Company Announcements

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.

 

25 February 2020

 

dotdigital Group plc

("dotdigital", "the Company" or "the Group")

Interim Results for the six months ended 31 December 2019

dotdigital Group plc (AIM: DOTD), the leading 'SaaS' provider of an omnichannel marketing automation and customer engagement platform, announces its Half Year results for the six months ended 31 December 2019 ("H1 2020").

 

Financial Highlights:

·     Revenue from Continuing Operations grew 15% to £23.1m (H1 2019: £20.1m)

o  Functionality revenue (which includes licence fees and bolt-on functionality) from additional services grew 32% to £7.4m (H1 2019: £5.7m)

o  c90% of revenue from Continuing Operations is recurring

·     Adjusted EBITDA¹ from Continuing Operations grew 39% to £9.3m (H1 2019: £6.7m)

o  Adjusted EBITDA margin from Continuing Operations grew to 40% in the period

·     Cash balance at period end of £22.6m (H1 2019: £16.7m)

·     Restructure of the Comapi business now complete and Discontinued Operations (comprising the legacy, non-core SMS division) were breakeven through the period

 

Operational Highlights:

·     Another half year of continued strong delivery against strategic pillars: geographic expansion, partnership development and product innovation

 

Geographic expansion

·     Organic international revenue up by 33% to £7.9m (H1 2019: £6.0m), with international sales now representing 34% of total sales (excluding Discontinued Operations² (H1 2019: 30%))

·     EMEA region continued double digit growth at 11% to £17.7m (H1 2019: £15.9m)

·     North America revenue grew organically 18% to $5.1m (H1 2019: $4.3m) driven by acquisition of higher value customers and growth of existing customers

o  Continued investment in region with appointment of regional General Manager post period end to capitalise on the market opportunity

·     APAC sales, channel team expansion and Asia presence drove revenue from the region, which grew organically 51% to AUS$2.5m (H1 2019: AUS$1.6m) following investment in the region in the prior year

 

 Strategic partnerships

·     Growing pipeline and enhanced value proposition for connectors into both ecommerce platforms and CRM (Customer Relationship Management) software

·     Sales through connectors into strategic partners increased 4% to £10.7m (H1 2019: £10.3m), impacted by ramp up times of new staff. Magento (an Adobe company) connector revenues grew 16% in the reported period.

·     We added to our Magento integration with Engagement Cloud live chat now bundled into their core code base

·     Continued investment in new hires in all regions with increased focus on building strategic partnerships

 

Product innovation

·     Investment in product R&D totalled £2.9m during the period (H1 2019: £2.6m) underpinning management's commitment to continuous innovation

·     Enhanced AI capabilities in period including launch of sector-tailored product package for commerce customers and enhanced product recommendations capabilities

·     Improved end user experience interface, driving better return on investments for our customers

·     Further channel functionality added to Engagement Cloud, including a new chat solution and additional SMS capabilities

 

Milan Patel, CEO of dotdigital, commented: "We are delighted to report a strong first half year performance, and we are proud of the achievements we have made against the growth strategy. The Group has once again delivered double-digit organic growth and positive progress against all strategic objectives, demonstrating the momentum we are experiencing with the growing global adoption of our software and services offering.

 

"The 'martech' industry is fast-paced and growing, and all of us at dotdigital are excited by the opportunities ahead. We enter the second half of the year in a strong position operationally and with healthy trading, giving the Board confidence in a successful outcome for the year and sustained future growth."

 

Investor Presentation: Please click here to access the latest investor deck.

Investor Video: A highlights video is available on our website.

 

For further information please contact:

 

dotdigital Group Plc Milan Patel, CEO Paraag Amin, CFO	Tel: 020 3953 3072 InvestorRelations@dotdigital.com
Alma PR (Financial PR) Hilary Buchanan Josh Royston David Ison	Tel: 020 3405 0210 dotdigital@almapr.co.uk
Canaccord Genuity (Nominated Advisor and Joint Broker) Bobbie Hilliam Georgina McCooke Jonathan Barr, Sales	Tel: 020 7523 8000
finnCap (Joint Broker) Stuart Andrews, Corporate Finance Rhys Williams, Sales	Tel: 020 7496 3000
N+1 Singer (Joint Broker) Shaun Dobson, Head of Corporate Finance Alex Bond, Corporate Finance	Tel: 020 7220 0500

 

About dotdigital

 

dotdigital Group plc's (AIM: DOTD) SaaS omnichannel marketing automation platform, Engagement Cloud, makes it easy for brands to carry out sophisticated, customer data-driven digital marketing campaigns across channels including email, SMS, social, ads, mobile, web and offline.

