TIDMDBOX
RNS Number : 7178T
Digitalbox PLC
29 March 2021
--`3
29 March 2021
Digitalbox plc
("Digitalbox" or the "Group")
Final Audited Results for the year ended 31 December 2020
Digitalbox plc, the mobile-first digital media business, which
owns leading websites Entertainment Daily, The Daily Mash, and The
Tab, is pleased to announce its final audited results for the year
ended 31 December 2020.
Financial Highlights [1] :
-- Revenue of GBP2.2m (2019: GBP2.2m)
-- Gross profit of GBP1.7m (2019: GBP1.8m)
-- Gross margin of 76% (2019: 82%)
-- Adjusted EBITDA [2] of GBP0.3m (2019: GBP0.5m)
-- Adjusted EBITDA margin of 13.9% (2019: 23.4%)
-- Adjusted EBITDA per share of 0.3p (2019: 0.7p)
-- Loss before tax of GBP143k (2019: loss of GBP460k)
-- Gross cash of GBP1.9m as at 31 December 2020 (31 December
2019: GBP0.5m) including GBP500k of Government-backed Covid loans
[3]
Operational Highlights:
-- Encouraging progress across the portfolio despite challenging
market conditions. Users [4] who visited Digitalbox's websites are
up 76% to 67 million (2019: 38 million)
-- Completed acquisition of The Tab in October 2020 - Q4 traffic up 42% year on year.
-- Digitalbox's Graphene platform underpins The Tab's shift from
operating loss to a positive contribution
-- 88% of users are via mobile devices in line with Group
strategy of building a leading mobile-focused media business.
-- After a difficult third quarter due to disruptive social
media algorithm changes designed to counter COVID-19
disinformation, Group audience figures recovered to 12 million
monthly users in December 2020, with more than 250 million ad
impressions.
-- In 2020, Entertainment Daily saw 112% growth in Google/Direct
traffic, and The Daily Mash had 14% growth in visits per user.
-- Former Chief Executive of TI Media, Marcus Rich appointed
Non-executive Chairman in February 2021, post year-end.
Outlook:
-- Acquisitions of The Daily Mash and The Tab have proved the
potential of the Digitalbox operating model and its Graphene
platform, giving continued confidence in the Group's ability to
build a larger portfolio of successful, profitable digital
brands.
-- We are evaluating potential targets and, with a strong
balance sheet, have the flexibility to move on the right
opportunities at speed.
-- Advertising trends continue to be accelerated by the impact
of COVID-19, resulting in money rapidly moving into the mobile
sector. Combined with a strengthening economy, Digitalbox is well
placed for growth.
James Carter, CEO, Digitalbox plc, said: "Digitalbox delivered a
very positive performance in 2020. Despite challenging market
conditions, we thrived by taking advantage of the changing
landscape to deliver on our strategy of building a leading
mobile-focused media business by acquiring additional assets and
integrating them with our Graphene operating platform. This success
has been greatly aided by our agile approach enabling us to quickly
adapt to opportunities and challenges as they arise.
"The year saw a massively disrupted economic environment created
by the COVID-19 pandemic alongside some significant turbulence
within social media platforms as their algorithms struggled to
manage issues around misinformation. However, I am pleased to
report we have moved the business forward, ending the year
operating three significant brands and in a much stronger position
than we started it.
"2020 ended with the business having traded profitably on an
adjusted EBITDA basis, having brought on board a cornerstone
investor in Downing Strategic Micro-Cap Investment Trust plc, and,
importantly, having continued our buy and build plan in acquiring
The Tab at the beginning of October.
"We enter 2021 with cash at the bank, an expanded portfolio of
assets, a stronger investor base, a brighter advertising market and
a re-invigorated Board. We look forward to 2021 as a trading period
that will start to normalise and present more acquisition
opportunities as the reality of life begins to create pressures on
those businesses who were less able to navigate the economy in 2020
."
Footnotes:
[1] 2019 refers to 10 months of trading of The Daily Mash and
Entertainment Daily.
2 Adjusted EBITDA is defined as the loss from operations after
deducting depreciation, amortisation, share-based payments,
acquisition and listing costs, direct costs associated with
business combinations and capital restructure costs.
3 Government-backed CBILS scheme loan of GBP450k taken in
October 2020 and GBP50k Government-backed CBILS scheme loan taken
on as part of the acquisition of The Tab.
(4) Figures include full-year Google Analytics compound audience
figures for Entertainment Daily & The Daily Mash and
post-acquisition period Oct-Dec 2020 for The Tab and associated
social channels.
Investor Presentations
InvestorMeetCompany
The Company will provide a live presentation via the
InvestorMeetCompany platform today at 9:00am. Introduced by Company
Chairman, Marcus Rich and presented by CEO James Carter and the
executive team, the presentation is open to all existing and
potential shareholders. Questions can be submitted at any time
during the live presentation. Investors can sign up to Investor
Meet Company for free and add to meet DIGITALBOX PLC via:
https://www.investormeetcompany.com/digitalbox-plc/register-investor
MelloMonday
Furthermore, Digitalbox will also be attending MelloMonday today
from 5.00pm - 9.30pm via Zoom webinar. CEO James Carter and CFO
David Joseph will be presenting to participants and taking
questions during the event. If you would like to attend the webinar
as a shareholder, please get your ticket here using code SHVIP for
50% off.
Market abuse regulation:
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014 as it forms part of UK
domestic law by virtue of the European Union (Withdrawal) Act 2018
("MAR").
Enquiries:
Digitalbox c/o SEC Newgate
James Carter, CEO
Panmure Gordon (Nominated Adviser, Tel: +44 (0)20 7886 2500
Financial Adviser & Joint Broker)
Alina Vaskina / Sandy Clark (Corporate
Advisory)
Erik Anderson / Rupert Dearden (Corporate
Broking)
Alvarium Capital Partners (Joint Broker) Tel: +44 (0)20 7195 1400
Alex Davies / Hugh Kingsmill Moore
SEC Newgate (Financial PR) Tel: +44 (0)7540 106 366
Robin Tozer / Isabelle Smurfit Email: digitalbox@secnewgate.co.uk
About Digitalbox plc
Based in Bath, UK, Digitalbox is a 'pure-play' digital media
business with the aim of profitable publishing at scale on mobile
platforms.
Digitalbox operates three trading brands, "Entertainment Daily",
"The Tab" and "The Daily Mash". Entertainment Daily produces and
publishes online UK entertainment news covering TV, showbusiness
and celebrity news. The Daily Mash produces and publishes satirical
news content. The Tab is the UK's biggest youth culture site
fuelled by students.
Digitalbox generates revenue from the sale of advertising in and
around the content it publishes. The Group's optimisation for
mobile enables it to achieve revenues per session significantly
ahead of market norms for publishers on mobile.
CHAIRMAN'S STATEMENT
I am delighted to report that Digitalbox has successfully
navigated its way through the most challenging social and economic
period in recent history.
The business was confronted with not just the sudden and
dramatic economic downturn in Q2 2020 caused by COVID-19, but also
the disruption created by the social media giants in their efforts
to combat misinformation in the run-up to the US elections and
their ongoing difficulties combatting the same about COVID-19.
Thanks to swift decision-making by an alert management team the
business took immediate action in 'right-sizing' the cost base in
order to soften the blow of the sudden and inevitable reduction in
revenues.
Further, management shored up the balance sheet by availing
itself of the Government-backed CBILS scheme, taking on a loan of
GBP450k in October and at the same time securing an injection of
GBP1.2m of fresh capital from a new cornerstone investor Downing
Strategic Micro-Cap Investment Trust plc ("Downing") through the
issue of shares.
Management did not let the prevailing challenging economic
conditions get in the way of progressing its buy and build
strategy. On 1(st) October 2020 Digitalbox announced it had
successfully acquired Tab Media Limited ('The Tab') adding it to
the portfolio alongside Entertainment Daily and The Daily Mash. The
Tab is now profitable (being loss making under previous ownership)
and has benefitted from being integrated onto the group's
proprietary tech platform Graphene.
Our efficient and expert content creation married to our
cutting-edge technology creates value with The Tab being a strong
proof point for our buy and build plan.
This combination of mitigating activity and delivery of strategy
meant year-on-year revenue impact was successfully contained at
only a 2.4% reduction and the business generated a robust GBP305k
of adjusted EBITDA compared to GBP525k in 2019.
Digitalbox begins 2021 with GBP1.9m cash reserves and a stronger
investor base. The three brands in our portfolio are seeing the
disruption in the ecosystems of the social media giants beginning
to dissipate and we are successfully diversifying our traffic
sources. In addition, Group M industry forecasters are predicting
double-digit year-on-year advertising growth for the UK led by
programmatic display on mobile.
Whilst the impacts of the pandemic are far from over, our
mobile-first business is in excellent shape to continue to
grow.
We remain highly cash generative, have healthy cash reserves and
we see further opportunities for both organic growth from the
existing brands and complementary acquisitions in 2021.
Marcus Rich
Chairman
26 March 2021
CHIEF EXECUTIVE'S STATEMENT
Digitalbox delivered a very positive performance in FY2020.
Despite challenging market conditions, we thrived by taking
advantage of the changing landscape to deliver on our strategy of
building a leading mobile-focused media business through the
acquisition of an additional asset and integrating it with our
operating platform. This success has been greatly aided by our
agile approach, which enables us to quickly adapt to opportunities
and challenges as they arise.
The year saw a massively disrupted economic environment created
by the COVID-19 pandemic alongside some significant turbulence
within social media platforms as their algorithms struggled to
manage issues around misinformation, but I am pleased to report we
have been able to move the business forwards, ending the year
operating three significant brands and in a much stronger position
than we started it.
2020 ended with the business having traded profitably on an
adjusted EBITDA basis, having brought on board a cornerstone
investor in Downing, availing ourselves of a Government-backed loan
under the CBILS scheme during October and, importantly, having
continued our buy and build plan in acquiring The Tab at the end of
September.
We enter 2021 with GBP1.9m cash at the bank, an expanded
portfolio of assets, a stronger investor base, a brighter
advertising market and a re-invigorated Board. We look forward to
2021 as a trading period that will start to normalise and present
more acquisition opportunities as the reality of life begins to
create pressures on those businesses who were less able to navigate
the economy in 2020.
Financial review
As with most businesses, Digitalbox suffered from the economic
impact created by the global COVID-19 pandemic. Advertising markets
declined sharply, and ongoing uncertainty meant recovery took time.
This heavily impacted our revenue expectation for Q2, and it wasn't
until late into Q3 that advertising markets started to return to
normal.
Further, the social media giants made changes to their content
algorithms in order to counter misinformation attached to COVID-19,
Black Lives Matter campaigns and also the US presidential
elections. Changes within some of the ecosystems had some
unforeseen negative impacts on legitimate sites and content that
the platforms continue to try and rectify. The result of this saw a
negative impact to traffic and revenues in Q3 and a recovery
beginning in Q4 for Digitalbox.
Despite these dual challenges, thanks to swift and decisive
action, we quickly adapted the business to mitigate the revenue
shortfall as much as possible and, more importantly, ensuring the
business maintained its cash reserves.
The Group therefore ended the year with virtually flat revenues
of GBP2.2m, which the Board consider a significant achievement
under the circumstances. These revenues are for the full 12 months
of trading to 31(st) December 2020 versus 10 months of trading in
2019, but the outcome is a reassuring indicator of the resilience
of the Digitalbox business model.
