ANNUAL
REPORT22/23
FINA NCIAL STATEMENTS
Content
Strategic report
2 Chairman’s statement
4 Dotdigital CXDP
6
Investment case
8 Key performance indicators
10 Case study – Parkdean Resorts
12 Chief Executive Officer’s report and
financial review
20 Case study – ScentAir
22 Risks, impact and mitigations
27 Streamlined energy and carbon reporting
28 Section 172 report
29 Environmental, Social and Governance (ESG) Statement
Governance
32 Board of Directors
34 Corporate governance report
37 Audit Committee report
38 Remuneration Committee report
43 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
86 Company information
Corporate statement
Dotdigital is an all-in-one customer experience and data platform
(CXDP) that empowers marketing teams to exceed customer
expectations with highly personalised cross-channel journeys.
With powerful AI capabilities, Dotdigital makes it easy to
automate deeply personalised experiences across web, email, SMS,
WhatsApp, chat, push, social, ads, and more.
*Revenue
*Adjusted
profit before tax
*Adjusted EBITDA
Cash position
Up 10%
from
£62.8m
Up 6%
from
£14.5m
Up 2%
from
£21.7m
Up 20%
from
£43.9m
£69.2m
£15.4m £22.0m £52.7m
* Adjusted for continuing operations for the prior year.
1
STRATEGIC REP ORT
Chairman’s statement
We operate in an incredibly dynamic industry
that is in a perpetual state of evolution, so it is
important we build out our offering at pace to
cement our competitive advantage.
John Conoley
Non-Executive Chairman
Since we announced our FY22 results,
Dotdigital Group Plc (Dotdigital) has made
important steps forward and I am pleased
to be able to report on a year characterised
by solid commercial out-turn and, crucially,
material advances in the development and
delivery of our growth strategy. We have
entered the new financial year in a strong
position and are optimistic about the future.
Optimal allocation of cash to
accelerate growth and build
long-term value
I would first like to welcome our new
colleagues that joined the business
with the post-period acquisition of Fresh
Relevance Ltd (Fresh Relevance), a leading
cross-channel personalisation technology
firm. (For further details see note 33 of the
consolidated financial statements).
Behind the scenes, much of the financial
year was spent refining our Customer
Experience and Data Platform (CXDP)
growth strategy and ensuring we have a
crystal-clear picture of where we want to
get to as a business and the deliverables
required to achieve this.
We operate in an incredibly dynamic industry
that is in a perpetual state of evolution, so it
is important that we build out our offering at
pace to cement our competitive advantage.
The Fresh Relevance deal enables us to
meet several deliverables that would have
taken considerable time and resource to
achieve organically, enabling us to leapfrog
several of our competitors and bringing
us closer to providing the most complete
platform on the market.
Dotdigital is a highly cash generative
business and has built up significant cash
reserves for a company of its size. The
Board firmly believes that using Dotdigital’s
balance sheet to fortify its strategic
position and unlock higher growth potential
will deliver the best long-term returns to
shareholders. The acquisition of Fresh
Relevance is aligned to this and, supported
by a financial position that remains
strong, we are continuing to explore M&A
opportunities where we are confident it
will further accelerate progress towards
our goals.
Established teams and steadily
improving performance
Since joining Dotdigital in July 2022, I have
observed a steady continued improvement
as the Group moved past the challenges
of H1 FY22. In some ways the year prior
was a period of transition with important
personnel changes against an uncertain
macroeconomic backdrop. We now have
the right talented leadership in place and
teams well-embedded across all regions,
with activity ramping up as expected.
A return to growth in the US reflects the
management’s drive and the work they have
done to enhance sales discipline. Our North
American operations are now stable and
there is a sense that momentum is building.
Our venture into Japan, while still in its
infancy, looks promising. For the team there
to have achieved the level of sales traction
they have at this stage is remarkable and
bolsters the performance of an already
strong Asia-Pacific region. (See note 3).
Geographic expansion remains a key pillar
of our growth strategy and our overseas
operations are now in excellent condition.
The progress we are making overseas
demonstrates the truly global appeal of our
platform and we are confident of making
further inroads as we elevate our offering
and strengthen the channels and partners
that underpin our growth ambitions.
Fostering a culture of responsibility
FY23 was a year of material progress across
our ESG strategy. The establishment of
Dotvoice, our colleague-led programme
comprising Dotwellbeing, Dotgreen,
Dotcommunity and DotDEI, has helped
bring clear direction and purpose to our
efforts. Together these groups have been
instrumental in building a culture of learning
and engagement across our communities
and make social responsibility an
inextricable part of how we do business.
Dotwellbeing continues to be a beacon for
our employees, supporting their wellbeing.
Dotgreen has championed sustainability,
achieving ISO14001 certification and
actively contributing to our ambitious
Net Zero 2030 target. DotDEI has made
significant strides, ensuring diversity,
equity, and inclusion remain at the heart of
our organisational ethos. Dotcommunity,
through impactful partnerships and
initiatives, has reinforced our commitment
to social responsibility.
Dividend
The Board will be maintaining its progressive
dividend policy in line with Group EBITDA
growth. Therefore, subject to approval at the
AGM in December 2023, the Board proposes
that the Group pay a final dividend of 1p per
ordinary share (2022: 0.98p), payable at the
end of January 2024.
Well-positioned to take advantage of
the wealth of available opportunities
On behalf of the Board I would like to
extend our gratitude to everyone at
Dotdigital. Through their collective buy-in
and dedication we have achieved important
milestones in the year and are well set to
make further progress.
The broader economic environment
remains uncertain but with a meticulously
mapped-out set of organic and inorganic
deliverables, an increased focus and
exceptionally capable teams, we will
navigate it with confidence.
John Conoley
Non-Executive Chairman
7 November 2023
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D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
3
STRATEGIC REP ORT
Dotdigital CXDP
Unlocking customer data for unforgettable CX.
Data enrichment
Unify data for a clearer picture
of customers
Dotdigital’s all-in-one CXDP platform breaks down data siloes to
create a centralised data hub that delivers actionable insights.
Connected data gives marketers a clear insight into customer
behaviors, intent, preferred channels, all whilst making it
actionable too.
Decision-making
Insights made for acting on
Marketers can tap into customer insights and real-time performance
metrics with Dotdigital’s CXDP. An unforgettable customer
experience goes beyond simple engagement tactics with behavioral
modeling that deliver scalable personalised experiences every time.
Customer experience
Unparalleled cross-channel reach
Dotdigital combines the power of automation with the benefits of
a Customer data Platform (CDP) to help marketing teams deliver
customer experiences driven by data, not by hunches. Deeper
customer relationships that go beyond the expected are key to
conversion and customer loyalty.
The leading customer experience and data platform for marketers
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
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D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
5
STRATEGIC REP ORT
Investment case
Dotdigital is the leading Software as a Service (SaaS) provider
of an all-in-one customer experience and data 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.
The support we have received from Dotdigital has been fantastic
so far and has allowed us to simplify our SMS campaigns with scope for
utilising features such as segmentation. Through their proactive analysis
both on and off the platform, we’ve been able to better identify and
remove redundant contacts from our re-contacting phases.
Shani Pattni | Research Executive at Ipsos
Strategy
Scalable
Growth
Independence
Leadership
Outlook
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
The successful Dotdigital culture
Experienced management team
Strong growth prospects
Focussed on both the B2B and B2C
SaaS business model driving
Email marketing automation has a
Highly talented and motivated
Executive team with a proven
Innovation to support marketing
digital experiences for mid-market
high margins.
proven superior ROI for Marketeers
people focussed on customer
track record of success.
teams with their data challenges
and enterprise companies.
from all digital marketing channels.
success.
Predictable and transparent
Strong Non-executive Board
and move to omnichannel using
personalisation and intelligence.
Rapid product innovation
financial model with high levels
Global Marketing Automation spend
A culture that is aligned to Company
with experience of scaling
supporting average revenue
of recurring revenue.
is, according to Precient & Strategic
objectives and vison.
businesses of this size.
Ability to complement organic
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 generation and no debt.
Intelligence, showing double-digit
growth and predicted to reach
$14.2bn by 2030.
Marketeers are predicted to
accelerate adoption of omnichannel
and digital marketing.
Digital marketing as a proportion
of overall marketing budgets
continues to accelerate.
Unique industry position with many
Wider management team with
growth strategy with technology
acquisitions to accelerate product
competitors distracted.
the motivation to continue the
expansion.
Flexible, extendable and effective
product that drives retention.
profitable growth story.
All employees aligned to
the strategic priorities of
geographic expansion, product
Attract more global strategic
partners to increase addressable
market.
innovation and building strong
New geographic markets with
strategic partnerships.
greater potential than the UK alone.
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D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
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STRATEGIC REP ORT
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.
£69.2m
£52.7m
£62.8m
£58.1m
£43.9m
£32.0m
Adjusted profit before tax (continued)*
We aim to have strong adjusted
profit growth from
normal business.
£14.5m
£15.4m
£13.6m
+23%
+8%
+10%
2021
2022
2023
2021
2022
2023
+5%
2021
+7%
6%
2022
2023
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.
£1,622
93%
94%
94%
31%
31%
33%
£1,461
£1,251
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 being crucial to the success of our
business. Employee remuneration is specifically linked
to these KPIs.
Non-financial KPIs
Customer Support Customer Satisfaction score (CSAT)
CSAT is our main measure of customer satisfaction after an
interaction with our support team has taken place. It is derived
by taking positive ratings/total ratings x 100. We receive over
1000+ customer ratings every month, and this metric provides
a good and regular pulse on how happy customers are with the
support service that we provide. We regard maintaining levels of
98-99% month to month as world class.
Email delivery rate
Our email delivery rate shows the rate at which the emails that
we send are accepted by receivers. Emails can be rejected
for numerous reasons, including being detected as spam. It is
therefore important that we monitor our email delivery rate and
this metric shows that our infrastructure is both well configured
and optimised.
98.5%
2022
98.4%
99.0%
99.0%
2022
99.0%
99.0%
2021
2023
2021
2023
Mean email delivery time
This KPI shows the mean delivery time of emails successfully
delivered. Delivery time is an important metric for our customers
and some email campaigns can be time sensitive. This KPI
enables us to see that we are delivering email quickly and
meeting our customers’ needs.
Email sending volume
This is the total number of emails sent from our platform. It
is an important metric for us to show that our customers are
getting great value and outcomes from using our technology.
It indicates that are customers can successfully address their
business challenges using the Dotdigital platform.
13.6 mins
12.3 mins
15.3 mins
29.4bn
31.3bn
24.4bn
+16%
+17%
+11%
2021
2022
2023
2021
2022
2023
2021
2022
2023
*
Adjusted profit before tax excludes share-based payment (note 29), exceptional costs (note 5) and amortisation of intangibles
on acquisition (note 13).
-9%
2021
-10%
2022
+24%
2023
+15%
2021
+20%
2022
+7%
2023
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STRATEGIC REP ORT
Case study
Case study
Parkdean Resorts turned first-
time visitors into repeat customers
using automation
With over 60 holiday parks and multiple
accommodation types in the UK, Parkdean Resorts
knows how to maximise the use of Dotdigital’s
advanced personalisation features and Dotdigital
partner Fresh Relevance to ensure every campaign
is tailored to the individual customer.
Challenge
Parkdean Resorts wanted to increase customer retention and
drive bookings off the back of completed holidays at a resort.
88%
78%
increased conversions
return bookings
With over 60 holiday parks and multiple accommodation
types, we maximised the use of Dotdigital’s advanced
personalisation features to ensure we could tailor our email
content for each customer.
Bradley Stokoe | Email Marketing Manager, Parkdean Resorts
Solution
A new ‘Welcome home’ retention program was introduced,
encouraging previous customers to book another holiday after
a completed stay. Each message was hyper-personalised using
insight data and creative components such as customised holiday
types, tailored web pages and images relating to their past stay.
Parkdean included email and SMS in their outreach and targeted
each customer on their preferred channel. When a customer booked
through the campaign, they moved into a ‘Future Booker’ program to
support their retention strategy, encouraging reviews and other user-
generated content for social channels.
Results
Adding in the new SMS program allowed Parkdean Resorts to
reach an additional 27,559 customers. Transaction rates have also
increased by 27% since launching the program, and split-testing led
to an additional increase in conversions of 88%.
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STRATEGIC REP ORT
Chief Executive Officer’s report and financial review
The Group’s technology platform, built from
the ground up with analytics and data at its
core, represents a compelling proposition
in line with long-term trends and in differing
market conditions.
Key highlights
Revenue
Adjusted profit before tax*
Adjusted EBITDA**
Net assets
Cash
30.06.23
(£m)
69.2
15.4
22.0
80.3
52.7
30.06.22
(£m)
62.8
14.5
21.7
69.8
43.9
%
10%
6%
2%
15%
20%
* Adjusted profit before tax 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.
Milan Patel
Chief Executive Officer
Overview
The Group delivered a robust performance
in FY23, with double-digit revenue growth
and strong cash generation. This follows
healthy demand across the Group’s
diverse customer base as marketing
professionals focus their budgets towards
data-led marketing initiatives, together
with a growing contribution from prior
year investments which drove accelerating
momentum in the second half.
Group revenue grew 10% to £69.2m (FY22:
£62.8m), with recurring and repeat revenue
representing 94% (FY22: 94%). Adjusted
profit before tax was ahead of expectations
at £15.4m (FY22: £14.5m) and adjusted
EBITDA was in line with expectations at
£22.0m (FY22: £21.7m), reflecting planned
investment in headcount and operations.
Strong cash generation continued through
the period contributing to a cash balance
of £52.7m at year end (FY22: £43.9m).
The Group’s roadmap of expanding
Customer Experience Data Platform
(“CXDP”) capabilities and regular
functionality enhancements continue
to unlock new, higher value growth
opportunities. This is reflected in the
continued progression of Average Revenue
Per Customer (ARPC) and functionality
recurring revenue, both increasing 11% in the
year, as customers expand their usage of
the platform and the Group converts a larger
pipeline of higher value enterprise deals.
This provides the resource and flexibility
for ongoing investment in the organic and
inorganic growth opportunity, which is
centred on building out the Group’s CXDP
offering. These efforts were accelerated
post-year end with the acquisition of
personalisation technology business,
Fresh Relevance, adding highly
complementary capabilities to the Group
along with more than 300 customers and
the ability to address a larger, higher value
market opportunity.
Positive trading continues to translate into
financial strength for the Group, which
is governed by a resilient, profitable and
cash generative business model with high
levels of recurring revenues. For FY23,
The Group exited the year with positive
trading momentum across all regions,
a strong financial position and a clear
product strategy. Investments into the
Group’s infrastructure, people and product
has delivered results as expected, and
worked to create a strong platform to layer
on the capabilities and talent from Fresh
Relevance. The Group is now in a stronger
position to pursue its growth ambitions,
supported by a healthy pipeline and robust
financial position.
Business review
Dotdigital provides omnichannel marketing
automation technology and customer data
insights to digital marketing professionals.
The Group’s technology works to unify
datapoints from across marketing stacks
to create a single, trusted source from
which marketing professionals can launch
highly targeted, personalised and relevant
campaigns to customers and prospects.
The result is better customer experience
and improved conversions, helping to drive
revenue and business growth.
Dotdigital’s solutions address a common
marketing requirement across regions and
sectors, with the Group’s customer base
comprising a spread of industry verticals.
During the year, the Group saw particularly
strong momentum in charity and not for
profit, events and entertainment, health
and fitness and travel sectors , with new
customers including Shell Energy UK, CBRE,
Lloyds Pharmacy, Britvic PLC, National
Farmers’ Union of England and Wales, RSA
Conference LLC and Hawksmoor Group.
