Interim Results

RNS Number : 4626D

dotDigital Group plc

03 March 2022

 

3 March 2022 Dotdigital Group plc ("Dotdigital" or the "Group") Interim results for the six months ended 31 December 2021 Dotdigital Group plc (AIM: DOTD), the leading 'SaaS' provider of an omnichannel marketing automation and customer engagement platform, announces its unaudited interim results for the six months ended 31 December 2021 ("H1 2022"). Financial Highlights · Organic revenue up by 10% to £30.9m (H1 2021: £28.2m) driven by growth in sales from both new and existing customers -  Recurring revenue as a percentage of total revenue increased to 94% ( 30 June    2021: 93%) -  Monthly ARPC1 up by 19% to 1,422 per month (H1 2021: 1,196 per month) · Adjusted EBITDA2 grew 17% to £12.2m (H1 2021: £10.5m) and adjusted operating profit3 grew 17% to £8.9m (H1 2021: £7.6m) · R&D continues to underpin Dotdigital's growth strategy, with recurring revenues from enhanced product functionality growing by 22% to £10.8m (H1 2021: £8.9m) · Strong net cash balance as of 31 December 2021 of £40.0m (30 June 2021: £32.0m) Operational Highlights · International revenue increased by 4% to £9.7m (H1 2021: £9.3m), with international sales representing 31% to total revenue (H1 2021: 33%) · Strengthening of strategic partnerships in both ecommerce and CRM, with sales through connectors increasing by 9% to £13.9m (H1 2021: £12.8m) · Significant enhancements, such as single customer view and program analytics and reporting, to the Dotdigital platform, driving new growth opportunities and deepen existing customer relationships Current Trading and Outlook · Unwinding of customer buying behaviour in post-lockdown environment, with reduced growth in demand for SMS, and macro headwinds affecting international activities as previously highlighted. The Board now expects full year revenue growth to be slower than previous expectations during the current and future financial years · The Group is committed to investing in its people and its culture, in an increasingly competitive global labour market, in order to continue to achieve year on year revenue growth Milan Patel, CEO of Dotdigital, commented: "The Group delivered a first half performance of strong growth and profitability driven by new customer wins and expanded use of the platform across the existing customer base. Our consistent strategy continues to support our growth ambition in what is a significant market opportunity. "Although we appear to be moving away from the worst of the pandemic, it triggered a dramatic acceleration in organisations' adoption of digital marketing that is set to endure, and the strength of our platform puts us in an ideal position to benefit from that trend. Whilst we continue to navigate through market challenges, particularly related to hiring, and adjust to a post-lockdown environment, the Board is committed to investing in our teams in line with the growth opportunity available, supported by a strong financial position and recurring SaaS business model." Investor Presentation : https://www.dotdigitalgroup.com/events-presentations/ Live presentation to investors: Management will host a live presentation to investors via the Investor Meet Company platform on 4 March at 4pm UK time. Investors who already follow Dotdigital on the platform will automatically be invited, others are invited to register in advance via the following link: https://www.investormeetcompany.com/dotdigital-group-plc/register-investor . Notes 1.  ARPC means Average Revenue Per Customer (including new customers added in period and existing customers) 2.  EBITDA is earnings before interest, tax, depreciation and amortization and adjusted for acquisition costs and share-based payments 3.  Operating profit is adjusted for acquisition costs and share-based payments For further information please contact: Dotdigital Group plc Milan Patel, CEO   Tel: [phone] [e-mail] Alma PR (Financial PR) Hilary Buchanan David Ison Tel: [phone] [e-mail] Kieran Breheny Canaccord Genuity (Nominated Advisor and Joint Broker) Bobbie Hilliam Georgina McCooke Jonathan Barr, Sales Tel: [phone] finnCap (Joint Broker) Stuart Andrews, Corporate Finance Alice Lane, ECM Rhys Williams, Sales Tel: [phone] Singer Capital Markets (Joint Broker) Shaun Dobson, Head of Corporate Finance Alex Bond, Corporate Finance Tel: [phone] THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO CONSTITUTE INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN. OPERATIONAL REVIEW Introduction For the first half period the Group delivered solid growth in a more normalised trading environment against a strong comparative period in the prior year. The marketing industry's march towards digital continues at pace, and while the mix of channel usage ebbs and flows, our omnichannel offering positions us well to capture the full range of opportunities it presents. The focus in the first half of 2022 has been on cementing our position as one of the leading marketing automation platforms through enhancing the functionality of our Engagement Cloud, deepening our strategic partnerships and hiring exciting talent to build demand across our territories among both new and existing customers. We continue to be trusted by household names to help them engage with and get closer to their audiences. In the period, we signed Warner Bros, Sunderland Football Club, and the British Dental Association as new customers, and the pipeline for the second half remains healthy. We continue to invest in product innovation, geographic expansion and strategic partnerships - the three components of our growth strategy - to grow our share of the market while protecting our strong margins. Demand for our platform is growing globally, underpinned by a robust, pureplay SaaS model, which provides high-quality and highly visible recurring revenues. Current Trading and Outlook Trading in the first half of the year, which delivered 10% growth and strong profitability, reflects a period of more normalised trading following a spike in one-off pandemic related SMS activity in the prior year. This trend has continued with the emergence from lockdown in EMEA accelerating post period end, and while our core offering has made an encouraging start to the second half, we have seen a further softening of transactional based SMS of which we will see the full impact next financial year. In addition, we are seeing a lag in US growth due to the impact of a challenging labour market on our pace of recruitment and retention. In the US we have put in place a new management structure and team to support the region, which will start contributing through the second half of the year. As a result of the above, the Board anticipates revenue for the full year to show growth in the range of 7 - 8%, slightly below current expectations. Whilst our operating margin at the half year is higher than normal levels, we expect this to be in the region of 20 - 22% margin by the end of the year as we accelerate our investment in our teams due to wage inflation and strengthen our international operations. This investment in talent and the actions taken as described above, positions us well for continued revenue growth in the next financial year and beyond. We appear to be moving away from the worst of the pandemic, yet the acceleration in organisations' adoption of digital marketing triggered is set to endure, and the strength of our platform puts us in an ideal position to benefit from that trend. There remain industry-wide pressures to overcome, but they don't detract from the confidence we have in continuing to make significant strides forward with each period that passes. We continue to grow our presence in key territories around the world, developing a product that meets the changing needs of marketeers while strengthening the organisational infrastructure that underpins it. Market The shift from traditional to digital marketing is a long-term trend, dramatically accelerated by the pandemic as organisations quickly grew to rely on digital channels from both a customer retention and acquisition perspective. At the same time, we have seen a marked increase in demand for a more sophisticated approach, as marketeers recognise the step change in ROI possible from developing more targeted and personalised campaigns based on increasingly rich data sets. This is evident in the continued adoption of channels in addition to email, which remains the most widely used means of engagement, and strong growth in functionality recurring revenue seen in the period. As a result of the pandemic and the increased frequency and depth of engagement, organisations have grown their contact bases, and the audiences now expect a personalised end-to-end experience; a trend that will persist long after Covid-related restrictions ease. We have developed Dotdigital's platform to provide marketeers with everything they need to meet these expectations and more, from highly customisable user experiences to the most advanced analytics on the market, ensuring every campaign and touchpoint is memorable and feeds back data to drive continuous ROI enhancements.  