Dianomi plc
("Dianomi, the "Company" or the "Group")
Final Results
Dianomi, a leading provider of native digital advertising services to premium clients in the Business, Finance and Lifestyle sectors, announces the Company's audited results for the year ended 31 December 2023.
Financial Headlines
· Revenue of £30.2 million for the year (FY22: £35.9 million) with reduced traffic across our publisher base contributing to lower revenue
· Gross margin for the full year of 24.7% (FY22: 27.3%) as a result of a previously announced contract amendment with a major publisher partner and publisher mix
· Adjusted EBITDA* loss of £0.4 million (FY22: profit of £1.6 million), with a return to profitability in the second half of the year
· EBITDA loss of £1.7 million (FY22: profit of £1.2 million), including reorganisation costs of £1.1 million
· Adjusted loss per share** of 3.10 pence (FY22: earnings of 2.58 pence)
· Statutory loss per share of 9.71 pence (FY22: earnings of 1.62 pence)
· As at 31 December 2023, the Group had no borrowings and cash of £7.7 million (30 June 2023: £7.1 million, 31 December 2022: £11.7 million)
Operating Headlines
· Appointment of Ken Johnston as Head of Global sales alongside the integration of the US and EMEA sales teams to drive collaboration and maximise the opportunity to capture additional advertising spend
· Successfully reduced cost base by £1 million on an annualised basis
· Good client retention with annual advertiser and publisher churn (calculated on a revenue basis) of 6.2% (FY22: 5.5%) and 0.9% (FY22: 2.8%) respectively
· Continued to add new publishers to our client base with the number of publishers at year end standing at 340 (FY22: 336)
· In 2023, new clients attracted to the platform included Natixis Investment Management, Equinix, Macquarie, Emirates, and Allianz Global Investors and the overall number of advertisers stood at 371 (FY22: 387)
· Continued to establish Dianomi as a full format advertising platform offering premium brands and agencies a single point of access to ad buying across the world's premium publishers
Outlook
· Elections in the US and in a further 63 countries around the world likely to boost traffic across the Dianomi publisher base in 2024
· Dianomi now better placed to monetise any uptick in traffic with a substantially reduced cost base and significantly broadened product suite
· Focus on providing a single point of access to digital advertising buying across the world's premium publishers by evolving to a full format advertising platform and giving Dianomi the opportunity to compete for more varied and larger marketing budgets
· Continued investment in programmatic capacity to support full format advertising
· Balance sheet strength continues to underpin the business and provide the ability to invest appropriately as opportunities arise
· Current year trading is in line with management expectations, with the profitability achieved in the second half of 2023 continuing into 2024.
Rupert Hodson, CEO of Dianomi commented:
"At the headline level 2023 has been a challenging year for Dianomi and the wider advertising industry. Digital traffic across news publications over the course of the year reduced by between 10% to 30%. This naturally translated into lower revenues for the business which is reflected in the results we report today. It is important to highlight that demand from many of our advertisers was unchanged but lower traffic levels reduced our ability to monetise this demand. In response, during 2023 we focused on expanding our distribution channels, scaling up both new and existing publisher partnerships, and moving to become a full format advertising platform. These actions together with reducing our cost base by £1m on an annualised basis and reorganising our management and sales teams means the Group is well placed to drive scale and profitability."
* Calculated as profit after tax before charging interest, tax, depreciation and amortisation in the financial year, adjusted for share-based payments, non-recurring income and costs relating to the reorganisation. This metric provides a more comparable indication of the Group's core business performance by removing the impact of non-trading items that are reported separately.
** Adjusted to exclude costs relating to the reorganisation, non-recurring income, the derecognition of the deferred tax asset and share-based payments.
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. It forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
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 / Safia Colebrook
| 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 Business, Finance and Lifestyle 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 and mobile websites, mobile and tablet applications of premium publishers. It provides over 350 advertisers, including blue chip names such as abrdn, Invesco and Charles Schwab, with access to an international audience of over 400 million devices per month through its partnerships with over 300 premium publishers, including blue chip names such as Reuters, CNN Business and WSJ. Adverts served are contextually relevant to the content of the webpages on which they appear and mirror the style of the page, which enhances reader engagement. http://www.dianomi.com.
Chairman's Statement
Introduction
The business continued to face a number of market related challenges during the year, and we believe Dianomi (the "Company" or the "Group") responded well. The fundamentals of the business remain robust. Dianomi continues to work with an enviable premium client base, boasting relationships with the top global names in banking and wealth management alongside a host of leading financial institutions. The client list is matched by the premium portfolio of publishers from CNN Business and the Wall Street Journal to the Times. Our financial position is underpinned by a strong balance sheet.
Despite these advantages, the fall in traffic numbers across certain publications by up to 30%, naturally impacted the trading performance of the business in 2023. In response, the executive management team made some important strategic changes. Firstly, reducing the cost base by £1 million on an annualised basis. Secondly, reorganising the structure of the business teams and making changes to some key leadership positions. Thirdly, recognising the importance of improving distribution channels in this market and moving the business to becoming a full format advertising platform.
Dianomi therefore enters 2024 a more nimble and more focused business.
Our People
In March 2023, Raphael Queisser and Cabell de Marcellus, who, alongside our CEO Rupert Hodson, founded the business, stepped down from the Board and from their day to day roles. Dianomi is deeply grateful to both Raphael and Cabell for their substantial contributions to the business since its inception in 2003. This was also the start of a wider number of organisational changes made across the business. In April, Ken Johnston, who had originally helped establish our US presence, rejoined the business after a successful run as a sales leader at Meta. With Ken's appointment, as Head of Global Sales, came the key decision to integrate the sales teams of the US and EMEA and restructure the operating teams seeking greater collaboration and shared purpose. Towards the end of the year, in November, we welcomed Paul Gibson as an independent Non-Executive Director. Paul brings substantial operational experience and has spent 30 years in software and related services, as well as experience of serving on the Board's of several private and listed companies.
During the year the Board reviewed the equity incentivisation in place for employees and were of the view that the share option plans put in place at the time of the Company's IPO no longer met the three principles of its remuneration strategy, namely, alignment with shareholders, and incentivisation and retention of employees. Therefore, in order to ensure that the senior leaders and employees were appropriately incentivised, after consulting with significant shareholders, the Board took the decision to cancel the existing share options and grant new share options under new share option plans with rebased performance and extended vesting criteria alongside a lower exercise price.
Our Strategy
Whilst a fall in traffic numbers impacted our trading performance in 2023, strategically, the business remains well placed especially given the current demise of the cookie as an advertising targeting tool because our platform already provides a cookie-free solution. Critically, Dianomi occupies a premium position in the contextual advertising space and has the platform and technology to offer transparency on performance for publishers and advertisers alike.
Dianomi is evolving from a native advertising platform where we serve ads into owned and operated placements on a publisher's website based on the content of those pages, to a full format advertising platform whereby we can offer advertisers different types of ad formats such as video, display, podcasts and polls as well as native. In doing so we aim to offer premium brands and agencies a single point of access to digital advertising buying across the world's premium publishers giving us the opportunity to compete for more varied and larger marketing budgets. To this end, we have continued to invest in programmatic capacity, together with broadening our suite of ad products significantly.
In 2023, the Group continued to broaden advertiser base by enabling financial and lifestyle ads to sit alongside each other across our full publisher inventory. The content we serve is typically from premium advertising brands and are vetted for quality and brand safety, meaning that the broader pool of lifestyle content is still highly relevant for our contextual positioning with publishing partners. Furthermore, we are increasingly moving our ads higher up the page, creating more viewable content with in-article units and display ads, reflecting the strength of our performance for publishers and consistent quality of our advertisers.
ESG
We seek to operate our business in an environmentally friendly manner. We are helped in this goal by our business model which is based on direct relationships with publishers without the need for intermediaries which in industry terms is known as supply path optimised and therefore more efficient, streamlined and carbon friendly than the majority of similar platforms. Furthermore, earlier this year we migrated from a hosted solution with Rackspace to AWS which on average runs workloads with a much lower carbon footprint than the average data centre.
In total, we are a company of less than 40 people and operate a hybrid home working and office working model, with the serviced offices from which we operate being environmentally conscious in the products they use and the energy they consume.
We value and support the people in our business, comprised of a talented and diverse team who value and respect difference. We remain committed to attracting, developing, and retaining the best talent from a diverse range of backgrounds regardless of race, ethnicity, age, gender, sexual orientation or physical ability.
The Board operates within a robust governance framework and ensures that the Group has a balance of diverse skills and experience to deliver our strategy and growth objectives. The Board and its subcommittees include independent non-executive members with varying backgrounds and experience.
Financial Overview and Outlook
We delivered revenue for the full year of £30.2 million. This was a 15.9% decrease against the prior year and directly reflects the fall in traffic across the Group's publisher inventory. We made a loss at adjusted EBITDA* level of £0.4 million (unadjusted loss at EBITDA level was £1.7 million) and an adjusted loss per share** of 3.10 pence (statutory loss per share was 9.71 pence). This was due in part to a contract amendment with one of our top publisher partners whereby we agreed not to recoup an overpayment relating to a guarantee under which minimum traffic levels were not met, which resulted in the overpayment of £0.8 million being recognised as an additional cost of sale which was in part off-set by a higher revenue share with the publisher for second half of the year. During the first half of the year we undertook a cost rationalisation and, while the Group returned to profitability in the second half of the year, this rationalisation was not sufficient to offset the cost of the contract amendment and the reduction in revenue as a result of challenging market conditions.
