REG - Digitalbox PLC - Final Audited Results
28/03/2023 07:15
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RNS Number : 3864U Digitalbox PLC 28 March 2023
28 March 2023
Digitalbox plc
("Digitalbox", the "Group" or the "Company")
Final Audited Results for the year ended 31 December 2022
Digitalbox plc, the mobile-first digital media business, which owns leading
websites Entertainment Daily, The Daily Mash, The Poke and The Tab, today
publishes its final audited results for the year ended 31 December 2022.
The Company will host a live investor presentation through the Investor Meet
Company platform today at 10.00am (further details below).
Financial Highlights
2022 2021 Variance
£'000 £'000
Group revenue 3,578 3,667 -2.4%
Gross profit 3,044 3,138 -3.0%
Adjusted EBITDA((1)) 1,081 1,029 +5.1%
Adjusted EBTDA margin((1)) 30.2% 28.1% +2.1ppts
Cash generated by operations 1,418 586 +142%
Gross cash 2,827 2,186 +29%
Net Cash 2,509 1,755 +43%
(1) Adjusted EBITDA is defined as the operating profit after adding back
depreciation, amortisation, impairment, share based payments, acquisition
costs, direct costs associated with business combinations and capital
restructure costs
Operational Highlights
· Encouraging progress across the portfolio despite challenging
market conditions. Audience levels in terms of sessions increased by 7% to
293m
· Successfully acquired The Poke in December 2022. Integration has
been smooth and the brand has been re-platformed to start to benefit from the
Company's Graphene technology stack and drive its commercial success
· Graphene Ad Stack (GAS) now powers Entertainment Daily, The Daily
Mash, The Tab and, most recently, The Poke, enabling market-leading
performance and optimisations to be rapidly applied
· Exchanged contracts on the acquisition of the assets of
tvguide.co.uk which is expected to complete in H1 2023
· The Tab successfully paid back 100% of its purchase costs within
the period
· Entertainment Daily saw overall sessions (visits) growth of 17%
YoY
· Launch of the Entertainment Daily Awards attracted more than 150k
votes and national coverage including the opening segment of ITV's This
Morning
· The launch of an ad-free premium content experience on The Daily
Mash continues to show encouraging signs with over 1,400 monthly subscribers
Current trading and outlook
· Acquisitions of The Daily Mash, The Tab and The Poke have proved
the potential of the Digitalbox operating model and its Graphene platform,
giving continued confidence in the Group's ability to build a larger portfolio
of successful profitable digital brands
· Trading for the current financial year remains in line with
expectations with advertising markets expected to bounce back as we head into
2024
James Carter, CEO, Digitalbox plc, said: "Digitalbox delivered a solid
performance in 2022, despite some challenging market conditions. The growth we
have achieved in profitability and cash generated, is a testament to the
agility and hard work of our teams enabling us to navigate a volatile trading
environment.
We successfully delivered profitable growth and made significant progress in
delivering our strategy of building a leading mobile-focused media business,
developing an enlarged portfolio, attracting new audiences, and monetising
them effectively.
Current trading remains in line with market expectations and our expanded
portfolio is primed for future growth when the economy returns. The business
is well placed to deal with any foreseeable challenges in 2023 and to take
advantage of further acquisition opportunities given our ability to quickly
improve margins and recover purchase costs."
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
James Sinclair-Ford
Rupert Dearden
Leander Capital Partners (Joint Broker) Tel: 07786150915
Alex Davies
SEC Newgate (Financial PR) Tel: 07540 106 366
Robin Tozer / Molly Gretton / Harry Handyside digitalbox@secnewgate.co.uk
About Digitalbox plc
Based in the UK, Digitalbox is a 'pure-play' digital media business with the
aim of profitable publishing at scale on mobile platforms.
Digitalbox operates the following trading brands, "Entertainment Daily", "The
Daily Mash", "The Tab", and "The Poke". 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 fuelled by students. The Poke expertly
curates and editorialises the funniest content from around the web and social
media.
Digitalbox primarily 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.
71
CHAIRMAN'S STATEMENT
I am delighted to report that Digitalbox plc ('Digitalbox') successfully
delivered an Adjusted EBITDA* for 2022 of £1.1m, an increase of 5.1% on the
prior year and, importantly, the business increased profitability with the
Adjusted EBITDA margin of 30.2% compared to 28.1% in the prior year.