The Group’s global presence, it’s ability
to serve customers in multiple territories,
its comprehensive offering and focus on
customer support remain key differentiators.
Market opportunity
The overarching shift toward digital
marketing continues its progression,
occupying a steadily increasing proportion
of marketing budget and forecast to be
double digit growth in the coming years
according to Statista. Underneath this,
the uncertain global economic backdrop
through the year prompted more acute focus
on retention marketing backed by clear
demonstrable return on investment (ROI).
The Group’s technology platform, built from
the ground up with analytics and data at its
core, represents a compelling proposition
in line with long-term trends and in different
market conditions. Customers of Dotdigital
on average see a 409% ROI, $21k of cost
savings and $1m increase in profit over a
three year period according to Forrester’s
Total Economic Impact study that was
commissioned by Dotdigital.
Through this, Email marketing maintains
its place as one of the most cost-effective
marketing channels, with email volumes
growing 7% in the period, alongside the
ongoing adoption of an omnichannel
approach, including continued adoption
of SMS with a pipeline increasing for
WhatsApp and In-app Push messaging
capabilities.
Our core growth strategies
?
Geographic
Product
innovation
Strategic
partnerships
Growth strategy
The Group’s underlying growth is the result
of continued execution against a consistent
organic growth strategy, centred on three
pillars: geographic expansion, product
innovation and strategic partnerships.
In addition, the Board looks to complement
the Group’s organic growth through select
acquisitions focused on the following
key categories: adjacent CXDP-related
technologies that will drive ARPC expansion
and open up new markets; consolidation in
the market for talent and brand to expand
geographical coverage; and specialist
functionality for target verticals.
Geographic expansion
Regional breakdown reported
in local currency
The Group delivered growth in all of its
regions. Organic international revenue
increased 18% to £22.8m (FY22: £19.2m),
with international sales contributing 33% to
total revenue (FY22: 31%).
The Group’s largest region, EMEA, continued
its upward trajectory, delivering growth of 9%
to £52.3m (FY22: £48.2m). Contributing to
this growth was new customer acquisitions,
particularly in noncommerce related
customers complemented by continued
expansion within the existing base.
Revenue growth in EMEA was somewhat
offset by a lower level of professional
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D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
13
STRATEGIC REP ORT
Chief Executive Officer’s report and financial review continued
Our people presence
service fees due to slower decision making
from organisations due to an uncertain
macroeconomic backdrop.
As anticipated at the half year, North
America saw a return to growth in
the second half, delivering an overall
performance for the year of US$13.1m,
an increase of 2% (FY22: US$12.9m).
This is the result of previous investments
into the region now bearing fruit, including
the establishment of a strong management
team in-region, increased emphasis on
enablement for our Sales and Customer
Success teams, and early success
in converting a reestablished and
growing pipeline.
In APAC, the Group reported strong growth
in revenues, up 19% to AUS$10.8m (FY22:
AUS$9.1m). The standout performer was
Japan, an area where the Group has made
measured investments in increasing brand
awareness across the region, establishing
a solid partner network and making several
appointments in the go to market team. This
led to numerous customer wins in Q4 along
with a stronger pipeline.
Product innovation
The core priority of the Group’s R&D efforts
is building out and enhancing its CXDP
offering. This is designed to address the
growing demand for more sophisticated
marketing tools with a greater depth of
analytics and personalised user experiences
delivered via an all-in-one solution. In
line with this vision, the focus areas of
product development in the year were on:
Connectivity and Data, culminating in the
launch of a new data platform; Insights and
Analytics, to support deeper actionable
insights to drive a higher ROI and increasing
efficiencies in the Marketing department;
and Experiences, to facilitate more
personalised customer journeys across
any channel.
The first half of the year saw the launch
of the Group’s CXDP platform, an evolution
of the Dotdigital Engagement platform,
incorporating cloud first data architecture
to support unification across channels
and support next generation Application
Programming Interface (API). Alongside
the platform launch, the Group unveiled
a number of new packages and plans
for existing customers to support their
transition and platform adoption of the
new CXDP functionality, with all Dotdigital
customers now benefiting from a new
and improved user interface and navigation.
The result of this effort can be seen in
the increased functionality recurring
revenue and reduction in churn of clients.
Programme enhancements have continued
post period end including new features
to enable easy conversion of email
campaigns to SMS, and improved unified
contacts capability.
In May 2023, the Group launched its
WinstonAI intelligence engine within the
Dotdigital CXDP platform, incorporating
artificial intelligence and machine-
learning capabilities to help marketers
discover deeper insights and analytics,
curate captivating content, and optimise
communication for higher customer
engagement. The platform’s single customer
view now includes WinstonAI’s features
such as predictive Customer Lifetime Value,
predictive churn and predictive next order.
The newly released capabilities have been
one of the fastest adopted functionality
features in the platform driving efficiencies
within marketing teams.
The Group’s acquisition of Fresh Relevance
post period end marked a leap forward in
the Group’s CXDP growth journey, bringing
together customer insights, cross-channel
engagement, and on-site personalisation
capabilities to provide marketers with the
tools to exert greater influence across the
customer journey. The result is a much-
expanded addressable market opportunity,
particularly within larger enterprises, as
businesses consolidate their marketing
tools and focus spend (see note 33).
Strategic partnerships
The Group’s strategic partnerships refer
to a partner where a customer using that
technology integration has the potential
to represent or accounts for 10% of Group
revenue. This network is complemented
by a broader general partner referral
network which includes over 200 active
global partners.
The main efforts of the Group’s partnership
expansion are on forming connectors into
both ecommerce and CRM platforms, with
the Group’s core functionality able to serve
a range of industry verticals. During the year,
the Group has made significant additions to
its technology integrations, enabling ‘out of
the box’ connectivity to customers’ existing
technology stacks including Zendesk,
TrustPilot, Shopify Hydrogen, Facebook
Lead Ads and Google Analytics 4.
Revenue from strategic partners increased
8% to £31.2m (FY22: £28.9m), with new
partnerships secured in the year including
NetSuite and Shopware. Of the two market
segments, the main growth driver was CRM
connectors, which increased 22% to £9.8m
following targeted investment. Relationships
in the ecommerce segment remain
solid with partners including Magento,
BigCommerce and Shopify contributing
to overall ecommerce partner channel
revenue growth of 2% to £21.4m, where
the pipeline remains strong but with a
slightly lengthened sales cycle.
Investing in people
A key aspect of Dotdigital’s differentiation
is the Group’s reputation for high levels of
customer support and handling, alongside
its innovative technology offering, a position
achieved by the Group as a result of the
work of its dedicated and talented team.
The Group’s workforce of over 400
employees across 8 countries are
fundamental to the Group’s continued
success, and we were delighted to see the
result of the team’s hard work culminate in
the Dotdigital Summit post period end in
North America
Los Angeles
North America
New York
UK
London and
Manchester
Europe
Netherlands
and Warsaw
Asia
Singapore
Asia
Tokyo
Africa
Cape Town
Australia
Sydney and Melbourne
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D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
15
STRATEGIC REP ORT
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
D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
Bringing Fresh Relevance’s industry-leading cross-channel personalisation
capabilities to Dotdigital’s customer experience and data platform will
help marketers better engage with their customers, drive repeat purchases
and build lifelong loyalty across all touch points.
Mike Austin | SVP Personalisation
October, showcasing Dotdigital’s leadership
position by bringing together over 900
professionals from across the industry
sharing insight on the ever changing
landscape of digital marketing.
We have continued to invest in our people
and regional teams during the year, seizing
the opportunity to add talent and expertise
at a time when other businesses took stock
of their prior expansion plans. Headcount
grew 15% in the year, with a focus on
bolstering the Group’s international footprint.
Update on Fresh Relevance acquisition
Post year end we were delighted to welcome
our new colleagues from Fresh Relevance
to the team following its acquisition. With
the two organisations having worked
together as partners for five years, with
circa 60 joint customers and with a strong
cultural alignment, the team integration has
progressed well.
The existing integration between the
Dotdigital and Fresh Relevance platforms
facilitates the smooth transfer of web
personalisation data from the Fresh
Relevance platform into Dotdigital to deliver
even more targeted campaigns.
Looking ahead, the integration roadmap
focuses on enabling new and joint
customers to seamlessly log into and move
between the platforms, making it easier for
customers to access all capabilities across
both. Work will also begin on enhancing
the data flow between both platforms to
leverage the combined data sets to enable
personalisation, segmentation, orchestration
and content creation.
From the cost synergies that have been
identified and the interest from higher value
prospects and existing customers, we
expect the acquisition to support the growth
of higher margin recurring revenue and have
a similar profitable profile to the group in the
medium term.
Current trading and outlook
The Board is pleased to confirm that
positive trading has continued through the
start of the new financial year, in line with
expectations, alongside the continuation of
increasing average order value and building
momentum in new industry verticals.
The Group’s product positioning, enhanced
through the acquisition of Fresh Relevance,
is resonating in the market with increased
pipeline, particularly for larger value deals.
The Board is pleased to confirm that the
integration of the two teams is on track
to complete, and the combined Group
has secured its first brand new customer
taking both capabilities. We have also
seen an increase in interest from our
existing customers from the additional
capabilities Fresh Relevance brings to
the Dotdigital platform.
The robustness of the Group’s financial
model and a healthy pipeline gives the Board
comfort in the ongoing investment plans as
the Group seizes the market opportunity.
The Group continues to demonstrate its
resilience and capacity to execute strategic
progress, and the Board remains confident
in the Group’s continued growth prospects.
Financial review
Business model
The Group generates circa 80% of its
revenues from software and annual
message plans which are recognised evenly
over the life of the contract. New customers
are typically sold one of three packages of
modules which are designed to address the
most common customer personas, with
pricing driven by the functionality adopted,
the number of contacts, and the volume
of messages a customer intends to send.
These contracted volumes are committed;
however, we of course allow customers to
upgrade through their contract period as
they recognise value in the platform and
require more capacity.
The best value is available to those
customers who take advantage of additional
functionality and integrations which help
them leverage their customer data – this
is evidenced by the very low churn we see
amongst those customers who have invested
in the full power of the product. We have a
small amount of professional service revenue
(less than 5% of total group revenues) which
is recognised as work is delivered. These
services relate to both the initial deployment
of software, design services, training and
support to customers who want to maximise
value from the product.
17
STRATEGIC REP ORT
Chief Executive Officer’s report and financial review continued
balance sheet date we completed the
acquisition of Fresh Relevance and this
reduced our cash balance by circa £20m,
we continue to hold over £30m.
Tax
Our effective tax rate is 12.4% (FY22: 13%).
This continues to be significantly lower than
the mainstream UK corporation tax rate
because of our Research & Development
tax claim.
EPS
Adjusted Diluted EPS has grown by 6%
to 4.43p (FY22: 4.18p). There has been
only marginal movement in the number of
shares in issue and share options granted
in the year, so this reflects underlying
profitability growth.
Dividend policy
Consistent with our progressive dividend
policy we have increased our proposed final
dividend in line with EBITDA growth to 1p
in FY23 from 0.98p in FY22.
Milan Patel
Chief Executive Officer
7 November 2023
Alistair Gurney
Chief Financial Officer
7 November 2023
FY23 saw the business change from a
period of consolidation, as a rebuilt North
American sales team ramped up and a new
CFO was appointed, into a period of growth
with many new hires to drive both sales and
development productivity.
In this context, and against the backdrop of
challenging macroeconomic in which many
businesses reported slowing growth, we are
proud to deliver revenue, profit before tax,
Earnings per share and Cash slightly ahead
of market expectations.
Revenue and gross margin
Our recurring and diversified revenue base
proved to be resilient and thus we exit
the year in a strong position to continue
delivering in FY24. We saw a reduction
in customer churn particularly in North
America and over 94% of our revenues
continue to be predictably repeating or
contractually recurring.
Revenue increased by 10% FY23 to
£69.2m (FY22: £62.8m), driven by SaaS
and contracted marketing SMS revenue
uplift of £4.7m (10%) and transactional
SMS revenue uplift of £1.9m (20%). EMEA
remains our largest region with revenue of
£52.3m (FY22: £48.2m), however our growth
rate in APAC of 19% continues to show the
strength of our proposition in that market.
Although the weakening pound through H1
has supported our interim revenues, these
benefits largely reversed through H2.
Gross margin on our core software product
continues to be close to 90% but is diluted
by SMS which is typically under 50%. Gross
margin of 79.3% in the year reported was
marginally lower than FY22 (81.6%) due to a
small increase in transactional SMS volume.
Operating expenses
Despite high inflationary environment in
all regions and significant investment
in sales and development capacity to
strengthen all the regions, we maintained
a good adjusted operating margin at 21%
(FY22: 23%). FY23 operating expenses of
£40.4m (FY22: £36.7m) grew primarily
because we increased net headcount by 54
and offered inflationary
pay increases earlier in the year. This
investment has resulted in declining staff
attrition through the year, reducing to 12%
on a 12 month rolling basis by June 2023.
Balance sheet
The business continues to generate cash
in line with profitability and maintain a
healthy working capital profile such that
we end the year with £52.7m cash (FY22:
£43.9m). We have implemented new cash
treasury management processes through
the year and so have benefited from the
higher interest rates that have been
available for fixed term cash deposits
than in recent history. While after the
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.
18
D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
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STRATEGIC REP ORT
Case study
Case study
Case study
ScentAir sees an impressive 18%
rate for abandoned carts, in just
six months
ScentAir provides best-in-class ambient scent
marketing solutions to many of the world’s most
recognised brands. ScentAir is based in Charlotte,
North Carolina, USA, with corporate offices in
the United Kingdom, France, Netherlands, China,
Hong Kong, and Australia. The company’s 425+
global team members service customers in 119
countries through its dedicated global supply chain
and manufacturing operations in North America,
Europe, and Asia.
Challenge
ScentAir came to the Dotdigital Americas team looking to provide
a better ecommerce customer experience for its existing US
consumer audience, and support in its ecommerce expansion
into other regions. Finding a customer experience platform that
offers support in various international regions was crucial to the
company’s growth. Dotdigital has a strong market presence in the
US, across EMEA, and in APAC. This global positioning naturally
comes with in-region support and expertise, so it was a perfect fit.
ScentAir needed support in managing the various customer data
privacy laws around the globe. It was important to the brand that
data privacy laws and best practice were followed in each region,
to ensure deliverability and that the overall brand reputation
remained positive.
In addition to supporting its ecommerce needs, ScentAir also
uses Salesforce to manage its B2B automation needs. Dotdigital
is one of the few marketing providers that has great integrations to
both industries.
300%
200%
in repeat purchase customers
increase in sales
Solution
The Dotdigital regional teams were able to work with ScentAir to
understand and meet the various regulations and data privacy
laws in place across the globe. The Dotdigital Customer Success
team suggested a multi-store set up using the Adobe Commerce
integration, which allows ScentAir to separately manage the
customer lists for each region.
Our premier partnership with Adobe Commerce meant our
connector is able to sync customer account information to
the correct database sets. Our Salesforce integration was also
incredibly valuable, simplifying data management and syncing leads
to and from Salesforce for ultimate cross-platform collaboration.
When it comes to seeing results, Dotdigital offers reporting at
account level, per region, and per regional storefront. Cross-account
analytics also mean that the global management team can see
marketing performance across the entire business. This flexibility
allows brands to create whatever set up makes sense for them.
It’s the best of both worlds; separation when you need it, with no
compromise when it comes to the bigger picture.
Results
ScentAir has seen some incredibly encouraging results since joining
Dotdigital. After just six months its US store saw an increase of over
300% in repeat purchasers. This clearly demonstrates the impact a
positive customer experience will have on shoppers when it comes
to choosing your brand over competitors and in a climate of high
acquisition costs, these are especially significant results.
Marketing automation also proved very successful for the brand.
ScentAir saw an impressive 18% recovery rate for abandoned carts
in just six months. The brand also saw a huge 200% increase in
sales overall, a fantastic achievement in times of economic struggle
around the globe.
Looking ahead
ScentAir is now expanding and applying its learnings to all other
regions following on from its success in the US. Using Dotdigital’s
advanced personalisation tools, ScentAir is able to create tailored
campaigns with dynamic content to ensure accurate messaging is
delivered to customers in each region – all while recognising and
adapting to varying time zones.
Having seen such encouraging results from email marketing
automations, ScentAir is now expanding into other channels.
The brand is currently trialing SMS for promotional messages
and will soon add transactional SMS, available through the Adobe
Commerce integration, to their capabilities to further the brand’s
cross-channel strategy.
To capitalise on the increasing loyalty the brand has already seen,
ScentAir is also working with Dotdigital integration partner Yotpo
to build out a personalised loyalty program for its clients.
ScentAir won the Best Newcomer award at the US Dotties 2022,
an accolade to the team’s fantastic achievements in such a short
space of time. With such strong results early on, and plans to
utilise the Dotdigital platform even more, we’re excited to see
what comes next.
Our partnership with Dotdigital has helped
enhance our cross-channel platform
capabilities and improve our end-to-end
integrations. The collaboration with our
customer success manager and Dotdigital
support team has helped us maximise
performance and discover
new functionalities.
Megan Fallaw | CRM Lead, ScentAir
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D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
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STRATEGIC REP ORT
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
Operational Risk Committee. Members of the
Operational Risk Committee are assigned to
principal risks and they become executive
owners who are responsible for confirming
that adequate controls are in place and the
necessary action plans are implemented. The
Chairman of the Operational Risk Committee
(Steve Shaw, Chief Product and Technology
Officer (CPTO)) reports on the principal risks
to the main Group Board.
The Board has also approved a change to
the remit of the audit committee, which now
includes more extensive oversight of risk
management. In particular the committee
will assist the Board in its assessment of the
Group’s principal and emerging risks and their
disclosure in the annual report and accounts
and will monitor developments in the Group’s
risk management processes by reviewing
reports from the executive operational risk
committee. This change to the committee’s
terms of reference was approved by the
Board and became effective from the
commencement of the financial year from 1
July 2023. The risk management framework
as described above remains unchanged.
Strategic
Financial
Technological
Operational
The influence of stakeholders
and industry on our business
Our financial status, standing
and continued growth
Our platform, technology,
business systems 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.
Global economic
disruption
Financial
Movement:
Decreased
Optimising and
growing high-
performance teams
Failure to attract, hire in a timely manner
and develop, support and retain high-
performing individuals will reduce the
ability to achieve our business goals.
Operational
Movement:
Stable
• Continued building of recurring contracted revenue stream
• Sufficient liquidity resources so that we can cope with a prolonged
period of time without accessing the capital markets
• 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 an event there are
energy supply disruptions
• Providing power stations and batteries in regions where rolling
power cuts have been enforced.
• Additional investments in the HR team resource; not only within
the talent acquisition team but internationally too. This included
the hiring of a HR Manager for the APAC region to support the local
businesses in Australia, Singapore and Japan. Providing localised
support for direct hiring, local guidance and support to help retain
and develop local talent
• Successfully hired our first Global Learning & Development
Manager with a focus on driving the development of all employees
globally. The responsibilities include the strategic ownership of
our global employee learning platform, developing company-wide,
department and manager learning paths
• Continued investment in our people engagement platform,
enabling us to integrate with important business tools such as our
talent acquisition platform
• Continued monitoring and tracking of employee churn to manage
it closely. This includes surveying of employees on their company
engagement so we can track its ongoing health score
•
Implemented measures to continue the reduction in employee
churn. Initiatives included benefits reviews, cost of living awards,
company bonuses, manager support, and career development,
resulting in a reduction in employee churn.
Risk area
Impact
Mitigation of risk
Geography-specific
market and political
environments
Financial and
operational
Movement:
Increased
Data privacy
Operational
Movement:
Stable
Environmental
Operational
Movement:
Stable
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.
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.
While there have been developments
making UK/EU data transfers to the US
easier, there will continue to be focus
and scrutiny on international data
transfers as past legal challenges of
similar agreements continue to cause
uncertainty.
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 programs 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. While our business model
revolves around digital services, we
recognise that our operations, including
cloud computing, office spaces, and
employee commuting, still contribute to
our environmental impact.
Customers, partners, and investors are
increasing focusing on ensuring that the
businesses they deal with are meeting
environmental legislation and taking their
ESG responsibilities seriously.
As we grow in staff and revenue numbers,
we will be in scope of more environmental
legislation.
• Revenue growth in territories beyond EMEA, North America and
ANZ including South America, Singapore and Japan
• Constant review by our executive team for growth opportunities in
additional territories
• Monitoring of 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
• The Belarus software development operation was closed within
the period with many engineers successfully relocating to Poland.
• Provisioning of global instances of our platforms, allowing
customers to meet data sovereignty requirements
• Maintained our ISO 27701 certified Privacy Information
Management System (PIMS), aligning our policies, processes
and procedures with requirements of international data
protection legislation
• The ongoing internal and external auditing of the PIMS ensures
that policies, processes, and controls continue to meet the
requirements of ISO 27701 and international legislation
• Additional resource has been made available to continue to bolster
the Privacy team; providing more capacity for operational tasks,
and strategic planning
• Ongoing data security and privacy training published to all staff
• Maintenance of a public-facing Trust Centre and support
documentation communicating important compliance information
for prospects, customers, and partners
• Continue to build our product with privacy-by-design in mind
and provide privacy features to customers to enable their own
compliance, even to regions where new data protection legislation
is emerging.
• We have maintained an ISO 14001 certified Environmental
Management System (EMS), which is used to assess operational
aspects and impacts, set objectives, and drive continual
improvement.
• We operate as a carbon neutral business and we include additional
scopes in our carbon offsetting which includes 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)
• Dotdigital’s compute infrastructure is hosted in industry leading
cloud service providers; meaning all our products now run on 100%
renewable energy cloud providers
• An internal group (Dotgreen) 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
• A dedicated Sustainability page (https://dotdigital.com/
sustainability/) is published to promote our Green credentials
and initiatives
• Energy Saving Opportunity Scheme (ESOS) energy audits have
been completed in preparation for the ESOS Phase 3 deadline.
22
D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
23
STRATEGIC REP ORT
Risks, impact and mitigations continued
Risk area
Impact
Mitigation of risk
Risk area
Impact
Mitigation of risk
Evolving technology
and customer
requirements
Operational
Movement:
Increased
Internet service
providers (ISPs),
reputation, internet
browser-related
and device risks
Strategic and
Technological
Movement:
Stable
Failure to anticipate, respond to evolving
customer requirements, to introduce
competitive enhancements or maintain
existing products may impact growth and
customer retention.
• A product roadmap that facilitates the implementation of rapidly
advancing technologies such as Generative AI and ChatGPT
•
Investment into a future-ready underlying architecture, data
platform and modern API (Application Programming Interface) to
cater for advancing customer data requirements
• A balanced roadmap of 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 engineering and product teams
• Quarterly marketing led releases that enable our customers and
prospects to see how our products continue to evolve.
• 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.
• Provision of, and investment into platform functionality to help
customers comply with industry best practices and global anti-
spam regulations as well as onboard faster, block trial account
sign-ups, automated bots and artificially inflated traffic
• 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)
•
Increased presence in the SMS industry raising awareness of
who we are, resulting in trust and closer partnerships with Tier
1 providers and carriers. specifically with the Cellular Telephone
Industries Association (CTIA), Mobile Ecosystem Forum (MEF) and
International Telecoms Week (ITW)
• Continued risk-based vetting approach of prospective customers
and their data acquisition practises for all messaging channels
• A unified collaborative approach to SMS and email with continued
investment in a deliverability, anti-abuse and compliance team,
under the leadership of our messaging operations team
• 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
• Maintain multiple connections with upstream SMS/MMS 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 regularly reviewed and monitored by
the executive team.
A significant portion of our revenue
is generated by charging customers
per email or SMS message sent on
their behalf. Consequently, changes in
the industry or any inability to deliver
messages or track engagement can have
a substantial impact on our business.
Factors that may hinder this include:
•
Internet browsers, ISPs, anti-spam
filtering or mailbox providers flagging
campaign hyperlinks as threats
• The blocking or throttling of messages
by ISPs, SMS aggregators, SMS
carriers, anti-spam filtering, or mailbox
providers
• The listing of domains and IP
addresses on blocklisting providers
• Varying global legislation on SMS
sending
• A change in relationship with one or
more SMS suppliers, or one or more of
these suppliers no longer being able to
operate, could impact profitability
• Outages with upstream SMS suppliers
• Any infrastructure challenges causing
the inability to send messages for
a prolonged period will result in sub
optimal service, potentially leading to
a loss in revenue
Additionally, changes to consumer
privacy functionality by manufacturers
of computing devices, internet browsers,
or operating system software could
adversely affect the performance of our
products, potentially deviating from their
intended services.
Competitive
environment
Strategic
Movement:
Stable
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 and
becomes harder to differentiate our
business.
• Continually evaluate the maturity curve of our market to be ahead
of the competition and develop products that add differentiation
and offerings for markets that are less mature
• A focussed approach providing marketing solutions in specific
verticals; retail, commerce, government, higher education, not for
profit, charities and D2C - reduces the competitive landscape
•
Investment in new differentiated product features, best-in-class
24/7 customer support and service offerings, enhanced brand
recognition and improved service delivery
• Continual reviewing of the attractiveness and competitiveness
of our product pricing and packages to suit customer needs.
• Further roadmap development of our USPs to focus on niches
where we win new customers
• Expanding our partner ecosystem, its resources available and
visibility for both service and technology partners
•
Increasing our regional account and customer success teams, the
feature usage data they have access to, 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
• Continued investment into the development of each key
integration, to ensure continued relevancy for customers and
compliance with any third-party or statutory changes.
Key messaging
channel
integrations
Strategic
Movement:
Stable
Loss of a strategic
partnership
Strategic
Movement:
Increased
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, has 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
an 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.
• Maintained agreements with all key strategic partners and
reviewed targets for potential new
• Dedicated resources for strategic partnerships, development of our
partner strategy and program
• Expansion of our service & technology partner program to support
a partner first approach
• Diversification of approach to connect to more ecommerce
platforms outside of just the market share leaders
• Continued investment into product and development that builds
integrations into a wide range of marketing & ecommerce
technologies within our customers’ SaaS ecosystem
• Schemes, extensibility development and dedicated resources
to encourage technology partners to build integrations into our
products.
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 provider
being targeted in cyber attacks.
•
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.
24
D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
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STRATEGIC REP ORT
Risks, impact and mitigations continued
Streamlined energy and carbon reporting
Impact
Mitigation of risk
Risk area
Acquisitions
Strategic
Movement:
New
A strategic focus of the business is to
pursue acquisitions. While this offers
significant opportunities for diversification
and increased market presence, we
recognise that they also present potential
risks. These risks may include integration
challenges, cultural differences,
unforeseen liabilities, and potential
impacts on our financial performance.
Information security
and cyber risks
Technological
Movement:
Stable
Cyber security risks have become
an increasingly critical concern for
businesses across all industries. The past
year has seen a significant rise in cyber
threats, including sophisticated phishing
campaigns, ransomware attacks, and data
breaches being reported in the media.
As a Company, we recognise that
safeguarding our digital assets, customer
information, and operational infrastructure
is paramount to maintaining trust in our
brand; supporting strategic goals, and
financial targets.
• Extensive financial, legal, privacy, security and technology due
diligence processes from internal and external resources
• Dedicated integration planning and execution resources for
increased management bandwidth
• Detailed integration plans across all impacted areas of the
organisation designed pre-acquisition, ready for execution post
transaction. Including communication, people, go-to-market,
change management, product, engineering, business operations
and synergy plans
• Warrantees and indemnity insurances taken based on levels
of risk.
• Dotdigital has built, and continue to invest in a dedicated internal
Information Security & Privacy function
• We have maintained an ISO 27001 certified Information Security
Management System (ISMS), aligning our policies, processes and
procedures with globally recognised industry best practice
• We continue to maintain certification to the UK government-backed
Cyber Essentials Plus scheme
• Regular internal and external auditing of security controls policies
and procedures are in place to ensure the ISMS continues to
function well, meeting the requirements of ISO standards
• The proactive testing of security posture through third-party
Penetration Testing, Vulnerability Scanning, and social engineering
exercises
• The transference of some risk by the maintenance of Cyber
Insurance.
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 and 2 Greenhouse Gas
(GHG) emissions. The Group goes further by voluntarily reporting
on, and offsetting Scope 3 emissions related to the following impacts
and aspects:
• Major computer and infrastructure cloud providers
• 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
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 in
line with the requirements under SECR highlighted by UK DEFRA
and DBEIS and uses the GHG Protocol methodology for GHG
emissions reporting.
Energy use and GHG emissions
Current reporting year
Previous reporting year
1 July 2022 – 30 June 2023 1 July 2021 – 30 June 2022
Energy Usage (kWh)
Energy Usage (kWh)
Natural gas
Electricity
Other fuels (stationary)1
Other fuels (mobile)1
Total energy
of which in the UK
81%
146,258
545,481
0
18,697
710,435
111,171
391,988
0
7,490
510,649
82%
GHG emissions
(tonnes of CO2e)
GHG emissions
(tonnes of CO2e)
Scope 1&2 gross CO2e
159.4 (+30.9%)
of which in the UK
75%
Scope 3 gross CO2e
338.2 (+74.6%)
Total gross CO2e
497.7 (+57.7%)
Scope 1&2 net CO2e
127.3
Scope 3 net CO2e
333.6 (+72.2%)
Total net CO2e (before
carbon offsets)
Purchased carbon offsets
Total net CO2e
460.9 (+54.7%)
465
-4.1
121.8
77%
193.7
315.5
62.5
193.7
256.2
300
-43.8
Current reporting year
Previous reporting year
1 July 2021 – 30 June 2022 1 July 2020 – 30 June 2021
Intensity Ratios
(kilograms of CO2e)
Intensity Ratios
(kilograms of CO2e)
have been revised in order to consider some data corrections. As a
consequence, fuel and energy related activities not included in Scopes
1 and 2 were reduced; resulting in the following corrections:
• 2021/22 total gross GHG emissions are now 12% lower than
previous estimates
• 2019/20 total gross GHG emissions are now 8% lower than
previous estimates
As a result, the offsets acquired by the Group in prior reporting periods
have rendered the total net CO2e increasingly net negative.
Intensity measurement
* Scope 1 and 2 emissions in tonnes of CO2e per thousand £ of
turnover, was chosen as a reference for intensity measurement.
Turnover at the end of June 2023 was 69,100 thousand £.
** Additionally, the Group also report Scope 1 and 2 emissions in
tonnes of CO2e per FTEE. FTEE at the end of June 2023 was 404.
Energy and emissions summary
The Group’s total energy usage increased by 39% from the previous
year (+31% compared to the baseline year). The total gross GHG
emissions have increased by 58% from the previous year (+33% on
the baseline year). This is due to:
• The lifting of COVID-19 restrictions had a profound impact in
travel. Therefore Scope 3 emissions have increased dramatically
compared to the previous year. However, this increase in line with
pre-COVID patterns as highlighted in the baseline year data.