 

The platform is currently used by more than 65,000 marketers across more than 110 countries in eight languages, with over 19 billion messages sent in 2019.

 

Founded in 1999, dotdigital is headquartered in London with offices in Amsterdam, Croydon, Manchester, Cheltenham, New York, Los Angeles, Melbourne, Sydney, Singapore, Cape Town, Minsk and Warsaw.

 

 

Operational Review

Introduction

This has been a period of strong trading and operational progress for the Group, delivering double digit organic growth and positive momentum against all pillars of our growth strategy. A significant amount of work has gone into strengthening the foundations of the business over a number of years and we are seeing the benefits of this reflected in the widening adoption globally of our omnichannel marketing technology platform, Engagement Cloud.

 

The Group delivered organic revenue growth from Continuing Operations of 15% to £23.1m (H1 2019: £20.1m) and adjusted EBITDA growth of 39% to £9.3m. Our recurring revenues derived from enhanced product functionality grew by 32% to £7.4m (H1 2019: £5.7m), an important indicator of the value created by our focussed R&D programme. The Group is cash generative and maintains a strong balance sheet with no debt and net cash balances of £22.6m at period end (H1 2019: £16.7m).

 

Following the acquisition of Comapi in November 2017, its omnichannel technology has been fully integrated into the Group's Engagement Cloud platform, significantly enhancing its functionality and value proposition. The restructure of the Comapi business is now complete and the Discontinued Operations (comprising the legacy, non-core SMS division) were breakeven through the period. The Board has clarity over the continued wind down of this division and expects to conclude its reporting on Discontinued Operations by financial year end June 2021. 

 

We continue to invest in our international markets, product innovation and strengthening our partner relationships in line with the substantial market opportunity, whilst maintaining strong margin. Our 'software-as-a-service' (SaaS) model provides a high-quality and highly visible revenue stream with repeatable characteristics that underpins our future growth plans.

 

Market

Technology advancements have fundamentally changed how people expect to interact with brands, and these businesses must adapt their marketing efforts accordingly in order to stay ahead of the competition. With this comes increased complexity for businesses across all industries striving to attract and retain consumers through effective and efficient digital engagement across all customer touch points. As a result, there is a real and global requirement for enterprise and mid-market technologies that can enable meaningful marketing campaigns in the new digital age. According to Forrester, global marketing automation spend is predicted to grow to US$25.1bn by 2027 from US$3.8bn today. 

 

dotdigital's specialised focus is in facilitating data-driven, timely and flexible marketing communication through the provision of technology and services, ultimately driving better consumer acquisition, retention and brand loyalty. We seek to empower marketers (our customers) to reach their customers in ways that engage them on their own terms, in a personalised and relevant manner, and through the channel of the consumer's choice.

 

The competitive landscape is characterised by a range of diverse providers from small business vendors to large cloud enterprise software providers. Our platform's ease of use, technical expertise service layer and available graduation pathway to more sophisticated tools make the platform applicable to small businesses, whilst the breadth of functionality, platform extensibility and speed of deployment make it equally in demand by large enterprises. Given the breadth of opportunities our primary area of focus is in the mid-market, however we do play across all tiers which is reflected in our customer base. Engagement Cloud is unique in that it can integrate into any of our customers' data sources (CRM and ecommerce platforms), is available in 8 languages, on a 'per user' basis within an organisation and is sector agnostic. The value placed on our products and services by our customers is evidenced by our high renewal rates, and the relationships we have with a range of industry-leading ecommerce and CRM providers indicate the level of trust and endorsement that the wider marketing technology industry has in our solution.

 

Strategy

The Group's clear growth strategy places organic growth at its core, centred around three strategic pillars: international diversification; expanded market reach through partnership relationships; and continuous product innovation. In addition to the organic growth strategy, we continue to assess the market for strategic acquisitions, based around three criteria: 1) complementary synergy technologies; 2) product functionality that accelerates go-to-market; and 3) customer base or talent acquisition that helps strengthen our foundations.

