Final Results, 16 Nov 2022 07:00

16 November 2022, 07:00

Source - LSE Regulatory

RNS Number : 5442G

dotDigital Group plc

16 November 2022

Dotdigital Group plc

("Dotdigital" or the "Group")

Final Results for the year ended 30 June 2022

Growth in all regions with strong profits and cash generation

Dotdigital Group plc (AIM: DOTD), the leading 'SaaS' provider of an omnichannel marketing automation and customer engagement platform, announces its final audited results for the year ended 30 June 2022 ("FY22").

Financial Highlights

· Organic revenue growth of 8% to £62.8m (FY21: £58.1m)

o Recurring revenue increased to 94% (FY21: 93%)

o Monthly ARPC¹ increased 17% to £1,461 (FY21: £1,251 per month)

· Adjusted EBITDA² grew 10% to £21.7m (FY21: £19.8m)

· Adjusted operating profit³ increased 6% to £14.5m (FY21: £13.7m)

· Adjusted basic earnings per share of 4.27p (FY21: 3.82p)

· Strong net cash balance at 30 June 2022 of £43.9m (FY21: £32m)

· Proposed final dividend of 0.98p per ordinary share (FY21: 0.86p) in line with progressive dividend policy

Operational Highlights

· Growth across all global regions against exceptional prior year

· Digital marketing budgets continue to increase with focus on data and actionable insights

· Deeper and broader partner engagement, with revenue through strategic partner connectors up 14% to £28.9m (FY21: £25.4m)

· Email marketing remains core alongside growing omnichannel uptake, with email volumes up 22% YOY

· Increased headcount and new management team in North America showing early positive trends as well as strengthening the sales and customer success teams in APAC

· Product innovation driving value with functionality recurring revenue⁴ up 18% to £22.3m (FY21: £18.9m)

· Customer data platform launched to enable our customers to aggregate data from their business systems for relevancy and personalisation

· Board commitment to net zero emissions target by 2030

· Post period end appointment of Chairman and CFO adding management bandwidth

Milan Patel, CEO of Dotdigital, commented:

"We are pleased to report a strong year of growth and profitability for Dotdigital and significant operational enhancements, comparing well against a strong prior year that was boosted by one-off pandemic related SMS revenue.

"The advancements we have made to our technology platform over the year positions us at the heart of Marketeers' evolving needs, providing the tools they require to drive broader, more targeted customer engagement. At the same time, we believe we now have in place the right teams and infrastructure to support our next stage of growth. Backed by high recurring revenues and strong cash generation, we will continue our focused investment in the business to grow our brand awareness through our partner networks, build our platform offering in line with our technology vision and bolster our internal talent to ensure we continue to scale across our territories.

"The positive trading momentum at the end of the period has continued into the new financial year. With the challenges from the first half of the year addressed together with favourable market drivers, the Group is tracking in line with expectations for revenue growth and profitability marginally ahead.

"Whilst we are monitoring the impact of the wider economic climate across our markets, our technology's proven ROI provides a compelling value proposition to customers as they look to connect with their target audiences. This, together with a clear growth strategy and strong balance sheet, gives us confidence in our ability to continue to grow profitably."

Investor Video: A highlights video is available to watch here: http://bit.ly/3tu7MX1

Investor Deck: A copy of the slides relating to the FY22 results is available here: https://www.dotdigitalgroup.com/events-presentations/

Investor Presentation: The management team will provide a live presentation relating to the final results via the Investor Meet Company platform on Friday, 18 November at 10.30am GMT. Investors can register here: https://www.investormeetcompany.com/dotdigital-group-plc/register-investor

Annual Report: A copy of the Annual Report for FY22 will be available on our website shortly: https://www.dotdigitalgroup.com/reports/

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 amortisation and adjusted for acquisition costs and share-based payments

3. Operating profit is adjusted for acquisition costs and share-based payments

4. Functionality revenue refers to license fees and enhanced bolt-on functionality

For further information please contact:

Dotdigital Group Plc Milan Patel, CEO Alistair Gurney, CFO	Tel: 020 3953 3072 InvestorRelations@dotdigital.com

Alma PR (Financial PR) Hilary Buchanan David Ison Kieran Breheny	Tel: 020 3405 0210 dotdigital@almapr.co.uk

Canaccord Genuity (Nominated Advisor and Joint Broker) Bobbie Hilliam Jonathan Barr, Sales	Tel: 020 7523 8000

finnCap (Joint Broker) Jonny Franklin Adams, Corporate Finance Alice Lane, ECM Rhys Williams, Sales	Tel: 020 7220 0500

Singer Capital Markets (Joint Broker) Shaun Dobson, Chairman of Corporate Finance Alex Bond, Corporate Finance	Tel: 020 7496 3000

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.

CHAIRMAN'S STATEMENT

I became Chairman of Dotdigital Group Plc post-year end on 5 July 2022, replacing Mike O'Leary, who left the business due to health reasons. Mike played an important role in helping the Company navigate the pandemic while continuing to deliver against its strategic objectives and I would first like to wish him all the best in his continued recovery.

A compelling opportunity

There were several reasons I took the role. Firstly, the product is exceptional. The marketing automation technology the Group has developed is among the most powerful and easy to use on the market, capable of delivering outstanding returns on investment and significantly enhancing a brand's reputation.

The second is the quality of the Group's growing customer base. International in nature and comprising a diverse range of blue-chip organisations from different sectors, marketeers at some of the world's biggest brands rely on Dotdigital to power their campaigns.

Thirdly, the Group has an impeccable knowledge of the markets in which it operates. Its teams understand the direction the digital marketing industry is moving in; they understand the evolving needs of marketeers, they know how to address them through the platform, and they recognise the steps we need to take as a business to grow our competitive advantage.

Finally, the business has immense potential. The Group has firmly established itself as one of the leading firms in the industry, but there is much more to go for. Supported by a robust balance sheet, there are several routes to accelerate growth available to us.

Ending the year on a high

To have successfully delivered a year of strong growth and profitability despite the challenging circumstances is testament to the ability and hard work of our teams, the resilience of our model, and the continuing demand for our products.

The pandemic led to a temporary increase in demand for transactional SMS in the prior year which tempered the year-on-year growth rate, our North American operation was negatively impacted by an unusually competitive labour market in the first half, and the Group was recruiting for a Chairman and Chief Financial Officer (CFO) for much of the second.

I'm pleased to report that those challenges were overcome in the second half, and positive momentum has continued into the new financial year. Crucially, we now have management in place in North America and are having success in both hiring and retaining colleagues in the region. While our teams there continue to embed, the pipeline is building at a healthy rate.

We have also now filled the vacant roles on the Board, adding complementary new skills and abilities and providing the bandwidth for management to return to focusing solely on growing the business and creating shareholder value.

My priorities since joining

The first was to secure a new Chief Financial Officer with the right credentials and ambitions that matched our own. A dynamic finance professional with an impressive track record working in senior roles at private equity-backed technology businesses, Alistair Gurney was the outstanding candidate for the position, and I am delighted we were able to welcome him onto the Board in September 2022.

The second priority was to work with the Board to sharpen the strategy. For several years now, much of Dotdigital's R&D efforts have centred around data functionality as demand for actionable insight in the market grows. As a result, Dotdigital is now the platform of choice for thousands of marketeers around the world looking to design and deliver advanced strategies with personalisation at their core.

The next step is to build out our data capabilities further, ensuring we stay ahead of the curve and granting access to new markets by offering one of the most comprehensive customer data experience platforms (CDXP) available. Plans are in place across our R&D teams to this end, and we are exploring opportunities to accelerate the process through selective acquisitions of adjacent technology. More information on our CDXP ambitions is provided in the Chief Executive Officer's review in this report.

The third priority, in parallel with the first two, was to engage with the Group and its marketplace and understand the culture of Dotdigital. Over the past few months, I have met with many colleagues from across the Group. I have been impressed by the calibre of talent at our disposal and encouraged by our teams' enthusiasm for what we as a Group are trying to achieve.

Sustainable foundations

The Board continues to focus efforts on progressing the Group's Environmental, Social and Governance (ESG) agenda. ESG is central to what we do and have made significant progress on our initiatives in the year.

The Board is also aware that focussing on Dotdigital's own performance, as well as the technology we provide to our customers, also has a beneficial impact on both the people and our planet. As a business we prioritise our people through wellbeing initiatives, meeting governance expectations through our accreditation of ISO14001 and achieve high standards on data privacy and data security through our accreditations and control systems of ISO27001 & ISO27701.

We have a number of new initiatives underway, including a Board commitment to a net zero emissions target by 2030. Further details of Dotdigital's environmental initiatives and performance in 2022 are set out in the FY22 annual report.

Dividend

The Board has agreed to maintain a progressive dividend in line with Group EBITDA growth. Therefore, subject to approval at the AGM in December 2022, the Board proposes that the Group pay a final dividend of 0.98p per ordinary share (2021: 0.86p), payable at the end of January 2023.

Looking ahead

We now have in place a strong Board with the right blend of skills and experience, high quality management and support teams across our international markets, a first-class product, growing pipelines, a clear strategy and the financial firepower to accelerate delivery.

The economic backdrop remains uncertain but, as the pandemic demonstrated, effective engagement with existing and prospective customers is just as important to brands in more challenging times as it is in good, providing Dotdigital a degree of insulation against recessionary pressures.

We know the direction we want to take the business and are focussed on using our cash in the optimal way to capture the wealth of available opportunity. It is early in my tenure, but I am excited about our prospects, and look forward to keeping shareholders updated as we progress towards our goals.

John Conoley

Non-Executive Chairman

15 November 2022

CHIEF EXECUTIVE OFFICER'S REPORT AND FINANCIAL REVIEW

Overview - Year of profitable growth and operational enhancements

We are pleased to report a strong year of growth and profitability for Dotdigital, along with significant operational enhancements. These results represent a full financial year since the onset of the pandemic and, despite challenges in the macro environment, compare well against a strong prior year performance that was boosted by one-off pandemic- related SMS revenue. We have cemented our relationships with our customers as a strategic partner, helping them deliver a high return on investment from their digital marketing strategies through a combination of best of breed functionality and services.

We have a differentiated and well-integrated offering, including leading orchestration functionality at the heart of the platform, saving our customers time. We have seen sustained business momentum through 2022 as a result of continued execution against each pillar of the Group's growth strategy, namely product innovation, geographic expansion and strategic partnerships, helping us deliver Group organic growth of 8%.

During the year, while some form of normality is returning across the different territories post COVID-related restrictions, we have continued to see an acceleration in the shift towards Digital Marketing and the creation of relevant and personalised experiences to audiences across all industries. The use of data, platform adoption and automation capabilities are all continuing to rise and, from a product development perspective, we continue to enhance the Dotdigital platform to ensure it excels in these areas. By helping launch targeted campaigns in our customers' advanced marketing strategies, ensuring they have an individualised message at every touchpoint with their customer or prospect and a strong return on investment, our product has cemented itself as the platform of choice for both B2B and B2C marketeers.

A lot of progress has been made in the second half of the year rebuilding our team in North America, with management now in place to lead the vision and execution of growth in the region. We continue to see employee retention strengthen and the successful recruitment of new talent as we embed our culture in a hybrid working environment and competitors pause for breath in their hiring efforts. Through these investments we are making the business more scalable, which puts us in a good place to return to double digit organic growth over the medium term.

We continue to see the increase in customers adopting an omnichannel approach, with Email Marketing remaining core to their strategies for driving customer acquisition and retention. We saw email volumes grow 20% in the period as budgets continued to increase and verticals/industries started to return to normal volumes post-pandemic.

As we look forwards, with our vision of building out our Customer Data Experience Platform (CDXP), alongside our own research and development efforts, we will look at acquisitions that offer added value and resilience to our business model. This will not only allow us to expand our addressable market with larger customers, but also makes our existing customers stickier.

Business Review - Marketing automation platform underpinned by rich customer data

Dotdigital is focussed on empowering marketers to connect with customers through its powerful automation platform that unifies all digital channels. Our platform provides tools that enable marketing teams to launch highly targeted, personalised and relevant campaigns to customers and prospects with personalised engagement at every touchpoint - the right message, at the right time, through the right channel to the right person. The result is faster and more effective marketing campaigns with increased engagement and demonstrable ROI.