We continue to see digital marketing grow as a percentage of overall revenue spend and expect to see organisations in those industries worst affected by the pandemic such as travel continue to increase their budgets as they ramp back up. As the world moves towards a point where there is acceptance of Covid as part and parcel of normal life, organisations will adapt their strategies accordingly, but their reliance on marketing automation will continue to grow apace and the strength of our offering puts us in a strong position to capitalise. Strategy The Group's strategy has organic growth at its core, centred around three strategic pillars: international diversification, expanded market reach through partnership relationships, and continuous product innovation. Geographic expansion Organic international revenue increased by 4% to £9.7m (H1 2021: £9.3m) in the period, with international sales contributing 31% to total revenue (H1 2021: 33%). EMEA EMEA showed solid revenue growth of c.10% in the period to £23.6m (H1 2021: £21.5m). The Group continues to see growing demand in the region for its omnichannel capability, as marketeers increase their focus on relevancy and personalisation to provide the best possible customer experience. As international travel is now opening, our teams have started to meet customers face to face and build further pipeline through the partner and sales teams. People was a major focus in EMEA across the period. We continued to: invest in our customer success team, which is already having a tangible, positive impact on retention; strengthen our partnership team to deepen relationships and drive greater reach into their respective customer bases; and broaden our agency and technology partner ecosystem, helping to build 'top of funnel' lead generation demand. North America Revenues from North America grew organically by c.3% to $6.5m (H1 2021: $6.3m). The recruitment of talent and expanding the employee base is key to improving growth rates within the region. In a challenging labour market with high levels of wage inflation, the Directors continue to focus on strengthening the management team in the region, most recently with the hire of a new VP of Growth and VP of Customer Success. Whilst investment in management bandwidth will take time to flow through to the financial results, this provides us with the right structure to support future growth. With the addition of more customer success specialists to support growth and consultants to help drive increased uptake of our platform from upper-tier mid-market companies and larger enterprises, and plans to further strengthen our senior team, our prospects for the territory remain strong. APAC APAC revenue grew organically by c.27% to AUS$4.4m (H1 2021: AUS$3.5m). The Group's Japan office is now operational and uptake of the platform in Singapore has been encouraging. The Group has continued to develop its presence in Australia despite the challenges posed by lockdowns. As our newest region, the focus in APAC continues to be building our teams on the ground, deepening relationships with strategic partners, and driving brand awareness. The Group continues to navigate various cost pressures, particularly regarding hiring, across all regions but is confident of actions being taken by management to support the Group's geographic expansion strategy in the second half and beyond. Strategic partnerships The Group continues to broaden and deepen its partnership relationships, amplifying the Group's market reach beyond its direct sales channel. A strategic technology partner for the Group is defined as a partner where our customer using that technology integration has the potential to represent or accounts for 10% of Group revenue. This strategic partnership model is complemented by a broader general partner referral network which includes over 200 active global partners. A core focus of the strategic partnership network is forging connectors into both ecommerce and CRM platforms, with the aim of building brand awareness as we push out into international markets. Sales through connectors into our strategic partners increased by 9% to £13.9m (H1 2021: £12.8m). Magento connector revenue grew 6%, Shopify connector revenue grew by 47% and MS Dynamics connector revenue grew by 3% compared to the same period in the previous year. While the Group works through pressures in the US, it continues to build on its work with its strategic partners, both in the ecommerce and CRM platform space, to drive brand awareness across their customer bases through joint go to market plans. In H1, the Group increased its investment in adding new channel managers into its international operations, building on the strong relationships it has with its agency and technology partners that operate within the ecosystem. The pipeline continues to build as we move through the second half, with the Group now also exploring opportunities to expand its strategic partner base and further diversify its revenues into areas such as service clouds, as is evident with the recent Zendesk Sell integration. Product innovation The Group's growth is supported by a focussed R&D investment programme which continues to drive value for both our new and existing customers. Recurring revenue from enhanced product functionality and upgrades increased 22% to £10.8m. The key areas of investment for the Group remain: enhancing our customer data and experience platform capabilities; data visualisations through reporting and analytics; deeper integrations with new and existing technology partners; and our user experience of the platform. During the period we invested £3.4m in R&D, underpinning management's commitment to continuous product innovation. Our focus for product innovation centres around the key areas of: · Data and intelligence - joining all data together to create a single customer view and help our customers better personalise their campaigns and be relevant · Marketing automation - harnessing artificial intelligence (AI) and machine learning across targeted parts of the platform's architecture, informed by our customers' needs and requirements to give efficiencies to time-poor marketeers · Building out further omni-channel functionality to Engagement Cloud to assist businesses through the full customer journey at every touch point they have with their customers During the period we introduced single customer view, giving marketeers and merchants a holistic, real-time view of their customer data and interactions. We also released new program analytics and reporting, empowering marketeers to optimise their customer journeys. New segment analytics provide our customers additional insight into marketing and commerce audiences, and we were the first to market with a toolkit to help customers mitigate the impact of iOS 15 and mail privacy protections. We also, developed new data integrations with Zoom Webinar, Zendesk Sell, Oracle Netsuite and Shopware 6, expanding our addressable market and providing customers with greater functionality. M&A To support the Group's organic growth strategy, the Board continues to evaluate the market for complementary acquisitions, backed by the Group's robust financial position. The Board's acquisition strategy is focused on set criteria, being: synergy technology for new revenue streams; bolt-on functionality to accelerate platform development, new talent acquisition and the expansion of expertise, and extension of the customer base in strategic territories. People Our success to date is solely down to the highly talented team we have built at Dotdigital. We have built a special culture around empowering colleagues to make decisions, recognising that everyone plays an important role in helping us reach our growth ambitions and giving them the freedom to express themselves. The togetherness this creates has again paid dividends in the first half, as we continued to meet challenges head on while driving the business forwards. On behalf of myself and the Board I would like to thank everyone at Dotdigital for their continued hard work and dedication. As announced on 25 February 2022, Chief Financial Officer Paraag Amin has informed the Board of his intention to step down as an Executive Director of the Company, effective as of 31 March 2022. The Company has appointed Spencer Stuart to conduct a formal search process will update shareholders in due course. We thank Paraag for his valuable contribution and wish him well in his future endeavours. To continue to grow and increase our presence around the world, we need to continue to hire and retain exceptional individuals and invest in our talent. We have continued to bolster our product development teams and sales teams while bringing in highly experienced customer success professionals and continue to work hard to attract more senior talent to help us realise our vision. FINANCIAL REVIEW Revenue Revenue during the period grew 10% to £30.9m from £28.2m in H1 2021. This performance was driven primarily by new customer wins and existing customer growth. Recurring revenue represents c.94% of revenues, improving visibility on future revenues. Enhanced functionality revenue (which includes licence fees and bolt-on functionality) grew 22% to £10.8m from £8.9m in H1 2021. International revenue was 31% of total sales in the period, from 33% in H1 2021. Of that, revenues were up 3% in the US to $6.5m (H1 2021: $6.3m), and up 27% in APAC to AUS$4.4m (H1 2021: AUS$3.5m). EMEA revenues grew 10% in the period to £23.6m (H1 2021: £21.5m). During the period ARPC3 increased by 19% to £1422 per month (H1 2021: £1196 per month). EBITDA We achieved an adjusted EBITDA1 margin of 40% and an adjusted operating profit margin of 29% in the first half, which was in line with management expectations. The adjustments include a share-based payment charge of £0.22m and exceptional costs of £0.06m. Balance Sheet & Cash Position Dotdigital continues to generate strong cash flow from its Engagement Cloud operations with an interim period end net cash balance of £40.0m. The Group continues to prioritise product development and during the period spent £3.4m on development (compared to £3.1m in H1 2021). Dividend Policy A dividend of 0.86p per ordinary share (2021: 0.83p) was proposed by the Company at the time of its Final Results in November last year, demonstrating a commitment from the Board to deliver value by focusing on total shareholder return. This dividend was approved by shareholders at the Annual General Meeting on 22 December 2021 and paid on 31 January 2022. The Group will continue to conduct a full dividend review at year end; therefore, in line with previous years the Board is not proposing an interim dividend.