Going into 2024, we believe the changes made to personnel and the way the business is structured have had a positive impact. The election in the US and in a further 63 countries around the world should benefit traffic numbers. Most importantly, there is a good pipeline of publisher and advertiser prospects which we are hopeful of converting during the course of 2024.
Lastly, I would like to thank both our shareholders for their support and the team for their continued commitment and enthusiasm towards driving Dianomi to achieve our goals.
Michael Kelly
Non-Executive Chairman
Chief Executive's Statement
Introduction
As a technology-led business we are constantly working to evolve the solutions we provide to our clients and we did this successfully during 2023. While the market environment was certainly challenging, demand from many of our premium clients was unchanged. We represent all of the top ten largest asset managers and seven of the top ten largest wealth management companies in the US, similarly we represent 340 of the world's leading publishers. We continue to turn away the majority of the companies and publishers who ask to be a part of the Dianomi platform in order to ensure we remain a pure premium operator. We know that many of our customers and publishers would like to place more ads through our platform and this is why we are evolving from a native ad platform to a full format advertising platform.
Our objective is to grow the business beyond our native roots whilst retaining a premium, privacy first positioning. Our ability to achieve this is being significantly enhanced by the global switch from cookies to an ID free future. Advertisers and publishers continue to look for a solution to this seismic change and for the premium end of the market Dianomi provides a ready-made solution.
Operational review
The return of Ken Johnston to head global sales has had a positive impact on the business. Uniting the sales teams in the US and EMEA has brought the business closer together and highlighted the global nature of our business and potential for shared opportunities and collaborations. A key goal for the combined sales team is to maximise the opportunities for additional spend amongst the Group's ten largest clients all of whom have substantial global advertising budgets outside of their current spend with Dianomi.
The ability to increase the spend of existing clients is in part driven by capacity. Dianomi is evolving to enable clients to buy both native (owned and operated) and display (owned and operated and open market) ads. Currently, a top ten Dianomi publisher is trialing Dianomi direct demand display ads to their audiences, the results of which are due in Q2 2024. We have also substantially broadened our suite of products aimed at scaling CPM sales (where we charge the advertiser based on impressions rather than clicks) including Canvas, Polling, Content Hubs and Podcasts.
We took the decision to allow lifestyle ads to sit alongside financial ads for the first time on the Dianomi platform. Historically, lifestyle advertisers were treated as a separate vertical to financial advertisers. Over time it has become clear that our audiences are interested in both premium financial and lifestyle content and that it is logical and commercially valuable to combine them. This fits with the Dianomi approach to focus not on the publication but on the interests of our audiences. Each month there are approximately 440 million readers across our premium financial publications, and we know their interests extend well beyond business. Initially, we are serving Lifestyle ads in just four categories: Automotive, Luxury, Technology and Travel.
We continue to develop our programmatic offering and our programmatic revenue grew by 50% in 2023 to £1.8 million from £1.2 million. During the year we were able to increase supply through testing a growing number of publishers including Newsweek, MSN Money and Yahoo Finance via programmatic channels. We believe that we have an opportunity to be the contextual partner of choice in the direct and programmatic space within the premium end of the market.
Commercial review
Our premium publisher base increased in number over the course of 2023 and by the end of the year we had 340 active publishers vs 336 at year end 2022 with the majority of new publishers being Apple News publishers. Despite only joining the Dianomi platform in 2021, CNN Business, is now our largest publisher with plans to further extend Dianomi's presence on CNN platforms. 20 new publishers joined in 2023 including US News, Smithsonian Magazine and The Guardian. However, the majority of our publishers experienced a drop in their traffic volumes which lead to a reduction in the number of clicks on our ads. Revenue per click ("RPC") was down at 55 pence in 2023 vs 64 pence in 2022 predominantly due to a change in the mix of our impressions, with more impressions coming from Apple News publishers, which tend to command a lower RPC.
During 2023, we had 371 active advertisers, compared to 387 in the prior year but we continued to attract new premium brands to the platform including Natixis Investment Managers, First Horizon Bank and CoStar Realty Investment. Reflecting the wider market environment average spend across the top 100 advertisers on the platform reduced by 18% to £227k per annum however we did see increased spend on the Dianomi platform from companies such as Bank of America and abdrn.
Financial review
Group revenue decreased 15.9% to £30.2 million (2022: £35.9 million) as a result of the decrease in traffic seen across our publisher base.
Programmatic revenue increased in the year from £1.2 million in 2022 to £1.8 million in 2023. Video revenue decreased from £1.4 million to £1.2 million. Video revenue tends to be tied to specific campaigns. We still believe that video represents a key growth opportunity for Dianomi and hope to report improved progress in the current year.
Revenue from the Group's new Lifestyle segment remained static at £1.3 million (2022: £1.3 million). With the decision to enable lifestyle advertisers across the whole of our publisher network, we hope to see the number of lifestyle advertisers grow in the current year.
Gross margin was down 260 basis points to 24.7% predominantly due to a contract amendment with one of our major publisher partners as a result of minimum guaranteed traffic levels not being met by the publisher which resulted in a one off cost of £0.8 million. The one off cost was in effect an overpayment by Dianomi which Dianomi agreed not to recoup, in return for which the publisher provided Dianomi with an enhanced revenue share as from 1 July 2023 and, in addition to its existing permanent ad units, additional premium ad inventory, including a new in-article unit in line with Dianomi's strategy of moving further up a publisher's page.
Gross profit for the period was £7.5 million (2022: £9.8 million), a 23.5% decline on the previous year due to lower revenues and the one off cost as described above.
We made a loss at adjusted EBITDA* level of £0.4 million (2022: profit of £1.6 million) and a corresponding adjusted** loss per share of 3.10 pence (2022: profit of 2.58 pence) reflecting the lower revenues and lower gross profit. Statutory loss per share was 9.71 pence (2022: profit of 1.62 pence). We underwent a reorganisation during the year in order to streamline the cost base, resulting in one-off costs of £1.1 million. The Group returned to profitability in the second half of the year and the first quarter of 2024.
We currently have no borrowings and at the end of the year we had cash of £7.7 million vs £11.7 million at the end of 2022. Our cash position declined during the year partly due to restructuring costs of £1.1 million associated with the cost rationalisation programme we undertook during the first half of the year, as well as the publisher overpayment as explained above, the losses in the first half of the year and the unwinding of the working capital benefit at the end of 2022 highlighted at the time of the 2022 results.
The Group is in a growth phase of its evolution and so the Board is not proposing to recommend a dividend and instead the Group will continue to preserve its cash resources so that it has sufficient capacity to invest in the growth of the Group and/or take advantage of strategic opportunities should they arise.
Outlook
As ever, I would like to thank our team, for their individual and collective contributions during 2023. We are a people business and it is our relationships with each other and with our clients that is the key to our success. Going into 2024, I am confident we have a stronger suite of products and solutions to offer our customers with which we can drive increasing scale into the business. Trading in the first three months is in line with our expectations and we will look to build upon that during the course of the year.
Rupert Hodson
Chief Executive Officer
Financial Review
|
| 2023 | 2022 | Change |
| Revenue (£m) | 30.2 | 35.9 | (15.9)% |
| Gross profit (£m) | 7.5 | 9.8 | (23.5)% |
| Gross margin | 24.7% | 27.3% | (9.5)% |
| Adjusted EBITDA* (£m) | (0.4) | 1.6 | £(2.0) |
| Adjusted (loss)/profit before tax* (£m) | (0.5) | 1.5 | £(2.0) |
| Adjusted EPS* (p) | (3.10) | 2.58 | (5.68)p |
| Net cash (£m) | 7.7 | 11.7 | (34.2)% |
* In order to provide better clarity to the underlying performance of the Group, Dianomi uses adjusted EBITDA, adjusted profit before tax and adjusted EPS as alternative performance measures. Please refer to notes 8 and 13 for further details.
Basis of Preparation
The financial statements, for the year ended 31 December 2023 together with the comparative period data for the year ended 31 December 2022, are prepared in accordance with International Financial Reporting Standards adopted by the UK.
Revenue
Revenue decreased 15.9% to £30.2 million (2022: £35.9 million), predominantly due to lower traffic levels across the publisher base and a lower level of revenue being generated from new publishers coming on to the platform during the year compared to previous years.
Programmatic revenue increased to £1.8 million compared to £1.2 million in 2022 as we increased our capacity to buy additional publisher inventory via programmatic means. Video revenue decreased from £1.4 million in the year to 31 December 2022 to £1.2 million.
Revenue from the Group's Lifestyle segment amounted to £1.3 million (2022: £1.3 million). With the decision to enable lifestyle advertisers across the Group's entire publisher base, both financial and lifestyle, this segment should show growth in the current year.