The use cases of the Group's offering are wide and global, however the Group remains focused on mid-market and enterprise clients across target verticals including retail, non-profit, education, financial services, sports and travel to name a few. The Group's foundations and particular strengths are in email and deep integrations into strategic partners within e-commerce and CRM.

Results summary - Organic growth and cash generation

The Group generated revenues of £62.8m (2021: £58.1m). This 8% growth was entirely organic, led by larger value customers, existing client growth and improved customer retention in the EMEA region.

Adjusted EBITDA increased by 10% to £21.7m (2021: £19.8m) driven by the contribution from organic growth and improving gross margin due to an increase in email volumes which is a very high margin compared to lower margin channels such as SMS. Statutory operating profit was £13.6 million (2021: £12.9 m) including adjusting items of £8.1 million (2021: £6.9 m).

We have a strong track record of cash generation and this remains a high priority for the Group with net cash increase of £11.6m in the period (2021: £6.5m).

Market opportunity - Continued march toward digital and heightened focus on personalisation

We operate within the large global Marketing Automation market, estimated to be worth $5.5bn and growing at between 12% -13% year on year. This market comprises three main target segments with technologies and business models optimised accordingly. These segments consist of small/micro companies, mid-market and enterprise. The mid-market and enterprise segments we are primarily focussed on together estimated to be worth circa $3bn.

Our target verticals differ slightly depending on region and level of brand awareness. In North America and APAC, where awareness of Dotdigital continues to develop, we focus on e-commerce businesses through our strategic partnerships and integrations. In the EMEA market, where our brand awareness is high, we target all industry types. In what remains a fragmented market, we offer a comprehensive functionality set and range of services to help customers drive a higher ROI.

Digital transformation for marketeers continues at pace in a post-Covid world which has adapted quickly to online experiences. Marketeers' strategies are becoming more sophisticated with the use of data and actionable insights. The Dotdigital platform is well placed to support this, making it easy for customers to make use of data while providing drag and drop functionality to automate messaging at all parts of the customer journey.

Email Marketing still generates the highest ROI from all Digital Marketing campaigns and continues to be the marketeers' channel of choice, complemented by other channels to form the overall experience. As the shift to digital progresses, we continue to see an uptake of additional channels, such as push and app messaging, aligned with our move towards building out omni-channel capabilities through the acquisition of Comapi. According to eMarketer, Digital Marketing as a percentage of overall Marketing continues to increase and now represents 66%; as some of the traditional marketing budgets move into Digital. We are well placed to capture this growth.

Growth strategy - Focussed execution against long-term vision

Having established a best-in-breed marketing automation platform with omni-channel capability and global scale, we continue to see huge growth potential with our core capabilities as the market moves toward digitally-enabled marketing. At the same time, our financial strength, combined with broad customer reach, provides us with the foundation and resources to build our offering, both organically and through acquisition, in line with our long term vision of building the most comprehensive CDXP capabilities. CDXP describes the ecosystem by which companies and brands view and seek to influence the customer journey - from connecting and communication with customers and prospects, to retaining and optimising their purchasing decisions. The tools that enable marketeers to have insight into the journey is founded on rich customer data, which is where the Dotdigital Engagement Cloud excels, and provides an opportunity to leverage through core capability enhancements as well as new capabilities in this space.

Customer data sits at the core of everything we do, and there is substantial scope to broaden our offering to provide even deeper engagement for our customers across any channel through a unified source of customer intelligence.

This vision is underpinned by our organic growth strategy, which continues to be focussed around three core pillars: product innovation, geographic expansion and strategic partnerships.

Product innovation

We are making good progress in growing the number of customers using enhanced functionality, including an increasing number of data connectors through our IPaaS (Infrastructure Platform as a Service) capabilities, while continuing to enhance our customer data platform launched in the financial year to enable our customers to aggregate data from their business systems for relevancy and personalisation. We continue to educate the markets, through live sessions and digital marketing content, on how to adopt new features to enhance messaging. This helped drive an 18% increase in functionality recurring revenue from product updates and enhancement, taken by both existing and new customers, to £22.3m (2021: £18.9m).

The platform continues to go from strength to strength, delivering on the needs of our customers and maintaining our competitive advantage.

Geographic expansion

We continued to successfully grow our presence in international market in the period, in pursuit of our goal of diversifying revenues outside of the UK. The Group saw revenue growth across all key global regions, despite the wider effects of COVID-19, supply chain issues and a weakening economic backdrop.

In EMEA, revenues grew 8% to £48.2m (2021: £44.6m) helped by retention as we strengthen relationships with our customers and deliver on their ROI metrics. We have continued to see retention improve in the region as we strengthen relationships with our customers and deliver on their ROI metrics. We have also seen continued growth in spend from existing clients as they increase their email message volumes, start to adopt an omnichannel approach and continue to increase the use of our platform features.

Revenues from the Americas were up 3% to $12.9m (2021: $12.5m). Despite headwinds faced in the first half of the financial year from recruitment challenges, we made great progress in the second half. A new management team has now been put in place to lead the execution of the strategy in the region and we were able to step up our recruitment efforts in our go to market teams, which are now embedded and are already starting to gain traction. We saw strong customer wins in the fourth quarter of the financial year and that momentum has continued into FY23.

The APAC market saw high levels of growth in the year, with revenues growing 18% to $9.1m (2021: $7.7m). We further increased Dotdigital's presence in the region in the period through expanding our team in Singapore, which has led to encouraging pipeline growth in Japan and the Far East.

Strategic partnerships

Revenues from customers using a data connector from one of our strategic partners grew 14% to £28.9m in the year.

Enhanced brand awareness, alongside additional functionality and new integrations into technology platforms, have allowed us to continue growth in the Magento space. Our respective teams continue to work together on our joint marketing strategy and enhanced development of our integration. During the year we also became a premier partner of the Adobe Experience programme. In the year, revenue from Magento customers grew 10% from £14.3m to £15.8m.

Our Shopify relationship continues to go from strength to strength. We have seen an increasing pipeline resulting from the integration we have built with Shopify Flow, which allows e-commerce merchants a seamless connection to easily deploy campaigns from the Dotdigital platform. We continue to build relationships with system integrators in the ecosystem. In the year, revenue from Shopify customers grew 56% from £2.1m to £3.3m.

As BigCommerce's global partner, we continue to build on the brand awareness within the user base and deepen our strategic relationship, formulating a joint go to market plan and joint marketing efforts to the user base. We saw a 67% increase in revenue from BigCommerce-connected customers in the year to £0.6m (from £0.4m in June 2021).

As part of our commitment to our B2B Marketing customers, we have continued to enhance our integrations into both Microsoft Dynamics and Salesforce CRM as well as building additional functionality specifically for B2B Marketing tactics. Revenues from customers using our CRM connectors increased 7% to £8.0m in the year, from £7.5m in the prior period.

We have recently launched our integration into a new strategic partnership with Zendesk to further enhance Zendesk Sell, bringing the Marketing Automation value proposition to its customer base. This will allow its customers to store conversations that can be used to increase relevancy and personalisation. Albeit early days, we continue to see a growing pipeline.

M&A

Together with our organic growth we intend to create value from acquisitions to help build our position as a global market leader in the growing Marketing Automation sector. We will look to invest in adjacent technology that accelerates development of the platform's CDXP capabilities. This will allow for average revenue per customer (ARPC) expansion within our existing global customer base but also the ability to enter new addressable markets.

The key categories will remain around the three pillars to our acquisition strategy:

· Adjacent technology to accelerate our CDXP capability;

· Consolidation of the market for talent and brand to expand geographical coverage

· Specialist functionality for target verticals.

To drive value, we will integrate the core capabilities into the platform to accelerate growth but also manage costs to increase margins and cash generation.

Financial review

Business model

The Group generates most of its revenues from software and annual message plans which are recognised equally over the life of the contract. In addition, we sell upgrade packages to customers, allowing them to use additional modules and platform features. The best value is available to those who take advantage of additional functionality and integrations which help them leverage their customer data. We also have a small amount of professional services revenue.

Revenues

The Group achieved revenue growth of 8% (2021: 23%) to £62.8m (£58.1m 2021). To achieve this against the backdrop of 2021 in which, we enjoyed significant revenue from one off COVID-19 related messaging volumes, is testament to the Group's focus on contracted SaaS revenues, which grew by 10% to £49.6m in 2022. Total recurring revenues including contracted messaging plans now comprise 94% of total revenue.

Total recurring revenue has grown with a compound annual growth rate (CAGR) of 17% since 2018, this is driven by our functional recurring revenues which have grown at 26% over the same 4 year period.

International revenues remained at 31% of the Group total.

Gross margin

The gross margin for the period remained at 82%. Whilst the gross margin for email and standard channels remained above 90%, this is always diluted by SMS and professional services, which each have a higher marginal cost of sale. We continue our focus on high margin growth as opposed to driving revenue irrespective of quality.

Operating expenses

Adjusted operating profit from continuing operations grew by 6% from £13.7m to £14.5m as we continued to invest in people in the areas of development, sales and marketing, particularly within the high-growth regional offices, to continue enhancing and adding to the product suite.

Balance sheet

There was strong cash management in the year with net cash generated from continuing operations of £23.4m (2021: £20.7m). The cash balance at the end of the period was £43.9m (2021: £32.0m). The Group continues to be debt free and maintains a healthy balance sheet. A combination of a highly efficient cash collection process and an incentivisation push to move more customers onto Direct Debit and other automated payment collection methods helped with the year-end position.

Trade receivables have reduced by 3% in the year reflecting focussed cash management. Overall receivables have reduced by 1%.

The Group continues to invest heavily in the platform to increase functionality around marketing automation, increasing the number of messaging channels and surfacing data and providing insights for our customers to provide excellent customer engagement. This continued investment is demonstrated by the increase in product development to £7.6m (2021: £6.8m).

Tax

Profitability from continuing operations continues to grow. This is reflected within the tax charge, which is now £1.2m with an effective tax rate of 9%, with a lower than standard rate due to enhanced R&D tax credits.

EPS

In the year the adjusted basic EPS increased to 4.27p (2021: 3.82p) and adjusted diluted EPS increased to 4.18p (2021: 3.76p), despite the higher effective tax rate of 9%, (2021: 8%). Basic EPS also increased to 3.96p (2021: 3.55p)

Dividend policy

As announced last year, the Board conducted its review of its organic business plan for the following three years. This included evaluating the cash needs required for opportunities in organic growth to increase shareholder value and capital expenditure. The Board decided that it will continue to keep a progressive dividend in line with Group EBITDA growth. Therefore, subject to approval at the AGM in December 2022, the Board proposes that the Group will pay a final dividend of 0.98 pence per ordinary share (2021: 0.86p), to be payable at the end of January 2023.

People - The lifeblood of Dotdigital

John Conoley joined us as Non-Executive Chairman and Board member on 5 July 2022. John brings significant public company experience to the Board as well as industry experience following extensive career spanning various roles within the technology sector. John has established a track record in growing businesses and delivering value creation.

Alistair Gurney also joined us as Chief Financial Officer and Board member on 19 September 2022. Alistair brings significant experience from private equity backed technology business, M&A and in areas such as financial planning and analysis.

Through the period we continued investing in management across all regions as well as in Product Engineering, Sales, Customer Success, and Marketing to bring new experiences and build scale within the teams.

Environmental, Social and Governance (ESG) - Our sustainable foundations

We report on our Scope 1, 2 and 3 Greenhouse Gas (GHG) emission and there was an increase in the period of gross CO2e by 27% as travel came back post covid lockdowns and return to some normalisation to events and face to face meetings. We are incredibly proud that we have offset our CO2 emission by carbon offsetting to be Carbon neutral through the period. We have also continued to adhere to the standard on ISO14001 Environmental Management systems and continue to support the Terra carta on environmental matters.

Current trading and outlook

The advancements we have made to our technology platform over the year positions us at the heart of Marketeers' evolving needs, providing the tools they require to drive broader, more targeted customer engagement. At the same time, we believe we now have in place the right teams and infrastructure to support our next stage of growth. Backed by high recurring revenues and strong cash generation, we will continue our focused investment in the business to grow our brand awareness through our partner networks, build our platform offering in line with our technology vision and bolster our internal talent to ensure we continue to scale across our territories.