Dotdigital Group Plc
Consolidated Income Statement
For the six months ended 31 December 2021
					Restated*
			6 months		6 months		12 months
			to 31 Dec 2021		to 31 Dec 2020		to 30 June 2021
			Unaudited		Unaudited		Audited
		Note	£'000s		£'000s		£'000s
	Continuing operations
	Revenue from contracts with customers	4	30,911		28,226		58,124
	Cost of sales		(5,541)		(5,067)		(10,356)
	Gross profit	4	25,370		23,159		47,768
	Administrative expenses		(16,470)		(15,583)		(34,089)
	Share based payments		(222)		(344)		(625)
	Exceptional costs**		(60)		(68)		(188)
	Operating profit from continuing operations		8,618		7,164		12,866
	Finance income		16		16		20
	Finance costs		(30)		(41)		(74)
	Profit before income tax from continuing operations		8,604		7,139		12,812
	Income tax expense		(1,825)		(815)		(1,322)
	Profit for the period from continuing operations		6,779		6,324		11,490
	Discontinuing operations
	Loss for the period from discontinued operations		-		(424)		(899)
	Profit for the period attributable to the owners of the Company		6,779		5,900		10,591
	Earnings per share from all operations (pence per share)
	Basic	6	2.27		1.98		3.55
	Diluted	6	2.23		1.95		3.50
	Adjusted basic	6	2.36		2.11		3.82
	Adjusted diluted	6	2.32		2.08		3.76