The business maintained its strategic focus delivering a 'mobile first' media
operation at scale through the use of leading technologies to optimise both
audience engagement and commercial performance. As the mobile channel
represents the key segment of the fast-growing digital advertising market, we
continue to see this as an excellent area to operate within.
The aftershocks of the global pandemic together with the war in Ukraine had a
profound impact on global food and energy prices which have negatively
impacted consumer spending power and, in turn, advertising spend. The result
was a highly volatile trading environment in 2022 which was well navigated by
the management team. We reported seeing the headwinds arriving in the middle
of the year and the team adapted to deliver full year revenues of £3.6m and
Adjusted EBITDA within market guidance.
Digitalbox closed the year with gross cash of £2.8m which is £0.6m up on the
prior year and with net cash (gross cash less bank debt) of £2.5m which is
£0.7m up on the prior year.
On the acquisition front, in accordance with Digitalbox's stated buy and build
strategy, we have exchanged contracts on the acquisition of the assets of
tvguide.co.uk ltd and completed the purchase of The Poke, the latter having
hit the ground running and demonstrating its potential from the outset. The
acquisition of tvguide.co.uk is expected to complete in H1 2023.
With the enlarged portfolio of Entertainment Daily, The Daily Mash, The Tab,
The Poke and tvguide.co.uk, the business will be well placed to deal with the
challenges of 2023 and to take advantage of further acquisition opportunities
that the trading conditions will likely bring to the fore.
Marcus Rich
Chairman
27 March 2023
*Adjusted EBITDA is defined as the operating profit after adding back
depreciation, amortisation, impairment, share based payments, acquisition
costs, direct costs associated with business combinations and capital
restructure costs
CHIEF EXECUTIVE'S STATEMENT
2022 was another significant year for Digitalbox, once again delivering
profitable growth and making further progress on our strategy of building a
leading mobile-focused media business. We developed our portfolio with the
addition of The Poke, attracted new audiences and monetised them effectively.
The successful year-end outcome has been greatly aided by our knowledge, focus
and agility allowing us to drive benefit from our strategic positioning and
navigate challenging trading environments.
With the economic turmoil arising from the pandemic, the war in Ukraine and
other issues within the UK economy itself, marketers continue to choose media
which presents the most accountable and relevant commercial solutions within
the marketing mix, in particular mobile digital media. As we have continued to
develop our audience verticals we are now the most significant online
publisher of humour/comedy content in the UK and one of the largest publishers
for women, continuing to benefit from the market movement towards quality
advertising inventory at scale.
Financial review
We are pleased to deliver Adjusted EBITDA* of £1.1m, which reflected an
increase of 5.1% on the prior year and a margin of 30.2% (2021: 28.1%). Cash
generation is a key feature of this business and we closed the year with gross
cash of £2.8m, an uplift of £0.6m on the prior year and with net cash (gross
cash less bank debt) of £2.5m an uplift of £0.7m on the prior year.
These cash increases are despite the business having continued to invest in
its products and having acquired The Poke in an all-cash purchase towards the
end of the year. This underlines the cash generative nature of the business
delivering Cash Generated by Operations of £1.4m which is 131% of Adjusted
EBITDA.
Full year revenues of £3.6m are 2.4% down overall on 2021 but mask the
challenging macro trading environment of 2022 which saw the Group's underlying
revenues up 40% in H1 and down 27% in H2 on the same periods in the prior year
The revenue model for The Daily Mash changed from purely consumer advertising
dependent to a hybrid subscription model during the year, which required the
Directors to provide for a full impairment of the carrying value of this cash
generating unit. Accordingly, an impairment charge of £716k has been charged
to the profit and loss account.
Operating review
Digitalbox currently owns and operates four trading brands - Entertainment
Daily, The Daily Mash, The Tab and The Poke. Entertainment Daily produces and
publishes online UK entertainment news covering TV, showbiz and celebrities.
The Tab is the UK's largest student and youth culture site fuelled by a
London-based core team and a national network of 30 local university sites.
The Daily Mash delivers online satirical news articles in its own distinctive
style and The Poke expertly curates the funniest content from around the web
and social media. All four brands generate revenue from advertising in and
around the content they publish.
Whilst 2022 was a year of continued uncertainty, it further demonstrated the
effectiveness of the digital advertising medium as its share grew to 65% of
global ad spend. As post-pandemic trends continued to evolve the adoption of
ecommerce via the most personal of channels, the mobile device, continued to
grow. With Digitalbox's mobile-first focus, we were well positioned in 2022
and remain very well placed for the forecast growth over coming years.