Gross profit of GBP1.7m (2019: GBP1.8m) also suffered a margin
percentage decline due to the advertising rates falling during the
sudden and dramatic global advertising market reduction, but still
delivering healthy gross margins of 76% (2019: 82%).
Adjusted EBITDA for the year was GBP305k (2019: GBP525k), and
our adjusted EBITDA margin was 13.9% (2019: 23.4%).
Digitalbox has a low capital expenditure requirement and is not
working capital hungry. This, together with the successful GBP1.2m
placing in October to a cornerstone investor and the securing of a
CBILS loan of GBP450k in the same month, ensured that the business
strengthened its balance sheet and cash reserves, ending the year
with GBP1.9m of cash (2019: GBP0.5m).
Operating review
The Group's three current trading brands are Entertainment
Daily, The Daily Mash and the newly acquired site, The Tab.
Entertainment Daily produces and publishes online UK entertainment
news covering TV, showbiz and celebrities. The Daily Mash produces
and publishes online satirical news articles in its own distinctive
style, and The Tab is the UK's largest student and youth culture
site fuelled by a network of 33 local university sites. All three
brands generate revenue from the sale of advertising in and around
the content they publish.
Content and technology remain at the core of the Digitalbox
offering. Article length, page speed, server set-up and advertising
auctions are all refined for the mobile journey as we obsess about
delivering the optimal user experience.
Our user base has grown 76% year-on-year as we have been
successful in broadening our horizons through additional sites and
content verticals and extended our reach of UK adults. Our growth
reflects our focus; unlike many media companies we are not
distracted by the need to manage declining print assets but instead
are free to concentrate on consumer habits and profitability.
Mobile is the device of choice for consumers and advertisers alike,
and we know how to engage audiences and monetise them better than
much of the UK market through this channel.
As with many of the trends that have been accelerated by
COVID-19, we have clearly seen disproportionate advertising market
growth benefitting the mobile audience segment.
Proprietary technology continues to evolve within Digitalbox,
and our Graphene technology stack now powers Entertainment Daily,
The Daily Mash and The Tab, ensuring the fastest experience for
users and advertisers alike.
Our interest in making acquisitions remains strong, and The Tab
has proved to be a great success since its acquisition at the end
of September 2020. The disruption brought to the market by the
pandemic created opportunities, and as time progresses we envisage
seeing more businesses increasingly challenged and being made
available to interested parties. Overlaying our model on two
acquisitions so far has proved successful and we remain focused on
repeating this to grow the business.
The Digitalbox team and infrastructure maintain capacity for
further growth and acquisitions to deliver further expansion while
operational efficiencies remain strong.
Mobile-first strategy
Our strategy to establish a mobile-first platform business with
diversified brands that engage consumers at scale is clearly
working with 85% of our audience on Entertainment Daily, The Daily
Mash and The Tab being accessed through these devices. Having grown
to more than 12m monthly unique users, we present a significant
scale when compared to the more traditional UK publishing houses
and our primary objective is to continue this expansion.
Mobile ad spending worldwide was growing well ahead of the wider
digital market prior to the pandemic and the impact of COVID-19
only looks to have accelerated this trend. As part of our
technology supporting our mobile-first strategy, we have built a
proprietary video player called BOB. The BOB player is built to
ensure optimal mobile performance and efficiency. Both
Entertainment Daily and The Tab are presenting 'must-see TV
previews' on their sites.
PROJECTED GLOBAL DIGITAL / MOBILE AD SP
2019 2020 2021 2022 2023 2024
Global Digital Ad
Spend $bn* 318 348 397 438 466 507
----- ----- ----- ----- ----- -----
Mobile % of total** 73% 76% 78% 79% 80% -
----- ----- ----- ----- ----- -----
*Group M Global End-of-Year-Forecast 2020 / ** Pubmatic 2020
Global Ad Trends/eMarketer (excludes 2024)
Portfolio expansion
Digitalbox is a highly cash-generative business enabling us to
continue with this strategy despite the impact of COVID-19. As part
of the development of our acquisition strategy, the Group acquired
Tab Media Limited during the year.
Tab Media Limited operated the UK's most successful student and
youth culture site, The Tab. The site was founded by three students
at Cambridge in 2009 as a reaction to out-of-touch student papers.
Since then it has exploded into one of the biggest youth media
sites in Britain, speaking directly to Generation Z and engaging
with over six million users a month.
Content is driven by a core team based in London who work with
student journalists on 33 subsites across UK campuses. Not only is
this an incredible opportunity to engage with this influential
demographic, it also opens up a pool of smart journalist talent who
may well be interested in getting involved in the broader
Digitalbox business.
Growth from the existing portfolio
During the year, Entertainment Daily saw continued growth of its
user-base, averaging 4.5m unique users per month which was up from
3.3m in 2019. The site continues to diversify its traffic sources
as it builds out on other platforms, most notably Google. In
addition to the growth seen from Google search traffic, we have
experienced a continued rise in Google Discover traffic that in
many ways, provides a similar user experience to Facebook Newsfeed.
These channels combined saw growth of more than 100%
year-on-year.
The Daily Mash was impacted in the year by Facebook's
increasingly sensitive 'misinformation' algorithms repeatedly
failing to identify and understand satirical content correctly and
therefore reducing reach on our articles. We have seen consistently
high levels of engagement when users are presented with our
content, and a high proportion of The Daily Mash traffic comes from
direct visits which increasingly offsets the issue. Dialogue
continues with Facebook to help them understand and address the
issue.
Also, the Daily Mash saw a big increase in audience for its TV
show The Mash Report in Q2. With studio access closed, the show was
delivered from the homes of our presenters through video conference
facilities and grew its weekly viewer levels from 800k to well over
1m.
Technology
Our proprietary tech stack, named Graphene, is a key part of our
success. As a mobile-first business, we have shaped Graphene to
ensure we deliver the fastest page speeds across our sites along
with the most efficient advertising transactions.
Graphene allows audience scale to build rapidly with the least
resistance from the technology and is a significant contributing
factor as to why we were able to turn a loss-making site (The Tab)
to profitability within the first quarter of ownership.
COVID-19
Our main focus has been to protect our staff and stakeholders
and in keeping with our regular operating model, we have used
technology to best navigate the challenges brought by the pandemic.
From the middle of March 2020, we took a strong steer from
Alphabet's response to the developing issue and moved all staff to
working from home ahead of the UK Government's enforced
lockdown.
Additionally, as a precaution, we acted quickly in 2020 to
access a CBILS loan of GBP0.45m to enable us to continue trading
and delivering our strategy for growth even if the outcomes of the
pandemic were more severe than expected, but this has yet to be
needed.
In fact, the Group has performed well during the COVID-19
period; as detailed earlier in the report, after a dramatic
downturn in Q2, advertising session values increased significantly
as the year unfolded.
Culture and people
When we joined AIM, we said: 'We work in the ways that deliver
the best results most efficiently. Rather than harbouring
traditional views of office culture or adopting a one-size-fits-all
approach, we mix office-based roles and home working arrangements,
full-time and part-time positions, staff and freelance contributor
agreements to marry the needs of the business with those of our
people.'
This nimble approach meant we were better placed than many to
adapt to the challenges of 2020. Our teams fully shifted to
remote-working early and have been outstanding; adapting quickly
and continuing to deliver. Good communication and a sense of
inclusion are important to us, and so to adapt to the reduction in
contact time, we have increased communication frequency through
monthly newsletters and weekly leadership meetings alongside daily
team meetings. We have also more recently introduced company-wide
discussion groups via Zoom.
Recruiting and retaining the best people is crucial to the
success of Digitalbox. We have had great success hiring younger
talent on Entertainment Daily through its apprentice programme, we
have recruited a tranche of new contributing writers on The Daily
Mash, and the acquisition of The Tab brings an entirely new
opportunity. With the local network of University sites having
already proved a fantastic gateway to great staff on The Tab, we
aim to make broader opportunities across our growing portfolio
available to this amazing talent pool.
We aim to ensure our staff are rewarded fairly and have
opportunities to progress within the business. All staff benefit
from the company's life assurance scheme. All staff and their
immediate families are able to access a free wellbeing &
support programme including personalised healthy eating and
exercise plans, mental health support, legal and medical advice and
ways to prevent burnout. Senior staff also have access to a share
options scheme.
I would like to thank all staff for their fantastic hard work
during the last year and their valuable contribution to these
results and promise a summer party for all in Bath when the law
allows.
Outlook
Digitalbox has continued to develop its profitable UK platform
business positioned directly in the mobile space and our buy and
build strategy is enabling us to deliver our vision of creating a
market-leading, mobile-first digital media business for the 21st
century.
Since joining the AIM, we have seen the successful integration
of The Daily Mash, and, more recently The Tab. Both of these
acquisitions have proved the potential of our model, and give us
continued confidence in our ability to build a larger portfolio of
successful, profitable digital brands with this approach. We are
actively evaluating potential targets on an ongoing basis and with
cash at the bank and the ability to raise funds via the market, we
have the flexibility to move on the right opportunities at
speed.
We clearly all hope that the worst of the COVID-19 pandemic is
now behind us, and as the vaccines roll out globally, economies
will bounce back. With the UK set well with its vaccine program, we
can look forward to a more positive market than we have experienced
over the last 12 months. We firmly believe that with advertising
trends continuing to be accelerated by the COVID-19 impact
resulting in money moving into the mobile sector at a rapid pace,
combined with a strengthening economy, we are perfectly placed to
grow over the coming years.
James Carter
Chief Executive
26 March 2021
STRATEGIC REPORT
The Digitalbox Vision
We set out to build a new digital media business; one driven by
profit and efficiency delivering high quality, engaging content to
users at scale.
Our aim continues to be to acquire and transform digital media
assets with potential through the application of the Digitalbox
model.
Free from legacy issues, we have a proven ability to grow at
speed by focusing on current and future trends; rapidly adapting to
the habits of our audience and the needs of our commercial
partners.
Consumer media habits
Our formative approach was informed by our recognition of the
growth of 'push media' consumption, especially on mobile - where
the most highly engaging and relevant content from publishers is
pushed into users' feeds based on trending topics, article
performance and their own behaviours and interests.
The content-surfacing algorithms will continue to be refined,
delivering better user experience and higher rates of engagement
and generating further growth of this type of consumption.
The major platforms (chiefly Facebook and Google) are
continually competing for consumer time, and it is publishers of
the most engaging content that will continue to benefit. In the
last couple of years Google has developed its push content strategy
via its Discover feed which is now making billions of content
suggestions its 800m global mobile users.
Targeting consumers via an array of distribution channels is one
thing but operating effectively enough to ensure maximum engagement
is where the real skillset lies.
Whilst the tech duopoly continue to evolve their models,
consumers continue to support other push media sources too, signing
up to notifications, subscriptions and emails from their favourite
media brands. We continue to see growth in all three of these
areas.
Our approach
We believe in order to be successful in today's media
environment a business, its brands and its people
must be:
ENGAGING - The internet is dominated by platforms that compete
for engagement and media brands that deliver the highest levels
will prosper. Our teams' passion for their subjects, understanding
of their audiences and expertise in producing truly compelling
content consistently deliver market-leading levels of
engagement.
AGILE - The landscape is constantly changing, and we are always
ready to adapt, to seize opportunities and address challenges,
taking effective tactical steps to deliver on strategy.
EFFICIENT - Efficiency matters because we regard profitable
operation as the key to longevity. The digital market has seen many
long bets against models that fail the profit test. Our teams use
every tool to maximise their impact and efficiency.
Relevance
Our business is currently built around a UK audience focus which
brings distinct benefits across our key disciplines:
-- Our editorial content resonates strongly with our audiences,
keeping our readers coming back again and again.
-- Our key advertiser relationships all have a significant
presence in our local market which is one of the world's most
advanced marketing economies and they place the greatest value on
high-quality UK traffic.
The addition of The Tab at the end of September 2020 with its
hyper-local university sites adds even more depth to this element
of our strategy.
Growth through acquisition
On our admission to AIM in February 2019, Digitalbox outlined a
strategy to make investments in acquisitions to grow the portfolio.
In particular we intended to identify targets from three distinct
categories; Legacy Publisher, First Wave Digital and Bedroom
Start-Ups. In our view, each of these categories continue to face
challenges around monetisation, operating profitability, audience
growth and technology performance which can be addressed through
the application of the Digitalbox model.
The completion of The Tab acquisition marked our second
acquisition after The Daily Mash in 2019 as part of this plan and
we continue to evaluate further potential targets.
In particular, we will identify assets that best align with our
processes and enhance our existing portfolio to deliver the
strategic vision. We will continue to seek out content verticals
that offer the opportunity to scale against larger media
organisations who are struggling to operate profitably at
scale.
Growing valuable audiences
Entertainment Daily reaches a core demographic of 25-55 year old
UK women; the power brokers of UK shopping. Being frequently in
charge of the household budget they are passionate about the
territory they control. They love brands that provide status and
are always on the look-out for great deals they can share with
their friends. Our audience has evolved to more than 4m per month
and our channel diversification saw significant growth from Google
sourced users.
The Daily Mash is consumed by savvy UK independent thinkers.
These educated professionals respond to the brand's pitch-perfect
skewering of the rich and infamous and its inventive and surreal
takes on the absurdity of modern life. Influential among their
peers thanks to their own finely-tuned view of the world, they are
seen as selective and discerning. These 25-44 year olds are
power-sharers of digital media who even in these challenging times
continue to spread a smile.
The Tab was founded by three students at Cambridge in 2009 as a
reaction to out-of-touch student papers. Since then it has exploded
into one of the biggest youth media sites in Britain, speaking
directly the UK's 15-24 year olds. They are the generation tasked
with more responsibility than any other in the last 50 years. It
will be their reinvention that heals the planet, that creates new
ways of working and cares for our ageing population. The leaders of
tomorrow, the global citizens who need to think in a more measured
and considered fashion.
The three audiences have further scope for growth and
cross-fertilisation as they continue to demonstrate increasing
levels of engagement.
Mobile-optimised tech platform
We are able to quickly on-board new brands and businesses onto
our mobile-first Graphene platform. This tech stack consists of a
blend of technologies allowing our websites to flourish through an
efficient, light touch commercial approach designed to maximise
mobile profitability.
Graphene is a highly scalable and dynamic platform that assists
content delivery at the highest speeds. This brings significant
advantages to how our sites are experienced by users and also
ranked by the key power brokers - especially Google and Facebook -
as they evaluate the preferred destinations for users. Graphene
also enables us to realise tech and serving costs on the
acquisitions we make.
Graphene will continue to evolve via our tech roadmap for
2021.
Product development
While profitability is key, we continue to invest in the
existing business. 2021 will see additional investment across
Entertainment Daily, The Tab and The Daily Mash as we aim to
deliver further meaningful growth from diversification of our key
routes to audiences.
Pandemic Coverage
Our brands delivered coverage of the impacts of the pandemic
each in a unique tone tuned to their respective audience.
Entertainment Daily kept readers abreast of the impact on
production of their favourite shows and popular celebrities
personal struggles with the virus. The Tab launched its You Matter
campaign highlighting mental health and loneliness issues facing
students caused by the pandemic and The Daily Mash delivered
winning satirical coverage with stories including Five Smug
Middle-Class Social Isolation Activities and its take on panic
buying Waitrose Limits Food Sales To People With Detached
Houses.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARED
31 DECEMBER 2020
Year ended Year ended
31 December 31 December
2020 2019
Note GBP'000 GBP'000
Revenue 7 2,187 2,240
Cost of sales (529) (394)
------------ ------------
Gross profit 1,658 1,846
Administrative expenses (1,823) (2,303)
Other operating income 8 24 -
-------------- --------------
Operating loss 8 (141) (457)
Memorandum:
Adjusted EBITDA(1) 305 525
Depreciation (30) (11)
Amortisation (149) (133)
Share based payments (140) (149)
Acquisition & listing costs - (689)
Direct costs of business combinations (98) -
Capital restructure costs (29) -
-------------- --------------
Loss from Operations (141) (457)
--------------------------------------- ----- --------------- ---------------
Finance costs 10 (2) (3)
------------ ------------
Loss before taxation and attributable
to equity holders of the parent (143) (460)
Taxation 11 (48) 23
------------ ------------
(191) (437)
Loss after tax ------------ ------------
All losses after taxation arise from
continuing operations.
There was no other comprehensive income for 2020 (2019: GBPNIL).
(1) Adjusted EBITDA is defined as the loss from operations after
deducting depreciation, amortisation, share based payments,
acquisition and listing costs, direct costs associated with
business combinations and capital restructure costs.
GBP GBP
Loss per share
Basic (continuing) 12 (0.00198) (0.00571)
====== ======
Loss per share
Diluted (continuing) 12 (0.00198) (0.00571)
====== ======
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARED
31 DECEMBER 2020
Share based Retained
Share Share payment (deficit)/ Total
capital premium earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January 2019 20,488 19,164 32 (39,399) 285
Shares issued 843 10,710 - - 11,553
Share issue costs - (117) - - (117)
Equity settled share-based
payments - - 149 - 149
Loss after tax - - - (437) (437)
-------------- -------------- -------------- -------------- --------------
Balance at 31 December
2019 21,331 29,757 181 (39,836) 11,433
-------------- -------------- -------------- -------------- --------------
Shares issued 260 976 - - 1,236
Share issue costs - (84) - - (84)
Capital reduction (20,428) (19,500) - 39,928 -
Equity settled share-based
payments - - 140 - 140
Loss after tax - - - (191) (191)
-------------- -------------- -------------- -------------- --------------
Balance at 31 December
2020 1,163 11,149 321 (99) 12,534
-------------- -------------- -------------- -------------- --------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020
31 December 31
2020 December
2019
ASSETS Note GBP'000 GBP'000
Non-current assets
Property, plant and equipment 14 19 49
Intangible fixed assets 15 10,839 10,248
----------------- -----------------
Total non-current assets 10,858 10,297
Current assets
Trade and other receivables 16 1,047 1,407
Cash and cash equivalents 17 1,853 477
----------------- -----------------
Total current assets 2,900 1,884
----------------- -----------------
Total assets 13,758 12,181
========= =========
LIABILITIES
Current liabilities
Trade and other payables 18 (449) (488)
Lease liabilities 18 (2) (24)
Bank loans 18 (25) -
Corporation tax 18 (51) (98)
----------------- -----------------
Total current liabilities (527) (610)
----------------- -----------------
Non-current liabilities
Other payables 18 - (8)
Lease liabilities 18 - (2)
Bank loans 19 (465) -
Deferred tax liability 20 (232) (128)
------------------ ------------------
(697) (138)
------------------ ------------------
Total liabilities (1,224) (748)
------------------ ------------------
Total net current assets 2,373 1,274
------------------ ------------------
Total net assets 12,534 11,433
========= =========
Capital and reserves attributable
to owners
of the parent
Share capital 22 1,163 21,331
Share premium 24 11,149 29,757
Share based payment reserve 24 321 181
Retained deficit 24 (99) (39,836)
------------------ ------------------
Total equity 12,534 11,433
========= =========
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARED 31 DECEMBER
2020
Year ended Year ended
31 December 31 December
2020 2019
GBP'000 GBP'000
Cash flows from operating activities
Loss from ordinary activities
Adjustments for: (191) (437)
Income tax expense 48 -
Share based payments 140 149
Depreciation on property plant and
equipment 30 11
Amortisation of intangible assets 149 133
Finance costs 2 22
Income tax paid (109) -
----------------- -----------------
Cash flows from operating activities
before changes 69 (122)
in working capital
Decrease / (increase) in trade and
other receivables 518 (86)
Decrease in trade and other payables (205) (100)
----------------- -----------------
Cash generated/(used in) in operations 382 (308)
Investing activities
Purchase of property, plant and
equipment - (13)
Acquisition of subsidiary (841) (993)
Cash on acquisition 269 433
----------------- -----------------
Net cash (used in)/generated from
investing activities (572) (573)
Financing activities
Finance costs (2) (22)
New loans and finance leases 440 33
Loan repayments (24) (7)
Issue of new share capital 1,236 1,240
Costs on issue of shares (84) (117)
----------------- -----------------
Net cash from financing activities 1,566 1,127
----------------- -----------------
Net increase in cash and cash equivalents 1,376 246
Cash and cash equivalents at beginning
of the period 477 231
------------------ ------------------
Cash and cash equivalents at end
of the period 1,853 477
========= =========
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARED 31 DECEMBER
2020
Reconciliation of net cash flow to movement
in net funds: Year ended Year ended
31 December 31 December
2020 2019
GBP000 GBP000
Net increase in cash and cash equivalents 1,376 246
New loans and finance leases (440) (33)
Loans acquired in business combinations (50) -
Repayment of loans 24 7
----------------- -----------------
Movement in net funds in the year 910 220
Net funds at 1 January 451 231
----------------- ------------------
Net funds at 31 December 1,361 451
========= =========
Breakdown of net funds
Cash and cash equivalents 1,853 477
Lease liabilities (2) (26)
Bank loans (490) -
----------------- ------------------
Net funds at 31 December 1,361 451
========= =========
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEARED 31 DECEMBER 2020
1. GENERAL INFORMATION
Digitalbox plc is a public limited company incorporated and
domiciled in the United Kingdom. The address of the registered
office 2-4 Henry Street, Bath, England, BA1 1JT. The Company is
listed on AIM of the London Stock Exchange.
The principal activity of the Group during the year was the
production of publishing content and the sale of advertising
space.
These financial statements are presented in pounds sterling
because that is the currency of the primary economic environment in
which the Group operates. Foreign operations are included in
accordance with the policies set out in note 4.
2. STANDARDS, AMMENTS AND INTERPRETATIONS ADOPTED IN THE CURRENT
FINANCIAL YEARED 31 DECEMBER 2020
The accounting policies adopted are consistent with those of the
previous financial year except for the following new and amended
standards and interpretations during the year that are applicable
to the Group.
Definition of a Business (Amendments to IFRS 3)
Amendments to IFRS 3 were mandatorily effective for reporting
periods beginning on or after 1 January 2020. The Group has applied
the revised definition of a business for acquisitions occurring on
or after 1 January 2020 in determining whether an acquisition is
accounted for in accordance with IFRS 3 Business Combinations. The
amendments do not permit the Group to reassess whether acquisitions
occurring prior to 1 January 2020 met the revised definition of a
business. See note 13 for disclosures relating to the Group's
business combination occurring during the year ended 31 December
2020.