• The UK offices have been audited for compliance with phase 3
of the Energy Saving Opportunity Scheme (ESOS). The audit has
improved the methodology for the energy usage estimation, which
now uses floor area combined with UK typical energy usage for a
standard air conditioned office per m2 per year.
• Grey fleet milage was not included in previous years calculations.
• The Group employs more FTEE compared to the previous year.
Initiatives during the reporting period
• Dotdigital’s SaaS platforms fully ran on 100% renewable energy.
• Undertook ESOS energy audits to better understand office
energy usage.
• Based on ESOS audits, changed methodology for more accurate
usage estimates.
• Using the improved methodology, revised past office energy
usage estimations.
• Over 29,000 trees have now been planted in total, an increase
of 4,000 within the period, through various initiatives such as
corporate gifting and donations. https://ecologi.com/dotdigital.
• Our Environmental Management System (EMS) was re-certified
against the internationally recognised ISO 14001 standard.
• Renewed Woodland Trust corporate membership and continued
to be a donor.
Per turnover*
Scope 1&2 CO2e gross figure 2.31 (+19.1%)
Per turnover*
Total CO2e gross figure
7.20 (+43.4%)
Per employee**
Scope 1&2 CO2e gross figure 395 (+16.9%)
Per employee**
Total CO2e gross figure
1,232 (+50%)
Baseline and previous year comparison
1.94
5.02
338
874
•
•
•
Internal sustainability advocacy group (Dotgreen) continued to
publish awareness information on topics such as personal carbon
offsetting, moving to solar and battery systems at home, and
ways to have a greener festive season.
Instigated a project to promote our partners who meet our
sustainability standards - incentivising wider adoption of
environmental improvements outside Dotdigital.
Instigated a project to review the feasibility and potential uptake
of an EV (Electric Vehicle) benefit scheme for UK staff.
1 The baseline year (2019/20) and previous year (2021/22) energy
consumption and carbon emissions are reported from the Dotdigital
SECR 2021/22 report. However, the stationary and mobile fuel usage
• Closure of the Belarusian office.
• Downsizing of the New York office.
26
D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
27
Section 172 report
Environmental, Social and Governance (ESG) statement
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 and
has continued to operate as a carbon neutral business. We have
also met the criteria of ESOS phase 3 which enables us to complete
energy audits for the UK environment agency.
As part of our DotCommunity initiative we aim to raise money and
awareness for many charitable causes. During the year we became
a corporate partner of The Girl’s Network, who work to create
mentorship programmes that empower and inspire. We also have
a close partnership with the Kids Haven charity in South Africa.
For further details on how we interact with communities and the
environment, please see pages 29 to 31.
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 34.
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.
An Operational Risk committee exists within the business that
meets bi-monthly to make sure all aspects of risks are registered,
mitigated or solutions are found and executed to reduce these.
For details of our principal risks and uncertainties, and how we
manage our risk environment, please see pages 22 to 26.
Our people
The Group is committed to being a responsible business. Our
behaviour is aligned with the expectations of our people, clients,
investors, communities and society as a whole. People are at the
heart of our business. The Group has found the balance in culture
to succeed along with managing our people’s performance and
development and bringing through the talent while ensuring we
operate as efficiently as possible. We continue to ensure we share
common values that inform and guide our behaviour, so we achieve
our goals in the right way. For further details on our people, please
see page 14.
We look back on a year of material progress across
our ESG strategy and Dotvoice groups.
This year we maintained a continuous
commitment to being a proactive partner
in our community through the delivery of
various ESG-centred activities. Learning
has been a key theme across the various
groups that make up Dotvoice as we seek
to educate our employees, customers,
partners, and community on what our ESG
strategy is and how they can get involved
and play an active role in it.
Dotvoice summary
David Aldrich,
Chief Human Resources Officer (CHRO)
Dotvoice is our established employee
lead programme which has four key
employee groups: Dotwellbeing, Dotgreen,
Dotcommunity, and DotDEI.
This year has seen the groups go from
strength to strength in educating, engaging
and supporting our employees by delivering
on multiple key initiatives.
The groups come together under Dotvoice
which enables full cooperation and
collaboration and has helped us deliver huge
value to our clients, partners, employees and
the charities we work with.
In recognition of the commitment from
all parts of Dotvoice, we are proud and
honoured to have sponsored the ‘Responsible
Marketing Award’ at this years’ Dotties
awards. The Dotties are a celebration of all
the great work delivered by our partners and
clients in partnership with Dotdigital.
The award for ‘Responsible Marketing’
recognises clients whose approach ensures
they not only meet their customers’ needs
but also have a positive impact on the
community with emphasis on sustainable,
ethical, and philanthropic marketing.
This year the Responsible Marketing Award
went to the University of Nottingham’s
campaign and Alumni Relations Office who
are responsible for generating philanthropic
and volunteering support for the future
development and success of the university.
They raised thousands of pounds for causes
such as scholarships to help disadvantaged
students; medical research, and mental
health support. Their campaign helped them
re-engage multiple donors who had not
engaged with them for years.
Mental Health for People Managers was
a series of learning workshops for our
managers. Led and delivered by our Global
L&D Manager, these sessions helped
better equip our managers with tools
and knowledge to better support all their
employees.
In recognition of World Mental Health Day,
Dotwellbeing shared a series of our employee
videos from across the globe in which they
presented their own stories and insights on
mental health issues that have either affected
them directly or someone close to them. The
aim in sharing these very personal accounts
was to help bring an end to the stigma
around speaking about our mental health in
both the workplace and at home.
The wellbeing app ‘My Possible Self’
was introduced and made available to all
colleagues this year. The app contains a
wealth of content and information which
the group shared with employees in support
of our initiatives, awareness events, and
education days across a wide range of
wellbeing areas. This included Women’s
Health Week, World Menopause Day,
Nutrition and Hydration Week and Movember.
The high level of interest and passion for
wellbeing has meant we continue to see new
members join, be they brand new or existing
colleagues who become ambassadors,
promoting the wellbeing mission of the
groups across all regions.
Dotdigital remain firmly committed to actively
supporting our employee wellbeing. The
actions and initiatives from this group are
a key part of how we provide that support
alongside corporate programmes. Initiatives
include two wellbeing days per year and
an annual wellbeing award through which
employees are encouraged to purchase items
and activities in support of their wellbeing.
Dotwellbeing
Mission: To implement wellbeing initiatives
and encourage open discussion, provide
support and education, and to provide
employees with the tools to manage their
own wellbeing.
Dotwellbeing is our employee-led group that
seeks to raise awareness and education
and provide support to employees across
the following key pillars; physical, mental,
financial, emotional, and social.
Drawing on the success of last year’s
inaugural ‘On your feet Dotdigital’ initiative,
the Dotwellbeing group launched a similar
campaign this year. ‘On your feet Dotdigital
2023’ continues to encourage our employees
across the globe to record their walk and
share videos and photographs on the
Company-wide Slack group. New for this
year, colleagues were asked to record how far
they walked. As a Company, we collectively
walked 625 miles, exceeded our goal of 500
miles and donated to the following charities
as a result; £500 to AimUp in the UK, $500
to the Trevor Project in the US and $500 to
Variety in the APAC region.
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D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
2929
STRATEGIC REP ORT
Environmental, Social and Governance (ESG) Statement continued
We have continued to support our long-
standing partner and customer the Woodland
Trust as a member and donor and have now
extended our ‘Dotforest’ of planted trees
to over 29,000. Education and awareness
is a big proponent of the Dotgreen mission
and as such Steve Shaw (Dotgreen
executive sponsor) was invited onto ‘The
ISO Show’ podcast to educate businesses
on Dotdigital’s journey of creating a culture
of sustainability. We have also revised our
own partner program to review our partner’s
sustainability and provide a badge for those
who meet the same high standards as
Dotdigital. This will help raise awareness
to both our customers and the wider
partner ecosystem.
Looking ahead we have been working hard
to adopt the core principles of sustainability,
alongside privacy and security, across
the latest AI developments that span our
platform. WinstonAI, Dotdigital’s cutting-
edge marketing intelligence engine powering
many of the platform’s connectivity,
insights, content and communications, is
running on the same sustainable cloud
infrastructure powered by renewable energy.
We have therefore continued to operate as
a carbon neutral business. For details of our
streamlined energy and carbon reporting
please see page 27.
DotDEI - Diversity, Equality, Inclusion
Mission: To create a diverse, inclusive and
respectful workplace through education,
awareness and conversation.
DEI has been a big focus across the whole
business in the last 12 months; we’re proud
of the steps we’ve taken to progress on our
DEI journey. DotDEI has been working closely
with the other Dotvoice committees, the
Human Resources and the Talent Acquisition
teams this year. In addition to this, everyone
at Dotdigital has had the opportunity to
engage in events and activities.
Some of the highlights from last year include:
• An all-company, week-long celebration
for International Women’s day and Pride,
including panel Q&A sessions, employee
storytelling and marching in this years
Pride Parade.
• The appointment of a Global Learning
and Development Manager to provide
further opportunities for all employees
to develop their skills and progress
their careers. A DEI training course was
delivered and all existing employees
took part in the learning, and all new
employees cover the course as part of
their onboarding.
• A review took place of our recruitment
processes leading to anonymous
applications being launched in our
applicant tracking system to tackle
unconscious bias, providing a Diversity
hiring managers guide and ensuring our
job adverts are inclusive.
• A partnership with The Girls Network
was launched, enabling our employees
to provide mentoring to school-age girls
interested in STEM subjects.
• Employee surveys were run to allow
all employees to feedback on their
thoughts relating to DEI.
• A new employee anonymous reporting
tool was launched to allow employees to
ask questions or raise concerns directly
to senior management.
Diversity, Equity and Inclusion remains a top
priority for the entire business at all levels and
we look forward to continuing our journey.
DotGreen
Mission: To conduct our operations
with minimal negative impact on the
environment and to promote positive
environmental behaviours. This is our
part in mitigating the climate crisis and
ecological emergency. With a target to hit
Net Zero by 2030.
Our Dotgreen group have continued
to educate customers, partners and
staff to generate awareness around
environmental issues and promote a culture
of sustainability. We have provided internal
guides to staff around the greenest way
to travel and how they can become more
sustainable at home, advising on solar
power and battery technologies. We are also
reviewing proposals on creating a new EV
(Electric Vehicle) benefit scheme that could
be made available to UK staff.
The group successfully maintained its
ISO14001 certification as part of its triennial
re-certification process. The group now
meets the criteria of ESOS (Energy Savings
Opportunity Scheme) phase 3, and so it
has completed its energy audits to the
UK environment agency by the 5 June
2024 deadline.
We are proud that all of the Dotdigital
products within the period used by our
customers were running on 100% renewable
energy. The final physical data centres in use
were migrated to the cloud in July 2022.
Doing the right thing has always been part of Dotdigital’s
DNA. Our ESG strategy and Dotvoice program ensures we
take everyone with us as the company continues to grow.
David Aldrich | CHRO
acquired skills. We had fantastic feedback
from the students who came away with a
feeling of excitement and were excited about
the prospect of a career in tech.
Another charity we have a close partnership
with is Kids Haven in South Africa. We
attended a Careers Expo earlier this year
which promoted the tech world and what we
do at Dotdigital to a disadvantaged youth
community in Johannesburg.
During March, we ran a series of initiatives
throughout the business to raise awareness
and promote International Women’s Day.
Together with the other Dotvoice groups, we
dedicated a week to the event. We promoted
women-specific charities, we held a panel
discussion in each region, we ran a series of
interviews with colleagues and concluded the
week with a quiz about famous women.
Dotcommunity are looking forward to the
year ahead with a successful Women’s Day
event held in South Africa in August, our
Breast Cancer Awareness Month initiatives
in October, and a continued strengthening of
our partnership with our existing charities.
This year we have reviewed and revised
all significant internal policies from health
and safety through to anti-slavery, money
laundering, fraud and information security.
New training material has been prepared
which is now delivered to all staff and
new joiners and experts have been
identified internally to both assist with
compliance and enforcement. All of these
policies were reviewed by the Board prior
to formal adoption.
We note in particular that 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.
Similarly, 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 ISO27001, ISO 27701 and Cyber
Essentials Plus certified.
Governance
Our corporate governance framework is
well established and the details of these
can be seen on pages 34 to 36 within this
report. However, we realise the value of high
standards of governance throughout our
organisation and so have implemented a
robust framework of policies, underpinned
by training and controls, to ensure our
people continue to meet and exceed
the expectations of our customers and
shareholders at all times.
In the Board, we have added more structure
to our governance framework with an
updated Board authority matrix and an
unwavering focus on ensuring all decisions
are made with appropriate scrutiny to ensure
that they are in the best interest of the Group
and its shareholders.
Strategic report
The Strategic report was approved by a
duly authorised committee of the Board of
Directors on 7 November 2023 and signed
on its behalf by:
Milan Patel
Chief Executive Officer
Dotcommunity
Mission: To work on and organise internal
events, focus on improving corporate
social responsibility and social mobility by
organising fundraising events, partnering
with charities and organising volunteering
days for employees.
Dotcommunity has had a great year with
initiatives being held all over our global
locations. We were very excited to become
one of ten corporate partners of The Girls’
Network in the UK. The Girls’ Network
aims to inspire and empower girls from
the least advantaged communities by
connecting them to a mentor and a network
of professional female role models. We
currently have six mentors across the UK.
In partnership with The Girls’ Network, we
hosted 25 schoolgirls from a school near
Brighton for an office day which included a
team energiser activity, an office tour, a panel
discussion by ten of our female colleagues
in different roles, a training session on our
platform which then concluded in five groups
of five students working together to build
their own email campaign with their newly
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D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
31
GOVER NANCE
Board of Directors
Milan Patel FCCA ACA BFP
Chief Executive Officer
Alistair Gurney FCA
Chief Financial Officer
John Conoley
Non-Executive Chairman
Boris Huard
Non-Executive Director
Elizabeth (Liz) Richards ACA
Non-Executive Director
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.
Alistair joined the board on 19 September 2022 as CFO, bringing
experience of senior finance leadership roles in international
technology businesses. At Dotdigital he leads the finance and
legal teams and uses his experience to improve productivity
and accelerate growth through sound commercial and strategic
decisions. Alistair also plays a leading role in driving the Group’s
M&A programme.
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 over seven years ago. 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 and execution of strategic objectives,
clear leadership, international business development, mergers and
acquisitions and strong decisive management skills.
Milan is 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.
He was previously 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.
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
was acquired by Learning Technologies plc.
In addition he was Non-Executive Chairman
of Wameja Limited, the AIM and ASX-
quoted innovative mobile financial services
company that was acquired by Mastercard
in 2021. He was Executive Chairman of the
AIM-listed FireAngel Safety Technology
Group PLC until June 2023.
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.
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D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
33
GOVER NANCE
Corporate governance report
Chairman’s introduction to governance
The Board is fully committed to achieving high standards of
governance in line or ahead of those expected for the size and
stage of development of the Group and I believe this 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 ten 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 31 of the Group’s annual
report. The risk section of the Annual Report is on pages 22 to
26 and deals with the challenges the business faces and how
these challenges are mitigated/addressed.
The Chief Executive is responsible for the leadership and day-to-
day management of the Group. This includes formulating and
recommending the Group’s strategy for Board approval and then
executing the approved strategy. You can find a full description
of the roles of the Board at www.dotdigitalgroup.com.
Our simple and transparent business model has consistently
delivered value to our shareholders.