 

Geographic Expansion

As we invest in international markets, our Engagement Cloud platform continues to be well received globally. Organic international revenue was up by 33% to £7.9m (H1 2019: £6.0m), with international sales now representing 34% of total sales (excluding Discontinued Operations) (H1 2019: 30%), in line with our strategy to grow our global operations. We will continue to build on our global footprint, currently spanning 14 offices worldwide, and we believe we are well placed to benefit from these investments.

 

EMEA

Our EMEA business grew 11% in the period to £17.7m (H1 2019: 15.9m), driven by sustained execution of our strategy and the implementation of efficiency measures in previous periods now bearing fruit. The move to a general manager structure across all business units has created more management bandwidth, and the opening of our Netherlands office and investment in people in region has resulted in strong product up-take and servicing of our existing clients.

 

With the dust now settled on the implementation of GDPR, the use of data has become paramount to our customers' marketing strategies, with a greater focus on relevancy. We have built into our platform functionality around these requirements to put more control in the hands of end users. As a result, we have seen email and messaging volumes return to normalised levels, over 30% growth compared to the corresponding month in the prior year.

 

North America

Revenues in North America grew 18% to US$5.1m (H1 2019: $4.3m), driven by both the acquisition of higher value customers and increased revenue per existing customer. We have further invested in the region as we expand our presence, including the appointment of Mike Weiss, General Manager of North America, post period end. Mike joins us from Magento where he held the position of SVP of North America of Magento sales. The investment we have made in marketing and people has helped develop further brand awareness and strengthened the foundations from which to scale. We are encouraged by our progress in this region which represents a significant growth opportunity for the Group.

 

APAC

Sales in the APAC region grew 51% to AUS$2.5m, (H1 2019: AUS$1.6m). Our expanded presence in the region, including customer support personnel and the opening of our Singapore office, combined with strengthening relationships with strategic partners and System Integrators (SI), drove brand awareness. Albeit early, customer successes we have had in the region have resulted in growing market confidence in our offering and we are seeing increased referrals through our partner network as a result.

 

Partnerships

The Group continues to broaden and deepen its partnership relationships, amplifying the Group's market reach beyond its direct sales channel. Sales originating through strategic partner referrals increased 4% to £10.7m (H1 2019: £10.3m). This was impacted by the ramp up times of new channel partner staff within the Group, where typical ramp up is 3-6 months.

 

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 232 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.

 

Our strategic partnership with Magento (an Adobe company) continues to strengthen, with our Engagement Cloud live chat product recently bundled into the core code base of the latest version of their ecommerce platform and therefore made available as the default option. Our move into omnichannel through the Comapi acquisition has enabled this increased integration. Revenues via our Magento connector increased 16% in the period. Furthermore, post period end we were awarded Adobe Premier Partner status, a prestigious endorsement of our market proposition.

 

Our connector into our strategic partnership with Shopify was impacted as a result of increased competitive pressure at the small business end of the market. Based on our learnings, we introduced a rolling 30-day contracted model in January to have a comparative pricing structure for this segment.

 

Our focus in the period ahead continues towards strengthening and building both ecommerce and CRM partners and we will increase investment in our relationships both from a people and R&D perspective to enhance our value proposition, in line with our planning at the start of the year.

 

Product Innovation

Product innovation is integral to the business and we remain committed to ensuring our platform is at the forefront of the market. The benefit of previous years' investments is demonstrated in the monetisation of new enhanced features, which in the period saw functionality revenues grow by 32% to £7.4m (H1 2019: £5.7m), adding to the recurring revenue base of the Continuing Operations, (now c.90% of revenue). This demonstrates the value that can be derived not only through our messaging function, but through the creation of new revenue streams through enhanced functionality and data. 

 

During the period we invested £2.9m in R&D underpinning management's commitment to continuous product innovation. The focus for product innovation is in the key areas of:

-      Data and intelligence - joining all data together to create a single customer view and help our customers target their campaigns better from a personalisation perspective.

 

-      Marketing automation - harnessing artificial intelligence and machine learning across targeted parts of the platform's architecture, informed by our customers' needs and requirements.

 

-      Building out further omni-channel functionality to Engagement Cloud to assist businesses through the full customer journey at every touch point. This included the launch of a new chat solution and additional SMS capabilities.

