Final Audited Results year ended 31 December 2021
29/03/2022 07:00
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RNS Number : 3081G Digitalbox PLC 29 March 2022
29 March 2022
Digitalbox plc
("Digitalbox", the "Group" or the "Company")
Final Audited Results for the year ended 31 December 2021
Digitalbox plc, the mobile-first digital media business, which owns leading
websites Entertainment Daily, The Daily Mash and The Tab, today publishes its
final audited results for the year ended 31 December 2021.
The Company will host a live investor presentation through the Investor Meet
Company platform today at 10.00am (further details below).
Financial Highlights
2021 2020 Variance
Group revenue £3.7m £2.2m +68%
Gross profit £3.1m £1.7m +89%
Gross profit margin 86% 76% +10 ppts
Adjusted EBITDA((1)) £1.0m £0.3m +237%
Adjusted EBTDA margin((1)) 28% 14% +14 ppts
Profit/loss before taxation £0.63m £(0.14)m +£0.77m
Net cash generated from operating activities £0.51m £0.38m +34%
Gross cash £2.2m £1.9m +16%
(1) Adjusted EBITDA is defined as the operating profit/(loss) after adding
back depreciation, amortisation, share based payments, acquisition and listing
costs, direct costs associated with business combinations and capital
restructure costs.
Operational Highlights
· Entertainment Daily was named by UK Press Gazette as the fastest
growing news site in the UK for two months running
· User base grew 82% year-on-year
· Average of over 22m monthly user visits to Digitalbox sites -
providing truly significant user scale to the market
· New Graphene Ad Stack enables optimisations to be rapidly applied -
ensured The Tab December 2021 session values were up more than 100% over the
previous December
· The Tab paid back over 70% of its purchase price within the first 15
months of ownership
· Strong year for The Daily Mash - launched ad-free experience behind a
paywall to diversify revenue sources
· TV relationship moved from the BBC to Dave - Late Night Mash
increased the number of episodes from six to nine. The show was Dave's third
best performing show for the year, delivering double the slot average
Current trading and outlook
· Trading for the current financial year remains strong and in line
with market expectations
· Digitalbox is well placed to capitalise on the recovery of both the
advertising market and entertainment production houses post the Pandemic
· Strong balance sheet of £2.7m gross cash as at 25 March 2022, with
the ability and flexibility to evaluate and execute further acquisitions
James Carter, CEO, Digitalbox plc, said: "2021 was an important year for
Digitalbox, with profitable growth and further progress made in delivering our
strategy of building a leading mobile-focused media business. We developed our
portfolio, attracted new audiences, and monetised them effectively. The
successful year-end outcome has been greatly aided by our knowledge, focus and
technology, allowing us to drive benefit from our strategic positioning.
Against a backdrop of economic disruption created by the Pandemic, we were
well served by operating in the segment of the advertising market which
presents the most accountable and relevant commercial solutions. When pressure
was placed on marketeers in 2020 and 2021, they chose to increasingly shift
their spend to targeting highly engaged users on mobile devices - Digitalbox's
heartland.
The two acquisitions we have completed since our admission to AIM - The Daily
Mash and The Tab - have proved the potential of our model, giving us
confidence, we can continue to create growth within the portfolio and make
further acquisitions when the fit is right.
Current trading remains strong and in line with market expectations. In short,
we have entered 2022 with a portfolio of assets primed for future growth, a
stronger investor base and a confident digital advertising sector destined to
increase its share of global ad spend significantly."
Investor Presentation - Investor Meet Company
Digitalbox will also provide a live investor presentation through the Investor
Meet Company platform today at 10.00am. 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
(https://www.investormeetcompany.com/digitalbox-plc/register-investor) .
Investors who have already registered and added to meet the Company will be
automatically invited.
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 (Financial Adviser, Nominated Adviser & Joint Broker) Tel: 020 7886 2500
Alina Vaskina / James Sinclair-Ford (Corporate Advisory)
Rupert Dearden (Corporate Broking)
Alvarium Capital Partners (Joint Broker) Tel: 020 7195 1400
Alex Davies / Hugh Kingsmill Moore
SEC Newgate (Financial PR) Tel: 07540 106 366
Robin Tozer / Molly Gretton / Max Richardson 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, showbiz and celebrity news. The Daily Mash produces and
publishes satirical news content. The Tab is the UK's biggest youth culture
site fueled 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 plc ('Digitalbox') has successfully
continued to deliver on its growth strategy in 2021 as it strengthened all
parts of its business.
When the management team set about building Digitalbox they did so by
identifying consumer media trends that they were confident would play out over
the medium term. These trends have generally been accelerated by the global
pandemic which, whilst painful for all in 2020, have progressed the business
more quickly than would have once been anticipated.
As the market continued to experience uncertainty throughout the year,
Digitalbox was able to quickly adapt, benefiting from the agile structures put
in place during 2020. With strong editorial propositions running through the
portfolio, the teams expertly navigated the market to extract great value over
the year, assisted by some post-pandemic tailwinds. The delivery of the female
audience at scale is continuing to build a premium price from advertisers.
As the year progressed, the business has built its cash position from a
starting point of £1.9m to £2.2m at 31 December 2021. While maintaining the
CBILS loan from 2020, this increasingly puts the business in a stronger
position when it comes to making investment decisions and the team have
continued to review potential acquisitions and opportunities for in-house
growth. The amount outstanding on the CBILS loan as at 31 December 2021 was
£0.4m. The gross cash balance on hand as at 25 March 2022 was £2.7m.
In terms of acquisitions, the Tab is a great example of how Digitalbox acquire
and improve a business. Moving into operating profit in its first month of
ownership, the asset paid back over 70% of its purchase price by the year end
alongside bringing other financial benefits to the business. The team spent
time further integrating the editorial operation whilst strengthening its
commercial operations, which saw advertising session values more than double
for the critical trading month of December.
Much of Digitalbox's success has been driven by its Graphene platform. With a
technology team briefed to optimise everything they can from a mobile
perspective, Graphene is constantly evolving as the market changes and is
behind the company strengthening its position in all key areas, including
commercial growth and audience engagement.
This combination of maintaining agile structures, delivery on strategy and
using skills to best adapt to positive market conditions has led to a 68%
year-on-year growth in revenue and a strong £1.0m of adjusted EBITDA compared
to £0.3m in 2020.
Adjusted EBITDA is defined as the operating profit/(loss) after adding back
depreciation, amortisation, share based payments, acquisition and listing
costs, direct costs associated with business combinations and capital
restructure costs.
We strengthened the Board with the appointment of Philip Machray in July 2021
as an independent non-executive director.
While we all hope the chief impacts of the pandemic are largely over, this
mobile-first business is in excellent shape to take advantage of the new
economic landscape.
As management are strengthening the operating team through new appointments,
we remain highly cash generative and with healthy cash reserves in hand, we
are in a great position to deliver further opportunities for growth in 2022.
Marcus Rich
Chairman
28 March 2022
Chief Executive's Statement
2021 was an important year for Digitalbox, with profitable growth and further
progress made in delivering our strategy of building a leading mobile-focused
media business. We developed our portfolio, attracted new audiences and
monetised them effectively. The successful year-end outcome has been greatly
aided by our knowledge, focus and technology allowing us to drive benefit from
our strategic positioning.
