ANNUAL
REPORT
Content
Strategic report
2 Chairman’s report
4
Empowering customers with intelligent
tools and people
Investment case
6
8 Key performance indicators
10 Case study – Converse
12 Chief Executive Officer’s report and
financial review
20 Case study – Kissed Earth
22 Risks, impact and mitigations
27 Environmental, Social and Governance (ESG) Statement
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
85 Company information
Corporate statement
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 their most valuable business
systems, surfacing powerful insights and automating predictive
cross-channel messages.
*Revenue
*Adjusted
operating profit
*Adjusted EBITDA
Cash position
£62.8m
£14.5m £21.7m £43.9m
Up 8% from £58.1m
Up 6% from £13.7m
Up 10% from £19.8m
Up 37% from £32.0m
* Adjusted for continuing operations.
1
Strategic report
Chairman’s statement
“To have successfully delivered a year
of strong growth and profitability
despite the challenging circumstances
is testament to the ability and hard
work of our teams, the resilience
of our model, and the continuing
demand for our products.”
John Conoley
Non-Executive Chairman
I became Chairman of Dotdigital Group Plc
post-year end on 5 July 2022, replacing
Mike O’Leary, who left the business due
to health reasons. Mike played an important
role in helping the Company navigate the
pandemic while continuing to deliver
against its strategic objectives and I would
first like to wish him all the best in his
continued recovery.
Thirdly, the Group has an impeccable
knowledge of the markets in which it
operates. Its’ teams understand the direction
the digital marketing industry is moving
in; they understand the evolving needs of
marketeers, they know how to address them
through the platform, and they recognise the
steps we need to take as a business to grow
our competitive advantage.
I’m pleased to report that those challenges
were overcome in the second half, and
positive momentum has continued into the
new financial year. Crucially, we now have
management in place in North America
and are having success in both hiring and
retaining colleagues in the region. While our
teams there continue to embed, the pipeline
is building at a healthy rate.
A compelling opportunity
There were several reasons I took the role.
Firstly, the product is exceptional. The
marketing automation technology the
Group has developed is among the most
powerful and easy to use on the market,
capable of delivering outstanding returns
on investment and significantly enhancing
a brand’s reputation.
The second is the quality of the Group’s
growing customer base. International in
nature and comprising a diverse range
of blue-chip organisations from different
sectors, marketeers at some of the world’s
biggest brands rely on Dotdigital to power
their campaigns.
Finally, the business has immense potential.
The Group has firmly established itself as
one of the leading firms in the industry, but
there is much more to go for. Supported by
a robust balance sheet, there are several
routes to accelerate growth available to us.
We have also now filled the vacant roles on
the Board, adding complementary new skills
and abilities and providing the bandwidth
for management to return to focusing
solely on growing the business and creating
shareholder value.
Ending the year on a high
To have successfully delivered a year of
strong growth and profitability despite the
challenging circumstances is testament to
the ability and hard work of our teams, the
resilience of our model, and the continuing
demand for our products.
The pandemic led to a temporary increase
in demand for transactional SMS in the
prior year which tempered the year-on-year
growth rate, our North American operation
was negatively impacted by an unusually
competitive labour market in the first half,
and the Group was recruiting for a Chairman
and Chief Financial Officer (CFO) for much
of the second.
My priorities since joining
The first was to secure a new Chief
Financial Officer with the right credentials
and ambitions that matched our own.
A dynamic finance professional with an
impressive track record working in senior
roles at private equity-backed technology
businesses, Alistair Gurney was the
outstanding candidate for the position, and
I am delighted we were able to welcome
him onto the Board in September 2022.
The second priority was to work with the
Board to sharpen the strategy. For several
years now, much of Dotdigital’s R&D efforts
have centred around data functionality
2
Dotdigital Group Plc Annual Report 2021/2022
“Dotdigital product recommendations have allowed us to
get through a few roadblocks that the team faced previously. We
struggled to match complex product packages to customers, but
that’s where AI has come into play. The fact that we have access to an
emerging technology that is proving its potential, is quite thrilling. It
enables us to build many capabilities with very low effort and much
higher returns.”
Adam Hollinshead | Chief Digital Officer at winedirect.com.au
as demand for actionable insight in the
market grows. As a result, Dotdigital is
now the platform of choice for thousands
of marketeers around the world looking to
design and deliver advanced strategies with
personalisation at their core.
The next step is to build out our data
capabilities further, ensuring we stay
ahead of the curve and granting access to
new markets by offering one of the most
comprehensive customer data experience
platforms (CDXP) available. Plans are in
place across our R&D teams to this end, and
we are exploring opportunities to accelerate
the process through selective acquisitions
of adjacent technology. More information on
our CDXP ambitions is provided in the Chief
Executive Officer’s review in this report.
The third priority, in parallel with the first
two, was to engage with the Group and its
marketplace and understand the culture of
Dotdigital. Over the past few months, I have
met with many colleagues from across the
Group. I have been impressed by the calibre
of talent at our disposal and encouraged
by our teams’ enthusiasm for what we as a
Group are trying to achieve.
Sustainable foundations
The Board continues to focus efforts on
progressing the Group’s Environmental,
Social and Governance (ESG) agenda.
ESG is central to what we do and have
made significant progress on our initiatives
in the year.
The Board is also aware that focussing
on Dotdigital’s own performance, as well as
the technology we provide to our customers,
also has a beneficial impact on both the
people and our planet. As a business we
prioritise our people through wellbeing
initiatives, meeting governance expectations
through our accreditation of ISO14001 and
achieve high standards on data privacy and
data security through our accreditations and
control systems of ISO27001 and ISO27701.
We have a number of new initiatives
underway, including a Board commitment
to a net zero emissions target by 2030.
Further details of Dotdigital’s environmental
initiatives and performance in 2022 are set
out on pages 27 to 29.
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 2022,
the Board proposes that the Group pay a
final dividend of 0.98p per ordinary share
(2021: 0.86p), payable at the end of
January 2023.
Looking ahead
We now have in place a strong Board with
the right blend of skills and experience,
high quality management and support
teams across our international markets,
a first-class product, growing pipelines, a
clear strategy and the financial firepower
to accelerate delivery.
The economic backdrop remains uncertain
but, as the pandemic demonstrated,
effective engagement with existing and
prospective customers is just as important
to brands in more challenging times as it
is in good, providing Dotdigital a degree of
insulation against recessionary pressures.
We know the direction we want to take
the business and are focussed on using
our cash in the optimal way to capture the
wealth of available opportunity. It is early
in my tenure, but I am excited about our
prospects, and look forward to keeping
shareholders updated as we progress
towards our goals.
John Conoley
Non-Executive Chairman
15 November 2022
3
Strategic report
Empowering customers with intelligent tools and people
Dotdigital empowers multidisciplinary teams to plan, test,
execute and optimize cross-channel marketing campaigns.
We empower 4,000+ brands across 150 countries and help
marketeers connect with their target audience at scale, through
engaging messages that drive significant customer value.
What does DotdIgital do?
Dotdigital is a Software as a Service (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 marketeers 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 marketeers. 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.
4
Dotdigital Group Plc Annual Report 2021/2022
The leading customer engagement platform designed for marketeers
CRM | ERP
CDP | DMP
Zero & first party
data
Offline
Behaviour
Connect
Data collection | Data capture | Deduplication | Data enrichment | Profile unification
Analys e
t
c
i
d
Subscribed:
23 Aug 2021
Purchase phase:
Active
RFM:
Loyal
AOV:
$150
Last SMS send:
4 Oct 2021
e
r
P
A
c
t
i
o
n
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
5
5
Strategic report
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.
Strategy
Scalable
Growth
Clear and compelling strategy
focussed on organic growth
complemented with M&A
Highly scalable platform for
all sizes of customers with a
predictable financial model
Attractive industry growth
with a change in sentiment
post-COVID-19
Focussed on both the B2B and
SaaS business model driving
Email marketing automation has a
B2C digital experiences for mid-
high margins.
proven superior ROI for marketeers
market and enterprise companies.
from all digital marketing channels.
Predictable and transparent
Rapid product innovation
financial model with high levels
Global marketing automation
supporting average revenue
of recurring revenue.
spend is, according to Precient
per customer expansion and
driving return on investment
for our customers.
International growth based
on proven blueprint.
A focussed approach to
brand success extended through
global strategic partners.
Diverse customer base from
size of business to industries they
operate within.
Profitable growth with strong
cash balance and no debt.
and Strategic Intelligence, showing
double-digit growth and is predicted
to reach $14.2bn by 2030.
Marketeers are predicted
to accelerate adoption of
omnichannel.
Digital marketing as a proportion
of overall marketing budgets
continues to accelerate.
6
Dotdigital Group Plc Annual Report 2021/2022
“The experience we’ve had with Dotdigital so far has been fantastic,
and one of the reasons is their proactiveness. It’s not just about
providing us with a service, the advice they offer us around what we
could be doing more to take advantage of their platform to better
service our customers, has been invaluable.”
Briony Kennedy | Founder & CEO at Adorn Cosmetics
Independence
Leadership
Outlook
The successful Dotdigital culture
Experienced management team
Strong growth prospects
Highly talented and motivated
Executive team with a proven
Innovation to support marketing
people focussed on customer
track record of success.
teams with their data challenges
success.
A culture that is aligned to company
experience of scaling businesses
objectives and vison.
of this size.
Strong Non-Executive Board with
Unique industry position with
Wider management team with
many competitors distracted.
the motivation to continue the
Flexible, extendable and effective
product that drives retention.
All employees aligned to the
profitable growth story.
strategic priorities of geographic
expansion, product innovation
and move to omnichannel using
personalisation and intelligence.
Ability to complement organic
growth strategy with technology
acquisitions to accelerate
product expansion.
Attract more global strategic
partners to increase addressable
market.
and building strong strategic
New geographic markets with
partnerships.
greater potential than the UK alone.
7
Strategic report
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.
£62.8m
£58.1m
£43.9m
Adjusted operating profit (continued)*
We aim to have strong adjusted
operating profit growth from
normal business.
£13.1m
£13.7m
£14.5m
£47.4m
£32.0m
£25.4m
+12%
+23%
+8%
+11%
+5%
+6%
2020
2021
2022
2020
2021
2022
2020
2021
2022
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.
£1,461
91%
93%
94%
31%
31%
31%
£1,251
£1,083
+12%
+16%
+17%
2020
2021
2022
2020
2021
2022
2020
2021
2022
*
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).
8
Dotdigital Group Plc Annual Report 2021/2022
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
98.5% 99.0%
2022
2022
98.0%
98.4%
98.9%
99.0%
2020
2021
2020
2021
Mean email delivery time
Message sending volume
15 mins
13.6 mins
29.4bn
12.3 mins
24.4bn
21.1bn
-42%
-9%
-10%
+28%
+15%
+20%
2020
2021
2022
2020
2021
2022
9
Strategic report
Case study
Case study
Converse gain greater footing
in international markets with the
power of live chat
Established in Massachusetts, USA in 1908 as an
independent rubber shoe manufacturer, Converse
has since grown into one of the most iconic
footwear brands in the world — with a rich history
that has attracted global audiences generation after
generation.
Challenge
Converse had set its sights on expanding its global presence,
particularly in Latin America, and was in search of a marketing
automation provider that would support the company as it
introduced its shoes and clothing to new customers. Converse
knew that personalised, scalable marketing programmes would
play a critical role in its efforts to connect with a larger audience.
Best known for its Chuck Taylor All Star and One
Star styles, Converse now offers a broad range of
footwear and apparel designed to celebrate the
individuality of every customer.
29%
of marketing
list captured via
live chat
25%
of contacts
converted into
paying customers
300%
repeat
purchase rate
10
Dotdigital Group Plc Annual Report 2021/2022
Solution
The team at Converse heard that Dotdigital was the leading
marketing automation provider for e-commerce platform Magento,
and they set up a meeting to learn more about Dotdigital’s offerings.
During the discussion, Converse quickly discovered everything that
the Dotdigital platform had to offer — not to mention the added
perk of having on-the-ground support in Spanish. After conferring
with its teams, Converse made the decision to use Dotdigital as its
marketing automation provider of choice for Converse Mexico.
Converse believed that a personalised experience was key to its
efforts to reach more customers across the country — and that
one of the most important ways to create that connection was by
embracing live chat as a preferred channel of communication. The
stats are clear: 44% of consumers consider real-time chat the most
important feature of an e-commerce website, and a further 55% say
they would abandon a transaction if they can’t find the answer to
their question. By engaging one-on-one with customers and offering
immediate responses, Converse knew that it could remove barriers
to sale.
Known for pushing the boundaries, Converse wanted to take
engagement a step further. The plan? The team would turn live chat
into an acquisition channel to expand their footprint in new markets.
Working closely with the Dotdigital team, they developed a strategy
to use the Dotdigital live chat tool to not only keep their existing
customers happy with top-notch customer service, but also acquire
new customers through information obtained in data capture
forms in the chat. Along with live chat, Converse used Dotdigital’s
landing page and form builder to increase customer engagement
and interest. These solutions were especially important when it
came to limited-edition product launches, like the Bugs Bunny 80th
Anniversary collection.
Results
Their strategy was a huge success. Live chat has proven to be
an important growth tool for Converse Mexico, with 29% of the
company’s marketing list now captured via Dotdigital live chat. More
than a quarter of these contacts are now paying customers and
represent 31% of total orders. What’s more, these customers show
a greater propensity to buy, with an average purchase window of
13 days, compared to the established 19 days for customers who
haven’t had the benefit of five-star live chat service.
Live chat has set an excellent foundation for Converse to further
develop distinct customer cohorts that are ready for retargeting and
marketing nurture programmes. In addition, clear segmentation and
implementation of an abandoned cart programme have helped the
team win over their newly acquired customers, with repeat purchase
rates tripling just months after onboarding with Dotdigital.
To quote the Converse team, “Who knew, a simple ‘¡Hola!, ¿En qué
puedo ayudarte?’ could go such a long way?”
What has also helped Converse accelerate its marketing strategy in
the Latin American market is Dotdigital’s position as a truly global
provider of marketing technology. Visitors to the Converse Mexico
website see live chat in Spanish, which means that no opportunity
or key information is lost in translation — ensuring their shopping
experience is elevated and relevant.
The Converse team benefits too. With round-the-clock assistance
from Dotdigital’s Spanish-speaking support team, they can get all
the answers they need as they build out their international footprint.
“Who knew, a simple
‘¡Hola!, ¿En qué puedo ayudarte?’ could
go such a long way?”
The Converse Team
11
Strategic report
Chief Executive Officer’s report and financial review
“Giving customers the ability to better
utilise customer data is the next frontier
of efficiency for digital marketers. Whilst
offering leading automation capabilities
have been a core strength for some
time, we now enter a phase whereby
customers can deliver more personalised
experiences not just through the channels
they adopt, but also through the data
they are able to command.”
Milan Patel
Chief Executive Officer
Overview
Year of profitable growth and
operational enhancements
We are pleased to report a strong year of
growth and profitability for Dotdigital, along
with significant operational enhancements.
These results represent a full financial
year since the onset of the pandemic
and, despite challenges in the macro
environment, compare well against a strong
prior year performance that was boosted by
one-off pandemic-related SMS revenue. We
have cemented our relationships with our
customers as a strategic partner, helping
them deliver a high return on investment
from their digital marketing strategies
through a combination of best-of-breed
functionality and services.