Gross profit and margin
Gross profit represents the Group's share of revenue from publishers under the terms of the revenue share agreements that the Group has with them. Gross profit decreased 23.5% to £7.5 million from £9.8 million, representing a gross margin of 24.7% (2022: 27.3%). The decrease was largely due to the one-off cost of £0.8 million relating to a contract amendment with one of the Group's largest publishers in the first half of the year which resulted from minimum guaranteed traffic levels not being met by the publisher. The one-off cost was in effect an overpayment by Dianomi which Dianomi agreed not to recoup in return for an enhanced revenue share as from 1 July 2023 and, in addition to its existing permanent ad units, additional premium ad inventory, including a new in-article unit.
Also contributing to the lower gross margin was the mix of publishers, with a larger contribution from CNN Business which is now the largest publisher for the Group, but which is on a lower revenue share than average in favour of the publisher, though Dianomi's share increases as revenue grows.
Administrative expenses
Administrative expenses decreased to £8.3 million in the year to 31 December 2023 from £9.0 million in 2022. Included in administrative expenses were share-based payments of £0.3 million (2022: £0.5 million). During the year the Board took the decision to cancel the existing share options and grant new share options under new share option plans with rebased performance and extended vesting criteria alongside a lower exercise price. The decrease in administrative expenses is due to the reorganisation undertaken by the Group during the year to rationalise its cost base. As a result of this reorganisation, staff costs, which represent the largest cost within administrative expenses, decreased to £4.5 million from £5.2 million in previous year. However, the reorganisation meant that the Group incurred one-off costs of £1.1 million in the year (2022: £nil).
The Group does not capitalise costs relating to the ongoing support and development of its platform, these are included within administrative expenses as they relate to the maintenance and enhancement of its ongoing operations, and therefore do not meet the capitalisation criteria.
Group profitability
As a result of both lower revenues and gross profit, the Group generated a loss at adjusted EBITDA level of £0.4 million compared to a profit of £1.6 million in 2022. To provide a better guide to the underlying business performance, adjusted EBITDA excludes share-based payments, other, non-recurring income and costs relating to the reorganisation along with depreciation, amortisation, interest and tax from the measure of profit.
The Group made a loss before tax of £1.8 million and a loss after tax of £2.9 million (2022: profit of £1.1 million and £0.5 million respectively).
Net finance income
Net finance income was £0.1 million compared to net finance income of £0.04 million in 2022, reflecting the higher interest rate environment. The Group is debt-free and has no interest rate exposure.
Taxation
The Group had a tax charge for the year ended 31 December 2023 of £1.1 million (2022: £0.7 million) representing the tax payable in relation to the Group's US subsidiary and the derecognition of the deferred tax asset. For further detail on taxation see notes 11 and 12 of the Financial Statements. Adjusted loss after tax, used in calculating adjusted earnings per share, is shown after adjustments for the applicable tax on adjusting items as set out in notes 8 and 13.
Earnings per share
Loss per share for the year ended 31 December 2023 was 9.71 pence (2022: earnings of 1.62 pence). Adjusted loss per share was 3.10 pence (2022: earnings of 2.58 pence). Adjusting items and their tax impacts are set out in note 13.
Diluted loss per share for the year ended 31 December 2023 was 9.71 pence (2022: earnings of 1.46 pence). Adjusted diluted loss per share was 3.10 pence (2022: earnings of 2.34 pence). As at 31 December 2023, 1,420,017 share options were outstanding (31 December 2022: 1,721,551) following the cancellation of the option plans implemented at IPO and introduction of the new option plans in November 2023.
Statement of Financial Position
Net assets as at 31 December 2023 totalled £8.6 million (31 December 2022: £11.8 million). Trade receivables increased to £8.1 million (31 December 2022: £7.5 million) and trade creditors increased to £4.2 million as at 31 December 2023 (31 December 2022: £3.0 million). Accruals, which predominantly reflect the payments due to the Group's publisher partners, decreased to £3.0 million as at 31 December 2023 from £4.5 million as at 31 December 2022.
The Group's net cash position decreased 34.2% to £7.7 million as at 31 December 2023 (31 December 2022: £11.7 million). The Group used cash during the year due to the unwinding of the working capital benefit at the end of 2022 as flagged in the 2022 Annual Report, the one-off costs incurred in relation to the reorganisation and the contract amendment with one of the Group's major publisher partners. Net cash outflow from operations was £3.2 million in 2023 (2022: net cash inflow of £1.0 million) with £0.9 million of tax paid in the year in relation to the Group's US operations, including amounts due from 2022 and payments on account in relation to 2024, which resulted in overpayments which will be put towards the Group's 2024 tax liability. The Group is debt-free.
Charlotte Stranner
Chief Financial Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| | Year ended 31 Dec 2023 | Year ended 31 Dec 2022 | |
| | £000 | £000 | |
|
| | | |
| Note | | | |
| Revenue | 4 | 30,154 | 35,915 |
| Cost of sales | (22,702) | (26,127) | |
| | --------------------------------------------------- | --------------------------------------------------- | |
| Gross profit | 7,452 | 9,788 | |
| Administrative expenses | 7 | (8,329) | (8,981) |
| Other gains and losses |
| - | 136 |
| Reorganisation costs | 3&8 | (1,054) | - |
| Other income | 6 | - | 167 |
| ---------------------------------------------------- | ----------------------------------------------------- | ||
| Operating (loss)/profit |
| (1,931) | 1,110 |
|
|
|
|
|
|
|
|
|
|
| Depreciation | 14 | 213 | 107 |
| Share-based payments | 24 | 312 | 526 |
| Reorganisation costs | 3&8 | 1,054 | - |
| Other income | 6 | - | (167) |
| | | ------------------------------- | ------------------------------- |
| Adjusted EBITDA |
| (352) | 1,576 |
|
|
|
|
|
| Finance income | 10 | 115 | 41 |
| Finance expense | 10 | (3) | (4) |
| | ------------------------------------------------- | ----------------------------------------------------- | |
| (Loss)/profit on ordinary activities before taxation | (1,819) | 1,147 | |
| Taxation | 11 | (1,097) | (662) |
| ||||
| | | ------------------------------------------------- | ----------------------------------------------------- | |||||
| (Loss)/profit for the year |
| (2,916) | 485 | |||||
|
|
| | | |||||
| Other comprehensive (loss)/income items that may be reclassified subsequently to profit or loss Currency translation differences |
| (600) | 651 | |||||
|
| | ------------------------------------------------- | --------------------------------------------------- | |||||
|
Total comprehensive (loss)/income for the year attributable to the owners of the company |
| (3,516) | 1,136 | |||||
|
|
| ================================================= | ================================================== | |||||
|
|
| | | |||||
| Basic (loss)/earnings per ordinary share (p) | 13 | (9.71) | 1.62 | |||||
| |
| | | |||||
| Diluted (loss)/earnings per ordinary share (p) | 13 | (9.71) | 1.46
| |||||
| |
| | |
| ||||
All operations are continuing operations.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| | As at 31 Dec 2023 | As at 31 Dec 2022 |
| | £000 | £000 |
| Note | | |
Non-current assets
| Right-of-use asset | 14 | - | 213 |
| | --------------------------------------------------- | --------------------------------------------------- | |
| Total non-current assets | - | 213 | |
Current assets
| Trade and other receivables | 16 | 8,339 | 7,874 |
| Deferred tax asset | 12 | - | 675 |
| Corporation tax receivable |
| 145 | - |
| Cash and cash equivalents | 17 | 7,740 | 11,663 |
| | ------------------------------------------------------ | ------------------------------------------------------ | |
| Total current assets | 16,224 | 20,212 | |
|
| | | |
| Total assets | 16,224 | 20,425 | |
| Current liabilities |
| | |
| Trade and other payables | 18 | (7,641) | (8,048) |
| Corporation tax payable |
| - | (371) |
| Lease liabilities | 19 | - | (219) |
| | ------------------------------------------------------ | ------------------------------------------------------ | |
| Total current liabilities | (7,641) | (8,638) | |
| | ----------------------------------------------------- | ----------------------------------------------------- | |
|
| | | |
| Total liabilities | (7,641) | (8,638) | |
|
| ==================================================== | ==================================================== | |
| Net assets | 8,583 | 11,787 | |
| | ==================================================== | ==================================================== | |
| Equity
|
| | |
| Share capital | 23 | 60 | 60 |
| Share premium account |
| 5,436 | 5,436 |
| Share options reserve |
| 3,692 | 3,380 |
| Foreign currency reserve |
| (461) | 139 |
| Retained (losses)/earnings |
| (144) | 2,772 |
| | ==================================================== | ==================================================== | |
| Total equity attributable to the owners of the company | 8,583 | 11,787 | |
| | ==================================================== | ==================================================== | |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| | Attributable to the owners of the Company |
| |||||||||||
|
| Share capital | Share premium account | Share options reserve | Foreign currency reserve | Retained earnings/ (losses) | Total equity |
| ||||||
|
| £000 | £000 | £000 | £000 | £000 | £000 |
| ||||||
| | ----------------------------------------- | ------------------------------------------------ | ------------------------------------------------ | ------------------------------------------------ | ----------------------------------------------- | ------------------------------------------------ |
| ||||||
| Balance at 1 January 2023 | 60 | 5,436 | 3,380 | 139 | 2,772 | 11,787 |
| ||||||
| | ----------------------------------------- | ------------------------------------------------- | ------------------------------------------------- | ------------------------------------------------- | ----------------------------------------------- | ------------------------------------------------ |
| ||||||
| Comprehensive loss for the period | | | | | | |
| ||||||
| Loss for the period | - | - | - | - | (2,916) | (2,916) |
| ||||||
| Currency translation differences | - | - | - | (600) | - | (600) |
| ||||||
| | ----------------------------------------- | ------------------------------------------------- | ------------------------------------------------- | ------------------------------------------------- | ----------------------------------------------- | ------------------------------------------------ |
| ||||||
| Total comprehensive loss for the period | - |
