Interims 2011 AIM Admission The story so far The Board Simon Bird – Technical Director Peter Simmonds – CEO & Finance Director Skip Fidura – Client Services Director Tink Taylor - Business Development Director Company Summary o o o o o o B2B Digital Marketing products and services Established 1999 135 staff 3500+ Clients Winner - National Business Awards –Best Growth Strategy Offices in Croydon, London Bridge, Manchester, Northampton & Minsk The Digital Journey Conversion 4 Some of our Clients Some of our Clients Significant Achievements last 18 months o o o o o o o o o o o AIM Admission announced Increased sales & software engineering teams Grew client base significantly Implemented Microsoft Dynamics CRM Implemented Sage 200 Implemented new IT infrastructure Successfully launched dotCommerce Successfully launched dotSEO Acquired Netcallidus Created SEO team in Belarus Maintained the high energy entrepreneurial culture Our people are key to the success o Young team - average age is 26 o Highly empowered o All staff become option holders o Focus on goal alignment o We aim to hire the best people o We aim to keep our good people Financial Highlights – 2009/10 Full Year 2010/11 Interims o Revenues increased by 48% (From £2,785k to £4,123k) o Profits after tax increased by 48% (From £520k to £771k) o Up 56% excluding IFRS2 charge relating to options of £38k o Strong growth in customer numbers o An expansion of products and services o New Offices in Belarus & Scotland o Earnings per share up 50% 5 Year Financial Summary £m 12 Months to June 2010 12 Months to June 2009 Yr to 30 April 2008 Yr to 30 April 2007 Yr to 30 April 2006 Turnover 6.0 4.2 2.5 1.2 0.8 Admin Costs 4.6 3.3 1.7 0.9 0.5 PBT 1.4 0.9 0.75 0.3 0.3 PAT 1.14 0.77 0.57 0.23 0.23 Cash Flow Summary Low dependence on largest clients • Largest Client less than 5% of total revenue • Top 20 clients less than 15% of total revenue • Largest Debtor less than £40k • Client base spread across many sectors • 51% of dotMailer customers on direct debit with 14 payment terms Google rankings drive enquiries Keywords Google email marketing 1 email marketing software 1 email marketing templates 1 email marketing services 1 bulk email marketing 1 email templates 6 email marketing campaign 1 email marketing company 1 email marketing solution 1 email marketing solutions 2 email marketing uk 1 email marketing service 1 email marketing agency 4 Google rankings Keywords Google ecommerce solutions 1 ecommerce solution 2 bespoke ecommerce 1 ecommerce business solutions 1 ecommerce web site solution 5 Google Rankings Keywords Google design agency 20 web design agency 14 website design agency 2 Google rankings Keywords Google seo agency 4 search engine optimisation agency 5 seo agency in london 1 seo agencies 3 website seo services 6 Google Rankings Keywords Google strategic search engine marketing 2 search engine marketing company 4 search engine marketing 5 internet marketing company 6 search engine marketing companies 6 search engine marketing firm 8 search engine marketing service 9 seo marketing 14 internet marketing 15 Focus on recurring revenues o dotMailer monthly recurring revenue continues to grow strongly o dotSEO/Netcallidus recurring revenue now increasing significantly o dotCommerce recurring revenue starting to build Interims - Impact of new products on growth o o o o o o New products showing good growth Email marketing continues to perform strongly Managed service aids retention Search marketing boosted by Netcallidus acquisition Project revenues declining in absolute terms and as a percentage Recurring revenues increasing as a percentage of total revenue Further organic growth opportunities o dotMailer V5 o Currently in Beta testing, full launch early 2011 - powerful new editor - intuitive new step process - powerful split testing o dotSurvey o new product Beta launch in Q1 2011 o Saas version dotCommerce o target Beta late 2011 - features now built for “bespoke” version - powerful new editor in development Further organic growth opportunities o Open new partner distribution channels through development of connectors to CRM tools eg Microsoft Dynamics o Appointment of International resellers o Opening of further sales offices in UK and International o Edinburgh office opened on Tuesday this week. Acquisition Targets The target sectors selected for potential acquisitions are: o SEO o Mobile o Word of Mouth Marketing …….. “Social” o Surveys o Analytics o Usability testing o Research Acquisition Criteria The “ideal” criteria agreed for acquisition targets are as follows: o High proportion of recurring revenues ideally minimum 40% of total o No more than 10% of revenue from one client o Strong technology with ownership of IP o Not dependant on one (few) key person(s) o Client base closely matches the dotMailer/Group client profiles o Turnover £1m plus or potential to be £1m plus inside two years o Total consideration ideally 3-7 PE ratio o Deferred consideration to ensure goal alignment to dotDigital shareholders o Consideration LT 50% cash with the remainder payable in shares Acquisition of Netcallidus o o o o SEO has been our main focus In depth discussions & negotiations with four targets Compared each business against our criteria In addition to financial criteria we wanted cultural fit & a scalable infrastructure o Netcallidus ticked all those boxes Netcallidus – financial overview of deal Seeking goal alignment Earnings enhancing v dotDigital shareholders Shared vision for growth Deal structure 5 x PAT for y/e June 2010 = (5x£230k) £1.15m (Cash £1m) Deferred consideration 4X PAT for y/e June 2011 less £1.15 paid so far 3X PAT for y/e June 2012 less previous payments Deferred consideration split 60% dotDigital Shares 40% cash Our commitment to life as a plc o o o o Orderly Market - Continual matching of buyers with sellers of shares Executive directors shareholding - 49% Acquisition concluded using blend paper & cash Commitment to first class corporate governance and reporting procedures o Annual accounts produced to AIM standard o AIM admission process conducted smoothly o AIM Admission document published 14th march 2011 In conclusion o o o o o High growth profitable business in attractive market sectors Cash generative Significant opportunities for organic & adjacent growth Opportunities for international expansion Opportunities for acquisitions & joint ventures 2011 will be a year of further investment for future growth: Investment in marketing Investment in people Investment in products