Our audience levels in term of sessions increased by 7% to 293m. As well as
building out further content strands to our existing brands we invested in
acquiring The Poke, with the deal completing in December 2022. Integration has
been smooth and we have quickly re-platformed the brand to gain benefit from
our technology stack 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
marry their expertise with our proprietary mobile-first tech stack, Graphene.
Named after the incredibly fast, light, super-conductive material, Graphene
has been developed to deliver the best user experience through the fastest and
lightest page load speeds on mobile.
Alongside this highly optimised, low-friction content delivery, part of the
Graphene suite, the Graphene Ad Stack (GAS) now powers Entertainment Daily,
The Daily Mash, The Tab and, most recently, The Poke. We are seeing
significant value creation here as The Poke's improved data from our
deployment of GAS has enabled it to significantly grow advertising session
values within the early stages of our ownership.
As our portfolio expands GAS's role in optimising revenue performance across
the business and speeding the route to enhanced profitability for acquired
properties is key for us.
The Tab has proved to be a great success since its acquisition at the end of
2020 having fully paid back its purchase costs within the first two years and
we hope to deliver similar results with The Poke. We continue to evaluate
further acquisitions and have seen a significant increase in opportunities as
other publishers with lower margin headroom endured challenging trading
conditions in 2022. We remain ready to move quickly where we can realise the
appropriate value.
The Digitalbox team was scaled during 2022 to bring capacity for further
growth on our existing brands and to ensure any acquisitions can be quickly
integrated, whilst operational efficiencies will remain strong.
Leading as a mobile-first business
Our strategy to create a mobile-first business has helped position us as a
leader in the market for both audience engagement and monetisation. Push media
skills remain critical and our brands continue to engage consumers at scale
through this channel with 91% of our audience across the portfolio visiting on
mobile devices. With an average of over 24m monthly user visits to our sites,
we present truly significant user scale to the market especially when combined
with our capacity to engage.
Mobile advertising spend was growing well ahead of the economic issues of 2022
and we anticipate its acceleration once we emerge from this challenging
period. As part of our Graphene technology suite that supports our
mobile-first strategy, we have built a new Graphene Ad Stack (GAS) which
enables optimisations to be rapidly applied. As previously reported, our GAS
set up on The Tab quickly drove it to profitability and we are seeing similar
results on The Poke. This will give Digitalbox a distinct advantage as we look
to further optimise our existing portfolio, complete more acquisitions and
benefit from the forecast growth in the digital ad market.
PROJECTED GLOBAL DIGITAL / MOBILE AD SPEND
2022 2023 2024 2025 2026
Global digital ad spend $bn* 567 627 696 766 836
Mobile share of global digital ad spend* 65% 67% 69% 71% 73%
*Source: eMarketer, Oct 2022
https://www.insiderintelligence.com/content/worldwide-digital-ad-spending-2023
Portfolio growth
Humour curation site The Poke is the most recent addition to the Digitalbox
portfolio, with its acquisition completing in December. We feel The Poke is an
excellent stablemate for The Daily Mash with a distinct editorial proposition
of its own. It brings 1m social followers.
Entertainment Daily saw overall session (visits) growth of 17% year-on-year
despite Google algorithm changes causing some challenges. Google accounted for
25m sessions in 2022 and Facebook also performed well in the first half of the
year contributing to record organic traffic levels in Q1. The editorial team
continued to hit all the TV and showbiz stories as the news broke, maximising
traffic and social engagement around moments that caught the nation's
imagination. This year also saw the launch of the Entertainment Daily Awards,
which attracted more than 150k votes and national coverage including the
opening segment of ITV's daytime flagship, This Morning.
The Tab continues to perform on strategy delivering consistent positive
contribution now we have transitioned it onto our Graphene platform which will
enable further optimisations going forward. This year saw another year of
strong, campaigning editorial alongside its established output in
entertainment and culture coverage, new hires into the social and editorial
team and increased content output from its 30 local teams.
The Daily Mash had a steady year of recovery growing back from the Facebook
strike that caused problems in H1 when the platform struggled to identify the
difference between fictional individuals identified in satire and mainstream
news articles. With a highly loyal core audience and genuinely unique content,
the Mash represented an ideal opportunity to diversify its revenue sources.