*    Restated see note 11

**  The  exceptional costs relate to amortisation of technology and in the prior year to amortisation of technology and acquisition costs of Comapi.

Dotdigital Group Plc
Consolidated Statement of Comprehensive Income
For the six months ended 31 December 2021
6 months Restated* 6 months 12 months to 31 Dec 2021 to 31 Dec 2020 to 30 June 2021 Unaudited Unaudited Audited Note £'000s £'000s £'000s
Earnings per share from continuing operations (pence per share)
Basic				6	2.27			2.12			3.85
Diluted				6	2.23			2.09			3.79
Adjusted basic				6	2.36			2.26			4.12
Adjusted diluted				6	2.32			2.22			4.06
Earnings per share from discontinued operations (pence per share)
Basic				6	-			(0.14)			(0.30)
Diluted				6	-			(0.14)			(0.30)
Adjusted basic				6	-			(0.14)			(0.30)
Adjusted diluted				6	-			(0.14)			(0.30)

Dotdigital Group Plc

Consolidated Statement of Comprehensive Income

For the six months ended 31 December 2021

6 months

Restated* 6 months

12 months

to 31 Dec 2021

to 31 Dec 2020

to 30 June 2021

Unaudited

Unaudited

Audited

note

£'000s

£'000s

£'000s

Profit for the period

6,779

5,900

10,591

Other comprehensive income

Items that may be subsequently reclassified to

profit and loss:

Exchange differences on translating foreign operations

29

(79)

(87)

Total comprehensive income attributable to:

Owners of the parent

4

6,808

5,821

10,504

Total comprehensive income for the year

Comprehensive income from continuing operations

6,808

6,245

11,403

Comprehensive income from discontinued operations

-

(424)

(899)

Dotdigital Group Plc Consolidated Statement of Financial Position For the six months ended 31 December 2021
					Restated*
		Note	As at		As at		As at
			31 Dec 2021		31 Dec 2020		30 June 2021
			Unaudited		Unaudited		Audited
			£'000s		£'000s		£'000s
	Assets
	Non-current assets
	Goodwill		9,680		9,680		9,680
	Intangible assets		16,749		14,893		16,134
	Property, plant and equipment		639		722		649
	Right-of-use asset		2,983		3,805		3,323
			30,051		29,100		29,786
	Current assets
	Trade and other receivables		12,838		13,253		13,350
	Cash and cash equivalents		40,035		27,556		31,951
			52,873		40,809		45,301
	Total assets	4	82,924		69,909		75,087
	Equity attributable to the owners of the parent
	Called up share capital	8	1,494		1,493		1,494
	Share premium		7,124		6,967		7,124
	Reverse acquisition reserve		(4,695)		(4,695)		(4,695)
	Other reserves		3,829		2,087		3,066
	Retranslation reserve		(8)		(29)		(37)
	Retained earnings		60,863		50,883		54,081
	Total equity		68,607		56,706		61,033

	Dotdigital Group Plc
	Consolidated Statement of Financial Position
	For the six months ended 31 December 2021
					Restated*
			As at		As at		As at
			31 Dec 2021		31 Dec 2020		30 June 2021
			Unaudited		Unaudited		Audited
			£'000s		£'000s		£'000s
	Liabilities
	Non-current liabilities
	Lease liabilities		2,174		2,885		2,489
	Deferred tax		1,451		1,365		1,207
			3,625		4,250		3,696
	Current liabilities
	Trade and other payables		9,739		7,830		9,334
	Lease liabilities		902		1,031		934
	Current tax payable		51		92		90
			10,692		8,953		10,358
	Total liabilities		14,317		13,203		14,054
	Total equity and liabilities		82,924		69,909		75,087