 

During the period we launched our Commerce Intelligence product offering, a packaged suite of solutions targeted to the specific needs of our commerce customers and made further enhancements to our AI powered product recommendations capabilities.

 

We also released an improved end user experience interface with new online landing pages and forms feature, including easy access to our product recommendations and consent management capabilities, driving better return on investments for our customers.

 

People

Our people are at the heart of the business. Our customers value our business not only because of our great technology but because of the expertise of our people who bring the technology to life, providing the right ingredients that make our customers more successful. The culture at dotdigital is centred around empowering all employees to make decisions which lends to our agile structure and sets us apart. We trust and value all of our employees and thank them for their tireless effort and passion in progressing the Group's vision.

 

 

FINANCIAL REVIEW
 

Revenue

Revenue from Continuing Operations during the period grew 15% to £23.1m from £20.1m in H1 2019, in line with management expectations. This performance was driven primarily by new customer wins and existing customer growth.

 

Recurring revenue represents c.90% of Continuing Operations revenues, improving visibility on future revenues. Enhanced functionality revenue (which includes licence fees and bolt-on functionality), grew 32% to £7.4m from £5.7m in H1 2019.

 

The geographic split of revenues continued to diversify, with international sales now representing 34% of total sales (excluding Discontinued Operations) in the period, up from 30% in H1 2019. Of that, revenues were up 18% in the US to $5.1m (H1 2019: $4.3m), and up 51% in APAC to AUS$2.5m (H1 2019: AUS$1.6m). EMEA revenues grew 11% in the period to £17.7m (H1 2019: £15.9m).

 

During the period ARPU³ increased by 14% to £999 per month (H1 2019: £876 per month).

 

EBITDA

We achieved an Adjusted EBITDA margin from Continuing Operations of 40%, with Adjusted EBITDA from Continuing Operations growing 39% to £9.3m from £6.7m in H1 2019, which was in line with management expectations. The adjustments include a share-based payment charge of £0.34m and exceptional costs of £0.07m.

 

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 £22.6m.

 

The Group continues to prioritise product development and during the period spent £2.9m on development (compared to £2.6m in H1 2019). The Group continues to maintain a strong balance sheet with net assets of £47.5m and zero debt.

 

Dividend Policy

A dividend of 0.67p per ordinary share (2019: 0.64p) was proposed by the Company at the time of its Final Results in October 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 17 December 2019 and paid on 31 January 2020.

 

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.

 

Outlook

The results and strategic progress achieved in the first half demonstrate the strength of the business foundations that have been established. We are a truly global business with a sophisticated platform that creates customer journeys at every touch point.

 

Expenditure on 'martech' has seen year-on-year growth of 22%, with a combined value of $65.9bn for the UK and North America alone in 2019⁴. With the trend expected to continue, we believe we have the right platform in place from which to scale and a clear strategy that is focused on generating results. The Board is confident in a successful outcome for the year in line with market expectations and sustained future growth.

 

¹ Consensus adjusted EBITDA for continuing operations as at 21 January 2020, for the year ending 30 June 2020, is approx. £17.0 million. EBITDA means earnings before interest, tax, depreciation, amortisation, and before restructuring, other non-recurring costs and certain non-cash items.

 

 ² Following the acquisition Comapi in Nov 2017 and integration of its omnichannel technology platform into the dotdigital Engagement Cloud, the Group discontinued the legacy, non-core SMS division in May 2019

 

 ³ ARPU means average revenue per user/customer

 

⁴ "Martech: 2020 and Beyond" WARC in collaboration with BDO and University of Bristol, October 2019

 