Against a backdrop of economic disruption created by the pandemic, we were
well served by operating in the segment of the advertising market which
presents the most accountable and relevant commercial solutions. When pressure
was placed on marketeers in 2020 and 2021, they chose to increasingly shift
their spend to targeting highly engaged users on mobile devices - Digitalbox's
heartland. As we have continued to build our audience base to become one of
the most significant publishers for women in the UK, we have benefited from
the market demand for quality advertising inventory at scale for this
demographic.
Financial review
Like the major platform businesses (Facebook/Google/Amazon), Digitalbox has
benefited from a positive shift in consumer media behaviour and the arising
marketing trends. Traffic has been stimulated by the ubiquity of mobile
devices that has seen usage time climb to record levels in 2021. Advertising
markets also grew back strongly, and while the market returned in a less
traditional shape due to some macro-economic challenges, it really surged
forwards over the year.
With this momentum in the market, Digitalbox again traded profitably in 2021
delivering an adjusted EBITDA of more than £1.0m while building its cash
position to £2.2m as at 31(st) December 2021. The business therefore ended
the year with revenues up 68% year on year to £3.7m, which the Board consider
a significant achievement. Revenues include 12 months of trading on the Tab to
31(st) December 2021 (versus three months of trading in 2020). The outcome is
a strong indicator of the Digitalbox business model.
Gross profit was £3.1m (2020: £1.7m) delivering a year-on-year margin
increase on the back of advertising rates recovering and delivering healthy
gross margins of 86% (2020: 76%). Adjusted EBITDA for the year was £1.0m
(2020: £0.3m), and our adjusted EBITDA margin doubled to 28% (2020: 14%).
Digitalbox has a low capital expenditure requirement and is not working
capital hungry. This, together with the successful £1.2m placing with Downing
Ventures in October 2020, alongside our CBILS loan of £0.45m secured in the
same month, ensured that the business continued to strengthen its balance
sheet and cash reserves, ending the year with £2.2m of cash (2020: £1.9m).
We retained the CBILS loan but repaid the £50k Bounce Back Loan inherited
when we acquired Tab Media Limited.
Market landscape
As the AIM market has seen new entrants from the media industry over the past
year, it is good to see this increased activity draw attention to our sector.
It has also been increasingly pleasing to see the market recognise the value
contained within the Digitalbox business, with further headroom on valuations
given those of comparable peers. There are commonalities in our operation to
that of LBG Media plc and our UK female audience figures are positioned
positively alongside those of Future plc.
Operating review
2021 was a year of continued uncertainty due to the pandemic, but it further
demonstrated the effectiveness of the digital advertising medium as its share
grew towards 60% of global ad spend. As the pandemic disrupted movement and
shopping habits, it rapidly accelerated the adoption of ecommerce via the most
personal of channels, the mobile device. With Digitalbox's mobile-first focus,
we were well positioned for the market adjustments of 2021 and remain very
well placed for the forecast growth over coming years.
Digitalbox currently owns and operates three trading brands - Entertainment
Daily, The Daily Mash and The Tab. Entertainment Daily produces and publishes
online UK entertainment news covering TV, showbiz and celebrities. The Daily
Mash delivers 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 more than 30 local university sites. All three brands generate
revenue from advertising in and around the content they publish.
Our user base grew 82% year-on-year as we strengthened our portfolio of assets
over the 12-month period. As well as building out further strands to our
existing brands we invested in ensuring The Tab was as well integrated as
possible to benefit from our technology and drive its commercial success.
Compelling content remains at the core of the Digitalbox offering, created by
talented teams with an expert understanding of their respective audiences. We
couple this expertise with our proprietary mobile-first tech stack, Graphene.
Named after the incredibly fast, light, super-conductive material, Graphene
has been shaped to deliver the best user experience through the fastest and
lightest page load speeds on mobile and highly efficient advertising auctions
that drive value through competitive tension. It enables audiences to scale
rapidly with the least resistance from the technology as the major platforms
continue to up-rank publishers in real time as speed quickens.
The Tab has proved to be a great success since its acquisition at the end of
2020. It has now paid back over 70% of its purchase price within the first 15
months of ownership. We have been considering further acquisitions and have
been highly selective, rejecting some targets owing to the nature of their
broken business models and some for being overpriced. We continue to scour the
market and with cash in the bank will move quickly where we can realise the
appropriate value.
The Digitalbox team is being scaled to bring capacity for further growth on
our existing brands and to ensure any acquisitions can be quickly integrated,
while operational efficiencies remain strong.
Leading as a mobile-first business
Our strategy to create a mobile-first business has positioned us as a market
leader for both audience engagement and monetisation. Push media skills remain
critical and our brands continue to engage consumers at scale with over 88% of
our audience on Entertainment Daily, The Daily Mash and The Tab visiting on
mobile devices. With an average of over 22m monthly user visits to our sites,
we provide truly significant user scale to the market.
As noted earlier, mobile advertising spend was growing well ahead of the
pandemic. The COVID-19 pandemic has accelerated the trend, with digital
advertising now accounting for 64% of all global advertising expenditure. As
part of our Graphene technology suite that supports our mobile-first strategy,
we have built a new Graphene Ad Stack (G.A.S.) which enables optimisations to
be rapidly applied. As previously reported, our G.A.S. video player has helped
contribute to our growth with record revenues being generated in December
2021.
PROJECTED GLOBAL DIGITAL / MOBILE AD SPEND
2021 2022 2023 2024 2025 2026
Global Digital Ad Spend $bn* 465 515 560 602 643 683
Mobile % of total* 60% 62% 64% 66% 68% 70%
*Source: Statista Worldwide Digital Advertising Report Nov 2021
Portfolio growth
Entertainment Daily saw its user-base grow as the site diversified its traffic
sources. The site was named by UK Press Gazette as the fastest growing news
site in the UK for two months running. Google now accounts for over 40m
sessions and is set for further growth as we invest more in SEO content and
optimisation alongside the Discover feed. Facebook also performed well as the
turbulence within its ecosystem reduced after the challenges of the US
elections in 2020. The editorial team hit all the TV and showbiz stories as
the news broke, maximising traffic and social engagement around moments that
caught the nation's imagination.
We acquired the UK's most successful student and youth culture site, The Tab
in late 2020. The site was founded by three students at Cambridge in 2009 as a
reaction to out-of-touch student papers and since then it has exploded into
one of the biggest youth media sites in Britain, speaking directly to
Generation Z and engaging with more than six million users a month. Content is
driven by a core team based in London who work with student journalists on
more than 30 subsites across UK campuses, offering a mix of smart takes on
trending youth culture and strong campaigning editorial. 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
contributing to the broader Digitalbox business.
While the Tab's founders were right about the need for a fresh, relevant
platform for the student audience, we have spent time refining the commercial
approach. G.A.S. has increased its impact over 2021 with the December 2021
session values being up more than 100% over the previous December. This is a
great case study in how our approach can take websites forward with a much
more efficient operating model.
The Daily Mash had a strong year growing back from the Facebook misinformation
algorithm that caused setbacks in 2020 when Facebook/Meta struggled to
identify the difference between satire and fake news. With a highly loyal core
audience we decided to diversify our revenue sources on the site through the
test launch of an ad-free experience behind a paywall. This test has proved
very encouraging with over 450 subscribers and we plan to scale the project
with the addition of a premium content offering for these paying visitors. We
also moved our TV relationship from BBC2 to UK TV's Dave channel where the
Late Night Mash show upped its on-air time from 30 mins to 45 minutes per
episode and increased the number of episodes from six to nine for the season.
The show achieved fantastic BARB (Broadcasters Audience Research Board)
audience figures by establishing itself as the channel's third best performing
show for the year and delivering more than double the slot average audience.