The positive trading momentum at the end of the period has continued into the new financial year. With the challenges from the first half of the year addressed together with favourable market drivers, the Group is tracking in line with expectations for revenue growth and profitability marginally ahead.

Whilst we are monitoring the impact of the wider economic climate across our markets, our technology's proven ROI provides a compelling value proposition to customers as they look to connect with their target audiences. This, together with a clear growth strategy and strong balance sheet, gives us confidence in our ability to continue to grow profitably.

Milan Patel

Chief Executive Officer

15 November 2022

Alistair Gurney

Chief Financial Officer

15 November 2022

DOTDIGITAL GROUP PLC

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 30 JUNE 2022

							30.6.22					30.6.21
							£'000					£'000
				Notes
CONTINUING OPERATIONS
Revenue from contracts with customers							62,832					58,124
Cost of sales				7			(11,570)					(10,356)

Gross profit							51,262					47,768

Administrative expenses				7			(36,726)					(34,089)

OPERATING PROFIT FROM CONTINUING OPERATIONS PRE SHARE-BASED PAYMENTS AND EXCEPTIONAL COSTS							14,536					13,679

Share based payments				28			(456)					(625)
Exceptional costs				5			(475)					(188)

OPERATING PROFIT FROM CONTINUING OPERATIONS							13,605					12,866

Finance costs				6			(57)					(74)
Finance income				6			57					20

PROFIT BEFORE INCOME TAX FROM CONTINUING OPERATIONS				7			13,605					12,812

Income tax expense				8			(1,774)					(1,322)

Profit for the year from continuing operations							11,831					11,490
Loss for the year from discontinuing operations				12			-					(899)

	Profit for the year attributable to the owners of the parent				11,831						10,591
Earnings per share from all operations (pence per share)
		Basic		11			3.96					3.55
		Diluted		11			3.88					3.50
		Adjusted Basic		11			4.27					3.82
		Adjusted Diluted		11			4.18					3.76

Earnings per share from continuing operations (pence per share)
Basic				11		3.96				3.85
Diluted				11		3.88				3.79
Adjusted Basic				11		4.27				4.12
Adjusted Diluted				11		4.18							4.06


Earnings per share from discontinued operations (pence per share)
Basic			11					(0.00)	(0.30)
Diluted			11					(0.00)	(0.30)
Adjusted Basic			11					(0.00)	(0.30)
Adjusted Diluted			11					(0.00)			(0.30)

DOTDIGITAL GROUP PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2022

		30.6.22	30.6.21
		£'000	£'000


PROFIT FOR THE YEAR		11,831	10,591

OTHER COMPREHENSIVE INCOME
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translating foreign operations		333	(87)

Total comprehensive income attributable to:
	Owners of the parent	12,164	10,504

TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Comprehensive income from continuing operations		12,164	11,403
Comprehensive loss from discontinued operations		-	(899)

DOTDIGITAL GROUP PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

30 JUNE 2022

		30.6.22	30.6.21
		£'000	£'000
	Notes
ASSETS
NON-CURRENT ASSETS
Goodwill	13	9,680	9,680
Intangible assets	14	17,698	16,134
Property, plant and equipment	15	3,285	3,972

		30,663	29,786

CURRENT ASSETS
Trade and other receivables	17	13,211	13,350
Cash and cash equivalents	18	43,919	31,951

		57,130	45,301

TOTAL ASSETS		87,793	75,087


EQUITY ATTRIBUTABLE TO THE
OWNERS OF THE PARENT
Called up share capital	19	1,496	1,494
Share premium	20	7,124	7,124
Reverse acquisition reserve	20	(4,695)	(4,695)
Other reserves	20	2,005	3,066
Retranslation reserve	20	296	(37)
Retained earnings	20	63,582	54,081

TOTAL EQUITY		69,808	61,033


LIABILITIES
NON-CURRENT LIABILITIES
Lease liabilities	22	1,758	2,489
Deferred tax	24	2,755	1,207

		4,513	3,696
CURRENT LIABILITIES
Trade and other payables	21	12,654	9,334
Financial liabilities:
Interest bearing loans and borrowings		-	-
Lease liabilities	22	818	934
Current tax payable		-	90

		13,472	10,358

TOTAL LIABILITIES		17,985	14,054

TOTAL EQUITY AND LIABILITIES		87,793	75,087

DOTDIGITAL GROUP PLC

COMPANY STATEMENT OF FINANCIAL POSITION

30 JUNE 2022


		30.6.22	30.6.21
		£'000	£'000
	Notes
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment		7	4
Investments	16	18,362	18,141

		18,369	18,145

CURRENT ASSETS
Trade and other receivables	17	1,545	140
Cash and cash equivalents	18	163	85

		1,708	225

TOTAL ASSETS		20,077	18,370


EQUITY ATTRIBUTABLE TO THE
OWNERS OF THE PARENT
Called up share capital	19	1,496	1,494
Share premium	20	7,124	7,124
Other reserves	20	1,915	1,690
Retained earnings	20	9,400	7,570

TOTAL EQUITY		19,935	17,878


LIABILITIES
CURRENT LIABILITIES
Trade and other payables	21	142	492

TOTAL LIABILITIES		142	492

TOTAL EQUITY AND LIABILITIES		20,077	18,370

DOTDIGITAL GROUP PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2022


	Called up share	Retained	Share
	capital	earnings	premium
	£'000	£'000	£'000

Balance as at 1 July 2020	1,493	45,655	6,967

Transactions with owners
Issue of share capital	1	-	157
Dividends	-	(2,472)	-
Transfer in reserves	-	307	-
Deferred tax on share options	-	-	-
Share-based payments	-	-	-
Transactions with owners (restated)	1	(2,165)	157

Total comprehensive income
Profit for the year	-	10,591	-
Other comprehensive income	-	-	-
Total comprehensive income	-	10,591	-

Restated balance as at 30 June 2021	1,494	54,081	7,124

Balance as at 1 July 2021	1,494	54,081	7,124
Issue of share capital	2	-	-
Dividends	-	(2,564)	-
Transfer in reserves	-	234	-
Deferred tax on share options	-	-	-
Share-based payments	-	-	-
Transactions with owners	2	(2,330)	-

Profit for the year	-	11,831	-
Other comprehensive income	-	-	-
Total comprehensive income	-	11,831	-

Balance as at 30 June 2022	1,496	63,582	7,124

DOTDIGITAL GROUP PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2022

CONTINUED…
	Retranslation	Reverse acquisition	Other	Total equity
	reserve	reserve	reserves
	£'000	£'000	£'000	£'000

Balance as at 1 July 2020	50	(4,695)	1,600	51,070

Transactions with owners
Issue of share capital	-	-	-	158
Dividends	-	-	-	(2,472)
Transfer in reserves	-	-	(307)	-
Deferred tax on share options	-	-	1,148	1,148
Share-based payments	-	-	625	625
Transactions with owners	-	-	1,466	(541)

Total comprehensive income
Profit for the year	-	-	-	10,591
Other comprehensive income	(87)	-	-	(87)
Total comprehensive income	(87)	-	-	10,504

Balance as at 30 June 2021	(37)	(4,695)	3,066	61,033

Balance as at 1 July 2021
Issue of share capital	-	-	-	2
Dividends	-	-	-	(2,564)
Transfer in reserves	-	-	(234)	-
Deferred tax on share options	-	-	(1,283)	(1,283)
Share-based payments	-	-	456	456
Transactions with owners	-	-	(1,061)	(3,389)

Profit for the year	-	-	-	11,831
Other comprehensive income	333	-	-	333
Total comprehensive income	333	-	-	12,164

Balance as at 30 June 2022	296	(4,695)	2,005	69,808

· 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 2and the transfer on the exercise or lapsing of share options.

DOTDIGITAL GROUP PLC

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2022


	Called up share	Retained	Share	Other
	capital	earnings	premium	Reserves	Total equity
	£'000	£'000	£'000	£'000	£'000

Balance as at 1 July 2020	1,493	5,924	6,967	1,372	15,756

Transactions with owners
Issue of share capital	1	-	157	-	158
Dividends	-	(2,472)	-	-	(2,472)
Transfer in reserves	-	307	-	-	307
Share based payments	-	-	-	318	318
Transactions with owners	1	(2,165)	157	318	(1,689)

Total comprehensive income
Profit for the year	-	3,811	-	-	3,811
Total comprehensive income (restated)	-	3,811	-	-	3,811

Balance as at 30 June 2021	1,494	7,570	7,124	1,690	17,878

Balance as at 1 July 2021	1,494	7,570	7,124	1,690	17,878

Issue of share capital	2	-	-	-	2
Dividends	-	(2,564)	-	-	(2,564)
Transfer in reserves	-	231	-	(231)	-
Share based payments	-	-	-	456	456
Transactions with owners	2	(2,333)	-	225	(2,106)

Profit for the year	-	4,163	-	-	4,163
Total comprehensive income	-	4,163	-	-	4,163

Balance as at 30 June 2022	1,496	9,400	7,124	1,915	19,935

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

· Retained earnings represents the cumulative earnings of the Company attributable to equity shareholders.

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

· Other reserves relate to the charge for the share-based payment in accordance with IFRS 2 and the transfer on the exercise or lapsing of share options.

DOTDIGITAL GROUP PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2022


		30.6.22	30.6.21
		£'000	£'000
	Notes
Cash flows from operating activities
Cash generated from operations	29	25,162	17,969
Tax paid		(1,761)	(975)

Net cash generated from all operating activities		23,401	16,994


Net cash generated from continuing operating activities		23,401	20,710
Net cash used in discontinued operating activities		-	(3,716)
Cash flows from investing activities
Purchase of intangible fixed assets	14	(7,686)	(6,870)
Purchase of property, plant and equipment	15	(465)	(169)
Proceeds from sale of property, plant and equipment		-	2
Interest received		57	20

Net cash flows used in investing activities		(8,094)	(7,017)


Net cash used in from continuing investing activities		(8,094)	(7,017)
Net cash used in discontinued investing activities		-	-
Cash flows from financing activities
Equity dividends paid		(2,564)	(2,472)
Payment of lease liabilities		(1,110)	(1,182)
Proceeds from share issues		2	158

Net cash flows used in financing activities		(3,672)	(3,496)

Net cash used in continuing financing activities		(3,672)	(3,446)
Net cash used in discontinued financing activities		-	(50)

Increase/(decrease) in cash and cash equivalents		11,635	6,481

Cash and cash equivalents at beginning of year	30	31,951	25,383
Effect of foreign exchange rate changes		333	87

Cash and cash equivalents at end of year	30	43,919	31,951

DOTDIGITAL GROUP PLC

COMPANY STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2022


		30.6.22	30.6.21
		£'000	£'000
	Notes
Cash flows from operating activities
Cash generated from operations	29	2,645	2,006

		2,645	2,006
Net cash generated from operating activities

Cash used in investing activities

Purchase of property, plant and equipment		(5)	(3)

Net cash flows used in investing activities		(5)	(3)

Cash flows used in financing activates
Equity dividends paid		(2,564)	(2,472)
Proceeds from share issues		2	158

Net cash flows used in financing activities		(2,562)	(2,314)


Increase in cash and cash equivalents		78	(311)

Cash and cash equivalents at beginning of year	30	85	396

Cash and cash equivalents at end of year	30	163	85

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2022

1. GENERAL INFORMATION

Dotdigital Group Plc ("Dotdigital") is a public limited company incorporated in England and Wales and quoted on the AIM Market. The address of the registered office is disclosed on the inside back cover of the financial statements. The principal activity of the Group is described below.

2.ACCOUNTING POLICIES

Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the UK (IFRSs as adopted by the UK) and those parts of Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention.

The Group has applied all accounting standards and interpretations issued by the International Accounting Standards Board and the IFRS Interpretations Committee effective at the time of preparing the consolidated financial statements.

New and amended standards adopted by the Company

The Company adopted the following new and amended relevant IFRS in the year:
IFRS 7	Financial Instruments: Disclosures - amendments regarding replacement issues in the context of the IBOR reform
IFRS 9	Financial Instruments - Amendments regarding replacement issues in the context of the IBOR reform
IFRS 9	Financial Instruments - Amendments resulting from Annual Improvements to IFRS Standards 2018-2020 (fees in the "10 per cent" test for derecognition of financial liabilities)
IAS 37	Provisions, Contingent Liabilities and Contingent Assets - Amendments regarding the costs to include when assessing whether a contract is onerous
IFRS 16	Leases - Amendments regarding COVID-19 related rent concessions
The adoption of these accounting standards did not have any effect on the Company's Statement of Comprehensive Income, Statement of Financial Position or equity.