2. Seek to understand and meet shareholders’ needs and
expectations (fully complies)
The Group seeks regular dialogue with both existing and
potential new shareholders, either through the management
team, investor relations or through the Company analysts,
ensuring its strategy, business model and performance are
clearly understood as well as to understand the needs and
expectations of shareholders.
The Chief Executive and Chief Financial Officer meet regularly
with investors and analysts via investor roadshows and attend
investor conferences 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) and through webinars offered during the semi-annual
roadshows. 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-Executive directors 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 managers. 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 Dotcommunity 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 29 to 31.
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
Alistair Gurney
Non-Executive Directors
Boris Huard
John Conoley
Elizabeth Richards
Board
Audit
Committee
Operational Risk
Committee
Remuneration
Committee
Nomination
Committee
Attended Total
Attended Total
Attended Total
Attended Total
Attended Total
12
10
12
12
12
12
10
12
12
12
–
2
3
1
3
–
2
3
1
3
5
4
–
–
–
5
4
–
–
–
2
2
2
2
2
2
2
2
2
2
–
–
1
1
1
–
–
1
1
1
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 Operational 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 Operational 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.
Effective from 1 July 2023 the board agreed to extend the
responsibilities of the audit committee to include a more
extensive oversight of risk management. For further details see
page 37.
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 Operational 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 23 January 2023.
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 Executive and 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 2022 to June 2023.
6. Ensure that, between them, the directors have the necessary
up-to-date experience, skills and capabilities (fully complies)
The Board considers its current composition and overall size
to be both appropriate and suitable with the adequate skills,
experience and capabilities to make informed decisions,
evaluate performance and constructively criticise strategy.
The composition of the board is reviewed annually by the
Nomination Committee. The Board is fully committed to the
appointment of the right skillsets that are required to grow
shareholder value. One third of the directors retire at the AGM
in rotation in accordance with the Company’s Articles of
34
D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
35
GOVER NANCE
Corporate governance report continued
Audit Committee report
9. Maintain governance structures and processes that are fit
for purpose and support good decision making by the Board
(fully 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
38 to 42.
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.
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 32 and 33.
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)
Though regular meetings with all members of the Board, the
Chairman continuously appraises the performance of each other
Board member. The Group’s corporate objectives were agreed
early in the year following the appointment of the new CFO, and
from these objectives, the terms of reference, matters reserved
and authority matrix documents, the objectives of each Board
member are clear.
The Nominations Committee is responsible for formal Board
evaluation. The Committee has previously carried out formal
Board performance evaluations including the circulation of
questionnaires to each Board member to assess whether
the capabilities of the Board and ensure it complied with this
principle. The learnings from this process have been discussed
by the Board and been addressed. The Committee’s intention
has been 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. This internal evaluation
is currently in progress with the findings to be discussed at a
future Board meeting.
8. Promote a corporate culture that is based on ethical values
and behaviours (fully complies)
We are committed to acting ethically and with integrity in all
our business relationships 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.
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, 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 Committee
The members of the Committee are independent Non-Executive
Directors and it comprises Elizabeth Richards as Chair and Boris
Huard. In addition, John Conoley, Milan Patel, Alistair Gurney
and the external auditor attend meetings as appropriate. The
Committee also 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 Committee during the year
• The Committee met three times during the financial year.
• At its meeting on 1 November 2023 the Committee reviewed
the Group’s preliminary announcement of its results for the
financial year to 30 June 2023 and the draft report and accounts
for that year.
•
It 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.
•
•
It considered and reviewed the report from a routine audit quality
review carried out by the Financial Reporting Council on the
auditors Moore Kingston Smith’s audit of the Group’s financial
statements for the year ended 30 June 2022.
It reviewed its terms of reference and recommended to the
Board that more extensive oversight of risk management should
be added to its responsibilities. This change was approved by
the Board and became effective from the commencement of the
new financial year from 1 July 2023. In particular the Committee
will assist the Board in its assessment of the Group’s principal
and emerging risks and their disclosure in the annual report and
accounts and shall monitor developments in the Group’s risk
management processes by reviewing reports from the executive
operational risk committee.
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 7 November 2023 and
signed on its behalf by:
Elizabeth Richards
Chairwoman of the Audit and Risk Committee
36
D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
37
GOVER NANCE
Remuneration Committee report
Introduction
Dear Shareholder, on behalf of the Board, I am pleased to present the
Directors’ Remuneration Report for the year ended 30 June 2023. As
the Company is listed on AIM, we are required to comply with AIM
Rule 19 in respect of remuneration disclosures. However, we also
provide additional disclosures to those required by AIM
Rule 19 on a voluntary basis, in line with AIM best practice, to
enable shareholders to better understand and consider our
remuneration arrangements.
This report is divided into three sections, these being:
• This Annual Statement, which summarises the work of the
Committee, remuneration outcomes in the year ended 30 June
2023 and how the Remuneration Policy will be operated for the
year ending 30 June 2024;
• The Remuneration Policy Report, which summarises the
Company’s Remuneration Policy, which remains unchanged; and
• The Annual Report on Remuneration, which discloses how
the Remuneration Policy was implemented in the year ended
30 June 2023 and how the Policy will operate for the year
ending 30 June 2024.
The items included in this report are unaudited unless otherwise
stated.
Annual statement
I am very pleased to present our Directors’ Remuneration Report
for the year ended 30 June 2023.
In keeping with last year’s framework, we have ensured that
incentives cover annual and longer-term targets, to deliver
sustainable and profitable growth.
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.
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 page 41
provides details of the amounts earned in respect of the year
ended 30 June 2023 and how the Directors’ Remuneration Policy
has operated.
The report will be subject to an advisory shareholder vote at the
2023 AGM.
Review of the year ended 30 June 2023
As described earlier in the annual report, the Group has performed
well during the year, delivering continuing operations revenue of £69.2
million, back to double digit organic revenue growth on the previous
year and total profit before tax excluding exceptional costs and share-
based payments of £15.4m, a 6% increase to prior year. Consequently,
the Executive Directors earned an annual cash bonus against sliding
scale revenue and profit targets equivalent of 67% of maximum
potential (84% of potential for the revenue target and 50% for the
profit target). The Chief Financial Officer’s bonus award was
pro-rated for his 9.5 months tenure in the year under review.
Performance Share Plan (PSP) awards granted to Milan Patel on
21 December 2020 over 306,728 shares will partially vest (currently
estimated to be between 25% to 35% of maximum potential) against
the relative three-year total shareholder return and earnings per share
targets. Full details of the actual performance against the targets
and number of shares vesting will be set out in next year’s Directors’
Remuneration Report.
In respect of PSP awards granted in the year ended 30 June 2023,
on 8 December 2022 the Chief Executive Officer was granted a
PSP award over 600,379 shares while the Chief Finance Officer
was granted an award over 276,490 PSP shares. These become
exercisable subject to continued service and the Company’s relative
three-year total shareholder return and earnings per share in respect
of the year ending 30 June 2025.
Engagement with shareholders
During the 2022/23 financial year, we consulted with the
major shareholders in relation to several aspects of executive
remuneration for the year ahead.
Outlook for 2024
The Committee remains committed to a fair and responsible
approach to executive pay whilst ensuring it stays 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 the year ending
30 June 2024:
• Executive Director salary levels will remain unchanged (£380,000
for the Chief Executive Officer and £210,000 for the Chief
Financial Officer)
• Pension provision will be capped at 5% of salary.
• No changes will be made to the Chairman’s fee of £100,000 and
Non-Executive Director fees will remain at £50,000.
• Annual bonus provision will remain capped at 125% of salary
for the Chief Executive Officer and 100% of salary for the Chief
Financial Officer with sliding scale equally weighted targets
based on revenue and profit before tax;
• The Committee intends to grant Performance Share Plan (PSP)
awards to the Chief Executive Officer and Chief Finance Officer
during 2023 in accordance with the 2017 PSP with stretching
three-year 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 appropriate
changes will be made as a result of feedback from the review.
On behalf of the Board
Boris Huard
Chairman of the Remuneration Committee
7 November 2023
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 CEO
100% of salary for CFO
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 CEO
and 100% of salary for other
Executive Directors.
Not applicable
38
D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
39
GOVER NANCE
Remuneration Committee report continued
Explanation of performance measures
Performance measures are selected such that they align 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 PSP.
Employee incentive schemes
The Company also operates a share option plan (CSOP). 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’ remunerationpolicy
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.
Remuneration
The Directors’ emoluments for the year ended 30 June 2023 were as per the following table. This information has been audited.
Executive Directors
A Gurney
M Patel
Non-Executive Directors
B Huard
J Conoley
M O’Leary
E Richards
Salary/Fees
£’000
Benefits
£’000
Bonus
£’000
Pension
£’000
Share-based
payment*
£’000
Total
£‘000
Number of
outstanding
options
166
380
546
5
4
9
110
318
428
3
19
22
24
224
248
308
276,490
945 2,043,565
1,253 2,320,055
Salary/Fees
£’000
Benefits
£’000
Bonus
£’000
Ex-gratia
£’000
Share-based
Pension payment**
£’000
£’000
50
100
8
50
208
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
£‘000
50
100
8
50
208
Number of
outstanding
options
–
–
–
–
* The share-based payment calculation is based on annual share option awards granted to Milan Patel in 2020, 2021 and 2022 and Alistair
Gurney in 2022 which are assessed for vesting in the third year of the performance 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 and 2025 respectively for Milan Patel and 2025 for Alistair Gurney. 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 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
48
100
48
196
–
–
–
–
–
–
–
–
–
–
–
–
Share-based
Pension payment**
£’000
£’000
–
–
–
–
–
–
–
–
Total
£‘000
48
100
48
196
Number of
outstanding
options
–
–
–
** The share-based payment calculation was 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 and
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.
40
D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
41
GOVER NANCE
Remuneration Committee report continued
Report of the Directors
Directors’ interests
The respective interests, all of which are beneficial, in the shares of the Company for the members of the Board at the year-end
are stated below:
M Patel
B Huard
E Richards
A Gurney
No of
shares
held
1,631,182
95.084
42,669
27,000
1,795,935
% 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
M Patel
A Gurney
Grant date
19/12/171
21/12/202
23/09/212
28/09/222
28/09/222
No. of share
options granted
No. of share
options vested
Option
price (pence)
1,375,000
306,728
201,458
600,379
276,490
935,000
–
–
–
–
0.5
0.5
0.5
0.5
0.5
Date first
exercisable
18/12/22
21/12/23
23/09/24
28/09/25
28/09/25
Expiry date
18/12/27
21/12/30
23/09/31
28/09/32
28/09/32
1 Awards vested on 18 December 2022 at 68% of the maximum based on absolute Total Shareholder Return targets.
2 Vesting is based on sliding scale relative Total Shareholder Return targets (50% of awards) and Earnings Per Share targets (50% of
awards) measured over three-years.
Composition of the Remuneration Committee
For the period from 1 July 2022 to 30 June 2023, the Remuneration Committee comprised independent Non-Executive Directors, namely
Boris Huard (Chairman), John Conoley and Elizabeth 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 two 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 7 November 2023 and signed on its behalf by:
Boris Huard
Chairman of Remuneration Committee
42
D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
The Directors present their report with the financial statements of
the Company and the Group for the year ended 30 June 2023.
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 an all-in-one
customer experience and data platform (CXDP).
Review of business
During the year the Group has shown stable growth from continuing
operations in customer numbers, sales and profits. Continuing
operations revenues grew from £62.8m in the year ended June 2022
to £69.2m for the year ended June 2023, an increase of 10%.
Adjusted profit before tax grew by 6% to 15.4m for the year ended
June 2023 (2022: £14.5m).
Dividends
The Board proposes a dividend payment of £3,049,840 comprising
an ordinary dividend of 1.00p per ordinary share (2022: £2,924,613
ordinary dividend of 0.98p 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 27.
Strategic report
The Strategic report covers pages 2 to 31.
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 29 days (2022: 35 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 2023, are as follows:
30.06.23
30.06.22
Number of
shares held
1,631,182
95,084
–
42,669
27,000
Percentage
shareholding
%
0.55
0.01
–
0.01
0.01
Number of
shares held
1,631,182
95,084
50,000
42,669
–
Percentage
shareholding
%
0.55
0.01
0.01
0.01
–
Director
M Patel
B Huard
M O’Leary
E Richards
A Gurney
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 2023, are as follows:
Director
M Patel
A Gurney
30.06.23
Number of
options held
30.06.22
Number of
options held
2,043,565
1,443,186
276,490
–
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 payments, the Group must provide an estimate for
the costs based on a Monte Carlo 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 circa three-year period.
In the previous two periods 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, 2024 and
2025 respectively.
Substantial interests
On 30 September 2023, 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
52,956,375
Tink Taylor, Founder and President
29,776,667
Octopus Investments
Slater Investments
26,541,746
15,741,642
17.34
9.75
8.69
5.15
Future outlook
The Group provides an all-in-one customer experience and data
platform (CXDP). This area 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 2022 to the date of this report.
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
Indemnity of officers
The Group purchases directors’ and officers’ insurance against their
costs in defending themselves in legal proceedings taken against
them in that capacity, and in respect of damages resulting from the
unsuccessful defence of any proceedings.
Financial instruments
Details of the Group’s risk management objectives and policies
together with its exposure to financial risk are set out in note 22 to
the financial statements.
43
GOVER NANCE
Report of the Directors continued
Report of the independent auditor
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.
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
On 11 September 2023 the Company announced the acquisition of
Fresh Relevance Limited, a vendor of cross-channel personalisation
technology. The total consideration was £25 million with circa
£18.9 million being satisfied in cash and circa £6.1 million by issue
of 6,862,683 new ordinary shares in Dotdigital Group Plc. For further
details see note 33.
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 2023 was 84.6p (2022: 69.6p).
Related party transactions
Disclosures relating to related party transactions are set out in note
27 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 £17,902
(FY22: £10,903).
Employees
The number of employees and their remuneration is set out in
note 4.
Applications for employment by disabled persons are always
fully considered, bearing in mind the aptitudes of the applicant
concerned. In the event of members of staff becoming disabled
every effort is made to ensure that their employment with the Group
continues and that appropriate training is arranged. It is the policy
of the Group that the training, career development and promotion of
disabled persons should, as far as possible, be identical to that of
other employees.
The Group complies with all applicable labour laws in the respective
jurisdictions in which it operates
Statement of Directors’ responsibilities
The Directors are responsible for preparing the annual report and
the financial statements in accordance with applicable law and
regulations.
International Accounting Standards as adopted by the UK.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and the Group and of
the profit or loss of the Group for that period. In preparing these
financial statements, the Directors are required to:
• Select suitable accounting policies and then apply them
consistently;
• Make judgements and accounting estimates that are reasonable
and prudent;
• State whether the Group and Parent Company financial
statements have been prepared in accordance with 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 7 November 2023 and was signed on its behalf by:
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
Milan Patel
Chief Executive Director
7 November 2023
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 2023 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 at 30 June
2023 and of the Group’s profit for the year then ended;
• The Group financial statements have been properly prepared
in accordance with UK adopted international accounting
standards;
• The parent company financial statements have been properly
prepared in accordance with UK adopted accounting standards
and as applied in accordance with the provisions of the
Companies Act 2006; and
• The financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s
Responsibilities for the audit of the financial statements section of
our report. We are independent of the group and parent company
in accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including the
FRC’s Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
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 15 of the financial statements. All work was carried
out by the Group audit team.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
44
D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
45
GOVER NANCE
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.
The Group generated revenue of £69,228,000
in the financial year ended 30 June 2023 (2022:
£62,832,000) (Note 3).