Other standards
New standards that have been adopted in the annual financial
statements for the year ended 31 December 2020, but have not had a
significant effect on the Group are:
-- IAS 1 Presentation of Financial Statements and IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors
(Amendment - Disclosure Initiative - Definition of Material);
and
-- Revisions to the Conceptual Framework for Financial Reporting.
3. NEW AND REVISED IFRS STANDARDS IN ISSUE BUT NOT YET EFFECTIVE
There are a number of standards, amendments to standards, and
interpretations which have been issued by the IASB that are
effective in future accounting periods that the group has decided
not to adopt early.
The following amendments are effective for the period beginning
1 January 2022:
-- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37);
-- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
-- Annual Improvements to IFRS Standards 2018-2020 (Amendments
to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and
-- References to Conceptual Framework (Amendments to IFRS 3).
In January 2020, the IASB issued amendments to IAS 1, which
clarify the criteria used to determine whether liabilities are
classified as current or non-current. These amendments clarify that
current or non-current classification is based on whether an entity
has a right at the end of the reporting period to defer settlement
of the liability for at least twelve months after the reporting
period. The amendments also clarify that 'settlement' includes the
transfer of cash, goods, services, or equity instruments unless the
obligation to transfer equity instruments arises from a conversion
feature classified as an equity instrument separately from the
liability component of a compound financial instrument. The
amendments were originally effective for annual reporting periods
beginning on or after 1 January 2022. However, in May 2020, the
effective date was deferred to annual reporting periods beginning
on or after 1 January 2023.
The Group does not expect any of the standards issued by the
IASB, but not yet effective, to have a material impact on the
group.
4. ACCOUNTING POLICIES
Principal accounting policies
The Group is a public Group incorporated and domiciled in the
United Kingdom. The principal accounting policies applied in the
preparation of these consolidated financial statements are set out
below. These policies have been consistently applied to all the
periods presented, unless otherwise stated.
Basis of preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards, International
Accounting Standards and Interpretations (collectively IFRS) issued
by the International Accounting Standards Board (IASB) as adopted
by the European Union ("adopted IFRSs") and those parts of the
Companies Act 2006 which apply to companies preparing their
financial statements under IFRSs. The financial statements are
presented to the nearest round thousand (GBP'000) except where
otherwise indicated.
Basis of Consolidation
The Group comprises a holding company, dormant subsidiaries and
a trading company. All of
these have been included in the consolidated financial
statements in accordance with the principles of acquisition
accounting as laid out by IFRS 3 Business Combinations.
Going concern
Notwithstanding the loss generated during the year of GBP191k
(2019: GBP437k), the Group had closing net assets of GBP12,534k
(2019: GBP11,433k), net current assets of GBP2,373k (2019:
GBP1,274k) and cash at bank
and in hand of GBP1,853k (2019: GBP477k).
The Group generated cash inflows from operating activities of
GBP382k during the year, also benefitting from net cashflows from
share issues amounting to GBP1,152k. The Group has remained cash
generative during a difficult economic period which saw the
profound impact of COVID-19.
In considering going concern, the Directors consider the current
financial position and performance of
the business, as well as reviewing financial information for a
period of at least 12 months from the date
of approval of the financial statements. Given the financial
performance of the Group, the successful acquisition and
integration of Tab Media and the expectations from forecast
financial information, the Directors have a reasonable expectation
that the Group has adequate resources to continue in operational
existence for the foreseeable future.
The Directors believe that they can continue to mitigate the
impact of COVID-19 as has been demonstrably achieved in the year
ended 31 December 2020, and accordingly continue to adopt the
going concern basis in preparing the financial statements.
Business combinations and goodwill
Acquisitions of subsidiaries and business are accounted for
using the acquisition method. The assets and liabilities and
contingent liabilities of the subsidiaries are measured at their
fair value at the date of acquisition. Any excess of acquisition
over fair values of the identifiable net assets acquired is
recognised as goodwill. Goodwill arising on consolidation is
recognised as an asset and reviewed for impairment at least
annually. Any impairment is recognised immediately in profit or
loss accounts and is not subsequently reversed. Acquisition related
costs are recognised in the income statement as incurred.
Transactions between wholly owned group members involving the
hive-up or hive-across of trade and / or assets and liabilities are
outside the scope of IFRS 3 on the grounds that they represent
common control business combinations. The group has elected to
apply IFRS 3 in accounting for all such transactions, which
involves a full fair value exercise at the date of the transaction.
This accounting policy has been consistently applied to all such
transactions and has been chosen on the grounds that the nature of
these transactions is the amalgamation of acquired businesses into
the existing trading business, which generally takes place shortly
after the original acquisition.
Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Group and the revenue can be
reliably measured. Revenue is measured as the fair value of the
consideration received or receivable, excluding discounts, rebates,
value added tax and other sales taxes. The following criteria must
also be met before revenue is recognised:
The Group does not expect to have any contracts where the period
between the transfer of the promised goods or services to the
customer and payment exceeds one year. As a consequence, the
Company does not adjust any of the transaction prices for the time
value of money.
The Group monitors the performance obligations in accordance
with IFRS 15 considering that the performance obligations are met
upon the Group delivering the advertisement to the customer.
A receivable is recognised when the services are delivered at
this is the point in time that the consideration is unconditional
because only the passage of time is required before the payment is
due.
Rendering of services
Revenue from providing services is recognised in the accounting
period in which the services are rendered.
Revenue from the sale of advertising space is recognised upon
the advertisement being generated and the Group delivering the
advertisement to the customer. The Group recognises revenue when
the amount of revenue can be reliably measured, it is probable
future economic benefits will flow to the entity and the Group has
satisfied the performance obligations. Revenue is not received in
advance and therefore the Group does not account for contract
liabilities.
Leases
The Company assesses whether a contract is or contains a lease,
at inception of a contract. The Company recognises a right-of-use
asset and a corresponding lease liability with respect to all lease
agreements in which it is the lessee, except for short-term leases
(defined as leases with a lease term of 12 months or less) and
leases of low value assets. For these leases, the Company
recognises the lease payments as an operating expense on a
straight-line basis over the term of the lease unless another
systematic basis is more representative of the time pattern in
which economic benefits from the leased asset are consumed.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate
cannot be readily determined, the Group uses its incremental
borrowing rate. The Group assesses its discount rate using its
incremental borrowing rate.
Lease payments included in the measurement of the lease
liability comprise:
a) Fixed lease payments (including in-substance fixed payments), less any lease incentives.
The lease liability is included in Payables in the Statement of
Financial Position.
The lease liability is subsequently measured by increasing the
carrying amount to reflect interest on the lease liability (using
the effective interest method) and by reducing the carrying amount
to reflect the payments made.
The right-of-use assets comprise the initial measurement of the
corresponding lease liability, lease payments made at or before the
commencement day and any initial direct costs. They are
subsequently measured at cost less accumulated depreciation and
impairment losses.
Right-of-use assets are depreciated over the shorter period of
lease term and useful life of the underlying asset. If a lease
transfers ownership of the underlying asset or the cost of the
right-of-use asset reflects that the Group expects to exercise a
purchase option, the related right-of-use asset is depreciation
over the useful life of the underlying asset. The depreciation
starts at the commencement date of the lease.
The right-of-use assets are included in the tangible fixed
assets in the Statement of Financial Position.
The Group applies IAS 36 to determine whether a right-of-use
asset is impaired and accounts any identified impairment
losses.
Foreign currency
The individual financial statements of each group company are
presented in the currency of the primary economic environment in
which it operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial
position of each group company are expressed in pound sterling,
which is the functional currency of the Group, and the
presentational currency for the consolidated financial
statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the Group
Company's functional currency (foreign currencies) are recorded at
rates of exchange prevailing on the dates of the transactions. At
the reporting date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing on the reporting date. Non-monetary items carried at
fair value that are denominated in foreign currencies are
translated at the rates prevailing at the date when the fair value
was determined. Non-monetary items that are measured in terms of
historical cost in foreign currency are not retranslated. Exchange
differences arising on the settlement of monetary items, and on the
retranslation of monetary items, are included in profit or loss for
the period. Exchange differences arising on the retranslation of
non-monetary items carried at fair value are included in profit or
loss for the period except for differences arising on the
retranslation of non-monetary items in respect of which gains and
losses are recognised directly in equity. For such non-monetary
items, any exchange component of the gain or loss is also
recognised directly in equity.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
translated at exchange rates prevailing on the reporting date.
Income and expense items are translated at the average exchange
rates for the period, unless exchange rates fluctuate significantly
during the period, in which case the exchange rates at the date of
transactions are used. Exchange differences arising, if any, are
classified as equity and transferred to the Group's translation
reserve. Such translation differences are recognised as income and
expense in the period in which the operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition of a
foreign entity are treated as assets and liabilities of the foreign
entity and translated at the closing rates.
Intangible assets
Intangible assets include goodwill arising on the acquisition of
subsidiaries and represents the difference between the fair value
of the consideration payable and the fair value of the net assets
that have been acquired. The residual element of Goodwill is not
being amortised but is subject to an annual impairment review.
Also included within intangible assets are various assets
separately identified in business combinations (such as brand
value) to which the Directors have ascribed a commercial value and
a useful economic life. The ascribed value of these intangible
assets is being amortised on a straight-line basis over their
estimated useful economic life, which is considered to be 7
years.
Other intangible assets purchased by the Group are initially
recognised at cost. After recognition, under the cost model,
intangible assets are measured at cost less any accumulated
amortisation and any accumulated impairment losses. Amortisation is
recognised so as to write off the cost less their residual values
over their useful lives, which is considered to be 3 years straight
line.
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.
Contract liabilities
Contract liabilities comprise payments in advance of revenue
recognition and revenue deferred due to contract performance
obligation not being completed. They are classified as current
liabilities if the contract performance obligations payments are
due to be completed within one year or less (or in the normal
operating cycle of the business if longer). If not, they are
presented as non-current liabilities. Contract liabilities are
recognised initially at fair value and subsequently at amortised
cost.
Trade and other receivables
Trade and other receivables are measured at initial recognition
at fair value, and subsequently measured at amortised cost using
the effective interest method. A provision is established when
there is objective evidence that the Group will not be able to
collect all amounts due. The amount of any provision is recognised
in profit or loss.
The Group always recognises lifetime expected credit losses
(ECL) for trade receivables and amounts due on contracts with
customers. The expected credit losses on these financial assets are
estimated based on the Group's historical credit loss experience,
adjusted for facts that are specific to the debtors, general
economic conditions and an assessment of both the current as well
as the forecast director of conditions at the reporting date,
including time value of money where appropriate. Lifetime ECL
represents the expected credit losses that will result from all
possible default events over the expected life of a financial
instrument.
Cash and cash equivalents
Cash and cash equivalents are recognised as financial assets.
They comprise cash held by the Group and short-term bank deposits
with an original maturity date of three months or less. Loss
recognised previously in equity is included in profit or loss for
the period.
Trade payables
Trade payables are initially recognised as financial liabilities
measured at fair value, and subsequent to initial recognition
measured at amortised cost.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deduction of all its
liabilities. Equity instruments issued by the Group are recorded at
the proceeds received net of direct issue costs.
