dotDigital Group Regulatory News (DOTD)

2 August 2011

dotDigital Group plc (the "Company")

Pre-Close Trading Statement

dotDigital Group Plc (AIM:DOTD), the leading provider of search marketing services, digital strategy advice, intuitive Software as a Service and managed services to digital marketing professionals, announces its pre-close update for the year ended 30th June 2011, ahead of its full year results which will be announced in early October. Overall, the board is very pleased with the Company's performance and now anticipates that full year profits before tax will be marginally ahead of analyst forecasts thanks to very strong new business sales and recurring monthly revenues in the last few months of the financial year.

Peter Simmonds, Chief Executive, commented:

"During the last year we have seen the impact of our award winning growth strategy on revenues with e-commerce and search engine optimization making significant contributions to our overall growth.

"Email marketing continues to perform extremely strongly both in terms of new clients and recurring revenues from existing clients, with monthly recurring revenue now accounting for over 65% of total revenue across the Company.

"We expect overall revenues to be approximately 47% higher than in the year ended June 2010 with much of this being organic growth. However, the integration of Netcallidus, acquired in May 2010, is now largely complete and search marketing contributed over £1.1 million of revenue compared to £0.1 million consolidated in the group accounts in 2009/10.

"On a like for like basis, comparing year end June 2010 to June 2011, the revenue booked through Netcallidus (including sales made by the Company) grew by approximately 65% which gives us confidence of future performance as we build the brand dotSearch and raise awareness amongst our customer base across the Company.

"New customer acquisition has continued to be a significant source of revenue growth in the year with 1330 new clients being added during the year, in the range of 100 to 130 per month.

"In March we successfully transitioned from PLUS to AIM - an exercise which was undertaken without distraction to the business and at relatively low cost. Following this move, a round of presentations to investment funds resulted in three well known institutions (Blackrock, Legal & General and Herald) acquiring shares.

In addition to our first investment from the Helium Fund, the institutional shareholding now represents 37.7% of the total issued share capital:

"We continue to be strongly cash generative with cash from operations growing in the year, although this has been somewhat offset by taxation payments as the company transitioned from 'small company' to 'large company' during the year requiring corporation tax to be paid in advance rather than nine months after the year end".

Into 2011/2012

Overall the directors continue to be extremely pleased with performance since the year end with sales in July 2011 slightly ahead of target.

Whilst this strong performance is encouraging the directors are mindful that the wider economic outlook for the UK suggests that businesses will continue to manage costs tightly and defer investment decisions. Accordingly, the conditions for strong organic growth will be challenging in the months ahead which emphasises the importance of new product innovation and strong marketing.

Enquiries: