Source - LSE Regulatory
RNS Number : 4705L
Dianomi PLC
13 September 2021
 

                                                                           

 

13 September 2021

Dianomi plc

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

 

Interim Results

 

Dianomi, a leading provider of native digital advertising services to premium clients in the Financial Services and Business sectors, is pleased to announce its unaudited interim results for the six months ending 30 June 2021.

Financial Highlights

·      Revenue increased 34.0% to £17.4 million (H1 2020: £13.0 million) with growth from both new and existing customers

·      Gross margin increased 0.5% to 28.7% (H1 2020: 28.2%) 

·      Adjusted EBITDA* increased 122% to £1.7 million (H1 2020: £0.8 million) 

·      Adjusted EPS** of 2.11 pence per share (H1 2020: 1.67 pence per share)

·      As at 30 June 2021 the Company had no borrowings and cash of £7.9 million (31 December 2020: net cash of £3.5 million)

Operating Highlights

·      Completed a successful listing on AIM alongside a significantly over-subscribed share placing in May

·      Strong demand from both existing and new advertisers, including several premium global brands from both the Business and Lifestyle sectors which went 'live' on the platform in H1

·      Continued expansion of the publisher base with the additions of a market leading luxury publishing house and a British national newspaper, providing additional premium advertising space to meet increased demand

·      Launch of new applications and innovations including Podcast ads and a new self-serve platform for advertisers/ publishers

Outlook

·      New partnership with CNN as the exclusive content recommendation partner across CNN Business, replacing the incumbent provider, demonstrates the quality and relevance of Dianomi's ad monetisation capabilities

·      Structural shift away from third party cookies presents opportunities for Dianomi

·      Strong budgets from advertisers alongside publisher pipeline gives good visibility over H2

 

* Adjusted EBITDA is calculated as profit after tax before deducting net finance costs, tax, depreciation, exceptional items and share based payment charges

** Adjusted to exclude exceptional costs related to the IPO and share based payments. Share numbers for H1 2020 have been adjusted to reflect the share reorganisation which took place in May 2021

 

Rupert Hodson, Chief Executive Officer of Dianomi, said: "I am very proud to report a strong first six months of trading in 2021 following a successful IPO on AIM in May. Our proposition continues to grow in appeal amongst our customers who appreciate the transparency in pricing and the brand protection and relevance our ad platform delivers. Our publisher base is also expanding driven by a number of factors, in particular the attraction of working with our premium client base. Looking ahead, the shift to digital news is ongoing across multiple applications from mobile to laptop and we believe we are well placed to continue to gain market share, as demonstrated by the recent CNN Business win."

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

For further information contact:

Dianomi

Rupert Hodson (Chief Executive Officer)

Charlotte Stranner (Chief Financial Officer)

 

Tel: +44 (0)207 802 5530

Panmure Gordon (NOMAD and Broker)

Emma Earl/ Freddy Crossley, Corporate Finance

Rupert Dearden, Corporate Broking 

 

Tel: +44 (0)207 886 2500

Novella Communications

Tim Robertson / Fergus Young

 

Tel: +44 (0)203 151 7008

About Dianomi

Dianomi, established in 2003, is a leading provider of native digital advertising services to premium clients in the Financial Services and Business sectors. The Group operates from its offices in London, New York and Sydney. The Group enables premium brands to deliver native advertisements to a targeted audience on the desktop, mobile and tablet websites and apps of premium publishers. It provides over 400 advertisers, including blue chip names such as Aberdeen Standard Investments, Invesco and Baillie Gifford, with access to an international audience of 438 million devices per month through its partnerships with over 300 premium publishers of business and finance content, including blue chip names such as Reuters, Bloomberg and WSJ. Ads served are contextually relevant to the content of the web page on which they appear and mirror the style of the page, which enhances reader engagement. http://www.dianomi.com.

 

Chief Executive's Statement

Introduction

I am delighted to report on a strong first six months of trading as well as confirm that we have made further progress in the second half of the year with a new partnership with CNN Business as their exclusive content recommendation partner.  As is widely apparent, the shift to digital continues apace with digital ad spend in the U.S., our main market, expected to increase from USD 356 billion in 2020 to USD 460 billion by 2024. Worldwide, digital ad spend is expected to increase from USD 378 billion in 2020 to USD 646 billion by 2024[1].

Also adding to our appeal is the structural shift occurring around protecting consumers' privacy with the likes of iOS and Chrome phasing out third party cookies and thereby leading advertisers to seek alternative solutions like ours which is not reliant on third party cookies.

Our focus is to continue to expand our share of this growth market, focusing on the premium segments in Business and Finance, and the newer Lifestyle vertical. Key to our ability to grow is adding new advertisers and publishers as well as growing our existing base of both. We believe the business is well placed to address these opportunities.