Share based payments
Where share options are awarded to employees, the fair value of
the options at the date of grant is charged to the statement of
comprehensive income on a straight-line basis over the vesting
period.
Non-market vesting conditions are taken into account by
adjusting the number of options 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.
Fair value is calculated using the Black-Scholes model, details
of which are given in note 23.
Pensions
The pension schemes operated by the Group are defined
contribution schemes. The pension cost charge represents the
contributions payable by the Group.
Property, plant and equipment
Property, plant and equipment are stated at cost net of
accumulated depreciation and provision for impairment. Depreciation
is provided on all property plant and equipment, at rates
calculated to write off the cost less estimated residual value, of
each asset on a straight-line basis over its expected useful life.
The residual value is the estimated amount that would currently be
obtained from disposal of the asset if the asset were already of
the age and in the condition expected at the end of its useful
economic life.
The method of depreciation for each class of depreciable asset
is:
Fixtures and fittings - 25% straight line
Office equipment - 25% reducing balance
Right-of-Use asset - over term of lease
Impairment of Assets
Impairment tests on goodwill are undertaken annually at the
balance sheet date. The recoverable value of goodwill is estimated
on the basis of value in use, defined as the present value of the
cash generating units with which the goodwill is associated. This
is computed by applying an appropriate discount rate to the
estimated value of future cash flows. When value in use is less
than the book value, an impairment is recorded and is
irreversible.
Other non-financial assets are subject to impairment tests
whenever circumstances indicate that their carrying amount may not
be recoverable. Where the carrying value of an asset exceeds its
estimated recoverable value (i.e. the higher of value in use and
fair value less costs to sell), the asset is written down
accordingly. Where it is not possible to estimate the recoverable
value of an individual asset, the impairment test is carried out on
the asset's cash-generating unit. The carrying value of property,
plant and equipment is assessed in order to determine if there is
an indication of impairment. Any impairment is charged to the
statement of comprehensive income. Impairment charges are included
under administrative expenses within the consolidated statement of
comprehensive income.
Taxation and deferred taxation
Corporation tax payable is provided on taxable profits at
prevailing rates.
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability in the balance sheet
differs from its tax base, except for differences arising on:
-- the initial recognition of goodwill; and
-- the initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of
the transaction affects neither accounting nor taxable profit.
Recognition of deferred tax assets is restricted to those
instances where it is probable that future taxable profit will be
available against which the asset can be utilised. The amount of
the asset or liability is determined using tax rates that have been
enacted or substantively enacted by the balance sheet date and are
expected to apply when the deferred tax liabilities/(assets) are
settled/(recovered).
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority on either:
-- the same taxable Group company; or
-- different Group entities which intend either to settle
current tax assets and liabilities on a net basis, or to realise
the assets and settle the liabilities simultaneously, in each
future period in which significant amounts of deferred tax assets
or liabilities are expected to be settled or recovered.
Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the Executive Directors, who are
responsible for allocating resources and assessing performance of
the operating segments.
A business segment is a group of assets and operations, engaged
in providing products or services that are subject to risks and
returns that are different from those of other operating
segments.
A geographical segment is engaged in providing products or
services within a particular economic environment that are subject
to risks and returns that are different from those of segments
operating in other economic environments. The Executive Directors
assess the performance of the operating segments based on the
measures of revenue, profit before taxation (PBT) and profit after
taxation (PAT). Central overheads are not allocated to business
segments.
Government grants
Government grants are recognised when there is reasonable
assurance that the grant conditions will
be met and the grants will be received, and are recognised as a
separate component of other operating income, rather than being
offset against the costs to which they relate.
5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
In the application of the Group's accounting policies, which are
described in note 4, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on experience and
other factors considered to be relevant. Actual results may differ
from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
The following are the critical judgements and estimations that
the Directors have made in the process of applying the Company's
accounting policies and that have the most significant effect on
the amounts recognised in the financial statements.
Critical accounting judgements
Impairment of goodwill
Impairment of the valuation of the goodwill relating to the
acquisition of subsidiaries is considered annually for indicators
of impairment to ensure that the asset is not overstated within the
financial statements. The annual impairment assessment in respect
of goodwill requires estimates of the value in use (or fair value
less costs to sell) of subsidiaries to which goodwill has been
allocated. This requires the Directors to estimate the future cash
flows and an appropriate discount factor, in order that the net
present value of those cash flows can be determined. Discounted
cash flow forecasts give due consideration to the impact of
COVID-19 on the future cash flows, and are stress tested under a
range of scenarios. In all instances, the headroom is sufficient to
satisfy the Directors that there are no indicators of impairment
based on circumstances that were present or could be reasonably
foreseen at the reporting date.
Critical accounting Estimates
Amortisation of intangible assets
The periods of amortisation adopted to write down capitalised
intangible assets requires judgements to be made in respect of
estimating the useful lives of the intangible assets to determine
an appropriate amortisation rate. Domain names and website costs
are being amortised on a straight-line basis over the period during
which the economic benefits are expected to be received, which has
been estimated at 3 years. Intangible assets recognised in relation
to the brand names are being amortised straight-line over 7
years.
Depreciation
The useful economic lives of tangible fixed assets are based on
management's judgement and experience. When management identifies
that actual useful economic lives differ materially from the
estimates used to calculate depreciation, that charge is adjusted
retrospectively.
Share based payments expense
Non-market performance and service conditions are included in
the assumptions about the number of options that are expected to
vest. At the end of each reporting period the Group revises its
estimates of the number of options that are expected to vest based
on the non-market vesting conditions. It recognises the impact of
the revision to the original estimates, if any, in the consolidated
statement of comprehensive income, with a corresponding adjustment
to equity.
This requires a judgement as to how many options will meet the
future vesting criteria as well as the judgements required in
estimating the fair value of the options.
IFRS 16 discount rates
The Group estimates an appropriate discount rate based on an
incremental rate of borrowing for the calculation of the IFRS 16
right-of-use assets. This requires judgement as to an appropriate
discount rate.
Provision for bad and doubtful debts
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses using a lifetime expected credit loss
provision for trade receivables. To measure expected credit losses
on a collective basis, trade receivables are grouped based on
similar ageing. The expected loss rates are based on the Group's
historical credit losses experience over the twelve month period
prior to the period end. Forward looking issues have been
considered, including in relation to the ongoing impact of the
COVID-19 pandemic. This has had an immaterial effect on the
expected credit loss rate.
6. SEGMENTAL INFORMATION
A segmental analysis of revenue and expenditure is as
follows:
2020 Entertainment The Daily The Head Total
Daily Mash Tab Office 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 1,641 334 208 4 2,187
Cost of sales (307) (192) (30) - (529)
Administrative
expenses* (447) (40) (71) (819) (1,377)
Other operating
income - - - 24 24
-------------- -------------- -------------- --------------
Adjusted EBITDA 887 102 107 (791) 305
Amortisation - - - (149) (149)
Depreciation - - - (30) (30)
Acquisition
costs - - - (98) (98)
Capital restructure
costs - - - (29) (29)
Share based
payments - - - (140) (140)
Finance costs - - - (2) (2)
Tax - - - (48) (48)
------------- ------------- ------------- ------------- -------------
Profit/(loss)
for the year 887 102 107 (1,287) (191)
====== ====== ====== ====== ======
6. SEGMENTAL INFORMATION (continued)
2019 Entertainment The Daily Head Total
Daily Mash Office 2020
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 1,864 358 18 2,240
Cost of sales (263) (131) - (394)
Administrative
expenses* (288) (60) (973) (1,321)
Other operating
income - - - -
-------------- -------------- --------------
Adjusted EBITDA 1,313 167 (955) 525
Amortisation - - (133) (133)
Depreciation - - (11) (11)
Acquisition
and listing
costs - - (689) (689)
Share based
payments - - (149) (149)
Finance costs - - (3) (3)
Finance income - -
Tax - - 23 23
------------- ------------- ------------- -------------
Profit/(loss)
for the year 1,313 167 (1,917) (437)
====== ====== ====== ======
*Administrative expenses exclude depreciation, amortisation,
share based payments and acquisition and listing costs.
The segmental analysis above reflects the parameters applied by
the Board when considering the Group's monthly management
accounts.
External revenue by Total assets by Net tangible capital
location of customer location expenditure by location
31 December 31 December 31 December 31 December 31 December
2020 31 December 2020 2019 2020 2019
Continuing 2019 Continuing
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
United Kingdom 1,024 1,434 13,475 11,953 - 13
Europe 704 612 103 135 - -
Rest of
World 459 194 180 93 - -
------------- ------------- ------------- ------------- ------------- -------------
2,187 2,240 13,758 12,181 - 13
====== ====== ====== ====== ====== ======
7. REVENUE
2020 2019
Revenue by stream is split: GBP'000 GBP'000
Advertising space 2,187 2,240
------------- -------------
2,187 2,240
Revenue by location is split:
United Kingdom 1,024 1,434
Europe 594 612
Rest of world 569 194
------------- -------------
2,187 2,240
====== ======
The Group had three customers whose revenue individually represented
10% or more of the Group's total revenue, being 23.3%, 17.5% and
10.0% respectively.
8. LOSS FROM OPERATIONS
2020 2019
GBP'000 GBP'000
This is arrived at after charging/(crediting):
Continuing operations
Staff costs (see note 9) 1,078 953
Acquisition and listing costs - 689
Direct costs of business combinations 98 -
Depreciation of property, plant & equipment 30 11
Amortisation of intangible fixed assets 149 133
Operating lease expense - property 24 17
Foreign exchange differences (27) 19
Government grants (24) -
====== ======
Auditors' remuneration in respect of the
Company 18 13
Audit of the Group and subsidiary undertakings 33 23
Auditors' remuneration - non-audit services
- accounting service fees - 9
Auditors' remuneration - non-audit services
- taxation fees - 5
Auditors' remuneration - transaction related
services 25 124
------------- -------------
76 174
====== ======
In 2020, government grants of GBP24k were received as part of
the Government's initiatives to provide immediate financial support
as a result of the COVID-19 pandemic. There are no future related
costs associated with these grants which were received solely as
compensation for costs incurred in the year.
9. STAFF COSTS
2020 2019
GBP'000 GBP'000
Staff costs for all employees, including
Directors consist of:
Wages and salaries 838 716
Social security costs 90 79
Pensions 10 9
----------- -----------
938 804
Share based payment charge 140 149
----------- -----------
1,078 953
===== =====
2020 2019
The average number of employees of the Number Number
group during the year was as follows:
Directors 6 6
Management and administration 3 4
Content 11 9
----------- -----------
20 19
===== = ===== =
Directors' Detailed Emoluments
Details of individual Directors' emoluments for the year are as
follows:
Salary Consultancy Bonus Pension Total Total
2020 2020 2020 2020 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
N Burton (resigned 17 February
2021) 25 - - - 25 22
J Carter 127 - - 1 128 175
J Douglas 127 - - 1 128 175
M Higginson - 25 - - 25 12
D Joseph 41 - - - 41 33
R Miller (resigned 17 February
2021) 18 17 - - 35 27
J Treacy (resigned 28 February
2019) - - - - - 22
----------- ----------- ----------- ----------- ----------- -----------
Total 338 42 - 2 382 466
===== ===== ===== ===== ===== =====
9. STAFF COSTS (continued)
All pension contributions represent payments into defined
contribution schemes.