We have a differentiated and well-integrated
offering, including leading orchestration
functionality at the heart of the platform,
saving our customers time. We have seen
sustained business momentum through
2022 as a result of continued execution
against each pillar of the Group’s growth
strategy, namely product innovation,
geographic expansion and strategic
partnerships, helping us deliver Group
organic growth of 8%.
During the year, while some form of
normality is returning across the different
territories post-COVID-19-related
restrictions, we have continued to see
an acceleration in the shift towards
Digital Marketing and the creation of
relevant and personalised experiences to
audiences across all industries. The use
of data, platform adoption and automation
capabilities are all continuing to rise and,
from a product development perspective,
we continue to enhance the Dotdigital
platform to ensure it excels in these areas.
By helping launch targeted campaigns in our
customers’ advanced marketing strategies,
ensuring they have an individualised
message at every touchpoint with their
customer or prospect and a strong return on
investment, our product has cemented itself
as the platform of choice for both B2B and
B2C marketeers.
A lot of progress has been made in the
second half of the year rebuilding our team
in North America, with management now
in place to lead the vision and execution of
growth in the region. We continue to see
employee retention strengthen and the
successful recruitment of new talent as
we embed our culture in a hybrid working
environment and competitors pause for
breath in their hiring efforts. Through these
investments we are making the business
more scalable, which puts us in a good
place to return to double-digit organic
growth over the medium-term.
We continue to see the increase in
customers adopting an omnichannel
approach, with Email Marketing remaining
core to their strategies for driving customer
acquisition and retention. We saw email
volumes grow 20% in the period as budgets
continued to increase and verticals/
industries started to return to normal
volumes post-pandemic.
As we look forwards, with our vision of
building out our Customer Data Experience
Platform (CDXP), alongside our own
research and development efforts, we
will look at acquisitions that offer added
value and resilience to our business
model. This will not only allow us to
expand our addressable market with larger
customers, but also makes our existing
customers stickier.
Business Review
Marketing automation platform
underpinned by rich customer data
Dotdigital is focussed on empowering
marketeers to connect with customers
through its powerful automation platform
that unifies all digital channels. Our platform
provides tools that enable marketing teams
to launch highly targeted, personalised
and relevant campaigns to customers and
prospects with personalised engagement at
every touchpoint – the right message, at the
12
Dotdigital Group Plc Annual Report 2021/2022
Key highlights
Group revenue
(Continuing and discontinued)
Revenue (Continuing)
Adjusted operating profit
(Continuing)*
Adjusted EBITDA
(Continuing)**
Net assets
Cash
30.06.22
(£m)
30.06.21
(£m)
62.8
62.8
14.5
21.7
69.8
43.9
60.6
58.1
13.7
19.8
61.0
32.0
%
4%
8%
6%
10%
14%
37%
* 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.
right time, through the right channel
to the right person. 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
focussed on mid-market and enterprise
clients across target verticals including
retail, non-profit, education, financial
services, sports and travel to name a few.
The Group’s foundations and particular
strengths are in email and deep integrations
into strategic partners within e-commerce
and CRM.
Results summary
Organic growth and cash generation
The Group generated continuing revenues
of £62.8m (2021: £58.1m). This 8%
growth was entirely organic, led by larger
value customers, existing client growth
and improved customer retention in the
EMEA region.
Adjusted EBITDA increased by 10% to
£21.7m (2021: £19.8m) driven by the
contribution from organic growth and
improving gross margin due to an increase
in email volumes which is a very high margin
compared to lower margin channels such
as SMS. Statutory operating profit was
£13.6m (2021: £12.9 m) including adjusting
items of £8.1m (2021: £6.9 m).
Our core growth strategies
?
Geographic
Product
innovation
Strategic
partnerships
We have a strong track record of cash
generation and this remains a high
priority for the Group with net cash
increase of £11.6m (2021: £6.5m)in the
period.
Market opportunity
Continued march towards digital and
heightened focus on personalisation
We operate within the large global
Marketing Automation market, estimated
to be worth $5.5bn and growing
at between 12%-13% year on year. This
market comprises three main target
segments with technologies and
business models optimised accordingly.
These segments consist of small/micro
companies, mid-market and enterprise.
The mid-market and enterprise segments
we are primarily focussed on are together
estimated to be worth $3bn.
Our target verticals differ slightly depending
on region and level of brand awareness. In
North America and APAC, where awareness
of Dotdigital continues to develop, we focus
on e-commerce businesses through our
strategic partnerships and integrations.
In the EMEA market, where our brand
awareness is high, we target all industry
types. In what remains a fragmented market,
we offer a comprehensive functionality set
and range of services to help customers
drive a higher ROI.
Digital transformation for marketeers
continues at pace in a post-COVID-19
world which has adapted quickly to online
experiences. Marketeers’ strategies are
becoming more sophisticated with the
use of data and actionable insights. The
Dotdigital platform is well placed to support
this, making it easy for customers to make
13
Strategic report
Chief Executive Officer’s report and financial review continued
“There are so many things that we can do now,
thanks to Dotdigital. The hardest part is choosing
just one area to focus on and grow, because all
of it is so exciting.”
Ken Holden | Digital Marketing Manager at Sportif USA
use of data while providing drag and drop
functionality to automate messaging at all
parts of the customer journey.
Email Marketing still generates the highest
ROI from all Digital Marketing campaigns
and continues to be the marketeers’ channel
of choice, complemented by other channels
to form the overall experience. As the shift
to digital progresses, we continue to see
an uptake of additional channels, such as
push and app messaging, aligned with our
move towards building out omnichannel
capabilities through the acquisition on
Comapi. According to eMarketer, Digital
Marketing as a percentage of overall
Marketing continues to increase and now
represents 66%; as some of the traditional
marketing budgets move into digital. We are
well placed to capture this growth.
Growth strategy
Focussed execution against
long-term vision
Having established a best-in-breed
marketing automation platform with
omnichannel capability and global scale,
we continue to see huge growth potential
with our core capabilities as the market
moves toward digitally-enabled marketing.
At the same time, our financial strength,
combined with broad customer reach,
provides us with the foundation and
resources to build our offering, both
organically and through acquisition, in line
with our long-term vision of building the
most comprehensive CDXP capabilities.
CDXP describes the ecosystem by which
companies and brands view and seek to
influence the customer journey – from
connecting and communication with
customers and prospects, to retaining and
optimising their purchasing decisions.
The tools that enable marketeers to have
insight into the journey is founded on rich
customer data, which is where the Dotdigital
Engagement Cloud excels, and provides
an opportunity to leverage through core
capability enhancements as well as new
capabilities in this space. Customer data
sits at the core of everything we do, and
there is substantial scope to broaden our
offering to provide even deeper engagement
for our customers across any channel
through a unified source of customer
intelligence.
This vision is underpinned by our organic
growth strategy, which continues to be
focussed around three core pillars: product
innovation, geographic expansion and
strategic partnerships.
Product innovation
We are making good progress in growing
the number of customers using enhanced
functionality, including an increasing
number of data connectors through our
IPaaS (Infrastructure Platform as a Service)
capabilities, while continuing to enhance
our customer data platform launched in
the financial year to enable our customers
to aggregate data from their business
systems for relevancy and personalisation.
We continue to educate the market, through
live sessions and digital marketing content,
on how to adopt new features to enhance
messaging. This helped drive an 18%
increase in functionality recurring revenue
from product updates and enhancement,
taken by both existing and new customers,
to £22.3m (2021: £18.9m).
The platform continues to go from strength
to strength, delivering on the needs of our
customers and maintaining our competitive
advantage.
Geographic expansion
We continued to successfully grow our
presence in international markets in the
period, in pursuit of our goal of diversifying
revenues outside of the UK. The Group saw
revenue growth across all key global regions,
despite the wider effects of COVID-19,
supply chain issues and a weakening
economic backdrop.
In EMEA, revenues grew 8% to £48.2m
(2021: £44.6m), helped by retention as we
strengthen relationships with our customers
and deliver on their ROI metrics. We have
continued to see retention improve in the
region as we strengthen relationships
with our customers and deliver on their
ROI metrics. We have also seen continued
growth in spend from existing clients as
they increase their email message volumes,
start to adopt an omnichannel approach
and continue to increase the use of our
platform features.
Revenues from the Americas were up 3% to
$12.9m (2021: $12.5m). Despite headwinds
faced in the first half of the financial year
from recruitment challenges, we made
great progress in the second half. A new
management team has now been put in
place to lead the execution of the strategy
in the region and we were able to step up
our recruitment efforts in our go to market
teams, which are now embedded and are
already starting to gain traction. We saw
strong customer wins in the fourth quarter
of the financial year and that momentum
has continued into FY23.
The APAC market saw high levels of growth
in the year, with revenues growing 18% to
$9.1m (2021: $7.7m). We further increased
Dotdigital’s presence in the region in the
period through expanding our team in
Singapore, which has led to encouraging
pipeline growth in Japan and the Far East.
Strategic partnerships
Revenues from customers using a data
connector from one of our strategic partners
grew 14% to £28.9m in the year.
Enhanced brand awareness, alongside
additional functionality and new integrations
into technology platforms, have allowed
us to continue growth in the Magento
space. Our respective teams continue
to work together on our joint marketing
strategy and enhanced development of our
integration. During the year we also became
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Dotdigital Group Plc Annual Report 2021/2022
Our people presence
North America
Los Angeles
North America
New York
UK
London, Cheltenham
and Manchester
Europe
Netherlands
and Warsaw
Asia
Singapore
Asia
Tokyo
Africa
Cape Town
Australia
Sydney and Melbourne
15
Strategic report
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
16
Dotdigital Group Plc Annual Report 2021/2022
“We’re excited to be working with our platinum partner Dotdigital on a project that
gives our joint clients the ability to use Fresh Relevance dynamic, targeted content
directly in the Dotdigital editor will improve ease of use and foster a more seamless
integration. Together with Dotdigital, we’re committed to taking our partnership
to new heights, and this is an important step in that direction.”
Mike Austin | CEO, Fresh Relevance
a premier partner of the Adobe Experience
programme. In the year, revenue from
Magento customers grew 10% from
£14.3m to £15.8m.
Our Shopify relationship continues to go
from strength to strength. We have seen
an increasing pipeline resulting from the
integration we have built with Shopify Flow,
which allows e-commerce merchants
a seamless connection to easily deploy
campaigns from the Dotdigital platform.
We continue to build relationships with
system integrators in the ecosystem. In the
year, revenue from Shopify customers grew
56% from £2.1m to £3.3m.
As BigCommerce’s global partner, we
continue to build on the brand awareness
within the user base and deepen our
strategic relationship, formulating a joint go
to market plan and joint marketing efforts
to the user base. We saw a 67% increase
in revenue from BigCommerce-connected
customers in the year to £0.6m (from £0.4m
in June 2021).
As part of our commitment to our B2B
Marketing customers, we have continued to
enhance our integrations into both Microsoft
Dynamics and Salesforce CRM as well as
building additional functionality specifically
for B2B Marketing tactics. Revenues from
customers using our CRM connectors
increased 7% to £8.0m in the year, from
£7.5m in the prior period.
We have recently launched our integration
into a new strategic partnership with
Zendesk to further enhance Zendesk Sell,
bringing the Marketing Automation value
proposition to its customer base. This will
allow its customers to store conversations
that can be used to increase relevancy
and personalisation. Albeit early days, we
continue to see a growing pipeline.
M&A
Together with our organic growth we intend
to create value from acquisitions to help
build our position as a global market leader
in the growing Marketing Automation
sector. We will look to invest in adjacent
technology that accelerates development
of the platform’s CDXP capabilities. This
will allow for average revenue per customer
(ARPC) expansion within our existing global
customer base but also the ability to enter
new addressable markets.
The key categories will remain around the
three pillars to our acquisition strategy:
Total recurring revenues including
contracted messaging plans now comprise
94% of total revenue.
Total recurring revenue has grown with
a compound annual growth rate (CAGR)
of 17% since 2018, this is driven by our
functional recurring revenues which have
grown at 26% over the same 4 year period.
International revenues remained at 31%
of the Group total.
• Adjacent technology to accelerate our
CDXP capability;
• Consolidation of the market for talent
and brand to expand geographical
coverage;
• Specialist functionality for target
verticals.
To drive value, we will integrate the core
capabilities into the platform to accelerate
growth but also manage costs to increase
margins and cash generation.
Financial review
Business model
The Group generates most of its revenues
from software and 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 platform
features. The best value is available to
those who take advantage of additional
functionality and integrations which help
them leverage their customer data. We
also have a small amount of professional
services revenue.
Revenues
The Group achieved revenue growth of
8% (2021: 23%) to £62.8m (£58.1m 2021).
To achieve this against the backdrop of
2021, in which we experienced significant
revenue from one off COVID-19 related
messaging volumes, is testament to the
Group’s focus on contracted SaaS revenues,
which grew by 10% to £49.6m in 2022.
Gross margin
The gross margin for the period remained at
82%. Whilst the gross margin for email and
standard channels remained above 90%, this
is always diluted by SMS and professional
services, which each have a higher marginal
cost of sale. We continue our focus on
high margin growth as opposed to driving
revenue irrespective of quality.
Operating expenses
Adjusted operating profit from continuing
operations grew by 6% from £13.7m
to £14.5m as we continued 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 £23.4m (2021:
£20.7m). The cash balance at the end of
the period was £43.9m (2021: £32.0m).
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 reduced by 3% in the
year reflecting focussed cash management.
17
Strategic report
Chief Executive Officer’s report and financial review continued
“The platform does a lot of the heavy lifting in examining the data
you have and suggesting segments that make sense and opportunities
for targeting them. We could tell very quickly that Dotdigital was a smarter,
harder-working tool than what we were using before and compared to
other platforms in the digital marketing space.”
Antonia Peterson | Director of Ecommerce, T3 Micro
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 £7.6m (2021: £6.8m).
Tax
Profitability from continuing operations
continues to grow. This is reflected within
the tax charge, which is now £1.2m with
an effective tax rate of 9%, with a lower
than standard rate due to enhanced R&D
tax credits.
EPS
In the year the adjusted basic EPS increased
to 4.27p (2021: 3.82p) and adjusted diluted
EPS increased to 4.18p (2021: 3.76p),
despite the higher effective tax rate of 9%,
(2021: 8%). Basic EPS also increased to
3.96p (2021: 3.55p).
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
2022, the Board proposes that the Group
will pay a final dividend of 0.98 pence per
ordinary share (2021: 0.86p), to be payable
at the end of January 2023.
People
The lifeblood of Dotdigital
John Conoley joined us as Non-Executive
Chairman and Board member on
5 July 2022. John brings significant public
company experience to the Board as well
as industry experience following extensive
career spanning various roles within the
technology sector. John has established
a track record in growing businesses and
delivering value creation.
Alistair Gurney also joined us as Chief
Financial Officer and Board member on 19
September 2022. Alistair brings significant
experience from private equity-backed
technology business, M&A and in areas such
as financial planning and analysis.
Through the period we continued investing
in management across all regions as
well as Product Engineering, Sales,
Customer Success, and Marketing to
bring new experiences and build scale
within the teams.
Environmental, Social and
Governance (ESG)
Our sustainable foundations
We report on our Scope 1, 2 and 3
Greenhouse Gas (GHG) emission and
there was an increase in the period of
gross CO2e by 27% as travel came back
post-COVID-19 lockdowns and return to
some normalisation to events and face
to face meetings. We are incredibly proud
that we have offset our CO2 emission by
carbon offsetting to be carbon neutral
through the period. We have also
continued to adhere to the standard on
ISO 14001 Environmental Management
systems and continue to support the
Terra Carta on environmental matters.
For more information on our ESG priorities
and progress see pages 42 to 43.
Current trading and outlook
The advancements we have made to our
technology platform over the year positions
us at the heart of marketeers’ evolving
needs, providing the tools they require to
drive broader, more targeted customer
engagement. At the same time, we believe
we now have in place the right teams and
infrastructure to support our next stage of
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Dotdigital Group Plc Annual Report 2021/2022
growth. Backed by high recurring revenues
and strong cash generation, we will continue
our focused investment in the business
to grow our brand awareness through our
partner networks, build our platform offering
in line with our technology vision and bolster
our internal talent to ensure we continue to
scale across our territories.
The positive trading momentum at the end
of the period has continued into the new
financial year. With the challenges from the
first half of the year addressed together
with favourable market drivers, the Group is
tracking in line with expectations for revenue
growth and profitabitility marginally ahead.
Whilst we are monitoring the impact of the
wider economic climate across our markets,
our technology’s proven ROI provides a
compelling value proposition to customers
as they look to connect with their target
audiences. This, together with a clear growth
strategy and strong balance sheet, gives us
confidence in our ability to continue to grow
profitably.
Milan Patel
Chief Executive Officer
15 November 2022
Alistair Gurney
Chief Financial Officer
15 November 2022
The Dotdigital difference
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.
19
Strategic report
Case study
Case study
Case study
Kissed Earth uses Dotdigital for
stronger customer engagement and
database management
Kissed Earth is one of Australia’s fastest-growing
wellness brands committed to using only the
finest quality ingredients. Developed in Australia
by Australians, with a team of food and science
experts, the products aim to help people around
the world stay healthy. Sourced and selected from
some of the best ingredients worldwide, Kissed
Earth is committed to using the cleanest and most
potent foods from nature.
Challenge
Kissed Earth faced two key challenges – a lack of personalised
campaigns and a stagnant customer database that resulted in
the team overserving existing customers. It also led to a lower
conversion rate and customer engagement. In response, the brand
partnered with Dotdigital to integrate automated email marketing
campaigns to drive better database management, re-engagement,
segmentation, and personalisation.
30%
increase in
database growth
61%
customer retention
rate for FY22
22%
increased
re-purchase rate for
Cleanse SKU
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Dotdigital Group Plc Annual Report 2021/2022
Solution
The partnership saw Kissed Earth use Dotdigital’s expertise to host
and run its replenishment campaigns. With the help of Dotdigital,
the team was able to tap into key data points and understand
the customers’ shopping behavior better. Building personalised
replenishment programmes per SKU enabled the brand to send
timely reminders to customers based on their re-purchase frequency
of the products. Furthermore, Shopify order insights provided
detailed information on repeat customers for the Cleanse SKU,
which helped analyse, segment, and create tailored experiences.
“Before Dotdigital, our digital marketing initiatives were re-marketing
and Dynamic Product Ads (DPAs). With Dotdigital’s cross-channel
platform, we can now reallocate our DPAs ad spends to other
channels, maximizing the spend and customer reach,” said Amy
Goodsell, Head of Marketing at Kissed Earth. “This has allowed
us to grow and reach new audiences without losing any existing
purchasers, resulting in database growth and higher customer
retention.” added Amy.
With a significant focus on email marketing as the primary re-
targeting channel, Kissed Earth also uses Dotdigital’s Google
ads and Facebook audience channels for database growth and
amplifying its re-targeting efforts. The audience sharing has allowed
the team to build a full-funnel sales approach, reaching customers at
different stages of the buying journey. The audience-based targeting
helps exclude regular customers or site visitors from being targeted
with ads before necessary to avoid duplication.
For example, as part of the re-engagement strategy, the team targets
customers who ordered the Cleanse product more than four months
ago but haven’t placed another order, with a triggered reminder
email. If the customer doesn’t engage with the email or place an
order, they are re-targeted using Dotdigital’s feed into Facebook and
Google, reminding them of their next purchase.
Results
The brand witnessed a 30% increase in database growth year-on-
year and recorded a customer retention rate of 61% for FY22. The
replenishment email campaigns continue to be effective, logging
excellent engagement rates. While the Brilliance SKU saw a 28%
open rate and 15% click-to-open rate (CTR), the Cleanse SKU clocked
in a 29% open rate and 10% CTR. Cleanse has also become one of
the top-performing single SKUs and is growing month-on-month
with a re-purchase rate of 22%.
“With Dotdigital’s cross-channel platform,
we can now reallocate our DPAs ad spends
to other channels, maximizing the spend and
customer reach.”
Amy Goodsell | Head of Marketing, Kissed Earth
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Strategic report
Principal 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,
we identify 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 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 they 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, Chief Product and Technology Officer
(CPTO)) reports on the principal risks to the
main Group Board.
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
Disruption caused by global external
events, such as pandemics, economic
downturns, and war have the potential to
impact our financial performance.
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, war or political unrest.
Global economic
disruption
Financial
Movement:
Increased
Geography-specific
market and political
environments
Financial and
operational
Movement:
Increased
• Continued building of recurring contracted revenue stream.
• Sufficient liquidity resources so that we can cope for prolonged
period of time without accessing the capital markets.
• Continuing flexibility for customers around payment terms.
• Continued investment into Business Continuity Planning (BCP)
to enable staff availability, building accessibility and for
hardware failure.
• BCP for office and remote staff working in the event that there
are energy supply disruptions.
• Successful revenue growth in territories beyond the UK, US
and ANZ – specifically Singapore and Japan.
• Constant review by our Executive team for growth opportunities
in additional territories.
• Monitoring the market conditions and political environment in regions
where we have staff, offices, target prospects and customers.
• Continue to distribute critical staff and engineering teams across
regions for resilience.
• Offer staff relocation to regions that have reduced risk, and
evaluate continuing operations in existing regions if the risk
becomes too great.
Optimising and
growing high-
performance teams
Failure to attract, hire, develop, support
and retain high-performing individuals in
a timely manner will reduce the ability to
achieve our business goals.
• Additional investments made in our Talent Acquisition team. These
have been made in the numbers of inhouse recruiters to increase
the speed of hiring, and in the continued investment in a dedicated
Applicant Tracking System.
Operational
Movement:
Stable
22
Dotdigital Group Plc Annual Report 2021/2022
• Commitment to invest in a new position; Global Learning &
Development Manager. It is expected this role will help us; build
on tools such as Udemy (L&D Content platform), facilitate and
support team internal onboarding and development, and Early
Career support for both existing employees and new hires.
• Plans being made to roll out an Apprentice and Graduate
programme to support the attraction and development of
Early Career talent.
• Continued development and refinement of our Performance
Review and goal setting platform. This provides the basis for
performance-related pay increases and Company bonuses.
• Continued commitment to organisational structures, internal
communication tools and processes to enable cross-team
collaboration.
• Regular evaluation of staff benefits to ensure market
competitiveness, particularly in international regions to
ensure these growth areas are supported.
• Provided competitive staff remuneration in light of the current
macro environment conditions and cost of living increases.
Data privacy
Operational
Movement:
Stable
Environmental
Operational
Movement:
Stable
As we operate in many territories, both
as a Data Controller and a Data Processor.
The complex Data Protection landscape
continues to evolve with additions and
alterations to international legislation.
There has been, and will continue to be,
a focus on the international transfer of
personal information with legal challenges
of cross-border transfer agreements/
frameworks.
Failure to keep up with changes,
and comply with legal or regulatory
requirements may result in reputational
damage, fines, or other adverse
consequences.
Failure to build and adapt privacy-
related product features needed for
the compliance programmes of
customers may result in the loss of
business to competitors offering a
wider range of features.
The impact of the climate emergency is
becoming increasingly apparent around
the globe. More environmental legislation
is being developed to support local and
international emissions targets.
As general awareness on the climate
change increases, there will be more
customer and consumer emphasis on
working with sustainability conscious
businesses.
•
Implementation of an ISO 27701 certified Privacy Information
Management System (PIMS), aligning our policies, processes and
procedures with the requirements of international Data Protection
Legislation.
• The ongoing monitoring of Data Protection/Privacy-related risks
by our Group Risk Committee.
• Provisioning of global instances for our platforms, allowing
customers to meet data sovereignty requirements.
• The development of product features to help customers with
their own compliance obligations.
• Maintenance of a public-facing Trust Centre communicating
important compliance information for prospects, customers,
and partners.
• Building a dedicated internal Privacy Operations team.
• The appointment of an external Data Protection specialist law
firm as the registered Data Protection Officer (DPO).
• Providing an ongoing Privacy awareness/training programme
for our staff.
• We have set science-based targets to become Net zero by 2030
• Using the Oxford Offsetting Principles, we continue to develop
our carbon offsetting and mitigation strategy. We operate as a
carbon neutral business and which include additional scopes in
our carbon offsetting which include GHG emission scopes 1, 2
and 3 (business travel, data centres, major cloud vendors, remote
workers, transmission and distribution (T&D) losses related to
office electricity and well-to-tank for fuels including electricity
generation and T&D losses).
• An ISO 14001 certified Environmental Management System
(EMS) continues to be maintained, and is used to assess
operational aspects and impacts, set objectives, and drive
continual improvement.
• We have now migrated the last of the platform infrastructure from
physical data centres to industry-leading cloud service providers;
meaning all our products now run on 100% renewable energy
(completed July 2022).
• An internal group (Dotgreen) made up of representatives from
around the business own the Environmental Management System,
and are empowered to initiate and promote new environmental
and sustainability initiatives within the company, with partners and
customers, and in the wider community.
• Marketing and promotion of our sustainability achievements,
including the maintenance of a dedicated sustainability area on
the corporate website.
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Strategic report
Risks, impact and mitigations continued
Risk area
Impact
Mitigation of risk
Evolving technology
and customer
requirements
Operational
Movement:
Stable
Failure to anticipate, respond to evolving
customer requirements, to introduce
competitive enhancements or maintain
existing products may impact growth and
customer retention.
Internet service
providers (ISPs),
reputation, internet
browser-related and
device 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 and 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 blocklisted,
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 of our products to
perform the originally designed service.
.
24
Dotdigital Group Plc Annual Report 2021/2022
• 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.
• Continued investment into research and development by growing
the data science, engineering and product teams.
•
Increasing the amount of customer feedback of our products by
implementing a new iterative release process that proactively
involves the customer in the product design.
• Quarterly marketing-led releases that enable our customers and
prospects to see how our products continue to evolve.
• A clear roadmap, aligned to the product vision, focussed
towards solving real world customer problems. The roadmap
is also focussed on delivering a Customer Data and Experience
Platform (CDXP).
• Constantly reviewing technology acquisition opportunities
that can further strengthen our go-to-market.
• A constant focus on enabling customer growth through the
breadth, ease of use and flexibility of integrations. Rapid
development of new integrations (including to third party
platforms such as Zendesk Sell, Netsuite ERP, Trustpilot, Maropost
Commerce Cloud, AP21, CommerceTools, Google Sheets and
Yotpo Reviews).
• Continued evaluation and optimisation of product performance
in the technology landscape to reduce maintenance overheads.
• 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). Additional commitment
shown through increased SMS participation.
• Continued investment into technology that can proactively block
trial account sign-ups and automated bots.
• Continued risk-based vetting approach of prospective customers
and their data acquisition practises.
• The consolidation of the messaging teams with the methods of
SMS and email along with continued investment in a deliverability,
anti-abuse and compliance team, under the leadership of our
messaging operations team.
• Continued swift handling of abuse complaints generated by
customer messaging, including where necessary account
suspension and agreement termination.
• Continued exploration and implementation of alternative message
routes for upstream providers for channels where this is supported
e.g. SMS.
• Continued investment into our technology to enable customers
to onboard 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, improvement of risk mitigations and
product changes that have been put in place with a focus
on continued learning and educating our customers on the
changes where necessary.
Risk area
Impact
Mitigation of risk
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.
Key messaging
channel integrations
Strategic
Movement:
Decreased
Loss of a strategic
partnership
Strategic
Movement:
Decreased
Use of public cloud
service
suppliers
Technological
Movement:
Stable
We are increasingly investing in
integration with third-party platforms to
provide an enhanced product feature
set – for example Meta, 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. In 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.
We utilise public cloud suppliers to
host our platforms and products.
An event resulting in multiple cloud
data centres failing, for any significant
period, or termination of services by
a cloud supplier, may negatively impact
our business, operating results and
financial condition.
The nature of public cloud computing
means that the underlying infrastructure
is used to host many organisations
assets; increasing the likelihood of the
infrastructure or cloud service providers
being targeted in cyber attacks.
• Continually evaluate the maturity curve of our market to stay ahead
of the competition and develop products that add differentiation
and offerings for markets that are less mature.
•
Investment in new differentiated product features, best-in-class
24/7 customer support and service offerings, enhanced brand
recognition and improved service delivery.
• An increased focus on delivering value for customers quickly
with a clear value proposition and target customer personas.
• Further leverage and definition of our USPs to focus on niches
where we can win new customers.
• A global marketing presence and PR strategy to attract
new customers.
•
•
Increasing our partner ecosystem with a new partner programme
for both our service and technology partners.
Increasing the number of regional account and customer success
teams to drive product adoption, delivering further value for our
customers using our product.
• 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.
• Expansion of our service and technology partner program to
support a partner first approach.
• Maintained agreements with all key strategic partners.
• A product and development strategy that continues to build
integrations into leading market share and upcoming e-commerce
and CRM platforms, to reduce reliance on a single strategic
technology partner.
• Continued investment into building integrations into our strategic
partners ecosystem of partners.
•
Informed choice of best-of-breed cloud computing suppliers (we
utilise Microsoft Azure, Cloudflare, Amazon AWS, and Google
Cloud Platform), the architecture and contracts of which facilitates
high uptime Service Level Agreements (SLAs) and a quick recovery
in the event of a single region failure.
• Resilient global instances of the platform to serve local customers
and avoid global customer impact in the event of a regional outage.
• Replication of data to secondary facilities within each region.
• Hot stand-by databases; resulting in a faster platform Recovery
Time Objective (RTO).
• Regular simulation of Disaster Recovery plans ensuring the plan
continues to meet the defined Recovery Time Objectives (RTO),
and Recovery Point Objectives (RPO).
• Use of modern platform agnostic technologies; allowing easier
migration to alternative cloud service providers.
• Due diligence and liaison with cloud computing suppliers on their
continuance plans in the event their energy providers are unable
to continue supply.
25
Strategic report
Risks, impact and mitigations continued
Risk area
Impact
Mitigation of risk
Supplier and
computer
hardware-related
risks
Technological
Movement:
Reduced
Information security
and cyber risks
Technological
Movement:
Increasing
The infrastructure used to send messages
from Dotdigital’s platforms is a critical
component of our services. An event
resulting in the inability to send messages
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.
Similarly, there is a reliance 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 profitability.
The ever-evolving, sophisticated nature
of the cyber threat landscape poses
an ongoing risk. The brand reputation
and financial performance depends on
the protection of the Confidentiality,
Integrity, Availability (CIA) of data and
computer systems.
An internal or external incident
compromising the CIA of data could
significantly impact our ability to function,
retain and attract business, as well as
potentially result in financial penalties
from regulators.
The industry in which we operate has
been the target of recent attacks with
competitors and other technology
companies publicly reporting incidents.