- |
- | (600) | (2,916) | (3,516) | |||||||
| | ----------------------------------------- | ----------------------------------------------- | ----------------------------------------------- | ----------------------------------------------- | ----------------------------------------------- | ------------------------------------------------ | |||||||
| Transactions with owners of the Company | | | | | | | |||||||
| Share-based payment credit | - | - | 312 | - | - | 312 | |||||||
| | ----------------------------------------- | ----------------------------------------------- | ----------------------------------------------- | ----------------------------------------------- | ------------------------------------------------- | ------------------------------------------------ | |||||||
| Total transactions with owners of the Company | - |
- | 312 | - | - | 312 | |||||||
| | ----------------------------------------- | ----------------------------------------------- | ----------------------------------------------- | ----------------------------------------------- | ------------------------------------------------- | ------------------------------------------------ | |||||||
| Balance at 31 December 2023 | 60 | 5,436 | 3,692 | (461) | (144) | 8,583 | |||||||
| | ----------------------------------------- | --------------------------------------------------- | --------------------------------------------------- | --------------------------------------------------- | ------------------------------------------------ | ---------------------------------------------- |
| ||||||
| | Attributable to the owners of the Company |
| |||||||||||
|
| Share capital | Share premium account | Share options reserve | Foreign currency reserve | Retained earnings | Total equity |
| ||||||
|
| £000 | £000 | £000 | £000 | £000 | £000 |
| ||||||
| | ----------------------------------------- | ------------------------------------------------ | ------------------------------------------------ | ------------------------------------------------ | ----------------------------------------------- | ------------------------------------------------ |
| ||||||
| Balance at 1 January 2022 | 60 | 5,436 | 2,854 | (512) | 2,287 | 10,125 |
| ||||||
| | ----------------------------------------- | ------------------------------------------------- | ------------------------------------------------- | ------------------------------------------------- | ----------------------------------------------- | ------------------------------------------------ |
| ||||||
| Comprehensive income for the period | | | | | | |
| ||||||
| Profit for the period | - | - | - | - | 485 | 485 |
| ||||||
| Currency translation differences | - | - | - | 651 | - | 651 |
| ||||||
| | ----------------------------------------- | ------------------------------------------------- | ------------------------------------------------- | ------------------------------------------------- | ----------------------------------------------- | ------------------------------------------------ |
| ||||||
| Total comprehensive income for the period | - |
- |
- |
651 | 485 | 1,136 | |||||||
| | ----------------------------------------- | ----------------------------------------------- | ----------------------------------------------- | ----------------------------------------------- | ----------------------------------------------- | ------------------------------------------------ | |||||||
| Transactions with owners of the Company | | | | | | | |||||||
| Share-based payment credit | - | - | 526 | - | - | 526 | |||||||
| | ----------------------------------------- | ----------------------------------------------- | ----------------------------------------------- | ----------------------------------------------- | ------------------------------------------------- | ------------------------------------------------ | |||||||
| Total transactions with owners of the Company | - |
- |
526 |
- | - | 526 | |||||||
| | ----------------------------------------- | ----------------------------------------------- | ----------------------------------------------- | ----------------------------------------------- | ------------------------------------------------- | ------------------------------------------------ | |||||||
| Balance at 31 December 2022 | 60 | 5,436 | 3,380 | 139 | 2,772 | 11,787 |
| ||||||
| | ----------------------------------------- | --------------------------------------------------- | --------------------------------------------------- | --------------------------------------------------- | ------------------------------------------------ | ---------------------------------------------- |
| ||||||
CONSOLIDATED STATEMENT OF CASH FLOWS
|
| Year ended 31 Dec 2023 |
Year ended 31 Dec 2022 |
|
| £000 | £000 |
Cash flows from operating activities
| (Loss)/profit on ordinary activities before taxation | (1,819) | 1,147 |
|
| | |
| Adjustments for: | | |
| Depreciation - leased assets | 213 | 107 |
| Interest payable | 3 | 4 |
| Interest receivable | (115) | (41) |
| Increase in trade and other receivables | (465) | (478) |
| (Decrease)/increase in trade and other payables | (407) | 185 |
| Other cost/(income) | 33 | (167) |
| Share-based payment charge | 312 | 526 |
| | | |
| | ------------------------------------------------------ | ------------------------------------------------------ |
| Cash (used in)/generated from operating activities | (2,245) | 1,283 |
| | ====================================================== | ====================================================== |
| | | |
| Taxation paid | (907) | (269) |
| | ------------------------------------------------------ | ------------------------------------------------------ |
| Net cash (used in)/generated from operating activities | (3,152) | 1,014 |
| | ====================================================== | ====================================================== |
Cash flows from investing activity
| | | |
| Interest received | 115 | 41 |
| | ------------------------------------------------------ | ------------------------------------------------------ |
| Net cash generated from investing activity | 115 | 41 |
| | ====================================================== | ====================================================== |
Cash flows from financing activities
| Interest paid in respect of leases | (3) | (4) |
| Capital payments in respect of leases | (219) | (106) |
| | ------------------------------------------------------ | ------------------------------------------------------ |
| Net cash used in financing activities | (222) | (110) |
| | ====================================================== | ====================================================== |
| Net (decrease)/increase in cash and cash equivalents | (3,259) | 945 |
| Cash and cash equivalents at beginning of period | 11,663 | 10,278 |
| Exchange movement on cash | (664) | 440 |
| | ------------------------------------------------------ | ------------------------------------------------------ |
| Cash and cash equivalents at end of period | 7,740 | 11,663 |
| | ====================================================== | ====================================================== |
NOTES TO THE FINANCIAL STATEMENTS
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 and 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 material accounting policies
2.1. Basis of preparation
The financial statements for the year ended 31 December 2023 have been prepared in accordance with the historical cost convention and with international accounting standards in conformity with the requirements of the Companies Act 2006 and with UK adopted International Financial Reporting International Financial Reporting Standards (IFRSs).
The profit before charging interest, tax, depreciation, amortisation, share-based payment charges, other, non-recurring income and exceptional costs (adjusted EBITDA) is presented in the income statement as the Directors consider this performance measure provides a more accurate indication of the underlying performance of the Company and is commonly used by City analysts and investors.
The preparation of financial statements requires management to exercise its judgement in the process of applying accounting policies. The areas involving a higher degree of judgement, or areas where assumptions and estimates are significant to the financial information, are disclosed in note 3.
The presentational and functional currency of the Company is sterling. Results in these financial statements have been prepared to the nearest £1,000.
2.2. 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, being Dianomi Inc. and Dianomi Pty Ltd. 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.
2.3. Going concern
At the time of approving the financial statements, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. At 31 December 2023 the Company had cash and cash equivalents of £7.7 million (2022: £11.7 million) and net current assets of £8.6 million (2022: £11.8 million). The Group has no debt outstanding or facilities in place (2022: £nil).
The Directors have prepared detailed cash flow forecasts for the next 18 months that indicate the existing activities of the Group do not require additional funding during that period. The forecasts are challenged by various downside scenarios such as the loss of a major publisher, margin erosion or no new business to stress test the estimated future cash position. The Directors are pleased to note that the stress tests did not have a significant impact on the cash flow or cash position of the Group. In addition, current trading is in line with the forecast.
2.4. Material accounting policies
2.4.1. 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 advertisers for 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), cost per click (CPC) or cost per action (CPA) with the volumes of units delivered. 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 payment terms vary between 30 to 120 days of receipt of invoice dependent on advertiser.
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.
2.4.2. 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.
In limited instances, the Company incurs costs with publishers based on a guaranteed minimum rate of payment from the Company in exchange for guaranteed placement of the Company's promoted recommendations on specified portions of the publisher's online properties. These guaranteed rates are typically either a minimum monthly payment or a minimum CPM and are recognised as an expense as incurred.
2.4.3. Taxation
Current tax is the tax currently payable based on the taxable profit for the year.
The Group recognises current tax assets and liabilities of entities in different jurisdictions separately as there is no legal right of offset.
The Group's US subsidiary does not charge US sales tax on its services as it provides non-taxable services.
Deferred tax is provided in full on temporary differences between the carrying amounts of assets and liabilities and their tax bases, except when, at the initial recognition of the asset or liability, there is no effect on accounting or taxable profit or loss under a business combination. Deferred tax is determined using tax rates and laws that have been substantially enacted by the statement of financial position date, and that are expected to apply when the temporary difference reverses.