The Executive Directors have service contracts with the Company
which are terminable by the Company or relevant director after a
fixed term of 12 months followed by 6 months' notice.
The Directors' interest in the issued ordinary share capital of
the Company was as follows:
Shares of GBP0.01 Shares of GBP0.01
31/12/2020 31/12/2019
James Carter 10,908,078 9.4% 10,908,078 12.1%
James Douglas 10,908,078 9.4% 10,908,078 12.1%
Nigel Burton 238,095 0.2% 238,095 0.3%
Sir Robin
Miller 775,465 0.7% 775,465 0.9%
Details of the options over the Company's shares held by the
directors are as follows:
Options
held at Exercise
31 December price
Type of Option 2020 GBP Date of grant Exercise period
28 February 28 February
James Carter EMI option 1,504,404 0.14 2019 2022
28 February 28 February
James Douglas EMI option 1,504,404 0.14 2019 2022
Further information on share options is included in note 23.
The market price of the shares at 31 December 2020 was 6.35p
with a quoted range from throughout 2020 of 4.75p to 7.35p. The
options vest based on performance criteria detailed in note 23.
10. FINANCE COSTS
2020 2019
GBP'000 GBP'000
Interest charges paid for lease liabilities 1 1
Bank charges and interest payable 1 2
------------ ------------
2 3
====== ======
11. TAXATION ON LOSS FROM ORDINARY ACTIVITIES
2020 2019
GBP'000 GBP'000
Corporation tax 50 51
Adjustment in respect of prior periods 12 (58)
Deferred tax movement (14) (16)
------------ ------------
Tax credit for the year 48 (23)
====== ======
The tax assessed for the year differs from the standard rate of
corporation tax in the UK applied to loss before tax.
2020 2019
GBP'000 GBP'000
Total loss on ordinary activities before
tax (143) (460)
------------ ------------
Loss on ordinary activities at the standard
rate of corporation tax in the UK of 19%
(2019: 19%) (27) (87)
Effects of:
Expenses not deductible for tax purposes 46 191
Income not taxable (1) -
Adjustments to prior periods 15 (58)
Deferred tax not recognised - (69)
Effect of changes in tax rates on deferred
tax 15
----------- -----------
Tax credit for the year 48 (23)
====== ======
In the Budget on 3 March 2021, the Chancellor announced the
intention to increase the main rate of UK corporation tax to 25%
for the financial year beginning 1 April 2023. This was not
substantively enacted at the balance sheet date.
Deferred tax at the balance sheet date has been measured using
the newly enacted tax rate of 19% (2019: 17%) in these financial
statements.
There were unused tax losses of GBP4.5m at the 31 December 2020,
with the majority restricted for use within Digitalbox plc. No
deferred tax asset has been recognised on these losses due to the
uncertainty surrounding future profits and the restrictions on the
application of the losses.
12. EARNINGS PER SHARE
2020 2019
GBP'000 GBP'000
The earnings per share is based on the following:
Continuing earnings post tax loss attributable to shareholders (191) (437)
========== ===========
Basic weighted average number of shares 96,425,598 76,597,859
Diluted weighted average number of shares 96,425,598 76,597,859
========== ===========
Basic earnings per share (0.00198) (0.00571)
Diluted earnings per share (0.00198) (0.00571)
========== ==========
Earnings/(Loss) per ordinary share has been calculated using the
weighted average number of shares in issue during the relevant
financial periods. IAS 33 requires presentation of diluted EPS when
a company could be called upon to issue shares that would decrease
earnings per share or increase the loss per share. The exercise
price of the outstanding share options is significantly more than
the average and closing share price. Therefore, as per IAS33 the
potential ordinary shares are disregarded in the calculation of
diluted EPS.
13. BUSINESS COMBINATIONS
On 30 September 2020 the Group acquired 100% of the ordinary
shares in Tab Media Limited for a total consideration of
GBP841,464. This investment is included in Digitalbox Publishing
Ltd company's balance sheet at its fair value at the date of
acquisition.
The completion accounts show a breakdown of the assets and
liabilities of the acquired company to be as follows:
Book value Fair value Fair value
adjustment to Group
GBP'000 GBP'000 GBP'000
Intangible fixed
assets - 622 622
Receivables 158 - 158
Cash and cash equivalents 269 - 269
Payables (158) - (158)
Borrowings (50) - (50)
Deferred tax arising
on intangible adjustment - (118) (118)
----------------------- ----------------------- -----------------------
Net assets on acquisition 723
Goodwill on acquisition 118
----------------------
Total consideration 841
==========
Discharged by:
841
Cash
---------------------
841
==========
Acquisition related costs (included in administrative expenses)
amount to GBP98k.
The revenue and loss included in the Consolidated Statement of
Comprehensive Income for the 3 months to 31 December 2020 was
GBP208k and GBP107k pre-tax respectively.
The intangible fixed asset fair value adjustment is in relation
to a brand asset.
14. TANGIBLE FIXED ASSETS
IFRS 16 Office Fixtures and Total
Right-of-Use equipment Fittings
Asset
GBP'000 GBP'000 GBP'000 GBP'000
Cost
Balance at 1 January 2019 33 - - 33
Additions on acquisition
of subsidiary - 12 2 14
Additions - 13 - 13
--------- --------- -------------- ---------------
Balance at 31 December 2019 33 25 2 60
--------- --------- -------------- ---------------
Balance at 31 December 2020 33 25 2 60
--------- --------- -------------- ---------------
Accumulated depreciation
Balance at 1 January 2019 - - - -
Depreciation charge on owned
assets - 2 1 3
Depreciation charge on financed
assets 8 - - 8
--------- --------- -------------- ---------------
Balance at 31 December 2019 8 2 1 11
Depreciation charge on owned
assets - 6 1 7
Depreciation charge on financed
assets 23 - - 23
--------- --------- -------------- ---------------
Balance at 31 December 2020 31 8 2 41
--------- --------- -------------- ---------------
Net Book Value
At 31 December 2020 2 17 - 19
===== ===== ===== =====
At 31 December 2019 25 23 1 49
===== ===== ===== =====
At 31 December 2018 33 - - 33
===== ===== ===== =====
The net book value of owned and leased assets included as
"Tangible fixed assets" in the Statement of Financial Position is
as follows:
2020 2019
GBP'000 GBP'000
Tangible fixed assets owned 17 24
Right-of-Use tangible fixed assets 2 25
--------- ---------
19 49
===== =====
14. TANGIBLE FIXED ASSETS
(continued)
Information about the Right-of-Use assets is summarised
below:
Net Book Value 2020 2019
GBP'000 GBP'000
Property 2 25
--------- ---------
2 25
===== =====
Depreciation charge in respect of the Right-of-Use asset is as
follows:
2020 2019
GBP'000 GBP'000
Property 23 8
--------- ---------
23 8
===== =====
15. INTANGIBLE FIXED ASSETS
Goodwill Other Development Total
GROUP Arising Intangible costs
on
Consolidation Assets
GBP'000 GBP'000 GBP'000 GBP'000
Cost
Balance at 1 January - - - -
2019
Arising on acquisition
of subsidiary - - 35 35
Additions 9,492 854 - 10,346
----------- ----------- ----------- -----------
Balance at 31 December
2019 9,492 854 35 10,381
Arising on acquisition
of subsidiary 118 622 - 740
----------- ----------- ----------- -----------
Balance at 31 December
2020 9,610 1,476 35 11,121
Accumulated amortisation
Balance at 1 January - - - -
2019
Amortisation - 102 31 133
----------- ------------ ------------ ---------------
Balance at 1 January
2020 - 102 31 133
Amortisation - 145 4 149
----------- ------------ ------------ ---------------
Balance at 31 December
2020 - 247 35 282
------------ ------------ ------------ ---------------
Net Book Value
At 31 December 2020 9,610 1,229 - 10,839
====== ====== ====== ======
At 31 December 2019 9,492 752 4 10,248
====== ====== ====== ======
At 31 December 2018 - - - -
====== ====== ====== ======
Amortisation is charged to administrative costs in the Statement
of Comprehensive Income.
15. INTANGIBLE FIXED ASSETS (continued)
GOODWILL AND IMPAIRMENT
The carrying value of goodwill in respect of each cash generating
unit is as follows:
31 31
December December
2020 2019
GBP'000 GBP'000
Entertainment Daily 9,171 9,171
The Daily Mash 321 321
The Tab 118
------------- -------------
9,610 9,492
====== =======
The Group is obliged to test goodwill annually for impairment,
or more frequently if there are indications that goodwill and
indefinite life intangibles might be impaired, due to the goodwill
deemed to have an indefinite useful life. In order to perform this
test, management is required to compare the carrying value of the
relevant cash generating unit ("CGU") including the goodwill with
its recoverable amount. The recoverable amount of the CGU is
determined from a value in use calculation. It is considered that
any reasonably possible changes in the key assumptions would not
result in an impairment of the present carrying value of the
goodwill.
Entertainment Daily
The recoverable amount of Entertainment Daily has been
determined from a review of the current and anticipated performance
of this unit. In preparing this projection, a discount rate of 7%
has been used based on the weighted average cost of capital and a
future growth rate of 3% has been assumed. It has been assumed
investment in capital equipment will equate to depreciation over
the year. The discount rate was based on the Company's cost of
capital as estimated by management. After applying sensitivity
analysis in respect of the results and future cash flows, in
particular for presumed growth rates and discount rates, management
is satisfied that it is highly improbable that such a change in key
assumptions that the recoverable amount would be reduced below book
value.
The Daily Mash
The recoverable amount of The Daily Mash has been determined
from a review of the current and anticipated performance of this
unit. In preparing this projection, a discount rate of 7% has been
used based on the weighted average cost of capital and a future
growth rate of 3% has been assumed. It has been assumed investment
in capital equipment will equate to depreciation over the year. The
discount rate was based on the Company's cost of capital as
estimated by management. After applying sensitivity analysis in
respect of the results and future cash flows, in particular for
presumed growth rates and discount rates, management is satisfied
that it is highly improbable that such a change in key assumptions
that the recoverable amount would be reduced below book value.