Culture and people
We are focused on creating a culture that enables talented people to do their
best work. Even before the pandemic that meant being flexible rather than
harbouring traditional views of office culture or adopting a one-size-fits-all
approach. We continue to mix office-based roles and remote 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.
During the year our teams rose to the challenges presented by reduced
face-to-face contact while delivering great results. Good communication and a
sense of inclusion are important to us, so we publish monthly all-staff
updates on progress and stage weekly leadership sessions alongside daily team
meetings. Building on this, in July we held our first all-staff conference
which was a fantastic opportunity to bring everyone together and share ideas.
Recruiting and retaining great people is crucial to our success. Our success
hiring younger talent on Entertainment Daily through its apprentice programme
has continued along with new development opportunities, training and
development for more senior staff. The Daily Mash has strengthened its
commissioning team, and we have used The Tab's outreach network to bring new
writing talent onto the site.
Everyone at Digitalbox benefits from the company's life assurance and pension
schemes and we aim to ensure our staff are rewarded fairly and have
opportunities to progress within the business. All team members and their
immediate families have access to our free wellbeing & support programme
including personalised healthy eating and exercise plans, mental health
support, legal and medical advice and ways to prevent burnout. A share options
scheme also exists for senior staff.
I would like to take the opportunity to thank all staff across the business
for their incredible hard work and commitment during the last year and their
valuable contribution to these results. I would also like to thank all those
student journalists who have contributed to The Tab over the year, some of
whom I had the pleasure of meeting at the brand's annual student curry night
in Brick Lane.
Business outlook
Digitalbox has continued to develop as a profitable UK digital media business
positioned squarely in the mobile space.
Global digital advertising spend is forecast to grow by more than 50% in the
next four years. The market reaction to the COVID-19 pandemic has accelerated
the positive trends we had already identified, pushing the business to the
forefront as mobile devices market share is forecast to shift from 60% of all
digital ad spend in 2021 to 70% in 2026 (see table above) and our content and
tech teams continue to strengthen delivery through this channe
Beyond the advertising market, the entertainment production houses that were
hit hard in 2020 are also recovering well. 2022 is anticipated to see UK TV
production spend rise to over £10bn, which we anticipate will benefit our
audience engagement with new shows to cover and provide further opportunities
for our associated TV show, Late Night Mash.
The two acquisitions we have completed since our admission to AIM - The Daily
Mash and The Tab - have proved the potential of our model, giving us
confidence we can continue to create growth within the portfolio and make
further acquisitions when the fit is right.
Current trading remains strong and in line with market expectations. We remain
alert to any market adjustments as a result of the war in the Ukraine,
although Digitalbox is no more exposed than any other primarily UK-based media
business. The Company has made a charitable donation to the Disasters
Emergency Committee to assist those impacted by the crisis.
In short, we enter 2022 with a portfolio of assets primed for future growth, a
stronger investor base and a confident digital advertising sector destined to
significantly increase its share of global ad spend.
James Carter
Chief Executive
28 March 2022
Strategic Report
The Digitalbox Vision
We set out to build a new digital media business; one driven by profit and
efficiency delivering high-quality content engaging users at speed and scale.
Our aim remains to generate organic growth of our existing assets and to
acquire and transform digital media properties with the potential to thrive
through the application of the Digitalbox model.
We have a proven ability to grow at speed by focusing on current and future
trends; rapidly adapting to technical advances and the habits of our audience,
free from legacy issues that frequently cause distraction in other media
businesses.
Consumer media behaviour
The Digitalbox publishing model was informed by the recognition of the growth
of 'push media' consumption, especially on mobile - where the most highly
engaging and relevant content from publishers is placed in users' feeds based
on trending topics, article performance and their own behaviours and
interests.
Content-surfacing algorithms continue to be refined, delivering a better user
experience and higher rates of engagement resulting in more time being spent
within the respective gateways to this content.
Both Meta and Alphabet continue to compete for consumer attention through
'push media' consumption, and it is the publishers with the most engaging
content that will continue to benefit from this competition. Google continues
to develop its push content strategy via its Discover feed which is now making
billions of content suggestions and Facebook is placing a greater focus on its
content tools being more fully integrated across its platforms in a bid to
better enable creators and satisfy their audiences.
Targeting consumers via an array of distribution channels is one thing, but
having the ability to profitably operate in those channels is where the real
skillset lies.
Whilst the major platforms continue to evolve their models, consumers continue
to support other push media sources too, with the continued growth of TikTok
amongst the younger demographic. As a result, we continue to see growth
opportunities.
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.
FAST - Audiences' expectation levels are higher than ever and their attention
spans are lower. Our content and tech teams obsess about getting the best
stories to their readers as quickly as possible.
FLEXIBLE - Digitalbox is a mobile-first media company for the simple reason
that this is where consumers have congregated. Our future strategy will be
shaped by continuing to move with our audience. This will inevitably require
flexibility as different platforms go in and out of favour and different
devices emerge. We know tomorrow will be different.
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 great 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 'buy and build'
On our admission to AIM in February 2019, Digitalbox outlined a strategy to
make investments in its existing portfolio and perform acquisitions to grow
the business. We intended to identify targets within markets that offer
natural synergies with our ongoing operations and also to expand our existing
assets into areas where there is a clear appetite from our audiences.
The integration of The Tab acquisition in 2020 marked our second acquisition
after The Daily Mash in 2019. The results have been pleasing as we have
improved the brand's commercial performance to a point where it has repaid 70%
of its acquisition cost after the first 15 months.
We will continue target and screen acquisitions that best align with our
processes and enhance our existing portfolio to deliver the strategic vision.
We will also continue to develop new content verticals that offer the
opportunity to scale our existing portfolio. The fruits of this approach
included Entertainment Daily being named fastest growing news brand in the UK
for both August and September by respected industry source UK Press Gazette.
Audiences that are in demand
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.
It's also worth noting that female readers are particularly in demand by
advertisers and women visited Digitalbox's websites more than 180 million
times in 2021.
Mobile-optimised Graphene tech platform
Graphene is our scalable and dynamic mobile-first tech stack; a blend of
technologies allowing our websites to flourish through fast, light-touch
content delivery and optimised mobile profitability. It brings significant
advantages to how our sites are experienced by users and ranked by the key
platforms - especially Alphabet and Meta - and also enables us to reduce tech
and serving costs. Since our deployment of the Graphene Ad Stack (G.A.S.) The
Tab has seen session values more than double since early 2021.
Graphene will continue to evolve through increased investment in our tech
roadmap in 2022 and we will on-board future acquisitions onto the platform.
Portfolio development
While profitability is key, we continue to invest in the existing business.
2022 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.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
Year ended Year ended
31 December 31 December
2021 2020
Note £'000 £'000
Revenue 7 3,667 2,187
Cost of sales (529) (529)
------------ ------------
Gross profit 3,138 1,658
Administrative expenses (2,508) (1,823)
Other operating income 8 10 24
-------------- --------------
Operating profit/(loss) 8 640 (141)
Memorandum:
Adjusted EBITDA(1) 1,029 305
Depreciation (31) (30)
Amortisation (215) (149)
Share based payments (143) (140)
Direct costs of business combinations - (98)
Capital restructure costs - (29)
-------------- --------------
Operating profit/(loss) 640 (141)
Finance costs 10 (14) (2)
Finance income 1 -
------------ ------------
Profit/(loss) before taxation and attributable to equity holders of the parent 627 (143)
Taxation 11 (231) (48)
------------ ------------
Profit/(loss) after tax 396 (191)
------------ ------------
All profits/(losses) after taxation arise from continuing operations.