Tax losses available to be carried forward, and other tax credits to the Group, are recognised as deferred tax assets, to the extent that it is probable that there will be future taxable profits against which the temporary differences can be utilised.
Changes in deferred tax assets or liabilities are recognised as a component of the tax expense in the statement of comprehensive income, except where they relate to items that are charged or credited directly to equity, in which case the related deferred tax is also charged or credited directly to equity.
2.4.4. Development costs
Costs relating to the ongoing support and development of the Group's platform are recognised as an expense in profit and loss as incurred.
2.4.5. 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 Company'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.
2.4.6. Cash and cash equivalents
Cash is represented by cash in hand and deposits with financial institutions.
2.4.7. Financial instruments
The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement. Financial instruments are recognised on trade date when the Group becomes a party to the contractual provisions of the instrument. Financial instruments are recognised initially at fair value plus, in the case of a financial instrument not a fair value through profit and loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument. Financial instruments are derecognised on the trade date when the Group is no longer a party to the contractual provisions of the instrument.
Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings and trade and other payables. All financial instruments held are classified as loans and receivables.
a) Trade and other receivables and trade and other payables
Trade and other receivables are recognised initially at transaction price less attributable transaction costs. Trade and other payables are recognised initially at transaction price plus attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any expected credit losses in the case of trade receivables. If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments discounted at a market rate of interest for a similar debt instrument.
b) Contract liabilities
A contract liability is recognised if a payment is received or a payment is due (whichever is earlier) from a customer before the Group transfers the related services. Contract liabilities are recognised as revenue when the performance obligation has been met.
c) Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at the present value of future payments discounted at a market rate of interest. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised costs using the effective interest method, less any impairment losses.
d) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits.
e) Derivative financial instruments
Derivative financial instruments comprise economic hedges. Hedge accounting is not applied to derivative instruments that economically hedge financial assets and liabilities denominated in foreign currencies. Changes in the fair value of such derivatives are recognized in profit or loss under financing income or expenses.
2.4.8. Leases
The Group leases property in the UK, US and Australia.
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
- Leases of low value assets; and
- Leases with a duration of twelve months or less.
These leases are recognised as an expense on a straight-line basis over the term of the lease.
Lease liabilities are measured at the present value of contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Group's incremental borrowing rate on commencement of the lease is used. This was 3.0 per cent. in the periods under review. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.
Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:
- Lease payments made at or before commencement of the lease;
- Initial direct costs incurred; and
- The amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset (typically leasehold dilapidations).
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.
No lease modification or reassessment changes have been made during the reporting period from changes in any lease terms or rent charges.
2.4.9. Earnings per share
The Group presents basic and diluted earnings per share on an IFRS basis. In calculating the weighted average number of shares outstanding during the period, any share restructuring is adjusted to allow comparability with other periods. The calculation of diluted earnings per share assumes conversion of all potentially dilutive ordinary shares, which arise from share options outstanding.
2.4.10. Financing income and expenses
Financing expenses comprise interest payable, finance charges on shares classified as liabilities and leases recognised in the income statement using the effective interest method, unwinding of the discount on provisions, and not foreign exchange losses that are recognised in the statement of comprehensive income.
Financing income includes interest receivable on funds invested. Interest income and interest payable are recognised in the statement of comprehensive income as they accrue, using the effective interest method.
2.4.11. Reorganisation costs
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 this category are the costs relating the reorganisation which took place in 2023.
Reorganisation costs 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.
2.4.12. 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. If a modification results in a reduction in the number of options granted, then this results in an acceleration of the vesting period and therefore any amount unrecognised that would otherwise have been charged is charged to profit or loss immediately.
Where equity instruments are granted to persons other than employees, profit or loss is charged with the fair value of goods and services received.
2.5. Standards issued but not yet effective
The IASB and IFRIC have issued the following relevant standards and interpretations with effective dates as noted below:
| Standard | Key Requirements | Effective date (for annual periods beginning on or after) |
| Amendments to IAS 1 Presentation of Liabilities as Current or Non-current | The amendments clarify how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability. | 1 January 2024 |
| Amendments to IFRS 16 Lease Liability in a Sale and Leaseback | The amendments clarify how a seller-lessee subsequently measures sale and leaseback transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale. | 1 January 2024 |
| Amendments to IAS 1 Non-Current Liabilities with Covenants | The amendment clarifies how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability. | 1 January 2024 |
| Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates | The amendments clarify when a currency is exchangeable into another currency and how a company estimates a spot rate when a currency lacks exchangeability. | 1 January 2025 |
The new standards, listed above, are not expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions.
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, share-based payment charges, other, non-recurring income and non-recurring exceptional costs. Adjusted EPS excludes from profit after tax share-based payment charges, other, non-recurring income and non-recurring exceptional items and their related tax impacts. Please refer to note 8 for reconciliations to Alternative Performance Measures ("APMs").
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:
Estimations:
- Share-based payments: 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.
- Receivables provision: the Group reviews the amount of credit loss associated with its trade receivables, intercompany receivables and other receivables based on historical default rates as well as forward looking estimates that consider current and forecast credit conditions.
Judgements:
- Deferred tax: the extent to which deferred tax assets can be recognised is based on an assessment of the probability that future taxable income will be available against which the deductible temporary differences and tax loss carry-forwards can be utilised. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties.
- Going concern: The financial statements have been prepared on the going concern basis based on a judgement by the Directors that the Group will continue to be able to meet its liabilities as they fall due for the foreseeable future, being a period of at least 18 months from the date of signing these financial statements. In this context, the Directors have prepared detailed cash flow forecasts for the next 18 months that indicate the existing activities of the Group do not require additional funding during that period. The forecasts were challenged by various downside scenarios to stress test the estimated future cash position. The Directors note that the stress tests did not have a significant impact on the cash flow or cash position of the Group. In addition, current trading is in line with the forecast.
- Treatment of costs incurred in relation to the reorganisation: The Group has recorded significant one-off costs in respect of the reorganisation undertaken in the year ended 31 December 2023 including consultancy, legal and employee settlement costs. The Directors reviewed the reasonableness and inclusion of these items in operating adjusted items and the disclosures in the Annual Report.
3. Revenue
Revenue arises from:
| | | Year to 31 Dec 2023 | Year to 31 Dec 2022 |
| | | £000 | £000 |
| | | | |
| EMEA | | 4,811 | 6,591 |
| United States of America | | 24,428 | 28,317 |
| APAC | | 915 | 1,007 |
| | | ====================================================== | ====================================================== |
| | | 30,154 | 35,915 |
| | | ====================================================== | ====================================================== |
4. Operating segments
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. The Directors consider that the geographies where the Group operates have similar economic and operating characteristics and the products and services provided in each region are all related to premium native advertising. Management therefore consider that the Group has one operating segment. The Group report is presented and measured to the Board as a single segment and is consistent with the financial statements. As such, no additional disclosure has been recorded under IFRS 8.
6. Other income
| | | Year to 31 Dec 2023 | Year to 31 Dec 2022 |
| | | £000 | £000 |
| Other income | | - | 167 |
| | | ====================================================== | ====================================================== |
Other income in the year ended 31 December 2022 related to a tax refund as a result of an R&D tax credit.
7. Administrative expenses
| | | Year to 31 Dec 2023 | Year to 31 Dec 2022 | |
| | | £000 | £000 | |
| | | | | |
| Direct staff costs | | 4,476 | 5,167 | |
| IT and software costs | | 1,511 | 1,273 | |
| Legal and professional | | 734 | 754 | |
| Rent | | 146 | 239 | |
| Insurance | | 268 | 186 | |
| Depreciation - leased assets | | 213 | 107 | |
| Foreign exchange (gains)/losses | | (39) | 33 | |
| Share-based payments | | 312 | 526 | |
| Other administrative expenses | | 708 | 696 | |
| | | ====================================================== | ====================================================== | |
| | | 8,329 | 8,981 | |
| | | ====================================================== | ====================================================== | |
During the year the Group obtained the following services from the Company's auditors as detailed below:
| | | Year to 31 Dec 2023 | Year to 31 Dec 2022 |
| | | £000 | £000 |
| | | | |
| Audit fees | | 128 | 118 |
| Other services: | | | |
| Tax compliance | | 10 | 19 |
| Agreed upon procedures on interim results | | 17 | 15 |
| | | ====================================================== | ====================================================== |
| | | 155 | 152 |
| | | ====================================================== | ====================================================== |
8. Reconciliations to alternative profit measures
In order to provide better clarity to the underlying performance of the Group, Dianomi uses adjusted EBITDA and adjusted earnings per share 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 non-cash depreciation charges, share-based payment charges, other, non-recurring income and non-recurring exceptional costs from operating (loss)/profit. Adjusted EPS excludes share-based payment charges, other, non-recurring income and non-recurring exceptional items and their related tax impacts from profit after tax.