Operational Review

Dianomi is focused on serving the premium segment of the Business and Finance sector with our client base including 7 of the world's top 10 largest asset management companies, 7 of the top 10 of the largest wealth management firms in the US and half of the top 10 largest banks in the US. The Company also recently entered the premium Lifestyle sector which is complementary in its focus on premium brands and affluent audiences.

During the six months to 30 June 2021, the Company had over 400 active advertisers with an average spend by the top one hundred of £0.14 million compared to £0.11 million in the first half of 2020. Of the £17.4 million of advertising revenue generated, there was a high level of repeat revenue with 59% of revenue being generated by relationships beginning in the past five years and 60% was generated through direct relationships with advertisers. During the period, a number of new advertisers within both the established Finance and Business vertical and the newer premium Lifestyle vertical have 'gone live' on Dianomi's platform, including several premium global brands. 

Through partnerships with over 250 premium publishers over the six months to 30 June 2021, the Company accessed an international audience of, on average, 425 million devices per month. A key focus is to continue to build on our existing publisher partnerships as well as forming new ones, thus delivering increased distribution capabilities to our platform as well as increased scale and reach to our advertisers. There is substantial scope for increasing distribution, with publishers tending to increase their collaboration with Dianomi as they experience the success and quality of the offering. In the period under review, a market leading luxury publishing house and a British national newspaper joined the publisher base and, post period end, we were delighted to have signed a new partnership with CNN as the exclusive content recommendation partner across CNN Business.

Mobile and Video are two growth segments for the Company. Mobile has grown significantly over the last two years, in H1 2021 £9.3 million (H1 2020: £6.6 million) of all advertising revenue came from ads served to mobile devices. Growth in mobile income has benefitted from Dianomi becoming an Apple News sales agent in March 2019 enabling the Company to work directly with Apple News publishers. Video, while much smaller in revenue terms currently, is also expected to expand significantly. In H1 2021, video generated revenue of £0.6 million (H1 2020: £0.2 million). In time this is expected to move to more regular patterns of ad spend with budgets already received for campaigns later in the year.  

Dianomi's ad algorithm sits at the heart of the business and is constantly evolving to match the changes in consumer dynamics and uses of technology. In 2021, the Company began distributing in-stream paid podcasts across our publisher partners. This is an area where we have seen significant interest from advertisers looking to drive new listeners through to their podcast content. Our ability to distribute paid podcast onto our partner sites, where listeners are able to engage with the podcast on-site, is a first for a native ad platform. Furthermore, we launched a new self-serve ad platform with several new features requested by our advertisers; targeting ads by time of day; the ability to create and manage video ads and several other improvements. Advertisers can now also adjust bids by device as well as by publisher.

In May 2021 the Company completed a successful listing on the AIM market of the London Stock Exchange alongside a significantly over-subscribed placing, raising gross proceeds of £5.0 million for the Company. The new capital provides additional working capital and is being used to drive additional growth, in particular, through expanding the North American sales and marketing team with three new hires having recently joined, including a senior sales person in the US. Post IPO the £1.25 million loan notes in issue to BGF were repaid and the business is now debt free with cash of £7.9 million as at 30 June 2021 (31 December 2020: net cash of £3.5 million). 

Financial Review

Revenue grew by £4.4 million to £17.4 million in the six months to 30 June 2021 (H1 2020: £13.0 million) representing an increase of 34.0%. Gross margin benefited from growth in certain higher margin publishers increasing from 28.2% to 28.7% and as a result gross profit increased by 36.5% to £5.0 million (H1 2020: £3.7 million).

Adjusted EBITDA[2] increased 122% to £1.7 million (H1 2020: £0.8 million), reflecting the operational leverage within the business alongside reduced office rental costs and lower than expected marketing expenditure. As expected, the rate of growth in Adjusted EBITDA will be lower in the second half of the year, as new recruits come on board, and office rental costs increase as we take on additional space.  

Share based payments amounted to £2.7 million for the period (H1 2020: £nil), the vast majority of which related to the options which were in existence pre-IPO and which were exercised upon IPO. Included in the £2.7 million was a small charge of £0.06 million relating to the new options granted on IPO as a result of the share price having increased since IPO.

Exceptional items of £0.6 million consisted of costs relating to the IPO (H1 2020: nil), with a further £0.6 million of IPO related costs, including commission payable on new shares issued, being set against share premium.

Adjusted Profit before Tax[3] of £1.6 million was also delivered at an improved margin of 9.4% compared with 5.5% for the six-month period ended 30 Jun 2020.

Adjusted basic earnings per share[4] for the six months to 30 June 2021 increased by 26% to 2.11 pence (H1 2020: 1.67 pence[5]). Basic loss per share was 7.87 pence (H1 2020: profit per share of 1.67 pence*).   

Net assets as at 30 June 2021 amounted to £8.4 million (31 December 2020: £3.3 million). In May 2021, shortly before the IPO, the Company undertook a share reorganisation whereby the various classes of shares were redesignated and sub-divided into ordinary shares of £0.002 pence each. At the time of the IPO, the Company raised gross proceeds of £5.0 million by the issue of 1,831,501 new ordinary shares at a price of £2.73 each. Further details on the movements in share capital can be found in Note 8.