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 £19,860,000 as at 30 June 2023 (30 June
2022: £17,698,000). (Note 13)
The Group had goodwill with a net book value of
£9,680,000 as at 30 June 2023 (30 June 2022:
£9,680,000). (Note 12)
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.
How our scope addressed this matter
Key audit matters
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, the accounting
policy and IFRS 15, having considered the principles of IFRS 15 and the commercial
substance of the contracts.
Testing of certain controls including automated 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 IFRS 15.
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.
Critically assessing management’s identification of continuing Cash Generating
Units (CGUs).
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 the 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 £8,729,000 (2022: £7,599,000) within an
internally generated development asset (note 13).
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 £19,047,000 as at 30 June 2023 (30 June 2022:
£18,362,000) (Note 15).
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 which have been
capitalised 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.
We have scrutinised expenses incurred during the year to ensure amounts
charged off should not have been capitalised.
We also reviewed the client’s accounting policy to ensure that it is consistent
with IAS 38.
Key observations
Based on our audit work, we concluded that the development costs have been
capitalised in accordance with the requirements of IAS 38.
Our audit work included, but was not restricted to:
Obtaining management’s cash flow forecasts utilised in management’s impairment
assessment and critically assessing these. This included:
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 each 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
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.
46
D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
47
GOVER ANCE
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 £692,280, 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 £195,302, 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 £346,140 and
£97,651 respectively.
We agreed to report to the Audit Committee all audit differences
in excess of £34,614 for the Group and £9,765 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 and the energy crisis. We
evaluated management’s forecasting accuracy based on historical
budgets versus actual performance.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the group
and parent company’s ability to continue as a going concern for a
period of at least twelve months from when the financial statements
are authorised for issue.
Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections of
this report.
Other information
The other information comprises the information included in
the annual report, other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other
information contained within the annual report. Our opinion on the
financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
course of the audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements themselves.
If, based on the work we have performed, we conclude that there
is a material misstatement of this other information, we are required
to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies
Act 2006
In our opinion the part of the remuneration committee report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
• The information given in the Strategic Report and the Directors’
Report for the financial year for which the financial statements
are prepared is consistent with the parent company financial
statements; and
• The strategic report and the directors’ report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and
the parent company and their environment obtained in the course
of the audit, we have not identified material misstatements in the
strategic report or the directors’ report.
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
• Adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been
received from branches not visited by us; or
• The parent company financial statements and the part of
the remuneration committee report to be audited are not in
agreement with the accounting records and returns; or
• Certain disclosures of directors’ remuneration specified by
law are not made; or
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.
• We have not received all the information and explanations
Our approach was as follows:
we require for our audit.
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.
48
D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
49
GOVER ANCE
Report of the independent auditor continued
Use of our report
This report is made solely to the company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken for no purpose other than to
draw to the attention of the company’s members those matters
which we are required to include in an auditor’s report addressed
to them. To the fullest extent permitted by law, we do not accept
or assume responsibility to any party other than the company and
company’s members as a body, for our work, for this report, or for
the opinions we have formed.
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
7 November 2023
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
86 Company information
50
50
D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
51
51
Consolidated income statement
For the year ended 30 June 2023
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
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
Notes
30.06.23
£’000
30.06.22
£’000
3
7
7
29
5
6
6
7
8
11
11
11
11
69,228
(14,351)
54,877
62,832
(11,570)
51,262
(40,359)
(36,726)
14,518
14,536
(736)
(234)
(456)
(475)
13,548
13,605
(57)
895
14,386
(1,791)
12,595
12,595
4.21
4.11
4.53
4.43
(57)
57
13,605
(1,774)
11,831
11,831
3.96
3.88
4.27
4.18
Consolidated statement of comprehensive income
For the year ended 30 June 2023
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
Notes
30.06.23
£’000
12,595
30.06.22
£’000
11,831
(38)
333
12,557
12,164
12,557
12,164
Consolidated statement of financial position
For the year ended 30 June 2023
Assets
Non-current assets
Goodwill
Intangible assets
Property, plant and equipment
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity attributable to the owners of the parent
Called up share capital
Share premium
Reverse acquisition reserve
Other reserves
Retranslation reserve
Retained earnings
Total equity
Liabilities
Non-current liabilities
Lease liabilities
Deferred tax
Current liabilities
Trade and other payables
Financial liabilities – Lease liabilities
Current tax payable
Total liabilities
Total equity and liabilities
Notes
30.06.23
£’000
30.06.22
£’000
12
13
14
16
17
18
19
19
19
19
19
21
24
20
21
9,680
19,860
2,696
32,236
15,261
52,676
67,937
100,173
1,496
7,124
(4,695)
2,591
258
73,536
80,310
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
1,321
2,644
3,965
1,758
2,755
4,513
14,629
12,654
823
446
15,898
19,863
100,173
818
–
13,472
17,985
87,793
The financial statements were approved and authorised for issue by the Board of Directors on 7 November 2023 and were
signed on its behalf by:
Milan Patel
Director
Company registration number: 06289659 (England and Wales)
52
53
DOTDIGITAL GROUP PLC ANNUAL REPORT 2022/2023FINANCIAL STATEMENTS
Company statement of financial position
For the year ended 30 June 2023
Consolidated statement of changes in equity
For the year ended 30 June 2023
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
30.06.23
£’000
30.06.22
£’000
14
15
16
17
18
19
19
19
20
9
19,047
19,056
2,939
396
3,335
7
18,362
18,369
1,545
163
1,708
22,391
20,077
1,496
7,124
2,600
10,969
22,189
1,496
7,124
1,915
9,400
19,935
202
202
142
142
22,391
20,077
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 £4,459,042 (2022: £4,163,416).
The financial statements were approved and authorised for issue by the Board of Directors on 7 November 2023 and were
signed on its behalf by:
Milan Patel
Director
Company registration number: 06289659 (England and Wales)
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 2021
1,494
54,081
7,124
(37)
(4,695)
3,066
61,033
Transactions with owners
Issue of share capital
Dividends
Transfer in reserves
Deferred tax on share options
Share-based payments
Transactions with owners
Total comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
Balance as at 30 June 2022
Balance as at 1 July 2022
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
2
–
–
–
–
2
–
–
–
1,496
1,496
–
–
–
–
–
–
–
–
–
Balance as at 30 June 2023
1,496
–
(2,564)
234
–
–
(2,330)
11,831
–
11,831
63,582
63,582
–
(2,926)
285
–
–
(2,641)
12,595
–
12,595
73,536
–
–
–
–
–
–
–
–
–
7,124
7,124
–
–
–
–
–
–
–
–
–
7,124
–
–
–
–
–
–
–
333
333
296
296
–
–
–
–
–
–
–
(38)
(38)
258
–
–
–
–
–
–
–
–
–
(4,695)
(4,695)
–
–
–
–
–
–
–
–
–
–
–
(234)
(1,283)
456
2
(2,564)
–
(1,283)
456
(1,061)
(3,389)
–
–
–
2,005
2,005
–
–
(285)
150
721
586
–
–
–
11,831
333
12,164
69,808
69,808
–
(2,926)
–
150
721
(2,055)
12,595
(38)
12,557
80,310
(4,695)
2,591
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.
54
55
DOTDIGITAL GROUP PLC ANNUAL REPORT 2022/2023FINANCIAL STATEMENTS Company statement of changes in equity
For the year ended 30 June 2023
Consolidated statement of cash flows
For the year ended 30 June 2023
Balance as at 1 July 2021
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)
Balance as at 30 June 2022
Balance as at 1 July 2022
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 2023
Called up
share capital
£’000
1,494
Retained
earnings
£’000
7,570
Share
premium
£’000
7,124
Other
reserves
£’000
1,690
2
–
–
–
2
–
–
1,496
1,496
–
–
–
–
–
–
–
–
(2,564)
231
–
(2,333)
4,163
4,163
9,400
9,400
–
(2,926)
36
–
(2,890)
4,459
4,459
–
–
–
–
–
–
–
7,124
7,124
–
–
–
–
–
–
–
–
–
(231)
456
225
–
–
1,915
1,915
–
–
(36)
721
685
–
–
Total
equity
£’000
17,878
2
(2,564)
–
456
(2,106)
4,163
4,163
19,935
19,935
–
(2,926)
–
721
(2,205)
4,459
4,459
1,496
10,969
7,124
2,600
22,189
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.
Cash flows from operating activities
Cash generated from operations
Tax paid
Net cash generated from operating activities
Cash flows from investing activities
Purchase of intangible fixed assets
Purchase of property, plant and equipment
Interest received
Net cash flows used in 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
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 2023
Cash flows from operating activities
Cash generated from operations
Net cash generated from operating activities
Cash used in investing activities
Purchase of property, plant and equipment
Net cash flows used in investing activities
Cash flows from financing activities
Equity dividends paid
Proceeds from share issues
Net cash flows used in financing activities
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Notes
30
13
14
31
31
30.06.23
£’000
30.06.22
£’000
21,928
(1,119)
20,809
(8,760)
(306)
895
25,162
(1,761)
23,401
(7,686)
(465)
57
(8,171)
(8,094)
(2,926)
(917)
–
(2,564)
(1,110)
2
(3,843)
(3,672)
8,795
43,919
(38)
52,676
11,635
31,951
333
43,919
Notes
30.06.23
£’000
30.06.22
£’000
30
14
31
31
3,165
3,165
2,645
2,645
(6)
(6)
(5)
(5)
(2,926)
(2,564)
–
2
(2,926)
(2,562)
233
163
396
78
85
163
56
57
DOTDIGITAL GROUP PLC ANNUAL REPORT 2022/2023FINANCIAL STATEMENTS Notes to the consolidated financial statements
For the year ended 30 June 2023
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 43.
IAS 12
IFRS 16
IAS 1
1 January 2024
1 January 2024
1 January 2024
International Tax Reform –
Pillar Two Model Rules
Leases – amendments
regarding Lease Liability in
a Sale and Leaseback
Presentation of Financial
Statements – amendments
regarding the classification
of liabilities as current or
non-current and Non-current
Liabilities with Covenants
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 intuitive software as a service (SaaS) via an all-in-
one customer experience and data platform (CXDP).
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.
The following accounting treatment has been applied in
respect of the acquisition of Dotdigital Group Plc:
• The assets and liabilities of Dotdigital Group Plc are
recognised and measured in the consolidated financial
statements at their fair value at the date of acquisition
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
2. Accounting policies
Basis of preparation
The financial statements have been prepared in accordance
with International Accounting Standards as adopted by the
UK (IASs as adopted by the UK) and International Financial
Reporting Interpretations Committee (IFRIC) Interpretations
as endorsed for use in the UK. The financial statements have
also been prepared under the historical cost convention, with
the exception of the valuation of the valuation of investments,
financial liabilities and initial valuation of assets and liabilities
acquired in business combinations which are included on
a fair value basis, and in accordance with those parts of
Companies Act 2006 applicable to companies reporting
under UK adopted International Accounting Standards.
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 Group adopted the following new and amended relevant
IFRS in the year:
Annual Improvements to IFRS Standards 2018-2020
IAS 16 Property, Plant and Equipment: Proceeds before
Intended Use
IAS 37 Onerous Contracts – Cost of Fulfilling a Contract
IFRS 3 Reference to the Conceptual Framework
The adoption of these accounting standards did not have any
effect on the Group’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 Group 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 Group’s financial statements in the period of
initial application.
Effective date
1 January 2023
1 January 2023
1 January 2023
IAS 1 and
IFRS Practice
Statement 2
Presentation of Financial
Statements – amendments
regarding the disclosure of
accounting policies
Accounting Policies, Changes
in Accounting Estimates
– amendments regarding
the definition of accounting
estimates
Income Taxes – amendments
regarding deferred tax related
to assets and liabilities arising
from a single transaction
IAS 8
IAS 12
58
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, at the time of approving the financial
statements, have a reasonable expectation that the Company
and the Group have adequate resources to continue in
operational existence for the foreseeable future. Thus, they
continue to adopt the going concern basis of accounting in
preparing the financial statements.
Operating profit
Operating profit is stated after charging operating expenses
but before finance costs and finance income.
Dividends
Final dividend distributions to the Company’s shareholders
are recognised as a liability in the financial statements in the
period in which the dividends are approved by the Company’s
shareholders while interim dividends distributions are
recognised in the period in which the dividends are declared
and paid.
Goodwill
Goodwill represents the excess of the fair value of the
consideration over the fair values of the identifiable net
tangible and intangible assets acquired and is allocated
to cash generating units.
Under IFRS 3 ‘Business combinations’, goodwill arising
on acquisitions is not subject to amortisation but is
subject to annual impairment testing. Any impairment is
recognised immediately in the income statement and not
subsequently reversed.
Investments in subsidiaries
Investments are held as non-current assets at cost less any
provision for impairment. Where the recoverable amount of
the investment is less than the carrying amount, impairment
is recognised.
59
DOTDIGITAL GROUP PLC ANNUAL REPORT 2022/2023FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
For the year ended 30 June 2023
2. Accounting policies continued
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 to five 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 resources
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
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 2023 were optional.
In determining the lease term, management considers all
facts and circumstances that create an economic incentive
to exercise an extension option, or not exercise a termination
option. Extension options (or periods after termination
options) are only included in the lease term if the lease
is reasonably certain to be extended (or not terminated).
Potential future cash outflows have not been included in the
lease liability because it is not reasonably certain that the
leases will be extended (or not terminated), the amount of
these cash flows is uncertain as several rounds of rent reviews
are due before this extension date.
60
61
DOTDIGITAL GROUP PLC ANNUAL REPORT 2022/2023FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
For the year ended 30 June 2023
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 FVPL, ‘amortised cost’ or ‘fair
value through other comprehensive income’ (‘FVOCI’). The
classification depends on the nature and purpose of the
financial assets and is determined at the time of recognition.
Financial assets are assessed for indicators of impairment
at each balance sheet date. Financial assets are impaired
where there is objective evidence that, as a result of one
or more events that occurred after the initial recognition of
the financial asset, the estimated future cash flows of the
investment have been impacted.
For certain categories of financial asset, such as trade
receivables, assets that are assessed not to be impaired
individually, the Group recognises lifetime expected credit
losses (‘ECL’) when there has been a significant increase in
credit risk since initial recognition. However, if the credit risk
on the financial instrument has not increased significantly
since initial recognition, the Group measures the loss
allowance for that financial instrument at an amount equal
to 12-month ECL.
Lifetime ECL represents the expected credit losses that will
result from all possible default events over the expected life
of a financial instrument. In contrast, 12-month ECL represents
the portion of lifetime ECL that is expected to result from
default events on a financial instrument that are possible
within 12 months after the reporting date.
On derecognition of a financial asset measured at amortised
cost, the difference between the asset’s carrying amount
and the sum of the consideration received and receivable is
recognised in profit or loss.
• Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and
on hand, demand deposits with banks and other financial
institutions, and short-term, highly liquid investments that are
readily convertible into known amounts of cash and which
are subject to an insignificant risk of changes in value, having
a maturity period of 95 days or less at the date of 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.
This accounting policy has been changed for the year ended
30 June 2023 to classify short term highly liquid investments
that have a maturity of up to 95 days as cash equivalents,
the policy in the previous year having referred to 3 months.
Management believe that both the financial position and
liquidity of the Group are made clearer for the reader when all
cash and cash equivalent items are analysed together and
that the change therefore results in the presentation of more
relevant and reliable information in the financial statements.
The change in accounting policy has not resulted in a prior
period adjustment.