The table below sets out the reconciliation of the Group's adjusted EBITDA and adjusted (loss)/profit before tax from (loss)/profit before tax.
| | | Year to 31 Dec 2023 | Year to 31 Dec 2022 |
| | | £000 | £000 |
| | | | |
| | | ====================================================== | ====================================================== |
| (Loss)/profit before tax |
| (1,819) | 1,147 |
| | | ====================================================== | ====================================================== |
| Adjusting items: | | | |
| Reorganisation costs | | 1,054 | - |
| Share-based payments | | 312 | 526 |
| Other income | | - | (167) |
| | | ====================================================== | ====================================================== |
| Adjusted (loss)/profit before tax |
| (453) | 1,506 |
| | | ====================================================== | ====================================================== |
| | | | |
| | | | |
| Depreciation | | 213 | 107 |
| Net finance income | | (112) | (37) |
| | | ====================================================== | ====================================================== |
| Adjusted EBITDA |
| (352) | 1,576 |
| | | ====================================================== | ====================================================== |
| | | | |
The table below sets out the reconciliation of the Group's adjusted (loss)/profit after tax to adjusted (loss)/profit before tax.
| | | ====================================================== | ====================================================== |
| Adjusted (loss)/profit before tax |
| (453) | 1,506 |
| | | ====================================================== | ====================================================== |
| | | | |
| | | | |
| Tax expense | | (1,097) | (662) |
| Derecognition of deferred tax asset | | 675 | |
| Tax impact of adjusting items | | (55) | (68) |
| | | ====================================================== | ====================================================== |
| Adjusted (loss)/profit after tax |
| (930) | 776 |
| | | ====================================================== | ====================================================== |
| | | | |
Adjusted (loss)/profit after tax is used in calculating adjusted basic and adjusted diluted EPS. Adjusted (loss)/profit after tax is stated before adjusting items and their associated tax effects. Adjusted EPS is calculated by dividing the adjusted (loss)/profit after tax for the period attributable to Ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Adjusted diluted EPS is calculated by dividing adjusted (loss)/profit after tax by the weighted average number of shares adjusted for the impact of potential ordinary shares. Potential Ordinary shares are treated as dilutive when their conversion to Ordinary shares would decrease EPS. Please refer to note 13 for further detail.
9. Employee information
The average number of persons employed by the Group (including directors) during the year, analysed by category, was as follows:
| | Year to 31 Dec 2023 | Year to 31 Dec 2022 |
| | Number | Number |
| Directors | 6 | 7 |
| Employees | 36 | 39 |
| | ---------------------------------------------------- | ---------------------------------------------------- |
| | 42 | 46 |
| | ====================================================== | ====================================================== |
The aggregate payroll costs of these persons (including directors) were as follows:
| | Year to 31 Dec 2023 | Year to 31 Dec 2022 | ||
| | £000 | £000 | ||
| Wages and salaries | 3,965 | 4,537 | ||
| Social security costs | 464 | 569 | ||
| Pension costs | 47 | 61 | ||
| Share-based payment expense | 312 | 526 | ||
| | ---------------------------------------------------- | ---------------------------------------------------- |
| |
| | 4,788 | 5,693 |
| |
| | ===================================================== | ===================================================== |
| |
A defined contribution pension scheme is operated by a third party and the Group pays contributions on behalf of the employees. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension charge represents contributions payable by the Group to the fund. Contributions amounting to £nil were payable to the fund at the end of 2023 (2022: £nil).
Key management personnel include employees across the Group who together have authority and responsibility for planning, directing and controlling the activities of the Group. Key management personnel are considered to be the executive directors of the Group and details regarding their remuneration are set out below:
|
| FY23 | ||||
|
| Salary | Notice and Termination Payment | Benefits | Pension | Total |
| Name | £'000s | £'000s | £'000s | £'000s | £'000s |
| Rupert Hodson | 190 | - | 11 | 2 | 203 |
| Charlotte Stranner | 180 | - | - | 1 | 181 |
| Raphael Queisser[1] | 37 | 221 | 2 | 1 | 261 |
| Robert Cabell de Marcellus[1] | 37 | 225 | - | 1 | 263 |
| Total | 444 | 446 | 13 | 5 | 908 |
|
| FY22 | ||||
|
| Salary | Bonus/ Commission | Benefits | Pension | Total |
| Name | £'000s | £'000s | £'000s | £'000s | £'000s |
| Rupert Hodson | 220 | - | 11 | 2 | 233 |
| Charlotte Stranner | 180 | - | - | 1 | 181 |
| Raphael Queisser[1] | 220 | - | 7 | 3 | 230 |
| Robert Cabell de Marcellus[1] | 220 | - | 2 | 4 | 226 |
| Total | 840 | - | 20 | 10 | 870 |
[1] Raphael Queisser and Robert Cabell de Marcellus stepped down from the board and from their positions as COO and CTO respectively on 15 March 2023.
The highest paid director received remuneration of £203k (2022: £233k). No share options were exercised by the directors in the year (2022: nil).
10. Finance income and expense
|
| Year to 31 Dec 2023 | Year to 31 Dec 2022 |
| | £000 | £000 |
| | | |
| Interest received | 115 | 41 |
| | ---------------------------------------------- | ---------------------------------------------- |
| Total finance income | 115 | 41 |
| | ============================================ | ============================================ |
| |
|
|
| On lease liability | 3 | 4 |
| | ---------------------------------------------- | ---------------------------------------------- |
| Total finance expense | 3 | 4 |
| | ============================================ | ============================================== |
11. Taxation
| | Year to 31 Dec 2023 | Year to 31 Dec 2022 |
| | £000 | £000 |
| UK corporation tax | | |
| Current tax on (loss)/profit for the year | - | - |
| Adjustments in respect of prior periods | - | - |
| | ----------------------------------------------- | ----------------------------------------------- |
| | - | - |
| | ================================================= | ================================================= |
| Foreign tax | | |
| Foreign tax on (loss)/profit for the year | 422 | 662 |
| | ----------------------------------------------- | ----------------------------------------------- |
| Total current tax | 422 | 662 |
| | ================================================= | ================================================= |
| Deferred tax | | |
| Origination and reversal of timing differences | 675 | - |
|
| ----------------------------------------------- | ----------------------------------------------- |
| Total deferred tax | 675- | -- |
|
| ================================================= | ================================================= |
|
| ----------------------------------------------- | ----------------------------------------------- |
| Taxation on (loss)/profit on ordinary activities | 1,097 | 662 |
|
| ================================================= | ================================================= |
Reconciliation of tax expense
The tax assessed on the (loss)/profit on ordinary activities for the year is higher than (2022: higher than) the standard rate of corporation tax in the UK of 23.52%[1] (2022: 19%).
| | Year to 31 Dec 2023 | Year to 31 Dec 2022 |
| | £000 | £000 |
| | | |
| (Loss)/profit on ordinary activities before taxation | (1,819) | 1,147 |
| | ======================================================= | ======================================================= |
| | | |
| (Loss)/profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 23.52%[1] (2022: 19%) | (428) | 218 |
| | | |
| Effects of: | | |
| Expenses not deductible for tax purposes | 127 | 16 |
| Foreign tax | - | 321 |
| Difference in tax rates | (38) | - |
| Deferred tax not recognised | 1,436 | 107 |
| | | |
| | ======================================================= | ======================================================= |
| Tax on (loss)/profit | 1,097 | 662 |
| | ======================================================= | ====================================================== |
| | | |
[1] the standard rate of corporation tax in the UK increased from 19% to 25% in April 2023 hence a blended rate of 23.52% has been used for 2023.
A total of £946k was paid during the year with respect to US tax relating to both 2022 and 2023 (2022: £436k), offset by a net credit received in relation to Australian tax of £35k (2022: £nil) and a UK corporation tax credit of £4k respectively (2022: credit of £167k).
12. Deferred tax
| Deferred tax asset | | |
| ||
| | As at 31 Dec 2023 | As at 31 Dec 2022 | |||
| | £000 | £000 | |||
| | | | |||
| Tax losses | - | 675 | |||
| | ============= =========================== | ======================================== | |||
The Company has an unrecognised deferred tax asset of £2,763k calculated at 25% (gross £11,055k) (FY22: 25%, gross amount £5,748k) in respect of losses carried forward to future years. Given the uncertainty of the timing as to when the losses will be utilised the Directors have decided to take a cautious approach and derecognise the deferred tax asset brought forward.