Cash generated from operations was £0.6 million (H1 2020: £1.7 million). Conversion of EBITDA (adjusted for share based payments) to operating cash was 57% in the period. The conversion rate was impacted by the timing of cash receipts with the significant majority of the debtor balances due as at 30 June 2021 now settled.

The Group's net cash position increased to £7.9 million as at 30 June 2021 (31 December 2020: £3.5 million) as a result of the net proceeds of the IPO (£3.8 million) and the cash generated from operations. In May 2021, the Group repaid the £1.25 million loan notes outstanding to BGF and is now debt-free. 

Outlook 

The Company entered the second half of 2021 with a strong pipeline of new publishers and has already had success in converting these opportunities, notably with the recent entry into a new partnership with CNN as the exclusive content recommendation partner across CNN Business, replacing the incumbent.  Consistent with the digital media market as a whole, our publisher base has seen lower average traffic volumes over the summer as people take advantage of the opening up of economies following sustained periods of lockdown across the world. However, despite these lower overall traffic volumes, Dianomi has been successful in increasing revenues with publishers and signing up new publishers as detailed above. Significant budgets are already being received from advertisers for the remainder of the year, and this, combined with our pipeline of new publishers and our established base of premium publishers, gives us confidence in the Group's prospects for the current financial year and beyond. 


[1] Statista.com, May 2021

[2] Adjusted EBITDA is calculated as profit after tax before deducting net finance costs, tax, depreciation, exceptional items and share based payment charges

[3] Adjusted profit before tax is calculated as profit after tax before deducting tax, exceptional items and share based payments

[4] Adjusted basic earnings per share is calculated using profit after tax before deducting exceptional items and share based payments

[5] Share numbers for H1 2020 have been adjusted to reflect the share reorganisation which took place in May 2021

 

 

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

 

6 months ended

30 Jun 2021

6 months

ended

30 Jun 2020

Year

ended

31 Dec 2020

 

£000

£000

£000

 

 

 

 

Note

 

 

 

Revenue

 

17,358

12,953

28,430

Cost of sales

(12,368)

(9,298)

(20,285)

 

---------------------------------------------------

--------------------------------------------------

-------------------------------------------------------

Gross profit

4,990

3,655

8,145

         

 

Administrative expenses

 

(6,038)

(2,918)

(5,939)

Exceptional items

 

(568)

-

(115)

Other operating income

-

-

38

Fair value movements

(21)

(6)

9

----------------------------------------------------

 

-----------------------------------------------

-----------------------------------------------------

Operating (loss)/profit

 

(1,637)

731

2,138

 

 

 

 

 

 

 

 

 

 

Depreciation

 

77

26

103

Share based payments

9

2,673

-

-

Exceptional items

 

568

-

115

 

 

-----------------------------------------------

-----------------------------------------------------

----------------------------------------------------

Adjusted EBITDA

 

1,681

757

2,356

 

 

 

 

 

           

 

Finance income

 

2

3

7

Finance expense

 

(43)

(51)

(105)

 

-------------------------------------------------

-----------------------------------------------

-----------------------------------------------------

(Loss)/profit on ordinary activities before taxation

(1,678)

683

2,040

 

Taxation

 

(366)

(267)

(534)

 

 -------------------------------------------------

---------------------------------------------

-----------------------------------------------------

(Loss)/profit for the year

(2,044)

416

1,506

 

 

 

 

 

Other comprehensive (loss)/income items that may be reclassified subsequently to profit or loss

Currency translation differences

 

 

 

(2)

75

(182)

 

 

 -------------------------------------------------

-------------------------------------------------

---------------------------------------------------

 

Total comprehensive (loss)/income for the year attributable to the owners of the company

 

 

(2,046)

491

1,324

 

 

=================================================

=================================================

==================================================

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted basic earnings per ordinary share (p)

6

2.11

1.67

6.41

 

 

 

 

 

Adjusted diluted earnings per ordinary share (p)

6

1.90

1.52

5.78

 

 

 

 

 

Basic (loss)/ earnings per ordinary share

(p)

6

(7.87)

1.67

6.05

 

 

 

 

 

Diluted (loss)/ earnings per ordinary share (p)

6

(7.87)

1.52

5.45

 

 

 

 

 

 

 

 

 

 

             

 

All operations are continuing operations.