Our launch of an ad-free premium content experience behind a paywall continues
to show encouraging signs with 1,400 monthly subscribers. The impact of the
brand was further extended with The Late Night Mash TV show returning for a
second series on UK TV's Dave channel. This season the show had a
well-received new host in the form of Rachel Parris and continued to perform
well with audience levels once again placed it in the top three programmes for
the channel.
Culture and people
We remain focused on creating a culture that enables talented people to do
their best work. Even before the pandemic that meant being flexible and agile
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. A hybrid scenario of both home and office working is what we have
found most successful.
During the year our teams fully embraced flexible working while delivering
great results. Good communication and a sense of inclusion are important to
us, so we continue to publish monthly all-staff updates on progress and stage
weekly leadership sessions alongside daily team meetings. Building on this, in
July we held our second all-staff conference and party in Bath followed by a
December trip to London's Winter Wonderland, both providing fantastic
opportunities for the entire company to gather and share ideas.
Recruiting and retaining great people is crucial to our growth. 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 and 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 Digitalbox staff for their
incredible hard work and enthusiasm during the last year and their valuable
contribution to these results. As the company continues to grow it's a
pleasure to be working with such a talented and committed team.
Business outlook
Digitalbox has continued to develop as a profitable UK digital media business
positioned squarely in the mobile space.
Despite the highly challenging macroeconomic environment, global digital
advertising spend is forecast to grow by more than 40% in the next four years.
The market reaction to both economic and health-related turbulence of the last
few years has accelerated the trends which benefit Digitalbox, pushing the
business to the forefront as mobile devices' share is forecast to shift from
65% of all digital ad spend in 2022 to 70% in 2027 and our content and tech
teams continue to strengthen delivery through this channel.
Beyond the advertising market, entertainment production houses are expected to
increase their spend to over £10bn for UK TV in 2023, providing increasing
engagement from both the big terrestrial channels and the streamers. This
increasing investment stimulates our various audiences leading to big shows
like I'm a Celebrity Get Me Out Of Here and Love Island showing record
engagement on our sites in 2022.
The three acquisitions completed since being listed on AIM - The Daily Mash,
The Tab and The Poke - have all 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.
Whilst 2021 saw a strong recovery from the pandemic and the markets adjusted
to work with the new realities attached to changed consumer behaviour, 2022
was a clear story of two halves. The trend towards digital and mobile
advertising spend continued accelerating in the first half followed by a
second half slowdown driven by the global impact of spiralling energy and food
prices impacting consumer spending power. With global economies subject to
these headwinds into H1 2023, the open ad market is a good place to be as it
has the ability to adapt in real time. Global commentary points towards the
market recovering in the second half of 2023 with a full return forecast for
2024. We have no reason to doubt these predicted changes and are confident the
business is very well placed for the returning market.
We enter 2023 with an expanded portfolio primed for future growth when the
economy returns, a stronger investor base and a confident digital advertising
sector expected to significantly increase its share of global ad spend over
coming years.
James Carter
Chief Executive
27 March 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
Year ended Year ended
31 December 31 December
2022 2021
Note £'000 £'000
Revenue 7 3,578 3,667
Cost of sales (534) (529)
------------ ------------
Gross profit 3,044 3,138
Administrative expenses (2,999) (2,508)
Other operating income 8 - 10
-------------- --------------
Operating profit 8 45 640
Memorandum:
Adjusted EBITDA(1) 1,081 1,029
Depreciation (7) (31)
Amortisation (191) (215)
Impairment of goodwill and intangible assets (716) -
Share based payments (62) (143)
Direct costs of business combinations and capital restructure (60) -
-------------- --------------
Profit from Operations 45 640
Finance costs 10 (8) (14)
Finance income 8 1
------------ ------------
Profit before taxation and attributable to equity holders of the parent 45 627
Taxation 11 759 (231)
------------ ------------
Profit after tax 804 396
------------ ------------
All profits after taxation arise from continuing operations.
There was no other comprehensive income for 2022 (2021: £NIL).
