
commitment to sustainability which aligns with our own brand
identify values, and culture.”
Jarvis Smith | Co-founder, MyGreenPod.com
CARBON NEUTRAL
Last year marked Dotdigital’s first year of
being carbon neutral. We will extend this into
the future, always offsetting our measured
Scope 1, Scope 2, and select Scope 3
emissions with high quality offsets that
follow the Oxford Offsetting Principles.
This year, we’ve decided to continue
offsetting all of our measured emissions
with Climate Care, who recently merged
with Natural Capital Partners to give access
to an increased range of projects to reduce
carbon emissions.
We are also maintaining our corporate
membership with our long-standing customer
The Woodland Trust, providing additional
carbon mitigation and combating the
ecological emergency.
BROADENED SCOPE 3 ACCOUNTING
Last year, we calculated our Scope 3 GHG
emissions from business travel, data centres
and hosting.
We’ve added to this list this year to include
GHG emissions from remote workers,
worker commuting, and transmission and
distribution losses. The first two items were
particularly pertinent in a year in which our
working patterns remained drastically altered
as a result of the Covid-19 pandemic.
We aim to continue adding and calculating
major Scope 3 emissions sources and
offsetting these in line with our carbon
neutral claim.
NET ZERO BY 2030
We are treating carbon neutrality as a
step on the way to net zero. Becoming
net zero means reducing our emissions
to a level where only truly unavoidable
emissions remain.
We will then offset these “residual” emissions
with GHG removal projects, which remove
GHG emissions directly from the atmosphere
and store them for long periods of time, for
example as rock or biochar.
This is in contrast to the GHG reduction
projects that enable us to claim or carbon
neutral status, which involve supporting
projects around the world that reduce
the level of emissions compared to a
hypothetical world without those projects.
We are pleased to announce that we aim to
be net zero by the end of our financial year
in 2035, a full 15 years ahead of the timeline
set out in the Paris Agreement to limit global
heating to 1.5oC. We continue to look out for
standards for net zero that will hopefully be
announced at COP26 in late 2021. For now,
we are using information from the Science
Based Targets initiative to guide our net
zero ambition.
RESPONSIBLE MARKETING
We have made a commitment to
responsible marketing, focusing on the
imperatives for a customer-centric approach
to marketing. We believe that now more
than ever that building trust with customers
through responsible marketing, focused
on data privacy, security, and sustainability,
is central to retention and life-time value.
We are proud to be the world’s first carbon
neutral, ISO14001, ISO 27701 and ISO27001
certified marketing automation platform.
RENEWABLE ENERGY
One great leap to meeting our new ambition
to reach net zero by 2035 is in shifting
our London Bridge headquarters to 100%
renewable energy, which took effect from
1 July 2021. This will single-handedly reduce
our annual Scope 2 emissions by 46%
(compared to our first year of measurement
in 2019/20).
Efforts are also under way to transition our
Sydney and Melbourne offices to use 100%
renewable energy in the next financial year,
further reducing our Scope 2 emissions, and
to power our platform with 100% renewable
energy globally. It remains the case that
our platform is powered only by renewable
energy in Europe.
ISO 14001
We have maintained ISO 14001
certification with zero non-conformities
raised (for the second time!). ISO 14001
defines an environmental management
system and provides third-party verification
that we measure our environmental
impact and continually improve our
environmental performance.
TERRA CARTA
As the first anniversary of our green journey
approached in April 2021, we were thrilled to
see discussions about sustainable business
practices making their way onto the world
stage. To reaffirm our pledge to protect the
environment, we’ve signed the Terra Carta,
a charter that puts sustainability at the
heart of the private sector. This is part of
the Sustainable Markets Initiative and was
announced by HRH The Prince of Wales.
APPOINTED OUR FIRST
SUSTAINABILITY LEAD
For the first time, Dotdigital has a
Sustainability Lead pushing forwards our
green initiatives and steering us towards
our sustainability goals.
STRATEGIC REPORT
The Strategic Report was approved by a
duly authorised committee of the Board of
Directors on 16 November 2021 and signed
on its behalf by:
MILAN PATEL
Chief Executive Officer
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Annual Report 2020/2021
29
Governance
BOARD OF DIRECTORS
MILAN PATEL FCCA ACSI
Chief Executive Officer
PARAAG AMIN CFA
Chief Financial Officer
MICHAEL (MIKE) O’LEARY
Non-Executive Chairman
BORIS HUARD
Non-Executive Director
ELIZABETH (LIZ) RICHARDS ACA
Non-Executive Director
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.
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.
Milan joined the Group 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
(ACCA) and a member of the Institute of Chartered Accountants
in England and Wales (ICAEW). He has been responsible for the
Group’s admission to ISDX (now Aquis - AQSE) and the introduction
to AIM.
Milan 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 executing on the acquisition
strategy. He has a strong track record of delivery of performance
against plan through the life of the company on the public markets.
Mike joined the Board of Dotdigital in
January 2020 as Chairman. He has over
35 years of main board experience with
AIM, FTSE 250 and FTSE 100 listed
companies, during which he has
consistently created value for shareholders
through organic and acquisitive growth.
He has experience of running UK and
international operations in a broad range
of business environments with a focus
on the software and technology sector.
Mike is currently also a Non-Executive
Director and Chair of the Remuneration
Committee of Epwin Group plc, and is the
Chairman of Ipswich Town Football Club
and Chairman of its holding company,
Gamechanger 20 Limited. His prior
experience includes: main board director
and Joint Chief Operating Officer of
Misys Group plc, Chief Executive of Huon
Corporation, Chief Executive of Marlborough
Stirling plc, Chairman of Digital Healthcare
Ltd, Non-Executive Director and Chair of
Remuneration Committee of Headlam
Group plc, Non-Executive Director and
Chair of Remuneration Committee of Psion
Group plc, Non-Executive Director and Chair
of Remuneration Committee of Stroud &
Swindon Building Society, Non-Executive
Director and senior independent Director
of Helphire Group, Chief Executive Officer
of West Bromwich Albion Group PLC and
Chairman of EMIS Group plc.
Boris joined the Board on 26 March 2019
and is the EMEA Managing Director for
GBG Plc, bringing present day experience
of running software, big data and analytics
businesses – topics of key importance
to Dotdigital.
Boris joined GBG in 2020, having previously
held roles in the technology industry for 20
years, ranging from divisional Managing
Director at Logica, Board Director with
Maxima Plc, Chief Executive at Sword
CTSpace and UK & I Executive Board at
Experian.
During those years, he delivered sustainable
organic growth and executed bolt-on
acquisitions. From turnaround to successful
public to public exit transactions, Boris
drove performance through hands-on
P&L management, international business
development, cross-continents operations,
mergers and acquisitions and company
restructurations and integrations.
Liz joined the Board on 1 May 2020 and also
chairs the Audit Committee. She is a highly
experienced executive and Non-Executive
Director with a career spanning the Financial
Services, Data and Software sectors.
After an early career with Lloyds Bank, Liz
qualified as a Chartered Accountant with
Ernst & Young.
Liz was Chief Financial Officer for Callcredit
(now Transunion), a successful consumer
data business, where as a founder member,
she oversaw its rapid growth from start-
up in 2000 to a £150m revenue business
by 2015. During that period, she was
instrumental in the purchase and integration
of several successful acquisitions and has
end to end experience of significant private
equity and trade corporate transactions.
Liz currently also holds Non-Executive
Director and Audit Committee Chair
positions at both LINK Scheme Ltd and
Tracsis plc, as well as two pro bono roles –
Governor and Chair of Audit for Leeds
Trinity University and Trustee and Chair
of Finance and Investment for Yorkshire
Cancer Research.
She brings experience of high-growth
acquisitive business, and financial, audit
and governance expertise to the Board
at Dotdigital.
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Annual Report 2020/2021
31
Governance
CORPORATE GOVERNANCE REPORT
CHAIRMAN’S INTRODUCTION TO GOVERNANCE
The Board is fully committed to achieving high standards of
governance in line with the size and stage of development of the
Group and I believe contributes to our ability to deliver long-term
shareholder value. As an AIM-quoted company, 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. The QCA Code
identifies 10 principles to be followed to deliver growth in long-term
shareholder value by ensuring that the management framework
is efficient, effect and dynamic. This in turn is supported by good
stakeholder communication to promote confidence and trust.
The below sections describe how the 10 principles of the QCA
Code are applied to deliver medium to long-term success without
preventing innovation and entrepreneurial spirit, together with
any areas on non-compliance.
MICHAEL O’LEARY
Non-Executive Chairman
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 29 of the Group’s annual
report. The risk section of the Annual Report is on pages 22 to
26 and deals with the challenges the business faces and how
these challenges are mitigated/addressed.
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 then
executing the approved strategy. You can find a full description
of the roles of the Board at www.dotdigitalgroup.com.
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 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, Boris Huard, 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 the 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 27.
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.
4. Embed effective risk management, considering both
opportunities and threats, throughout the organisations
(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.
Executive Directors
Milan Patel
Paraag Amin
Non-Executive Directors
Boris Huard
Michael O’Leary
Elizabeth Richards
Board
Audit
Committee
Risk
Committee
Remuneration
Committee
Nomination
Committee
Attended Total
Attended Total
Attended Total
Attended Total
Attended Total
6
6
6
6
13
13
13
13
13
13
13
13
13
13
2
4
4
2
4
2
4
4
2
4
4
4
4
4
4
4
4
4
1
1
1
1
1
1
1
1
1
1
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.
A summary of the principal risks and uncertainties facing the
Group, as well as mitigating actions, are set out on pages 22
to 26.
5. Maintain the Board as a well-functioning, balanced team
led by the Chair (fully complies)
The Group is managed by a Board of Directors chaired by
Mike O’Leary. 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 August 2021 and will be reviewed annually.
The Board currently consists of two Executive Directors
and three Independent Non-Executive Directors. The
Non-Executives spend a minimum of two days a month
on Dotdigital Group business matters. 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.
The Board believes it is appropriate to have a Senior
Independent Non-Executive Director and Boris Huard
currently fulfils this role. Mike 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 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 2020 to June 2021.
6. Ensure that, between them, the Directors have the necessary
up-to-date experience, skills and capabilities (fully 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 by the
Nomination Committee. The Board is fully committed to the
appointment of the right skillsets 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 with 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 30 and 31.
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.
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Governance
CORPORATE GOVERNANCE REPORT CONTINUED
AUDIT COMMITTEE REPORT
Throughout the year, the Directors receive updates on corporate
governance matters from either the Company Secretary or the
Company’s nominated advisors.
9. Maintain governance structures and processes that are fit
for purpose and support good decision making by the Board
(fully complies)
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
(fully complies)
The Nominations Committee is responsible for Board
evaluation. The Committee in the past has carried out informal
Board performance evaluations but embarked on this formal
process for the Board where questionnaires were circulated to
ensure they complied with this principle. The learnings from this
process have been discussed by the Board and hence have been
addressed. The Committee’s intention is to continue to conduct
an internal evaluation on an annual basis, with the same process
being 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 complies)
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 organisations, 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 Board is supported by a Remuneration Committee, Audit
Committee and Nomination Committee. Any matters that fall
outside of 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 complies)
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 36 to 40.
The Group’s website www.dotdigitalgroup.com 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.
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. The Group’s 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; and
• General consulting – in recognition of public concern over
the effect of consulting services on auditors’ independence,
the Group’s policy is that the external auditors are not invited
to tender for general consulting work.
APPROVAL
This report was approved by the Board on 16 November 2021
and signed on its behalf by:
LIZ RICHARDS
Chairman of the Audit Committee
RESPONSIBILITIES AND SCOPE OF THE AUDIT COMMITTEE
The Audit Committee is a sub-committee of the Board. The
responsibilities of the committee include:
• Reviewing the half-year 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 reports from the Group’s auditors relating to the
systems of internal financial control and risk management;
• Considering the appointment of the external auditors, overseeing
the process for their selection and making recommendations to
the Board in relation to their appointment; and
• 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.
COMPOSITION OF THE AUDIT COMMITTEE
The Audit Committee comprises Liz Richards as Chair and Boris
Huard, with Mike O’Leary, Milan Patel and Paraag Amin as attendees
as appropriate. The Committee meets separately with the external
auditors without management being present.
The Secretary to the Committee is the Group Company Secretary
George Kasparian.
MAIN ACTIVITIES OF THE AUDIT COMMITTEE DURING
THE YEAR
In line with best practice the Audit Committee periodically
reviews the Group’s external audit arrangements and during the
financial year ended 30 June 2021 it oversaw the change of auditor
from Jeffreys Henry plc to Moore Kingston Smith LLP following
a tender process.
The Committee also oversaw the award of various non-audit
services relating to the role of global accountant to another
accounting firm, ensuring the independence of the external auditors.
At its meeting on 9 November 2021, the Committee reviewed the
Group’s preliminary announcement of its results for the financial
year to 30 June 2021 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.
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Governance
REMUNERATION COMMITTEE REPORT
STATEMENT FROM THE CHAIRMAN OF THE REMUNERATION
COMMITTEE
I am pleased to present the Remuneration Committee Report
for 2021, which sets out the remuneration earned and paid to
the Executive and Non-Executive Directors in the year ended
30 June 2021.
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
a number of these regulations into account in the preparation of
this report for the year as a matter of best practice.
The Committee’s Terms of Reference, which are reviewed annually
to ensure they reflect any changes in legislation, regulation and best
practice, can be found at www.dotdigitalgroup.com.
The Annual Report on Remuneration, detailed on pages 36 to 40,
provides details of the amounts earned in respect of the year ended
30 June 2021 and how the Directors’ Remuneration Policy has
operated and will be subject to an advisory shareholder vote at
the 2021 AGM.
REVIEW OF THE YEAR ENDED 30 JUNE 2021
As described earlier in the annual report, the Group has performed
well during the year, delivering revenue of £58.1 million, a 23%
organic revenue growth on previous year and total profit before tax
excluding exceptional costs and share-based payments of £13.7m.
Consequently, the Executive Directors earned an annual cash bonus
against sliding scale revenue and profit targets equivalent of 85%
of salary out of a maximum 100% of salary (100% of potential for
the revenue target and 70% for the profit target).
The Performance Share Plan (“PSP”) award granted to the
Chief Executive Officer in December 2017 vested in the period
at circa. 70% of the maximum against stretching absolute Total
Shareholder Return targets. In accordance to the rules of the
scheme those shares will be exercisable between December
2022 and December 2024.
On 21 December 2020, the Chief Executive Officer was awarded
with 306,728 options pursuant to the above scheme. These
become exercisable subject to hitting defined performance
targets and continued employment. The performance measures
are based on the Company’s total shareholder return and earnings
per share in 2023.
ENGAGEMENT WITH SHAREHOLDERS
During the 2020/21 financial year, we consulted with the
major shareholders in relation to several aspects of executive
remuneration for the year ahead.
OUTLOOK FOR 2021
The Committee remains committed to a fair and responsible
approach to executive pay while ensuring it remains in line with best
practice and appropriately incentivises Executive Directors over the
longer term to deliver the Group’s strategy. In respect of operating
the Remuneration Policy for 2021/22:
• Following no change in the previous year during the uncertain
Covid-19 period, and in light of the sustained growth of the
Company, the Committee determined it was appropriate this
time around that base salaries for the Chief Executive Officer
and Chief Finance Officer should be increased at the 1 July 2021
review date;
• Annual bonus provision should remain capped at 100% of
salary with targets based on revenue and profit before tax.