This together with the guidance from
national cyber security agencies (due
to the escalating political climate) has
resulted in this risk changing from a
status of stable last year to Increasing.
• 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 message sending infrastructure has been migrated away
from a physical infrastructure hosted in single region data centres,
to virtual systems hosted in highly resilient cloud service providers.
• Continual evaluation of suppliers and technologies with the
prioritisation of send volume, scalability and resiliency, and
business continuity.
• Continual investment in, and maintenance of, our sending IP
address ranges by a dedicated messaging operations team;
ensuring global reputability and use optimisation.
• Strong relationships with Mailbox Providers (MBPs) and industry
groups have been developed allowing for speedy containment
and recovery of IP reputation issues.
• Maintained multiple connections with upstream SMS providers,
reducing the impact of an issue with individual providers.
In addition to this, we frequently review the most profitable
upstream supplier routing options, and negotiate contracts
regularly based on current and anticipated volume.
• Tracking of message metrics regular reviewed and monitored
by the Executive team.
• The continual growth and development of the Information
Security & Privacy teams.
• Our Information Security Management Systems (ISMS) continues
to mature, using the ISO 27001 framework to manage risk and to
drive continual improvement.
• The use of external consultancies to audit our security programme
from a people, processes, and technology perspective.
• Attainment of the UK government-backed Cyber Essentials
Plus Certification.
• The proactive testing of security posture through third-party
Penetration Testing, Vulnerability Scanning, and social engineering
exercises.
• The implementation of best practice tools and technology to
block malicious connections or files from reaching our systems
and staff.
• The transference of some risk by the introduction of cyber
insurance.
26
Dotdigital Group Plc Annual Report 2021/2022
Environmental, Social and Governance (ESG) statement
This year saw a continuation of our investment
in our people, customers and communities with
sustained investment in learning and development
across the board.
Dotdigital remains committed to the
further development and implementation
of an effective ESG strategy that will be
at the centre of what we do.
Dotdigital’s objective is to deliver growth
which benefits our customers and the
communities in which we operate. As we
implement our growth strategy ESG remains
at the forefront of what we do. We realise
the importance of ESG to our customers,
employees and shareholders and therefore
are fully committed to providing details of
these as stated below.
Dotvoice summary - David Aldrich,
Chief Human Resources Officer (CHRO)
Our Dotvoice initiative is run by volunteer
employees and is made up of four
distinct pillars: Dotgreen (environmental),
Dotcommunity, dotDEI, and Dotwellbeing.
Each group benefits from an executive
sponsor from the leadership team and a
budget which is shared between the groups.
The past year has been very successful.
We have shared information and advice over
our global internal channels globally and
distribute regular newsletters to help with
awareness and recruitment. The remit and
goals for each group are summarized on this
and the following pages.
Dotwellbeing
Mission: To implement wellbeing initiatives
and encourage open discussion, provide
support and education and seek to provide
employees with the tools to manage their
own wellbeing..
Dotwellbeing is an employee-led group
that seeks to raise awareness and support
employees on all aspects of wellbeing –
mental, physical, social, and financial.
Over the FY 21/22 Dotwellbeing encourage
the use of wellbeing days and the wellbeing
reward by sharing personal stories on how
these were used to ensure employees
were taking full advantage of our wellbeing
offerings. Dotwellbeing also hosted R U
OK? Day, a national day in Australia. They
subsequently made it a global event by
encouraging all employees to ask their
colleagues twice if they are ok and sharing
resources to support this.
Dotwellbeing also hosted an International
Stress Awareness Week sharing resources
and personal stories on how members
de-stress, a free meditation workshop for all
employees to partake in, and an early Friday
finish to encourage employees to spend
some extra time on themselves.
Dotwellbeing also honored the 2nd
anniversary of the mandatory ‘work from
home’ announcement by putting together
a video of employees’ personal and
professional achievements in an initiative
to boost morale and reflect positively on
the challenging two years prior. The group
also celebrated ‘On Your Feet Dotdigital’
in a global initiative that saw employees
recording themselves on a walk. It was
shared in company-wide Slack channel,
asking colleagues from around the world
to guess where they were and nominating
others to get involved.
The group also recognized Men’s Health
Week with a video featuring six Dotdigital
employees. These employees talked openly
about their mental health and maintaining
their mental wellbeing to remove the stigma
and encourage further open conversation
around mental health at Dotdigital.
Dotwellbeing aims to produce a similar video
from women around the business and will
honor more awareness days such as World
Mental Health Day, inviting speakers in,
running activities, and having a larger focus
on stress management and anxiety.
DotDEI - Diversity, Equality, Inclusion
Mission: To create a diverse, inclusive, and
respectful workplace through education,
awareness, and conversation.
This year Dotdigital produced its first formal
Gender Pay Gap report. To ensure these
data points were as relevant as possible, we
used the same reporting methodology for
the global business, publishing the results
internally, and hosting an interactive Q&A
session to educate employees on the data
and considerations.
As part of the group’s goal to make its work
as relevant as possible, a company-wide
employee survey was completed to capture
the main areas of interest and concern.
These results were then used as a focus for
key projects and education.
As the business continues to grow, attracting
and hiring new talent remains a key focus.
Our DEI group has worked with our Talent
Acquisition team to roll out changes and
improvements to the process to support
inclusive hiring. This includes technical
solutions to parse job descriptions/adverts
to avoid negative gender bias, equality
statements, and hiring manager guidelines.
Storytelling and sharing are powerful
educational tool. We have begun to build
awareness of topics such as neurodiversity
by sharing employee stories. This has
proved an effective route to education and
awareness.
27
Strategic report
Environmental, Social and Governance (ESG) Statement continued
“Sustainability isn’t just about adopting the latest technology, it’s ensuring
that every one of us acts responsibly, making changes in our daily lives. This is
something we at Dotdigital are driving towards, enabling our customers and
colleagues to take control of their green house gas emissions. As market leaders
in responsible marketing, we want this to be our way of life for all who work
within us and all we work with.”
Steve Shaw | Chief Product and Technology Officer, Dotdigital
We were able to host events and raise money
for charities including AmnesTEA day to raise
money for Amnesty International, Light Up
The Night in aid of Marie Curie, and globally
celebrating Singapore’s Bubble Tea Day. We
also raised £5,512 for the Red Cross Appeal,
going straight to help causes in Ukraine. In
addition, we hosted a Christmas raffle where
we raised £500 to donate to the UN World
Food Programme to combat global hunger
and improve food security.
Looking to the year ahead, we have a new
partnership with The Girls’ Network, through
which we will be implementing a mentorship
program with young girls across the UK.
We will be attending the Kids Haven Career
Expo in South Africa to inform teenagers and
young adults about career opportunities and
to support personal interactions between
young people and working adults. Around
100 students will attend, and we will be there
to advise about the world of tech and give out
some Dotdigital swag!
At the beginning of the calendar year 2023,
we will have planned the important dates
throughout the year that our group will be
celebrating and raising awareness globally.
The Group also supported employees at UK
Pride this year with the production of Pride
Packs for employees to attend their local
Pride events.
Upcoming plans to further support this
key area of the business include:
• Mandatory DEI training to be rolled
out to all employees.
• Education and resource centre on
the company intranet.
• Additional employee story sessions.
• Launch of a DEI Charter to provide
specific guidance to all.
Dotcommunity
Mission: To work on and organize internal
events, focusing on improving corporate
social responsibility and social mobility by
planning fundraising events, partnering
with charities, and organizing volunteering
days for employees.
It was important to arrange the in-person
employee events for FY 21/22, as it was the
first in-person event we had held since 2019.
Across the globe, employees came together
by attending activities such as the Sydney
Bridge Climb, a ping pong tournament,
and even hiring a boat in the US! We are
looking forward to hosting the party for
Christmas 2022.
DotGreen
Mission: Through our commitment to
sustainable marketing, we lead the way
in providing the most energy efficient,
low emission, environmentally friendly
technology for our customers. Ensuring a
greener future for generations to come.
28
Dotdigital Group Plc Annual Report 2021/2022
1. Carbon neutral
We have continued to operate as a carbon
neutral business for the 3rd year in a row and
are still the market leader in our category
regarding responsible digital marketing.
We measure not just Scope 1 and 2 GHG
emissions but have extended that further by
measuring several key impacts within Scope
3. We follow the Oxford Offsetting principles
and science-based targets on our route to
net zero. Where offsets have been made, we
use Gold Standard-approved offsets from our
partners Climate Impact.
Our long-standing relationship with Woodland
Trust has restored nearly an acre of ancient
woodland , with 330 trees planted on land
bought by the Trust. Additionally, we raised
awareness of the climate crises of World
Earth Day by gifting sunflower seeds to our
customers to encourage them to get outside
more and enjoy the natural beauty of our planet.
Our partnership with Ecologi went from
strength to strength as we hit the figure of
25,000 trees planted with changes to our
Christmas gifting strategy. This was coupled
with a Christmas advent calendar with
content on how to be more sustainable in the
run-up to the 2021 festive period produced by
our DotGreen team.
2. Social responsibility with Dotdigital
We provide businesses with the tools
needed to better reach and engage with their
customers, but our priority is to ensure we
enable them to do so responsibly.
We are proud that we have paved the way
for other marketing automation companies
to follow suit in responsible marketing, and
as of July 2022, our platform is now run
on 100% renewable energy in all regions
across the UK, US, and Australia. We have
also created awareness in marketing emails
where customers can now create a pre-built
block informing audiences that their emails
are sent by a carbon neutral supplier.
Case study – Adorn Cosmetics
Australian Mineral Makeup & Natural Skincare
“It is really important to us that companies we
use also support the environment and also support
their employees so it was really nice to see that
Dotdigital was a company that has taken on board the
monumental effort to become carbon neutral.”
Briony Kennedy | CEO & Founder, Adorn Cosmetics
Image from the video case study
Australian Mineral Makeup
& Natural Skincare - Adorn
Cosmetics
Link to the video case study
We aim to be net zero by the end of our
financial year in 2030, a full 20 years ahead of
the timeline set out in the Paris Agreement to
limit global heating to 1.5 C..
5. Terra Carta
As the first carbon neutral cross-channel
marketing software, this collaboration with
Terra Carta puts our commitment to a
greener future and our customers’ needs
at the forefront of what we do. It reiterates
our dedication to promoting responsible
marketing precedent whilst helping to make
green marketing practices more accessible.
6. ISO 14001
As part of that promise, we have worked
hard to maintain our ISO 14001 certification
with zero non-conformities raised. We’ve
also worked on implementing a certified
Environmental Management System (EMS)
to monitor and continuously improve our
environmental performance. Our selected
EMS has been externally audited by a
UKAS-accredited certification body –
Alcumus ISOQAR.
This encourages our customers to take some
of that environmental ownership to celebrate
the achievements with us as they develop
- something that our customers value in
combating the climate emergency.
3. Further achievements over the
past year
Additionally, a new sustainable travel flow
chart was created to educate our colleagues
on sustainable choices of travel, both socially
and professionally.
We also introduced and increased recycling
solutions of coffee pod and battery recycling
in all UK, US, and Australian offices.
Furthermore, our work with landlords has
enabled communication with their teams
to ensure accurate recycling and waste
practices are being adhered to.
4. Net zero by 2030
Becoming net zero will help us deliver our
commitment to carbon neutrality. This
means taking the necessary steps to reduce
our emissions on a global scale. The final
stages of migrating all three physical data
centers in the UK, US, and Australia to utilize
Microsoft Azure, which is already carbon
neutral and uses renewable energy/RECs,
was completed. This milestone was achieved
in July 2022 and will reduce GHG emissions
in the next reporting period by approximately
24 tonnes of CO2e.
Governance
Our corporate governance framework is well
established and the details can be seen on
pages 32 to 34 within this report. However,
we realise the importance of continuing to
meet and exceed the expectation of our
customers, employees and shareholders.
Therefore, all of our staff are expected to
operate in an ethical manner no matter what
the situation. Compliance with all applicable
laws and regulations is of imperative
importance to avoid reputational damage
or fines.
We fully support the Modern Slavery
Act 2015 and do not engage in any
form of slavery or human trafficking
activities. Additionally, we uphold a zero
tolerance approach to both bribery and
corruption and are committed to acting in
the most professional manner in all our
business dealings.
Dotdigital remains committed to maintaining
the highest levels of privacy and security
operations for both our employees and our
customers hence why we continue to be
ISO 27001, ISO 27701 and Cyber Essentials
Plus certified.
Strategic report
The Strategic report was approved by a
duly authorised committee of the Board of
Directors on 15 November 2022 and signed
on its behalf by:
Milan Patel
Chief Executive Officer
29
Governance
Board of Directors
Milan Patel FCCA ACA BFPI
Chief Executive Officer
Alistair Gurney FCA
Chief Financial Officer
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 Group’s
listing onto AIM.
Milan was responsible for the Group’s functions in financial
management and reporting, regulatory compliance, legal and
corporate governance 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, its vision
and the 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.
Alistair joined the Board on 19 September 2022 as CFO, bringing
experience of senior finance leadership roles in international
technology businesses. At Dotdigital he will lead the finance and
legal teams and use his experience in established but growing tech
businesses to drive efficient growth and sound commercial and
strategic decisions.
He was most recently Director of Group FP&A at Unit4 Business
Software, where he revised the Group’s management reporting and
business partnering processes. Additionally, he led the financial due
diligence process in Advent’s sale of the business to TA Associates
and Partners Group.
Previously he held a Finance Director role and led the Group
Commercial Finance team at Iris Software Group, having supported
the sale of the Group in 2018.
Alistair is a Chartered Accountant (FCA ICAEW), having trained in
Deloitte’s corporate finance practice, working primarily on financial
restructuring projects.
30
Dotdigital Group Plc Annual Report 2021/2022
John Conoley
Non-Executive Chairman
Boris Huard
Non-Executive Director
Elizabeth (Liz) Richards FCA
Non-Executive Director
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
restructurings and integrations.
John was appointed as Non-Executive
Chairman of the Board on 5 July 2022,
following the resignation of the previous
Non-Executive Chairman. He brings
significant executive and non-executive
Board-level experience of both fully-listed
and AIM-quoted businesses.
He began his career in the IT industry with
IBM in 1983 where he worked in a range of
industries in technical, sales and marketing
roles. Since then, John has held general
management and director-level roles in
small and medium-sized private and public
companies. Recent public company roles
include Chief Executive Officer of Psion
PLC, the fully listed international mobile
device company, from April 2008 to October
2012 when it was acquired by Motorola;
Non-Executive Director of NetDimensions
(Holdings) Limited, the AIM-quoted human
capital management software company,
from October 2016 to April 2017 when it
acquired by Learning Technologies plc.
Non-Executive Chairman of Wameja
Limited, the AIM and ASX quoted innovative
mobile financial services company that
was acquired by Mastercard in 2021.
He is currently Executive Chairman of the
AIM-listed FireAngel Safety Technology
Group PLC.
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 is also currently a Non-Executive Director
and Audit Committee Chair at Tracsis plc,
an AIM-listed software business in the
transportation sector. She is also a Trustee
and Chair of Finance and Investment for
Yorkshire Cancer Research. Previous NED
and Audit Chair roles have included LINK
Scheme, the ATM operator, and Leeds
Trinity University.
She brings experience of high-growth
acquisitive business, and financial, audit
and governance expertise to the Board
at Dotdigital.
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 sections that follow 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.