Consolidated Income Statement
For the six months ended 31 December 2019
					Restated
			6 months		6 months		12 months
			to 31 Dec 2019		to 31 Dec 2018		to 30 June 2019
			Unaudited		Unaudited		Audited
		Note	£'000s		£'000s		£'000s
	Continuing operations
	Revenue	4	23,072		20,146		42,522
	Cost of sales		(2,461)		(2,350)		(4,377)
	Gross profit	4	20,611		17,796		38,145
	Administrative expenses		(13,642)		(12,553)		(26,380)
	Share based payments		(341)		(450)		(565)
	Exceptional costs		(67)		(111)		(179)
	Operating profit from continuing operations		6,561		4,682		11,021
	Finance income		16		10		19
	Finance costs		(48)		-		-
	Profit before income tax from continuing operations		6,529		4,692		11,040
	Income tax expense		(842)		(670)		(58)
	Profit for the period from continuing operations		5,687		4,022		10,982
	Discontinuing operations
	(Loss)/Profit for the year from discontinued operations		(175)		258		(2,457)
	Profit for the period attributable to the owners of the Company		5,512		4,280		8,525
	Earnings per share from all operations (pence per share)
	Basic	6	1.84		1.44		2.86
	Diluted	6	1.84		1.42		2.82
	Adjusted basic	6	2.00		1.65		3.36
	Adjusted diluted	6	1.99		1.63		3.31
	Consolidated Statement of Comprehensive Income
	For the six months ended 31 December 2019
					Restated
			6 months to 31 Dec 2019		6 months to 31 Dec 2018		12 months to 30 June 2019
			Unaudited		Unaudited		Audited
		Note	£'000s		£'000s		£'000s
	Earnings per share from continuing operations (pence per share)
	Basic	6	1.90		1.35		3.68
	Diluted	6	1.89		1.33		3.63
	Adjusted basic	6	2.03		1.54		3.93
	Adjusted diluted	6	2.03		1.52		3.88
	Earnings per share from discontinued operations (pence per share)
	Basic	6	(0.06)		0.09		(0.82)
	Diluted	6	(0.06)		1.09		(0.81)
	Adjusted basic	6	(0.04)		0.11		(0.57)
	Adjusted diluted	6	(0.04)		0.11		(0.57)

 

 

 

 

Consolidated Statement of Comprehensive Income
For the six months ended 31 December 2019
					Restated
			6 months		6 months		12 months
			to 31 Dec 2019		to 31 Dec 2018		to 30 June 2019
			Unaudited		Unaudited		Audited
		note	£'000s		£'000s		£'000s
	Profit for the period		5,512		4,280		8,525
	Other comprehensive income
	Items that may be subsequently reclassified to
	profit and loss:
	Exchange differences on translating foreign operations		(133)		(25)		(42)
	Total comprehensive income attributable to:
	Owners of the parent	4	5,379		4,255		8,483
	Total comprehensive income for the year
	Comprehensive income from continuing operations		5,554		3,997		10,940
	Comprehensive income from discontinued operations		(175)		258		(2,457)

 

Consolidated Statement of Financial Position For the six months ended 31 December 2019
		Note	As at		As at		As at
			31 Dec 2019		31 Dec 2018		30 June 2019
			Unaudited		Unaudited		Audited
			£'000s		£'000s		£'000s
	Assets
	Non-current assets
	Goodwill		9,680		9,680		9,680
	Intangible assets		12,721		10,790		11,702
	Property, plant and equipment		1,001		1,035		1,037
	Right-of-use assets		5,274		-		-
			28,676		21,505		22,419
	Current assets
	Trade and other receivables		13,306		12,411		12,222
	Cash and cash equivalents		22,559		16,677		19,320
			35,865		29,088		31,542
	Total assets	4	64,541		50,593		53,961
	Equity attributable to the owners of the parent
	Called up share capital	8	1,493		1,490		1,490
	Share premium		6,967		6,791		6,791
	Reverse acquisition reserve		(4,695)		(4,695)		(4,695)
	Other reserves		1,031		1,111		720
	Retranslation reserve		(117)		(51)		16
	Retained earnings		42,781		33,775		37,161
	Total equity		47,460		38,421		41,483

 

 

Consolidated Statement of Financial Position
For the six months ended 31 December 2019
		As at		As at		As at
		31 Dec 2019		to 31 Dec 2018		to 30 June 2019
		Unaudited		Unaudited		Audited
	note	£'000s		£'000s		£'000s
Liabilities
Non-current liabilities
Lease liabilities		4,258		-		-
Deferred tax		1,852		1,924		1,377
		6,110		1,924		1,377
Current liabilities
Trade and other payables		9,867		10,248		11,096
Lease liabilities		1,081		-		-
Financial liabilities - interest bearing loans		-		-		5
Current tax payable		23		-		-
		10,971		10,248		11,101
Total liabilities		17,081		12,172		12,478
Total equity and liabilities		64,541		50,593		53,961

 

 