The Tab
The recoverable amount of The Tab has been determined from a
review of the current and anticipated performance of this unit. In
preparing this projection, a discount rate of 7% has been used
based on the weighted average cost of capital and a future growth
rate of 3% has been assumed. It has been assumed investment in
capital equipment will equate to depreciation over the year. The
discount rate was based on the Company's cost of capital as
estimated by management. After applying sensitivity analysis in
respect of the results and future cash flows, in particular for
presumed growth rates and discount rates, management is satisfied
that it is highly improbable that such a change in key assumptions
that the recoverable amount would be reduced below book value
16. TRADE AND OTHER RECEIVABLES 31 December 31 December
2020 2019
GBP'000 GBP'000
Due after more than one year
Prepayments and accrued income - 18
------------- -------------
- 18
Trade receivables 758 1,037
Prepayments and accrued income 42 77
Other receivables 247 275
------------- -------------
1,047 1,407
====== ======
17. CASH AND CASH EQUIVALENTS 31 December 31 December
2020 2019
GBP'000 GBP'000
Cash at bank and in hand 1,853 477
------------- -------------
1,853 477
====== ======
18. LIABILITIES 31 December 31 December
2020 2019
GBP'000 GBP'000
Current liabilities
Trade payables 84 54
Social security and other taxes 209 143
Accruals 147 237
Lease liabilities 2 24
Other payables 10 54
Bank loans 25 -
Corporation tax payable 50 98
------------- -------------
527 610
====== ======
Non-current liabilities
Other payables - 8
Lease liabilities - 2
Bank loans 465 -
-------------- ------------
465 10
====== ======
19. LOANS 31 December 31 December
2020 2019
GBP'000 GBP'000
Bank loans
Due in less than one year 25 -
Due in between one and two years 122 -
Due in between two and five years 343 -
------------- -------------
490 -
====== ======
On 7 October 2020, Digitalbox Publishing Limited drew down a
loan facility amounting to GBP450k under the CBILS scheme. The
present value of the loan at inception discounted at a market rate
of interest was GBP440k. The loan is for a term of five years and
is repayable in equal monthly instalments commencing in November
2021. Interest is charged at a fixed rate of 2.43% per annum, with
the cost being fully subsidised by central Government for the first
12 months. The loan is secured by a debenture over the assets of
the Digitalbox Publishing Limited and a GBP450k guarantee granted
by Digitalbox plc.
Tab Media Limited; a business acquired by the group during the
year, has an outstanding loan amounting to GBP50k. The loan is for
a term of 6 years and is repayable in equal monthly instalments
commencing in May 2021. Interest is charged at a fixed rate of 2.5%
per annum, with the cost being fully subsidised by central
Government for the first 12 months. The loan is unsecured.
20. DEFERRED TAX
Total
GBP'000
Balance at 1 January 2020 128
Deferred tax on acquisition of subsidiaries 118
Deferred tax (credit) for the year (14)
-------------
Balance at 31 December 2020 232
=======
The deferred tax provision comprises: 31 December 2020 31 December
2019
GBP'000 GBP'000
Deferred tax on intangibles 232 128
------------- -------------
232 128
====== ======
The expected net reversal of deferred tax in 2020 is GBP40k.
21. FINANCIAL RISK MANAGEMENT
The Group is exposed to risks that arise from its use of
financial instruments. These financial instruments are within the
current assets and current liabilities shown on the face of the
statement of financial position and comprise the following:
Credit risk
The Group is exposed to credit risk primarily on its trade
receivables. The Group maintains its cash reserves at a reputable
bank. It is group policy to assess the credit risk of each new
customer before entering into binding contracts.
The maximum exposure to credit risk is represented by the
carrying value in the statement of financial position. The credit
risk on liquid funds is low as the funds are held at a bank with a
high credit rating assigned by international credit agencies.
31 December 31 December
2020 2019
GBP'000 GBP'000
Current financial assets
Trade receivables 758 1,037
Other receivables 247 275
Cash and cash equivalents 1,853 477
------------- -----------
2,858 1,789
====== ======
The table below illustrates the due date of trade
receivables:
31 December 31 December
2020 2019
GBP'000 GBP'000
Current 278 390
31 - 60 days 265 327
61 - 90 days 202 172
91 - 120 days 10 65
121 and over 3 83
------------- -----------
758 1,037
====== ======
The table below illustrates the geographical location of trade
receivables:
31 December 31 December
2020 2019
GBP'000 GBP'000
United Kingdom 475 809
Europe 180 135
Rest of world 103 93
------------- -----------
758 1,037
====== ======
Liquidity risk
Liquidity risk arises from the Group's management of working
capital and the finance charges and repayments of its liabilities.
The Group's policy is to ensure that it will have sufficient cash
to allow it to meet its liabilities when they become due and so
cash holdings may be high during certain periods throughout the
period.
The Group currently has no bank borrowing or overdraft
facilities. The Group's policy in respect of cash and cash
equivalents is to limit its exposure by reducing cash holding in
the operating units and investing amounts that are not immediately
required in funds that have low risk and are placed with a
reputable bank.
Cash at bank and cash equivalents
31 December 31 December
2020 2019
GBP'000 GBP'000
At the year end the Group had the following
cash balances: 1,853 477
====== ======
Cash at bank comprises Sterling and US Dollar cash deposits held
within National Westminster. All monetary assets and liabilities
within the group are denominated in the functional currency of the
operating unit in which they are held. All amounts stated at
carrying value equate to fair value.
31 December 31 December
2020 2019
GBP'000 GBP'000
Financial liabilities at
amortised cost
Trade payables 84 54
Accruals 147 237
Lease liabilities 2 26
Bank loans 490 -
Other payables 10 4
---------------- ----------------
733 321
====== ======
The table below illustrates the maturities of trade
payables:
31 December 31 December
2020 2019
GBP'000 GBP'000
Current 69 39
31 - 60 days 5 11
61 - 90 days - 3
91 - 120 days - -
121 and over 10 1
---------------- ---------------
84 54
======== ========
The Directors have considered expected credit losses under IFRS9
and have adopted the simplified approach to their evaluation as the
Group has limited exposure to them. The Directors have provided for
expected credit losses on a specific basis and this has led to the
Group carrying a provision against trade debtors of GBP21k (GBP25k
in 2019).
The table below shows the maturities of financial
liabilities:
2020 Carrying 6 months or 6-12 months 1 or more
amount less year
GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 84 84 - -
Accruals 147 142 5 -
Lease liabilities 2 2 - -
Loans 490 - 25 465
Other payables 10 10 - -
---------------- --------------- --------------- ---------------
733 238 30 465
======== ======== ======== ========
2019 Carrying 6 months or 6-12 months 1 or more
amount less year
GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 54 54 - -
Accruals 237 237 - -
Lease liabilities 26 12 12 2
Loans - - - -
Other payables 4 4 - -
---------------- --------------- --------------- ---------------
321 307 12 2
======== ======== ======== ========
Capital Disclosures and Risk Management
The Group's management define capital as the Group's equity
share capital and reserves.
The Group's objective when maintaining capital is to safeguard
its ability to continue as a going concern, so that in due course
it can provide returns for shareholders and benefits for other
stakeholders.
The Group manages its capital structure and makes adjustments to
it in the light of changes in the business and in economic
conditions. In order to maintain or adjust the capital structure,
the Group may from time-to-time issue new shares, based on working
capital and product development requirements and current and future
expectations of the Company's share price.
Share capital is used to raise cash and as direct payments to
third parties for assets or services acquired.
Market risk
Interest rate risk
Interest rate risk is the risk that the value of financial
instruments will fluctuate due to changes in market interest rates.
The Group considers the interest rates available when deciding
where to place cash balances.
Foreign currency risk
Foreign exchange transaction risk arises when individual Group
operations enter into transactions denominated in a currency other
than the functional currency. The principal risk arises from the
Group's US based subsidiary, Digitalbox Inc. The general policy for
the Group is to sell to customers in the same currency that
services or goods are purchased in, reducing the transactional
risk.
22. SHARE CAPITAL No. Value No. Value
31 December GBP'000 31 December GBP'000
2020 2019
Called up share capital
Allotted, called up and fully paid
Ordinary shares of GBP0.01 each 116,332,457 1,163 90,251,726 903
Deferred shares of GBP0.0499 each - - 386,907,464 19,306
Deferred shares of GBP0.01 each - - 112,176,000 1,122
------------ ------------ ------------- ------------
116,332,457 1,163 589,335,190 21,331
====== ====== ====== ======
On 20 May 2020 the shareholders resolved to cancel all of the
Company's deferred shares as set out above, reducing share capital
by GBP20.4m, and to reduce the share premium account by GBP19.5m.
The Court approved this capital restructure on 30 July 2020, and
this was subsequently certified at Companies House on 31 July
2020.
Shares issued and cancelled in the year to 31 December 2020:
Date Description No shares Price/ Gross share Cash received Shares Total consideration
share value issued
Pence GBP'000 GBP'000 GBP'000
Issue of
24.02.20 1p shares 1,590,931 1 15 36 - 36
Cancellation
of 4.99p
31.07.20 shares (386,907,464) 4.99 (19,306) - - -
Cancellation
of
31.07.20 1p shares (112,176,000) 1 (1,122) - - -
Issue of
21.10.20 1p shares 24,489,800 1 245 1,200 - 1,200
----------------------- --------------------- --------------------- --------------------- ---------------------
(473,002,733) (20,168) 1,236 - 1,236
=========== ========== ========== ========== =========
As at 31 December
2020 116,332,457 1,163
As at 31 December
2019 589,335,190 21,331
Cash received does not included costs relating to share issues.
In the year to 31 December 2020, costs of GBP84k were incurred
relating to share issues and these costs were charged against share
premium.
Share premium represents the total consideration received on
each share issue less the gross share value.
23. SHARE BASED PAYMENTS
During the year, the Company incurred a GBP140k share based payment
charge (2019: GBP149k).
During the year, 2,005,812 share options were cancelled and re-issued
with a lower strike price. Owing to the reduction in strike price,
the fair value of the new instruments is higher than those they
replaced. These have been identified as replacement equity instruments
and have been accounted for as a modification of the original
instrument. As this modification was prior to the vesting date,
the incremental amount is recognised over the remaining vesting
period.
2020 Weighted 2019 Weighted
No. of average No. of average
share exercise share exercise
options price options price
Outstanding at beginning
of year 5,343,905 14p 160,000 20p
Granted during the
year 2,005,812 6.75p 6,186,811 14p
Cancelled during the
year (2,005,812) 14p (1,002,906) 14p
Expired during the - - -
year
------------ ---------- ------------ ----------
Outstanding at the
end of the year 5,343,905 11p 5,343,905 14p
------------ ---------- ------------ ----------
Exercisable at the
end of the year 329,285 17p 160,000 20p
------------ ---------- ------------ ----------
329,285 options are exercisable 1 year after admission.
5,343,905 options are exercisable after 3 years, or an exit
event.
A Black-Scholes model has been used to determine the fair value
of the share options on the date of grant. The fair value is
expensed to the income statement on a straight-line basis over
the vesting period, which is determined annually. The model
assesses a number of factors in calculating the fair value.
These include the market price on the date of grant, the exercise
price of the share options, the expected share price volatility
of the Company's share price, the expected life of the options,
the risk-free rate of interest and the expected level of dividends
in future periods.
For those options granted where IFRS 2 "Share-Based Payment"
is applicable, the fair values were calculated using the Black-Scholes
model. The inputs into the model were as follows:
Risk free rate Share price volatility Share price at date of
grant
17 April 2020 0.10% 65.00% 6.75p
Expected volatility was determined by calculating the historical
volatility of the Company's share price for 12 months prior
to the date of grant. The expected life used in the model is
the term of the options.
The vesting conditions in relation to the share options are
3 years, or an exit event.
The vesting condition in relation to the warrants is 1 year
from admission.
24. RESERVES
Full details of movements in reserves are set out in the
consolidated statement of changes in equity. The following
describes the nature and purpose of each reserve within owners'
equity:
Share premium: Amount subscribed for share capital in excess of
nominal value.
Retained earnings: Cumulative net gains and losses recognised in
the consolidated statement of comprehensive income.
Share based payment reserve: Cumulative charges recognised in
the consolidated statement of comprehensive income in relation to
share based payments.