 

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

 

 

 As at

30 Jun

 2021

   As at 30 Jun

   2020

   As at 31 Dec

   2020

 

£000

£000

£000

 

 

 

 

Note

 

 

 

Non-current assets

Right-of-use assets

 

77

231

154

 

---------------------------------------------------

---------------------------------------------------

---------------------------------------------------

Total non-current assets

77

231

154

 

Current assets

Trade and other receivables

 

7,141

5,165

5,906

Cash and cash equivalents

 

7,854

4,307

4,722

 

------------------------------------------------------

----------------------------------------------------

---------------------------------------------------

Total current assets

14,995

9,472

10,628

 

 

 

 

Total assets

15,072

9,703

10,782

 

Current liabilities

 

 

 

 

Trade and other payables

 

(6,445)

(5,584)

(5,636)

Corporation tax payable

 

(198)

(158)

(427)

Lease liabilities

 

(79)

(153)

(157)

 

------------------------------------------------------

-----------------------------------------------------

-----------------------------------------------------

Total current liabilities

(6,722)

(5,895)

(6,220)

 

-----------------------------------------------------

-----------------------------------------------------

-----------------------------------------------------

 

 

 

 

Non-current liabilities

 

 

 

Loans and borrowings

7

-

(1,250)

(1,250)

Lease liabilities

 

-

(79)

-

 

-----------------------------------------------------

-----------------------------------------------------

-----------------------------------------------------

Total non-current liabilities

-

(1,329)

(1,250)

 

-----------------------------------------------------

-----------------------------------------------------

-----------------------------------------------------

 

 

 

 

Total liabilities

(6,722)

(7,224)

(7,470)

 

====================================================

====================================================

====================================================

 

 

 

 

Net assets

8,350

2,479

3,312

 

====================================================

====================================================

====================================================

Equity

 

 

 

 

 

Share capital

8

60

-

-

Share premium account

 

5,436

1,085

1,085

Share options reserve

 

2,673

-

-

Foreign currency reserve

 

(558)

(299)

(556)

Capital redemption reserve

 

-

-

-

Retained earnings

 

739

1,693

2,783

 

====================================================

====================================================

====================================================

 

 

 

 

Total equity attributable to the

owners of the company

8,350

2,479

3,312

 

====================================================

====================================================

====================================================

 

 

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

Attributable to the owners of the Company

 

 

Share capital

Share premium account

 

£000

£000

 

-----------------------------------------

-------------------------------------------

Balance at 1 January 2021

-

1,085

 

-----------------------------------------

-------------------------------------------------

Comprehensive income for the period

 

 

Loss for the period

-

-

Currency translation differences

-

-

 

-----------------------------------------

-------------------------------------------------

Total comprehensive income for the period

-

 

-

 

-

 

-

 

(2)

(2,044)

(2,046)

 

 

-----------------------------------------

-----------------------------------------------

-----------------------------------------------

-----------------------------------------------

-----------------------------------------------

-----------------------------------------------

------------------------------------------------

 

Transactions with owners of the Company

 

 

 

 

 

 

 

 

Shares issued

60

-

 

Contributions of equity

-

4,947

 

Transaction costs

-

(596)

 

Share buybacks

-

-

 

Share based payment credit

-

-

 

 

-----------------------------------------

-----------------------------------------------

 

Total transactions with owners of the Company

60

 

4,351

 

 

-----------------------------------------

-----------------------------------------------

 

Balance at 30 June 2021

60

5,436

 

-----------------------------------------

---------------------------------------------------

 

 

 

 

 

 

 

 

 

 

-----------------------------------------

------------------------------------------------

Balance at 1 January 2020

-

1,085

 

-----------------------------------------

-------------------------------------------------

 

 

 

Comprehensive income for the period

-

 

Profit for the period

-

-

Currency translation differences

-

-

 

-----------------------------------------

-------------------------------------------------

Total comprehensive income for the period

-

-

                                 

 

 

-----------------------------------------

------------------------------------------------

 

-----------------------------------------

---------------------------------------------------

---------------------------------------------------

-----------------------------------------------

-----------------------------------------------

--------------------------------------------------

------------------------------------------------

 

Balance at 30 June 2020

-

1,085

 

-----------------------------------------

------------------------------------------------

 

 

 

 

 

-----------------------------------------

------------------------------------------------

Balance at 1 January 2020

-

1,085

 

-----------------------------------------

-------------------------------------------------

 

 

 

Comprehensive income for the year

 

 

Profit for the year

-

-

Currency translation differences

-

-

 

-----------------------------------------

-------------------------------------------------

Total comprehensive income for the year

-

-

 

 

-----------------------------------------

-----------------------------------------------

Transactions with owners of the Company

 

 

 

 

-----------------------------------------

---------------------------------------------------

 

Balance at 31 December 2020

-

1,085

 

 

-----------------------------------------

-----------------------------------------------

 

 

 

 

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

 

Six months ended

 30 Jun 2021

Six months ended

 30 Jun 2020

 

Year

ended 31

Dec 2020

 

£000

£000

£000

Cash flows from operating activities

 

Profit on ordinary activities before taxation

(1,678)

683

2,040

 

 

 

 

Adjustments for:

 

 

 

Depreciation - leased assets

77

26

104

Interest paid

43

50

105

Interest received

(2)

(3)

(7)

Increase in trade and other receivables

(1,552)

(1,323)

(1,332)

Increase in trade and other payables

1,096

2,264

1,154

Net fair value gain recognised in P&L

(21)