Accounting standards issued but not yet effective
The International Accounting Standards Board ("IASB") has issued/revised a number of relevant standards with an effective date after the date of these financial statements. Any standards that are not deemed relevant to the operations of the Company have been excluded. The Directors have chosen not to early adopt these standards and interpretations and they do not anticipate that they would have a material impact on the Company's financial statements in the period of initial application.
		Effective date

IAS 1	Presentation of Financial Statements - amendments regarding the classification of liabilities	1 January 2023
IAS 1	Presentation of Financial Statements - amendments regarding the disclosure of accounting policies	1 January 2023
IAS 8	Accounting Policies, Changes in Accounting Estimates - amendments regarding the definition of accounting estimates	1 January 2023
IAS 12	Income Taxes - amendments regarding deferred tax related to assets and liabilities arising from a single transaction	1 January 2023
IFRS 16	Leases - amendments regarding the classification of liabilities	1 January 2024

The financial statements are presented in sterling (£), rounded to the nearest thousand pounds.

Significant accounting policies

The Group has consistently applied the following accounting policies to all periods presented in these consolidated financial statements, except if mentioned otherwise.

Basis of consolidation

In the period ended 2009, the Company acquired via a share for share exchange the entire issued share capital of Dotdigital EMEA Limited, whose principal activity is that of providing SaaS via a leading omni-channel marketing automation platform and managed services to digital marketing professionals.

Under IFRS 3 'Business combinations', the Dotdigital EMEA Limited share exchange has been accounted for as a reverse acquisition. Although these consolidated financial statements have been issued in the name of the legal parent, the Company it represents in substance is a continuation of the financial information of the legal subsidiary, Dotdigital EMEA Limited. The following accounting treatment has been applied in respect of the reverse acquisition:

- the assets and liabilities of the legal subsidiary, Dotdigital EMEA Limited, are recognised and measured in the consolidated financial statements at their pre-combination carrying amounts, without restatement to their fair value;

- the retained reserves recognised in the consolidated financial statements for the beginning of the prior period reflect the retained reserves of Dotdigital EMEA Limited to 30 April 2008. However, in accordance with IFRS3 'Business combinations', the equity structure appearing in the consolidated financial statements reflects the equity structure of the legal parent Dotdigital Group Plc, including the equity instruments issued under the share exchange to effect the business combination;

- a reverse acquisition reserve has been created to enable the presentation of a consolidated balance sheet which combines the equity structure of the legal parent with the non-statutory reserves of the legal subsidiary 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 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 omni-channel marketing services to other businesses, and services are either provided on a usage basis or fixed price bespoke contract. All revenue is from contracts signed with new customers and upgrades and additional functional recurring revenue sold to existing contracted clients. Revenue from contracts is recognised under percentage of completion method based on a percentage of services performed to date as a percentage of the total services to be performed.

Professional services at no charge: The Group sells professional services to its customers and there are occasions when these services are provided at no cost as part of the contract sold. The services provided for no charge are recognised at the price stated within the latest price list and accounted for as separate performance obligations when the service occurs. The amount allocated to the services is deducted from the contract value and the remainder of the contract value is spread evenly over the term of the contract.

Prepaid contracts: The Group sells 12-, 24- and 36-month contracts to its customers. This revenue is recognised monthly over the period of the contract. Where a customer prepays their contract, this is recognised over the period of the contract irrespective of materiality.

Term contract billing: The Group raises the first invoice to its new customers when the service agreement is signed. Occasionally, the service does not start in the same month as when the service agreement is signed but is invoiced in the month where the service agreement is signed. The revenue is then recognised over the period of the contract irrespective of materiality.

Going concern

The Directors are required to satisfy themselves that it is reasonable for them to conclude whether it is appropriate to prepare the financial statements on a going concern basis, and as part of that process they have followed the Financial Reporting Council's guidelines ("Guidance on the Going Concern Basis of Accounting and Reporting on Solvency and Liquidity Risk" issued April 2016).

The Group's business activities together with factors that are likely to affect its future development and position are set out in the Chairman's report, the Chief Executive Officer's report and financial review and the Directors' report. Budgets and detailed profit and loss forecasts that look beyond twelve months from the date of these consolidated financial statements have been prepared and used to ensure that the Group can meet its liabilities as they fall due.

The Directors have made various assumptions in preparing these forecasts, using their view of both the current and future economic conditions that may impact on the Group during the forecast period. The Directors have also considered the continued impact of the COVID-19 pandemic and the impact of the measures taken to contain it, on the Group. Due to the nature of the Group's activities, there has not been a significant on-going impact on the business (as detailed in the Chief Executive Officer's Review and Risk section).

The Directors, at the time of approving the financial statements, have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the financial statements.

Operating profit

Operating profit is stated after charging operating expenses but before finance costs and finance income.

Dividends

Final dividend distributions to the Company's shareholders are recognised as a liability in the financial statements in the period in which the dividends are approved by the Company's shareholders while interim dividends distributions are recognised in the period in which the dividends are declared and paid.

Goodwill

Goodwill represents the excess of the fair value of the consideration over the fair values of the identifiable net tangible and intangible assets acquired and is allocated to cash generating units.

Under IFRS 3 "Business Combinations", goodwill arising on acquisitions is not subject to amortisation but is subject to annual impairment testing. Any impairment is recognised immediately in the income statement and not subsequently reversed.

Investments in subsidiaries

Investments are held as non-current assets at cost less any provision for impairment. Where the recoverable amount of the investment is less than the carrying amount, impairment is recognised.

Intangible assets

Intangible assets are recorded as separately identifiable assets and recognised at historical cost less any accumulated amortisation. These assets are amortised over their useful economic lives of four to five years, with the charge included in administrative expenses in the income statement.

Intangible assets are reviewed for impairment annually. Impairment is measured by determining the recoverable amount of an asset or cash generating unit (CGU) which is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.

- Domain names

Acquired domain names are shown at historical cost. Domain names have a finite life and are carried at cost less accumulated amortisation. Amortisation is calculated using straight-line method to allocate the cost of domain names over their useful lives of four years.

- Software

Acquired software and websites are shown at historical cost. They have a finite life and are carried at cost less accumulated amortisation. Amortisation is calculated using straight-line method to allocate the cost of software and websites over their useful lives of four years.

- Product development

Product development expenditure is capitalised when it is considered that there is a commercially and technically viable product, the related expenditure is separately identifiable and there is a reasonable expectation that the related expenditure will be exceeded by future revenues. Following initial recognition, product developments are carried at cost less any accumulated amortisation and any accumulated impairment losses. The useful lives of these intangible assets are assessed to have a finite life of five years. Amortisation is charged on assets with finite lives, and until economic benefit can be received and recognised, this expense is taken to the income statement and useful lives are reviewed on an annual basis. Amortisation is charged from the point when the asset is available for use.

Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Capitalised development costs are recorded as intangible assets and amortised from the point at which they are ready for use on a straight-line basis over their useful life.

Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when the following criteria as detailed in IAS 38 'Intangible Assets' are fulfilled:

- It is technically feasible to complete the intangible asset so that it will be available for use or resale;

- Management intends to complete the intangible asset and use or sell it;

- There is an ability to use or sell the intangible asset;

- It can be demonstrated how the intangible asset will generate possible future economic benefits;

- Adequate technical, financial and other resource to complete the development and to use or sell the intangible asset are available; and

- The expenditure attributable to the intangible asset during its development can be reliably measured.

-Technology

Technology represents the cost that would be incurred to build the entire Comapi platform had the acquisition not occurred. The useful life of this intangible asset is assessed to have a finite life of 10 years. Amortisation is charged on assets with finite lives, and until economic benefit can be received and recognised, this expense is taken to the income statement and useful lives are reviewed on an annual basis. Amortisation is charged from the point when the asset is available for use.

-Customer relationships

This represents the value of high-value customer contracts within Comapi. The useful life of this intangible asset is assessed to have a finite life of three years. Amortisation is charged on assets with finite lives, and until economic benefit can be received and recognised, this expense is taken to the income statement and useful lives are reviewed on an annual basis. Amortisation is charged over the lifetime of the customer contract.

Impairment of non-financial assets (excluding goodwill)

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.

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 payment that are based on an index or a rate;

- amounts expected to be payable by the lessee under residual value guarantees;

- the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and;

- payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee's incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.

Right-of-use assets are measured at cost comprising the following:

- the amount of the initial measurement of lease liability;

- any lease payments made at or before the commencement date less any lease incentives received;

- any initial direct costs; and

- restoration costs.

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in the income statement. Short-term leases are leases with a lease term of 12 months or less. Low-value assets, being less than £5,000, comprise IT equipment and small items of office furniture.

Extension and termination options

Extension and termination options are included in a number of property and equipment leases across the Group. These terms are used to maximise operational flexibility in terms of managing contracts. The majority of extension and termination options held are exercisable only by the Group and not by the respective lessor. None of the total lease payments made in the period to 30 June 2022 were optional.

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). Potential future cash outflows have not been included in the lease liability because it is not reasonably certain that the leases will be extended (or not terminated), the amount of these cash flows is uncertain as several rounds of rent reviews are due before this extension date.

Financial instruments

Financial assets and financial liabilities are recognised on the statement of financial position when an entity becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the income statement.

Financial assets

The Group's accounting policies for financial assets are set out below.

Management determine the classification of its financial assets at initial recognition depending on the purpose for which the financial assets were acquired and, where allowed and appropriate, revaluate this designation at every reporting date.

All financial assets are recognised on a trade date when, and only when, the Group becomes a party to the contractual provisions of an instrument. When financial assets are recognised initially, they are measured at fair value plus transaction costs, except for those finance assets classified as at fair value through profit or loss ('FVTPL'), which are initially measured at fair value.

Financial assets are classified into the following specified categories: financial assets at FVTPL, 'held-to-maturity' investments, and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of recognition.

Financial assets are classified into the following specified categories: financial assets at FVPL, 'amortised cost' or 'fair value through other comprehensive income' ('FVOCI'). The classification depends on the nature and purpose of the financial assets and is determined at the time of recognition.

Financial assets are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.

For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually, the Group recognises lifetime expected credit losses ('ECL') when there has been a significant increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECL.

Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.

- Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are also included as a component of cash and cash equivalents for the purpose of the consolidated statement of cash flows.

- Trade receivables

Trade receivables are recognised initially at the lower of their original invoiced value and recoverable amount. A provision is made when it is likely that the balance will not be recovered in full. Terms on receivables range from 30 to 90 days.

- Financial liabilities and equity

Financial liabilities and equity are recognised on the Group's statement of financial position when the Group becomes a party to a contractual provision of an instrument. Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of transaction costs.

The Group's financial liabilities include trade payables, accrued liabilities and lease liabilities.

- Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Terms on accounts payable range from 10 to 90 days.

Foreign currency risk

Currency risk is the risk that the holding of foreign currencies will affect the Group's position as a result of a change in foreign currency exchange rates. The Group has no significant foreign currency risk as most of the Group's financial assets and liabilities are denominated in functional currencies of relevant Group entities. Accordingly, no quantitative market risk disclosures or sensitivity analysis for currency risks have been prepared.

The results and ﬁnancial position of all the Group entities (none of which has the currency of a hyper-inﬂationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
(a) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

(b) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

Equity

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

Share premium represents the excess of the amount subscribed for the share capital over the nominal value of the respective shares net of share issue expenses.

Retained earnings represent the cumulative earnings of the Group attributable to equity shareholders.

The reverse acquisition reserve relates to the adjustment required by accounting for the reverse acquisition in accordance with IFRS 3 'Business combinations'.

The retranslation reserve represents the cumulative exchange differences on the retranslation of foreign subsidiaries into the functional currency.

Other reserves relate to the charge for share-based payments in accordance with IFRS 2 'Share-based Payments' plus the movement on the exercise or lapsing of share options.