13. Earnings per share
The Group presents non-adjusted and adjusted basic and diluted (loss)/earnings per share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the (loss)/profit 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:
|
| Year to 31 Dec 2023 | Year to 31 Dec 2022 |
| | £000 | £000 |
| (Loss)/profit attributable to the ordinary equity holders of the Group used in calculating basic and diluted EPS | (2,916) | 485 |
| | | |
| Basic (loss)/earnings per ordinary share (p) | (9.71) | 1.62 |
| Diluted (loss)/earnings per ordinary share (p) | (9.71) | 1.46 |
| | Year to 31 Dec 2023 | Year to 31 Dec 2022 |
| Adjusted basic and diluted EPS | £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 |
(2,916) |
485 |
| Adjusting items: | | |
| Share-based payments | 312 | 526 |
| Reorganisation costs | 1,054 | - |
| Other income | - | (167) |
| Derecognition of deferred tax asset | 675 | - |
| | | |
| Tax impact of adjusting items | (55) | (68) |
| | ====================================================== | ====================================================== |
| (Loss)/profit attributable to the ordinary equity holders of the Group used in calculating adjusted basic and diluted EPS | (930) | 776 |
| | | |
| Adjusted basic (loss)/earnings per ordinary share (p) | (3.10) | 2.58 |
| Adjusted diluted (loss)/earnings per ordinary share (p) | (3.10) | 2.34 |
|
|
| Year to 31 Dec 2023 | Year to 31 Dec 2022 |
| |
| | |
| | | | |
| Weighted average number of ordinary shares used as the denominator in calculating non-adjusted and adjusted basic EPS | | 30,027,971 | 30,027,971 |
| Weighted average share option dilution impact | | 1,642,490 | 3,184,268 |
| | | ============================================================== | =============================================================== |
| Weighted average number of ordinary shares used as the denominator in calculating non-adjusted and adjusted diluted EPS | | 31,670,461 | 33,212,239 |
14. Right-of-use assets
|
| | Leased property | ||||
| | | £000 | ||||
| Cost | | | ||||
| At 1 January 2022 | | 257 | ||||
| Additions | | 320 | ||||
|
| | =================================================== | ||||
| At 31 December 2022 | | 577 | ||||
| | | ================================================== | ||||
| At 1 January 2023 | | 577 | ||||
| Additions | | - | ||||
| | | =================================================== | ||||
| At 31 December 2023 | | 577 | ||||
| | | ================================================== | ||||
| Depreciation | | | ||||
| At 1 January 2022 | | 257 | ||||
| Depreciation charge | | 107 | ||||
|
| | =================================================== | ||||
| At 31 December 2022 | | 364 | ||||
| | | ================================================== | ||||
| At 1 January 2023 | | 364 | ||||
| Depreciation charge | | 213 | ||||
| | | =================================================== | ||||
| At 31 December 2023 | | 577 | ||||
| | | =================================================== | ||||
| Net book value | | |
| At 31 December 2022 | | 213 |
| At 31 December 2023 | | - |
In 2022 the Company entered into an 18-month lease for its serviced office premises in London. The total payments due under the term of the lease amounted to £0.3 million. Lease liabilities in respect of right-of-use assets were nil as at 31 December 2023 (2022: £0.2 million). The discount rate used in determining the present value of the lease liability was 3%. The interest expense recognised in the statement of comprehensive income for the year ended 31 December 2023 was £3k (2022: £4k). In December 2023 the Company entered into a new 12-month lease agreement for its serviced office premises in London which commenced 1 January 2024.
15. Subsidiaries
The undertakings in which the Group's interest at the year-end is 20 per cent. or more are as follows:
| Subsidiary undertakings | Country of incorporation | Principal activity | At 31 Dec 2023 | At 31 Dec 2022 |
| | | | | |
| Dianomi Inc
| United States | Business support services | 100% | 100% |
| Dianomi PTY
| Australia | Business support services | 100% | 100% |
The registered office of Dianomi Inc is Corporate Service Bureau Inc., 28 Old Rudnick Lane, Dover, Delaware,19901. The registered office of Dianomi PTY is ALM Williams Partners, Level 2, 570 St Kilda Road, Melbourne, VIC 3004.
16. Trade and other receivables
| | As at 31 Dec 2023 | As at 31 Dec 2022 |
| | £000 | £000 |
| Current | | |
| Trade receivables | 8,081 | 7,488 |
| Prepayments | 145 | 116 |
| Loan receivable | 5 | 52 |
| Other receivables | 108 | 218 |
| | ---------------------------------------------- | ---------------------------------------------- |
| | 8,339 | 7,874 |
| | ============================================== | ============================================== |
All of the trade receivables were non-interest bearing and receivable under normal commercial terms. The directors consider that the carrying value of trade and other receivables approximates to their fair value.
The loan receivable balances relate to a loan owed from Buckingham Gate Financial Services Limited, a shareholder and related party. The loan accrues annual interest at 4%.
The expected credit loss on trade and other receivables was not material at the current or prior year end. For analysis of the maximum exposure to credit risk, please refer to note 21.
The impairment loss recognised in the income statement for the period in respect of bad and doubtful trade receivables was £35k (2022: £52k).
The ageing of trade receivables is detailed below:
As at 31 December 2023
| | < 30 days | < 60 days | < 90 days | < 180 days | > 180 days | Total |
| | £000 | £000 | £000 | £000 | £000 | £000 |
| | | | | | | |
| Gross carrying amount | 3,316 | 2,312 | 1,047 | 797 | 609 | 8,081 |
| | =============================================== | ============================================== | ============================================ | ============================================ | ============================================== | ================================================= |
As at 31 December 2022
| | < 30 days | < 60 days | < 90 days | < 180 days | > 180 days | Total |
| | £000 | £000 | £000 | £000 | £000 | £000 |
| | | | | | | |
| Gross carrying amount | 3,626 | 1,743 | 814 | 456 | 849 | 7,488 |
| | =============================================== | ============================================== | ============================================ | ============================================ | ============================================== | ================================================= |
17. Cash and cash equivalents
| | As at 31 Dec 2023 | As at 31 Dec 2022 |
| | £000 | £000 |
| | | |
| Cash at bank and in hand | 7,740 | 11,663 |
| | ============================================ | ============================================== |
Cash at bank earns interest at floating rates based on bank deposit rates.
18. Trade and other payables
| | As at 31 Dec 2023 | As at 31 Dec 2022 |
| | £000 | £000 |
| Current liabilities | | |
| Trade payables | 4,221 | 3,035 |
| Other taxes and social security costs | 37 | 116 |
| Contract liabilities | - | 104 |
| Other payables and accruals | 3,383 | 4,793 |
| | ---------------------------------------------- | ---------------------------------------------- |
| | 7,641 | 8,048 |
| | ============================================ | ============================================= |
The fair value of trade and other payables approximates to book value at each year end. Trade payables are non-interest bearing and are normally settled monthly.
19. Lease liabilities
| | As at 31 Dec 2023 | As at 31 Dec 2022 |
| | £000 | £000 |
| Current liabilities | | |
| Lease liabilities | | |
|
| - | 219 |
| | -------------------------------------------- | -------------------------------------------- |
| | - | 219 |
| | ========================================== | ========================================== |
The Group leases an office building in London for use by its staff. The discount rate used in determining the present value of lease liabilities was the Group's incremental borrowing rate of 3%. The interest expense recognised in the consolidated statement of comprehensive income for the year ended 31 December 2023 was £3k (2022: £4k). Payments of £222k (2022: £106k) in respect of rental payments paying down lease liabilities have been recognised in the consolidated statement of cash flows. In December 2023 the Company entered into a new 12-month lease agreement for its serviced office premises in London which commenced 1 January 2024.
The office leases in the US and Australia are considered short term as the lease terms are 12 months or less. The total amount recorded in the consolidated statement of comprehensive income in respect of short-term leases is £145k (2022: £239k). Remaining commitments on short term leases are recorded below.
| | As at 31 Dec 2023 | As at 31 Dec 2022 |
| | £000 | £000 |
| | | |
| Within one year | 29 | 27 |
| | -------------------------------------------- | -------------------------------------------- |
| | 29 | 27 |
| | ========================================== | ============================================== |
19. Financial instruments
The Group's and Company's financial instruments may be analysed as follows:
|
| As at 31 Dec 2023 | As at 31 Dec 2022 |
| | £000 | £000 |
| Financial assets | | |
| Financial assets measured at amortised cost: | | |
| Cash at bank and in hand | 7,740 | 11,663 |
| Trade receivables | 8,081 | 7,488 |
| Loan receivable | 5 | 52 |
| Other receivables | 108 | 218 |
| | =============================================== | =============================================== |
| | 15,934 | 19,421 |
| | =============================================== | =============================================== |
| Financial liabilities | | |
| Financial liabilities measured at amortised cost: | | |
| Trade payables | 4,221 | 3,035 |
| Other payables and accruals | 3,383 | 4,793 |
| | =============================================== | =============================================== |
| | 7,604 | 7,828 |
| | =============================================== | ============================================== |
The Group's income, expense, gains and losses in respect of financial assets measured at fair value through profit or loss realised a fair value loss of £nil (2022: gain of £nil).
21. Financial risk management
The Group and Company is exposed to a variety of financial risks through its use of financial instruments which result from its operating activities. All of the Group's financial instruments are classified as loans and receivables. The Group does not actively engage in the trading of financial assets for speculative purposes. The most significant financial risks to which the Group is exposed are described below:
Credit risk
Generally, the Group's and Company's maximum exposure to credit risk is limited to the carrying amount of the financial assets recognised at the reporting date, as summarised below:
| | As at 31 Dec 2023 | As at 31 Dec 2022 |
| | £000 | £000 |
| Trade receivables | 8,081 | 7,488 |
| Other receivables | 258 | 386 |
| | -------------------------------------------------- | -------------------------------------------------- |
| | 8,339 | 7,874 |
| | ================================================ | ================================================ |
Credit risk is the risk of financial risk to the Group and Company if a counter party to a financial instrument fails to meet its contractual obligation. The nature of the Group's and Company's debtor balances, the time taken for payment by clients and the associated credit risk are dependent on the type of engagement.