John Conoley
Non-Executive Chairman
It should also be noted that Michael O’Leary was the Chairman
until his resignation on 5 July 2022 when John Conoley took over.
Also during the period Paraag Amin resigned as Chief Financial
Officer on 31 March 2022.
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.
32
Dotdigital Group Plc Annual Report 2021/2022
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.
All Non-Executives are 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 Environmental, Social and Governance 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.
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
12
7
12
12
12
12
12
12
12
12
1
1
1
–
1
1
1
1
–
1
5
3
–
–
–
5
5
–
–
–
4
–
5
5
5
5
–
5
5
5
2
–
4
3
4
4
–
4
4
4
4. Embed effective risk management, considering both
opportunities and threats, throughout the organisation
(fully complies)
The Group’s system of internal controls, identification of
significant risks and reviewing its effectiveness are the
responsibility of the Board. These systems are designed to
mitigate the risk of failure to achieve the business objectives.
These systems can only provide reasonable, but not absolute,
assurance against material misstatement or loss.
There is an ongoing process for identifying, evaluating and
managing the Group’s significant risks and this is regularly
reviewed by the Risk Committee and the Board. The Group also
keeps an active risk register which is also formally reviewed
by the Committee on a quarterly basis.
The internal control procedures are delegated to Executive
Directors and senior management in the Group, operating within
clearly defined terms set by the Risk Committee. The Board
regularly reviews the internal control procedures in light of the
ongoing assessment of the Group’s significant risks and is
reviewed on a quarterly basis.
On a monthly basis, the management accounts, including a
comprehensive financial report, are reviewed by the Board in
order to provide effective monitoring of financial performance.
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 John
Conoley. 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 in the November 2022
Board meeting.
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. Boris 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, and these can be found on the corporate website.
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 aims to meet monthly and more frequently if
necessary. In addition to this the Board attends an annual
strategy meeting which also includes senior managers outside
of the Board. The table at the top of this page shows attendance
for the period July 2021 to June 2022.
33
Governance
Corporate governance report continued
6. Ensure that, between them, the Directors have the necessary
8. Promote a corporate culture that is based on ethical values
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 skill sets 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.
Throughout the year, the Directors receive updates on corporate
governance matters from either the Company Secretary or the
Company’s nominated advisors.
To ensure that the Board continue to develop their skills and
keep up to date with market developments, they have access to
independent professional advice, which will be at the expense of
the Company. In addition, all members of the Board have access
to the support and advice of the Company Secretary who is
responsible for the induction programme of new members.
7. Evaluate Board performance based on clear and
relevant objectives, seeking continuous improvement
(partially complies)
The Nominations Committee is responsible for Board evaluation.
The Committee in the past has carried out formal Board
performance evaluations 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 was 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
as normal, albeit with some disruption due to the illness of the
Chairman prior to his departure. This process will resume now
the Chairman is in place.
and behaviours (fully complies)
We are committed to acting ethically and with integrity in all our
business relationships and with all our people. The Company
wants the myriad 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, retain 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 are regularly
updated and communicated to employees to help us to be
compliant with our ethical and cultural values.
9. Maintain governance structures and processes that are fit for
purpose and support good decision-making by the Board
(fully complies)
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. Communication 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.
34
Dotdigital Group Plc Annual Report 2021/2022
Audit Committee report
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 Elizabeth Richards as Chair and
Boris Huard, with John Conoley, Milan Patel and Alistair Gurney 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
At its meeting on 4 November 2022 the Committee reviewed the
Group’s preliminary announcement of its results for the financial
year to 30 June 2022 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.
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 15 November 2022 and
signed on its behalf by:
Elizabeth Richards
Chairman of the Audit Committee
35
Governance
Remuneration Committee report
Introduction
This report is for the year ended 30 June 2022. It sets out the
remuneration policy as well as the remuneration earned and paid
to the Executive and Non-Executive Directors.
As an AIM-listed company, we have to disclose this information to
fulfil the requirement of AIM Rule 19. Also, whilst not required to
comply with the remuneration reporting requirements applicable
to fully listed companies in the UK, we are committed to achieving
both high governance standards and a transparent and effective
remuneration framework.
As a result, the Committee has taken a number of these
regulations into account in the preparation of this report as
a matter of best practice. The items included in this report are
unaudited unless otherwise stated.
Statement from the Chairman of the Remuneration Committee
I am very pleased to present our Directors’ Remuneration Report
for the year ended 30 June 2022.
In keeping with last year’s framework, we have ensured that
incentives cover annual and longer term targets, to deliver
sustainable and profitable growth.
As such, the Committee is primarily responsible for determining and
recommending to the Board the policy for the Executive Directors’
remuneration and employment terms. The Committee is also
responsible for reviewing and making recommendations to the Board
about share incentive plans and performance-related schemes across
the Group. Finally, the Committee also considers the remuneration
structure below Board level for key employees and potential hires.
For full consultation, 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 Directors’ Report on Remuneration, detailed on pages 41 to
44, provides details of the amounts earned in respect of the year
ended 30 June 2022 and how the Directors’ Remuneration Policy
has operated.
The report will be subject to an advisory shareholder vote at the
2022 AGM.
Review of the year ended 30 June 2022
As described earlier in the annual report, the Group has performed
well during the year, delivering continuing operations revenue of
£62.8 million, a 8% organic revenue growth on the previous year and
total profit before tax excluding exceptional costs and share-based
payments of £14.5m. Consequently, the Executive Directors earned
an annual cash bonus against sliding scale revenue and profit targets
equivalent of 34% of salary out of a maximum 100% of salary (0% of
potential for the revenue target and 34% for the profit target).
Considering the Chief Executive Officer discharged both the duties
of Chief Executive Officer and Chief Financial Officer for the second
half of the fiscal year, the committee further applied discretion to
the Chief Executive Officer bonus, increasing the amount earned by
50%. The annual cash bonus for the Chief Executive Officer was as
a result 51% of his base salary, against a maximum of 100%.
The Performance Share Plan award granted to the Chief Financial
Officer in December 2018 vested in December 2021 at 100%
against very stretching absolute Total Shareholder Return targets
(35% CAGR).
36
Dotdigital Group Plc Annual Report 2021/2022
Paraag Amin’s departure
On his departure from the business the Chief Financial Officer was
treated as a Good Leaver and was also allowed to exercise 50% of
his shares with the remaining 50% exercisable in April 2023.
We offered Paraag a six-month salary ex-gratia and paid his notice
period in lieu. No further payment was made to Paraag.
Upon vesting of his 2018 award, no further award had been made
to the Chief Financial Officer during the year. That award made in
December 2018 is therefore the only one ever received by the Chief
Financial Officer during his employment with Dotdigital.
On 23 September 2021 the Chief Executive Officer was awarded with
201,458 options pursuant to the 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 2024.
Engagement with shareholders
During the 2021/22 financial year, we consulted with the major
shareholders in relation to several aspects of executive remuneration
for the year ahead.
Outlook for 2023
The Committee remains committed to a fair and responsible approach
to executive pay whilst ensuring it remains in line with best practice
and appropriately incentivises Executive Directors over the longer term
to deliver the Group’s strategy.
In respect of operating the Remuneration Policy for 2022/23:
• Following a remuneration benchmarking exercise, and considering
practice within companies of similar size and market capitalisations,
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 review date; from 1 July 2022, the Chief
Executive Officer base salary is £380k and the Chief Financial
Officer base salary is £210k.
• Annual bonus provision should remain capped at 100% of salary
for the Chief Financial Officer and has been increased to 125% for
the Chief Executive Officer, with targets based on revenue and profit
before tax. For 2022/23, revenue and profit targets will be weighted
equally; with both an on target and a stretched component;
• The Board and Committee intend to make a Performance Share
Plan (PSP) award to the Chief Executive Officer and Chief Financial
Officer during 2022, as soon as this will be practical in line with
corporate guidance and governance. Such awards would be made
in accordance with the 2017 PSP and the reward framework
communicated in December 2020, 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
15 November 2022
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
Benefits
To provide a competitive base
salary to attract, motivate
and retain directors with the
experience and capabilities to
achieve the strategic aims.
To provide a market-
competitive benefits package.
Pension
To provide an appropriate
level of retirement benefit.
Annual
bonus
PSP
To reward performance
against annual targets which
support the strategic direction
of the Group.
To drive and reward the
achievement of longer term
objectives, support retention
and promote share ownership
for Executive Directors.
Shareholding
guidelines
To promote share ownership
for Executive Directors.
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
Receive benefits in line with
market practice, these include
company car/allowance, private
medical, income protection and
death in service insurance.
Executive Directors are eligible
to participate in the Group’s
pension plan.
Awards are based on annual
performance and are normally
paid in cash.
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.
Executive Directors are expected
to build a shareholding in the
Group over time.
Set a level deemed
appropriate by the
Remuneration Committee.
Not applicable
5% of base salary.
Not applicable
125% of salary for
Chief Executive Officer
100% of salary for Chief
Financial Officer
Sliding scale financial
(e.g. revenue and/or profit)
and/or personal/strategic
targets
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
200% of salary for the
Chief Executive Officer and
100% of salary for other
Executive Directors.
Not applicable
37
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 long-term incentive
programme (LTIP).
Employee Incentive Schemes
The Company share option plan (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 but the
appointment 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.
38
Dotdigital Group Plc Annual Report 2021/2022
Remuneration
The Directors’ emoluments for the year ended 30 June 2022 were as per the following table. This information has been audited.
Executive Directors
P Amin
M Patel
Non-Executive Directors
B Huard
M O’Leary
E Richards
Salary/Fees
£’000
Benefits
£’000
Bonus
£’000
Ex-gratia
£’000
Share-based
Pension payment**
£’000
£’000
Total
£‘000
Number of
outstanding
options
153
350
503
5
2
7
52
179
231
213
–
213
8
18
26
50
126
176
481
437,500
675 1,443,186
1,156 1,880,686
Salary/Fees
£’000
Benefits
£’000
Bonus
£’000
Ex-gratia
£’000
Share-based
Pension payment**
£’000
£’000
48
100
48
196
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
£‘000
48
100
48
196
Number of
outstanding
options
–
–
–
** The share-based payment calculation is based on annual share option awards granted to Milan Patel in 2020 and 2021 which are
assessed for vesting in the third year of the performance period. Paraag Amin had end to end awards, granted in October 2018, which vested
fully in 2021 and were subject to a holding period. Under IFRS 2 Share based payments, the Group must provide an estimate for the costs
based on the valuation model called Monte Carlo each year, as if they fully paid out at the end of the performance period in 2023 & 2024
respectively for Milan Patel. To be fully paid out, half the award is based on the Group achieving an annual compounded TSR in the upper
quartile of AIM 100 and the other half is based on hitting an EPS target set by the Remuneration Committee.
The Directors’ emoluments for the year ended 30 June 2021 were as per the following table. This information has been audited.
Executive Directors
P Amin
M Patel
Non-Executive Directors
B Huard
M O’Leary
E Richards
Salary/Fees
£’000
Benefits
£’000
Bonus
£’000
Pension
£’000
Share-based
payment*
£’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
Pension
£’000
Share-based
payment*
£’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 three-year vesting period. These are based on
challenging absolute total shareholder return performance targets. Under IFRS 2 share-based payment, 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 three-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 programme with performance measures that are based on the company’s total
shareholder return and earnings per share in 2024.
39
Governance
Remuneration Committee report continued
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
E Richards
M O’Leary
No of
shares
held
1,631,182
95.084
42,669
50,000
1,818,935
% Holding
0.55
0.01
0.01
0.01
0.58
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
M Patel
Grant
date
19/12/17
21/12/20
23/09/21
No. of share
options granted
Option
price (pence)
935,000
306,728
201,458
0.5
0.5
0.5
Date first
exercisable
18/12/22
21/12/23
23/09/24
Expiry date
18/12/24
21/12/25
23/09/26
The end-to-end awards granted to Milan Patel 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.
To fully vest, the Group must achieve an annual compounded TSR of 35% over a c.3 year period. In the previous period and in the period a
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 2023 and 2024 respectively.
Composition of the Remuneration Committee
For the period from 1 July 2021 to 30 June 2022, the Remuneration Committee comprised independent Non-Executive Directors,
namely Boris Huard (Chairman), Mike O’Leary and Liz Richards.
From 5 July 2022, the Remuneration Committee comprises independent Non-Executive Directors, namely Boris Huard (Chairman),
John Conoley 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 five 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 15 November 2022 and signed on its behalf by:
Boris Huard
Chairman of Remuneration Committee
40
Dotdigital Group Plc Annual Report 2021/2022
Report of the Directors
The Directors present their report with the financial statements of
the Company and the Group for the year ended 30 June 2022.
Information relating to principal risks and uncertainties, 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 stable growth from continuing
operations in customer numbers, sales and profits. Continuing
revenues grew from £58.1m in the year ended June 2021 to £62.8m
for the year ended June 2022, an increase of 8%.
Adjusted operating profit grew from £13.7m in the 12 months to
June 21 to £14.5m for the year ended June 2022, an increase of 6%.
Dividends
The Board proposes a dividend payment of £2,924,613 comprising
an ordinary dividend of 0.98p per ordinary share (2021: £2,563,819
ordinary dividend of 0.86p 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 35 days (2021: 13 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 2022, are as follows:
30.06.22
30.06.21
Number of
shares held
1,631,182
95,084
50,000
42,669
Percentage
shareholding
%
0.55
0.01
0.01
0.01
Number of
shares held
1,575,972
22,700
14,000
–
Percentage
shareholding
%
0.53
0.01
0.01
–
Director
M Patel
B Huard
M O’Leary
E Richards
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 2022, are as follows:
Director
M Patel
30.06.22
Number of
options held
30.06.21
Number of
options held
1,443,186
1,241,728
The end-to-end awards granted to Milan Patel can only be exercised
at the end of a three-year vesting period, based on challenging
absolute total shareholder return performance targets. Under IFRS
2 Share based payment, 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 September 2021 to Milan. To fully vest, the Group must
achieve an annual compounded TSR of 35% over a circa three-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
programme with performance measures that are based on the
Company’s total shareholder return and earnings per share in 2023
and 2024.
Substantial interests
On 30 September 2022, the following parties had notified the Group
of a beneficial interest that represents 3% or more of the Group’s
issued share capital at that date:
Shareholder
Number of
shares held
Percentage
shareholding
%
Lion Trust Asset Management
54,702,898
18.32
Tink Taylor, Founder and President
29,776,667
Octopus Investments
Slater Investments
Investec Wealth & Investment
Highclere International Investors
28,041,402
15,741,642
14,177,865
8,970,269
9.97
9.39
5.27
4.75
3.00
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 2021 to the date of this report.
P Amin (resigned 31 March 2022)
J Conoley (appointed 5 July 2022)
A Gurney (appointed 19 September 2022)
B Huard
M O’Leary (resigned 5 July 2022)
M Patel
E Richards
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 Streamlined Energy and Carbon Reporting (SECR) regulations
requires reporting on energy use and Scope 1 & 2 Greenhouse Gas
(GHG) emissions. The Group goes further by voluntarily reporting on
Scope 3 emissions related to the following impacts and aspects:
• Major compute and infrastructure cloud providers
• Data centres
• Business travel (rail, air and road)
• Employee remote working
• Transmission and distribution (T&D) losses
• Well-to-tank for fuels plus electricity generation and T&D losses
Energy use and GHG Emissions
The Group’s Scope 1 and 2 GHG emission sources are from office
building energy use as the Group has no business fleet vehicles.