	Dotdigital Group Plc
	Consolidated Statement of Changes in Equity
	For the six months ended 31 December 2021
			Share			Share					Retained				Other			Reverse			Re-translation			Total
			capital			premium					Earnings				reserves			acquisition			Reserve
																		reserve
			£'000s			£'000s					£'000s				£'000s			£'000s			£'000s			£'000s
	As at 1 July 2020 as previously stated		1,493			6,967					45,514				1,372			(4,695)			50			50,701
	Impact of correction of errors (note 11)		-			-					141				228			-			-			369
	Restated as at 1 July 2020		1,493			6,967					45,655				1,600			(4,695)			50			51,070
	Profit for the period		-			-					5,900				-			-			-			5,900
	Retranslation reserve		-			-					-				-			-			(79)			(79)
	Dividends		-			-					(950)				-			-			-			(950)
	Reserve Transfer		-			-					278				(278)			-			-			-
	Deferred tax on share options		-			-					-				421			-			-			421
	Share based payments		-			-					-				344			-			-			344
	As at 31 December 2020		1,493			6,967					50,883				2,087			(4,695)			(29)			56,706
	As at 1 January 2021		1,493			6,967					50,883				2,087			(4,695)			(29)			56,706
	Profit for the period		-			-					4,691				-			-			-			4,691
	Dividends		-			-					(1,522)				-			-			-			(1,522)
	Retranslation reserve		-			-					-				-			-			(8)			(8)
	Issue of share capital		1			157					-				-			-			-			158
	Reserve Transfer		-			-					29				(29)			-			-			-
	Deferred tax on share options		-			-					-				727			-			-			727
	Share based payments		-			-					-				281			-			-			281
	As at 30 June 2021		1,494			7,124					54,081				3,066			(4,695)			(37)			61,033
	As at 1 July 2021		1,494			7,124					54,081				3,066			(4,695)			(37)			61,033
	Profit for the period		-			-					6,779				-			-			-			6,779
	Dividends		-			-					-				-			-			-			-
	Retranslation reserve		-			-					-				-			-			29			29
	Reserve transfer		-			-					3				(3)			-			-			-
	Deferred tax on share options		-			-					-				544			-			-			544
	Share based payments		-			-					-				222			-			-			222
	As at 31 December 2021		1,494			7,124					60,863				3,829			(4,695)			(8)			68,607

Dotdigital Group Plc Consolidated Statement of Changes in Equity

For the six months ended 31 December 2021

- Share capital is the amount subscribed for shares at nominal value.

- Share premium represents the excess of the amount subscribed for Share Capital over the nominal value net of the share issue expenses.

- Retained earnings represents the cumulative earnings of the Group attributable to equity shareholders.

- The reverse acquisition reserve relates to the adjustment required to account the reverse acquisition in accordance with International Financial Reporting Standards.

- Other reserves relate to the charge for the share-based payments in accordance with International Financial Reporting Standard 2. The reserve transfer in the period relates to lapsed share options.

- Retranslation reserve relates to the retranslation of a foreign subsidiary into the functional currency of the Group.

Dotdigital Group Plc
Consolidated Statement of Cash Flows
For the six months ended 31 December 2021
			6 months		6 months		12 months
			to 31 Dec 2021		to 31 Dec 2020		to 30 June 2021
			Unaudited		Unaudited		Audited
		note	£'000s		£'000s		£'000s
	Cash flow from operating activities	7	13,258		7,944		17,969
	Tax paid		(1,075)		(982)		(975)
	Net cash generated from operating activities		12,183		6,962		16,994
	Net cash used in continuing operating activities		12,183		7,534		20,710
	Net cash used in discontinuing operating activities		-		(572)		(3,716)
	Cash flow from investing activities
	Purchase of intangible fixed assets		(3,439)		(3,147)		(6,870)
	Purchase of property, plant and equipment		(162)		(57)		(169)
	Proceeds from sale of property, plant and equipment		-		-		2
	Interest received		16		16		20
	Net cash used in investing activities		(3,585)		(3,188)		(7,017)
	Net cash used in continuing investing activities		(3,585)		(3,188)		(7,017)
	Net cash used in discontinuing investing activities		-		-		-
	Cash flows from financing activities
	Equity dividends paid		-		(950)		(2,472)
	Payment of leasing liabilities		(543)		(572)		(1,182)
	Proceeds from share issues		-		-		158
	Net cash used in financing activities		(543)		(1,522)		(3,496)
	Net cash used in continuing financing activities		(543)		(1,492)		(3,446)
	Net cash used in discontinuing financing activities		-		(30)		(50)
	Increase in cash and cash equivalents		8,055		2,252		6,481
	Cash and cash equivalents at beginning of period		31,951		25,383		25,383
	Effect of foreign exchange rate changes		29		(79)		87
	Cash and cash equivalents at end of period.		40,035		27,556		31,951

Dotdigital Group Plc

Notes to interim financial statements

For the six months ended 31 December 2021

1. GENERAL INFORMATION

Dotdigital Group Plc is a company incorporated in England and Wales and quoted on the AIM market.

2. BASIS OF INFORMATION

These consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the UK and on a historical basis, using the accounting policies which are consistent with those set out in the Group's annual report and accounts for the year ended 30 June 2021. The interim financial information for the six months to 31 December 2021, which complies with IAS 34 'Interim Financial Reporting' has been approved by the Board of Directors on 3 March 2022.

The unaudited interim financial information for the period ended 31 December 2021 does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. The comparative figures for the year ended 30 June 2021 are extracted from the statutory financial statements which have been filed with the Registrar of Companies and contain an unqualified audit report and did not contain statements under Section 498 to 502 of the Companies Act 2006.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies applied are consistent with those of the annual financial statements for the year ended 30 June 2021, as described in those financial statements.