£ £
Gain per share
Basic (continuing) 12 0.00683 0.00340
========= =========
Gain per share
Diluted (continuing) 12 0.00670 0.00335
========= =========
(1)Adjusted EBITDA is defined as the operating profit after adding back
depreciation, amortisation, impairment, share based payments, acquisition
costs, direct costs associated with business combinations and capital
restructure costs.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
Share capital Share premium Share based payment 2022 Retained (deficit)/ earnings Total equity
2022 2022 2022 2022
£'000 £'000 £'000 £'000 £'000
Balance at 1 January 2021 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
-------------- -------------- -------------- -------------- --------------
Issue of new shares 16 20 - - 36
Equity settled share-based payments - - 62 - 62
Reserves transfer in respect of lapsed options - - (330) 330 -
Profit after tax - - - 804 804
-------------- -------------- -------------- -------------- --------------
Balance at 31 December 2022 1,179 11,169 196 1,431 13,975
-------------- -------------- -------------- -------------- --------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
31 December 2022 31 December 2021
ASSETS Note £'000 £'000
Non-current assets
Property, plant and equipment 13 52 46
Intangible fixed assets 14 10,194 10,710
Deferred tax asset 19 617 -
----------------- -----------------
Total non-current assets 10,863 10,756
Current assets
Trade and other receivables 15 952 1,770
Cash and cash equivalents 16 2,827 2,186
----------------- -----------------
Total current assets 3,779 3,956
----------------- -----------------
Total assets 14,642 14,712
========= =========
LIABILITIES
Current liabilities
Trade and other payables 17 (288) (739)
Lease liabilities 17 - (29)
Bank loans 17 (112) (112)
Corporation tax 17 (61) (163)
----------------- -----------------
Total current liabilities (461) (1,043)
----------------- -----------------
Non-current liabilities
Lease liabilities 17 - (2)
Bank loans 17 (206) (319)
Deferred tax liability 19 (275)
------------------ ------------------
(206) (596)
------------------ ------------------
Total liabilities (667) (1,639)
------------------ ------------------
Total net current assets 3,318 2,913
------------------ ------------------
Total net assets 13,975 13,073
========= =========
Capital and reserves attributable to owners of the parent
Share capital 21 1,179 1,163
Share premium 23 11,169 11,149
Share based payment reserve 23 196 464
Retained earnings 23 1,431 297
------------------ ------------------
Total equity 13,975 13,073
========= =========
The financial statements were approved by the Board and authorised for issue
on 27 March 2023.
James
Carter
David Joseph
CEO
CFO
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
Year ended Year ended
31 December 2022 £'000 31 December 2021 £'000
Cash flows from operating activities
Profit from ordinary activities 804 396
Adjustments for:
Income tax expense (759) 231
Share based payments 62 143
Depreciation on property plant and equipment 7 31
Amortisation of intangible assets 191 215
Impairment on goodwill and intangible assets 716 -
Loss on disposal of property, plant and equipment 30 -
Finance costs 8 14
Finance income (8) (1)
----------------- -----------------
Cash flows from operating activities before changes in working capital 1,051 1,029
Decrease / (increase) in trade and other receivables 818 (723)
(Decrease) / increase in trade and other payables (451) 280
----------------- -----------------
Cash generated by operations 1,418 586
Income tax paid (235) (76)
----------------- -----------------
Net cash from operating activities 1,183 510
Investing activities
Purchase of property, plant and equipment (43) (2)
Purchase of intangibles (391) (86)
Interest received 8 1
----------------- -----------------
Net cash used in investing activities (426) (87)
Financing activities
Finance costs (8) (4)
Loan and lease repayments (144) (86)
Issue of new share capital 36 -
----------------- -----------------
Net cash from financing activities (116) (90)
----------------- -----------------
Net increase in cash and cash equivalents 641 333
Cash and cash equivalents at beginning of the period 2,186 1,853
------------------ ------------------
Cash and cash equivalents at end of the period 2,827 2,186
========= =========
Reconciliation of net cash flow to movement in net funds:
Year ended 31 December 2022 Year ended 31 December 2022
£000 £000
Net increase in cash and cash equivalents 641 333
Inception of finance leases - (56)
Repayment of loans and leases 144 86
----------------- -----------------
Movement in net funds in the year 785 363
Net funds at 1 January 1,724 1,361
----------------- -----------------
Net funds at 31 December 2,509 1,724
========= =========
Breakdown of net funds
Cash and cash equivalents 2,827 2,186
Lease liabilities - (31)
Bank loans (318) (431)
----------------- -----------------
Net funds at 31 December 2,509 1,724
========= =========
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
GENERAL INFORMATION
Digitalbox Plc is a public limited company incorporated and domiciled in the
United Kingdom. The address of the registered office Jubilee House, 92 Lincoln
Road, Peterborough, England, PE1 2SN. 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 2022
The following IFRS standards, amendments or interpretations became effective
during the year ended 31 December 2022 but have not had a material effect on
this Consolidated Financial Information:
Standard
Amendments to IFRS 3: Reference to the Conceptual Framework
Amendments to IAS 16: Property Plant and Equipment (Proceeds before intended
use)
Amendments to IAS 37: Onerous Contracts (Cost of fulfilling a contract)
Amendments to IFRS 1, Annual Improvements to IFRS Standards 2018-2020 IFRS 9,
IFRS 16 and IAS 41
All new standards and amendments to standards and interpretations effective
for annual periods beginning on or after 1 January 2022 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 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 2023.