(6)

(9)

Share based payment charge

2,673

-

-

 

 

------------------------------------------------------

------------------------------------------------------

------------------------------------------------------

Cash generated from operations

636

1,691

2,055

 

Taxation (paid)/ received

(622)

3

5

 

------------------------------------------------------

------------------------------------------------------

------------------------------------------------------

Net cash generated from / (used in) operating activities

14

1,694

2,060

 

======================================================

======================================================

======================================================

 

Cash flows from investing activities

 

 

 

 

Interest received

2

3

7

 

------------------------------------------------------

------------------------------------------------------

------------------------------------------------------

Net cash generated from investing activities

2

3

7

 

======================================================

======================================================

======================================================

 

Cash flows from financing activities

Issue of ordinary shares

4,411

-

-

Loan repayment

(1,250)

-

-

Interest paid

(43)

(50)

(101)

Finance lease repayment

-

(257)

(105)

 

------------------------------------------------------

------------------------------------------------------

------------------------------------------------------

Net cash generated from/ (used in) financing activities

3,118

(307)

(206)

 

======================================================

======================================================

======================================================

 

Net increase in cash and cash equivalents

3,134

1,390

1,861

Cash and cash equivalents at beginning of period

4,722

2,842

2,842

Exchange movement on cash

(2)

75

19

 

------------------------------------------------------

------------------------------------------------------

------------------------------------------------------

Cash and cash equivalents at end of period

7,854

4,307

4,722

 

======================================================

======================================================

======================================================

 

 

DIANOMI PLC

 

NOTES TO THE HISTORICAL FINANCIAL INFORMATION

 

1.         General information

 

Dianomi plc (the "Company") and its subsidiaries' (together the "Group") principal activity is the delivery of premium native advertising for the financial services, technology, corporate sand lifestyle sectors. The Company was incorporated on 16 August 2002 in England and Wales as a private company limited by shares under the name Data-ID Limited. On 17 December 2002, the Company changed its name to Dianomi Limited. On 17 May 2021, the Company re-registered as a public limited company and changed its name to Dianomi plc.

 

The address of the registered office is 6th Floor, 60 Gracechurch Street, London, EC3V 0HR and the limited company number is 04513809.

 

2.         Basis of preparation and significant accounting policies

 

2.1.            Basis of preparation

 

The financial information relating to the half year ended 30 June 2021 is unaudited and does not constitute statutory financial statements as defined in section 434 of the Companies Act 2006.

 

The annual report and accounts for the year ended 31 December 2020, which received an unqualified audit opinion and did not include a statement under section 498 (2) or (3) of the Companies Act 2006, have been filed with the Registrar of Companies. The statutory financial statements for the year ended 31 December 2020 were prepared in accordance with FRS 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland (United Kingdom Generally Accepted Accounting Practice - "UK GAAP").

 

On admission to AIM, the Company adopted International Financial Reporting Standards and interpretations (collectively "IFRS") issued by the International Accounting Standards Board ("IASB") as adopted by the European Union. The financial information in these interim accounts have been prepared and presented on that basis. The comparative figures for the year ended 31 December 2020 included in these interim accounts are therefore not consistent with the annual report and accounts as filed at Companies House.

 

The financial information for the half year ended 30 June 2021 has been prepared in accordance with the accounting policies the Company applied in the preparation of the accounts for the year ended 31 December 2020 which were included in the Company's admission document and are expected to be applied in the annual financial statements for the year ending 31 December 2020. These accounting policies are based on the EU-adopted International Financial Reporting Standards ("IFRS").

 

Whilst the financial information included in these interim accounts has been prepared in accordance with IFRS, they do not contain sufficient information to comply with IFRS. In addition, this report is not prepared in accordance with IAS 34.

 

This interim report was approved by the board of directors on 10 September 2021 and is available on the Company's website, dianomi.com

 

The presentational currency of these financial statements and the functional currency of the Group is pounds sterling.

 

2.2.            Measurement convention

 

The consolidated financial information has been prepared under the historical cost convention. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

 

The preparation of the consolidated financial information in compliance with IFRS requires the use of certain critical accounting estimates and management judgements in applying the accounting policies. The significant estimates and judgements that have been made and their effect is disclosed in note 3.

 

2.3.         Basis of consolidation

 

The consolidated financial information incorporates the financial information of Dianomi Plc and all of its subsidiary undertakings. Subsidiary undertakings include entities over which the Group has effective control. The Group controls a group when it is exposed to, or has right to, variable returns from its involvement with the Group and has the ability to affect those returns through its power over the Group. In assessing control, the Group takes into consideration potential voting rights.

 

2.4.         Going concern

 

The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operation for the foreseeable future. The Group's forecasts and projections, taking into account reasonable possible changes in trading performance, show that the Group has sufficient financial resources, together with assets that are expected to generate cash flow in the normal course of business. Accordingly, the Directors have adopted the going concern basis in preparing these consolidated financial statements.  