Previous
Current
reporting year
reporting year
1st July 2021 –
1st July 2020 –
30th June 2022 30th June 2021
Intensity Ratios
Intensity Ratios
(kilograms of
(kilograms of
CO2e)
CO2e)
2.4547 (-7%)
2.6442
5.304 (+9.7%)
4.834
427.0 (-8.6%)
467.4
923 (+8%)
854.4
Per turnover*
Scope 1&2 CO2e gross figure
Per turnover*
Total CO2e gross figure
Per employee**
Scope 1&2 CO2e gross figure
Per employee**
Total CO2e gross figure
Intensity measurement
* Scope 1 and 2 emissions in tonnes of CO2e per £’000 of turnover,
was chosen as a reference for intensity measurement. Turnover at
the end of June 2022 was 62,832 thousands £.
** Additionally, the Group also reports Scope 1 and 2 emissions in
tonnes of CO2e per full time equivalent employee (FTEE). FTEE at
the end of June 2022 was 361.
Energy and emissions summary
The total energy usage increased by 33% from the previous year,
however it was 6% down compared to the baseline year. This is
due to:
• Office energy usage of remaining offices returning to normal
levels post-COVID-19.
• The closure of leased offices in Amsterdam, Singapore,
Cheltenham and Warsaw.
Natural Gas
Electricity
Other fuels (stationary)
Other fuels (mobile)
Total energy
of which in the UK
Previous
Current
reporting year
reporting year
1st July 2021 –
1st July 2020 –
30th June 2022 30th June 2021
Energy Usage
(kWh)
Energy Usage
(kWh)
111,171
133,064
391,988
215,145
• Natural gas usage was not calculated in 2020/21 for the Minsk
and New York offices.
The total gross GHG emissions have increased by 18% compared to
the previous year but reduced by 19% compared
to the baseline year. Factors additionally to the above:
• Business travel recommencing post-COVID-19
127,500
127,500
• FTEE numbers have increased
0
0
•
630,660
475,709
Inclusion of further Scope 3 GHG emission impacts and aspects
in 2020/21 compared to 2019/20
85%
N/A
• Fuels and electricity well-to-tank were not included in the
2020/21 and 2019/20 reports.
GHG emissions GHG emissions
(tonnes of CO2e) (tonnes of CO2e)
Scope 1&2 gross CO2e
154.2 (+0.3%)
of which in the UK
Scope 3 gross CO2e
Total gross CO2e
Scope 1&2 net CO2e
Scope 3 net CO2e
77%
203.1 (+60%)
357.3 (+27%)
94.9 (-38%)
203.1 (+60%)
Total net CO2e (before carbon offsets)
298 (6%)
Purchased carbon offsets
Total net CO2e
300
-2
42
Dotdigital Group Plc Annual Report 2021/2022
153.8
N/A
127.3
281.1
153.8
127.3
281.1
279
+2.1
The Group’s Scope 1 and 2 GHG emission sources are from office
building energy use as the Group has no business fleet vehicles.
An independent third party is used to help collate the report and is
in line with the requirements under streamlined energy and carbon
reporting (SECR) highlighted by UK DEFRA and DBEIS and uses the
GHG Protocol methodology for GHG emissions reporting.
Initiatives during the reporting period
• Science-based targets set, working towards net zero for 2030 .
• The planting of 25,000 trees by changing the Group’s Christmas
gifting strategy. .
• The final stages were complete on migrating all three physical
data centres in the UK, the US and Australia to utilise Microsoft
Azure, which is already carbon neutral and using renewable
energy/RECs. Nb: This completed July 2022 and will reduce
GHG emissions in the next reporting period by approximately
24 tonnes of CO2e.
• A new sustainable travel flow chart was created for employees
to understand more sustainable choices of travel.
• Maintained ISO 14001 certification with zero non-conformities
raised.
• Maintained commitment to the Terra Carta and Woodland Trust
membership.
• Raised customer and partner awareness on the climate crises
on World Earth day by gifting seeds to plant sunflowers https://
dotdigital.com/blog/earth-day-at-dotdigital/
• At the request of customers, created awareness in marketing
emails where customers can now create a block of text
informing everyone that their emails were sent by a carbon
neutral supplier. https://support.dotdigital.com/hc/en-gb/
articles/4409054185106-Add-a-sustainability-statement-to-
your-email-campaigns
• The Dotgreen team produced a Christmas advent calendar with
content on how to be more sustainable in the run-up to the 2021
festive period.
• Further work with landlords to ensure that communication with
their teams regarding waste recycling is accurate and being
followed correctly.
•
Increased recycling solutions with the introduction of coffee
pod and battery recycling in all UK offices.
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 enquiries, the Directors consider that the
Company and the Group has adequate resources to continue in
operational existence for the foreseeable future. For this reason,
they continue to adopt the going concern basis in preparing the
financial statements.
Events after the reporting period
There are no events after the date of this report or the date the
financial statements were approved by the Board of Directors
which impact on the figures as presented.
Listing
The Group’s ordinary shares have been traded on 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 2022 was 69.6p (2021: 231p).
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 £10,903
(2021: £8,627).
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.
43
Governance
Report of the Directors continued
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 18.
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 4.
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 ISO 14001 certificate
for a third year with no non-conformities raised and has a fully
established Integrated Management System (IMS).
As part of our DotCommunity initiative we aim to raise money and
awareness for many charitable causes. In the coming financial
year, as well as other initiatives, we will be partnering with The Girl’s
Network to implement a mentorship programme with young girls.
The Group has continued to operate carbon neutral three years
in a row and we aim to achieve this standard into the foreseeable
future. Furthermore, as of July 22 our platform is now running on
100% renewable energy. For further details on how we interact with
communities and the environment, please see pages 27 to 29.
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 UK adopted
International Accounting as adopted by the UK. Under company law
44
Dotdigital Group Plc Annual Report 2021/2022
the Directors must not approve the financial statements unless they
are satisfied that they give a true and fair view of the state of affairs
of the Company and the Group and of the profit or loss of the Group
for that period. In preparing these financial statements, the Directors
are required to:
• Select suitable accounting policies and then apply them
consistently;
• Make judgements and accounting estimates that are
reasonable and prudent;
• State whether the Group and Parent Company financial
statements have been prepared in accordance with IFRS as
adopted by the UK subject to any material departures disclosed
and explained in the financial statements;
• Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the 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.
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 8 November 2022 and was signed on its behalf by:
Milan Patel
Chief Executive Director
15 November 2022
Report of the independent auditor
Opinion
We have audited the financial statements of Dotdigital Group Plc
(the ‘Parent Company’ and its subsidiaries (the ‘Group’) for the year
ended 30 June 2022 which comprise the Consolidated Income
Statement, the Consolidated Statement of Comprehensive Income,
the Consolidated Statement of Financial Position, the Company
Statement of Financial Position, the Consolidated Statement of
Changes in Equity, the Company Statement of Changes in Equity,
the Consolidated Statement of Cash Flows, the Company Statement
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 of
30 June 2022 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 International
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.
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 specific targeted audit
procedures, including analytical review, over the other components
listed in note 16 of the financial statements. All work was carried
out by the Group audit team.
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.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. This is not a
complete list of all risks identified by our audit.
45
Governance
Report of the independent auditor continued
Key audit matters continued
Key audit matters
Incorrect 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 wrong period;
• Revenue not being recognised in accordance
with IFRS 15 ‘Revenue from Contracts with
Customers’; and
• Manipulation of revenues around the year-
end through management override of internal
controls.
We therefore identified incorrect revenue
recognition as a key audit matter.
Valuation of intangible assets and goodwill
The directors are required to make an assessment
to determine whether there are impairment
indicators relating to the Group’s intangible assets
and goodwill.
The Group had intangible assets with a net
book value of £17,698,000 as at 30 June 2022
(30 June 2021: £16,134,000).
The Group had goodwill with a net book value of
£9,680,000 as at 30 June 2022 (30 June 2021:
£9,680,000).
The process for assessing whether impairment
exists under International Accounting Standard
(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 impairment of intangible
assets and goodwill as a key audit matter.
46
Dotdigital Group Plc Annual Report 2021/2022
How our scope addressed this matter
Our audit work included, but was not restricted to:
Evaluating and critically assessing the Group’s revenue recognition accounting
policy to determine whether it was in compliance with IFRS 15.
Performing tests of detail on a sample of individual revenue transactions
throughout the year across the significant revenue streams to evaluate whether
revenue was recognised in accordance with the contract terms and IFRS 15,
having considered the principles of IFRS 15 and the commercial substance of the
contracts.
Testing of certain controls identified in relation to revenue.
Substantive testing procedures included 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 to ensure
they were recorded in the correct accounting period.
Performing sales cut off tests to ensure revenue had been recognised in the
correct accounting period.
Testing accrued and deferred revenue to ensure that items included within these
balances had been recognised correctly.
In addition, we reviewed the adequacy of the disclosures in the financial
statements in accordance with the requirements of IFRS15.
Key observations
From our audit testing, we did not identify any material misstatements of revenue.
Our audit work included, but was not restricted to:
Obtaining management’s analysis of their assessment of whether there were any
indicators of impairment.
Critically assessing the impairment review performed by management. This
included considering the life cycle, public perception through the share price
of the Company and the fair value of intangible assets held by the Group.
Critically assessing the key assumptions used in the impairment workings and
performing sensitivity analysis through changing the assumptions and re-running
the cash flow forecast.
Evaluating the accounting policy and detailed disclosures to determine whether
the information provided in the financial statements is compliant with the
requirements of IAS 36 and consistent with the results of the impairment review.
Considering the appropriateness of the amortisation policy for intangible assets.
Key observations
Based on our audit work, we concluded that the intangible assets and goodwill
held by the Group are not materially misstated at the reporting date and that
management’s impairment assessment and reassessment of the useful
economic life of intangible assets is appropriate.
The analysis undertaken by the directors shows that Group is expected to remain
cash generative and profitable based on their technology. We have obtained an
understanding of and critically assessed the methodology used by the Directors
in performing this analysis and determined it to be appropriate.
Capitalisation and valuation of development costs
During the year, the Group capitalised development
costs of £7,686,000 of which £7,599,000
(2021: £6,461,000) was internally generated.
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 a significant degree of judgement and
subjectivity involved in assessing whether the
internally generated intangible asset qualifies for
capitalisation in accordance with the requirements
of IAS 38. We have therefore identified the
capitalisation of development costs as a key
audit matter.
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 in subsidiaries
of £18,363,000 as at 30 June 2022 (30 June 2021:
£18,141,000).
The process for assessing whether impairment
exists under International Financial Reporting
Standard (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.
Our approach was focused on ensuring that the costs
capitalised as development costs met the criteria for capitalisation of internally
generated intangible assets and were directly attributable to the development of
the asset in line with IAS 38. Our audit work included, but was not restricted to:
Using substantive testing to select a sample of projects to ensure that they
relate to development costs by review of timesheet data and employee contracts,
undertaking focused discussions with project leads and agreeing to other
supporting documentation where relevant.
Performing a critical assessment of whether any projects have had a research
phase that can be considered separate from the development phase. This
included selecting a sample of staff time on spent projects to identify any
costs which should not have been capitalised.
Performing substantive analytical review on internal staff costs capitalised by
agreeing to payroll reports for the development employees.
Testing a sample of 3rd party development costs to supporting documentation.
Considering whether certain administrative overhead expenditure which had
been capitalised was directly attributable to the development of the asset.
The Research & Development claim report prepared by Empower RD was critically
assessed and compared to the costs capitalised in the year.
Key observations
Based on our audit work, we concluded that the development costs have been
capitalised in accordance with the requirements of IAS38.
Our audit work included, but was not restricted to:
Obtaining management’s cash flow forecasts utilised in the impairment
assessment.
Reviewing the board minutes and holding discussions with management to
understand the strategy for the subsidiaries and expectations going forward.
Challenging management’s assumptions utilised in the impairment models,
including cash flow 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 investments to the carrying value
of the subsidiaries’ net assets to check that they are not impaired.
Evaluating the accounting policy and detailed disclosures in the financial
statements to check 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 have been transferred to
dotDigital EMEA Limited, the investment value in relation to Dynmark has been
considered as part of the value of the investment in dotDigital EMEA Limited.
Based on our audit work, we concluded that the carrying value of the Company’s
investments is not materially misstated at year-end and that management’s
impairment assessment is appropriate.
47
Governance
Report of the independent auditor continued
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 overall materiality for
the Group to be £628,320, based on one percent of revenue.
Due to the nature of the Parent company, we considered gross
assets 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
overall materiality for the parent Company to be £200,770, based
on one percent of gross assets.
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 and parent
Company was 50% of overall materiality, namely £314,160 and
£110,385 respectively.
We agreed to report to the Audit Committee all audit differences
in excess of £31,416 for the Group and £10,385 for the parent
Company, 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 a critical assessment of the detailed cash
flow projections 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 increased cost of living, the energy crisis, the ongoing
impact of the COVID-19 pandemic, as well as the ongoing Russia-
Ukraine conflict.
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 r
equired 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.
48
Dotdigital Group Plc Annual Report 2021/2022
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
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.
require for our audit.
Our approach was as follows:
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.
• We obtained an understanding of the legal and regulatory
requirements applicable to the company 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 and parent
Company 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.
• 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.
49
Governance
Report of the independent auditor continued
Use of our report
This report is made solely to the Group and parent 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.
Mital Shah
Senior Statutory Auditor
For and on behalf of
Moore Kingston Smith LLP
Chartered Accountants
Statutory Auditor
6th Floor
9 Appold Street
London
EC2A 2AP
15 November 2022
50
Dotdigital Group Plc Annual Report 2021/2022
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
85 Company information
51
Financial statements
Consolidated income statement
For the year ended 30 June 2022
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
30.06.22
£’000
30.06.21
£’000
62,832
(11,570)
51,262
58,124
(10,356)
47,768
(36,726)
(34,089)
14,536
13,679
(456)
(475)
(625)
(188)
13,605
12,866
(57)
57
13,605
(1,774)
11,831
–
(74)
20
12,812
(1,322)
11,490
(899)
11,831
10,591
3.96
3.88
4.27
4.18
3.96
3.88
4.27
4.18
(0.00)
(0.00)
(0.00)
(0.00)
3.55
3.50
3.82
3.76
3.85
3.79
4.12
4.06
(0.30)
(0.30)
(0.30)
(0.30)
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 2022
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
52
Dotdigital Group Plc Annual Report 2021/2022
Notes
30.06.22
£’000
11,831
30.06.21
£’000
10,591
333
(87)
12,164
10,504
12,164
–
11,403
(899)
Consolidated statement of financial position
For the year ended 30 June 2022
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
30.06.22
£’000
30.06.21
£’000
13
14
15
17
18
19
20
20
20
20
20
22
24
21
22
9,680
17,698
3,285
30,663
13,211
43,919
57,130
87,793
1,496
7,124
(4,695)
2,005
296
63,582
69,808
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
1,758
2,755
4,513
2,489
1,207
3,696
12,654
9,334
–
818
–
13,472
17,985
87,793
–
934
90
10,358
14,054
75,087
The financial statements were approved and authorised for issue by the Board of Directors on 15 November 2022 and were
signed on its behalf by:
Milan Patel
Director
Company registration number: 06289659 (England and Wales)
53
Financial statements
Company statement of financial position
For the year ended 30 June 2022
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
30.06.22
£’000
30.06.21
£’000
16
17
18
19
20
20
20
21
7
18,362
18,369
1,545
163
1,708
4
18,141
18,145
140
85
225
20,077
18,370
1,496
7,124
1,915
9,400
1,494
7,124
1,690
7,570
19,935
17,878
142
142
492
492
20,077
18,370
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 £4,163,416 (2021: £3,811,597).