Dotdigital Group Plc

Notes to interim financial statements For the six months ended 31 December 2021

4. SEGMENTAL REPORTING

The Group's single line of business is the provision of data-driven omnichannel marketing automation. The chief operating decision maker considers the Group's reportable segments to be by geographical location this being EMEA, US and APAC operations and by business activity, this being core Dotdigital and CPaaS as shown below: Geographical revenue and results (from all operations) 6 months to 31 December 2021 EMEA US APAC Operations Operations Operations Total £'000s £'000s £'000s £'000s Income statement Revenue 23,644 4,885 2,382 30,911 Gross profit 18,927 4,367 2,076 25,370 Profit/(Loss) before income tax 8,774 96 (266) 8,604 Total comprehensive income attributable to the owners of the parent 7,046 13 (251) 6,808 Financial position Total assets 75,743 4,670 2,511 82,924 Net current assets 36,957 3,727 1,497 42,181 Restated 6 months to 31 December 2020 EMEA US APAC Operations Operations Operations Total £'000s £'000s £'000s £'000s Income statement Revenue 22,973 4,842 1,933 29,748 Gross profit (restated see note 11) 17,251 4,354 1,775 23,380 Profit before income tax 6,386 425 (96) 6,715 Total comprehensive income attributable to the owners of the parent (restated see note 11) 5,576 362 (117) 5,821 Financial position Total assets 63,279 4,629 2,001 69,909 Net current assets (restated see note 11) 26,757 3,623 1,476 31,856

Dotdigital Group Plc

Notes to interim financial statements For the six months ended 31 December 2021

4. SEGMENTAL REPORTING (CONTINUED…)

	12 months to 30 June 2021
	EMEA		US		APAC
	Operations		Operations		Operations		Total
	£'000s		£'000s		£'000s		£'000s
Income statement
Revenue	47,024		9,264		4,262		60,550
Gross profit	36,878		8,241		3,864		48,983
Profit/(Loss) before income tax	11,699		609		(294)		12,014
Total comprehensive income
attributable to the owners of the parent	10,436		379		(311)		10,504
Financial position
Total assets	71,566		3,098		423		75,087
Net current assets/(liabilities)	33,942		1,387		(386)		34,943

Business activity revenue and results from all operations

	6 months to 31 December 2021
	Core		CPaaS		Total
	£'000s		£'000s		£'000s
Income statement
Revenue	30,911		-		30,911
Gross profit	25,370		-		25,370
Profit/(Loss) before income tax	8,604		-		8,604
Total comprehensive income attributable to the owners of the parent	6,808		-		6,808
Financial position
Total assets	82,882		42		82,924
Net current assets/(liabilities)	42,213		(32)		42,181

Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021

4. SEGMENTAL REPORTING (CONTINUED…)

	Restated 6 months to 31 December 2020
	Core		CPaaS		Total
	£'000s		£'000s		£'000s
Income statement
Revenue	28,226		1,522		29,748
Gross profit (restated see note 11)	23,159		221		23,380
Profit/(Loss) before income tax	7,139		(424)		6,715
Total comprehensive income attributable to the owners of the parent (restated see note 11)	6,245		(424)		5,821
Financial position
Total assets	67,069		2,840		69,909
Net current assets (restated see note 11)	31,088		768		31,856

	12 months to 30 June 2021
	Core		CPaaS		Total
	£'000s		£'000s		£'000s
Income statement
Revenue	58,124		2,426		60,550
Gross profit	47,768		1,215		48,983
Profit/(Loss) before income tax	12,812		(798)		12,014
Total comprehensive income attributable to the owners of the parent	11,403		(899)		10,504
Financial position
Total assets	74,976		111		75,087
Net current assets	34,974		(31)		34,943

5. DIVIDENDS

The proposed final dividend of £2,563,819 for the year ended 30 June 2021 of 0.86p per share was paid on the 31 January 2022.

Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021

6. EARNINGS PER SHARE

Earnings per share data is based on the consolidated profit using the weighted average number of shares in issue of the parent Company. Basic earnings per share are calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential ordinary shares. Adjusted earnings per share is based on the consolidated profit deducting the acquisition related exceptional costs and share-based payment.

A number of non-IFRS adjusted profit measures are used in the annual report and financial statements and in these interim 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:	6 months to 31 December 2021				6 months to 31 December 2020				12 months to 30 June 2021
From all operations	£'000s				£'000s				£'000s
Profit for the year attributable to the owners of the parent	6,779				5,900				10,591
Amortisation of acquisition-related intangible fixed asset	60				60				120
Other exceptional costs	-				8				68
Share-based payment	222				344				625
Adjusted profit for the year attributable to the owners of the parent	7,061				6,312				11,404
Adjusted profit for the year attributable to the owners of the parent from:
Continuing operations:		7,061				6,736				12,303
Discontinuing operations:		-				(424)				(899)
		7,061				6,312				11,404

Management does not consider the above adjustments to reflect the underlying business performance.

Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021
		6. EARNINGS PER SHARE (CONTINUED…)
				6 months		6 months					12 months
				to 31 Dec 2021		to 31 Dec 2020					to 30 June 2021
				Unaudited		Unaudited					Audited
		All operations
		Earnings per Ordinary share:
		Basic (pence)		2.27		1.98					3.55
		Diluted (pence)		2.23		1.95					3.50
		Adjusted basic (pence)		2.36		2.11					3.82
		Adjusted diluted (pence)		2.32		2.08					3.76
		Continuing operations
		Earnings per Ordinary share:
		Basic (pence)		2.27		2.12					3.85
		Diluted (pence)		2.23		2.09					3.79
		Adjusted basic (pence)		2.36		2.26					4.12
		Adjusted diluted (pence)		2.32		2.22					4.06
		Discontinued operations
		Earnings per Ordinary share:
		Basic (pence)		-		(0.14)					(0.30)
		Diluted (pence)		-		(0.14)					(0.30)
		Adjusted basic (pence)		-		(0.14)					(0.30)
		Adjusted diluted (pence)		-		(0.14)					(0.30)
		Dotdigital Group Plc
		Notes to interim financial statements
		For the six months ended 31 December 2021
		6. EARNINGS PER SHARE (CONTINUED…)
				6 months		6 months					12 months
				to 31 Dec 2021		to 31 Dec 2020					to 30 June 2021
				Unaudited		Unaudited					Audited
				£'000s		£'000s					£'000s
		Profit for the period from all
		operations for the purpose of earnings
		per share: Basic Adjusted		6,779 7,061		5,900 6,312					10,591 11,404
		Profit for the period from continuing
		operations for the purpose of earnings
		per share: Basic Adjusted		6,779 7,061		6,324 6,736					11,490 12,303
		Profit for the period from discontinued
		operations for the purpose of earnings
		per share: Basic Adjusted		- -		(424) (424)					(899) (899)
		Weighted average number of shares in issue as follows:
				6 months				6 months			12 months
				to 31 Dec 2021				to 31 Dec 2020			to 30 June 2021
				Unaudited				Unaudited			Audited
		Weighted average number
		Basic		298,778,630				298,547,645			298,598,459
		Diluted		304,006,513				303,231,752			302,921,327