 

2.5.         Principal Accounting Policies

 

2.5.1.1.   Revenue

 

The Group's customers are direct advertisers, affiliate advertisers and advertising agencies with whom the Group will enter into a contract or insertion order.

 

The Group generates revenue by charging its customers a fee based on a customer's total spend on advertising campaigns delivered through its platform. The customer's total spend on advertising is determined by multiplying an agreed performance metric option, such as cost per mil (CPM), cost per impression (CPI), click (CPC) or action (CPA) with the volumes of units delivered.

 

          Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

 

          Revenue is recognised on completion of the performance criteria which, in most cases, is when an internet user clicks through to an advertisement that has been displayed on a web page.

 

          Where advanced payments are made in advance of satisfying the performance obligation, these amounts are transferred to deferred revenue (contract liabilities) and recognised when the performance obligation has been met.

 

          The Group's standard payment terms require settlement of invoices within 60-90 days of receipt.

 

          The Group does not adjust the transaction price for the time value of money as it does not expect to have any contracts where the period between the transfer of the promised services to the client and the payment by the client exceeds one year.

 

2.5.1.2.   Cost of sales

 

          Cost of sales represents the direct expenses that are attributable to the services sold. They consist primarily of payments to publishers under the terms of the revenue share agreements that the Group has with them. Depending on the terms of the revenue share agreements, cost of sales can include commissions where applicable.

 

2.5.1.3.   Foreign currency translation

 

a)   Function and presentational currency

          Items included in the financial information of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial information is presented in 'sterling', which is the Group's functional currency and the Group's presentation currency.

 

          On consolidation, the results of overseas operations are translated into sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.

 

b)   Transactions and balances

Foreign currency transactions are translated into the functional currency using the 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 year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

           

2.5.1.4.   Exceptional items

 

Items which are material because of their size or nature and which are non-recurring are highlighted separately on the face of the consolidated statement of comprehensive income.  The separate reporting of exceptional items helps provide a better picture of the Group's underlying performance.  Items which have been included within the exceptional category are the costs relating to the Company's IPO on AIM in May 2021. The costs specifically related to the issue of new shares have been set against share premium. Other IPO costs which relate to listing both new and existing shares have been allocated on a 50/50 basis between exceptional P&L costs and share premium.

Exceptional items are excluded from the headline profit measures used by the Group and are highlighted separately in the consolidated statement of comprehensive income as management believe that they need to be considered separately to gain an understanding the underlying profitability of the trading businesses.

2.5.1.5.   Employee Benefits

 

        Post-retirement benefits

 

The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.

 

        The contributions are recognised as an expense in administrative expenses in the Consolidated Statement of Comprehensive Income when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Group in independently administered funds.

 

        Share based payments

 

        Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each Statement of Financial Position date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

 

        The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the group keeping the scheme open or the employee maintaining any contributions required by the scheme).

 

        Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.

 

        Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.

 

2.6.         Alternative performance measures

 

In order to provide better clarity to the underlying performance of the Group, adjusted EBITDA and adjusted earnings per share are used as alternative performance measures. These measures are not defined under IFRS. These non-GAAP measures are not intended to be a substitute for, or superior to, any IFRS measures of performance, but have been included as the Directors consider adjusted EBITDA and adjusted earnings per share to be key measures used within the business for assessing the underlying performance of the Group's ongoing business across periods. Adjusted EBITDA excludes from operating profit non-cash depreciation and share based payment charges and non-recurring exceptional costs. Adjusted EPS excludes from profit after tax, share based payment charges and non-recurring exceptional items and their related tax impacts.

 

 

3.       Judgements and key sources of estimation uncertainty

 

The preparation of the consolidated financial information requires the Directors to make estimates and judgements that affect the reported amounts of assets, liabilities, costs and revenue in the consolidated financial information. Actual results could differ from these estimates. The judgements, estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant.

 

The judgements and key sources of estimation uncertainty that have a significant effect on the amounts recognised in the consolidated financial information are:

 

-     The Group measures the cost of equity-settled transactions with employees by reference to the fair value of equity instruments at the date at which they are granted. The fair value is determined by using the Black-Scholes model taking into account the terms and conditions upon which the instruments were granted and requires assumptions to be made in particular the value of the shares at the date of options granted. Management have had to apply judgement when selecting assumptions.

 

4.       Revenue

 

          Revenue arises from:

 

6 months to

 30 Jun

 2021

 

 

£000

 

 

 

 

United Kingdom

2,817

 

Rest of World

14,541

 

 

======================================================

 

 

17,358

 

 

======================================================

 

 

 

 

 

5.       Operating segments

 

IFRS 8 requires that operating segments be identified on the basis of internal reporting and decision-making. The Group is operated as one global business by its executive team, with key decisions being taken by the same leaders irrespective of the geography where work for clients is carried out. Management therefore consider that the Group has one operating segment. As such, no additional disclosure has been recorded under IFRS 8.