The financial statements were approved and authorised for issue by the Board of Directors on 15 November 2022 and were
signed on its behalf by:
Milan Patel
Director
Company registration number: 06289659 (England and Wales)
54
Dotdigital Group Plc Annual Report 2021/2022
Consolidated statement of changes in equity
For the year ended 30 June 2022
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 2020
1,493
45,655
6,967
50
(4,695)
1,600
51,070
Transactions with owners
Issue of share capital
Dividends
Transfer in reserves
Deferred tax on share options
Share-based payments
Transactions with owners
(restated)
Total comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
Restated balance as
at 30 June 2021
Balance as at 1 July 2021
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
1
–
–
–
–
1
–
–
–
1,494
1,494
2
–
–
–
–
2
–
–
–
Balance as at 30 June 2022
1,496
–
(2,472)
307
–
–
157
–
–
–
–
(2,165)
157
10,591
–
10,591
54,081
54,081
–
(2,564)
234
–
–
(2,330)
11,831
–
11,831
63,582
–
–
–
7,124
7,124
–
–
–
–
–
–
–
–
–
7,124
–
–
–
–
–
–
–
(87)
(87)
(37)
(37)
–
–
–
–
–
–
–
333
333
296
–
–
–
–
–
–
–
–
–
(4,695)
(4,695)
–
–
–
–
–
–
–
–
–
–
–
(307)
1,148
625
158
(2,472)
–
1,148
625
1,466
(541)
–
–
–
3,066
3,066
–
–
(234)
(1,283)
456
(1,061)
–
–
–
10,591
(87)
10,504
61,033
61,033
2
(2,564)
–
(1,283)
456
(3,389)
11,831
333
12,164
69,808
(4,695)
2,005
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 UK
Adopted International Accounting 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.
55
Financial statements
Company statement of changes in equity
For the year ended 30 June 2022
Balance as at 1 July 2020
Transactions with owners (restated)
Issue of share capital
Dividends
Transfer in reserves
Share-based payments
Transactions with owners
Total comprehensive income
Profit for the year
Total comprehensive income (restated)
Restated balance as at 30 June 2021
Balance as at 1 July 2021
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 2022
Called up
share capital
£’000
1,493
1
–
–
–
1
–
–
1,494
1,494
2
–
–
–
2
–
–
1,496
(2,165)
157
Retained
earnings
£’000
5,924
–
(2,472)
307
–
3,811
3,811
7,570
7,570
–
(2,564)
231
–
(2,333)
4,163
4,163
9,400
Share
premium
£’000
6,967
Other
reserves
£’000
1,372
157
–
–
–
–
–
7,124
7,124
–
–
–
–
–
–
–
–
–
–
318
318
–
–
1,690
1,690
–
–
(231)
456
225
–
–
Total
equity
£’000
15,756
158
(2,472)
307
318
(1,689)
3,811
3,811
17,878
17,878
2
(2,564)
–
456
(2,106)
4,163
4,163
7,124
1,915
19,935
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.
56
Dotdigital Group Plc Annual Report 2021/2022
Consolidated statement of cash flows
For the year ended 30 June 2022
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 2022
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/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Notes
29
14
15
30
30
30.06.22
£’000
30.06.21
£’000
25,162
(1,761)
23,401
23,401
–
(7,686)
(465)
–
57
(8,094)
(8,094)
–
(2,564)
(1,110)
2
(3,672)
(3,672)
–
11,635
31,951
333
43,919
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
Notes
29
30.06.222
£’000
30.06.21
£’000
2,645
2,645
2,006
2,006
(5)
(5)
(2,564)
2
(2,562)
78
85
163
30
30
(3)
(3)
(2,472)
158
(2,314)
(311)
396
85
57
Financial statements
Notes to the consolidated financial statements
For the year ended 30 June 2022
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
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
IFRS 9
Financial Instruments - Amendments resulting from
Annual Improvements to IFRS Standards 2018-2020
(fees in the “10 per cent” test for derecognition of
financial liabilities)
IAS 37
Provisions, Contingent Liabilities and Contingent
Assets – Amendments regarding the costs to include
when assessing whether a contract is onerous
IFRS 16 Leases – Amendments regarding COVID-19 related
rent concessions
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.
IAS 8
Accounting Policies, Changes
in Accounting Estimates –
amendments regarding the definition
of accounting estimates
1 January 2023
IAS 12 Income Taxes – amendments
1 January 2023
regarding deferred tax related to
assets and liabilities arising from a
single transaction
IFRS 16 Leases – amendments regarding
1 January 2024
the classification of liabilities
The financial statements are presented in sterling (£),
rounded to the nearest thousand pounds.
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.
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:
• 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 IFRS 3
‘Business combinations’, the equity structure appearing in
the consolidated financial statements reflects the equity
structure of the legal parent Dotdigital Group Plc, including
the equity instruments issued under the share exchange to
effect the business combination;
• 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 and;
• Comparative numbers are prepared on the same basis.
Effective date
1 January 2023
The following accounting treatment has been applied in
respect of the acquisition of Dotdigital Group Plc:
Presentation of Financial
Statements – amendments
regarding the classification of
liabilities
IAS 1
IAS 1
Presentation of Financial
Statements – amendments regarding
the disclosure of accounting policies
1 January 2023
58
Dotdigital Group Plc Annual Report 2021/2022
• 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 and;
• 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 12 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
ongoing impact on the business (as detailed in the Chief
Executive Officer’s Review and Risk section).
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.
59
Financial statements
Notes to the consolidated financial statements continued
For the year ended 30 June 2022
2. Accounting policies continued
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.
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.
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
60
Dotdigital Group Plc Annual Report 2021/2022
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
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.
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.
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 payments 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.
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 2022 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), and the amount of
these cash flows is uncertain as several rounds of rent reviews
are due before this extension date.
61
Financial statements
Notes to the consolidated financial statements continued
For the year ended 30 June 2022
2. Accounting policies continued
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.
62
Dotdigital Group Plc Annual Report 2021/2022
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.
US Dollar
Australian Dollar
Singaporean Dollar
Euro
Belarusian Ruble
South African Rand
Polish Zloty
Canadian Dollar
30.06.22
£’000
60
14
(37)
10
(2)
(2)
5
1
30.06.21
£’000
60
13
(9)
(20)
7
4
95
(1)
49
149
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 – refer to note 14
Our business model is underpinned by our email and
data-driven omnichannel marketing automation platform,
dotmailer. Internal activities are continually undertaken
to enhance and maintain the product in a bid to stay
ahead of our competition. Management review the
work of developers during the period and make the
following judgements:
63
Financial statements
Notes to the consolidated financial statements continued
For the year ended 30 June 2022
2. Accounting policies continued
•
•
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 – refer to note 13
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 – refer to note 2: Going
concern
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 19.75% (2021: 6.2%). This has increased
as a result of the increase in the cost equity which was
impacted by both the decline in the share price at the year
end compared to last year and the increase in dividend
growth rate. 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:
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Dotdigital Group Plc Annual Report 2021/2022
• 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 there.
(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
right of use assets, 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.
Exceptional items
Where items of income and expense are of such size, nature
or incidence that their disclosure is relevant to explain the
performance of the company for the period, the nature and
amount of such items should be disclosed separately.
3. Segmental reporting
In the current year, Dotdigital’s single line of business remains the provision of data-driven omni-channel marketing automation.
In the previous year Dotdigital had two lines of business; the additional line being communication platform as a service (CPaaS).
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
48,191
38,374
12,444
30.06.22
US
£’000
9,688
8,537
972
APAC
£’000
4,953
4,351
189
Total
£’000
62,832
51,262
13,605
10,967
1,049
148
12,164
83,364
42,270
3,498
2,204
631
(816)
87,793
43,658
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 (2021: 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
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.
65
Financial statements
Notes to the consolidated financial statements continued
For the year ended 30 June 2022
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
Profit/(loss) before income tax
Total comprehensive income attributable
to the owners of the parent
Financial position
Total assets
Net current assets/(liabilities)
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
30.06.22
Core
£’000
CPaaS
£’000
Total
£’000
62,832
51,262
13,655
–
–
(50)
62,832
51,262
13,605
12,214
(50)
12,164
87,774
43,640
Core
£’000
58,124
47,768
12,812
19
18
87,793
43,658
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
111
(31)
75,087
34,943
30.06.22
£’000
24,650
2,396
562
27,608
30.06.21
£’000
22,005
2,228
534
24,767
30.06.22
5
30.06.21
5
157
117
69
348
160
105
69
339
Included in the total employees cost above, £6,194,834 (2021: £5,198,785) was capitalised in relation to internally generated
development costs.
5. Exceptional costs
Continuing exceptional costs incurred in the year relate to the amortisation of acquired intangibles of £120,000
(2021: £120,000), senior management settlement costs of £355,053 (2021:£nil) and the acquisition costs of Comapi
of £nil (2021: £68,095).
66
Dotdigital Group Plc Annual Report 2021/2022
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
30.06.22
£’000
30.06.21
£’000
57
(57)
–
20
(74)
(54)
30.06.22
£’000
11,570
11,570
30.6.22
£’000
3,066
2,125
20,290
81
6,001
1,080
1,028
802
682
(452)
119
413
–
432
1,059
–
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)
36,726
34,089
During the year the Group obtained the following services from the Group’s auditor at costs detailed below:
30.06.22
£’000
30.06.21
£’000
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
33
45
3
81
* Both amortisation of intangibles and depreciation charge will not agree to the relevant notes as these numbers exclude
amounts capitalised as development expenditure, amounts included in exceptional costs and amounts in cost of sales.
28
47
5
80
67
Financial statements
Notes to the consolidated financial statements continued
For the year ended 30 June 2022
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% (2021: 19%)
Effects of:
Adjustment in respect of prior years
Expenses not deductible
Research and development enhanced claim
Income not taxable
Share options
Tax rate changes
Effects of overseas tax rates
Other
Total tax charge for the year
30.06.22
£’000
1,180
142
452
30.06.21
£’000
1,008
(53)
367
1,774
1,322
30.6.22
£’000
–
–
–
30.6.21
£’000
–
101
101
30.06.22
£’000
13,605
30.06.21
£’000
12,014
2,585
2,283
142
98
(1,439)
(21)
71
291
38
9
(102)
673
(1,266)
(505)
11
375
(36)
(10)
1,774
1,423
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% (2021: 19%). Finance Act 2021 makes provision for the rate of
corporation tax in the UK to increase (from 1 April 2023) from 19% to 25%. UK deferred balances have therefore been recognised
at 25% in the period (2021: 25%).
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 £4,163,416 (2021: £3,879,692)
10. Dividends
Amounts recognised as distributions to equity holders in the period.
Paid dividend for year end 30 June 2021 of 0.86p (2020: 0.83p) per share
Proposed dividend for the year end 30 June 2022 of 0.98p (2021: 0.86p) per share
30.06.22
£’000
2,564
2,925
30.06.21
£’000
2,472
2,583
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
Dotdigital Group Plc Annual Report 2021/2022
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)
30.06.22
£’000
11,831
120
355
456
30.06.21
£’000
10,591
120
68
625
Adjusted profit for the year attributable to the owners of the parent
12,762
11,404
Management does not consider the above adjustments to reflect the underlying business performance. The other exceptional
costs relate to senior management settlement costs.
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
30.6.22
£’000
12,762
–
30.6.21
£’000
12,303
(899)
Adjusted profit for the year attributable to the owners of the parent
12,762
11,404
From all operations
Basic EPS
30.06.22
Weighted
average
number of
shares
Earnings
£’000
Profit for the year attributable to the owners of the parent
11,831
298,995,582
Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the parent
Options and warrants
Diluted EPS
12,762
298,995,582
–
6,222,724
Profit for the year attributable to the owners of the parent
11,831
305,218,306
Per share
Amount
Pence
3.96
4.27
–
3.88
Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the parent
12,762 305,218,306
4.18
From continuing operations
Basic EPS
Profit for the year attributable to the owners of the parent
11,831
298,995,582
Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the parent
Options and warrants
Diluted EPS
12,762
298,995,582
–
6,222,724
Profit for the year attributable to the owners of the parent
11,831
305,218,306
3.96
4.27
–
3.88
Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the parent
12,762 305,218,306
4.18
69
Financial statements
Notes to the consolidated financial statements continued
For the year ended 30 June 2022
11. Earnings per share continued
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
From discontinuing operations
Basic EPS
12,303 302,921,327
4.06
Earnings
£’000
Weighted
average
number of
shares
Per share
Amount
Pence
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)
Weighted average number of shares
Basic EPS
Diluted EPS
30.06.22
Shares
298,995,582
30.06.21
Shares
298,598,459
305,218,306
302,921,327
70
Dotdigital Group Plc Annual Report 2021/2022
12. Continuing and discontinuing operations
The analysis between continuing and discontinued operation is as follows:
Year ended 30 June 2022
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 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
13. Goodwill
Group
Cost
At 1 July
At 30 June
Impairment
At 1 July
At 30 June
Net book value
Continuing
operations
£’000
62,832
Discontinuing
operations
£’000
–
(11,570)
51,262
(36,726)
(456)
(475)
13,605
57
(57)
13,605
(1,774)
11,831
–
–
–
–
–
–
–
–
–
–
–
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
62,832
(11,570)
51,262
(36,726)
(456)
(475)
13,605
57
(57)
13,605
(1,774)
11,831
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)
20
(75)
12,014
(1,423)
10,591
30.06.22
£’000
30.06.21
£’000
13,192
13,192
3,512
3,512
9,680
13,192
13,192
3,512
3,512
9,680
Goodwill is allocated to the Groups cash generating unit (CGU) identified, being Dotdigital.
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.
71
Financial statements
Notes to the consolidated financial statements continued
For the year ended 30 June 2022
13. Goodwill continued
The carrying amount of goodwill relates to the Group’s trading activity and business segment. 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 19.75% (2021: 6.2%).
This has increased as a result of the increase in the cost equity which was impacted by both the decline in the share price at
the year end compared to last year and the increase in dividend growth rate.
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 15% (2021: 14%).
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% (2021: 75%).
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, would need to change before an impairment is required,
this being 161% (2021: 225%) discount rate and growth rate of -5% (2021: -21%).