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.
4. ACCOUNTING POLICIES (continued)
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
The Group generated profit during the year of £804k (2021: £396k), the Group
had closing net assets of £13,975k (2021: £13,073k), net current assets of
£3,318k (2021: £2,913k) and cash at bank and in hand of £2,827k (2021:
£2,186k).
The Group generated net cash from operating activities of £1,183k during the
year (2021: £510k). The Group has remained cash generative during a difficult
economic period which saw the impact of the war in Ukraine and the effect that
has had on inflation in the UK.
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 strong and liquid balance sheet position
and ongoing financial performance of the Group, the successful acquisition of
The Poke 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 accommodate the impact of
increasing inflation which has been demonstrably achieved in the year ended 31
December 2022, 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.
4. ACCOUNTING POLICIES (continued)
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.
4. ACCOUNTING POLICIES (continued)
Leases (continued)
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.
4. ACCOUNTING POLICIES (continued)
Intangible assets (continued)
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.
4. ACCOUNTING POLICIES (continued)
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 cash flows. When value in use is less
than the book value, an impairment is recorded and is irreversible.
Other non-financial assets are subject to impairment tests whenever
circumstances indicate that their carrying amount may not be recoverable.
Where the carrying value of an asset exceeds its estimated recoverable value
(i.e. the higher of value in use and fair value less costs to sell), the asset
is written down accordingly. Where it is not possible to estimate the
recoverable value of an individual asset, the impairment test is carried out
on the asset's cash-generating unit. The carrying value of property, plant and
equipment is assessed in order to determine if there is an indication of
impairment. Any impairment is charged to the statement of comprehensive
income. Impairment charges are included under administrative expenses within
the consolidated statement of comprehensive income.
4. ACCOUNTING POLICIES (continued)
Taxation and deferred taxation
Corporation tax payable is provided on taxable profits
at prevailing rates.
Deferred tax assets and liabilities are recognised where the carrying amount
of an asset or liability in the balance sheet differs from its tax base,
except for differences arising on:
· the initial recognition of goodwill; and
· the initial recognition of an asset or liability in a transaction
which is not a business combination and at the time of the transaction affects
neither accounting nor taxable profit.
Recognition of deferred tax assets is restricted to those instances where it
is probable that future taxable profit will be available against which the
asset can be utilised. The amount of the asset or liability is determined
using tax rates that have been enacted or substantively enacted by the balance
sheet date and are expected to apply when the deferred tax
liabilities/(assets) are settled/(recovered).
Deferred tax assets and liabilities are offset when the Group has a legally
enforceable right to offset current tax assets and liabilities and the
deferred tax assets and liabilities relate to taxes levied by the same tax
authority on either:
· the same taxable Group company; or
· different Group entities which intend either to settle current
tax assets and liabilities on a net basis, or to realise the assets and settle
the liabilities simultaneously, in each future period in which significant
amounts of deferred tax assets or liabilities are expected to be settled or
recovered.
There were unused tax losses at 31 December 2022 amounting to £3,172k. 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. A deferred tax asset has
been recognised in relation to these losses for the first time, as these are
now considered to be highly likely to be recoverable against future profits.
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
subsidiaries is considered annually for indicators of impairment to ensure
that the asset is not overstated within the financial statements. The annual
impairment assessment in respect of goodwill requires estimates of the value
in use (or fair value less costs to sell) of subsidiaries to which goodwill
has been allocated.
This requires the Directors to estimate the future cash flows and an
appropriate discount factor, in order that the net present value of those cash
flows can be determined. Discounted cash flow forecasts give due consideration
to the impact of COVID-19 on the future cash flows, and are stress tested
under a range of scenarios. In all instances, the headroom is sufficient to
satisfy the Directors that there are no indicators of impairment based on
circumstances that were present or could be reasonably foreseen at the
reporting date.