For 2021/22, revenue and profit targets will be weighted equally;
with both an on target and a stretched component;
• The Performance Share Plan award granted to the Chief
Financial Officer in December 2018 is expected to vest in
December 2021 against stretching absolute Total Shareholder
Return targets. Full details of this vesting will be set out in
next year’s Directors’ Remuneration Report, and
•
In accordance with the 2017 PSP and the reward framework
communicated in December 2020, the Chief Executive Officer
received in September 2021 a PSP award over shares equal to
150% of salary with stretching performance targets based on
Total Shareholder Return and Earnings Per Share.
Finally, 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.
On behalf of the Board
BORIS HUARD
Chairman of the Remuneration Committee
16 November 2021
DIRECTORS’ REMUNERATION POLICY
This section sets out the Directors’ Remuneration Policy. The Remuneration 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
Performance measure
Base salary
To provide a competitive base
salary to attract, motivate
and retain Directors with the
experience and capabilities to
achieve the strategic aims.
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.
Not applicable.
Benefits
To provide market-competitive
benefits package.
Receive benefits in line with
market practice, these include
company car/allowance, private
medical, income protection and
death in service insurance.
Set a level deemed
appropriate by the
Remuneration Committee.
Not applicable.
Pension
To provide an appropriate
level of retirement benefit.
Executive Directors are eligible
to participate in the Group’s
pension plan.
5% of base salary.
Not applicable.
Annual
bonus
PSP
To reward performance
against annual targets
which supports the strategic
direction of Group.
Awards are based on annual
performance and are normally
paid in cash.
100% of salary.
Sliding scale financial
(e.g. revenue and/or profit)
and/or personal/strategic
targets
To drive and reward the
achievement of longer term
objectives, support retention
and promote share ownership
for Executive Directors.
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, normally
over a period of three years.
Awards may be subject to malus
provisions at the discretion of
the Committee.
150% of salary (or 450%
of salary where end-to-
end awards, rather than
annual grants).
Performance metrics will
be linked to financial and/or
share price and/or strategic
performance.
Shareholding
guidelines
To promote share ownership
for Executive Directors.
Executive Directors are
expected to build a shareholding
in the Group over time.
200% of salary for the
Chief Executive and
100% of salary for other
Executive Directors.
Not applicable.
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Governance
REMUNERATION COMMITTEE REPORT CONTINUED
DIRECTORS’ REMUNERATION POLICY 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 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 CSOP scheme has now been adopted. 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 as follows:
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 a service contract with the Group. Each appointment runs for one year from that date of appointment
and automatically renews thereafter. It is also terminable by six months’ notice by either party to expire at the end of that year or at any time
thereafter. The agreement contains restrictive covenants. Upon termination, no benefits (other than those accruing during the notice period)
are due to the Director. The Executive Directors also retire at the AGM in rotation in accordance with the Company’s Articles of Association.
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 2021 are as follows:
Executive Directors
P Amin
M Patel
Non-Executive Directors
B Huard
M O’Leary
E Richards
12-month period to 30.06.21
Salary/Fees
£’000
Benefits
£’000
Bonus
£’000
Share-based
Pension payment**
£’000
£’000
Total
£‘000
Number of
outstanding
options
190
310
500
6
14
20
162
264
426
10
16
26
149
198
347
517
875,000
802 1,241,728
1,319 2,116,728
Salary/Fees
£’000
Benefits
£’000
Bonus
£’000
Share-based
Pension payment**
£’000
£’000
45
100
45
190
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
£‘000
45
100
45
190
Number of
outstanding
options
–
–
–
** The share-based payment calculation is based on the end-to-end share option awards allocated to Milan Patel post the AGM in
December 2017 and to Paraag Amin as of October 2018, which could be awarded at the end of a 3-year vesting period. These are
based on challenging absolute total shareholder return performance targets. Under IFRS 2 Share-based payments, the Group must provide
an estimate for the costs based on a Black Scholes model valuation each year, as if they fully paid out at the end of the performance period
in December 2020 and October 2021 for Paraag Amin. To be fully paid out, the Group must achieve an annual compounded TSR of 35%
over a 3-year period. In the period, part of the end-to-end share options awarded to Milan vested and the remainder lapsed. A new grant was
made by the remuneration committee under the long-term incentive program with performance measures that are based on the Company’s
total shareholder return and earnings per share in 2024.
The Directors’ emoluments for the year ended 30 June 2020 are as follows:
Executive Directors
P Amin
M Patel
Non-Executive Directors
T Taylor
B Huard
M O’Leary
E Richards
12-month period to 30.06.20
Salary/Fees
£’000
Benefits
£’000
Bonus
£’000
190
310
500
6
17
23
80
130
210
Pension
£’000
Share-based
payment*
£’000
10
15
25
149
289
438
Number of
Total outstanding
options
£‘000
435
875,000
761 1,375,000
1,196 2,250,000
Salary/Fees
£’000
Benefits
£’000
Bonus
£’000
Share-based
Pension payment**
£’000
£’000
Total
£‘000
Number of
outstanding
options
75
35
46
8
164
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
75
35
46
8
164
–
–
–
–
* The share-based payment calculation is based on the end-to-end share option awards allocated to Milan Patel post the AGM in
December 2017 and to Paraag Amin as of October 2018, which could be awarded at the end of a 3-year vesting period. These are
based on challenging absolute total shareholder return performance targets. Under IFRS 2 Shared-based payments, the Group must provide
an estimate for the costs based on a Black Scholes model valuation each year, as if they fully paid out at the end of the performance period
in December 2020 and October 2021 for Paraag Amin. To be fully paid out, the Group must achieve an annual compounded TSR of 35%
over a 3-year period. In the period, part of the end-to-end share options awarded to Milan vested and the remainder lapsed. A new grant was
made by the remuneration committee under the long-term incentive program with performance measures that are based on the Company’s
total shareholder return and earnings per share in 2024.
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Dotdigital Group Plc
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39
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
are stated below:
M Patel
B Huard
M O’Leary
No of
shares
held
1,575,927
22,700
14,000
1,612,627
% Holding
0.53
0.01
0.01
0.55
DIRECTORS’ INTEREST IN SHARE OPTIONS
Under the Group’s executive share option scheme, the following Directors have the right to acquire ordinary shares:
Director
M Patel
M Patel
P Amin
Grant
date
19/12/17
21/12/20
24/10/18
No. of share
options granted
Option
price (pence)
935,000
306,728
875,000
0.5
0.5
0.5
Date first
exercisable
18/12/22
21/12/23
23/10/23
Expiry date
18/12/24
21/12/25
23/10/25
The end-to-end awards granted to Milan Patel and to Paraag Amin can only be exercised at the end of a 3-year vesting period, based
on challenging absolute total shareholder return performance targets. Under IFRS 2 Share-based payments, the Group must provide an
estimate for the costs based on a Black Scholes model valuation each year, as if they fully paid out at the end of the performance period in
December 2020 to Milan and October 2021 for Paraag Amin. To fully vest, the Group must achieve an annual compounded TSR of 35% over
a c.3 year period. In the period, part of the end-to-end share options awarded to Milan vested and the remainder lapsed. A new grant was
made by the remuneration committee under the long-term incentive program with performance measures that are based on the Company’s
total shareholder return and earnings per share in 2024.
COMPOSITION OF THE REMUNERATION COMMITTEE
The Remuneration Committee comprises independent Non-Executive Directors, namely Boris Huard (Chairman), Mike O’Leary and Liz
Richards. 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 four
times during the year.
The Chief Executive attends meetings and provides information and support as requested. He is not present when his remuneration
package is considered.
ADVISORS
The Committee receives independent advice from FIT Remuneration Consultants LLP when required.
APPROVAL
This report was approved by the Board on 16 November 2021 and signed on its behalf by:
BORIS HUARD
Chairman of Remuneration Committee
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 2021, are as follows:
Director
M Patel
P Amin
30.06.21
Number of
options held
30.06.20
Number of
options held
1,241,728
1,375,000
875,000
875,000
The end-to-end awards granted to Milan Patel and to Paraag Amin
can only be exercised at the end of a 3-year vesting period, based
on challenging absolute total shareholder return performance
targets. Under IFRS 2 Share-based payments, the Group must
provide an estimate for the costs based on a Black Scholes model
valuation each year, as if they fully paid out at the end of the
performance period in December 2020 to Milan and October 2021
for Paraag Amin. To fully vest, the Group must achieve an annual
compounded TSR of 35% over a c.3 year period. In the period, part
of the end-to-end share options awarded to Milan vested and the
remainder lapsed. A new grant was made by the remuneration
committee under the long-term incentive program with performance
measures that are based on the Company’s total shareholder return
and earnings per share in 2024.
SUBSTANTIAL INTERESTS
On 30 September 2021, the following parties had notified the Group
of a beneficial interest that represents 3% or more of the Groups’s
issued share capital at that date:
Shareholder
Number of
shares held
Percentage
shareholding
%
Liontrust Asset Management
48,898,875
16.37%
Tink Taylor, Founder and President
29,776,667
Octopus Investments
Slater Investments
Investec Wealth & Investment
28,851,475
15,762,642
15,475,643
9.97%
9.66%
5.28%
5.18%
Franklin Templeton Fund Management
9,622,500
3.22%
FUTURE OUTLOOK
The Group provides omnichannel 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 whole
of the period from 1 July 2020 to the date of this report.
P Amin
B Huard
M O’Leary
M Patel
E Richards
The Directors present their report with the financial statements
of the Company and the Group for the year ended 30 June 2021.
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
omnichannel 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 £47.4m in the year ended June 2020 to £58.1m
for the year ended June 2021, an increase of 23%.
Adjusted operating profit grew from £13.1m in the 12 months to
June 20 to £13.7m for the year ended June 2021, an increase of 5%.
During the year and up until the year end, Dynmark International
trade was being transferred to Dotdigital EMEA Limited, in
preparation for it to cease trading on 30 June 2021.
DIVIDENDS
The Board proposes a dividend payment of £2,582,794 comprising
an ordinary dividend of 0.86p per ordinary share (2020: £2,472,466
ordinary dividend of 0.83p 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 for 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
and in Note 26.
STRATEGIC REPORT
The Strategic Report covers pages 2 to 29.
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 13 days (2020: 34 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 2021, are as follows:
30.06.21
30.06.20
Number of
shares held
1,575,927
22,700
14,000
Percentage
shareholding
%
0.53
0.01
0.01
Number of
shares held
1,575,972
22,700
–
Percentage
shareholding
%
0.53
0.01
–
Director
M Patel
B Huard
M O’Leary
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Dotdigital Group Plc
Annual Report 2020/2021
41
Governance
REPORT OF THE DIRECTORS CONTINUED
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 23
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.
STREAMLINED ENERGY AND CARBON REPORTING
The Group is committed to reducing its environmental impact.
The new Streamlined Energy and Carbon Reporting (SECR)
regulations require us to report on our energy use.
GHG Emissions and Energy Use
The Group’s Scope 1 and 2 GHG emission sources are from office
building energy use as the Group has no business fleet vehicles.
GHG Impact Areas
Scope 1 (Gas & Fuel Oil)
Scope 2 (Electricity)
GROSS SCOPE 1&2
GROSS SCOPE 1&2 / FTE
GROSS SCOPE 1&2 / £1000 REVENUE
Scope 3
Purchased green tariff
Purchased carbon offset
Total/kWh
260,534
Total/kg CO2e
58,544
215,145
61,084
475,679
119,628
1445
8.18
364
2.06
127,364
-17,441
-279,000
BASE YEAR RECALCULATION
The Group’s first reporting year (2019-20) uses only the last of the
above-mentioned methods for estimating emissions and a smaller
set of Scope 3 emissions sources. For consistency, the energy
consumption and GHG emissions have been recalculated with the
new methods, new emissions sources, and correction of Warsaw
staff members from an erroneous value of 39 to 7 (total correction
of FTEs from 343 to 311).
GHG Impact Areas
Scope 1 (Gas & Fuel Oil)
Scope 2 (Electricity)
GROSS SCOPE 1&2
GROSS SCOPE 1&2 / FTE
GROSS SCOPE 1&2 / £1000 REVENUE
Scope 3
Purchased green tariff
Purchased carbon offset
NET SCOPE 1, 2, 3 & OFFSETS
TRENDS
Compared to the base year of FY 2019/20:
Total/kWh
261,589
Total/kg CO2e
58,796
407,728
118,333
669,317
177,129
2152
14.12
290,451
570
3.74
-26,301
-329,000
112,279
GHG Impact Areas
Scope 1 (Gas & Fuel Oil)
Scope 2 (Electricity)
GROSS SCOPE 1&2 71.0
GROSS SCOPE 1&2 / FTE
GROSS SCOPE 1&2 / £1000 REVENUE
kWh % of kg
base year
99.6
CO2e % of
base year
99.6
52.8
67.5
67.1
57.9
43.9
51.6
63.9
55.1
NET SCOPE 1, 2, 3 & OFFSETS
-49,449
Scope 3
The Group are in serviced offices with little visibility on energy
consumption from landlords and property managers. The energy use
and GHG emissions were calculated using a combination of:
• mean averages from provided data;
• extrapolation of provided data considering seasonal trends;
• mean observed reduction in energy usage from reduced office
occupation due to Covid-19;
• as a last resort, using UK average per staff member office gas
and electricity use.
In all cases, national emissions factors were applied to the electricity
use, but a consistent UK value was applied to natural gas use. Office
variation was also considered in terms of use of mains gas.
The Group is gathering data on Scope 3 GHG emissions sources
from business travel, data centres and hosting, remote workers,
employee commuting, and transmission and distribution losses.
The Group is compliant with the Streamlined Energy and Carbon
Reporting requirements as a Quoted company. This is the second
year of reporting.
Consumption of gas and fuel oil has been assumed to remain largely
the same because of insufficient data to extrapolate a potential
reduction in use through the Covid-19 pandemic while all staff were
working from home. This reflects a “worst case” scenario and we
would expect to see a reduction if we had real-world data.
Electricity consumption per FTE has halved largely because of lower
office occupancy.
Despite all staff working from home, the Group observed a large
reduction in Scope 3 emissions due to the lack of business travel
and employee commuting.
GHG OFFSETS
The Group offsets all GHG emissions measured in a given financial
year. This commitment naturally covers all Scope 1 and 2 emissions,
but also includes Scope 3 emissions sources originally considered
in that reporting year.
Following recalculation of emissions sources in the base year of
2019/20, there were approximately 49 t CO2e of additional GHG
emissions to consider. These emissions have been offset with a one-
off additional purchase in this financial year (2020/21).
The Group’s total offset for 2020/21 was therefore 279 t CO2e,
comprised of 230 t CO2e to offset all measured emissions for
2020/21 and an additional 49 t CO2e to offset additional GHG
emissions for 2019/20 following recalculation.
42
Dotdigital Group Plc
PRODUCT DEVELOPMENT
In the markets in which the Group operates, effective development
is vital to maintaining competitive advantage and securing future
income streams.
GOING CONCERN
After making appropriate inquiries, 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 the London Stock
Exchange Alternative Investment Market (AIM) since 29 March 2011.
Canaccord Genuity are the Group’s nominated advisor and together
with FinnCap and Singer are the joint brokers. The closing mid-
market share price at 30 June 2021 was 231p (2020: 102p)
RELATED PARTY TRANSACTIONS
Disclosures relating to related party transactions are set out in
note 26 to the Consolidated financial statements.