 

 

 

 

 

6.       Earnings per share

 

The Group presents non-adjusted and adjusted basic and diluted earnings/loss per share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the profit/loss for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

Diluted EPS takes into consideration the Company's dilutive contingently issuable shares. The weighted average number of ordinary shares used in the diluted EPS calculation is inclusive of the number of share options that are expected to vest subject to performance criteria as appropriate, being met.

The (loss) / profit and weighted average number of shares used in the calculations are set out below:

 

 

 

 

Six months ended

30 Jun 21

Six months ended

 30 Jun 20

Year

ended

31 Dec 2020

 

 

 

£000

£000

£000

(Loss)/ profit attributable to the ordinary equity holders of the Group used in calculating basic and diluted EPS

 

 

 

(2,044)

 

416

1,506

 

 

 

 

 

 

Basic (loss)/ earnings per ordinary share (p)

 

 

(7.87)

1.67

6.05

Diluted (loss)/ earnings per ordinary share (p)

 

 

(7.87)

1.52

5.45

 

 

 

 

 

 

 

 

 

 

Six months ended

30 Jun 21

Six months ended

30 Jun 20

 

Year

 ended

31 Dec 20

Adjusted basic and diluted EPS 

 

 

£000

£000

£000

 

 

 

 

 

 

Reconciliation of earnings used in calculating adjusted EPS:

 

 

 

 

 

(Loss) / profit attributable to the ordinary equity holders of the Group used in calculating basic and diluted EPS

 

 

(2,044)

416

1,506

 

 

 

 

 

 

Adjusting items:

 

 

 

 

 

Share based payments

 

 

2,673

-

-

Exceptional items

 

 

568

-

115

 

 

 

 

 

 

Tax impact of adjusting items

 

 

(648)

-

(23)

 

 

 

======================================================

======================================================

======================================================

Profit attributable to the ordinary equity holders of the Group used in calculating adjusted basic and diluted EPS

 

 

549

416

1,598

 

 

 

 

 

 

Adjusted basic earnings per ordinary share (p)

 

 

2.11

1.67

6.41

Adjusted diluted earnings per ordinary share (p)

 

 

1.90

1.52

5.78

 

 

 

 

 

 

Six months ended

30 Jun 21

Six months

 ended

30 Jun 20

 

Year

 ended

31 Dec 20

 

 

 

 

 

 

 

 

 

 

Weighted average number of ordinary shares used as the denominator in calculating non-adjusted and adjusted basic EPS

 

25,986,890

24,913,036

24,913,036

Weighted share option dilution impact

 

2,900,015

2,487,950

2,716,169

 

 

======================================================

======================================================

======================================================

Weighted average number of ordinary shares used as the denominator in calculating non-adjusted and adjusted diluted EPS

 

28,886,905

27,400,986

27,629,205

 

7.       Loans and borrowings

 

As at 30 Jun 2021

As at 30 Jun 2020

As at 31 Dec 2020

 

£

£

£

Non-current liabilities

 

 

 

Other loans

-

1,250,000

1,250,000

 

--------------------------------------------

-----------------------------------------------

--------------------------------------------

 

-

1,250,000

1,250,000

 

==========================================

==============================================

==========================================

 

        In 2018 the Group issued loan notes totalling £1,250,000 to BGF Investments LP ("BGF"), a shareholder and related party. The loan notes accrued annual interest at 8% and were repayable in 4 equal, bi-annual instalments starting 31 December 2023, however the loan notes were repaid in full following the Company's admission to trading on AIM in May 2021.

 

 

8.     Share capital

 

Ordinary Shares

Issued Shares Number

 Nominal Value
£

Issued Amount
£

As at 1 January 2020, 30 June 2020 and 31 December 2020

18,345

         0.01

184

As at 1 January 2021

18,345

         0.01

184

Bonus issue

3,100,305

         0.01

31,003

Redesignation of A, B and C ordinary shares to Ordinary Shares

1,859,514

         0.01

18,595

Subtotal

4,978,164

         0.01

49,782

 

 

 

 

 

Subdivision of ordinary shares

24,890,820

       0.002

   49,782

Issue of shares pursuant to exercise of options

3,305,650

       0.002

     6,611

Issue of shares pursuant to placing

1,831,501

       0.002

     3,663

 

 

 

 

As at 30 June 2021

30,027,971

       0.002

   60,056

               

 

A ordinary shares

Issued Shares Number

 Nominal Value

£

Issued Amount

£

As at 1 January 2020, 30 June 2020 and 31 December 2020

10,361

         0.01

104

As at 1 January 2021

10,361

           0.01

104

Bonus issue

1,751,009

           0.01

17,510

Redesignation to Ordinary Shares

(1,761,370)

           0.01

(17,614)

As at 30 June 2021

                  -  

 

                  -  

 

 

 

 

 

 

 

 

 

B ordinary shares

Issued Shares Number

 Nominal Value

£

Issued Amount

£

 

 

 