	Consolidated Statement of Changes in Equity For the six months ended 31 December 2019
			Share			Share			Retained				Other			Reverse			Re-translation
			capital			premium			Earnings				reserves			Acquisition reserve			Reserve			Total
			£'000s			£'000s			£'000s				£'000s			£'000s			£'000s			£'000s
As at 1 July 2018			1,490			6,791			32,331				661			(4,695)			(26)			36,552
Profit for the period			-			-			4,280				-			-			-			4,280
Retranslation reserve			-			-			-				-			-			(25)			(25)
IFRS 15 restatement			-			-			(2,836)				-			-			-			(2,836)
Share based payments			-			-			-				450			-			-			450
As at 31 December 2018			1,490			6,791			33,775				1,111			(4,695)			(51)			38,421
As at 1 January 2019			1,490			6,791			33,775				1,111			(4,695)			(51)			38,421
Profit for the period			-			-			4,244				-			-			-			4,244
Dividends			-			-			(1,903)				-			-			-			(1,903)
Issue of share capital			-			-			-				-			-			-			-
Reserve transfer			-			-			506				(506)			-			-			-
Deferred tax asset on IFRS 15			-			-			539				-			-			-			539
Retranslation reserve			-			-			-				-			-			67			67
Share based payments			-			-			-				115			-			-			115
As at 30 June 2019			1,490			6,791			37,161				720			(4,695)			16			41,483
As at 1 July 2019			1,490			6,791			37,161				720			(4,695)			16			41,483
Profit for the period			-			-			5,512				-			-			-			5,512
Retranslation reserve			-			-			-				-			-			(133)			(133)
Issue of share capital			3			176			-				-			-			-			179
IFRS 16 restatement (note 9)			-			-			78				-			-			-			78
Reserve transfer			-			-			30				(30)			-			-			-
Share based payments			-			-			-				341			-			-			341
As at 31 December 2019			1,493			6,967			42,781				1,031			(4,695)			(117)			47,460

 

 

 

 

Consolidated Statement of Changes in Equity

For the six months ended 31 December 2019

- 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.

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

 

Consolidated Statement of Cash Flows
For the six months ended 31 December 2019
			6 months		6 months		12 months
			to 31 Dec 2019		to 31 Dec 2018		to 30 June 2019
			Unaudited		Unaudited		Audited
		note	£'000s		£'000s		£'000s
	Cash flow from operating activities	7	6,650		4,778		12,493
	Tax paid		(74)		(308)		(207)
	Net cash generated from operating activities		6,576		4,470		12,286
	Net cash generated from continuing operating activities		6,112		3,403		13,288
	Net cash generated from discontinuing operating activities		464		1,067		(1,002)
	Cash flow from investing activities
	Purchase of intangible fixed assets		(2,835)		(2,597)		(5,617)
	Purchase of tangible fixed assets		(168)		(206)		(456)
	Sales of tangible fixed assets		3		-		-
	Interest received		16		10		19
	Net cash used in investing activities		(2,984)		(2,793)		(6,054)
	Net cash used in continuing investing activities		(2,981)		(2,260)		(5,168)
	Net cash used in discontinuing investing activities		(3)		(533)		(886)
	Cash flows from financing activities
	Equity dividends paid		-		-		(1,903)
	Repayment of leasing liabilities		(527)		-		-
	Loan repayment in relation to acquisition		(5)		(5)		(14)
	Share issue		179		-		-
	Net cash used in financing activities		(353)		(5)		(1,917)
	Net cash used in continuing financing activities		(303)		-		(1,903)
	Net cash used in discontinuing financing activities		(50)		(5)		(14)
	Increase in cash and cash equivalents		3,239		1,672		4,315
	Cash and cash equivalents at beginning of period		19,320		15,005		15,005
	Cash and cash equivalents at end of period.		22,559		16,677		19,320

The above does not include the effect of foreign exchange rate changes on cash and cash equivalents due to the immaterial nature.

 

Notes to interim financial statements

For the six months ended 31 December 2019

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 European Union 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 2019. The interim financial information for the six months to 31 December 2019, which complies with IAS 34 'Interim Financial Reporting' has been approved by the Board of Directors on 25 February 2020.

The unaudited interim financial information for the period ended 31 December 2019 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 2019 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 2019, as described in those financial statements with the exception of the adoption of the new accounting standard IFRS 16 leases, see note 9.