Critical accounting Estimates
Amortisation of intangible assets
The periods of amortisation adopted to write down capitalised intangible
assets requires judgements to be made in respect of estimating the useful
lives of the intangible assets to determine an appropriate amortisation rate.
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
5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
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.
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 hostile global trading conditions driven
by the impact of the war in Europe. 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:
2022 Entertainment Daily Mashed Productions The Tab The Poke Head Office Total 2022
£'000 £'000 £'000 £'000 £'000 £'000
Revenue 2,261 243 1,059 15 - 3,578
Cost of sales (224) (190) (118) (2) - (534)
Administrative expenses* (529) (111) (398) (6) (919) (1,963)
Adjusted EBITDA 1,508 (58) 543 7 (919) 1,081
Amortisation, depreciation, and impairment - - - - (914) (914)
Acquisition costs - - - - (57) (57)
Capital restructure costs - - - - (3) (3)
Share based payments - - - - (62) (62)
Finance income - - - - 8 8
Finance costs - - - - (8) (8)
Tax - - - - 759 759
------------- ------------- ------------- ------------- ------------- -------------
Profit/(loss) for the year 1,508 (58) 543 7 (1,196) 804
====== ====== ====== ====== ======== ======
6. SEGMENTAL INFORMATION (continued)
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, depreciation, and impairment - - - (246) (246)
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
======= ====== ====== ======= =======
*Administrative expenses exclude depreciation, amortisation, impairment, 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 2022 31 December 2021 Continuing 31 December 2022 31 December 2021 31 December 2022 31 December 2021
Continuing
£'000 £'000 £'000 £'000 £'000 £'000
United Kingdom 759 1,683 14,097 14,205 43 58
Europe 1,381 665 284 141 - -
Rest of World 1,438 1,319 261 366 - -
------------- ------------- ------------- ------------- ------------- -------------
3,578 3,667 14,642 14,712 43 58
====== ======= ======= ======= ====== ======
At the end of 2021, a key UK based customer was acquired by a large European
based business. The acquired business continued to be a key customer of the
Group with its revenues billed from Holland instead of the UK. This is the
reason for the change in proportion of revenue from the UK and Europe.
7. REVENUE
2022 2021
Revenue by stream is split: £'000 £'000
Advertising space 3,578 3,667
3,578 3,667
Revenue by location is split:
United Kingdom 759 1,683
Europe 1,381 665
Rest of world 1,438 1,319
3,578 3,667
The Group had four customers whose revenue individually represented 10% or
more of the Group's total revenue, being 19.70%, 13.65%, 12.33% and 11.03%
respectively.
8. PROFIT FROM OPERATIONS
2022 2021
£'000 £'000
This is arrived at after charging/(crediting):
Continuing operations
Staff costs (see note 9) 1,322 1,584
Direct costs of business combinations 57 -
Depreciation of property, plant & equipment 31 31
Amortisation of intangible fixed assets 191 215
Impairment on goodwill and intangible assets 716 -
Foreign exchange differences - 17
Government grants - (10)
====== ======
Auditors' remuneration in respect of the Company 18 18
Audit of the Group and subsidiary undertakings 41 34
59 52
In 2022, government grants of £NIL (2021: £10k) 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
2022 2021
£'000 £'000
Staff costs for all employees, including Directors consist of:
Wages and salaries 1,176 1,284
Social security costs 134 101
Pensions 12 14
1,322 1,399
Share based payment charge 62 143
1,384 1,542
2022 2021
The average number of employees of the group during the year was as follows: Number Number
Directors 6 6
Management and administration 4 3
Content 22 20
32 29
Directors' Detailed Emoluments
Details of individual Directors' emoluments for the year are as follows:
Salary Consultancy Bonus Pension Total Total
2022 2022 2022 2022 2022 2021
£'000 £'000 £'000 £'000 £'000 £'000
N Burton (resigned 17 February 2021) - - - - - 3
J Carter 137 - - 1 138 *288
J Douglas 137 - - 1 138 *288
M Higginson - 25 - - 25 25
D Joseph 45 - - - 45 41
R Miller (resigned 17 February 2021) - - - - - 14
M Armitage (resigned 1 July 2021) - - - - - 13
P Machray (joined 1 July 2021) 25 - - - 25 13
M Rich (joined 17 February 2021) 35 - - - 35 30
----------- ----------- ----------- ----------- ----------- -----------
Total 379 25 - 2 406 715
( ) ===== ===== ===== ===== ===== =====
*these sums included bonuses paid in accordance with and Executive Bonus
Scheme, with the net proceeds being used to extinguish director loans.