14. Intangible assets
Group
Cost
At 1 July 2021
Additions
Exchange diferences
At 30 June 2022
Amortisation
At 1 July 2021
Amortisation for the year
At 30 June 2022
Net book value
At 30 June 2022
Customer
relationships
£’000
Technology
£’000
Computer
software
£’000
Internally
generated
development
costs
£’000
Domain
names
£’000
1,205
1,200
1,023
–
–
–
–
87
1
34,052
7,599
–
1,205
1,200
1,111
41,651
1,205
–
1,205
–
430
120
550
650
874
71
945
18,847
5,931
24,778
166
16,873
9
17,698
Totals
£’000
37,526
7,686
1
45,213
21,392
6,123
27,515
46
–
–
46
36
1
37
72
Dotdigital Group Plc Annual Report 2021/2022
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
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
Right of use
assets
£000
Short
leasehold
£’000
Fixtures &
fittings
£’000
Computer
equipment
£’000
Cost
At 1 July 2021
Additions
Disposals
Exchange differences
At 30 June 2022
Depreciation
At 1 July 2021
Depreciation for the year
Disposals
Exchange differences
At 30 June 2022
Net book value
At 30 June 2022
5,384
167
(60)
64
5,555
2,061
983
(45)
56
3,055
2,500
725
–
–
6
731
526
61
–
6
593
138
Totals
£’000
9,477
632
(60)
112
2,614
465
–
23
3,102
10,161
2,238
236
–
18
5,505
1,320
(45)
96
2,492
6,876
754
–
–
19
773
680
40
–
16
736
37
610
3,285
73
Financial statements
Notes to the consolidated financial statements continued
For the year ended 30 June 2022
15. Property, plant and equipment continued
Group
Right of use
assets
£000
Short
leasehold
£’000
Fixtures &
fittings
£’000
Computer
equipment
£’000
Included in the net carrying amount of property, plant and equipment are the right-of-use assets as follows:
Properties
£’000
Motor vehicles
£’000
Totals
£’000
155
5,384
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
Cost
As at 1 July 2021
Termination of leases
Additions
Foreign currency translation
At 30 June 2022
Depreciation
As at 1 July 2021
Depreciation for the year
Termination of leases
Foreign currency translation
At 30 June 2022
Net book value
At 30 June 2022
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
74
Dotdigital Group Plc Annual Report 2021/2022
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)
2,238
5,505
3,323
199
74
376
3,972
Totals
£’000
9,431
284
(154)
(84)
9,477
4,169
1,463
(78)
(49)
(60)
167
64
5,555
2,061
983
(45)
56
3,055
2,500
Totals
£’000
5,458
(136)
115
(53)
5,384
1,058
1,091
(65)
(23)
5,229
(60)
167
64
5,400
1,942
953
(45)
56
2,906
2,494
5,376
(136)
42
(53)
5,229
1,015
1,010
(65)
(18)
1,942
–
–
–
155
119
30
–
–
149
6
82
–
73
–
155
43
81
–
(5)
Properties
£’000
Motor vehicles
£’000
119
2,061
3,287
36
3,323
16. Investments
Company
Cost
At 1 July
Additions
Disposals
At 30 June
Impairment
At 1 July and 30 June
Impairment
At 30 June
Net book value
At 30 June
Shares in
Group
undertakings
30.06.22
£’000
Shares in
Group
undertakings
30.06.21
£’000
21,660
21,035
456
–
625
–
22,116
21,660
3,519
234
3,753
3,519
–
3,519
18,363
18,141
The Group’s or the Company’s investments at the balance sheet date in the share capital of companies include the following:
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 plus Dotdigital Canada Inc was also fully shut down before the year end. 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
75
Financial statements
Notes to the consolidated financial statements continued
For the year ended 30 June 2022
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
30.06.22
£’000
30.06.21
£’000
30.06.22
£’000
30.06.21
£’000
10,748
(1,892)
8,856
52
–
–
186
4,117
13,211
10,895
(1,785)
9,110
60
–
–
–
4,180
13,350
–
–
–
–
1,426
34
–
845
1,545
–
–
–
–
–
52
–
88
140
Further details on the above can be found in note 23.
Included within Group prepayments is an amount of £246,057 (2021: £299,016) 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
299,216,130 (2021: 298,778,630)
Group
Company
30.06.22
£’000
43,919
43,919
30.06.21
£’000
31,951
31,951
Nominal
value
£0.005
30.06.22
£’000
163
163
30.06.22
£’000
1,496
1,496
30.06.21
£’000
85
85
30.06.21
£’000
1,494
1,494
During the reporting period the Company undertook the following transactions involving the issuing of share capital:
On 1 April 2022 an employee exercised their share options, increasing the issued share capital by 437,500 shares.
76
Dotdigital Group Plc Annual Report 2021/2022
20. Reserves
Group
As at 1 July 2021
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
54,081
–
(2,564)
11,831
234
–
–
–
Share
premium
£’000
7,124
Reverse
acquisition
reserve
£’000
(4,695)
Retranslation
reserve
£’000
(37)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance as at 30 June 2022
63,582
7,124
(4,695)
Reverse
acquisition
reserve
£’000
(4,695)
Retranslation
reserve
£’000
50
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)
Company
As at 1 July 2021
Issue of share capital
Dividends
Profit for the year
Transfer in reserves
Share-based payments
As at 30 June 2022
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
Other
reserves
£’000
3,066
–
–
–
(234)
(1,283)
–
456
Totals
£’000
59,539
–
(2,564)
11,831
–
(1,283)
333
456
2,005
68,312
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
Other
reserves
£’000
1,690
–
–
–
(231)
456
Totals
£’000
16,384
–
(2,564)
4,163
–
456
–
–
–
–
–
333
–
296
–
–
–
–
–
(87)
–
(37)
Share
premium
£’000
7,124
–
–
–
–
–
–
–
–
–
–
–
–
Retained
earnings
£’000
7,570
–
(2,564)
4,163
231
–
9,400
7,124
1,915
18,439
Retained
earnings
£’000
5,924
–
(2,472)
3,811
307
–
Share
premium
£’000
6,967
157
–
–
–
–
7,570
7,124
Other
reserves
£’000
1,372
–
–
–
–
318
1,690
Totals
£’000
14,263
157
(2,472)
3,811
307
318
16,384
77
Financial statements
Notes to the consolidated financial statements continued
For the year ended 30 June 2022
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
30.06.22
£’000
30.06.21
£’000
30.06.22
£’000
30.06.21
£’000
2,428
–
68
151
228
9,779
12,654
769
–
29
84
18
8,434
9,334
81
–
–
–
–
61
142
16
390
–
–
–
86
492
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 2021
Termination of leases
Additions
Principal repayments
Interest
Foreign currency translation
At 30 June 2022
Current
Non-current
At 30 June 2022
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
Properties
£’000
3,359
(15)
167
(1,081)
89
21
2,540
796
1,744
2,540
Properties
£’000
4,427
(67)
42
(1,132)
110
(21)
3,359
906
2,453
3,359
Motor
vehicles
£’000
64
–
–
Totals
£’000
3,423
(15)
167
(29)
(1,110)
1
–
36
22
14
36
Motor
vehicles
£’000
40
–
73
(50)
1
–
64
28
36
64
90
21
2,576
818
1,758
2,576
Totals
£’000
4,467
(67)
115
(1,182)
111
(21)
3,423
934
2,489
3,423
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.
78
Dotdigital Group Plc Annual Report 2021/2022
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
Amounts owed to Group undertakings
Bank balances
Financial liabilities
Trade payables
Amounts owed to Group undertakings
Accrued liabilities and other payables
Group
Company
30.06.22
£’000
30.06.21
£’000
30.06.22
£’000
30.06.21
£’000
8,908
–
43,919
52,827
2,428
–
9,779
12,207
9,170
–
31,951
41,121
769
–
8,221
8,990
–
1,426
163
1,589
81
–
61
142
–
–
85
85
16
390
86
492
The fair value of the financial assets and financial liabilities is equal to their carrying values. All financial assets are categorised
as loans and receivables and all financial liabilities are categorised as financial liabilities at amortised costs.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and whilst
retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the Group’s Risk Committee. The Board receives quarterly reports
from the Risk Committee, through which it reviews the effectiveness of the processes put in place and the appropriateness of
the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the
Company’s competitiveness and flexibility. Further details regarding these policies are set out below:
Interest rate risk
The Group’s interest rate risk arises from interest-bearing assets and liabilities. The Group has in place a policy of maximising
finance income by ensuring that cash balances earn a market rate of interest offsetting where possible cash balances, and
by forecasting and financing its working capital requirements. As at the reporting date the Group was not exposed to any
movement in interest rates as it has no external borrowings and therefore is not exposed to interest rate risk. No sensitivity
analysis has been prepared.
The Group’s working capital requirements are managed through regular monitoring of the overall cash position and regularly
updated cash flow forecasts to ensure there are sufficient funds available for its operations.
Liquidity risk
The Group’s working capital requirements are managed through regular monitoring of the overall position and regularly updated
cash flow forecasts to ensure there are funds available for its operations. Management forecasts indicate no new borrowing
facilities will be required in the upcoming financial period.
Trade and other payables of £13,175,482 (2021: £10,221,000) are expected to mature in less than a year.
79
Financial statements
Notes to the consolidated financial statements continued
For the year ended 30 June 2022
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:
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
30.06.22
£’000
6,225
2,572
1,951
30.06.21
£’000
5,734
2,701
2,550
10,748
10,985
30.06.22
£’000
195
231
1,466
1,892
30.06.22
£’000
1,785
126
(19)
–
30.06.21
£’000
140
154
1,491
1,785
30.06.21
£’000
1,589
262
(66)
–
1,892
1,785
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
£2,055,923 (2021: £2,484,862) of which £1,476,586 (2021: £1,502,918) 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 (2021: £nil) and amounts payable over one year are nil (2021:
£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.
80
Dotdigital Group Plc Annual Report 2021/2022
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.
Contractual maturities at 30 June 2022
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
12,654
425
13,079
–
392
392
–
741
741
–
1,018
1,018
<6 months
£’000
6 to 12 months
£’000
1 to 2 years
£’000
2 to 5 years
£’000
Contractual maturities at 30 June 2021
Trade and other payables
Lease liabilities
Total non-derivatives
24. Deferred tax
As at 1 July
Current year provision
9,334
480
9,814
–
454
454
–
759
759
The deferred tax liability above comprises the following temporary differences:
Acquired intangibles
Capital allowances in excess of depreciation
Temporary differences
R&D relief in excess of amortisation
Share option relief
Losses
–
1,730
1,730
30.06.22
£’000
1,207
1,548
2,755
30.06.22
£’000
163
82
(82)
3,181
(453)
(136)
2,755
Total
contractual
cash flows
carrying
amounts
£’000
12,654
2,576
15,230
Total
contractual
cash flows
carrying
amounts
£’000
9,334
3,423
12,757
30.06.21
£’000
1,983
(776)
1,207
30.06.21
£’000
146
38
–
2,963
(1,805)
(135)
1,207
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.
81
Financial statements
Notes to the consolidated financial statements continued
For the year ended 30 June 2022
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
Ex-gratia payment
Company contributions to money purchase pension scheme
Share-based payments from the LTIP options granted
30.06.22
£’000
30.06.21
£’000
5
4
9
–
–
–
4
6
10
1
1
2
30.06.22
£’000
938
213
25
176
30.06.21
£’000
1,136
–
26
347
1,352
1,509
Directors’ pay summary does include Non-Executive Directors and an ex-gratia payment related to a settlement payment made
to the former Chief Financial Officer.
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
Receivables/(Payables)
30.06.22
£’000
529
30.06.21
£’000
574
2
18
126
675
14
16
198
802
30.06.22
£’000
30.06.21
£’000
2,151
2,151
(651)
(651)
The receivables and payables are unrestricted in nature and bear no interest. No provisions are held against receivables from
related parties.
82
Dotdigital Group Plc Annual Report 2021/2022
Loans to/from related parties
Dotdigital EMEA Limited
Subsidiary
As at 1 July
Loans advanced
Loans repaid
30.06.22
£’000
30.06.21
£’000
(1,041)
5,653
(3,886)
(726)
(3,545)
5,075
(2,571)
(1,041)
IAS 24 Related Party Disclosure (Revised) 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 Development 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 £455,549 (2021: £625,000).
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 below illustrates the number and weighted average exercise price (WAEP) of, and movements in, share options during
the period. The options outstanding at 30 June 2022 had a WAEP of 32.63p (2021: 26.05p) and a weighted average contracted
life of 5.82 years (2021: 5.14 years) and their exercise prices ranged from 0.5p to 181.2p. 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
30.06.22
30.06.21
No. of options
4,292,735
2,463,663
(259,562)
(437,500)
6,059,337
–
WAEP
26.05p
89.85p
137.88p
0.50p
49.04p
–
No. of options
3,910,984
WAEP
51.09p
1,093,728
104.67p
(480,992)
(230,985)
4,292,735
–
13.03p
68.50p
26.05p
–
The weighted average share price at the date of the exercise for share options exercised during the period was 0.84p (2021:
178.57p). For options granted after 2019, a Monte Carlo model was used in measuring the fair use of options granted that were
subject to a TSR performance condition. A Black-Scholes model was used in measuring the fair use of all other options granted.
22 December 2020
23 September 2021
24 December 2021
EPS (50%)
Relative
TSR (50%)
EPS (50%)
Relative
TSR (50%)
EPS (50%)
Relative
TSR (50%)
Number of options granted
153,364
153,364
100,729
100,729
193,894
193,894
Share price at grant date
Exercise price
Option life in years
Risk-free rate
Expected volatility
Expected dividend yield
Fair value of options
152.0p
0.50p
5 years
(0.08)%
40.40%
0%
152.0p
152.0p
0.50p
5 years
(0.08)%
40.40%
0%
99.0p
264.0p
0.50p
5 years
0.38%
39.00%
0%
264.0p
264.0p
0.50p
5 years
0.38%
39.00%
0%
181.0p
196.0p
0.50p
5 years
0.57%
43.00%
0%
196.0p
196.0p
0.50p
5 years
0.57%
43.00%
0%
115.0p
83
Financial statements
Notes to the consolidated financial statements continued
For the year ended 30 June 2022
28. Share-based payment transactions continued
Number of options granted
Share price at grant date
Exercise price
Option life in years
Risk-free rate
Expected dividend yield
Fair value of options
19 December
2017
1,375,000
24 October
2018
2,305,000
14 December
2020
535,920
15 December
2021
567,300
85.95p
0.50p
5 years
1.33%
1%
65.3p
77.5p
0.50p
5 years
1.23%
1%
52.7p
148.0p
147.5p
181.0p
181.2p
10 years
10 years
10 years
(0.01)%
0.56%
47.0p
0.54%
0.46%
62.0p
1.68%
0.96%
42.0p
14 April
2022
1,367,547
90.0p
86.5p
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, 22 December 2020, 23 September 2021 and 24 December 2021 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.
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
Gain on disposal of fixed assets
Loss on disposal of investments
Share-based payments
Impairment on investment
Finance expense
(Increase)/decrease in trade receivables
Increase in trade payables
Cash generated from operations
30. Group cash and cash equivalents
Group
Company
30.06.22
£’000
30.06.21
£’000
30.06.22
£’000
30.06.21
£’000
13,605
6,123
1,124
12,014
4,795
1,267
–
152
–
–
456
–
57
21,517
325
3,320
25,162
68
(48)
(2)
–
625
–
75
18,794
(363)
(462)
17,969
4,163
3,811
–
2
–
–
–
–
–
235
–
4,400
(1,405)
(350)
2,645
–
2
–
–
–
–
–
–
–
3,813
657
(2,464)
2,006
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 2020
As at 30 June 2021
As at 30 June 2022
Group
£’000
25,383
31,951
43,919
Company
£’000
396
85
163
31. Project development
During the year the Group incurred £7,599,073 (2021: £6,797,279) 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.
84
Dotdigital Group Plc Annual Report 2021/2022
Company information
For the year ended 30 June 2022
Directors:
P Amin (resigned 31 March 2022)
J Conoley (appointed 5 July 2022)
A Gurney (appointed 19 September 2022)
B Huard
M O’Leary (resigned 5 July 2022)
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
6th Floor
9 Appold Street
London
EC2A 2AP
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
85
Financial statements
Notes
86
Dotdigital Group Plc Annual Report 2021/2022
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