 

 

Notes to interim financial statements For the six months ended 31 December 2019

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 Engagement Cloud and CPaaS as shown below: Geographical revenue and results   6 months to 31 December 2019   EMEA   US   APAC       Operations   Operations   Operations   Total   £'000s   £'000s   £'000s   £'000s Income statement               Revenue 21,718   4,010   1,350   27,078 Gross profit 16,905   3,568   1,219   21,692 Profit before income tax 4,400   1,767   306   6,473                 Total comprehensive income attributable to the owners of the parent 3,593   1,475   311   5,379                 Financial position               Total assets 59,287   3,932   1,322   64,541 Net current assets 21,809   2,390   695   24,894     6 months to 31 December 2018   EMEA   US   APAC       Operations   Operations   Operations   Total   £'000s   £'000s   £'000s   £'000s Income statement               Revenue 20,681   3,299   921   24,901 Gross profit 15,336   2,953   890   19,179 Profit before income tax 3,355   1,392   190   4,937                 Total comprehensive income attributable to the owners of the parent 3,039   1,020   196   4,255                 Financial position               Total assets 46,527   3,093   973   50,593 Net current assets 15,569   2,659   612   18,840

 

 

 

Notes to interim financial statements For the six months ended 31 December 2019
4. SEGMENTAL REPORTING (CONTINUED…)

 

	12 months to 30 June 2019
	EMEA		US		APAC
	Operations		Operations		Operations		Total
	£'000s		£'000s		£'000s		£'000s
Income statement
Revenue	42,215		6,957		2,113		51,285
Gross profit	32,039		6,099		1,926		40,064
Profit before income tax	5,672		2,812		389		8,873
Total comprehensive income
attributable to the owners of the parent	5,441		2,657		385		8,483
Financial position
Total assets	52,100		1,717		144		53,961
Net current assets	16,771		2,938		732		20,441

 

Business activity revenue and results

 

	6 months to 31 December 2019
	Core		CPaaS		Total
	£'000s		£'000s		£'000s
Income statement
Revenue	23,072		4,005		27,077
Gross profit	20,611		1,081		21,692
Profit before income tax	6,529		(56)		6,473
Total comprehensive income attributable to the owners of the parent	5,554		(175)		5,379
Financial position
Total assets	61,296		3,245		64,541
Net current assets	25,399		(505)		24,894

 

Notes to interim financial statements
For the six months ended 31 December 2019

 

4. SEGMENTAL REPORTING (CONTINUED…)

	6 months to 31 December 2018
	Core		CPaaS		Total
	£'000s		£'000s		£'000s
Income statement
Revenue	20,146		4,755		24,901
Gross profit	17,796		1,383		19,179
Profit before income tax	4,692		245		4,937
Total comprehensive income attributable to the owners of the parent	4,012		243		4,255
Financial position
Total assets	46,375		4,218		50,593
Net current assets	19,167		(327)		18,840

 

 

	12 months to 30 June 2019
	Core		CPaaS		Total
	£'000s		£'000s		£'000s
Income statement
Revenue	42,522		8,763		51,285
Gross profit	38,145		1,919		40,064
Profit before income tax	11,040		(2,167)		8,873
Total comprehensive income attributable to the owners of the parent	10,940		(2,457)		8,483
Financial position
Total assets	52,263		1,698		53,961
Net current assets	21,177		(736)		20,441

 

 

5. DIVIDENDS

The proposed final dividend of £1,995,846 for the year ended 30 June 2019 of 0.67p per share was paid on the 31 January 2020.

 

Notes to interim financial statements
For the six months ended 31 December 2019

 

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 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:

	6 months to December 2019		6 months to December 2018		12 months to June 2019
From all operations	£'000s		£'000s		£'000s
Profit for the year attributable to the owners of the parent	5,512		4,280		8,525
Impairment of acquisition-related intangible fixed asset	-		-		344
Amortisation of acquisition-related intangible fixed asset	124		127		522
Other exceptional costs	7		51		59
Share-based payment	341		450		565
Adjusted profit for the year attributable to the owners of the parent	5,984		4,908		10,015
Adjusted profit for the year attributable to the owners of the parent from:
Continuing operations:	6,095		4,583		11,726
Discontinuing operations:	(111)		325		(1,711)

 

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

The other exceptional costs relate to one-off acquisition costs of Comapi.