CHARITABLE AND POLITICAL DONATIONS
No political donations were made by the Company.
Charitable donations made by the Group in the year were £8,627
(2020: £2,032).
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 BY THE DIRECTORS IN PERFORMANCE OF
THEIR STATUTORY DUTIES IN ACCORDANCE WITH S172 (1)
COMPANIES ACT 2006
The Board of Directors of Dotdigital Group PLC consider, both
individually and together, that they have acted in the way they
consider, in good faith, would be most likely to promote the success
of the Group for the benefit of its members and shareholders as a
whole and, in doing so have regard (amongst other matters) to:
•
•
•
•
the likely consequences of any decisions in the long term;
the interests of the Group’s employees;
the need to foster the Group’s business relationships with
suppliers, customers and others;
the impact of the Group’s operations on the community
and environment;
•
the desirability of the Group maintaining a reputation for high
standards of business conduct; and
•
the need to act fairly as between shareholders of the Group.
As part of a Director’s induction they are briefed on their duties
and they can access professional advice on these, either from
the Company Secretary, the NOMAD or any other independent
advisor if necessary. The Directors fulfil their duties partly through a
governance framework that delegates day-to-day decision making
within authority levels to senior employees of the Group.
The following paragraphs summarise how the Directors fulfil
their duties:
RISK MANAGEMENT
We provide business critical technology for our clients across
many industries and sectors. As we grow, our business and our risk
environment also become more complex. It is therefore vital that we
effectively identify, evaluate, manage and mitigate the risks we face,
and that we continue to evolve our approach to risk management. A
Risk committee exists within the business that meets bi-monthly to
make sure all aspects of risks are registered, mitigated or solutions
are found and executed to reduce these.
For details of our principal risks and uncertainties, and how we
manage our risk environment, please see pages 22 to 26.
OUR PEOPLE
The Group is committed to being a responsible business. Our
behaviour is aligned with the expectations of our people, clients,
investors, communities and society as a whole. People are at the
heart of our business. The Group has found the balance in culture
to succeed along with managing our people’s performance and
development and bringing through the talent while ensuring we
operate as efficiently as possible. We continue to ensure we share
common values that inform and guide our behaviour, so we achieve
our goals in the right way.
For further details on our people, please see page 27.
BUSINESS RELATIONSHIPS
Our strategy prioritises organic growth, driven by cross-selling
and upselling our services to our existing customers, as well as
recommending our partners, to help our customers to drive a better
return on investment from their digital marketing and bringing
new clients into the Group. To do this, we need to develop strong
relationships with both the customers and the strong partner
ecosystem we have built. We value our suppliers and have multi-year
contracts with our key suppliers. We have a goal in the business to
make sure we aim to pay all our suppliers within their credit terms to
help develop a healthy relationship.
For further details on how we work with our clients, please see page 28.
COMMUNITY AND ENVIRONMENT
The Group’s approach is to use our position of strength to create
positive change for the people and communities with which we
interact. The Group has maintained its ISO14001 certificate for
a second year with no non-conformities raised and has a fully
established Integrated Management System (IMS). This year the
Group is carbon neutral and we aim to achieve this standard into the
foreseeable future.
For further details on how we interact with communities and the
environment, please see pages 28 to 29.
Annual Report 2020/2021
43
Governance
REPORT OF THE DIRECTORS CONTINUED
REPORT OF THE INDEPENDENT AUDITOR
STATEMENT AS TO DISCLOSURE OF INFORMATION
TO AUDITOR
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.
AUDITORS
Moore Kingston Smith LLP were appointed as auditors on 11 May
2021 and, having expressed their willingness to continue in office,
will be proposed for reappointment at the forthcoming Annual
General Meeting in accordance with section 489 of the Companies
Act 2006.
The Directors’ Report was authorised for issue by the Board of
Directors on 16 November 2021 and was signed on its behalf by:
MILAN PATEL
Chief Executive Director
16 November 2021
SHAREHOLDERS
The Board is committed to openly engaging with our shareholders,
as we recognise the importance of a continuing effective dialogue,
whether with institutional investors, private or employee shareholders.
It is important to us that our stakeholders understand our strategy and
objectives, so these must be explained clearly, feedback heard, and
any issues or questions raised, properly considered.
For further details on how we engage with our shareholders, please
see page 32.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the annual report
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 UK.
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 UK subject to any material departures disclosed
and explained in the financial statements; and
• Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Parent
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.
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 2021 which comprise the Consolidated Income
Statement, the Consolidated Statement of Comprehensive Income,
the Consolidated and Parent Company Statements of Financial
Position, the Consolidated and Parent Company Statements
of Changes in Equity, the Consolidated and Parent Company
Statements of Cash Flows, and Notes to the Financial Statements,
including significant accounting policies. The financial reporting
framework that has been applied in their preparation is applicable
law and UK adopted international accounting standards and, as
regards the Parent Company financial statements, as applied in
accordance with the provisions of the Companies 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
2021 and of the Group’s profit for the year then ended;
• The Group financial statements have been properly prepared
in accordance with UK adopted international accounting
standards;
• The Parent Company financial statements have been properly
prepared in accordance with UK adopted accounting standards
and as applied in accordance with the provisions of the
Companies Act 2006; and
• The financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
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 Group 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.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our Group audit was scoped by obtaining an understanding of the
Group and its environment, including the Group’s system of internal
control, and assessing the risks of material misstatement in the
financial statements. We also addressed the risk of management
override of internal controls, including assessing whether there
was evidence of bias by the Directors that may have represented
a risk of material misstatement. The components of the Group
were evaluated by the Group audit team based on a measure of
materiality, considering each component as a percentage of the
Group’s total assets, current assets, revenue and gross profit, which
allowed the Group audit team to assess the significance of each
component and determine the planned audit response.
For those components that were evaluated as significant
components, either a full scope or specified audit approach was
determined based on their relative materiality to the Group and
our assessment of the audit risk. For significant components
requiring a full scope approach, we evaluated controls by performing
walkthroughs over the financial reporting systems identified as
part of our risk assessment, reviewed the accounts production
process and addressed critical accounting matters. We then
undertook substantive testing on significant transactions and
material account balances.
In order to address the audit risks identified during our planning
procedures, we performed a full scope audit of the financial
statements of the Parent Company and of the financial information
of Dotdigital EMEA Limited. We performed specified audit
procedures over the other components listed in note 16 to
the financial statements. All work was carried out by the Group
audit team.
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.
44
Dotdigital Group Plc
Annual Report 2020/2021
45
Governance
REPORT OF THE INDEPENDENT AUDITOR CONTINUED
KEY AUDIT MATTERS CONTINUED
Key audit matters
Revenue recognition
Revenue is a significant item in the consolidated income statement
and impacts a number of management’s key judgements,
performance indicators and key strategic indicators.
There is a risk of incorrect revenue recognition due to fraud or
error, arising from:
• Recognition of revenue in the incorrect period;
• Revenue not being recognised in accordance with the
requirements of IFRS 15 ‘Revenue from Contracts with
Customers’; and
• Manipulation of revenues around the year-end through
management override of controls.
How our scope addressed this matter
Our audit work included, but was not restricted to:
• Evaluating the Group’s accounting policy in respect of revenue
recognition to ensure it was in compliance with IFRS 15;
• Performing substantive testing on a sample of individual
revenue transactions throughout the year across the
significant revenue streams to evaluate whether revenue is
recognised in accordance with the contract terms, having
considered the principles of IFRS 15 and the commercial
substance of the contracts;
• Testing of certain key controls identified in relation
to revenue;
We therefore identified revenue recognition as a key audit matter.
• Performance of substantive audit procedures including
agreeing revenue transactions selected for testing through
to supporting evidence including sales invoice, contracts
and cash receipts;
• Reviewing material credit notes, invoices and receipts post
year end;
• Performing sales cut off tests to ensure revenue had been
recognised in the correct period;
• Testing deferred revenue and the revenue on free services
to ensure it had been correctly calculated; and
•
In addition, we reviewed the adequacy of the disclosures
under IFRS15.
Key observations
From our audit testing, we did not identify any material
misstatements in respect of revenue recognition.
Valuation of intangible assets and goodwill
The Directors are required to make an assessment to determine
Our audit work included, but was not restricted to:
whether there are indicators of impairment relating to the Group’s
intangible assets and goodwill at the reporting date.
• Obtaining management’s analysis of their assessment of
whether there were any indicators of impairment;
The Group had intangible assets with a net book value of £16,134,000
at 30 June 2021 (30 June 2020: £14,059,000).
The Group had goodwill with a net book value of £9,680,000 at
30 June 2021 (30 June 2020: £9,680,000).
The process for assessing whether impairment exists under
(IAS 36 ‘Impairment of Assets’) is complex. The process of
determining the value in use, through forecasting cash flows related
to each asset and the determination of the appropriate discount rate
and other assumptions to be applied, can be highly judgemental
and can significantly impact the results of the impairment review.
Based on the judgemental nature of an impairment review, we
identified valuation of intangible assets and goodwill as a key
audit matter.
• Critically assessing the impairment workings prepared by the
client in relation to intangible assets and goodwill to ensure
that no impairment was required;
• Performing sensitivity analysis on and critically assessing key
assumptions used in the impairment workings;
• Evaluating the accounting policy and detailed disclosures in
the notes to the financial statements to determine whether
information provided in the financial statements is compliant
with the requirements of IAS 36 and consistent with the
results of the impairment review; and
• Review of the amortisation accounting policy for intangible
fixed assets to ensure it was reasonable.
Key observations
Based on our audit work, we concluded that intangible assets
and goodwill are not materially misstated as the year-end and
that management’s assessment that no impairment was required
was appropriate.
Capitalisation and valuation of development costs
During the year, the Group capitalised development costs of
£6,797,000. These capitalised costs are being amortised over
five years. The development cost additions represent resources
the Group has invested in for the development of new innovative
technology products for marketing professionals.
There is significant level of judgement and subjectivity involved
in assessing whether the internally generated intangible assets
qualify for capitalisation in accordance with IAS 38. We have
therefore identified the capitalisation of developments costs
as a key audit matter.
Our audit work included, but was not restricted to:
• Using substantive procedures, selecting a sample of projects
to ensure that they related to development costs by review of
timesheet data, employee contracts, discussions with project
leads and agreeing to other supporting documentation;
• Performing a review of whether any projects have had a
research phase that should be considered separate from
the development phase. Selecting a sample of staff time on
projects to review for any costs which should not have been
capitalised;
• Performing substantive analytical review on internal staff
costs capitalised by completing a proof in total which
included agreeing costs per the payroll reports to the
amounts capitalised.
• Testing a sample of third party costs to supporting
documentation;
• Considering whether the criteria for capitalising certain
administrative overhead expenditure was in accordance
with IAS 38; and
• Reviewing the Research & Development prepared by both
internal and external experts and comparing to the costs
capitalised in the year.
Key observations
Based on our audit work, we concluded that the development
costs have been capitalised appropriately in accordance with
the requirements of IAS 38.
46
Dotdigital Group Plc
Annual Report 2020/2021
47
REPORT OF THE INDEPENDENT AUDITOR CONTINUED
Impairment of investments
The Directors are required to make an assessment to determine
whether the carrying value of the Parent Company’s investments in
subsidiaries is recoverable.
The Company had investments of £18,411,000 at the year ended
30 June 2021 (30 June 2020: £17,516,000 as restated).
The process for assessing whether impairment exists under IFRS
is complex. The process of determining the value in use through
forecasting cash flows and the determination of the appropriate
discount rate and other assumptions to be applied can be highly
judgemental and can significantly impact the results of the
impairment review.
Due to the complex nature of this process, we identified impairment
of investments as a key audit matter
Going concern
The global impact of the Covid-19 pandemic has led to
unprecedented levels of uncertainty of outcomes, with the full
range of possible effects still unknown. As a result going concern
is considered to be a key audit matter.
Our audit work included, but was not restricted to:
• Obtaining management’s forecasts utilised in the impairment
assessment and critically assessing them;
• Reviewing the board minutes, and holding discussions with
management to understand the strategy for the investment
and expectations going forward;
• Challenging and critically assessing management’s
assumptions utilised in the impairment models, including
forecasts, growth rates and discount rates;
• Performing a sensitivity analysis to check whether
management’s forecasts would leave positive headroom
if the assumptions of values increased or decreased;
• Comparing the calculated value in use for the investment
to the carrying value of its net assets; and
• Evaluating the accounting policy and detailed disclosures in
the notes to the financial statements to determine whether
information provided in the financial statements is compliant
with the requirements of IFRS and consistent with the results
of the impairment review.
Key observations
Given the fact that the trade and assets of Dynmark International
Ltd were transferred to Dotdigital EMEA Limited, the directors
have included the investments value in relation to Dynmark
International Ltd as part of the investments in Dotdigital EMEA
Limited in their assessment of impairment. We considered that
this was acceptable.
As summarised in other audit matters below, the carrying amount
of investments was understated in the current and prior year.
Based on our audit work, we concluded that the carrying value
of the Company’s investments is not materially misstated at
the reporting date and that management’s assessment that no
impairment is required is appropriate.
Our audit work included, but was not restricted to:
• We have critically assessed the forecasts prepared by the
directors for any indicators of adverse effects and potential
risks which could impact the group’s ability to continue as a
going concern;
• Reviewing post year end management accounts in
comparison to the profit and loss forecasts prepared by the
Directors; and
• Reviewing going concern disclosures and assessing whether
the disclosure referred to the relevant circumstances
considered by the management in forming their assessment
and were appropriate given the impact on the Group of the
ongoing Covid-19 pandemic.
Key observations
Based on our audit work, we concluded that there was no
material uncertainty in relation to going concern and that the
disclosures made in the financial statements provide sufficient
information in this area.
OTHER AUDIT MATTERS
In performing our audit work, we identified that the share-based
payment arrangements granted by the Parent Company to
employees of subsidiary undertakings had not been correctly
accounted for in accordance with IFRS 2 ‘Share-based Payment’.
This resulted in an understatement in investments and equity in
the current and prior year Parent Company financial statements.
A current year adjustment of £625,000 and a prior year adjustment
of £2,373,000 was required to increase the carrying value of
investments in subsidiaries with a corresponding increase in equity.
In performing our audit work, we also identified prior year
adjustments in relation to deferred tax which have been summarised
in note 33 of the financial statements.
OUR APPLICATION OF MATERIALITY
The scope and focus of our audit was influenced by our assessment
and application of materiality. We define materiality as the
magnitude of misstatement that could reasonably be expected
to influence the readers and the economic decisions of the users
of the financial statements. We use materiality to determine the
scope of our audit and the nature, timing and extent of our audit
procedures and to evaluate the effect of misstatements, both
individually and on the financial statements as a whole.
Due to the nature of the Group we considered revenue to be the
main focus for the readers of the financial statements, accordingly
this consideration influenced our judgement of materiality. Based
on our professional judgement, we determined materiality for the
Group to be £340,622, based on a percentage of revenue.
On the basis of our risk assessment, together with our assessment
of the overall control environment, our judgement was that
performance materiality (i.e. our tolerance for misstatement in an
individual account or balance) for the Group was 50% of materiality,
namely £170,311.