	The adjusted profit for the period, adjusted basic earnings per ordinary share and adjusted diluted earnings per ordinary share exclude exceptional costs relating to share based payments £221,767 (2020: £343,920, 2021: £624,881), ongoing acquisition costs of Comapi £nil (2020: £7,857, 2021: £68,095) and amortisation of acquired intangibles £60,000 (2020: £60,000, 2021: £120,000). Dotdigital Group Plc
	Notes to interim financial statements
	For the six months ended 31 December 2021
	7. RECONCILIATION OF PROFIT BEFORE CORPORATION TAX TO NET CASH GENERATED FROM OPERATIONS
			6 months		6 months		12 months
			to 31 Dec  2021		to 31 Dec 2020		to 30 June 2021
			Unaudited		Unaudited		Audited
			£'000s		£'000s		£'000s
	Profit before income tax from all operations		8,604		6,715		12,014
	Adjustments for:
	Depreciation		565		651		1,267
	Amortisation		2,824		2,314		4,795
	Exceptional costs		-		8		68
	Gain on disposal of fixed assets		-		-		(2)
	Share-based payments		222		344		625
	Finance lease non-cash movement		96		140		(48)
	Finance expense		30		41		75
	Decrease/ (increase) in trade and other receivables		512		(266)		(363)
	Increase/(decrease) in trade and other payables		405		(2,003)		(462)
	Net cash from operations		13,258		7,944		17,969
	8. CALLED UP SHARE CAPITAL
	During the period no shares were issued.

Dotdigital Group Plc

Notes to interim financial statements

For the six months ended 31 December 2021

9. RELATED PARTY NOTE

Transactions between the company and its subsidiaries, who are related parties, have been eliminated on

consolidation and are not disclosed in this note.

Key management remuneration:

Key management include Directors and non-executive Directors

The remuneration paid for key management for employee services are as follows:

12 months

6 months to 31 Dec 2021

6 months to 31 Dec 2020

to 30 June 2021

Unaudited

Unaudited

Audited

£'000s

£'000s

£'000s

Aggregate emoluments

312

285

1,136

Share-based payments on the LTIP options granted

133

220

347

Company contributions to money purchase pension scheme

13

13

26

458

518

1,509

The end-to-end awards granted to Milan Patel and to Paraag Amin can only be exercised at the end of a 3-year vesting period, based on challenging absolute total shareholder return performance targets. Under IFRS 2 Share-based payments, the Group must provide an estimate for the costs based on a Black Scholes model valuation each year, as if they fully paid out at the end of the performance period in December 2020 to Milan Patel and October 2021 for Paraag Amin. To fully vest, the Group must achieve an annual compounded TSR of 35% over a c.3 year period. In the period, part of the end-to-end share options awarded to Milan vested and the remainder lapsed. A new grant was made by the remuneration committee under the long-term incentive program with performance measures that are based on the company's total shareholder return and earnings per share in 2024.

Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021

9.RELATED PARTY NOTE (CONTINUED...)

					6 months			6 months			12 months
					to 31 Dec 2021			to 31 Dec 2020			to 30 June 2021
					Unaudited			Unaudited			Audited
					£'000s			£'000s			£'000s
	The following transactions were carried out with related parties
	Sale of services
	Entities controlled by non - executive director of the Group:
	Ipswich Town Football Club				5			-			4
	Epwin Group Plc - Email marketing services				3			3			6
	Cadence Performance Ltd - Email marketing services				-			1			-
					8			4			10
	Year end balances arising from the sale of services
	Entities controlled by non-executive directors of the Group:
	Ipswich Town Football Club				-			-			1
	Epwin Group Plc - Email marketing services				-			1			1
					-			1			2
10. SUBSEQUENT EVENTS TO 31 DECEMBER 2021
As at the date of these statements and the date they were approved by the Board of Directors there were no such events to report.
Copies of this interim statement are available form the Company at its registered office at, No 1 London Bridge London, SE1 9BG. The interim financial information document will also be available on the Company's website www.dotdigitalgroup.com.