There was no other comprehensive income for 2021 (2020: £NIL).
(1)Adjusted EBITDA is defined as the operating profit/(loss) after adding back
depreciation, amortisation, share based payments, acquisition and listing
costs, direct costs associated with business combinations and capital
restructure costs.
£ £
Gain/(loss) per share
Basic (continuing) 12 0.00340 (0.00198)
========= =========
Gain/(loss) per share
Diluted (continuing) 12 0.00335 (0.00198)
========= =========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
Share capital Share premium Share based payment Retained (deficit)/ earnings Total equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 January 2020 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
-------------- -------------- -------------- -------------- --------------
Equity settled share-based payments - - 143 - 143
Profit after tax - - - 396 396
-------------- -------------- -------------- -------------- --------------
Balance at 31 December 2021 1,163 11,149 464 297 13,073
-------------- -------------- -------------- -------------- --------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
31 December 2021 31 December 2020
ASSETS Note £'000 £'000
Non-current assets
Property, plant and equipment 13 46 19
Intangible fixed assets 14 10,710 10,839
----------------- -----------------
Total non-current assets 10,756 10,858
Current assets
Trade and other receivables 15 1,770 1,047
Cash and cash equivalents 16 2,186 1,853
----------------- -----------------
Total current assets 3,956 2,900
----------------- -----------------
Total assets 14,712 13,758
========= =========
LIABILITIES
Current liabilities
Trade and other payables 17 (739) (449)
Lease liabilities 17 (29) (2)
Bank loans 17 (112) (25)
Corporation tax 17 (163) (51)
----------------- -----------------
Total current liabilities (1,043) (527)
----------------- -----------------
Non-current liabilities
Lease liabilities 17 (2) -
Bank loans 17 (319) (465)
Deferred tax liability 19 (275) (232)
------------------ ------------------
(596) (697)
------------------ ------------------
Total liabilities (1,639) (1,224)
------------------ ------------------
Total net current assets 2,913 2,373
------------------ ------------------
Total net assets 13,073 12,534
========= =========
Capital and reserves attributable to owners of the parent
Share capital 21 1,163 1,163
Share premium 23 11,149 11,149
Share based payment reserve 23 464 321
Retained earnings/(deficit) 23 297 (99)
------------------ ------------------
Total equity 13,073 12,534
========= =========
The financial statements were approved by the Board and authorised for issue
on 28 March 2022
James Carter
David Joseph
CEO
CFO
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
Year ended Year ended
31 December 2021 31 December 2020
£'000 £'000
Cash flows from operating activities
Profit/(loss) from ordinary activities after tax 396 (191)
Adjustments for:
Income tax expense 231 48
Share based payments 143 140
Depreciation on property plant and equipment 31 30
Amortisation of intangible assets 215 149
Finance costs 14 2
Finance income (1) -
----------------- -----------------
Cash flows from operating activities before changes in working capital 1,029 178
Decrease / (increase) in trade and other receivables (723) 518
Decrease in trade and other payables 280 (205)
----------------- -----------------
Cash generated by operations 586 491
Income tax paid (76) (109)
----------------- -----------------
Net cash from operating activities 510 382
Investing activities
Purchase of property, plant and equipment (2) -
Purchase of intangibles (86) -
Acquisition of subsidiary - (841)
Cash on acquisition - 269
Interest received 1 -
----------------- -----------------
Net cash used in investing activities (87) (572)
Financing activities
Finance costs (4) (2)
New loans and finance leases - 440
Loan and finance lease repayments (86) (24)
Issue of new share capital - 1,236
Costs on issue of shares - (84)
----------------- -----------------
Net cash from financing activities (90) 1,566
----------------- -----------------
Net increase in cash and cash equivalents 333 1,376
Cash and cash equivalents at beginning of the period 1,853 477
------------------ ------------------
Cash and cash equivalents at end of the period 2,186 1,853
========= =========
Reconciliation of net cash flow to movement in net funds: Year ended Year ended
31 December 2021 31 December 2020
£000 £000
Net increase in cash and cash equivalents 333 1,376
Inception of finance leases (56) -
New loans - (440)
Loans acquired in business combinations - (50)
Repayment of loans and finance leases 86 24
----------------- -----------------
Movement in net funds in the year 363 910
Net funds at 1 January 1,361 451
----------------- ------------------
Net funds at 31 December 1,724 1,361
========= =========
Breakdown of net funds
Cash and cash equivalents 2,186 1,853
Lease liabilities (31) (2)
Bank loans (431) (490)
----------------- ------------------
Net funds at 31 December 1,724 1,361
========= =========
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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 and of the Company are disclosed in the
Directors' Report.
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, AMENDMENTS AND INTERPRETATIONS ADOPTED IN THE
CURRENT FINANCIAL YEAR ENDED 31 DECEMBER 2021
The following IFRS standards, amendments or interpretations became effective
during the year ended 31 December 2021 but have not had a material effect on
this Consolidated Financial Information:
Standard
Amendments to IFRS 16: Leases (Covid-19-Related Rent
Concessions)
All new standards and amendments to standards and interpretations effective
for annual periods beginning on or after 1 January 2021 that are applicable to
the Group have been applied in preparing these Consolidated Financial
Statements.
3. NEW AND REVISED IFRS STANDARDS IN ISSUE BUT NOT YET
EFFECTIVE
The standards and interpretations that are issued, but not yet effective, up
to the date of issuance of the Consolidated Financial Statements are disclosed
below. The Group intends to adopt these standards, if applicable, when they
become effective.
Standard Effective date
Amendments to IFRS 3 Reference to the Conceptual Framework 1 January 2022
Amendments to IAS 16 Property Plant and Equipment (Proceeds 1 January 2022
before intended use)
Amendments to IAS 37 Onerous Contracts (Cost of fulfilling a 1 January 2022
contract)
Amendments to IFRS 1, Annual Improvements to IFRS Standards 2018-2020 1 January 2022
IFRS 9, IFRS 16 and
IAS 41
Amendments to IAS 1 Disclosure of accounting policies 1 January 2023
Amendments to IAS 8 Definition of accounting estimates 1 January 2023
Amendments to IAS 12 Deferred tax related to assets and liabilities arising 1 January 2023
from a single transaction
The Directors are continuing to assess the potential impact that the adoption
of the standards listed above will have on the Consolidated Financial
Statements for the year ended 31 December 2022.
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 United Kingdom ("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 (£'000) except where otherwise indicated.
Basis of Consolidation
The Group comprises the parent company and its subsidiaries, as detailed in
note III to the company financial statements. 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
Considering the profit generated during the year of £396k (2020: loss of
£191k), the Group had closing net assets of £13,073k (2020: £12,534k), net
current assets of £2,913k (2020: £2,373k) and cash at bank and in hand of
£2,186k (2020: £1,853k).
The Group generated cashflows from operating activities of £510k during the
year. 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 in 2020 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 2021,
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 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 Group assesses whether a contract is or contains a lease, at inception of
a contract. The Group 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 Group
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
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 individual 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 fair 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.
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 22.
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:
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 cashflows. 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).
Taxation and deferred taxation (continued)
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 and profit after taxation.
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 Group'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
cash generating units 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 cash generating units 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.