• 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. For options granted after 2019,
a Monte Carlo model is used to measure the fair use of
options granted that are subject to a TSR performance
condition. A Black Scholes model is used to measure the fair
use of all other options granted. 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 table below 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
30.06.23
£’000
68
17
(42)
4
(8)
9
11
0
30.06.22
£’000
60
14
(37)
10
(2)
(2)
5
1
59
49
62
63
DOTDIGITAL GROUP PLC ANNUAL REPORT 2022/2023FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
For the year ended 30 June 2023
2. Accounting policies continued
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 13
Our business model is underpinned by our email and
data-driven omnichannel marketing automation platform.
Internal activities are continually undertaken to enhance
and maintain the product in a bid to stay ahead of our
competition. Management review the work of developers
during the period and make the following judgements:
•
•
Internal work relating to product development is
reviewed against IAS 38 criteria and will be capitalised
if management consider that the criteria have been
met;
Internal work relating to the maintenance of existing
products is expensed to the income statement and
accounted for in payroll costs.
(b) Valuation of goodwill – refer to note 12
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
64
discounted at 4.28% (2022: 19.75%). This has decreased
as a result of the decrease in the cost equity which was
impacted by the increase in the share price at the year
end compared to last year and the decrease 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 12 to the financial statements. At the
period end, based on the assumptions, there was no
indication of impairment to the carrying value of goodwill.
(b) Share-based compensation
Key management believe that there will not be only one
acceptable choice for estimating the fair value of share-
based payment arrangements. The judgements and
estimates that management apply in determination of
the share-based compensation are summarised as
follows:
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 29
to the financial statements. The charge made to income
statement for the 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
Dotdigital’s single line of business remains the provision intuitive software as a service (SaaS) via an all-in-one customer
experience and data platform (CXDP). In the previous years 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 Engagement Cloud
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/(loss) attributable
to the owners of the parent
Financial position
Total assets
Net current assets/(liabilities)
EMEA
£’000
52,338
39,773
14,067
30.06.23
US
£’000
10,862
9,702
921
APAC
£’000
6,028
5,402
(602)
Total
£’000
69,228
54,877
14,386
12,522
686
(651)
12,557
95,742
50,620
4,170
2,647
261
(1,228)
100,173
52,039
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 (2022: 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/(loss) 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
83,664
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.
65
DOTDIGITAL GROUP PLC ANNUAL REPORT 2022/2023FINANCIAL STATEMENTS Notes to the consolidated financial statements continued
For the year ended 30 June 2023
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/(loss) 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
30.06.23
Core
£’000
CPaaS
£’000
Total
£’000
69,228
54,877
14,386
12,557
100,173
52,039
–
–
–
–
–
–
69,228
54,877
14,386
12,557
100,173
52,039
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
19
18
87,793
43,658
30.06.23
£’000
26,290
2,744
671
30.06.22
£’000
24,650
2,396
561
29,705
27,607
30.06.23
4
30.06.22
5
193
126
61
384
157
117
69
348
Included in the total employees cost above, £6,581,768 (2022: £6,194,834) was capitalised in relation to internally
generated development costs.
5. Exceptional costs
Exceptional costs incurred in the year relate to the amortisation of acquired intangibles of £120,000 (2022: £120,000),
professional acquisition costs £100,000 (2022: £nil) please see note 33, professional fees related to the valuation of
share options £14,000 (2022: £nil) and senior management settlement costs of £nil (2022: £355,053).
66
6. Net finance income
Finance income:
Deposit account interest
Finance cost:
Interest on lease liabilities
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
Insurance
Staff welfare
Bank and credit card
Recruitment fees
Other costs
30.06.23
£’000
30.06.22
£’000
895
(57)
838
57
(57)
0
30.06.23
£’000
14,351
14,351
30.6.23
£’000
3,004
1,109
23,544
140
6,458
1,025
840
1,081
(193)
593
421
465
214
535
431
214
478
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
122
432
401
195
341
Total administrative expenses
40,359
36,726
During the year the Group obtained the following services from the Group’s auditor at costs detailed below:
30.06.23
£’000
30.06.22
£’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
– overrun of prior year audit services
41
63
4
32
140
* 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.
33
45
3
–
81
67
DOTDIGITAL GROUP PLC ANNUAL REPORT 2022/2023FINANCIAL STATEMENTS Notes to the consolidated financial statements continued
For the year ended 30 June 2023
8. Income tax expense
Analysis of the tax charge from continuing operations:
Current tax on profits for the year
Foreign tax suffered
Changes in estimates related to prior 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 standard rate of corporation
tax in the UK: 25% (2022: 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
30.06.23
£’000
1,448
266
38
39
30.06.22
£’000
968
212
329
265
1,791
1,774
30.06.23
£’000
14,386
30.06.22
£’000
13,605
3,597
2,585
(46)
66
142
98
(1,761)
(1,439)
(18)
78
(160)
35
–
(21)
71
291
38
9
1,791
1,774
Deferred tax was calculated using the rate 25% (2022: 25%). For further details on deferred tax see note 24.
Taxation for each region is calculated at the rates prevailing in the respective jurisdiction.
The main rate of UK corporation tax increased on 1 April 2023 from 19% to 25%. The effective tax rate in the period was
12.44% (2022: 13.03%). UK deferred balances have been recognised at 25% in the period (2022: 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 for the financial year was £4,459,042 (2022: £4,163,416).
10. Dividends
Amounts recognised as distributions to equity holders in the period.
Paid dividend for year end 30 June 2022 of 0.98p (2021: 0.86p) per share
Proposed dividend for the year end 30 June 2023 of 1.00p (2022: 0.98p) per share
30.06.23
£’000
2,926
3,050
30.06.22
£’000
2,564
2,925
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. The number of shares considered for the proposed dividend includes 6,862,683
shares issued post year end as part of the consideration for the acquisition of Fresh Relevance.
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.
68
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 13)
Other exceptional costs (see note 5)
Share-based payment (see note 29)
30.06.23
£’000
12,595
120
114
736
30.06.22
£’000
11,831
120
355
456
Adjusted profit for the year attributable to the owners of the parent
13,565
12,762
Management does not consider the above adjustments to reflect the underlying business performance. The other exceptional
costs relate to acquisition costs and professional fees. In 2022 the other exceptional costs related to senior management
settlement costs.
From all operations
Basic EPS
30.06.23
Weighted
average
number of
shares
Earnings
£’000
Profit for the year attributable to the owners of the parent
12,595
299,216,130
Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the parent
Options and warrants
Diluted EPS
13,565
299,216,130
–
7,219,476
Profit for the year attributable to the owners of the parent
12,595
306,435,606
Per share
Amount
Pence
4.21
4.53
–
4.11
Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the parent
13,565 306,435,606
4.43
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
Weighted average number of shares
Basic EPS
Diluted EPS
30.06.23
Shares
299,216,130
30.06.22
Shares
298,995,582
306,435,606
305,218,306
69
DOTDIGITAL GROUP PLC ANNUAL REPORT 2022/2023FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
For the year ended 30 June 2023
12. Goodwill
Group
Cost
At 1 July
At 30 June
Impairment
At 1 July
At 30 June
Net book value
30.06.23
£’000
30.06.22
£’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 Group’s cash generating unit (CGUs) 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.
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 4.28% (2022: 19.75%). This has
decreased as a result of the decrease in the cost equity which was impacted by the increase in the share price at the year end
compared to last year and the decrease 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 11% (2022: 15%).
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 is 73% (2022: 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, these would need to change before an impairment is
required, this being 145% (2022: 161%) discount rate and growth rate of -5% (2022: -5%).
13. Intangible assets
Group
Cost
At 1 July 2022
Additions
Disposals
Exchange differences
At 30 June 2023
Amortisation
At 1 July 2022
Amortisation for the year
Disposals
Exchange differences
At 30 June 2023
Net book value
At 30 June 2023
Cost
At 1 July 2021
Additions
Exchange differences
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
1,205
1,200
1,111
–
–
–
–
–
–
26
(1)
(1)
Internally
generated
development
costs
£’000
41,651
8,729
(17)
(4)
1,205
1,200
1,135
50,359
1,205
–
–
–
1,205
–
550
120
–
–
670
530
945
83
–
(1)
24,778
6,375
(2)
–
1,027
31,151
108
19,208
Domain
names
£’000
46
5
–
–
51
37
–
_
_
37
14
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
46
–
–
46
36
1
37
9
Totals
£’000
45,213
8,760
(18)
(5)
53,950
27,515
6,578
(2)
(1)
34,090
19,860
Totals
£’000
37,526
7,686
1
45,213
21,392
6,123
27,515
17,698
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.
70
71
DOTDIGITAL GROUP PLC ANNUAL REPORT 2022/2023FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
For the year ended 30 June 2023
14. Property, plant and equipment
Group
Cost
At 1 July 2022
Additions
Disposals
Re-measurement of existing lease liabilities
Exchange differences
At 30 June 2023
Depreciation
At 1 July 2022
Depreciation for the year
Disposals
Exchange differences
Re-measurement of existing lease liabilities
At 30 June 2023
Net book value
At 30 June 2023
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
Right of use
assets
£000
Short
leasehold
£’000
Fixtures &
fittings
£’000
Computer
equipment
£’000
5,555
406
(719)
(33)
–
5,209
3,055
873
(719)
(3)
14
3,220
731
3
(46)
–
(3)
685
593
52
(46)
(3)
–
596
773
53
(200)
–
(14)
612
736
23
(190)
(14)
–
555
3,102
250
(323)
–
(31)
2,998
2,492
278
(311)
(22)
–
2,437
Totals
£’000
10,161
712
(1,288)
(33)
(48)
9,504
6,876
1,226
(1,266)
(42)
14
6,808
1,989
89
57
561
2,696
Right of use
assets
£000
Short
leasehold
£’000
Fixtures &
fittings
£’000
Computer
equipment
£’000
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
Included in the net carrying amount of property, plant and equipment are the right-of-use assets as follows:
Properties
£’000
Motor vehicles
£’000
Cost
As at 1 July 2022
Termination of leases
Additions
Re-measurement of existing lease liabilities
Foreign currency translation
At 30 June 2023
Depreciation
As at 1 July 2022
Depreciation for the year
Termination of leases
Re-measurement of existing lease liabilities
Foreign currency translation
At 30 June 2023
Net book value
At 30 June 2023
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
Totals
£’000
5,555
(719)
406
(33)
–
5,209
3,055
873
(719)
14
(3)
5,400
(719)
366
(33)
–
5,014
2,906
836
(719)
14
(3)
3,034
155
–
40
–
–
195
149
37
–
–
–
186
3,220
1,980
9
Properties
£’000
Motor vehicles
£’000
1,989
Totals
£’000
5,229
(60)
167
64
5,400
1,942
953
(45)
56
2,906
155
5,384
–
–
–
155
119
30
–
–
149
(60)
167
64
5,555
2,061
983
(45)
56
3,055
2,494
6
2,500
72
73
DOTDIGITAL GROUP PLC ANNUAL REPORT 2022/2023FINANCIAL STATEMENTS Notes to the consolidated financial statements continued
For the year ended 30 June 2023
14. Property, plant and equipment continued
Company
Cost
As at 1 July 2022
Additions
Foreign currency translation
At 30 June 2023
Depreciation
As at 1 July 2022
Depreciation for the year
At 30 June 2023
Net book value
At 30 June 2023
Cost
As at 1 July 2021
Additions
Foreign currency translation
At 30 June 2022
Depreciation
As at 1 July 2021
Depreciation for the year
At 30 June 2022
Net book value
At 30 June 2022
15. 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
Computer
equipment
£’000
11
6
–
17
4
4
8
9
Computer
equipment
£’000
6
5
–
11
2
2
4
7
Shares in
Group
undertakings
30.06.23
£’000
Shares in
Group
undertakings
30.06.22
£’000
22,116
21,660
721
–
456
–
22,837
22,116
3,754
36
3,789
3,519
235
3,754
19,047
18,362
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
All-in-one customer experience and data platform
Dotdigital Inc
All-in-one customer experience and data platform
Dotdigital APAC Pty Limited
All-in-one customer experience and data platform
Dotdigital B.V.
All-in-one customer experience and data platform
Dotmailer Development Ltd
Holding company
Dotdigital Development SA Pty
Development hub
Dotdigital SG Pte Limited
All-in-one customer experience and data platform
Dynmark International Ltd
All-in-one customer experience and data platform
Dotdigital Poland S.p z.o.o
Development hub
Class of share
Proportion of
voting power
held directly %
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
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 Dotmailer LLC was also dissolved on 29 June 2023. 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 the Netherlands, Dotdigital SG Pte Ltd was incorporated in Singapore, Dotdigital Development SA Pty was incorporated
in South Africa, and Dotdigital Poland S.p. z.o.o was incorporated in Poland.
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 APAC Pty Ltd
60/2 O’Connell Street, Parramatta, New South Wales 2150, Australia
Dotdigital SG Pte Ltd
6001 Beach Road, 11-06 Golden Mile Tower, 199589 Singapore
Dotigital Development SA Pty Ltd BDO Building, Wanderers Office Park, 52 Corlett Drive, Illovo, Johannesburg 2196, South Africa
Dotdigital B.V.
Spaces Amstel, Mr. Treublaan 7, Amsterdam 1097DP, Netherlands
Dotdigital Poland s.p. z.o.o
Al. Jana Pawla II 22, 00-133 Warsaw, Poland
16. Trade and other receivables
Current:
Trade receivables
Less: Provision for impairment of trade receivables
Trade receivables – net
Other receivables
Amounts owed by Group undertakings
VAT
Tax receivables
Prepayments and contract assets
Group
Company
30.06.23
£’000
30.06.22
£’000
30.06.23
£’000
30.06.22
£’000
11,487
(1,305)
10,182
29
–
–
–
5,050
15,261
10,748
(1,892)
8,856
52
–
–
186
4,117
13,211
–
–
–
–
–
–
–
–
2,834
1,426
34
–
71
34
–
85
2,939
1,545
Further details on the above can be found in note 22.
Included within Group prepayments is an amount of £255,846 (2022: £246,057) 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.
74
75
DOTDIGITAL GROUP PLC ANNUAL REPORT 2022/2023FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
For the year ended 30 June 2023
17. Cash and cash equivalents
Cash at bank
Short term deposit accounts
Further details on the above can be found in note 22.
18. Called up share capital
Allotted, issued, fully paid number
299,216,130 (2022: 299,216,130)
19. Reserves
Group
As at 1 July 2022
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
63,582
–
(2,926)
12,595
285
–
–
–
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
–
–
–
Group
Company
30.06.23
£’000
17,534
35,142
52,676
30.06.22
£’000
23,458
20,461
43,919
Nominal
value
£0.005
Share
premium
£’000
7,124
Reverse
acquisition
reserve
£’000
(4,695)
Retranslation
reserve
£’000
296
Share
premium
£’000
7,124
Reverse
acquisition
reserve
£’000
(4,695)
Retranslation
reserve
£’000
(37)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(38)
–
258
–
–
–
–
–
333
–
296
30.06.23
£’000
396
–
396
30.06.23
£’000
1,496
1,496
Other
reserves
£’000
2,005
–
–
–
(285)
150
–
721
30.06.22
£’000
163
–
163
30.06.22
£’000
1,496
1,496
Totals
£’000
68,312
–
(2,926)
12,595
-
150
(38)
721
2,591
78,814
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
Balance as at 30 June 2023
73,536
7,124
(4,695)
Balance as at 30 June 2022
63,582
7,124
(4,695)
76
Company
As at 1 July 2022
Issue of share capital
Dividends
Profit for the year
Transfer in reserves
Share-based payments
As at 30 June 2023
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
20. Trade and other payables
Current:
Trade payables
Social security and other taxes
Other payables
VAT
Accruals and contract liabilities
Retained
earnings
£’000
9,400
–
(2,926)
4,459
36
–
10,969
Retained
earnings
£’000
7,570
–
(2,564)
4,163
231
–
Share
premium
£’000
7,124
Other
reserves
£’000
1,915
–
–
–
–
–
–
–
–
(36)
721
Totals
£’000
18,439
–
(2,926)
4,459
–
721
7,124
2,600
20,693
Share
premium
£’000
7,124
–
–
–
–
–
Other
reserves
£’000
1,690
–
–
–
(231)
456
Totals
£’000
16,384
–
(2,564)
4,163
–
456
9,400
7,124
1,915
18,439
Group
Company
30.06.23
£’000
30.06.22
£’000
30.06.23
£’000
30.06.22
£’000
2,175
2,428
588
170
730
10,966
14,629
68
151
228
9,779
12,654
–
–
–
–
202
202
81
–
–
–
61
142
Further details on liquidity and interest rate risk can be found in note 2.