 

Dotdigital Group Plc Notes to interim financial statements For the six months ended 31 December 2021 11. PRIOR YEAR RESTATEMENT NOTE

During the year ended 30 June 2021, the Group made the decision to modify the classification of direct marketing from cost of sales to administrative expenses and tech infrastructure from under administrative expenses to cost of sales, to reflect more appropriately gross profit and gross profit margin plus also administrative expenses under continuing operations. Comparative amounts in the 6 months ended 31 December 2020 in the Consolidated Income Statement have been reclassified for consistency. As a result, £66,111 was reclassified from administrative expenses to cost of sales. There has been no impact on the profit for the 6 months ended 31 December 2020 however gross profit has decreased from £23,225,000 to £23,159,000 and administrative expenses decreased from £15,649,000 to £15,583,000.

During the year ended 30 June 2021, the Group discovered that the share-based payment arrangement had been erroneously recognised in Dotdigital Group PLC instead of being recognised in the subsidiaries in which the employees are employed. Under IFRS 2 Share-based payments, when a parent grants rights to it's equity instruments to employees of its subsidiaries this arrangement should be accounted for as equity-settled in the consolidated financial statements but results in an investment being created in the parent's own statement of financial position. Therefore, the subsidiaries should in their own separate financial statements, measure the services received from its employees in accordance with the requirements of IFRS 2 applicable to equity-settled share-based payment transactions. Thereby resulting in a corresponding increase recognised in equity as a capital contribution from the parent. There was no impact on the Group profit for the 6 months ended 31 December 2020.

At the year end, the Group discovered on the calculation of deferred tax on the share options and the internally generated development costs that this had been misallocated and miscalculated respectively. On the misallocation of the deferred tax on the share option under IFRS 2 Share based payment, where the final deferred tax calculation exceeds the cumulative amount recognised as a share-based expense in the Income statement, the maximum amount of deferred tax income that can be recognised in the Income Statement can only equal the total share-based payment expense. Any excess deferred tax is recognised directly in reserves.

As for the miscalculation of deferred tax on the internally generated development costs this is with respect to the identification and calculation of the net book value for internally generated development costs qualifying for research and development, thereby impacting the deferred tax liability.

 Both adjustments have impacted the prior year's profit for the 6 months ended 31 December 2020 where this has decreased from £6,656,000 to £6,324,000. Net assets as per the consolidated of financial position have increased from £56,248,000 to £56,706,000.

 

Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021

11. PRIOR YEAR RESTATEMENT NOTE continued

Consolidated Income Statement for the 6 months ended 31 December 2020

		As previously reported		Adjustments		As restated
		£'000s		£'000s		£'000s
Continuing operations
Revenue from contracts with customers		28,226		-		28,226
Cost of sales		(5,001)		(66)		(5,067)
Gross profit		23,225		(66)		23,159
Administrative expenses		(15,649)		66		(15,583)
Share based payments		(344)		-		(344)
Exceptional costs		(68)		-		(68)
Operating profit from continuing operations		7,164		-		7,164
Finance income		16		-		16
Finance costs		(41)		-		(41)
Profit before income tax from continuing operations		7,139		-		7,139
Income tax expense		(483)		(332)		(815)
Profit for the period from continuing operations		6,656		(332)		6,324
Discontinuing operations
Loss for the year from discontinued operations		(424)		-		(424)
Profit for the period attributable to the owners of the Company		6,232		(332)		5,900

 

Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021

11. PRIOR YEAR RESTATEMENT NOTE continued

Consolidated Statement of Comprehensive Income for the 6 months ended 31 December 2020

	As previously reported		Adjustments		As restated
	Unaudited		Unaudited		Unaudited
	£'000s		£'000s		£'000s
Profit for the period	6,232		(332)		5,900
Other comprehensive income
Items that may be subsequently reclassified to
profit and loss:
Exchange differences on translating foreign operations	(79)		-		(79)
Total comprehensive income attributable to:
Owners of the parent	6,153		(332)		5,821
Total comprehensive income for the year
	6,577		(332)		6,245
Comprehensive income from continuing operations
Comprehensive income from discontinued operations	(424)		-		(424)

Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021

11. PRIOR YEAR RESTATEMENT NOTE continued

Consolidated Statement of Financial Position as at 31 December 2020

		As previously reported				Adjustments				As restated
		£'000s				£'000s				£'000s
Assets
Non-current assets Goodwill		9,680				-				9,680
Intangible assets		14,893				-				14,893
Property, plant and equipment		4,527				-				4,527
		29,100				-				29,100
Current assets
Trade and other receivables		13,253				-				13,253
Cash and cash equivalents		27,556				-				27,556
		40,809				-				40,809
Total assets		69,909				-				69,909
Equity attributable to the owners of the parent
Called up share capital		1,493				-				1,493
Share premium		6,967				-				6,967
Reverse acquisition reserve		(4,695)				-				(4,695)
Other reserves		1,438				649				2,087
Retranslation reserve		(29)				-				(29)
Retained earnings		51,074				(191)				50,883
Total equity		56,248				458				56,706

Dotdigital Group Plc
Notes to interim financial statements
For the six months ended 31 December 2021

11. PRIOR YEAR RESTATEMENT NOTE continued

Consolidated Statement of Financial Position as at 31 December 2020

		As previously reported		Adjustments		As restated
		£'000s		£'000s		£'000s
Liabilities
Non-current liabilities Lease liabilities		2,885		-		2,885
Deferred tax		1,904		(539)		1,365
		4,789		(539)		4,250
Current liabilities
Trade and other payables		7,830		-		7,830
Lease liabilities		1,031		-		1,031
Current tax payable		11		81		92
		8,872		81		8,953
Total liabilities		13,661		(458)		13,203
Total equity and liabilities		69,909		-		69,909

 

END

 

 

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