Development costs (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 payment 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:
2021 Entertainment Daily Mashed Productions The Head Office Total 2021
Tab
£'000 £'000 £'000 £'000 £'000
Revenue 2,463 308 896 - 3,667
Cost of sales (205) (171) (153) - (529)
Administrative expenses* (474) (86) (287) (1,272) (2,119)
Other operating income - - - 10 10
Adjusted EBITDA 1,784 51 456 (1,262) 1,029
Amortisation - - - (215) (215)
Depreciation - - - (31) (31)
Share based payments - - - (143) (143)
Finance income - - - 1 1
Finance costs - - - (14) (14)
Tax - - - (231) (231)
------------- ------------- ------------ ------------- -------------
Profit/(loss) for the year 1,784 51 456 (1,895) 396
====== ====== ====== ====== ======
6. SEGMENTAL INFORMATION (continued)
2020 Entertainment Daily Mashed Productions The Head Office Total 2020
Tab
£'000 £'000 £'000 £'000 £'000
Revenue 1,641 334 208 4 2,187
Cost of sales (307) (192) (30) - (529)
Administrative expenses* (447) (40) (1,377)
(71) (819)
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 (1,287) (191)
107
====== ====== ====== ====== ======
*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 location of customer Total assets by location Net tangible capital expenditure by location
31 December 2021 31 December 2020 Continuing 31 December 2021 31 December 2020 31 December 2021 31 December 2020
Continuing
£'000 £'000 £'000 £'000 £'000 £'000
United Kingdom 1,683 1,024 14,205 13,475 58 -
Europe 665 704 141 103 - -
Rest of World 1,319 459 366 180 - -
------------- ------------- ------------- -------------- ------------- -------------
3,667 2,187 14,712 13,758 58 -
====== ====== ====== ====== ====== ======
7. REVENUE
2021 2020
Revenue by stream is split: £'000 £'000
Advertising 3,667 2,187
------------- -------------
3,667 2,187
Revenue by location is split:
United Kingdom 1,683 1,024
Europe 665 594
Rest of world 1,319 569
------------- -------------
3,667 2,187
====== ======
The Group had three customers whose revenue individually represented 10% or
more of the Group's total revenue, being 21.1%, 15.0% and 11.5% respectively.
8. PROFIT/LOSS FROM OPERATIONS
2021 2020
£'000 £'000
This is arrived at after charging/(crediting):
Continuing operations
Staff costs (see note 9) 1,584 1,078
Direct costs of business combinations - 98
Depreciation of property, plant & equipment 31 30
Amortisation of intangible fixed assets 215 149
Foreign exchange differences 17 (27)
Government grants (10) (24)
====== ======
Auditors' remuneration in respect of the Company 18 18
Audit of the Group and subsidiary undertakings 34 33
Auditors' remuneration - corporate finance fees - 25
------------- -------------
52 76
====== ======
In 2021, government grants of £10k (2020: £24k) 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
2021 2020
£'000 £'000
Staff costs for all employees, including Directors consist of:
Wages and salaries 1,284 838
Social security costs 101 90
Pensions 14 10
----------- -----------
1,399 938
Share based payment charge 143 140
----------- -----------
1,542 1,078
===== =====
2021 2020
The average number of employees of the group during the year was as follows: Number Number
Directors 6 6
Management and administration 3 3
Content 20 11
----------- -----------
29 20
====== ======
Directors' Detailed Emoluments
Details of individual Directors' emoluments for the year are as follows:
Salary Consultancy Bonus Pension Total Total
2021 2021 2021 2021 2021 2020
£'000 £'000 £'000 £'000 £'000 £'000
N Burton (resigned 17 February 2021) 3 - - - 3 25
J Carter 127 - *160 1 288 128
J Douglas 127 - *160 1 288 128
M Higginson - 25 - - 25 25
D Joseph 41 - - - 41 41
R Miller (resigned 17 February 2021) 3 11 - - 14 35
M Armitage (resigned 1 July 2021) 13 - - - 13 -
P Machray (joined 1 July 2021) **13 - - - 13 -
M Rich (joined 17 February 2021) ***30 - - - 30 -
----------- ----------- ----------- ----------- ----------- -----------
Total 357 36 320 2 715 382
( ) ===== ===== ===== ===== ===== =====
*100% of net proceeds from bonus payment used to repay the directors company
loans.
**annual salary is £25k p.a.
***annual salary is £35k p.a.
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' interests in the issued ordinary share capital of the Company
was as follows:
Shares of £0.01 Shares of £0.01
Director 31/12/2021 31/12/2020
James Carter 10,908,078 9.4% 10,908,078 9.4%
James Douglas 10,908,078 9.4% 10,908,078 9.4%
Details of the EMI options over the Company's shares held by the directors are
as follows:
Type of Option Options held at 31 December 2021 Exercise price Date of grant Exercise period
£
James Carter EMI option 1,504,404 0.14 28 February 2019 28 February 2022
James Douglas EMI option 1,504,404 0.14 28 February 2019 28 February 2022
In addition, effective options in Digitalbox plc exist due to three directors
having warrants in its subsidiary company, Digitalbox Publishing (Holdings)
Limited, which, when exercised, are satisfied by issuing shares in Digitalbox
plc.
These are set out in the table, below;
'Effective Option' Holder Number of Shares
James Carter 681,958
Jim Douglas 681,958
Martin Higginson 1,590,936
2,954,852
The warrants had vested prior to admission onto AIM on 28 February 2019 and
carry an effective exercise price of 2.28 pence per share issued in Digitalbox
plc.
On 16 February 2022 Martin Higginson exercised his warrants in full. This is
noted as a post balance sheet event at note 27.
Further information on share options is included in note 22.
The market price of the shares at 31 December 2021 was 8.70p with a quoted
range from throughout 2021 of 5.25p to 9.25p. The EMI options vest based on
performance criteria detailed in note 22.
10. FINANCE COSTS
2021 2020
£'000 £'000
Interest on lease liabilities 2 1
Bank charges and interest payable - 1
Interest on bank loans 12 -
------------ ------------
14 2
====== ======
11. TAXATION ON PROFIT/LOSS FROM ORDINARY ACTIVITIES
2021 2020
£'000 £'000
Corporation tax - current period 165 50
Corporation tax - adjustment in respect of prior periods 24 12
Deferred tax - current period 27 (14)
Deferred tax - adjustments in respect of prior periods 15 -
------------ ------------
Tax credit/(charge) for the year 231 48
====== ======
The tax assessed for the year differs from the standard rate of corporation
tax in the UK applied to loss before tax.
2021 2020
£'000 £'000
Total profit/(loss) on ordinary activities before tax 627 (143)
------------ ------------
Profit/(loss) on ordinary activities at the standard rate of corporation tax 119 (27)
in the UK of 19% (2020: 19%)
Effects of:
Expenses not deductible for tax purposes 30 46
Income not taxable - (1)
Adjustments to prior periods 39 15
Deferred tax not recognised - loss relief in current period (23) -
Effect of changes in tax rates on deferred tax 66 15
------------- -----------
Tax credit for the year 231 48
====== ======
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 substantively enacted on 24 May 2021.
Deferred tax at the balance sheet date has therefore been measured using the
newly enacted tax rate of 25% (2020: 19%) in these financial statements.
There were unused tax losses at 31 December 2021 amounting to £3,434k. In the
majority, these were restricted for use for 5 years against future taxable
profits arising from the trade formerly carried on in Tab Media Limited and
now carried on in Digitalbox Publishing Limited. No deferred tax asset has
been recognised owing to materiality in the short term.