The Group's and Company's trade and other receivables are actively monitored. The ageing profile of trade receivables is monitored regularly by the Chief Financial Officer. Any debtors over 60 days are individually reviewed by the Chief Financial Officer every month and explanations sought for any balances that have not been recovered. A summary of significant trade and other receivables is provided to the Directors on a monthly basis and any issues are brought to their attention.
Unbilled revenue is recognised by the Group and Company only when all conditions for revenue recognition have been met in line with the Group's accounting policy.
The Directors are of the opinion that there is no material credit risk at group level.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting its obligations associated with its financial liabilities. The Group seeks to manage financial risks to ensure sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably.
The tables below analyse the Group's financial liabilities into relevant maturity groupings based on their contractual maturities.
The amounts disclosed in the tables are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances, because the impact of discounting is not significant.
Contractual maturities of financial liabilities:
| | | As at 31 December 2023 | As at 31 December 2022 | ||
| | |
Less than 6 months representing total contractual cashflows | Carrying amount of liabilities |
Less than 6 months representing total contractual cashflows | Carrying amount of Liabilities |
| | | £000 | £000 | £000 | £000 |
| | | | | | |
| Trade and other payables | | 7,641 | 7,641 | 8,048 | 8,048 |
| | | ============================================ | ============================================ | ============================================ | ============================================ |
| Total | | 7,641 | 7,641 | 8,048 | 8,048 |
| |
| ======================================= | ============================================ | ========================================= | ============================================ |
Interest rate risk
As at 31 December 2023 and 2022 the Group has no interest rate risk exposure as the Group had no debt outstanding.
Foreign currency risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily US Dollars and Australian Dollars. The Group monitors exchange rate movements closely and occasionally enters into forward contract agreements to hedge against the potential volatility of unfavourable foreign exchange rates. The Group ensures adequate funds are maintained in appropriate currencies to meet known liabilities. The Group also has trade receivable balances in foreign currency and monitors the potential effect of any exchange rate movements on these balances.
The Group's exposure to foreign currency risk at the end of the respective reporting period, expressed in Currency Units, was as follows:
| |
| ||||
| | As at 31 December 2023 CU000's | ||||
| | USD | CAD | EUR | AUD | SGD |
| Cash & cash equivalents | 8,399 | 355 | 41 | 968 | 364 |
| |
| ||||
| | As at 31 December 2022 CU000s | ||||
| | USD | CAD | EUR | AUD | SGD |
| Cash & cash equivalents | 11,017 | 1,170 | 249 | 825 | 265 |
The Group is exposed to foreign currency risk on the relationship between the functional currencies of the Group companies and the other currencies in which the Group's material assets and liabilities are denominated. The table below summaries the effect on profit and loss had the functional currency of the Group weakened or strengthened against these other currencies, with all other variables held constant.
|
| As at 31 Dec 2023 | As at 31 Dec 2022 |
| | £000 | £000 |
|
|
| |
| 10% weakening of functional currency | 100 | 193 |
| | ================================================== | ================================================== |
|
|
| |
| 10% strengthening of functional currency | (82) | (160) |
| | ================================================== | ======================================== |
The impact of a change of 10% has been selected as this has been considered reasonable given the current level of exchange rates and the volatility observed both on a historical basis and market expectations for future movements.
Fair value of financial instruments
The fair values of all financial assets and liabilities approximates their carrying value.
Capital risk management policy
The Group's capital management objectives are:
· to ensure the Group's ability to continue as a going concern in order to continue to provide returns for shareholders and benefits for other stakeholders
· maintain an optimal capital structure to reduce the cost of capital
The Group considers its capital comprises share capital plus all reserves, which amounted to £8.6 million as at 31 December 2023 (2022: £11.8 million).
The Group has no debt facilities in place as at 31 December 2023 (2022: £nil). Management assesses the Group's capital requirements in order to maintain an efficient overall financing structure. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.
22. Related party disclosures
Transactions with BGF are disclosed below:
| | Year ended 31 Dec 2023 | Year ended 31 Dec 2022 |
| | £000 | £000 |
| | | |
| Annual fee | 50 | 50 |
| | ================================================ | ============================================== |
The amount due to BGF as at 31 December 2023 is £nil (2022: £77k). The annual fee relates specifically to Matthew Singh's (a representative of BGF) services as a Non-Executive Director.
The Group received revenues of £29k (2022: £45k) from Buckingham Gate Financial Services Limited, a company that is controlled by shareholders of the Company. As at 31 December 2023 there were trade receivables from Buckingham Gate Financial Services Limited of £3k (31 December 2022: £4k). The Group also has a loan receivable from Buckingham Gate Financial Services Limited of £5k as at 31 December 2023 (31 December 2022: £52k), details of which are set out in note 16. Interest receivable of £1k accrued in the year ended 31 December 2023 (2022: £3k).
23. Share capital
|
Ordinary Shares | Issued Shares Number | Nominal Value | Issued Amount |
| As at 31 December 2022, 1 January 2023 and 31 December 2023 | 30,027,971 | 0.002 | 60,056 |
24. Share-based payments
At the time of the Company's IPO in May 2021, the Dianomi introduced share option schemes (the "IPO Option Schemes") in order to retain, incentivise and align employees with shareholders. Under the IPO Option Schemes employees were granted share options with an exercise price equal to the IPO price (or for those granted post IPO equal to the then current share price), a vesting period of 3 years and a non-market performance condition.
During the current financial year, it became clear that the performance condition for those options granted at IPO was not going to be met and for those options granted in 2022 under the same scheme it was unlikely to be met.
Therefore, it was decided that employees who were granted options in 2021 and 2022 would be given the option to have their original options cancelled (the "Cancellation"), and replacement option schemes (the "Replacement Option Schemes") would be introduced under which employees would be issued with new options with a revised performance condition, exercise price and extended vesting period but at a lower number than those originally issued.
315,950 options lapsed before the Cancellation due to employees leaving the Group as part of the reorganisation.
242,424 options were granted in April 2023 under the IPO Option Schemes with an exercise price of 82.5 pence were not cancelled.
1,405,601 options which were granted under the IPO Option Schemes were cancelled in November 2023. Simultaneously, 1,177,593 new options were issued under the Replacement Option Schemes.
| | Weighted average exercise price (pence) | Number | Weighted average exercise price (pence) | Number | |
|
| Dec 23 | Dec 23 | Dec 22 | Dec 22 | |
|
|
| | | | |
| Outstanding at the beginning of the period | 278 | 1,721,551 | 273 | 1,594,387 | |
| Granted during the period | 55 | 1,420,017 | 335 | 134,627 | |
| Lapsed/cancelled during the period | 278 | (1,721,551) | 335 | (7,463) | |
| | -------------------------------------------- | ----------------------------------------------------------- | ------------------------------------------------------------- | -------------------------------------------------------- | |
| Outstanding at the end of the period | 55 | 1,420,017 | 278 | 1,721,551 | |
|
| ============================================ | = ====================== ================================== | ============================================ | ======================================================= | |
Of the total number of options outstanding at the end of the period, nil had vested and were exercisable at the end of the year (31 Dec 22: Nil).
The Black-Scholes option pricing model was used to value the equity-settled 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 inputs into the model were as follows:
| | Options granted under IPO Option Schemes |
| Weighted average share price at grant date (£) | 2.78 |
| Weighted average exercise price (£) | 2.78 |
| Volatility (%) | 44.00% |
| Weighted average vesting period (years) | 3 |
| Risk free rate (%) | 3.482% |
| Expected dividend yield (%) | - |
| | Options granted under Replacement Option Schemes |
| Weighted average share price at grant date (£) | 48 |
| Weighted average exercise price (£) | 50 |
| Volatility (%) | 52.91% |
| Weighted average vesting period (years) | 3 |
| Risk free rate (%) | 3.595% |
| Expected dividend yield (%) | - |
The share-based remuneration expense comprises:
| | As at 31 Dec 2023 | As at 31 Dec 2022 |
| | £000 | £000 |
|
|
| |
| Equity-settled schemes | 312 | 526 |
| | ========================================== | ========================================== |
25. Reserves
Share Capital
Share capital represents the nominal value of share capital subscribed.
Share Premium
Share premium represents the funds received in exchange for shares over and above the nominal value, offset by costs incurred on the raise of equity.
Capital redemption reserve
The capital redemption reserve is a non-distributable reserve into which amounts are transferred following the redemption or purchase of the Company's own shares.
Foreign currency translation reserve The foreign currency translation reserve represents exchange differences that arise on consolidation from the translation of the financial statements of foreign subsidiaries.
Retained earnings
The retained earnings reserve represents cumulative net gains and losses recognised in the statement of comprehensive income.
Share option reserve
The share-based payment reserve represents amounts accruing for equity settled share options granted plus the fair value of share options exercised upon IPO.
26. Ultimate controlling party
There is no ultimate controlling party as at 31 December 2023 nor was there as at 31 December 2022.
27. Contingent liabilities and contingent assets
The Group had no contingent liabilities or contingent assets at 31 December 2023 (31 December 2022: £nil).
28. Capital Commitments
The Group's capital commitments at 31 December 2023 are £nil (31 December 2022: £nil).
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