Share-based payments

For equity-settled share-based payment transactions the Group, in accordance with IFRS 2 'Share-Based Payments' measures their value, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted. The fair value of those equity instruments is measured at the grant date using the trinomial method. The expense is apportioned over the vesting period of the financial instrument and is based on the number which is expected to vest and the fair value of those financial instruments at the date of grant. If the equity instruments granted vest immediately, the expense is recognised in full.

Functional currency translation

- Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (functional currency), which is mainly pounds sterling (£) and it is this currency the financial statements are presented in.

- Transaction and balances

Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

Employee benefit costs

The Group operates a defined contribution pension scheme. Contributions payable by the Group's pension scheme are charged to the income statement in the period in which they relate.

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments as identified by the Board of Directors.

Foreign currency exchange rate risk

The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. As well as naturally mitigating this risk by offsetting its cost base in the same currencies where possible, currency exposure arising from the net assets of the Group's foreign operations is managed through cash balances denominated in the relevant foreign currencies.

The Group is mainly exposed to the US Dollar, Australian Dollar, Singaporean Dollar, Euro, Belarusian Ruble, South African Rand, Polish Zloty and Canadian Dollar currencies.

The 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.

	30.6.22	30.6.21
	£'000	£'000

US Dollar	60	60
Australian Dollar	14	13
Singaporean Dollar	(37)	(9)
Euro	10	(20)
Belarusian Ruble	(2)	7
South African Rand	(2)	4
Polish Zloty	5	95
Canadian Dollar	1	(1)

	49	149

Critical accounting estimates and judgements

The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Judgements

(a) Capitalisation of development costs - refer to note 14

Our business model is underpinned by our email and data-driven omnichannel marketing automation platform, Dotmailer. Internal activities are continually undertaken to enhance and maintain the product in a bid to stay ahead of our competition. Management review the work of developers during the period and make the following judgements:

-Internal work relating to product development is reviewed against IAS 38 criteria and will be capitalised if management consider that the criteria have been met;

-Internal work relating to the maintenance of existing products is expensed to the income statement and accounted for in payroll costs.

(b) Valuation of goodwill - refer to note 13

The recognition of business combinations requires the excess of the purchase price of acquisitions over the net book value of assets acquired to be allocated to the assets and liabilities of the acquired entity. The Group makes judgements and estimates in relation to the fair value allocation of the purchase price. If any unallocated portion is positive it is recognised as goodwill and if negative, it is recognised in the consolidated income statement.

Judgement is required in determining the fair value of identifiable assets, liabilities and contingent assets and liabilities assumed in a business combination and the fair value of the consideration payable. Calculating the fair values involves the use of significant estimates and assumptions, including expectations about future cash flows, discount rates and the lives of assets following purchase.

Management review each of the trading entities operations, particularly when it is loss making to ascertain if it is a going concern and if its assets should be impaired.

Judgement is therefore required to review future looking forecasts and review existing and future sales pipeline within the region. Thereby leading to a decision as to whether the region remains viable.

Estimates and assumptions

(a) Impairment of goodwill

The Directors have carried out a detailed impairment review in respect of goodwill. The Group assesses at each reporting date whether there is an indication that an asset may be impaired, by considering the net present value of discounted cash flow forecasts which have been discounted at 19.75% (2021: 6.2%). This has increased as a result of the increase in the cost equity which was impacted by both the decline in the share price at the year end compared to last year and the increase in dividend growth rate. The cash flow projections are based on the assumption that the Group can realise projected sales. A prudent approach has been applied with no residual value being factored.

Further details on the estimates and assumptions we make in our annual impairment testing of goodwill are included in note 13 to the financial statements. At the period end, based on the assumptions, there was no indication of impairment to the carrying value of goodwill.

(b) Share-based compensation

Key management believe that there will not be only one acceptable choice for estimating the fair value of share-based payment arrangements. The judgements and estimates that management apply in determination of the share-based compensation are summarised below:

-Selection of a valuation model

-Making assumptions used in determining the variables used in a valuation model:

i. expected life

ii. expected volatility

iii. expected dividend yield

iv. interest rate

Further detail on the estimates and assumptions we make in our share-based compensation are included in note 28 to the financial statements. The charge made to income statement for period is also disclosed there.

The Group depreciates right of use assets, short leasehold, fixtures and fittings, computer equipment and amortises customer relationships, technology, computer software, internally generated development costs and domain names on a straight-line method over the estimated useful lives. The estimated useful lives reflect the Directors' estimate of the periods that the Group intends to derive future economic benefits from the use of the Group's right of use assets, short leasehold, fixtures and fittings, computer equipment, customer relationships, technology, computer software, internally generated development costs and domain names.

(d) Bad debt provision

We perform ongoing credit evaluations of our customers and grant credit based upon past payment history, financial condition and anticipated industry conditions. Customer payments are regularly monitored and a provision for doubtful accounts is established based upon specific situations and overall industry conditions. Hence the provision is maintained for potential credit losses based upon management's assessment of the expected collectability of all accounts receivable. In making this assessment, management take into consideration (i) any circumstances of which we are aware regarding a customer's inability to meet its financial obligations and (ii) our judgements as to potential prevailing economic conditions in the industry and their potential impact on the Group's customers.

Where a general provision is set then specific rationale will be set against this which will be a combination of looking at historical data to ascertain the percentage of debt which goes bad. Plus set against debts within a specific business sector which might be facing financial difficulty, thereby leading to a deemed higher risk of defaulting on their debts.

(e) Lease accounting - incremental borrowing rate

IFRS 16 "Leases" requires lease payments to be discounted using the lessee's incremental borrowing rate. The Group's incremental borrowing rate, as at the date of adoption of IFRS 16, has been based on local commercial bank loans. Management have taken the view that specific costs of borrowing should be applied to each lease as this reflects the different economic conditions within each geography and hence is more representative of the funding facilities available in those countries.

Exceptional items

Where items of income and expense are of such size, nature or incidence that their disclosure is relevant to explain the performance of the company for the period, the nature and amount of such items should be disclosed separately.

3. SEGMENTAL REPORTING

In the current year, Dotdigital's single line of business remains the provision of data-driven omni-channel marketing automation. In the previous year Dotdigital had two lines of business; the additional line being communication platform as a service (CPaaS). The chief operating decision maker considers the Group's segments to be by geographical location, this being EMEA, US and APAC operations and by business activity, this being core Engagement Cloud and CPaaS as shown in the tables that follow:

Geographical revenue and results (from all operations)

	30.6.2022
	EMEA	US	APAC	Total
	£'000	£'000	£'000	£'000
Income statement
Revenue	48,191	9,688	4,953	62,832
Gross profit	38,374	8,537	4,351	51,262
Profit/(loss) before income tax	12,444	972	189	13,605
Total comprehensive income attributable to the owners of the parent	10,967	1,049	148	12,164

Financial position
Total assets	83,664	3,498	631	87,793
Net current assets/(liabilities)	42,270	2,204	(816)	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.

	30.6.2021
	EMEA	US	APAC	Total
	£'000	£'000	£'000	£'000
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	11,669	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

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).

Segmental reporting

Business activity revenue and results

	30.6.2022
		Core	CPaaS	Total
		£'000	£'000	£'000
Income statement
Revenue		62,832	-	62,832
Gross profit		51,262	-	51,262
Profit/(loss) before income tax		13,655	(50)	13,605
Total comprehensive income attributable to the owners of the parent		12,214	(50)	12,164

Financial position
Total assets		87,774	19	87,793
Net current assets/(liabilities)		43,640	18	43,658

	30.6.2021
		Core	CPaaS	Total
		£'000	£'000	£'000
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/(liabilities)		34,974	(31)	34,943

4. EMPLOYEES AND DIRECTORS

			30.6.22	30.6.21
			£'000	£'000

		Wages and salaries	24,650	22,005
		Social security costs	2,396	2,228
		Other pension costs	561	534

			27,609	24,767

The average monthly number of employees during the year is as follows

			30.6.22	30.6.21

		Directors	5	5
		Sales and marketing product	157	160
		Development and system engineers	117	105
		Administration	69	69

			348	339

	Included in the total employees cost above, £6,194,834 (2021: £5,198,785) was capitalised in relation to internally generated development costs.

5. EXCEPTIONAL COSTS
Continuing exceptional costs incurred in the year relate to the amortisation of acquired intangibles of £120,000 (2021: £120,000), senior management settlement costs of £355,053 (2021:£nil) and the acquisition costs of Comapi of £nil (2021: £68,095).
6. NET FINANCE INCOME
			30.6.22	30.6.21
			£'000	£'000
		Finance income:
		Deposit account interest	57	20
		Finance cost:
		Finance lease interest	(57)	(74)

			-	(54)

7. OPERATING PROFIT

Costs by nature
Profit from continuing operations has been arrived at after charge and crediting:-
		30.6.22		30.6.21
		£'000		£'000

Outsourcing and tech infrastructure			11,570		10,356

	Total cost of sales		11,570		10,356


			30.6.22		30.6.21
			£'000		£'000

Direct marketing			3,066		2,976
Partner commission			2,125		2,198
Staff related costs (inc Directors' emoluments)			20,290		19,208
Auditor's remuneration			81		52
Amortisation of intangibles*			6,001		4,675
Depreciation charge*			1,080		1,410
Legal, professional and consultancy fees			1,028		848
	Computer expenditure		802		538
Bad debts			682		897
Foreign exchange losses/(gains)			(452)		543
Travel and subsistence costs			119		87
Office running			413		388
Gain on disposal of property, plant and equipment			-		(2)
Staff welfare			432		342
Other costs			1,059		549
Management charge			-		(620)

Total administrative expenses			36,726		34,089

During the year the Group obtained the following services from the Group's auditor at costs detailed below:

	30.6.22		30.6.21
	£'000		£'000

Fees payable to the Company's auditor for the audit of Parent Company and consolidated financial statements		33		28
Fees payable to the Company's auditor for other services
- audit of Company subsidiaries		45		47
- review of interim accounts		3		5

		81		80

*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.

8. INCOME TAX EXPENSE

	Analysis of the tax charge from continuing operations:
					30.6.22					30.6.21
					£'000					£'000

	Current tax on profits for the year						1,180					1,008
	Changes in estimates related to prior years						142					(53)
	Deferred tax on origination and reversal of timing differences					452						367

							1,774					1,322


	Analysis of the tax charge from discontinuing operations:
		30.6.22									30.6.21
		£'000									£'000

Current tax on profits for the year								-			-
Deferred tax on origination and reversal of timing differences								-			101

								-			101

	Factors affecting the tax charge:
				30.6.22					30.6.21
				£'000					£'000

Profit on ordinary activities from all operations before tax				13,605					12,014
Profit on ordinary activities multiplied by the average rate of corporation tax suffered globally: 19% (2021: 19%)			2,585						2,283
Effects of:
Adjustments in respect of prior years				142					(102)
Expenses not deductible				98					673
Research and development enhanced claim				(1,439)					(1,266)
Income not taxable				(21)					(505)
Share options				71					11
Tax rate changes				291					375
Effects of overseas tax rates				38					(36)
Other				9					(10)
Total tax charge for the year				1,774					1,423

Deferred tax was calculated using the rate 25% (2021: 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 in the period was 19% (2021: 19%). Finance Act 2021 makes provision for the rate of corporation tax in the UK to increase (from 1 April 2023) from 19% to 25%. UK deferred balances have therefore been recognised at 25% in the period (2021: 25%).

9. PROFIT OF PARENT COMPANY

The profit and loss account of the Parent Company is not presented as part of these financial statements. The Parent Company's profit before exceptional items for the financial year was £4,163,416 (2021: £3,879,692)

10. DIVIDENDS

Amounts recognised as distributions to equity holders in the period
	30.6.22		30.6.21
	£'000		£'000

Paid dividend for year end 30 June 2021 of 0.86p (2020: 0.83p) per share		2,564	2,472

Proposed dividend for the year end 30 June 2022 of 0.98p (2021: 0.86p) per share		2,925	2,583
The proposed final dividend is subject to approval by the shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

11. EARNINGS PER SHARE

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

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

A number of non-IFRS adjusted profit measures are used in this annual report and financial statements. Adjusting items are excluded from our headline performance measures by virtue of their size and nature, in order to reflect management's view of the performance of the Group. Summarised below is a reconciliation between statutory results to adjusted results. The Group believes that alternative performance measures such as adjusted EBITDA are commonly reported by companies in the markets in which it competes and are widely used by investors in comparing performance on a consistent basis without regard to factors such as depreciation and amortisation, which can vary significantly depending upon accounting methods (particularly when acquisitions have occurred), or based on factors which do not reflect the underlying performance of the business. The adjusted profit after tax earnings measure is also used for the purpose of calculating adjusted earnings per share.