We agreed to report to the Audit Committee all audit differences
in excess of £17,031, as well as differences below that threshold
that, in our view, warranted reporting on qualitative grounds. We
also reported to the Audit Committee on disclosure matters that
we identified when assessing the overall presentation of the
financial statements.
CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that
the Directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate. Our
evaluation of the Directors’ assessment of the Group and Parent
Company’s ability to continue to adopt the going concern basis
of accounting included, as set out in the Key Audit Matters
section above, a review of the detailed forecasts prepared by
the Directors which are based on their current expectations of
trading prospects and obtaining an understanding of all relevant
uncertainties, including those arising as a result of the ongoing
Covid-19 pandemic and the measures taken by the UK and
overseas governments to contain it.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group
and Parent Company’s ability to continue as a going concern for a
period of at least twelve months from when the financial statements
are authorised for issue.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections
of this report.
OTHER INFORMATION
The other information comprises the information included in
the annual report, other than the financial statements and our
auditor’s report thereon. The Directors are responsible for the other
information contained within the annual report. 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.
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
course of 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 themselves. 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 parent company 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
the Parent Company and their 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
where the Companies Act 2006 requires us to report to you if,
in our opinion:
• Adequate accounting records have not been kept by the
Parent Company, or returns adequate for our audit have not
been received from branches not visited by us; or
• The Parent Company financial statements are not in agreement
with the accounting records and returns; or
• Certain disclosures of Directors’ remuneration specified by
law are not made; or
• We have not received all the information and explanations
we require for our audit.
48
49
Annual Report 2020/2021Dotdigital Group PlcFinancial Statements
Governance
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Directors’ responsibilities statement
set out on page 44, 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 the 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 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 is available on the FRC’s
website at https://wwww.frc.org.uk/auditors/auditor-assurance/
auditor-s-responsibilities-for-the-audit-of-the-fi/description-of-the-
auditor’s-responsibilities-for
This description forms part of our Auditor’s Report.
EXPLANATION AS TO WHAT EXTENT THE AUDIT WAS
CONSIDERED CAPABLE OF DETECTING IRREGULARITIES,
INCLUDING FRAUD
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is
detailed below.
The objectives of our audit in respect of fraud, are; to identify
and assess the risks of material misstatement of the financial
statements due to fraud; to obtain sufficient appropriate audit
evidence regarding the assessed risks of material misstatement
due to fraud, through designing and implementing appropriate
responses to those assessed risks; and to respond appropriately
to instances of fraud or suspected fraud identified during the audit.
However, the primary responsibility for the prevention and detection
of fraud rests with both management and those charged with
governance of the Company.
Our approach was as follows:
• We obtained an understanding of the legal and regulatory
requirements applicable to the Group and considered that the
most significant are the Companies Act 2006, UK adopted
international accounting standards, the rules of the Alternative
Investment Market, and UK taxation legislation;
• We obtained an understanding of how the Group complies with
these requirements by discussions with management and those
charged with governance;
• We assessed the risk of material misstatement of the financial
statements, including the risk of material misstatement due
to fraud and how it might occur, by holding discussions with
management and those charged with governance;
• We inquired of management and those charged with governance
as to any known instances of non-compliance or suspected non-
compliance with laws and regulations; and
• Based on this understanding, we designed specific appropriate
audit procedures to identify instances of non-compliance
with laws and regulations. This included making enquiries of
management and those charged with governance and obtaining
additional corroborative evidence as required.
There are inherent limitations in the audit procedures described
above. We are less likely to become aware of instances of non-
compliance with laws and regulations that are not closely related
to events and transactions reflected in the financial statements.
Also, the risk of not detecting a material misstatement due to fraud
is higher than the risk of not detecting one resulting from error, as
fraud may involve deliberate concealment by, for example, forgery or
intentional misrepresentations, or through collusion.
USE OF OUR 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 for no purpose other than to
draw to the attention of the company’s members those matters
which we are required to include in an auditor’s report addressed
to them. To the fullest extent permitted by law, we do not accept
or assume responsibility to any party other than the company and
company’s members as a body, for our work, for this report, or for
the opinions we have formed.
ESTHER CARDER
Senior Statutory Auditor
For and on behalf of
Moore Kingston Smith LLP
Chartered Accountants
Statutory Auditor
Charlotte Building
17 Gresse Street
London
W1T 1QL
16 November 2021
FINANCIAL
STATEMENTS
CONTENTS
Financial statements
52 Consolidated income statement
52 Consolidated statement of comprehensive income
53 Consolidated statement of financial position
54 Company statement of financial position
55 Consolidated statement of changes in equity
56 Company statement of changes in equity
57 Consolidated statement of cash flows
57 Company statement of cash flows
58 Notes to the consolidated financial statements
90 Company information
50
50
Dotdigital Group Plc
Annual Report 2020/2021
51
Financial Statements
CONSOLIDATED INCOME STATEMENT
For the year ended 30 June 2021
Continuing operations
Revenue from contracts with customers
Cost of sales
Gross profit
Administrative expenses
Operating profit from continuing operations pre share-based
payments and exceptional costs
Share-based payments
Exceptional costs
Operating profit from continuing operations
Finance costs
Finance income
Profit before income tax from continuing operations
Income tax expense
Profit for the year from continuing operations
Loss for the year from discontinued operations
Profit for the period attributable to the owners of the Company
Earnings per share from all operations (pence per share)
Basic
Diluted
Adjusted Basic
Adjusted Diluted
Earnings per share from continuing operations (pence per share)
Basic
Diluted
Adjusted Basic
Adjusted Diluted
Earnings per share from discontinued operations (pence per share)
Basic
Diluted
Adjusted Basic
Adjusted Diluted
Notes
30.06.21
£’000
Restated
30.06.20
£’000
47,404
(3,899)
43,505
58,124
(10,356)
47,768
(34,089)
(30,443)
13,679
13,062
(625)
(188)
(682)
(136)
12,866
12,244
(74)
20
12,812
(1,322)
11,490
(899)
(98)
40
12,186
(1,219)
10,967
(378)
10,591
10,589
3.55
3.50
3.82
3.76
3.85
3.79
4.12
4.06
(0.30)
(0.30)
(0.30)
(0.30)
3.55
3.50
3.95
3.90
3.68
3.63
3.95
3.90
(0.13)
(0.13)
(0.00)
(0.00)
7
7
28
5
6
6
7
8
12
11
11
11
11
11
11
11
11
11
11
11
11
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2021
Profit for the year
Other comprehensive income
Items that may be subsequently reclassified to profit or 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
Comprehensive loss from discontinued operations
Notes
30.06.21
£’000
10,591
Restated
30.06.20
£’000
10,589
(87)
34
10,504
10,623
11,403
(899)
11,001
(378)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 30 June 2021
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
Lease liabilities
Deferred tax
Current liabilities
Trade and other payables
Financial liabilities – Interest bearing loans and borrowings
– Lease liabilities
Current tax payable
Total liabilities
Total equity and liabilities
Notes
30.06.21
£’000
Restated
30.06.20
£’000
Restated
30.06.19
£’000
13
14
15
17
18
19
20
20
20
20
20
22
24
21
22
9,680
16,134
3,972
29,786
13,350
31,951
45,301
75,087
1,494
7,124
(4,695)
3,066
(37)
54,081
61,033
2,489
1,207
3,696
9,334
–
934
90
10,358
14,054
75,087
9,680
14,059
5,262
29,001
12,987
25,383
38,370
67,371
1,493
6,967
(4,695)
1,600
50
45,655
51,070
3,399
1,983
5,382
9,796
–
1,068
55
10,919
16,301
67,371
9,680
11,702
1,037
22,419
12,222
19,320
31,542
53,961
1,490
6,791
(4,695)
910
16
36,971
41,483
–
1,377
1,377
11,096
5
–
–
11,101
12,478
53,961
The financial statements were approved and authorised for issue by the Board of Directors on 16 November 2021 and were
signed on its behalf by:
Milan Patel
Director
Company registration number: 06289659 (England and Wales)
52
Dotdigital Group Plc
Annual Report 2020/2021
53
Financial Statements
COMPANY STATEMENT OF FINANCIAL POSITION
For the year ended 30 June 2021
Assets
Non-current assets
Property, plant and equipment
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 and liabilities
Notes
30.06.21
£’000
Restated
30.06.20
£’000
Restated
30.06.19
£’000
16
17
18
19
20
20
20
21
4
18,141
18,145
140
85
225
18,370
1,494
7,124
1,690
7,570
3
17,516
17,519
797
396
1,193
18,712
1,493
6,967
1,372
5,924
–
16,839
16,839
808
594
1,402
18,241
1,490
6,791
720
5,207
17,878
15,756
14,208
492
492
2,956
2,956
4,033
4,033
18,370
18,712
18,241
As permitted by section 408 of the Companies Act 2006, the Parent Company’s income statement has not been included in
these financial statements. The profit for the Company was £3,811,597 (2020: £2,682,558).
The financial statements were approved and authorised for issue by the Board of Directors on 16 November 2021 and were
signed on its behalf by:
Milan Patel
Director
Company registration number: 06289659 (England and Wales)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2021
Called up
share capital
£’000
Retained
earnings
£’000
Share
premium
£’000
Retranslation
reserve
£’000
Reverse
acquisition
reserve
£’000
Other
reserves
£’000
Total
equity
£’000
Balance at 1 July 2019,
as previously reported
Impact of correction of errors
(note 33)
1,490
37,161
6,791
–
(190)
–
Restated balance at 1 July 2019
1,490
36,971
6,791
Transactions with owners
(restated)
Issue of share capital
Dividends
Adjustments in relation
to IFRS 16
Transfer in reserves
Deferred tax on share options
Share-based payments
Transactions with owners
(restated)
Total comprehensive income
(restated)
Profit for the year
Other comprehensive income
Total comprehensive income
Restated balance as
at 30 June 2020
Balance as at 1 July 2020
Issue of share capital
Dividends
Transfer in reserves
Deferred tax on share options
Share-based payments
Transactions with owners
Profit for the year
Other comprehensive income
Total comprehensive income
3
–
–
–
–
–
3
–
–
–
1,493
1,493
1
–
–
–
–
1
–
–
–
Balance as at 30 June 2021
1,494
–
(1,996)
61
30
–
–
176
–
–
–
–
–
(1,905)
176
10,589
–
10,589
45,655
45,655
–
(2,472)
307
–
–
(2,165)
10,591
–
10,591
54,081
–
–
–
6,967
6,967
157
–
–
–
–
157
–
–
–
7,124
16
–
16
–
–
–
–
–
–
–
–
34
34
50
50
–
–
–
–
–
–
–
(87)
(87)
(37)
(4,695)
720
41,483
–
(4,695)
190
910
–
41,483
–
–
–
–
–
–
–
–
–
–
(4,695)
(4,695)
–
–
–
–
–
–
–
–
–
–
–
–
(30)
38
682
179
(1,996)
61
–
38
682
690
(1,036)
–
–
–
1,600
1,600
–
–
(307)
1,148
625
1,466
–
–
–
10,589
34
10,623
51,070
51,070
158
(2,472)
–
1,148
625
(541)
10,591
(87)
10,504
61,033
(4,695)
3,066
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 IFRS 2 and the transfer on the exercise
or lapsing of share options.
54
Dotdigital Group Plc
Annual Report 2020/2021
55
Financial Statements
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2021
Called up
share capital
£’000
Retained
earnings
£’000
Share
premium
£’000
Other
reserves
£’000
Balance as at 30 June 2019,
as previously reported
Impact of correction of errors (note 33)
Restated balance at July 2019
Transactions with owners (restated)
Issue of share capital
Dividends
Transfer in reserves
Share-based payments
Transactions with owners (restated)
Total comprehensive income (restated)
Profit for the year
Total comprehensive income
Restated balance as at 30 June 2020
Balance as at 1 July 2020
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 2021
1,490
–
1,490
3
–
–
–
3
–
–
1,493
1,493
1
–
–
–
1
–
–
1,494
3,515
1,692
5,207
–
(1,996)
30
–
6,791
–
6,791
176
–
–
–
(1,966)
176
2,683
2,683
5,924
5,924
–
(2,472)
307
–
(2,165)
3,811
3,811
7,570
–
–
6,967
6,967
157
–
–
–
157
–
–
Total
equity
£’000
12,516
1,692
14,208
179
(1,996)
30
652
(1,135)
2,683
2,683
15,756
15,756
158
(2,472)
307
318
(1,689)
3,811
3,811
720
–
720
–
–
–
652
652
–
–
1,372
1,372
–
–
–
318
318
–
–
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 IFRS 2 and transfer on the exercise or
lapsing of share options.
7,124
1,690
17,878
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2021
Cash flows from operating activities
Cash generated from operations
Tax paid
Net cash generated from operating activities
Net cash used in continuing operating activities
Net cash used in discontinued operating activities
Cash flows from investing activities
Purchase of intangible fixed assets
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Interest received
Net cash flows used in investing activities
Net cash used in continuing investing activities
Net cash used in discontinued investing activities
Cash flows from financing activities
Equity dividends paid
Payment of lease liabilities
Proceeds from share issues
Net cash flows used in financing activities
Net cash used in continuing financing activities
Net cash used in discontinued financing activities
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes
Cash and cash equivalents at end of year
COMPANY STATEMENT OF CASH FLOWS
For the year ended 30 June 2021
Cash flows from operating activities
Cash generated from operations
Net cash generated from operating activities
Cash used in investing activities
Purchase of property, plant and equipment
Net cash flows used in investing activities
Cash flows from financing activities
Equity dividends paid
Proceeds from share issues
Net cash flows used in 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
29
30
30
30.06.21
£’000
30.06.20
£’000
17,969
(975)
16,994
20,710
(3,716)
(6,870)
(169)
2
20
(7,017)
(7,017)
–
(2,472)
(1,182)
158
(3,496)
(3,446)
(50)
6,481
25,383
87
31,951
15,907
(124)
15,783
18,214
(2,431)
(6,505)
(277)
–
40
(6,742)
(6,741)
(1)
(1,996)
(1,127)
179
(2,944)
(2,884)
(60)
6,097
19,320
(34)
25,383
Notes
29
30.06.21
£’000
30.06.20
£’000
2,006
2,006
1,622
1,622
(3)
(3)
(2,472)
158
(2,314)
(311)
396
85
(3)
(3)
(1,996)
179
(1,817)
(198)
594
396
30
30
56
Dotdigital Group Plc
Annual Report 2020/2021
57
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
1. General information
Dotdigital Group Plc (“Dotdigital”) is a public limited 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 41.
2. Accounting policies
Basis of preparation
These financial statements have been prepared in accordance
with International Financial Reporting Standards as adopted
by the UK (IFRSs as adopted by the UK) 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 Accounting
Standards Board and the IFRS Interpretations Committee
effective at the time of preparing the consolidated
financial statements.
New and amended standards adopted by the Company
The Company adopted the following new and amended
relevant IFRS in the year:
IFRS 7 Financial Instruments: Disclosures – amendments
IFRS 9 Financial Instruments–
1 January 2022
Amendments resulting from
Annual Improvements to IFRS
Standards 2018-2020 (fees in the
“10 per cent” test for derecognition
of financial liabilities)
Presentation of Financial
Statements – amendments
regarding the classification
of liabilities
Presentation of Financial
Statements – amendments
regarding the disclosure of
accounting policies
1 January 2023
1 January 2023
Accounting Policies, Changes in
Accounting Estimates and Errors –
amendments regarding the definition
of accounting estimates
1 January 2023
IAS 1
IAS 1
IAS 8
IAS 37 Provisions, Contingent Liabilities
and Contingent Assets –
Amendments regarding the costs
to include when assessing whether
a contract is onerous
1 January 2022
regarding pre-replacement issues in the context of the
IBOR reform
The financial statements are presented in sterling (£),
rounded to the nearest thousand pounds.