12 EARNINGS PER SHARE
2021 2020
£'000 £'000
The earnings per share is based on the following:
Continuing earnings post tax attributable to shareholders 396 (191)
========== ===========
Basic weighted average number of shares 116,332,457 96,425,598
Diluted weighted average number of shares 118,297,010 96,425,598
========== ===========
Basic earnings per share (£) 0.00340 (0.00198)
Diluted earnings per share (£) 0.00335 (0.00198)
========== ==========
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 has been tracked
against the quoted share price of the business from time to time during the
year, and taken into account in the calculation of diluted EPS.
13. TANGIBLE FIXED ASSETS
IFRS 16 Office Total
Right-of-Use equipment
Asset
£'000 £'000 £'000
Cost
Balance at 1 January 2020 and 1 January 2021 33 27 60
Additions 56 2 58
Disposals (33) - (33)
--------- --------- ---------------
Balance at 31 December 2021 56 29 85
--------- --------- ---------------
Accumulated depreciation
Balance at 1 January 2020 8 3 11
Depreciation charge 23 7 30
--------- --------- ---------------
Balance at 1 January 2021 31 10 41
Depreciation charge 27 4 31
Depreciation eliminated on disposal (33) - (33)
--------- --------- ---------------
Balance at 31 December 2021 25 14 39
--------- --------- ---------------
Net Book Value
At 31 December 2021 31 15 46
===== ===== =====
At 31 December 2020 2 17 19
===== ===== =====
At 31 December 2019 25 24 49
===== ===== =====
The net book value of owned and leased assets included as "Property, plant and
equipment" in the Statement of Financial Position is as follows:
2021 2020
£'000 £'000
Tangible fixed assets owned 15 17
Right-of-Use tangible fixed assets 31 2
--------- ---------
46 19
Information about the Right-of-Use assets is summarised below:
Net Book Value 2021 2020
£'000 £'000
Property 31 2
--------- ---------
31 2
===== =====
Depreciation charge in respect of the Right-of-Use asset is as follows:
2021 2020
£'000 £'000
Property 27 23
--------- ---------
27 23
===== =====
14. INTANGIBLE FIXED ASSETS
Goodwill Other Development Total
GROUP Arising on Intangible costs
Consolidation Assets
£'000 £'000 £'000 £'000
Cost
Balance at 1 January 2020 9,492 854 35 10,381
Additions 118 622 - 740
----------- ----------- ----------- ---------------
Balance at 1 January 2021 9,610 1,476 35 11,121
Additions - - 86 86
----------- ----------- ----------- ---------------
Balance at 31 December 2021 9,610 1,476 121 11,207
----------- ----------- ----------- ---------------
Accumulated amortisation
Balance at 1 January 2020 - 102 31 133
Amortisation - 145 4 149
----------- ----------- ----------- ---------------
Balance at 1 January 2021 - 247 35 282
Amortisation - 211 4 215
----------- ------------ ------------ ---------------
Balance at 31 December 2021 - 458 39 497
------------ ------------ ------------ ---------------
Net Book Value
At 31 December 2021 9,610 1,018 82 10,710
====== ====== ====== ======
At 31 December 2020 9,610 1,229 - 10,839
====== ====== ====== ======
At 31 December 2019 9,492 752 4 10,248
====== ====== ====== ======
Amortisation is charged to administrative expenses in the Statement of
Comprehensive Income.
GOODWILL AND IMPAIRMENT
The carrying value of goodwill in respect of each cash generating unit is as
follows:
31 December 31
2021 December 2020
£'000 £'000
Digitalbox Publishing (Holdings) Limited 9,171 9,171
Mashed Productions Limited 321 321
Tab Media Limited 118 118
------------- -------------
9,610 9,610
====== =======
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.
Digitalbox Publishing (Holdings) Limited
The recoverable amount of Digitalbox Publishing (Holdings) Limited relates to
the Entertainment Daily segment and 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 Group'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 would reduce the recoverable amount below book value.
Mashed Productions Limited
The recoverable amount of Mashed Productions Limited has been determined with
reference to the trade and assets hived across to Digitalbox Publishing
Limited in the prior year, which continues to benefit from cash inflows
through Mashed Productions. The recoverable amount 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 Group'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 would reduce the recoverable amount below book
value.
Tab Media Limited
The recoverable amount of the Tab Media segment, which was hived up from Tab
Media Limited to Digitalbox Publishing Limited on 1 October 2020, 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 Group'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 would reduce the recoverable
amount below book value.
15. TRADE AND OTHER RECEIVABLES 31 December 2021 31 December 2020
£'000 £'000
Trade receivables 1,428 758
Prepayments and accrued income 104 42
Other receivables 238 247
------------- -------------
1,770 1,047
====== ======
16. CASH AND CASH EQUIVALENTS 31 December 2021 31 December 2020
£'000 £'000
Cash at bank and in hand 2,186 1,853
------------- -------------
2,186 1,853
====== ======
17. LIABILITIES 31 December 2021 31 December 2020
£'000 £'000
Current liabilities
Trade payables 86 84
Social security and other taxes 144 209
Accruals 508 146
Lease liabilities 29 2
Other payables 1 10
Bank loans 112 25
Corporation tax payable 163 51
------------- -------------
1,043 527
====== ======
Non-current liabilities
Lease liabilities 2 -
Bank loans 319 465
------------ ------------
321 465
====== ======
18. LOANS 31 December 2021 31 December 2020
£'000 £'000
Bank loans
Due in less than one year 112 25
Due in between one and two years 122 122
Due in between two and five years 197 343
------------- -------------
431 490
====== ======
On 7 October 2020, Digitalbox Publishing Limited drew down a loan facility
amounting to £450k under the CBILS scheme. The present value of the loan at
inception discounted at a market rate of interest was £440k. The loan is for
a term of five years and is repayable in equal monthly instalments which
commenced in 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 £450k guarantee granted by Digitalbox plc. The
outstanding balance at 31 December 2021 was £431k (2020: £440k).
Tab Media Limited had an outstanding loan amounting to £50k at 31 December
2020. This loan was repaid in full during the year.
19. DEFERRED TAX
Total
£'000
Balance at 1 January 2021 232
Deferred tax charge for the year 43
-------------
Balance at 31 December 2021 275
=======
The deferred tax provision comprises: 31 December 2021 31 December
2020
£'000 £'000
Intangible asset timing differences 275 232
------------- -------------
275 232
====== ======
The expected net reversal of deferred tax in 2022 is £53k.
20. 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 2021 31 December 2020
£'000 £'000
Current financial assets
Trade receivables 1,428 758
Other receivables 238 247
Cash and cash equivalents 2,186 1,853
------------- -----------
3,852 2,858
====== ======
The table below illustrates the due date of trade receivables:
31 December 2021 31 December 2020
£'000 £'000
Current 577 278
31 - 60 days 421 265
61 - 90 days 267 202
91 - 120 days 126 10
121 and over 37 3
------------- -----------
1,428 758
====== ======
The table below illustrates the geographical location of trade receivables:
31 December 2021 31 December 2020
£'000 £'000
United Kingdom 921 475
Europe 141 180
Rest of world 366 103
------------- -----------
1,428 758
====== ======
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 £28k (2020: £21k).
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'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 2021 31 December 2020
£'000 £'000
At the year end the Group had the following cash balances: 2,186 1,853
====== ======
Cash at bank comprises Sterling and US Dollar cash deposits.