Reconciliations to earnings figures used in arriving at adjusted earnings per share are as follows:

	30.6.22	30.6.21
From all operations	£'000	£'000

Profit for the year attributable to the owners of the parent	11,831	10,591
Amortisation of acquisition-related intangible fixed assets (see note 14)	120	120
Other exceptional costs (see note 5)	355	68
Share-based payment (see note 28)	456	625
Adjusted profit for the year attributable to the owners of the parent	12,762	11,404

Management does not consider the above adjustments to reflect the underlying business performance. The other exceptional costs relate to senior management settlement costs.

		30.6.22	30.6.21
		£'000	£'000

Adjusted profit for the year attributable to the owners of the parent for continuing activities.	12,762		12,303
Adjusted loss for the year attributable to the owners of the parent for discontinuing activities.	-		(899)
Adjusted profit for the year attributable to the owners of the parent	12,762		11,404

		30.6.22
			Weighted
			average		Per share
From all operations		Earnings	number of		Amount
		£'000	shares		Pence

Basic EPS
Profit for the year attributable to the owners of the parent		11,831	298,995,582		3.96

Adjusted Basic EPS
	Adjusted profit for the year attributable to the owners of the parent	12,762		298,995,582	4.27

Options and warrants		-	6,222,724		-

Diluted EPS
Profit for the year attributable to the owners of the parent		11,831	305,218,306		3.88

Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the parent		12,762	305,218,306		4.18

	30.6.22
		Weighted
		average	Per share
From continuing operations	Earnings	number of	Amount
	£'000	shares	Pence

Basic EPS
Profit for the year attributable to the owners of the parent	11,831	298,995,582	3.96

Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the parent	12,762	298,995,582	4.27

Options and Warrants	-	6,222,724	-

Diluted EPS
Profit for the year attributable to the owners of the parent	11,831	305,218,306	3.88

Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the parent	12,762	305,218,306	4.18

	30.6.21
		Weighted
		average	Per share
From all operations	Earnings	number of	Amount
	£'000	shares	Pence

Basic EPS
Profit for the year attributable to the owners of the parent	10,591	298,598,459	3.55

Adjusted Basic EPS
Adjusted profit for the year attributable to the owners of the parent	11,404	298,598,459	3.82

Options and Warrants	-	4,322,868	-

Diluted EPS
Profit for the year attributable to the owners of the parent	10,591	302,921,327	3.50

Adjusted Diluted EPS
Adjusted profit for the year attributable to the owners of the parent	11,404	302,921,327	3.76

		30.6.21
			Weighted
			average	Per share
	From continuing operations	Earnings	number of	Amount
		£'000	shares	Pence

	Basic EPS
	Profit for the year attributable to the owners of the parent	11,490	298,598,459	3.85

	Adjusted Basic EPS
	Adjusted profit for the year attributable to the owners of the parent	12,303	298,598,459	4.12

	Options and warrants	-	4,322,868	-

	Diluted EPS
	Profit for the year attributable to the owners of the parent	11,490	302,921,327	3.79

	Adjusted Diluted EPS
	Adjusted profit for the year attributable to the owners of the parent	12,303	302,921,327	4.06

		30.6.21
			Weighted
			average	Per share
From discontinued operations		Earnings	number of	Amount
		£'000	shares	Pence

Basic EPS
Loss for the year attributable to the owners of the parent		(899)	298,598,459	(0.30)

Adjusted Basic EPS
Adjusted Loss for the year attributable to the owners of the parent		(899)	298,598,459	(0.30)

Options and Warrants		-	4,322,868	-

Diluted EPS
Loss for the year attributable to the owners of the parent		(899)	302,921,327	(0.30)

Adjusted Diluted EPS
Adjusted loss for the year attributable to the owners of the parent		(899)	302,921,327	(0.30)

Weighted average number of shares	30.6.22	30.6.21
	Shares	Shares

Basic EPS	298,995,582	298,598,459

Diluted EPS	305,218,306	302,921,327

12. CONTINUING AND DISCONTINUED OPERATIONS

The analysis between continuing and discontinued operation is as follows:

Year ended 30 June 2022

	Continuing operations	Discontinuing operations	TOTAL

	£'000	£'000	£'000

Revenue	62,832	-	62,832
Cost of sales	(11,570)	-	(11,570)

Gross profit	51,262	-	51,262

Administrative expense	(36,726)	-	(36,726)
Share based payments	(456)	-	(456)
Exceptional costs	(475)	-	(475)

OPERATING PROFIT	13,605	-	13,605

Finance income	57	-	57
Finance costs	(57)	-	(57)

PROFIT BEFORE INCOME TAX	13,605	-	13,605

Income tax expense	(1,774)	-	(1,774)

PROFIT FOR THE YEAR	11,831	-	11,831

Year ended 30 June 2021

	Continuing operations	Discontinuing operations	TOTAL

	£'000	£'000	£'000

Revenue	58,124	2,426	60,550
Cost of sales	(10,356)	(1,211)	(11,567)

Gross profit	47,768	1,215	48,983

Administrative expense	(34,089)	(2,012)	(36,101)
Share based payments	(625)	-	(625)
Exceptional costs	(188)	-	(188)

OPERATING PROFIT	12,866	(797)	12,069

Finance income	20	-	20
Finance costs	(74)	(1)	(75)

PROFIT BEFORE INCOME TAX	12,812	(798)	12,014

Income tax expense	(1,322)	(101)	(1,423)

PROFIT FOR THE YEAR	11,490	(899)	10,591

13. GOODWILL

Group
	30.6.22	30.6.21
COST	£'000	£'000
At 1 July	13,192	13,192
At 30 June	13,192	13,192

IMPAIRMENT
At 1 July	3,512	3,512

At 30 June	3,512	3,512

NET BOOK VALUE	9,680	9,680

Goodwill is allocated to the Groups 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 Groups trading activity and business segment. This has been tested for impairment during the current period by comparison with the recoverable amounts of the CGU. Recoverable amounts for CGUs are based on the higher of value in use and fair value less costs to sell. The recoverable amounts of the CGU have been determined from value in use calculations. These calculations use pre-tax cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rate for the continuing operations of the Group. These long-term growth rates are management's estimates. The discount rates used are pre-tax and reflect specific risks relating to the continuing operations of the Group.

The key assumptions for the value in use calculations are those regarding discount rates, growth rates, and expected changes in margins.

Discount rate

Management estimates discount rates using pre-tax rates that reflect the current market assessment of the time value of money and the risks specific to the CGUs. The pre-tax discount rate used to calculate the value in use is 19.75% (2021: 6.2%). This has increased as a result of the increase in the cost equity which was impacted by both the decline in the share price at the year end compared to last year and the increase in dividend growth rate.

Growth rates

The growth rate is stated as the compound annual growth rates in the initial five years for the continuing operations of the Group which are then used for impairment testing. These are performed using the projected cash flows based on budgets approved by management over a five-year period. Cash flow projections from the sixth year onwards are based on an estimated constant growth rate. The growth rate used to calculate the value in use is 15% (2021: 14%).

Gross profit margin

Changes in income and expenditure are based on experience and expectations of the future changes in the market. The impairment review is based on these estimated gross profit margins which were included with the budgets approved by management over a five-year period. From the sixth year onwards, an assumed constant margin is used. The gross profit margin used to calculate the value in use in 75% (2021: 75%).

The valuations indicate sufficient headroom such that a reasonably possible change in key assumptions would not result in impairment of goodwill.

Sensitivity analysis

The principal variables used, being both the discount rate and growth rates, these would need to change before an impairment is required, this being 161% (2021: 225%) discount rate and growth rate of -5% (2021: -21%).

14. INTANGIBLE ASSETS

Group

	Customer
	relationships	Technology
	£'000	£'000
COST
At 1 July 2021	1,205	1,200
Additions	-	-

At 30 June 2022	1,205	1,200

AMORTISATION
At 1 July 2021	1,205	430
Amortisation for the year	-	120

At 30 June 2022	1,205	550

NET BOOK VALUE At 30 June 2022	-	650

	Computer	Internally generated development	Domain
	software	costs	names		Totals
	£'000	£'000	£'000		£'000
COST
At 1 July 2021	1,023	34,052	46		37,526
Additions	87	7,599	-		7,686
Exchange differences	1	-	-		1

At 30 June 2022	1,111	41,651	46		45,213

AMORTISATION
At 1 July 2021	874	18,847	36		21,392
Amortisation for the year	71	5,931	1		6,123

At 30 June 2022	945	24,778	37		27,515

NET BOOK VALUE At 30 June 2022	166	16,873	9		17,698


				Customer
				relationships		Technology
				£'000		£'000
COST
At 1 July 2020				1,205		1,200
Additions				-		-

At 30 June 2021				1,205		1,200

AMORTISATION
At 1 July 2020				1,205		310
Amortisation for the year				-		120

At 30 June 2021				1,205		430

NET BOOK VALUE At 30 June 2021				-		770


	Computer	Internally generated development	Domain
	software	costs	names	Totals
	£'000	£'000	£'000	£'000
COST
At 1 July 2020	954	27,255	42	30,656
Additions	69	6,797	4	6,870

At 30 June 2021	1,023	34,052	46	37,526

AMORTISATION
At 1 July 2020	793	14,255	34	16,597
Amortisation for the year	81	4,592	2	4,795

At 30 June 2021	874	18,847	36	21,392

NET BOOK VALUE At 30 June 2021	149	15,205	10	16,134

Development cost additions represents resources the Group has invested in the development of new, innovative and ground-breaking technology products for marketing professionals. This platform allows them to create, send and automate marketing campaigns. Following development of the products the Group intends to licence the use of the platform.

Technology represents the cost that would be incurred to build the entire Comapi platform had the acquisition not occurred. Customer relationships represent the value of high-value customer contracts within Comapi.

15. PROPERTY, PLANT AND EQUIPMENT

Group

	Right of	Short	Fixtures &	Computer
	Use assets	leasehold	fittings	equipment	Totals
	£'000	£'000	£'000	£'000	£'000
COST
At 1 July 2021	5,384	725	754	2,614	9,477
Additions	167	-	-	465	632
Disposals	(60)	-	-	-	(60)
Exchange differences	64	6	19	23	112

At 30 June 2022	5,555	731	773	3,102	10,161

DEPRECIATION
At 1 July 2021	2,061	526	680	2,238	5,505
Depreciation for the year	983	61	40	236	1,320
Disposals	(45)	-	-	-	(45)
Exchange differences	56	6	16	18	96

At 30 June 2022	3,055	593	736	2,492	6,876

NET BOOK VALUE
At 30 June 2022	2,500	138	37	610	3,285


	Right of	Short	Fixtures &	Computer
	Use assets	leasehold	fittings	equipment	Totals
	£'000	£'000	£'000	£'000	£'000
COST
At 1 July 2020	5,458	730	770	2,473	9,431
Additions	115	-	-	169	284
Disposals	(136)	-	(4)	(14)	(154)
Exchange differences	(53)	(5)	(12)	(14)	(84)

At 30 June 2021	5,384	725	754	2,614	9,477

DEPRECIATION
At 1 July 2020	1,058	465	632	2,014	4,169
Depreciation for the year	1,091	65	63	244	1,463
Disposals	(66)	-	(2)	(10)	(78)
Exchange differences	(22)	(4)	(13)	(10)	(49)

At 30 June 2021	2,061	526	680	2,238	5,505

NET BOOK VALUE
At 30 June 2021	3,323	199	74	376	3,972

Included in the net carrying amount of property, plant and equipment are the right-of-use assets as follows:

		Motor
	Properties	vehicles	Totals
	£'000	£'000	£'000
COST
As at 1 July 2021	5,229	155	5,384
Termination of leases	(60)	-	(60)
Additions	167	-	167
Foreign currency translation	64	-	64

At 30 June 2022	5,400	155	5,555

DEPRECIATION
As at 1 July 2021	1,942	119	2,061
Depreciation for the year	953	30	983
Termination of leases	(45)	-	(45)
Foreign currency translation	56	-	56

At 30 June 2022	2,906	149	3,055

NET BOOK VALUE
At 30 June 2022	2,494	6	2,500

		Motor
	Properties	vehicles	Totals
	£'000	£'000	£'000
COST
As at 1 July 2020	5,376	82	5,458
Termination of leases	(136)	-	(136)
Additions	42	73	115
Foreign currency translation	(53)	-	(53)

At 30 June 2021	5,229	155	5,384

DEPRECIATION
As at 1 July 2020	1,015	43	1,058
Depreciation for the year	1,010	81	1,091
Termination of leases	(65)	-	(65)
Foreign currency translation	(18)	(5)	(23)

At 30 June 2021	1,942	119	2,061

NET BOOK VALUE
At 30 June 2021	3,287	36	3,323

16. INVESTMENTS

Company

	Group	Group
	undertakings	undertakings
	30.6.22	30.6.21
COST	£'000	£'000

At 1 July Additions Disposals	21,660 456 -	21,035 625 -
At 30 June	22,116	21,660

IMPAIRMENT
At 1 July and 30 June	3,519	3,519
Impairment	234	-
At 30 June	3,753	3,519
NET BOOK VALUE
At 30 June	18,363	18,141

The Group's or the Company's investments at the balance sheet date in the share capital of companies include the following:

Subsidiaries

Nature of business

Class of share

Proportion of

voting power

held directly %

Dotdigital EMEA Limited

Omni-channel

Ordinary

100

communication platform

Dotdigital Inc

Omni-channel communication platform

Ordinary

100

Dotdigital APAC Pty Limited

Omni-channel communication platform

Ordinary

100

Dotdigital B.V.