IFRS 9 Financial Instruments – amendments regarding pre-
replacement issues in the context of the IBOR reform
IAS 1
Presentation of financial statements – amendments
regarding the definition of materiality
IAS 8
Accounting policies, changes in accounting estimates
and errors – amendments regarding the definition of
materiality
The adoption of these accounting standards did not have any
effect on the Company’s statement of comprehensive income,
statement of financial position or equity.
Accounting standards issued but not yet effective
The International Accounting Standards Board (“IASB”)
has issued/revised a number of relevant standards with an
effective date after the date of these financial statements.
Any standards that are not deemed relevant to the operations
of the Company have been excluded. The Directors have
chosen not to early adopt these standards and interpretations
and they do not anticipate that they would have a material
impact on the Company’s financial statements in the period of
initial application.
Significant accounting policies
The Group has consistently applied the following accounting
policies to all periods presented in these consolidated
financial statements, except if mentioned otherwise.
The prior period consolidated income statement has been
restated because the Directors took the decision to change
the classification of certain expenses between cost of sales
and administrative expenses during the current year. In
addition, this has also been restated due to the misallocation
of deferred tax on share options between the income
statement and reserves and the miscalculation of deferred
tax on the internally generated development costs between
qualifying and non-qualifying assets. This misallocation and
miscalculation have also resulted in the restatement of the
consolidated statement of financial position and consolidated
statement of changes in equity. Further to the above, the prior
period company only statement of financial position and
statement of changes in equity have been restated to correct
the allocation of the share-based payment charge issued to
employees employed in the subsidiaries. Details of these
restatements can be found in note 33.
IFRS 7 Financial Instruments: Disclosures
– amendments regarding
replacement issues in the
context of the IBOR reform
IFRS 9 Financial Instruments –
Amendments regarding
replacement issues in the
context of the IBOR reform
Effective date
1 January 2021
1 January 2021
Basis of consolidation
In the period ended 2009, the Company acquired via a
share for share exchange the entire issued share capital
of Dotdigital EMEA Limited, whose principal activity is that
of providing SaaS via a leading omnichannel marketing
automation platform and managed services to digital
marketing professionals.
Under IFRS 3 ‘Business combinations’, the Dotdigital EMEA
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, Dotdigital EMEA
Limited. The following accounting treatment has been applied
in respect of the reverse acquisition:
58
Dotdigital Group Plc
• The assets and liabilities of the legal subsidiary, Dotdigital
EMEA 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 Dotdigital EMEA 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 Dotdigital EMEA Limited.
Revenue recognition
Revenue comprises the fair value of the consideration received
or receivable for the sale of 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 omnichannel marketing services to other
businesses, and services are either provided on a usage
basis or fixed price bespoke contract. All revenue is from
contracts signed with new customers and upgrades and
additional functional recurring revenue sold to existing
contracted clients. 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.
Professional services at no charge: The Group sells
professional services to its customers and there are occasions
when these services are provided at no cost as part of
the contract sold. The services provided for no charge are
recognised at the price stated within the latest price list and
accounted for as separate performance obligations when
the service occurs. The amount allocated to the services is
deducted from the contract value and the remainder of the
contract value is spread evenly over the term of the contract.
Prepaid contracts: The Group sells 12-, 24- and 36-month
contracts to its customers. This revenue is recognised monthly
over the period of the contract. Where a customer prepays
their contract, this is recognised over the period of the contract
irrespective of materiality.
Term contract billing: The Group raises the first invoice to
its new customers when the service agreement is signed.
Occasionally, the service does not start in the same month
as when the service agreement is signed but is invoiced in the
month where the service agreement is signed. The revenue
is then recognised over the period of the contract irrespective
of materiality.
Going concern
The Directors are required to satisfy themselves that it is
reasonable for them to conclude whether it is appropriate to
prepare the financial statements on a going concern basis,
and as part of that process they have followed the Financial
Reporting Council’s guidelines (“Guidance on the Going
Concern Basis of Accounting and Reporting on Solvency and
Liquidity Risk” issued April 2016).
The Group’s business activities together with factors that are
likely to affect its future development and position are set out
in the Chairman’s Report, the Chief Executive Officer’s Report
and Financial Review and the Directors’ Report. Budgets
and detailed profit and loss forecasts that look beyond
twelve months from the date of these consolidated financial
statements have been prepared and used to ensure that the
Group can meet its liabilities as they fall due.
The Directors have made various assumptions in preparing
these forecasts, using their view of both the current and future
economic conditions that may impact on the Group during
the forecast period. The Directors have also considered the
continued impact of the Covid-19 pandemic and the impact
of the measures taken to contain it, on the Group. Due to the
nature of the Group’s activities, there has not been a significant
on-going impact on the business (as detailed in the Chief
Executive Officer’s Review and Risk section).
Annual Report 2020/2021
59
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
For the year ended 30 June 2021
2. Accounting policies continued
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.
Operating profit
Operating profit is stated after charging operating expenses
but before finance costs and finance income.
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 CGUs.
• Domain names
Acquired domain names are shown at historical cost.
Domain names have a finite life and are carried at cost
less accumulated amortisation. Amortisation is calculated
using straight-line method to allocate the cost of domain
names over their useful lives of four years.
• Software
Acquired software and websites are shown at historical
cost. They have a finite life and are carried at cost less
accumulated amortisation. Amortisation is calculated
using straight-line method to allocate the cost of software
and websites over their useful lives of four years.
• Product development
Product development expenditure is capitalised when it
is considered that there is a commercially and technically
viable product, the related expenditure is separately
identifiable and there is a reasonable expectation that the
related expenditure will be exceeded by future revenues.
Following initial recognition, product developments are
carried at cost less any accumulated amortisation and
any accumulated impairment losses. The useful lives
of these intangible assets are assessed to have a finite
life of five years. Amortisation is charged on assets with
finite lives, and until economic benefit can be received and
recognised, this expense is taken to the income statement
and useful lives are reviewed on an annual basis.
Amortisation is charged from the point when the asset is
available for use.
Other development expenditures that do not meet
these criteria are recognised as an expense as incurred.
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
as detailed in IAS 38 ‘Intangible Assets’ 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 three 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
over the lifetime of the customer contract
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.
income or directly in equity. In this case, the tax is also
recognised in other comprehensive income or directly in
equity, respectively.
Current tax
Current taxes are based on the results shown in the financial
statements and are calculated according to local tax rules,
using tax rates enacted or substantially enacted by the balance
sheet date.
Deferred taxation
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in
the financial statements.
Deferred income tax assets are recognised to the extent that
it is probable that future taxable profit will be available against
which the temporary difference will be utilised.
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.
Right of use assets:
over the term of the lease
Short leaseholds:
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 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
Leases
Leases are recognised as a right-of-use asset and a
corresponding liability at the date at which the leased asset
is available for use by the Group. Each lease payment is
allocated between the liability and finance cost. The finance
cost is charged to the income statement over the lease period
so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period. The right-of-
use asset is depreciated over the shorter of the asset’s useful
life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured
on a present value basis. Lease liabilities include the net
present value of the following lease payments:
• fixed payments (including in-substance fixed payments),
less any lease incentives receivable;
• variable lease payment that are based on an index or
a rate;
• amounts expected to be payable by the lessee under
residual value guarantees;
•
the exercise price of a purchase option if the lessee is
reasonably certain to exercise that option, and;
• payments of penalties for terminating the lease, if the
lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be determined, the
lessee’s incremental borrowing rate is used, being the rate
that the lessee would have to pay to borrow the funds
necessary to obtain an asset of similar value in a similar
economic environment with similar terms and conditions.
Right-of-use assets are measured at cost comprising
the following:
•
the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement
date less any lease incentives received;
• any initial direct costs; and;
•
restoration costs.
60
Dotdigital Group Plc
Annual Report 2020/2021
61
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
For the year ended 30 June 2021
2. Accounting policies continued
Payments associated with short-term leases and leases of
low-value assets are recognised on a straight-line basis as
an expense in the income statement. Short-term leases are
leases with a lease term of 12 months or less. Low-value
assets, being less than £5,000, comprise IT equipment and
small items of office furniture.
Extension and termination options
Extension and termination options are included in a number
of property and equipment leases across the Group. These
terms are used to maximise operational flexibility in terms
of managing contracts. The majority of extension and
termination options held are exercisable only by the Group and
not by the respective lessor. None of the total lease payments
made in the period to 30 June 2021 were optional.
In determining the lease term, management considers all
facts and circumstances that create an economic incentive
to exercise an extension option, or not exercise a termination
option. Extension options (or periods after termination
options) are only included in the lease term if the lease
is reasonably certain to be extended (or not terminated).
Potential future cash outflows have not been included in the
lease liability because it is not reasonably certain that the
leases will be extended (or not terminated), the amount of
these cash flows is uncertain as several rounds of rent reviews
are due before this extension date.
Financial instruments
Financial assets and financial liabilities are recognised on
the statement of financial position when an entity becomes
a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured
at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial liabilities at
fair value through profit or loss) are added to or deducted from
the fair value of the financial assets or financial liabilities, as
appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognised
immediately in the income statement.
Financial assets
The Group’s accounting policies for financial assets are set
out below.
Management determine the classification of its financial
assets at initial recognition depending on the purpose for which
the financial assets were acquired and, where allowed and
appropriate, revaluate this designation at every reporting date.
All financial assets are recognised on a trade date when, and
only when, the Group becomes a party to the contractual
provisions of an instrument. When financial assets are
recognised initially, they are measured at fair value plus
transaction costs, except for those finance assets classified
as at fair value through profit or loss (‘FVTPL’), which are
initially measured at fair value.
Financial assets are classified into the following specified
categories: financial assets at FVTPL, ‘held-to-maturity’
investments, and loans and receivables. The classification
depends on the nature and purpose of the financial assets
and is determined at the time of recognition.
Financial assets are classified into the following specified
categories: financial assets at FVPL, ‘amortised cost’ or ‘fair
value through other comprehensive income’ (‘FVOCI’). The
classification depends on the nature and purpose of the
financial assets and is determined at the time of recognition.
Financial assets are assessed for indicators of impairment
at each balance sheet date. Financial assets are impaired
where there is objective evidence that, as a result of one
or more events that occurred after the initial recognition of
the financial asset, the estimated future cash flows of the
investment have been impacted.
For certain categories of financial asset, such as trade
receivables, assets that are assessed not to be impaired
individually, the Group recognises lifetime expected credit
losses (‘ECL’) when there has been a significant increase in
credit risk since initial recognition. However, if the credit risk
on the financial instrument has not increased significantly
since initial recognition, the Group measures the loss
allowance for that financial instrument at an amount equal to
12-month ECL.
Lifetime ECL represents the expected credit losses that will
result from all possible default events over the expected life of
a financial instrument. In contrast, 12-month ECL represents
the portion of lifetime ECL that is expected to result from
default events on a financial instrument that are possible
within 12 months after the reporting date.
On derecognition of a financial asset measured at amortised
cost, the difference between the asset’s carrying amount
and the sum of the consideration received and receivable is
recognised in profit or loss.
• 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,
accrued liabilities and lease 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’.
The retranslation reserve represents the cumulative exchange
differences on the retranslation of foreign subsidiaries into
the functional currency.
Other reserves relate to the charge for share-based payments
in accordance with IFRS 2 ‘Share-based Payments’ plus the
movement on the exercise or lapsing of share options.
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.
Foreign currency exchange rate risk
The Group has certain investments in foreign operations,
whose net assets are exposed to foreign currency translation
risk. As well as naturally mitigating this risk by offsetting its
cost base in the same currencies where possible, currency
exposure arising from the net assets of the Group’s foreign
operations is managed through cash balances denominated in
the relevant foreign currencies.
The Group is mainly exposed to the US Dollar, Australian Dollar,
Singaporean Dollar, Euro, Belarusian Ruble, South African Rand,
Polish Zloty and Canadian Dollar currencies.
The following table details the Group’s sensitivity to a 10%
increase or decrease in Sterling against the relevant foreign
currencies. 10% is the sensitivity rate which represents
management’s assessment of the reasonable possible change
in foreign exchange rates. The sensitivity analysis includes
only outstanding foreign currency denominated monetary
items and adjusts their translation at the period end of a 10%
change in foreign currency rates. A positive number below
indicates an increase in profit where Sterling strengthens
10% against the relevant currency. For a 10% weakening of
Sterling against the relevant currency, there would be an equal
and opposite impact on the profit and other equity, and the
balances below would be negative or positive.
62
Dotdigital Group Plc
Annual Report 2020/2021
63
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
For the year ended 30 June 2021
2. Accounting policies continued
US Dollar
Australian Dollar
Singaporean Dollar
Euro
Belarusian Ruble
South African Rand
Polish Zloty
Canadian Dollar*
30.06.21
£’000
60
13
(9)
(20)
7
4
95
(1)
30.06.20
£’000
55
7
(15)
(22)
11
2
(15)
–
149
23
* there was no foreign currency exchange rate risk against the
Canadian Dollar in the prior year as Dotdigital Canada Inc was
incorporated in January 2021.
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 omnichannel marketing automation platform,
Dotdigital. 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 consider that 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 goodwill
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.
(c) Going concern of Australian entity
Management review each of the trading entities
operations, particularly when it is loss making to ascertain
if it is a going concern and if its assets should be impaired.
Judgement is therefore required to review future looking
forecasts and review existing and future sales pipeline
within the region. Thereby leading to a decision as to
whether the region remains viable.
Estimates and assumptions
(a) 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 6.2% (2020: 6.2%). 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 13 to the financial statements. At the
period end, based on the assumptions, there was no
indication of impairment to the carrying value of goodwill.
(b) Share-based compensation
Key management believe that there will not be only one
acceptable choice for estimating the fair value of share-
based payment arrangements. The judgements and
estimates that management apply in determination of
the share-based compensation are summarised below:
• Selection of a valuation model
• Making assumptions used in determining the
variables used in a valuation model:
i. expected life
ii. expected volatility
iii. expected dividend yield
iv. interest rate
Further detail on the estimates and assumptions we make
in our share-based compensation are included in note 28
to the financial statements. The charge made to income
statement for period is also disclosed here.
(c) Depreciation and amortisation
The Group depreciates right of use assets, short leasehold,
fixtures and fittings, computer equipment and amortises
customer relationships, technology, 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,
customer relationships, technology, computer software,
internally generated development costs and domain
names.
(d) Bad debt provision
We perform ongoing credit evaluations of our customers
and grant credit based upon past payment history, financial
condition and anticipated industry conditions. Customer
payments are regularly monitored and a provision for
doubtful accounts is established based upon specific
situations and overall industry conditions. Hence the
provision is maintained for potential credit losses based
upon management’s assessment of the expected
collectability of all accounts receivable. In making this
assessment, management take into consideration (i)
any circumstances of which we are aware regarding a
customer’s inability to meet its financial obligations and
(ii) our judgements as to potential prevailing economic
conditions in the industry and their potential impact on
the Group’s customers.