25. LEASING COMMITMENTS
Group as a lessee
The Group leasing arrangements for their head office.
Lease liabilities are due as follows:
31 December 31 December
2020 2019
GBP'000 GBP'000
Current 2 24
Non-current - 2
------------- -------------
2 26
===== =====
Contractual undiscounted cash flows are due as follows:
31 December 31 December
2020 2019
GBP'000 GBP'000
Current 2 8
Non-current - 27
------------- -------------
2 35
===== =====
There is not considered to be any significant liquidity risk
by the Group in respect of leases.
The following amounts in respect of leases, where the Group is
a lessee, have been recognised in the profit or loss:
31 December 31 December
2020 2019
GBP'000 GBP'000
Interest expense on lease liabilities 1 1
Expenses relating to short-term leases 24 17
------------- -------------
25 18
===== =====
26. CAPITAL COMMITMENTS
At 31 December 2020 and 31 December 2019 there were no capital
commitments.
27. RELATED PARTY TRANSACTIONS
At 31 December 2020, the Group was due GBP171k (31 December
2020: GBP171k) from James Carter and Jim Douglas, two Directors of
the company. The outstanding balance is split equally between the
directors and is included within trade and other receivables. The
amounts are repayable either on sale of shares by the Directors, by
prior charge over the proceeds of dividends or distributions due to
the directors' net of tax or by prior charge over remuneration
payments in excess of a pre-determined level. Interest is charged
at 0.75% per annum.
Prior to the readmission of Digitalbox plc (formerly Polemos
plc) onto AIM, and its subsequent acquisition of Digitalbox
Publishing Holdings Ltd, James Carter and Jim Douglas each held
shares in Digitalbox Publishing Holdings Ltd. It was agreed by the
then board that these shares would form the basis for their
physical shareholding in Digitalbox plc once the acquisition had
completed and that the loans would transfer to the plc. The loan
facility from the Company was part of a package to ensure key
management were sufficiently incentivised and locked into the
success of the business. Where any individuals' personal bonus
payment exceeds GBP100,000 in a calendar year, the excess will be
used pay down these loans. The current board of Directors view this
arrangement as satisfactory and believe it has served well to
incentivise management.
During the year, Integral2 Limited billed GBP57k (2019: GBP43k)
to the Group, a company related by virtue of David Joseph, a member
of key management personnel, having control over the entity. As at
31 December 2020, GBP5k (2019: GBP5k) was owed to Integral2
Limited.
During the year, the Group received revenue of GBP1.5k (2019:
GBP17k) from Immotion Group plc, a company related by virtue of
Martin Higginson being a member of key management personnel of both
entities. As at 31 December 2020, GBPnil (2019: GBP2k) was owed to
the Group.
During the year, M Capital Investment Partners (Holdings)
Limited billed GBP25k (2019: GBP23k) to the Group, a company
related by virtue of Martin Higginson, a member of key management
personnel, having control over the entity. As at 31 December 2020,
GBP2.5k (2019: GBPnil), was owed to M Capital Investment Partners
(Holdings) Limited.
During the year, Robin Miller Consultants Limited billed GBP17k
(2019: GBP10k) to the Group, a company related by virtue of Robin
Miller, a member of key management personnel, having control over
the entity. As at 31 December 2020, GBP1.7k (2019: GBPnil), was
owed to Robin Miller Consultants Limited.
The key management personnel are considered to be the Board of
Directors. Their remuneration is disclosed in detail in note 9. Key
management were remunerated GBP382k in the year ended 31 December
2020 (2019: GBP444k).
The key management personnel were provided 3,008,808 share
options resulting in a charge of GBP99k in the period (2019:
GBP93k).
COMPANY STATEMENT OF FINANCIAL POSITION FOR THE YEARED 31 DECEMBER
2020
At 31 December At 31 December
2020 2019
GBP'000 GBP'000
Fixed assets
Investments III 10,990 11,192
----------------- -----------------
10,990 11,192
Current assets
Trade and other receivables IV 1,244 155
Cash and cash equivalents V 99 22
----------------- -----------------
1,343 177
Current liabilities
Trade and other payables VI (68) (214)
---------------- ----------------
Total current liabilities (68) (214)
Non-current liabilities
Other payables - (8)
---------------- ----------------
Total liabilities (68) (222)
Net current assets/(liabilities) 1,275 (37)
--------------- ---------------
Total assets less total
liabilities 12,265 11,147
======= =======
Capital and reserves
Called up share capital VII 1,163 21,331
Share premium account 11,149 29,757
Share based payment reserve 321 181
Retained reserves (368) (40,122)
------------------ ------------------
Shareholders' funds 12,265 11,147
========= =========
The Company has taken advantage of the exemptions allowed under
section 408 of the Companies Act 2006 and has not presented its
income statement in these financial statements. The Group loss for
the year included a loss on ordinary activities after tax of
GBP174k (2019: GBP723k loss) in respect of the Company which is
dealt with in the financial statements of the Parent Company.
The financial statements were approved by the Board and
authorised for issue on 26 March 2021.
James Carter David Joseph
CEO CFO
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 31 DECEMBER
2020
Share Share Share based Retained Retained
Capital Premium payment reserves reserves
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
1 January 2019 20,488 19,164 32 (39,399) 285
Issue of shares 843 10,710 - - 11,553
Share issue costs - (117) - - (117)
Loss after tax - - - (723) (723)
Equity settled share-based
payments - - 149 - 149
------------- ------------- ------------- ------------- -------------
31 December 2019 21,331 29,757 181 (40,122) 11,147
------------- -------------- ------------- ------------- -------------
Issue of shares 260 976 - - 1,236
Share issue costs - (84) - - (84)
Capital reduction (20,428) (19,500) - 39,928 -
Profit after tax - - - (174) (174)
Equity settled share-based
payments - - 140 - 140
------------- -------------- -------------- -------------- --------------
31 December 2020 1,163 11,149 321 (368) 12,265
------------- -------------- ------------- ------------- -------------
COMPANY STATEMENT OF CASH FLOWS FOR THE YEARED 31 DECEMBER 2020
Year ended Year ended
31 December 31 December
2020 2019
GBP'000 GBP'000
Cash flows from operating activities
Loss from ordinary activities
Adjustments for: (174) (723)
Dividend income (238) -
Impairment of fixed asset investments 238
Share based payments 140 149
----------------- -----------------
Cash flows from operating activities
before changes (34) (574)
in working capital
(Increase)/Decrease in trade and
other receivables (1,089) 62
Decrease in trade and other payables (154) (260)
----------------- -----------------
Cash used in operations (1,277) (772)
Investing activities
Acquisition of subsidiaries (36) (993)
Cash on acquisition - 433
Dividend income 238 -
----------------- -----------------
Net cash absorbed from investing
activities 202 (560)
Financing activities
Issue of new share capital 1,236 1,240
Costs on issue of shares (84) (117)
----------------- -----------------
Net cash from financing activities 1,152 1,123
----------------- -----------------
Net increase/(decrease) in cash
and cash equivalents 77 (209)
Cash and cash equivalents at beginning
of the period 22 231
------------------ ------------------
Cash and cash equivalents at end
of the period 99 22
========= =========
Reconciliation of net cash flow
to movement in net debt:
Net increase/(decrease) in cash
and cash equivalents 77 (209)
New loans and finance leases - -
Repayment of loans - -
----------------- -----------------
Movement in net debt in the year 77 (209)
Net funds at 1 January 22 231
----------------- -----------------
Net funds at 31 December 99 22
========= =========
NOTES FORMING PART OF THE COMPANY FINANCIAL STATEMENTS FOR THE
YEAR ENDED 31 DECEMBER 2020
I. ACCOUNTING POLICIES
The separate financial statements of the Company are presented
as required by the Companies Act 2006. As permitted by the Act the
separate financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted by the
European Union. The principal accounting policies adopted are the
same as those set out in note 4 to the consolidated financial
statements except as noted below:
Valuation of investments
Investments in subsidiaries are stated at cost less any
provision for impairment in value.
II. OPERATING LOSS
The auditor remuneration for audit and other services is
disclosed in note 8 to the consolidated financial statements.
The average number of employees of the company during the year
was 6 (2019: 6) and total staff costs were GBP408k (2019: GBP466k).
Directors remuneration is disclosed in note 9 to the consolidated
financial statements.
The operating loss is stated after charging an impairment loss
on the investment in Mashed Productions Limited amounting to
GBP238k (2019: GBPnil). This impairment loss is reflective of the
receipt of dividend income from this subsidiary amounting to
GBP238k, which was subsequently dissolved on 10 March 2020
following an earlier hive across of trade to Digitalbox Publishing
Limited. The impairment arose owing to the realisation of the
distributable reserves, and these two transactions have had a net
GBPnil effect on the result for the year.
III. FIXED ASSET INVESTMENTS 31 December
2020
GBP'000
Subsidiary undertakings
Cost
Balance at 1 January 2020 11,192
Additions 36
Disposals -
--------------
Balance at 31 December 2020 11,228
Provisions
Balance at 1 January 2020 -
Charge for the year 238
--------------
Balance at 31 December 2020 238
--------------
Carrying value of investments 10,990
=======
At the year end the Company had the following subsidiaries:
Subsidiary name Class Proportion Registered office
of shares of ownership
Digitalbox Publishing Limited Ordinary 100% Indirect 2-4 Henry Street, Bath, BA1
1JT
Digitalbox Inc Ordinary 100% Direct 19 Courtland Drive, Hudson,
MA 01749
Digitalbox Publishing (Holdings) Ordinary 100% Direct 2-4 Henry Street, Bath, BA1
Limited 1JT
Tab Media Limited Ordinary 100% Indirect Jubilee House, 92 Lincoln
Road, Peterborough, PE1 2SN
Subsidiary name Principal activity
Digitalbox Publishing Limited Sale of digital advertising space
Digitalbox Inc Sale of digital advertising space
Digitalbox Publishing (Holdings) Dormant subsidiary
Limited
Tab Media Limited Publishing activities
IV. RECEIVABLES: due within one year 31 December 31 December
2020 2019
GBP'000 GBP'000
Amounts owed by group undertakings 1,213 136
Other receivables 10 10
Prepayments and accrued income 21 9
------------ ------------
1,244 155
===== =====
V. CASH AND CASH EQUIVALENTS
31 December 2020 31 December
2019
GBP'000 GBP'000
Cash at bank and in hand 99 22
------------- -------------
99 22
====== ======
VI. PAYABLES: amounts falling due
within one year
31 December 2020 31 December
2019
GBP'000 GBP'000
Trade payables 5 3
Accruals 38 148
Other tax and social security 16 13
Other payables 9 50
------------ ------------
68 214
====== ======
VII. SHARE CAPITAL
Details of the Company's share capital and the movements in the
period can be found in Note 22 to the consolidated financial
statements.
VIII. SHARE OPTIONS
Share Option Scheme
Details of the share options outstanding at 31 December 2020 can
be found in Note 23 to the Consolidated financial statements.
IX. RESERVES
Details of the reserves can be found in Note 24 to the
Consolidated financial statements.
X. RELATED PARTY TRANSACTIONS
Details of the Company's related party transactions can be found
in Note 27 to the consolidated financial statements.
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END
FR KZGZFFNKGMZM
(END) Dow Jones Newswires
March 29, 2021 02:00 ET (06:00 GMT)
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