Omni-channel communication platform

Ordinary

100

Dotmailer Development Ltd

Holding company

Ordinary

100

Dotmailer SA Pty

Development hub

Ordinary

100

Dotmailer LLC**

Development hub

Ordinary

100

Dotdigital SG Pte Limited

Omni-channel communication platform

Ordinary

100

Dynmark International Ltd

Omni-channel communication platform

Ordinary

100

Dynmark S.p z.o.o**

Development hub

Ordinary

100

Dotdigital Canada Inc

Consultancy services

Ordinary

100

** These are held indirectly at 100%.

All of the above subsidiaries have been included within the consolidated results, however Dynmark International Ltd was exempt from audit by virtue of s479A of Companies Act 2006 plus Dotdigital Canada Inc was also fully shut down before the year end. Dotdigital EMEA Limited, Dotmailer Development Limited and Dynmark International Ltd were incorporated in England and Wales. Dotdigital Inc was incorporated in Delaware (US), Dotdigital APAC Pty Limited was incorporated in New South Wales (Australia), Dotdigital B.V. was incorporated in Netherlands, Dotdigital SG Pte Ltd was incorporated in Singapore, Dotmailer SA Pty was incorporated in South Africa, Dotmailer LLC was incorporated in the Republic of Belarus, Dynmark S.p. z.o.o. was incorporated in Poland and Dotdigital Canada Inc was incorporated in British Columbia (Canada).

Subsidiary			Registered office

Dotdigital EMEA Ltd			No.1 London Bridge
Dynmark International Ltd			London
Dotmailer Development Ltd			SE1 9BG

Dotdigital Inc			16192 Coastal Highway
			Lewes
			Delaware 19958-9776
			County of Sussex
			USA

Dotdigital Canada Inc			939 Granville Street
			Vancouver
			British Columbia
			V6Z 1L3
			Canada

Dotdigital APAC Pty Ltd			60/2 O'Connell Street
			Parramatta
			New South Wales 2150
			Australia

Dotdigital SG Pte Ltd			Level 17, Frasers Tower
			182 Cecil Street
			069547 Singapore

Dotmailer SA Pty Ltd			BDO Building
			Wanderers Office Park
			52 Corlett Drive
			Illovo
			Johannesburg 2196
			South Africa

Dotdigital B.V.			15 Hoogoorddreef
			Amsterdam
			1101 BA
			Netherlands

Dynmark s.p. z.o.o			Al. Jana Pawla II 22
			00-133 Warsaw
			Poland

Dotmailer LLC			Office 11-9
			Tolbukhina Street
			Minsk 220012
			Belarus

17. TRADE AND OTHER RECEIVABLES

	Group		Company
	30.6.22	30.6.21	30.6.22	30.6.21
	£'000	£'000	£'000	£'000
Current:
Trade receivables	10,748	10,895	-	-
Less: Provision for impairment of trade receivables	(1,892)	(1,785)	-	-

Trade receivables - net	8,856	9,110	-	-
Other receivables	52	60	-	-
Amounts owed by Group undertakings	-	-	1,426	-
VAT	-	-	34	52
Tax receivable	186	-	-	-
Prepayments and contract assets	4,117	4,180	845	88

	13,211	13,350	1,545	140

Further details on the above can be found in note 23.

Included within Group prepayments is an amount of £246,057 (2021: £299,016) in relation to deferred commission which is considered to be long term. The Group has applied IFRS 9 simplified approach to measuring expected credit losses, the balances have been assessed based on each entitiy's ability to repay amounts owed and no expected credit loss has been recognised.

18. CASH AND CASH EQUIVALENTS

	Group		Company
	30.6.22	30.6.21	30.6.22	30.6.21
	£'000	£'000	£'000	£'000

Bank accounts	43,919	31,951	163	85

	43,919	31,951	163	85

Further details on the above can be found in note 23.

19. CALLED UP SHARE CAPITAL

Allotted, issued, fully paid	Nominal	30.6.22	30.6.21
Number	value	£'000	£'000

299,216,130 (2021: 298,778,630)	£0.005	1,496	1,494

		1,496	1,494

During the reporting period the Company undertook the following transactions involving the issuing of share capital:

On 1 April 2022 an employee exercised their share options, increasing the issued share capital by 437,500 shares.

20. RESERVES

Group

	Retained	Share	Reverse acquisition
	earnings	premium	reserve
	£'000	£'000	£'000

As at 1 July 2021	54,081	7,124	(4,695)

Issue of share capital	-	-	-
Dividends	(2,564)	-	-
Profit for the year	11,831	-	-
Transfer of reserves	234	-	-
Deferred tax on share options	-	-	-
Other comprehensive income: currency translation	-	-	-
Share-based payment	-	-	-

Balance as at 30 June 2022	63,582	7,124	(4,695)

	Retranslation	Other
	Reserve	reserves	Totals
	£'000	£'000	£'000

As at 1 July 2021	(37)	3,066	59,539

Issue of share capital	-	-	-
Dividends	-	-	(2,564)
Profit for the year	-	-	11,831
Transfer of reserves	-	(234)	-
Deferred tax on share options	-	(1,283)	(1,283)
Other comprehensive income: currency translation	333	-	333
Share-based payment	-	456	456

Balance as at 30 June 2022	296	2,005	68,312

Group

	Retained		Share		Reverse acquisition
		earnings		premium		reserve
		£'000		£'000		£'000

As at 1 July 2020		45,655		6,967		(4,695)

Issue of share capital		-		157		-
Dividends		(2,472)		-		-
Profit for the year		10,591		-		-
Transfer of reserves		307		-		-
Deferred tax on share options		-		-		-
Other comprehensive income: currency translation		-		-		-
Share-based payment		-		-		-

Balance as at 30 June 2021		54,081		7,124		(4,695)

	Retranslation	Other
	reserve	reserves	Totals
	£'000	£'000	£'000

As at 1 July 2020	50	1,600	49,577

Issue of share capital	-	-	157
Dividends	-	-	(2,472)
Profit for the year	-	-	10,591
Transfer in reserves	-	(307)	-
Deferred tax on share options	-	1,148	1,148
Other comprehensive income: currency translation	(87)	-	(87)
Share-based payment	-	625	625

Balance as at 30 June 2021	(37)	3,066	59,539

Company
	Retained	Share	Other
	earnings	premium	Reserves	Totals
	£'000	£'000	£'000	£'000

At 1 July 2021	7,570	7,124	1,690	16,384

Issue of share capital	-	-	-	-
Dividends	(2,564)	-	-	(2,564)
Profit for the year	4,163	-	-	4,163
Transfer in reserves	231	-	(231)	-
Share based payments	-	-	456	456

At 30 June 2022	9,400	7,124	1,915	18,439


Company
	Retained	Share	Other
	earnings	premium	Reserves	Totals
	£'000	£'000	£'000	£'000

At 1 July 2020	5,924	6,967	1,372	14,263

Issue of share capital	-	157	-	157
Dividends	(2,472)	-	-	(2,472)
Profit for the year	3,811	-	-	3,811
Transfer in reserves	307	-	-	307
Share based payments	-	-	318	318

Restated balance as at 30 June 2021	7,570	7,124	1,690	16,384

21. TRADE AND OTHER PAYABLES

	Group		Company
	30.6.22	30.6.21	30.6.22	30.6.21
	£'000	£'000	£'000	£'000
Current:
Trade payables	2,428	769	81	16
Amounts owed to Group undertakings	-	-	-	390
Social security and other taxes	68	29	-	-
Other payables	151	84	-	-
VAT	228	18	-	-
Accruals and contract liabilities	9,779	8,434	61	86

	12,654	9,334	142	492

Further details on liquidity and interest rate risk can be found in note 23. Amounts owed to group undertakings are non-interest bearing and are repayable on demand.

22. LEASE LIABILITIES

Group

	Properties	Motor Vehicles	Totals
	£'000	£'000	£'000

At 1 July 2021	3,359	64	3,423
Termination of leases	(15)	-	(15)
Additions	167	-	167
Principal repayments	(1,081)	(29)	(1,110)
Interest	89	1	90
Foreign currency retranslation	21	-	21

At 30 June 2022	2,540	36	2,576

Current	796	22	818
Non-current	1,744	14	1,758

At 30 June 2022	2,540	36	2,576

Group

	Properties	Motor Vehicles	Totals
	£'000	£'000	£'000

At 1 July 2020	4,427	40	4,467
Termination of leases	(67)	-	(67)
Additions	42	73	115
Principal repayments	(1,132)	(50)	(1,182)
Interest	110	1	111
Foreign currency retranslation	(21)	-	(21)

At 30 June 2021	3,359	64	3,423

Current	906	28	934
Non-current	2,453	36	2,489

At 30 June 2021	3,359	64	3,423

The properties are office leases located in various location where the term in ranging from one to eight years. The motor vehicles are company cars offered to senior staff where the term is always three years.

23. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The Group's activities expose it to a number of financial risks that include credit risk, liquidity risk, currency risk and interest rate risk. These risks and the Group's policies for managing them have been applied consistently during the year and are set out below.

The Group holds no financial or other non-financial instruments other than those utilised in the working operations of the Group and that are listed in this note. It is the Group's policy not to trade in derivative contracts.

Principal financial instruments

The principal financial instruments used by the Group, from which financial instrument rate risk arises, are as follows:

-Trade receivables

-Cash and cash equivalents

-Trade and other payables

- Lease Liabilities

Financial instruments by category

The following table sets out the financial instruments as at the reporting date:

	Group		Company
	30.6.22	30.6.21	30.6.22	30.6.21
	£'000	£'000	£'000	£'000
Financial assets
Trade and other receivables	8,908	9,170	-	-
Amounts owed from group undertakings	-	-	1,426	-
Bank balances	43,919	31,951	163	85

	52,827	41,121	1,589	85

Financial liabilities
Trade payables	2,428	769	81	16
Amounts owed to group undertakings	-	-	-	390
Accrued liabilities and other payables	9,779	8,221	61	86

	12,207	8,990	142	492

The fair value of the financial assets and financial liabilities is equal to their carrying values. All financial assets are categorised as loans and receivables and all financial liabilities are categorised as financial liabilities at amortised costs.

General objectives, policies and processes

The Board has overall responsibility for the determination of the Group's risk management objectives and policies and whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group's Risk Committee. The Board receives quarterly reports from the Risk Committee, through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company's competitiveness and flexibility. Further details regarding these policies are set out below:

Interest rate risk

The Group's interest rate risk arises from interest-bearing assets and liabilities. The Group has in place a policy of maximising finance income by ensuring that cash balances earn a market rate of interest offsetting where possible cash balances, and by forecasting and financing its working capital requirements. As at the reporting date the Group was not exposed to any movement in interest rates as it has no external borrowings and therefore is not exposed to interest rate risk. No sensitivity analysis has been prepared.

The Group's working capital requirements are managed through regular monitoring of the overall cash position and regularly updated cash flow forecasts to ensure there are sufficient funds available for its operations.

Liquidity risk

The Group's working capital requirements are managed through regular monitoring of the overall position and regularly updated cash flow forecasts to ensure there are funds available for its operations. Management forecasts indicate no new borrowing facilities will be required in the upcoming financial period.

Trade and other payables of £13,175,482 (2021: £10,221,000) are expected to mature in less than a year

Credit risk

Credit risk arises principally from the Group's trade receivables, as there are no trade receivables within the Company, which comprise amounts due from customers. Prior to accepting new customers, a credit check is obtained. As at 30 June 2021 there were no significant debts past their due period which had not been provided for. The maturity of the Group's trade receivables is as follows:

	30.6.22	30.6.21
	£'000	£'000

0-30 days	6,225	5,734
30-60 days	2,572	2,701
More than 60 days	1,951	2,550

	10,748	10,985

The maturity of the Group's provision for impairment is as follows:

	30.6.22	30.6.21
	£'000	£'000

0-30 days	195	140
30-60 days	231	154
More than 60 days	1,466	1,491

	1,892	1,785

The movement in the provision for the impairment is as follows:

	30.06.22	30.6.21
	£'000	£'000

As at 1 July	1,785	1,589

Provision for impairment	126	262
Receivable written off in the year	(19)	(66)
Unused amount reversed	-	-

As at 30 June	1,892	1,785

The Group minimises its credit risk by profiling all new customers and monitoring existing customers of the Group for changes in their initial profile. The level of trade receivables older than the average collection period consisted of a value of £2,055,923 (2021: £2,484,862) of which £1,476,586) (2021: £1,502,918) was provided for. The Group felt that the remainder would be collected post year-end as they were with long-standing relationships, and the risk of default is considered to be low and write-offs due to bad debts are extremely low. The Group has no significant concentration of credit risk, with the exposure spread over a large number of customers.

The credit risk on liquid funds is low as the counterparts are banks with high credit ratings assigned by international credit rating bodies. The majority of the Company's cash holdings are held at NatWest Bank, which has a BBB credit rating.

The carrying value of both financial assets and liabilities approximates to fair value.

Capital policy

The Group's objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide optimal returns for shareholders and to maintain an efficient capital structure to reduce the cost of capital.

In doing so the Group's strategy is to maintain a capital structure commensurate with a strong credit rating and to retain appropriate levels of liquidity headroom to ensure financial stability and flexibility. To achieve this, the Group monitors key credit metrics, risk and fixed charge cover to maintain this position. In addition the Group ensures a combination of appropriate short-term and long-term liquidity headroom.

During the year the Group had a short-term loan balance of £nil (2021: £nil) and amounts payable over one year are nil (2021: £nil). The Group had a strong cash reserve to utilise for any short-term capital requirements that were needed.

The Group has continued to look for further long-term investments or acquisitions and therefore, to maintain or re-align the capital structure, the Group may adjust when dividends are paid to shareholders, return capital to shareholders, issue new shares or borrow from lenders.

Foreign currency exchange rate risk

Refer to foreign currency exchange rate risk under note 2..

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.

	<6 months	6 to 12 months	1 to 2 years	2 to 5 years	Total contractual cash flows carrying amounts
	£'000	£'000	£'000	£'000	£'000
Contractual maturities at 30 June 2022
Trade and other payables	12,654	-	-	-	12,654
Lease liabilities	425	392	741	1,018	2,576

Total non-derivatives	13,079	392	741	1,018	15,230



	<6 months	6 to 12 months	1 to 2 years	2 to 5 years	Total contractual cash flows carrying amounts
	£'000	£'000	£'000	£'000	£'000
Contractual maturities at 30 June 2021
Trade and other payables	9,334	-	-	-	9,334
Lease liabilities	480	454	759	1,730	3,423

Total non-derivatives	9,814	454	759	1,730	12,757

24. DEFERRED TAX

	30.6.22	30.6.21
	£'000	£'000

As at 1 July	1,207	1,983
Current year provision	1,548	(776)

	2,755	1,1,207

The deferred tax liability above comprises the following temporary differences:

	30.6.22	30.6.21
	£'000	£'000

Acquired intangibles	163	146
Capital allowances in excess of depreciation	82	38
Temporary differences	(82)	-
R&D relief in excess of amortisation	3,181	2,963
Share option relief	(453)	(1,805)
Losses	(136)	(135)

	2,755	1,207

Deferred tax provision relates to taxes to be levied by the same authority on the same entity expected to be settled at the same time. As such deferred tax assets and liabilities have been offset.

25. CAPITAL COMMITMENTS

The Company and Group have no capital commitments as at the year end.

26. RELATED PARTY DISCLOSURES

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

Group

The following transactions were carried out with related parties and were made on terms equivalent to those that prevail in arm's length transactions.

			30.6.22	30.6.21
			£'000	£'000
Sale of services
Ipswich Town Football Club	Entity under common directorship	Email marketing services	5	4
Epwin Group Plc	Entity under common directorship	Email marketing services	4	6

			9	10

Year end balances arising from sale of services			30.6.22 £'000	30.6.21 £'000
Ipswich Town Football Club	Entity under common directorship	Email marketing services	-	1
Epwin Group Plc	Entity under common directorship	Email marketing services	-	1

			-	2

Directors

	30.6.22	30.6.21
	£'000	£'000

Aggregate emoluments	938	1,136
Ex-gratia payment	213	-
Company contributions to money purchase pension scheme	25	26
Share-based payments from the LTIP options granted	176	347

	1,352	1,509

Directors' pay summary does include Non-Executive Directors. Ex-gratia payment related to a settlement payment made to the old CFO.

Information in relation to the highest paid Director is as follows:

	30.6.22	30.6.21
	£'000	£'000

Salaries	529	574
Other benefits	2	14
Pension costs	18	16
Share-based payments on the LTIP options granted	126	198

	675	802

Company

The following transactions were carried out with related parties

			30.06.22	30.06.21
			£'000	£'000
Year end balances arising from sales/purchase of services

Dotdigital EMEA Limited	Subsidiary	Receivables/(Payables)	2,151	(651)

			2,151	(651)

The receivables and payables are unrestricted in nature and bear no interest. No provisions are held against receivables from related parties.

Loans to/from related parties

		30.6.22	30.6.20
		£'000	£'000
Dotdigital EMEA Limited	Subsidiary
As at 1 July		(1,041)	(3,545)
Loans advanced		5,653	5,075
Loans repaid		(3,886)	(2,571)

		(726)	(1,041)

IAS 24 Related Party Disclosure (Revised) allows disclosure exemption of transactions between wholly-owned subsidiaries that are eliminated on consolidation.

27. ULTIMATE CONTROLLING PARTY

There is no ultimate controlling party of the Group. Dotdigital Group Plc acts as the Parent Company to Dotdigital EMEA Limited, Dotdigital Inc, Dotdigital APAC Pty Limited, Dotdigital B.V., Dotmailer Developments Limited, Dotmailer SA Pty, Dotmailer LLC, Dotdigital SG Pte. Limited, Dynmark International Ltd, Dotdigital Canada Inc and Dynmark S.p. z.o.o.

28. SHARE-BASED PAYMENT TRANSACTIONS

The measurement requirements of IFRS 2 have been implemented in respect of share options that were granted after 7 November 2002. The expense recognised for share-based payment made during the year is £455,549 (2021: £625,000).

Vesting conditions of the options dictate that employees must remain in the employment of the Group for the whole period to qualify.

Movement in issued share options during the year

The table below illustrates the number and weighted average exercise price (WAEP) of, and movements in, share options during the period. The options outstanding at 30 June 2022 had a WAEP of 49.04p (2021: 26.05p) and a weighted average contracted life of 5.82 years (2021: 5.14 years) and their exercise prices ranged from 0.5p to 181.2p. All share options are settled in form of equity issued.

	30.06.22		30.6.21
	No of options	WAEP	No of options	WAEP

Outstanding at the beginning of the period	4,292,735	26.05p	3,910,984	51.09p
Granted during the year	2,463,663	89.85p	1,093,728	104.67p
Forfeited/cancelled during the period	(259,562)	137.88p	(480,992)	13.03p
Exchanged for shares	(437,500)	0.50p	(230,985)	68.50p
Outstanding at the end of the period	6,059,337	49.04p	4,292,735	26.05p
Exercisable at the end of the period	-	-	-	-

The weighted average share price at the date of the exercise for share options exercised during the period was 0.84p (2021: 178.57p). For options granted after 2019, a Monte Carlo model was used in measuring the fair use of options granted that were subject to a TSR performance condition. A Black Scholes model was used in measuring the fair use of all other options granted.

22 December 2020

23 September 2021

24 December 2021

Relative

EPS (50%)

TSR (50%)

EPS (50%)

TSR (50%)

EPS (50%)

TSR (50%)

Number of options granted

153,364

100,729

193,894

Share price at grant date

152.0p

264.0p

196.0p

Exercise price

0.50p

Option life in years

5 years

Risk-free rate

(0.08)%

0.38%

0.57%

Expected volatility

40.40%

39.00%

43.00%

Expected dividend yield

Fair value of options

152.0p

99.0p

264.0p

181.0p

196.0p

115.0p

	19 December	24 October	14 December	15 December	14 April
	2017	2018	2020	2021	2022

Number of options granted	1,375,000	2,305,000	535,920	567,300	1,367,547
Share price at grant date	85.95p	77.5p	148.0p	181.0p	90.0p
Exercise price	0.50p	0.50p	147.5p	181.2p	86.5p
Option life in years	5 years	5 years	10 years	10 years	10 years
Risk-free rate	1.33%	1.23%	(0.01)%	0.54%	1.68%
Expected dividend yield	1%	1%	0.56%	0.46%	0.96%
Fair value of options	65.3p	52.7p	47.0p	62.0p	42.0p

Expected volatility was determined by calculating the historical volatility of the Group's share price from the date it listed to the grant date of the share option. The expected life used in the model is based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

The share options granted on 24 October 2018, 22 December 2020, 23 September 2021 and 24 December 2021 were following the approval of the LTIP scheme at the AGM on 19 December 2017 and the end-to-end awards that were granted to key personnel.


29.	GROUP RECONCILIATION OF PROFIT BEFORE CORPORATION TAX TO CASH GENERATED FROM OPERATIONS

	Group		Company
	30.6.22	30.6.21	30.6.22	30.6.21
	£'000	£'000	£'000	£'000
Current:
Profit before tax from all operations	13,605	12,014	4,163	3,811
Amortisation	6,123	4,795	-	-
Depreciation	1,124	1,267	2	2
Exceptional costs	-	68	-	-
Finance lease non-cash movement	152	(48)	-	-
Gain on disposal of fixed assets	-	(2)	-	-
Loss on disposal of investments	-	-	-	-
Share-based payments	456	625	-	-
Impairment on investment	-	-	235	-
Finance expense	57	75	-	-

	21,517	18,794	4,400	3,813

(Increase)/decrease in trade receivables	325	(363)	(1,405)	657
Increase in trade payables	3,320	(462)	(350)	(2,464)

Cash generated from operations	25,162	17,969	2,645	2,006

30. GROUP CASH AND CASH EQUIVALENTS

The amounts disclosed in the statement of cash flow in respect of cash and cash equivalents are in respect of these statements of financial position amounts:

	Group	Company
	£'000	£'000

As at 1 July 2020	25,383	396

As at 30 June 2021	31,951	85


As at 30 June 2022	43,919	163

31. PROJECT DEVELOPMENT

During the year the Group incurred £7,599,073 (2021: £6,797,279) in development investments. All resources utilised in development have been capitalised as outlined in the accounting policy governing this area.

32. EVENTS AFTER THE END OF THE REPORTING PERIOD

There are no events after the end of the reporting period which impact the Group's and Company's financial statements.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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END

FR FFFEDIEESELF

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