Where a general provision is set then specific rationale
will be set against this which will be a combination of
looking at historical data to ascertain the percentage
of debt which goes bad. Plus set against debts within a
specific business sector which might be facing financial
difficulty, thereby leading to a deemed higher risk of
defaulting on their debts.
(e) Lease accounting – incremental borrowing rate
IFRS 16 “Leases” requires lease payments to be
discounted using the lessee’s incremental borrowing rate.
The Group’s incremental borrowing rate, as at the date of
adoption of IFRS 16, has been based on local commercial
bank loans. Management have taken the view that specific
costs of borrowing should be applied to each lease as
this reflects the different economic conditions within
each geography and hence is more representative of the
funding facilities available in those countries.
3. Segmental reporting
Dotdigital’s single line of business remains the provision of data-driven omnichannel marketing automation. The chief operating
decision maker considers the Group’s segments to be by geographical location, this being EMEA, US and APAC operations and
by business activity, this being core Dotdigital and CPaaS as shown in the tables that follow:
Geographical revenue and results (from all operations)
Income statement
Revenue
Gross profit
Profit/(loss) before income tax
Total comprehensive income attributable
to the owners of the parent
Financial position
Total assets
Net current assets/(liabilities)
EMEA
£’000
47,024
36,878
11,699
30.06.21
US
£’000
9,264
8,241
609
APAC
£’000
4,262
3,864
(294)
Total
£’000
60,550
48,983
12,014
10,436
379
(311)
10,504
71,566
33,942
3,098
1,387
423
(386)
75,087
34,943
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% of revenue (2020: none).
All revenue is from contracts signed with new customers and upgrades and additional functional recurring revenue sold
to existing contracted clients. 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.
Income statement
Revenue
Gross profit (restated* see note 33)
Profit/(loss) before income tax
Total comprehensive income attributable
to the owners of the parent (restated** see note 33)
Financial position
Total assets
Net current assets/(liabilities) (restated** see note 33)
EMEA
£’000
43,810
35,181
11,256
30.06.20
US
£’000
8,325
7,420
598
APAC
£’000
2,777
2,496
(46)
Total
£’000
54,912
45,097
11,808
10,429
291
(97)
10,623
60,959
26,915
4,846
1,006
1,566
(470)
67,371
27,451
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% of revenue (2019: none).
All revenue is from contracts signed with new customers and upgrades and additional functional recurring revenue sold
to existing contracted clients. 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.
64
Dotdigital Group Plc
Annual Report 2020/2021
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
For the year ended 30 June 2021
3. Segmental reporting continued
Business activity revenue and results
Income statement
Revenue
Gross profit
Profit/(loss) 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 (restated* see note 33)
Profit/(loss) before income tax
Total comprehensive income attributable
to the owners of the parent (restated** see note 33)
Financial position
Total assets
Net current assets/(liabilities) (restated** see note 33)
Core
£’000
58,124
47,768
12,812
30.06.21
CPaaS
£’000
2,426
1,215
(798)
Total
£’000
60,550
48,983
12,014
11,403
(899)
10,504
74,976
34,974
Core
£’000
47,404
43,505
12,186
111
(31)
75,087
34,943
30.06.20
CPaaS
£’000
7,508
1,592
(378)
Total
£’000
54,912
45,097
11,808
11,001
(378)
10,623
65,114
29,174
2,257
(1,723)
67,371
27,451
* Direct marketing and partner commission were reclassified from cost of sales to administrative expenses and tech
infrastructure was reclassified from administrative expenses to cost of sales to reflect more appropriately the gross profit
and administrative expenses.
** In the prior year there was a correction re deferred tax and corporation tax provision. See note 33 for details.
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
30.06.21
£’000
22,005
2,228
534
30.06.20
£’000
20,892
2,377
505
24,767
23,774
30.06.21
5
30.06.20
4
160
105
69
339
164
103
67
338
Included in the total employees cost above, £5,198,785 (2020: £5,293,321) was capitalised in relation to internally generated
development costs.
5. Exceptional costs
Continuing exceptional costs incurred in the year relate to the ongoing acquisition costs of Comapi of £68,095 (2020: £15,714)
and amortisation of acquired intangibles of £120,000 (2020: £120,000).
Discontinued exceptional costs in the year relate to the amortisation of acquired intangibles of £nil (2020: £381,072).
6. Net finance income
Finance income:
Deposit account interest
Finance cost:
Finance lease interest
7. Operating profit
Costs by nature
Profit from continuing operations has been arrived at after charge and crediting:
Outsourcing and tech infrastructure
Total cost of sales
Direct marketing
Partner commission
Staff-related costs (inc Directors’ emoluments)
Auditor’s remuneration
Amortisation of intangibles**
Depreciation charge**
Legal, professional and consultancy fees
Computer expenditure
Bad debts
Foreign exchange losses/(gains)
Travel and subsistence costs
Office running
Gain on disposal of property, plant and equipment
Staff welfare
Other costs
Management charge
Total administrative expenses
30.06.21
£’000
30.06.20
£’000
20
(74)
(54)
40
(98)
(58)
30.06.21
£’000
10,356
10,356
30.6.21
£’000
2,976
2,198
19,208
52
4,675
1,410
848
538
897
543
87
388
(2)
342
549
(620)
Restated*
30.06.20
£’000
3,899
3,899
30.6.20
£’000
1,727
2,566
17,929
64
3,647
1,475
479
578
1,248
(120)
509
176
(3)
399
531
(762)
34,089
30,443
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
– review of interim accounts
30.06.21
£’000
30.06.20
£’000
28
47
5
80
22
47
3
72
* Partner commission and direct marketing have been reclassed under administrative expenses and tech infrastructure have
been reclassed under cost of sales and comparatives restated (see note 33).
**Both amortisation of intangibles and depreciation charge will not agree to the relevant notes as these numbers only apply
to the continuing operations.
66
Annual Report 2020/2021
67
Financial StatementsDotdigital Group Plc NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
For the year ended 30 June 2021
8. Income tax expense
Analysis of the tax charge from continuing operations:
Current tax on profits for the year
Changes in estimates related to prior year
Deferred tax on origination and reversal of timing differences
Analysis of the tax charge from discontinuing operations:
Current tax on profits for the year
Deferred tax on origination and reversal of timing differences
Factors affecting the tax charge:
Profit on ordinary activities from all operations before tax
Profit on ordinary activities multiplied by the average rate of corporation
tax suffered globally: 19% (2020: 19%)
Effects of:
Expenses not deductible
Research and development enhanced claim
Expenditure permitted on exercising options
Overseas tax losses
Depreciation in excess of capital allowances
Group relief losses brought forward
Current tax on profit for the year
Changes in estimates related to prior year
Deferred tax on origination and reversal of timing differences
Total tax charge for the year
* See note 33.
30.06.21
£’000
1,008
(53)
367
Restated*
30.06.20
£’000
575
–
644
1,322
1,219
30.6.21
£’000
–
101
101
30.06.21
£’000
12,014
30.6.20
£’000
–
–
–
Restated*
30.06.20
£’000
11,808
2,283
2,244
281
(2,239)
(49)
(5)
737
–
1,008
(53)
468
1,423
176
(2,069)
(98)
(20)
843
(501)
575
–
644
1,219
Deferred tax was calculated using the rate 25% (2020: 19%). For further details on deferred tax see note 24.
Taxation for each region is calculated at the rates prevailing in the respective jurisdiction.
The main rate of UK corporation tax in the period was 19% (2020: 19%). UK deferred balances have been recognised at 25%
in the period (2020: 19%).
9. Profit of Parent Company
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 £3,879,692 (2020: £2,698,172).
10. Dividends
Amounts recognised as distributions to equity holders in the period.
Paid dividend for year end 30 June 2021 of 0.83p (2020: 0.67p) per share
Proposed dividend for the year end 30 June 2020 of 0.86p (2020: 0.83p) per share
30.06.21
£’000
2,472
2,583
30.06.20
£’000
1,996
2,480
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.
68
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.
Reconciliations to earnings figures used in arriving at adjusted earnings per share are as follows:
From all operations
Profit for the year attributable to the owners of the parent
Amortisation of acquisition-related intangible fixed assets (see note 14)
Other exceptional costs (see note 5)
Share-based payment (see note 28)
30.06.21
£’000
10,591
120
68
625
Restated*
30.06.20
£’000
10,589
501
16
682
Adjusted profit for the year attributable to the owners of the parent
11,404
11,788
Management does not consider the above adjustments to reflect the underlying business performance. The other exceptional
costs relate to ongoing acquisition costs of Comapi.
Adjusted profit for the year attributable to the owners of the parent for continuing operations
Adjusted loss for the year attributable to the owners of the parent for discontinued operations
30.6.21
£’000
12,303
(899)
Restated*
30.6.20
£’000
11,785
3
Adjusted profit for the year attributable to the owners of the parent
11,404
11,788
From all operations
Basic EPS
30.06.21
Weighted
average
number of
shares
Earnings
£’000
Profit for the year attributable to the owners of the parent
10,591
298,598,459
Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the parent
Options and warrants
Diluted EPS
11,404
298,598,459
–
4,322,868
Profit for the year attributable to the owners of the parent
10,591
302,921,327
Per share
Amount
Pence
3.55
3.82
–
3.50
Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the parent
11,404 302,921,327
3.76
From continuing operations
Basic EPS
Profit for the year attributable to the owners of the parent
11,490
298,598,459
Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the parent
Options and warrants
Diluted EPS
12,303
298,598,459
–
4,322,868
Profit for the year attributable to the owners of the parent
11,490
302,921,327
3.85
4.12
–
3.79
Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the parent
12,303 302,921,327
4.06
69
Financial StatementsAnnual Report 2020/2021Dotdigital Group Plc
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
For the year ended 30 June 2021
11. Earnings per share continued
Weighted average number of shares
From discontinuing operations
Basic EPS
30.06.21
Weighted
average
number of
shares
Per share
Amount
Pence
Earnings
£’000
Loss for the year attributable to the owners of the parent
(899) 298,598,459
(0.30)
Adjusted Basic EPS
Adjusted loss for the year attributable to the owners of the parent
Options and warrants
Diluted EPS
(899) 298,598,459
–
4,322,868
(0.30)
–
Loss for the year attributable to the owners of the parent
(899) 302,921,327
(0.30)
Adjusted Diluted EPS
Adjusted loss for the year attributable to the owners of the parent
(899) 302,921,327
(0.30)
From all operations
Basic EPS
Restated*
30.06.20
Weighted
average
number of
shares
Earnings
£’000
Profit for the year attributable to the owners of the parent
10,589
298,306,813
Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the parent
Options and warrants
Diluted EPS
11,788
298,306,813
–
3,883,050
Profit for the year attributable to the owners of the parent
10,589
302,189,863
Per share
Amount
Pence
3.55
3.95
–
3.50
Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the parent
11,788 302,189,863
3.90
From continuing operations
Basic EPS
Profit for the year attributable to the owners of the parent
10,967
298,306,813
Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the parent
Options and warrants
Diluted EPS
11,785
298,306,813
–
3,883,050
Profit for the year attributable to the owners of the parent
10,967
302,189,863
3.68
3.95
–
3.63
Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the parent
11,785 302,189,863
3.90
From discontinued operations
Basic EPS
Loss for the year attributable to the owners of the parent
(378) 298,306,813
(0.13)
Adjusted Basic EPS
Adjusted loss for the year attributable to the owners of the parent
Options and warrants
Diluted EPS
3
–
298,306,813
3,883,050
(0.00)
–
Basic EPS
Diluted EPS
12. Continuing and discontinuing operations
The analysis between continuing and discontinued operation is as follows:
Year ended 30 June 2021
Revenue
Cost of sales
Gross profit
Administrative expense
Shared-based payments
Exceptional costs
Operating profit
Finance income
Finance costs
Profit before income tax
Income tax expense
Profit for the year
Year ended 30 June 2020
Revenue
Cost of sales (restated see note 33)
Gross profit
Administrative expense (restated see note 33)
Shared-based payments
Exceptional costs
Operating profit
Finance income
Finance costs
Profit before income tax
Income tax expense
Profit for the year
13. Goodwill
Group
Cost
At 1 July
At 30 June
Impairment
At 1 July
At 30 June
Net book value
30.06.21
Shares
298,598,459
30.06.20
Shares
298,306,813
302,921,327
302,189,863
Continuing
operations
£’000
58,124
Discontinuing
operations
£’000
2,426
(10,356)
47,768
(34,089)
(625)
(188)
(1,211)
1,215
(2,012)
–
–
Total
£’000
60,550
(11,567)
48,983
(36,101)
(625)
(188)
12,866
(797)
12,069
20
(74)
12,812
(1,322)
11,490
–
(1)
(798)
(101)
(899)
Continuing
operations
£’000
47,404
Discontinuing
operations
£’000
7,508
(3,899)
43,505
(30,443)
(682)
(136)
12,244
40
(98)
12,186
(1,219)
10,967
(5,916)
1,592
(1,587)
–
(381)
(376)
–
(2)
(378)
–
(378)
20
(75)
12,014
(1,423)
10,591
Total
£’000
54,912
(9,815)
45,097
(32,030)
(682)
(517)
11,868
40
(100)
11,808
(1,219)
10,589
30.06.21
£’000
30.06.20
£’000
13,192
13,192
3,512
3,512
9,680
13,192
13,192
3,512
3,512
9,680
Loss for the year attributable to the owners of the parent
(378) 302,189,863
(0.13)
Goodwill is allocated to the Group’s two cash generating units (CGUs) identified, those being Dotdigital and Comapi.
Adjusted Diluted EPS
Adjusted loss for the year attributable to the owners of the parent
3 302,420,648
(0.00)
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
CGUs that are expected to benefit from that business combination.
* See note 33.
70
Dotdigital Group Plc
Annual Report 2020/2021
71
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
For the year ended 30 June 2021
13. Goodwill continued
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. Cash flows beyond the five-year period are extrapolated using the estimated growth rate
for the continuing operations of the Group. These long-term growth rates are management’s estimates. The discount rates used are
pre-tax and reflect specific risks relating to the continuing operations of the Group.
The key assumptions for the value in use calculations are those regarding discount rates, growth rates, and expected
changes in margins.
Discount rate
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. The pre-tax discount rate used to calculate the value in use is 6.2% (2020: 6.2%).
Growth rates
The growth rate is stated as the compound annual growth rates in the initial five years for the continuing operations of the Group
which are then used for impairment testing. These are performed using the projected cash flows based on budgets approved
by management over a five-year period. Cash flow projections from the sixth year onwards are based on an estimated constant
growth rate. The growth rate used to calculate the value in use is 14% (2020: 12%).
Gross profit margin
Changes in income and expenditure are based on experience and expectations of the future changes in the market. The impairment
review is based on these estimated gross profit margins which were included with the budgets approved by management over a
five-year period. From the sixth year onwards, an assumed constant margin is used. The gross profit margin used to calculate the
value in use in 75% (2020: 86%).
The valuations indicate sufficient headroom such that a reasonably possible change in key assumptions would not result in
impairment of goodwill.
Sensitivity analysis
The principal variables used, being both the discount rate and growth rates, these would need to change before an impairment is
required, this being 225% (2020: 155%) discount rate and growth rate of (21%) (2020: -17%).