Included within revenue is £1,322,000 relating to contract liabilities that had been recognised at 30 June 2022 (£636,000 related
to contract liabilities recognised at 30 June 2021 that had been included within revenue in 2022).
21. Leasing liabilities
Group
As at July 2022
Termination of leases
Additions
Principal repayments
Interest
Foreign currency translation
At 30 June 2023
Current
Non-current
At 30 June 2023
Properties
£’000
2,540
Motor
vehicles
£’000
36
(4)
366
(864)
79
1
2,118
797
1,321
2,118
–
41
(53)
2
–
26
26
–
26
Totals
£’000
2,576
(4)
407
(917)
81
1
2,144
823
1,321
2,144
77
DOTDIGITAL GROUP PLC ANNUAL REPORT 2022/2023FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
For the year ended 30 June 2023
21. Leasing liabilities continued
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
Properties
£’000
3,359
(15)
167
(1,081)
89
21
2,540
796
1,744
2,540
Motor
vehicles
£’000
64
–
–
Totals
£’000
3,423
(15)
167
(29)
(1,110)
1
–
36
22
14
36
90
21
2,576
818
1,758
2,576
The properties are office leases located in various locations where the term ranges from one to ten years. The motor vehicles
are company cars offered to senior staff where the term is always three years.
22. Financial instruments and risk management
The Group’s activities expose it to a number of financial risks that include credit risk, liquidity risk, currency risk and interest
rate risk. These risks and the Group’s policies for managing them have been applied consistently during the year and are set
out below.
The Group holds no financial or other non-financial instruments other than those utilised in the working operations of the
Group and that are listed in this note. It 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 at amortised cost
Trade and other receivables
Amounts owed to Group undertakings
Bank balances
Financial liabilities at amortised cost
Trade payables
Accrued liabilities and other payables
Lease liabilities
General objectives, policies and processes
Group
Company
30.06.23
£’000
30.06.22
£’000
30.06.23
£’000
30.06.22
£’000
10,211
–
52,676
62,887
2,175
5,380
2,144
9,699
8,908
–
43,919
52,827
2,428
4,974
2,576
9,978
–
2,834
396
3,230
–
202
–
202
–
1,426
163
1,589
81
61
–
142
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 Operational Risk Committee. The Board receives quarterly
reports from the Operational 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 £8,377,583 (2022: £8,220,247) are expected to mature in less than a year.
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 2023 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
Receivables written off in the year
Unused amount reversed
As at 30 June
30.06.23
£’000
609
664
1,184
2,457
30.06.23
£’000
68
11
1,226
1,305
30.06.23
£’000
1,892
13
(193)
(407)
30.06.22
£’000
432
653
702
1,787
30.06.22
£’000
195
231
1,466
1,892
30.06.22
£’000
1,785
126
(19)
–
1,305
1,892
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 £2,203,244
(2022: £1,614,266) of which £1,219,374 (2022: £1,476,586) 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 Group’s cash holdings are held at NatWest Bank and Investec Bank Plc, which have A+ and BBB+
credit ratings respectively.
The carrying value of both financial assets and liabilities approximates to fair value.
78
79
DOTDIGITAL GROUP PLC ANNUAL REPORT 2022/2023FINANCIAL STATEMENTS Notes to the consolidated financial statements continued
For the year ended 30 June 2023
22. Financial instruments and risk management continued
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 (2022: £nil) and amounts payable over one year are £nil (2022:
£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.
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 2023
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
8,873
474
9,347
–
415
415
–
426
426
–
955
955
<6 months
£’000
6 to 12 months
£’000
1 to 2 years
£’000
2 to 5 years
£’000
Contractual maturities at 30 June 2022
Trade and other payables
Lease liabilities
Total non-derivatives
7,698
463
8,161
–
448
448
–
816
816
23. Reconciliation of liabilities arising from financing activites
As at 1 July
Cash flows
Interest
Foreign exchange movement
Lease additions and terminations
As at 30 June
–
1,082
1,082
30.06.23
£’000
2,576
(917)
81
1
403
Total
contractual
cash flows
carrying
amounts
£’000
8,873
2,270
11,143
Total
contractual
cash flows
carrying
amounts
£’000
7,698
2,809
10,507
30.06.22
£’000
3,423
(1,110)
90
21
152
2,144
2,576
24. Deferred tax
Deferred tax liability
At 1st July 2021
(Credit)/charge to the
consolidated income
statement
(Credit)/charge to the
consolidated statement of
changes in equity
At 1st July 2022
(Credit)/charge to the
consolidated income
statement
(Credit)/charge to the
consolidated statement of
changes in equity
At 30 June 2023
As at 1 July
Current year provision
Acquired
intangibles
£’000
146
Accelerated
capital
allowances
£’000
38
Short-term
timing
differences
£’000
–
R&D relief
in excess of
amortisation
£’000
2,963
Share-
based
payments
£’000
(1,805)
Tax
Losses
£’000
(135)
Total
£’000
1,207
17
–
163
44
–
82
(82)
218
69
(1)
265
–
(82)
–
3,181
1,283
(453)
–
(136)
1,283
2,755
(30)
(22)
(18)
350
(176)
(65)
39
–
133
–
60
–
–
(100)
3,531
(150)
(779)
–
(150)
(201)
2,644
30.06.23
£’000
2,755
(111)
2,644
30.06.23
£’000
(201)
2,845
2,644
30.06.22
£’000
1,207
1,548
2,755
30.06.22
£’000
(136)
2,891
2,755
The following is the analysis of the deferred tax balances after any offset:
Deferred tax assets
Deferred tax liabilities
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.
26. Contingent liabilities
The Company and Group have no Contingent liabilities as at the year end.
80
81
DOTDIGITAL GROUP PLC ANNUAL REPORT 2022/2023FINANCIAL STATEMENTS Notes to the consolidated financial statements continued
For the year ended 30 June 2023
27. 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
Key management personnel
Aggregate emoluments
Ex-gratia payment
Company contributions to money purchase pension scheme
Share-based payments from the LTIP options granted
30.06.23
£’000
30.06.22
£’000
_
_
_
–
–
–
5
4
9
–
–
–
30.06.23
£’000
1,191
-
22
248
30.06.22
£’000
938
213
25
176
1,461
1,352
The Board of Directors are deemed to be key management personnel. Details of directors’ emoluments are provided in the
Remuneration Committee report on page 41. Ex-gratia payment related to a settlement payment made to a former CFO.
Information in relation to the highest paid Director is as follows:
Salaries
Other benefits
Pension costs
Share-based payments on the LTIP options granted
30.06.23
£’000
698
30.06.22
£’000
529
4
19
224
945
2
18
126
675
The number of directors for whom retirement benefits are accruing under defined contribution pension schemes amounted
to 2 (2022: 2).
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)
30.06.23
£’000
30.06.22
£’000
4,904
4,904
2,151
2,151
The receivables and payables are unrestricted in nature and bear no interest. No provisions are held against receivables from
related parties.
Loans to/from related parties
Dotdigital EMEA Limited
Subsidiary
As at 1 July
Loans advanced
Loans repaid
30.06.23
£’000
30.06.22
£’000
726
5,330
(3,923)
2,133
(1,041)
5,653
(3,886)
(726)
IAS 24 Related Party Disclosure (Revised) allows disclosure exemption of transactions between wholly-owned subsidiaries
that are eliminated on consolidation.
28. 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, Dotdigital Development SA Pty Ltd,
Dotdigital SG Pte. Limited, Dynmark International Ltd, and Dotdigital Poland S.p. z.o.o.
29. 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 £721,070 and £15,003 movement
in the provision of NI (2022: £455,549).
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 2023 had a WAEP of 36.91p (2022: 49.04p) and a weighted average contracted
life of 7.27 years (2022: 5.82 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
30.06.23
30.06.22
No. of options
6,059,337
1,654,722
WAEP
49.04p
2.30p
No. of options
4,292,735
2,463,663
(201,636)
117.51p
–
–
(259,562)
(437,500)
7,512,423
36.91p
6,059,337
–
–
–
WAEP
26.05p
89.85p
137.88p
0.50p
49.04p
–
The weighted average share price at the date of the exercise for share options exercised during the period was n/a (2022:
0.84p). 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
08 December 2022
24 December 2022
EPS
(50%)
Relative
TSR
(50%)
EPS
(50%)
Relative
TSR
(50%)
EPS
(50%)
Relative
TSR
(50%)
EPS
(50%)
Relative
TSR
(50%)
EPS
(50%)
Relative
TSR
(50%)
153,364 153,364 100,729 100,729 193,894 193,894 438,435 438,434 283,157 283,156
Exercise price
0.50p
0.50p
0.50p
0.50p
0.50p
0.50p
152.0p
152.0p
264.0p
264.0p
196.0p
196.0p
93.0p
0.50p
93.0p
0.50p
83.9p
0.50p
83.9p
0.50p
Option life in years
10 years 10 years 10 years 10 years 10 years 10 years 10 years 10 years 10 years 10 years
Risk-free rate
(0.08)% (0.08)%
0.38%
0.38%
0.57%
0.57%
3.10%
3.10%
3.50%
3.50%
Expected volatility
40.40% 40.40% 39.00% 39.00% 43.00% 43.00% 52.60% 52.60% 52.70% 52.70%
Expected dividend yield
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Fair value of options
152.0p
99.0p
264.0p
181.0p
196.0p
115.0p
92.54p
71.0p
83.45p
60.0p
Number of options
granted
Share price at grant
date
82
83
DOTDIGITAL GROUP PLC ANNUAL REPORT 2022/2023FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
For the year ended 30 June 2023
29. Share-based payment transactions continued
Number of options granted
Share price at grant date
Exercise price
Option life in years
Risk-free rate
Expected volatility
Expected dividend yield
Fair value of options
85.95p
0.50p
5 years
1.33%
30.0%
1%
65.3p
19
December
2017
24
October
2018
1,375,000 2,305,000
14
December
2020
535,920
148.0p
147.5p
15
December
2021
567,300
181.0p
181.2p
12
April
2022
14
April
2022
91,127 1,367,547
22
December
2022
35,149
86.4p
0.50p
90.0p
86.5p
77.5p
0.50p
5 years
10 years
10 years
5 years
10 years
1.23%
30.0%
1%
52.7p
(0.01)%
34.3%
0.56%
47.0p
0.54%
35.5%
0.46%
62.0p
1.65%
53.2%
1%
80.5p
1.68%
50.3%
0.96%
42.0p
12
April
2023
85,264
91.8p
0.50p
5 years
3.40%
58.3%
1.07%
83.9p
83.35p
5 years
3.55%
60.7%
1.03%
46.56p
85.25p
Expected volatility was determined by calculating the historical volatility of the Group’s share price over a 3-year/6.5-year period
prior to the date of grant. 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, 24 December 2021, 8 December 2022
and 24 December 2022 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.
30. Group reconciliation of profit before corporation tax to cash generated from operations
Current
Operating profit from all operations
Amortisation
Depreciation
Finance lease non-cash movement
Loss on disposal of fixed assets
Share-based payments
Impairment on investment
Finance expense
(Increase)/decrease in trade receivables
Increase in trade payables
Cash generated from operations
Group
Company
30.06.23
£’000
30.06.22
£’000
30.06.23
£’000
30.06.22
£’000
13,548
6,578
1,035
212
38
721
–
57
22,189
(2,236)
1,975
21,928
13,605
6,123
1,124
152
–
456
–
57
21,517
325
3,320
25,162
4,459
4,163
–
4
–
–
–
36
–
4,499
(1,394)
60
3,165
–
2
–
–
–
235
–
4,400
(1,405)
(350)
2,645
31. Group cash and cash equivalents
The amounts disclosed in the statement of cash flow in respect of cash and cash equivalents are in respect of these statements
of financial position amounts:
As at 1 July 2021
As at 30 June 2022
As at 30 June 2023
Group
£’000
31,951
43,919
52,676
Company
£’000
85
163
396
32. Project development
During the year the Group incurred £8,729,106 (2022: £7,599,073) in development investments. All resources utilised in
development have been capitalised as outlined in the accounting policy governing this area.
33. Events after the end of the reporting period
On 11 September 2023 Dotdigital Group Plc acquired 100% of the voting equity instruments in Fresh Relevance Limited,
a vendor of cross-channel personalisation technology.
The principal reason for the acquisition was to bring complementary personalisation technology and website expertise
to the Group which accelerates Dotdigital’s CXDP roadmap, together with technical expertise. The increased functionality
the acquisition will both increase our total addressable market and help drive net revenue expansion.
The financial effects of this transaction have not been recognised at 30 June 2023. The operating results and assets and
liabilities of the acquired company will be consolidated from 11 September 2023.
As the acquisition was completed a short time before the authorisation date of these financial statements, it was not
practical to disclose an accurate book value of the net assets acquired as at 11 September 2023. The following figures
presented represent Fresh Relevance Limited unaudited management accounts for 31 August 2023:
Intangible assets
Property, plant and equipment
Trade and other receivables
Cash and cash equivalents
Assets
Trade and other payables
Interest bearing loans and borrowings
Liabilities
Total net liabilities
Provisional
31-Aug-23
£’000
208
22
909
1,545
2,684
1,612
1,899
3,511
(827)
At the date of authorisation of these financial statements a through and extensive detailed assessment of the fair value
of the identifiable net assets has not been completed.
Fair value of consideration paid
Dotdigital paid a total consideration of £25.0 million, 100% payable on completion, with circa £18.9 million being satisfied
in cash and circa £6.1 million by the issue of 6,862,683 new ordinary shares in Dotdigital at 88.698p, which are subject
to a 12 month lock-in.
It is expected that post fair value adjustments this will result in recognised goodwill especially after pre acquisition
adjustments such as the repayment of interesting bearing loans. The goodwill represents items, such as the know how
of the workforce, which do not qualify as assets.
84
85
DOTDIGITAL GROUP PLC ANNUAL REPORT 2022/2023FINANCIAL STATEMENTS
Our clients
FINA NCIAL STATEMENTS
Company information
For the year ended 30 June 2023
Directors:
J Conoley (appointed on 7 July 2022)
A Gurney (appointed 19 September 2022)
B Huard
M Patel
E Richards
Company Secretary:
G Kasparian
Registered office:
No. 1 London Bridge
London
SE1 9BG
Registered number:
06289659 (England and Wales)
Auditor:
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 Capital Markets Advisory LLP
1 Bartholomew Lane
London
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Solicitor:
BPE Solicitors LLP
St James House
St James Square
Cheltenham
GL50 3PR
86
D OT DIG ITAL GROUP PLC ANNUAL REPORT 2022/2023
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