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 2021 31 December 2020
£'000 £'000
Financial liabilities at amortised cost
Trade payables 86 84
Accruals 508 147
Lease liabilities 31 2
Bank loans 431 490
Other payables 1 10
---------------- ----------------
1,057 733
====== ======
31 December 2020
£'000
Financial liabilities at amortised cost
Trade payables
86
84
Accruals
508
147
Lease liabilities
31
2
Bank loans
431
490
Other payables
1
10
----------------
----------------
1,057
733
======
======
The table below illustrates the maturities of trade payables:
31 December 2021 31 December 2020
£'000
£'000
Current 45 69
31 - 60 days 28 5
61 - 90 days 12 -
91 - 120 days - -
121 and over 1 10
---------------- ---------------
86 84
======== ========
31 December 2020
£'000
Current
45
69
31 - 60 days
28
5
61 - 90 days
12
-
91 - 120 days
-
-
121 and over
1
10
----------------
---------------
86
84
========
========
The table below shows the maturities of financial liabilities:
2021 Carrying amount 6 months or less 6-12 months 1 or more year
£'000 £'000 £'000 £'000
Trade payables 86 85 1 -
Accruals 508 508 - -
Lease liabilities 31 14 15 2
Loans 431 56 56 319
Other payables 1 1 - -
---------------- --------------- --------------- ---------------
1,057 664 72 321
======== ======== ======== ========
2020 Carrying amount 6 months or less 6-12 months 1 or more year
£'000 £'000 £'000 £'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
======== ======== ======== ========
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.
21. SHARE CAPITAL No. Value No. Value
31 December 2021 £'000 31 December 2020 £'000
Called up share capital
Allotted, called up and fully paid
Ordinary shares of £0.01 each 116,332,457 1,163 116,332,457 1,163
------------ ------------ ---------- ------------
116,332,457 1,163 116,332,457 1,163
====== ====== ====== ======
22. SHARE BASED PAYMENTS
During the year, the Group incurred a £143k share based payment charge (2020:
£140k). Of this total, £100k (2020: £101k) was recorded as an expense in
Digitalbox plc and £43k (2020: £39k) was recorded as an expense in
Digitalbox Publishing Limited.
2021 Weighted average exercise price 2020 Weighted average exercise price
No. of No. of
share
share
options
options
Outstanding at beginning of year 8,298,757 8.19p 8,298,757 9.94p
Granted during the year 1,002,906 6.00p 2,005,812 6.75p
Cancelled during the year - - (2,005,812) 14.00p
Expired during the year (160,000) 20.00p - -
Outstanding at the end of the year 9,141,663 7.74p 8,298,757 8.19p
169,285 options relate to Warrants and are exercisable 1 year after admission.
6,017,526 options are exercisable after 3 years, or an exit event.
2,954,852 options relate to Warrants issued prior to the group's admission by
Digitalbox Publishing (Holdings) Limited, a subsidiary of the company. These
are exercisable upon the exercise of those warrants in a share for share
exchange arrangement, under which the company acquires all shares issued in
Digitalbox Publishing (Holdings) Limited and in consideration, issues shares
to the warrant holders.
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 during the year 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
24 February 2021 0.10% 65.00% 6.00p
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.
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 during the year 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
24 February 2021 0.10% 65.00% 6.00p
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.
23. 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.
24. LEASING COMMITMENTS
Group as a lessee
The Group leasing arrangements for their head office.
Lease liabilities are due as follows:
31 December 2021 31 December 2020
£'000 £'000
Current 29 2
Non-current 2 -
------------- -------------
31 2
===== =====
Contractual undiscounted cash flows are due as follows:
31 December 2021 31 December 2020
£'000 £'000
Current 30 2
Non-current 3 -
------------- -------------
33 2
===== =====
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 2021 31 December 2020
£'000 £'000
Interest expense on lease liabilities 2 1
Expenses relating to short-term leases 29 24
------------- -------------
31 25
===== =====
25. CAPITAL COMMITMENTS
At 31 December 2021 and 31 December 2020 there were no capital commitments.
26. RELATED PARTY TRANSACTIONS
At 31 December 2021, the Group was due £171k (2020: £171k) from James Carter
and Jim Douglas, two Directors of the company. 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
bought shares in Digitalbox Publishing Holdings Ltd using a company loan. 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. The Directors have chosen to use the entirety of their
2021 bonus payments to pay off the loans in full which results in a positive
cash return to the balance sheet.
During the year, Integral 2 Limited billed £53k (2020: £57k) 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 2021, £5k (2020:
£5k) was owed to Integral 2 Limited.
During the year, the Group received revenue of £nil (2020: £1.5k) 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 2021,
£nil (2020: £nil) was owed to the Group.
During the year, M Capital Investment Partners (Holdings) Limited billed £23k
(2020: £25k) to the Group, a company related by virtue of Martin Higginson, a
member of key management personnel, having control over the entity. The Group
accrued a further £2.0k for unbilled costs as at 31 December 2021 (2020:Nil).
As at 31 December 2021, £2.5k (2020: £2.5k), was owed to M Capital
Investment Partners (Holdings) Limited.
During the year, Robin Miller Consultants Limited billed £11k (2020: £17k)
to the Group, a company related by virtue of Robin Miller, a member of key
management personnel for part of the year, having control over the entity. As
at 31 December 2021, £1.7k (2020: £1.7k), was owed to Robin Miller
Consultants Limited. The balances stated here were for transactions up to the
point that Robin Miller resigned as a director and was therefore no longer a
related party.
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 £715k in the year ended 31 December 2021 (2020: £382k).
The key management personnel have been provided with a total of 5,963,660
share options resulting in a charge of £100k in the period (2020: £100k).
27. POST BALANCE SHEET EVENT
On 16 February 2022, Martin Higginson exercised his warrants over 7,085 shares
in Digitalbox Publishing (Holdings) Limited which were satisfied by the
issuance of 1,590,936 shares in Digitalbox plc in accordance with a Warrant
Acquisition Agreement dated 7 February 2019 under which Digitalbox plc
acquires all such warrant shares. Accordingly, Digitalbox plc's issued share
capital increased to 117,923,393 shares. The consideration received by the
company amounted to £36,275.
COMPANY STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2021
At 31 December 2021 At 31 December 2020
As restated
£'000 £'000
Fixed assets
Investments III 11,127 11,084
----------------- -----------------
11,127 11,084
Current assets
Trade and other receivables IV 1,747 1,244
Cash and cash equivalents V 20 99
----------------- -----------------
1,767 1,343
Current liabilities
Trade and other payables VI (467) (68)
---------------- ----------------
Total current liabilities (467) (68)
Non-current liabilities
Other payables - -
---------------- ----------------
Total liabilities (467) (68)
Net current assets/(liabilities) 1,300 1,275
--------------- ---------------
Total assets less total liabilities 12,427 12,359
======= =======
Capital and reserves
Called up share capital VII 1,163 1,163
Share premium account IX 11,149 11,149
Share-based payment reserve IX 464 321
Retained reserves IX (349) (274)
------------------ ------------------
Shareholders' funds 12,427 12,359
========= =========
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 £75k (2020: £135k loss as restated) 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 28 March 2022.