14. Intangible assets
Group
Cost
At 1 July 2020
Additions
At 30 June 2021
Amortisation
At 1 July 2020
Amortisation for the year
At 30 June 2021
Net book value
At 30 June 2021
Customer
relationships
£’000
Technology
£’000
Computer
software
£’000
Internally
generated
development
costs
£’000
Domain
names
£’000
1,205
–
1,205
1,205
–
1,205
–
1,200
–
1,200
310
120
430
770
954
69
1,023
793
81
874
27,255
6,797
34,052
14,255
4,592
18,847
149
15,205
42
4
46
34
2
36
10
Totals
£’000
30,656
6,870
37,526
16,597
4,795
21,392
16,134
Group
Cost
At 1 July 2019
Additions
At 30 June 2020
Amortisation
At 1 July 2019
Amortisation for the year
At 30 June 2020
Net book value
At 30 June 2020
Customer
relationships
£’000
Technology
£’000
Computer
software
£’000
Internally
generated
development
costs
£’000
Domain
names
£’000
1,205
–
1,205
824
381
1,205
–
1,200
–
1,200
190
120
310
890
911
43
954
697
96
793
20,794
6,461
27,255
10,706
3,549
14,255
161
13,000
41
1
42
32
2
34
8
Totals
£’000
24,151
6,505
30,656
12,449
4,148
16,597
14,059
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.
15. Property, plant and equipment
Group
Cost
At 1 July 2020
Additions
Disposals
Exchange differences
At 30 June 2021
Depreciation
At 1 July 2020
Depreciation for the year
Disposals
Exchange differences
At 30 June 2021
Net book value
At 30 June 2021
Right of Use
assets
£000
Short
leasehold
£’000
Fixtures &
fittings
£’000
Computer
equipment
£’000
5,458
115
(136)
(53)
5,384
1,058
1,091
(66)
(22)
2,061
730
–
–
(5)
725
465
65
–
(4)
526
770
–
(4)
(12)
754
632
63
(2)
(13)
680
2,473
169
(14)
(14)
2,614
2,014
244
(10)
(10)
Totals
£’000
9,431
284
(154)
(84)
9,477
4,169
1,463
(78)
(49)
2,238
5,505
3,323
199
74
376
3,972
72
Dotdigital Group Plc
Annual Report 2020/2021
73
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
For the year ended 30 June 2021
15. Property, plant and equipment continued
Right of Use
assets
£000
Short
leasehold
£’000
Fixtures &
fittings
£’000
Computer
equipment
£’000
Cost
At 1 July 2019
Additions
Disposals
Adjustment on transition of IFRS 16
Exchange differences
At 30 June 2020
Depreciation
At 1 July 2019
Depreciation for the year
Disposals
Exchange differences
At 30 June 2020
Net book value
At 30 June 2020
–
63
–
5,335
60
5,458
–
1,122
(61)
(3)
1,058
4,400
646
78
–
–
6
730
402
63
–
–
465
265
779
22
(30)
–
(1)
770
554
77
–
1
632
138
Totals
£’000
3,719
340
(30)
5,335
67
9,431
2,682
1,548
(61)
–
16. Investments
Company
Cost
At 1 July
Additions
Disposals
At 30 June
Impairment
At 1 July and 30 June
Net book value
At 30 June
Shares in
Group
undertakings
30.06.21
£’000
Restated*
Shares in
Group
undertakings
30.06.20
£’000
21,035
20,358
625
–
682
(5)
21,660
21,035
3,519
3,519
18,141
17,516
2,014
4,169
459
5,262
During the year and up until the year end Dynmark International Ltd has been transferring its trade where possible to Dotdigital
EMEA Limited, in preparation for the ceasing of trade of Dynmark International Ltd. Therefore the investment value of both within
the Group has been considered in aggregate.
* See note 33.
Included in the net carrying amount of property, plant and equipment are the right-of-use assets as follows:
The Group’s or the Company’s investments at the balance sheet date in the share capital of companies include the following:
2,294
177
–
–
2
2,473
1,726
286
–
2
82
–
73
–
155
43
81
–
(5)
Properties
£’000
Motor vehicles
£’000
5,376
(136)
42
(53)
5,229
1,015
1,010
(65)
(18)
1,942
Totals
£’000
5,458
(136)
115
(53)
5,384
1,058
1,091
(65)
(23)
119
2,061
3,287
36
Properties
£’000
Motor vehicles
£’000
5,678
(156)
(269)
63
60
5,376
1,079
(61)
(3)
1,015
4,361
82
–
–
–
–
82
43
–
–
43
39
3,323
Totals
£’000
5,760
(156)
(269)
63
60
5,458
1,122
(61)
(3)
1,058
4,400
Cost
As at 1 July 2020
Termination of leases
Additions
Foreign currency translation
At 30 June 2021
Depreciation
As at 1 July 2020
Depreciation for the year
Termination of leases
Foreign currency translation
At 30 June 2021
Net book value
At 30 June 2021
Cost
Transition on adoption of IFRS 16
Re-measurement of existing lease liabilities
Termination of leases
Additions
Foreign currency translation
At 30 June 2020
Depreciation
Depreciation for the year
Termination of leases
Foreign currency translation
At 30 June 2020
Net book value
At 30 June 2020
74
Dotdigital Group Plc
Subsidiaries
Nature of business
Dotdigital EMEA Limited
Omnichannel communication platform
Dotdigital Inc
Omnichannel communication platform
Dotdigital APAC Pty Limited
Omnichannel communication platform
Dotdigital B.V.
Omnichannel communication platform
dotmailer Development Ltd
Holding company
dotmailer SA Pty
dotmailer LLC**
Development hub
Development hub
Dotdigital SG Pte Limited
Omnichannel communication platform
Dynmark International Ltd
Omnichannel communication platform
Dynmark S.p z.o.o**
Dotdigital Canada Inc
Development hub
Consultancy services
** These are held indirectly at 100%.
Class of share
Proportion of
voting power
held directly %
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
100
100
100
100
100
All of the above subsidiaries have been included within the consolidated results, however Dynmark International Ltd was exempt from
audit by virtue of s479A of Companies Act 2006. Dotdigital EMEA Limited, dotmailer Development Limited and Dynmark International
Ltd were incorporated in England and Wales. Dotdigital Inc was incorporated in Delaware (US), Dotdigital APAC Pty Limited was
incorporated in New South Wales (Australia), Dotdigital B.V. was incorporated in Netherlands, Dotdigital SG Pte Ltd was incorporated in
Singapore, dotmailer SA Pty was incorporated in South Africa, dotmailer LLC was incorporated in the Republic of Belarus, Dynmark S.p.
z.o.o. was incorporated in Poland and Dotdigital Canada Inc was incorporated in British Columbia (Canada).
Subsidiary
Registered office
Dotdigital EMEA Ltd
No.1 London Bridge, London SE1 9BG
Dynmark International Ltd
No.1 London Bridge, London SE1 9BG
dotmailer development Ltd
No.1 London Bridge, London SE1 9BG
Dotdigital Inc
16192 Coastal Highway, Lewes, Delaware 19958-9776, County of Sussex, USA
Dotdigital Canada Inc
939 Granville Street, Vancouver, British Columbia, V6Z 1L3, Canada
Dotdigital APAC Pty Ltd
60/2 O’Connell Street, Parramatta, New South Wales 2150, Australia
Dotdigital SG Pte Ltd
Level 17, Frasers Tower, 182 Cecil Street, 069547 Singapore
dotmailer SA Pty Ltd
BDO Building, Wanderers Office Park, 52 Corlett Drive, Illovo, Johannesburg 2196, South Africa
Dotdigital B.V.
15 Hoogoorddreef, Amsterdam, 1101 BA, Netherlands
Dynmark s.p. z.o.o
Al. Jana Pawla II 22, 00-133 Warsaw, Poland
dotmailer LLC
Office 11-9, Tolbukhina Street, Minsk 220012, Belarus
Annual Report 2020/2021
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
For the year ended 30 June 2021
17. 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 contract assets
Group
Company
30.06.21
£’000
30.06.20
£’000
30.06.21
£’000
30.06.20
£’000
10,895
(1,785)
9,110
60
–
–
–
10,364
(1,589)
8,775
194
–
–
–
4,180
13,350
4,018
12,987
–
–
–
–
–
52
–
88
140
–
–
–
3
694
11
–
89
797
Further details on the above can be found in note 23.
Included within Group prepayments is an amount of £299,016 (2020: £404,150) in relation to deferred commission which
is considered to be long term. The Group has applied IFRS 9 simplified approach to measuring expected credit losses, the
balances have been assessed based on each entitiy’s ability to repay amounts owed and no expected credit loss has been
recognised.
18. Cash and cash equivalents
Bank accounts
Further details on the above can be found in note 23.
19. Called up share capital
Allotted, issued, fully paid number
298,778,630 (2019: 298,547,645)
Group
Company
30.06.21
£’000
31,951
31,951
30.06.20
£’000
25,383
25,383
Nominal
value
£0.005
30.06.21
£’000
85
85
30.06.21
£’000
1,494
1,494
30.06.20
£’000
396
396
30.06.20
£’000
1,493
1,493
During the reporting period the Company undertook the following transactions involving the issuing of share capital:
On 12 March 2021 an employee exercised their share options, increasing the issued share capital by 20,000 shares at
a premium price of 68.5p.
On 12 March 2021 an employee exercised their share options, increasing the issued share capital by 65,000 shares at
a premium price of 68.5p.
On 28 April 2021 an employee exercised their share options, increasing the issued share capital by 145,985 shares at
a premium price of 68.5p
Reverse
acquisition
reserve
£’000
(4,695)
Retranslation
reserve
£’000
50
20. Reserves
Group
As at 1 July 2020
Issue of share capital
Dividends
Profit for the year
Transfer of reserves
Deferred tax on share options
Other comprehensive income:
Currency translation
Share-based payments
Retained
earnings
£’000
45,655
–
(2,472)
10,591
307
–
–
–
Share
premium
£’000
6,967
157
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance as at 30 June 2021
54,081
7,124
(4,695)
Retranslation
reserve
£’000
Other
reserves
£’000
Retained
earnings
£’000
36,971
–
(1,996)
10,589
30
–
61
–
–
Share
premium
£’000
6,791
176
–
–
–
–
–
–
–
Reverse
acquisition
reserve
£’000
(4,695)
–
–
–
–
–
–
–
–
45,655
6,967
(4,695)
–
–
–
–
–
(87)
–
(37)
16
–
–
–
–
–
–
34
–
50
Other
reserves
£’000
1,600
–
–
–
(307)
1,148
–
625
Totals
£’000
49,577
157
(2,472)
10,591
–
1,148
(87)
625
3,066
59,539
Totals
£’000
39,993
176
(1,996)
10,589
–
38
61
34
682
910
–
–
–
(30)
38
–
–
682
1,600
49,577
Other
reserves
£’000
1,372
–
–
–
–
318
1,690
Other
reserves
£’000
720
–
–
–
–
652
1,372
Totals
£’000
14,263
157
(2,472)
3,811
307
318
16,384
Totals
£’000
12,718
176
(1,996)
2,683
30
652
14,263
Retained
earnings
£’000
5,924
–
(2,472)
3,811
307
–
Share
premium
£’000
6,967
157
–
–
–
–
7,570
7,124
Retained
earnings
£’000
5,207
–
(1,996)
2,683
30
–
Share
premium
£’000
6,791
176
–
–
–
–
Restated balance at 1 July 2019
(see note 33)
Issue of share capital
Dividends
Profit for the year
Transfer of reserves
Deferred tax on share options
Adjustments in relation to IFRS 16
Other comprehensive income:
Currency translation
Share-based payments
Balance as at 30 June 2020
(see note 33)
Company
As at 1 July 2020
Issue of share capital
Dividends
Profit for the year
Transfer in reserves
Share-based payments
As at 30 June 2021
Restated balance as at 1 July 2019 (see note 33)
Issue of share capital
Dividends
Profit for the year
Transfer in reserves
Share-based payments
Restated balance as at 30 June 2020 (see note 33)
5,924
6,967
76
Annual Report 2020/2021
77
Financial StatementsDotdigital Group Plc
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
For the year ended 30 June 2021
21. Trade and other payables
Current:
Trade payables
Amounts owed to Group undertakings
Social security and other taxes
Other payables
VAT
Accruals and contract liabilities
Group
Company
30.06.21
£’000
30.06.20
£’000
30.06.21
£’000
30.06.20
£’000
769
–
29
84
18
8,434
9,334
1,732
–
50
179
1,801
6,034
9,796
16
390
–
–
–
86
492
10
2,899
–
–
–
47
2,956
Further details on liquidity and interest rate risk can be found in note 23. Amounts owed to Group undertakings are non-interest
bearing and are repayable on demand.
22. Leasing liabilities
Group
As at July 2020
Termination of leases
Additions
Principal repayments
Interest
Foreign currency translation
At 30 June 2021
Current
Non-current
At 30 June 2021
Group
As at July 2019
Transition on adoption of IFRS 16
Re-measurement of existing lease liabilities
Termination of leases
Additions
Principal repayments
Interest
Foreign currency translation
At 30 June 2020
Current
Non-current
At 30 June 2020
Properties
£’000
4,427
(67)
42
(1,132)
110
(21)
3,359
906
2,453
3,359
Properties
£’000
–
5,678
(162)
(264)
63
(1,084)
136
60
4,427
1,034
3,393
4,427
Motor
vehicles
£’000
40
–
73
(50)
1
–
64
28
36
64
Motor
vehicles
£’000
–
82
–
–
–
Totals
£’000
4,467
(67)
115
(1,182)
111
(21)
3,423
934
2,489
3,423
Totals
£’000
–
5,760
(162)
(264)
63
(44)
(1,128)
2
–
40
34
6
40
138
60
4,467
1,068
3,399
4,467
The properties are office leases located in various location where the term in ranging from one to eight years. The motor
vehicles are company cars offered to senior staff where the term is always three years.
23. 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 is 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
– Lease liabilities
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
30.06.21
£’000
30.06.20
£’000
30.06.21
£’000
30.06.20
£’000
9,167
31,951
41,118
769
–
8,221
8,990
8,969
25,383
34,352
1,732
–
7,268
9,000
–
85
85
16
390
86
492
697
396
1,093
10
2,899
47
2,956
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 while
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 £10,221,000 (2020: £9,013,000) are expected to mature in less than a year.
78
Dotdigital Group Plc
Annual Report 2020/2021
79
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
For the year ended 30 June 2021
23. 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 2021 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:
Maturities of financial liabilities
The tables below analyse the Group’s financial liabilities into relevant maturity groupings based on their contractual maturities
for all non-derivative financial liabilities (the Group does not hold any derivative financial instruments in the current or prior
financial year).
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their
carrying balances as the impact of the discounting is not significant.
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
30.06.21
£’000
5,734
2,701
2,550
30.06.20
£’000
6,770
911
2,683
10,985
10,364
30.06.21
£’000
140
154
1,491
1,785
30.06.21
£’000
1,589
262
(66)
–
1,785
30.06.20
£’000
1
13
1,575
1,589
30.06.20
£’000
999
1,048
(335)
(123)
1,589
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
£2,484,862 (2020: £2,960,513) of which £1,502,918 (2020: £1,574,891) 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 (2020: £nil) and amounts payable over one year are nil (2020:
£nil). The Group had a strong cash reserve to utilise for any short-term capital requirements that were needed.
The Group has continued to look for 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.
Foreign currency exchange rate risk
Refer to foreign currency exchange rate risk under note 2 on page 63.