 

As at 1 January 2020, 30 June 2020                and 31 December 2020

602

         0.01

6

As at 1 January 2021

602

        0.01

6

Bonus issue

101,738

        0.01

1,017

Redesignation to Ordinary Shares

(80,124)

        0.01

(801)

Redesignation to deferred shares

(22,216)

        0.01

(222)

As at 30 June 2021

                 -  

 

                  -  

             

 

C ordinary shares

Issued Shares Number

 Nominal Value

£

Issued Amount

£

 

 

 

 

As at 1 January 2020, 30 June 2020

and 31 December 2020

106

         0.01

1

As at 1 January 2021

106

           0.01

1

Bonus issue

17,914

           0.01

179

Redesignation to Ordinary Shares

(18,020)

           0.01

(180)

As at 30 June 2021

                -  

 

             -  

 

 

Deferred shares

Issued Shares Number

 Nominal Value

£

Issued Amount

£

 

 

 

 

As at 1 January 2020, 30 June 2020

and 31 December 2020

            -  

 

              -  

As at 1 January 2021

            -  

 

              -  

Redesignation of B ordinary shares

22,216

       0.01

222

Repurchase of deferred shares

(22,216)

0.01

(222)

 

 

 

 

As at 30 June 2021

            -  

 

              -  

 

On 6 May 2021, £49,709.66 of the available £1,084,776 of the Company's share premium account was capitalised through the issue of bonus ordinary shares of £0.01 each, A ordinary shares of £0.01 each ("A Shares"), B ordinary shares of £0.01 each ("B Shares"), and C ordinary shares of £0.01 each ("C Shares") to existing shareholders pro rata to their holdings of ordinary shares of £0.01 each, A Shares, B Shares and/or C Shares. The capitalisation resulted in an issued share capital of 3,118,650 ordinary shares of £0.01 each, 1,761,370 A Shares, 102,340 B Shares and 18,020 C Shares.

 

A new set of interim articles of association was adopted by the Company to reflect its re-registration as a public limited company and the Company's name was changed to Dianomi plc.

 

Immediately prior to the Company's admission to trading on AIM ("Admission") taking place, the A Shares and C Shares were re-designated as ordinary shares of £0.01 each in the capital of the Company on the basis of one ordinary share of £0.01 per A Share or C Share then in issue.

 

Immediately prior to Admission taking place, the 102,340 B Shares in issue after the bonus issue described above were re-designated as 80,124 ordinary shares of £0.01 each and 22,216 deferred shares of £0.01 each in the capital of the Company.

 

Immediately after the re-designation of shares described above, each ordinary share of £0.01 was sub-divided into five ordinary shares of £0.002 each.

 

Immediately on Admission taking place on 24 May 2021, all of the deferred shares of £0.01 each were repurchased by the Company for an aggregate consideration of £1.00 to be satisfied in cash.

 

Furthermore, on Admission 1,831,501 new ordinary shares of £0.002 pence were issued pursuant to the placing, raising gross proceeds of £5 million for the Company.

 

 

9.         Share based payments

 

        The Group operates an equity-settled share based remuneration scheme for employees. All UK employees are eligible to participate in the long term incentive scheme, the only vesting condition being that the individual remains an employee of the Group over the ten year vesting period.

 

The number of options and weighted average exercise price in the table below have not been adjusted to reflect the share capital reorganisation in May 2021 as described in Note 8.

 

 

Weighted average exercise price (pence)

 

 

Jun 21

 

 

Outstanding at the beginning of the period

1.0

 

Granted during the period

225.9

 

Exercised/ lapsed during the period

0.2

 

 

--------------------------------------------

 

Outstanding at the end of the period

273

 

 

==========================================

 

                           

 

       

        Of the total number of options outstanding at the end of the period, Nil (30 Jun 20: Nil, 31 Dec 20: Nil) had vested and were exercisable at the end of the year with a weighted average exercise price of 273p (30 Jun 20: 1.0p, 31 Dec 20: 1.0p).

 

Certain options granted under the existing option schemes in place prior to Admission were due to lapse on 17 May 2021, and all but two of these lapsing options were replaced with equivalent options. Of the two other lapsing options, one of these was replaced with an option over a greater number of ordinary shares. All of the options granted under the existing option schemes in place prior to Admission were exercised immediately on Admission.

 

On Admission, new option schemes were established and a total of 1,640,926 options have been granted under these new option schemes with an exercise price of 273p.

 

The Black-Scholes option pricing model was used to value the equity-settles share-based payment awards as it was considered that this approach would result in materially accurate estimate of the fair value of the options granted.

 

The share-based remuneration expense comprises:

 

 

As at 30 Jun 2021

As at 30 Jun 2020

As at 31 Dec 2020

 

 

£000

£000

£000

 

 

 

 

 

Equity-settled schemes

2,673

-

-

 

 

==========================================

==============================================

==========================================

 

 

 

 

 

 

 

 

 

 

 

             

 

 

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