James
Carter
David Joseph
CEO
CFO
Company registration number: 04606754
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
Share Share Share-based Retained reserves Total
Capital Premium payment
£'000 £'000 £'000 £'000 £'000
Balance at 1 January 2020 21,331 29,757 181 (40,122) 11,147
Prior year adjustment - - - 55 55
------------- ------------- ------------- ------------- -------------
Balance at 1 January 2020 as restated 21,331 29,757 181 (40,067) 11,202
Issue of shares 260 976 - - 1,236
Share issue costs - (84) - - (84)
Capital reduction (20,428) (19,500) - 39,928 -
Loss after tax (restated) - - - (135) (135)
Share-based payments - - 140 - 140
------------- ------------- ------------- ------------- -------------
31 December 2020 as restated 1,163 11,149 321 (274) 12,359
------------- -------------- ------------- ------------- -------------
Loss after tax - - - (75) (75)
Share-based payments - - 143 - 143
------------- -------------- -------------- -------------- --------------
31 December 2021 1,163 11,149 464 (349) 12,427
------------- -------------- ------------- ------------- -------------
NOTES FORMING PART OF THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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 Financial Reporting Standard
101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable
accounting standards.
The company has taken advantage of the following disclosure exemptions under
FRS 101:
· the requirements of paragraphs 45(b) and 46 to 52 of IFRS 2
Share-based Payment
· the requirements of paragraphs 62, B64(d), B64(e), B64(g), B64(h),
B64(j) to B64(m), B64(n)(ii), B64 (o)(ii), B64(p), B64(q)(ii), B66 and B67of
IFRS 3 Business Combinations;
· the requirements of IFRS 7 Financial Instruments: Disclosures;
· the requirements of the second sentence of paragraph 110 and
paragraphs 113(a), 114, 115, 118, 119(a) to (c), 120 to 127 and 129 of IFRS 15
Revenue from Contracts with Customers;
· the requirements of paragraph 58 of IFRS 16, provided that the
disclosure of details of indebtedness required by paragraph 61(1) of Schedule
1 to the Regulations is presented separately for lease liabilities and other
liabilities, and in total;
· the requirement in paragraph 38 of IAS 1 'Presentation of Financial
Statements' to present comparative information in respect of: (i) paragraph
79(a) (iv) of IAS 1, (ii) paragraph 73(e) of IAS 16 Property Plant and
Equipment and (iii) paragraph 118 (e) of IAS 38 Intangibles Assets
· the requirements of paragraphs 10(d), 10(f), 16, 38A to 38D, 40A to
40D ,111 and 134-136 of IAS 1 Presentation of Financial Statements;
· the requirements of IAS 7 Statement of Cash Flows;
· the requirements of paragraphs 30 and 31 of IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors;
· the requirements of paragraph 17 and 18A of IAS 24 Related Party
Disclosures; and
· the requirements in IAS 24 Related Party Disclosures to disclose
related party transactions entered into between two or more members of a
group, provided that any subsidiary which is a party to the transaction is
wholly owned by such a member.
Where required, equivalent disclosures are given in the group financial
statements of Digitalbox plc.
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 PROFIT
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 5 (2020: 6)
and total staff costs were £815k (2020: £382k). Directors remuneration is
disclosed in note 9 to the consolidated financial statements.
The operating loss in the prior year is stated after charging an impairment
loss on the investment in Mashed Productions Limited amounting to £238k. This
impairment loss is reflective of the receipt of dividend income from this
subsidiary amounting to £238k, 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 £nil effect on the result
for the prior year. These transactions had no effect on the operating profit
in the current year.
III. FIXED ASSET INVESTMENTS 31 December
2021
£'000
Subsidiary undertakings
Cost
Balance at 1 January 2021 11,228
Prior year adjustment 94
--------------
Balance at 1 January 2021 as restated 11,322
Additions 43
Disposals -
--------------
Balance at 31 December 2021 11,365
Provisions
Balance at 1 January 2021 238
Charge for the year -
--------------
Balance at 31 December 2021 238
--------------
Carrying value of investments 11,127
=======
The investment addition relates to equity settled share based payments issued
to employees of the company's subsidiary, Digitalbox Publishing Limited, as
disclosed in Note 22 to the consolidated financial statements.
At the year end the Company had the following subsidiaries:
Subsidiary name Class of shares Proportion of ownership Registered office
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) Limited Ordinary 100% Direct 2-4 Henry Street, Bath, BA1 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) Limited Holding company
Tab Media Limited Dormant company
IV. RECEIVABLES: due within one year 31 December 31 December
2021 2020
£'000 £'000
Amounts owed by group undertakings 1,636 1,213
Other receivables - 10
Prepayments and accrued income 52 21
------------ ------------
1,688 1,244
===== =====
V. CASH AND CASH EQUIVALENTS
31 December 31 December
2021 2020
£'000 £'000
Cash at bank and in hand 20 99
------------- -------------
20 99
====== ======
VI. PAYABLES: amounts falling due within one year
31 December 1 December
2021 2020
£'000 £'000
Trade payables 29 5
Accruals 403 38
Corporation tax payable 18 -
Other tax and social security 16 16
Other payables 1 9
------------ ------------
467 68
====== ======
VII. SHARE CAPITAL
Details of the Company's share capital can be found in Note 21 to the
consolidated financial statements.
VIII. SHARE OPTIONS
Share Option Scheme
Details of the share options outstanding at 31 December 2021 can be found in
Note 22 to the consolidated financial statements.
IX. RESERVES
Details of the reserves can be found in Note 23 to the Consolidated financial
statements.
X. RELATED PARTY TRANSACTIONS
Details of the Company's related party transactions can be found in Note 26 to
the consolidated financial statements.
XI. PRIOR PERIOD ADJUSTMENT
Certain employees of the company's subsidiary, Digitalbox Publishing Limited,
have been granted rights to equity instruments in the company in consideration
for services provided to its
subsidiary. The associated share based payment charge has been recorded in the
financial statements of the company, but instead should have been recorded as
an expense in the subsidiary's financial statements.
As a result, at 1 January 2020 the investment in the subsidiary has been
increased by £55k by increasing retained earnings by the same amount. The
loss for the year ended 31 December 2020 has decreased by £39k, with a
corresponding increase in the investment in the subsidiary.
The consolidated financial statements and accordingly earnings per share are
unaffected by this error and the associated correction. The impact on the
financial statements is analysed below.
XI. PRIOR PERIOD ADJUSTMENT (continued)
At 1 January 2020 At 31 December 2020
Previously reported Prior year adjustment £'000 As restated Previously reported Prior year adjustment £'000 As restated
£'000 £'000 £'000 £'000
Fixed assets
Investments 11,192 55 11,247 10,990 94 11,084
Current assets
Trade and other receivables 155 - 155 1,244 - 1,244
Cash and cash equivalents 22 - 22 99 - 99
1,343 - 1,343 1,343 - 1,343
Current liabilities
Trade and other payables (214) - (214) (68) - (68)
Total current liabilities (214) - (214) (68) - (68)
At 1 January 2020 A 31 December 2020
Previously reported Prior year adjustment £'000 As restated Previously reported Prior year adjustment £'000 As restated
£'000 £'000 £'000 £'000
Non-current liabilities
Other payables (8) - (8) - - -
Total liabilities (222) - (222) (68) - (68)
Net current assets/(liabilities) (37) - (37) 1,275 - 1,275
Total assets less total liabilities 11,147 55 11,202 12,265 94 12,359
Capital and reserves
Called up share capital 21,331 - 21,331 1,163 - 1,163
Share premium account 29,757 - 29,757 11,149 - 11,149
Share-based payment reserve 181 - 181 321 - 321
Retained reserves (40,122) 55 (40,067) (368) 94 (274)
Shareholders' funds 11,147 55 11,202 12,265 94 12,359
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