Contractual maturities at 30 June 2021
Trade and other payables
Lease liabilities
Total non-derivatives
<6 months
£’000
6 to 12 months
£’000
1 to 2 years
£’000
2 to 5 years
£’000
9,334
480
9,814
–
454
454
–
759
759
–
1,730
1,730
<6 months
£’000
6 to 12 months
£’000
1 to 2 years
£’000
2 to 5 years
£’000
Total
contractual
cash flows
carrying
amounts
£’000
9,334
3,423
12,757
Total
contractual
cash flows
carrying
amounts
£’000
9,796
532
10,328
–
536
536
–
960
960
–
2,439
2,439
9,796
4,467
14,263
Contractual maturities at 30 June 2020
Trade and other payables
Lease liabilities
Total non-derivatives
24. Deferred tax
As at 1 July
Current year provision
The deferred tax liability above comprises the following temporary differences:
Acquired intangibles
Capital allowances in excess of depreciation
R&D relief in excess of amortisation
Share option relief
Losses
* Refer to note 33.
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.
25. Capital commitments
The Company and Group have no capital commitments as at the year end.
30.06.21
£’000
1,983
(776)
1,207
30.06.21
£’000
146
38
2,963
(1,805)
(135)
1,207
Restated*
30.06.20
£’000
1,377
606
1,983
Restated*
30.06.20
£’000
169
53
2,325
(495)
(69)
1,983
80
Dotdigital Group Plc
Annual Report 2020/2021
81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
For the year ended 30 June 2021
26. 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 and were made on terms equivalent to those that prevail
in arm’s length transactions:
Sale of services
Ipswich Town
Football Club
Entity under common directorship
Email marketing services
Epwin Group Plc
Entity under common directorship
Email marketing services
Year end balances arising from sale of services
Ipswich Town
Football Club
Entity under common directorship
Email marketing services
Epwin Group Plc
Entity under common directorship
Email marketing services
Directors
Aggregate emoluments
Company contributions to money purchase pension scheme
Share-based payments from the LTIP options granted
Directors’ pay summary does include Non-Executive Directors.
26. 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
Dotdigital EMEA Limited
Subsidiary
Payables
30.06.21
£’000
30.06.20
£’000
4
6
10
1
1
2
–
4
4
–
1
1
30.06.21
£’000
1,136
26
347
30.06.20
£’000
897
25
438
1,509
1,360
30.06.21
£’000
574
30.06.20
£’000
440
14
16
198
802
17
15
289
761
30.06.21
£’000
30.06.20
£’000
651
651
651
651
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
Dotdigital EMEA Limited
Subsidiary
As at 1 July
Loans advanced
Loans repaid
30.06.21
£’000
30.06.20
£’000
(3,545)
5,075
(2,571)
(1,041)
(4,580)
3,060
(2,025)
(3,545)
IAS 24 Related Party Disclosure allows disclosure exemption of transactions between wholly-owned subsidiaries that are
eliminated on consolidation.
27. Ultimate controlling party
There is no ultimate controlling party of the Group. Dotdigital Group Plc acts as the Parent Company to Dotdigital EMEA Limited,
Dotdigital Inc, Dotdigital APAC Pty Limited, Dotdigital B.V., dotmailer Developments Limited, dotmailer SA Pty, dotmailer LLC,
Dotdigital SG Pte. Limited, Dynmark International Ltd, Dotdigital Canada Inc and Dynmark S.p. z.o.o.
28. 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 £625,000 (2020: £682,000).
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 2021 had a WAEP of 26.05p (2020: 51.09p) and a weighted average contracted life
of 5.14 years (2020: 3.01 years) and their exercise prices ranged from 0.5p to 147.5p. 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
30.06.21
30.06.20
No. of options
3,910,984
WAEP
51.09p
No. of options
4,428,064
1,093,728
104.67p
(480,992)
(230,985)
4,292,735
–
13.03p
68.50p
26.05p
–
–
–
(517,080)
3,910,984
230,985
WAEP
49.16p
0p
0p
34.57p
51.09p
68.50p
The weighted average share price at the date of the exercise for share options exercised during the period was 178.57p
(2020: 92p).
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
22 December
2020
306,728
14 December
2020
787,000
152.00p
0.50p
5 years
0.95%
30%
1%
147.50p
147.50p
10 years
1.23%
32%
1%
24 October
2018
2,305,000
77.50p
0.50p
5 years
1.23%
30%
1%
19 December
2017
1,375,000
85.95p
0.50p
5 years
1.33%
30%
1%
103.72p
26.99p
52.70p
65.03p
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 24 October 2018 and 22 December 2020 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 key personnel.
82
83
Financial StatementsAnnual Report 2020/2021Dotdigital Group Plc NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
For the year ended 30 June 2021
29. Group reconciliation of profit before corporation tax to cash generated from operations
Current
Profit before tax from all operations
Amortisation
Depreciation
Exceptional costs
Finance lease non-cash movement
IFRS 16 restatement
Gain on disposal of fixed assets
Loss on disposal of investments
Share-based payments
Finance expense
(Increase)/decrease in trade receivables
Increase in trade payables
Cash generated from operations
* Refer to note 33.
Group
Company
30.06.21
£’000
30.06.20
£’000
30.06.21
£’000
Restated*
30.06.20
£’000
12,014
4,795
1,267
11,808
4,148
1,548
68
(48)
–
(2)
–
625
75
18,794
(363)
(462)
17,969
16
4
61
(3)
–
682
100
18,364
(1,157)
(1,300)
15,907
3,811
2,683
–
2
–
–
–
–
–
–
–
–
–
–
–
–
–
5
–
–
3,813
657
(2,464)
2,006
2,688
11
(1,077)
1,622
30. Group cash and cash equivalents
The amounts disclosed in the statement of cash flow in respect of cash and cash equivalents are in respect of these statements
of financial position amounts:
As at 1 July 2019
As at 30 June 2020
As at 30 June 2021
Group
£’000
19,320
25,383
31,951
Company
£’000
594
396
85
31. Project development
During the year the Group incurred £6,797,279 (2020: £6,461,313) in development investments.
All resources utilised in development have been capitalised as outlined in the accounting policy governing this area.
32. Events after the end of the reporting period
There are no events after the end of the reporting period which impact the Group’s and Company’s financial statements.
33. Prior year restatement note
During the year, the Group made the decision to modify the classification of direct marketing and partner commission from cost
of sales to administrative expenses and tech infrastructure from under administrative expenses to cost of sales, to reflect more
appropriately gross profit and gross profit margin plus also administrative expenses under continuing operations. Comparative
amounts in the Consolidated Income Statement have been reclassified for consistency. As a result, £4,293,125 was reclassified
from cost of sales to administrative expenses and £1,826,195 were reclassified from administrative expenses to cost of
sales. There has been no impact on the prior year’s profit for the year however gross profit has increased from £41,038,000 to
£43,505,000 and administrative expenses have increased from £27,976,000 to £30,443,000.
During the year, the Group discovered that the share-based payment arrangement had been erroneously recognised in Dotdigital
Group PLC instead of being recognised in the subsidiaries in which the employees are employed. Under IFRS 2 Share-based
payments, when a parent grants rights to its equity instruments to employees of its subsidiaries this arrangement should
be accounted for as equity-settled in the consolidated financial statements but results in an investment being created in the
parent’s own statement of financial position. Therefore, the subsidiaries should in their own separate financial statements,
measure the services received from its employees in accordance with the requirements of IFRS 2 applicable to equity-settled
share-based payment transactions. Thereby resulting in a corresponding increase recognised in equity as a capital contribution
from the parent. There has been no impact on the prior year’s Group profit for the year, however company only investments
increased from £15,142,000 to £17,516,000 and retained earnings increased from £3,550,000 to £5,924,000.
At the year end, the Group discovered on the calculation of deferred tax on the share options and the internally generated
development costs that this had been misallocated and miscalculated respectively. On the matter of the misallocation of
the deferred tax on the share option under IFRS 2 Share based payment, where the final deferred tax calculation exceeds the
cumulative amount recognised as a share-based payment expense in the Income Statement, the maximum amount of deferred
tax income that can be recognised in the Income Statement can only equal the total share-based payment expense. Any excess
deferred tax income is recognised directly in reserves.
As for the miscalculation of deferred tax on the internally generated development costs this is with respect to the identification
and calculation of the net book value for internally generated development costs qualifying for research and development,
thereby impacting the deferred tax liability.
Both adjustments have impacted the prior year’s profit for the year from continuing operations where this has increased
from £10,636,000 to £10,967,000 and total comprehensive income attributable to owners of the parent has increased from
£10,292,000 to £10,623,000. Net assets as per the consolidated statement of financial position have also increased from
£50,701,000 to £51,070,000.
Consolidated Income Statement for the year ended 30 June 2020
Continuing operations
Revenue from contracts with customers
Cost of sales
Gross profit
Administrative expenses
Operating profit from continuing operations pre share-based
payments and exceptional costs
Share-based payments
Exceptional costs
Operating profit from continuing operations
Finance costs
Finance income
Profit before income tax from continuing operations
Income tax expense
Profit for the year from continuing operations
Loss for the year from discontinuing operations
Profit for the year attributable to the owners of the parent
Profit for the year
Other comprehensive income
Items that may be subsequently reclassified to profit or 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
Comprehensive loss from discontinued operations
As previously
reported
£’000
Adjustments
£’000
As restated
£’000
47,404
(6,366)
41,038
(27,976)
13,062
(682)
(136)
12,244
(98)
40
12,186
(1,550)
10,636
(378)
10,258
10,258
–
2,467
2,467
(2,467)
–
–
–
–
–
–
–
331
331
–
331
331
47,404
(3,899)
43,505
(30,443)
13,062
(682)
(136)
12,244
(98)
40
12,186
(1,219)
10,967
(378)
10,589
10,589
34
–
34
10,292
331
10,623
10,670
(378)
331
–
11,001
(378)
84
85
Financial StatementsAnnual Report 2020/2021Dotdigital Group Plc
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
For the year ended 30 June 2021
33. Prior year restatement note continued
Operating profit
Costs by nature
Profit from continuing operations has been arrived after charging:
Direct marketing
Outsourcing and other costs
Outsourcing and tech infrastructure
Total cost of sales
Direct marketing
Partner commission
Staff-related costs (inc Directors’ emoluments)
Auditor’s remuneration
Amortisation of intangibles
Depreciation charge
Legal, professional and consultancy fees
Computer expenditure
Bad debts
Foreign exchange losses/(gains)
Travel and subsistence costs
Office running
Gain on disposal of tangible asset
Staff welfare
Other costs
Management charge
Total administration costs
As previously
reported
£’000
1,727
4,639
–
6,366
As previously
reported
£’000
–
–
17,929
64
3,647
1,475
479
2,404
1,248
(120)
509
176
(3)
399
531
(762)
Adjustments
£’000
(1,727)
(4,639)
3,899
(2,467)
Adjustments
£’000
1,727
2,566
–
–
–
–
–
(1,826)
–
–
–
–
–
–
–
–
As
restated
£’000
–
–
3,899
3,899
As
restated
£’000
1,727
2,566
17,929
64
3,647
1,475
479
578
1,248
(120)
509
176
(3)
399
531
(762)
27,976
2,467
30,443
86
Consolidated Statement of Financial Position
30 June 2019
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
Lease liabilities
Deferred tax
Current liabilities
Trade and other payables
Financial liabilities:
– Interest bearing loans and borrowings
Total liabilities
Total equity and liabilities
As
previously
reported
£’000
Adjustments
£’000
As
restated
£’000
9,680
11,702
1,037
22,419
12,222
19,320
31,542
53,961
1,490
6,791
(4,695)
720
16
37,161
41,483
–
1,377
1,377
11,096
5
11,101
12,478
53,961
–
–
–
–
–
–
–
–
–
–
–
190
–
(190)
–
–
–
–
–
–
–
–
–
9,680
11,702
1,037
22,419
12,222
19,320
31,542
53,961
1,490
6,791
(4,695)
910
16
36,971
41,483
–
1,377
1,377
11,096
5
11,101
12,478
53,961
87
Financial StatementsAnnual Report 2020/2021Dotdigital Group Plc NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
For the year ended 30 June 2021
As
previously
reported
£’000
Adjustments
£’000
As
restated
£’000
9,680
14,059
5,262
29,001
12,987
25,383
38,370
67,371
1,493
6,967
(4,695)
1,372
50
45,514
50,701
3,399
2,169
5,568
9,796
1,068
238
11,102
16,670
67,371
–
–
–
–
–
–
–
–
–
–
–
228
–
141
369
–
(186)
(186)
–
–
(183)
(183)
(369)
–
9,680
14,059
5,262
29,001
12,987
25,383
38,370
67,371
1,493
6,967
(4,695)
1,600
50
45,655
51,070
3,399
1,983
5,382
9,796
1,068
55
10,919
16,301
67,371
33. Prior year restatement note continued
Consolidated Statement of Financial Position
30 June 2020
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
Lease liabilities
Deferred tax
Current liabilities
Trade and other payables
Financial liabilities:
– Lease liabilities
Current tax payable
Total liabilities
Total equity and liabilities
88
Company Statement of Financial Position
30 June 2019
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 and liabilities
Company Statement of Financial Position
30 June 2020
Assets
Non-current assets
Owned property, plant and equipment
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 and liabilities
As previously
reported
£’000
Adjustments
£’000
As
restated
£’000
15,147
15,147
808
594
1,402
16,549
1,490
6,791
720
3,515
12,516
4,033
4,033
16,549
1,692
1,692
–
–
–
1,692
–
–
–
1,692
1,692
16,839
16,839
808
594
1,402
18,241
1,490
6,791
720
5,207
14,208
–
–
4,033
4,033
1,692
18,241
As previously
reported
£’000
Adjustments
£’000
As
restated
£’000
3
15,142
15,145
797
396
1,193
16,338
1,493
6,967
1,372
3,550
13,382
2,956
2,956
16,338
–
2,374
2,374
–
–
–
2,374
–
–
–
2,374
2,374
3
17,516
17,519
797
396
1,193
18,712
1,493
6,967
1,372
5,924
15,756
–
–
2,956
2,956
2,374
18,712
89
Financial StatementsAnnual Report 2020/2021Dotdigital Group Plc OUR CLIENTS
Financial Statements
COMPANY INFORMATION
For the year ended 30 June 2021
Directors:
P Amin
B Huard
M O’Leary
M Patel
E Richards
Company Secretary:
G Kasparian
Registered office:
No. 1 London Bridge
London
SE1 9BG
Registered number:
06289659 (England and Wales)
Auditors:
Moore Kingston Smith LLP
Statutory Auditor
Charlotte Building
17 Gresse Street
London
W1T 1QL
Nomad/broker:
Canaccord Genuity
88 Wood Street
London
EC2V 7QR
Joint broker:
FinnCap
1 Barthlomew Close
London
EC1A 7BL
Singer
1 Bartholomew Lane
London
EC2N 2AX
Solicitors:
BPE Solicitors LLP
St James House
St James Square
Cheltenham
GL50 3PR
90
Dotdigital Group Plc
EMEA Head Office
London
No.1 London Bridge
London
SE1 9BG
United Kingdom
Americas Head Office
New York
333 7th Avenue
Floor 18
NYC, NY 10001
USA
APAC Head Office
Sydney
Level 4
213 Clarence Street
Sydney, 2000
Australia