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 31/12/2022 31/12/2021
James Carter 10,908,078 9.3% 10,908,078 9.4%
Jim Douglas 10,908,078 9.3% 10,908,078 9.4%
David Joseph* 600,000 0.5% - -
*David Joseph acquired shares through Integral 2
Limited, a company controlled by him.
There is a share-based payment charge attributable to options held by the
directors' during the year amounting to £17k (2021: £100k). These options
subsequently lapsed on 28 February 2022.
Effective options in Digitalbox plc exist due to two directors having warrants
in its subsidiary company, Digital 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
1,363,916
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 1,590,936 warrants at 2.28
pence per share and subsequently disposed of these shares.
Further information on share options is included in note 22.
The market price of the shares at 31 December 2022 was 8.50p with a quoted
range from throughout 2022 of 8.25p to 16.25p. The options vest based on
performance criteria detailed in note 22.
10. FINANCE COSTS
2022 2021
£'000 £'000
Interest on lease liabilities - 2
Interest on bank loans 8 12
------------ ------------
8 14
====== ======
11. TAXATION ON PROFIT/LOSS FROM ORDINARY ACTIVITIES
2022 2021
£'000 £'000
Current tax
UK corporation tax on profits for the current period 132 165
Adjustment in respect of prior periods 1 24
Deferred tax
Origination and reversal of temporary differences (96) 27
Changes in tax rates (3) -
Benefit arising from previously unrecognised tax losses (793) -
Adjustments in respect of prior periods - 15
------------ ------------
Total tax charge/(credit) (759) 231
====== ======
The tax assessed for the year differs from the standard rate of corporation
tax in the UK applied to loss before tax.
2022 2021
£'000 £'000
Total profit on ordinary activities before tax 45 627
------------ ------------
Profit on ordinary activities at the standard rate of corporation tax in the 9 119
UK of 19% (2021: 19%)
Effects of:
Expenses not deductible for tax purposes 24 30
Income not taxable (6) -
Impairment on goodwill 61 -
Adjustments to prior periods 1 39
Fixed asset differences (2) -
Deferred tax asset not previously recognised (793) -
Deferred tax not recognised - loss relief in current period (50) (23)
Effect of changes in tax rates on deferred tax (3) 66
------------- -------------
Tax charge/(credit) for the year (759) 231
====== ======
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 enacted
tax rate of 25% (2021: 25%) in these financial statements.
There were unused tax losses at 31 December 2022 amounting to £3,172k. 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. A deferred tax asset has
been recognised in relation to these losses for the first time, as these are
now considered to be highly likely to be recoverable against future profits.
12. EARNINGS PER SHARE
2022 2021
£'000 £'000
The earnings per share is based on the following:
Continuing earnings post tax attributable to shareholders 804 396
Basic weighted average number of shares 117,718,533 116,332,457
Diluted weighted average number of shares 120,002,622 118,297,010
Basic earnings per share (£) 0.00683 0.00340
Diluted earnings per share (£) 0.00670 0.00335
Earnings per ordinary share has been calculated using the weighted average
number of shares in issue during the relevant financial periods. IAS 33
requires presentation of diluted EPS when a company could be called upon to
issue shares that would decrease earnings per share or increase the loss per
share. The exercise price of the outstanding share options is significantly
more than the average and closing share price. Therefore, as per IAS33 the
potential ordinary shares which could arise from exercised share options are
disregarded 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 2021 33 27 60
Additions 56 2 58
Disposals (33) - (33)
Balance at 1 January 2022 56 29 85
Additions - 43 43
Disposals (56) (14) (70)
Balance at 31 December 2022 - 58 58
Accumulated depreciation
Balance at 1 January 2021 31 10 41
Depreciation charge 27 4 31
Depreciation eliminated on disposal (33) - (33)
Balance at 1 January 2022 25 14 39
Depreciation charge - 7 7
Depreciation eliminated on disposal (25) (15) (40)
Balance at 31 December 2022 - 6 6
Net Book Value
At 31 December 2022 - 52 52
At 31 December 2021 31 15 46
The net book value of owned and leased assets included as "Property, plant and
equipment" in the Statement of Financial Position is as follows:
2022 2021
£'000 £'000
Tangible fixed assets owned 52 15
Right-of-Use tangible fixed assets - 31
52 46
13. TANGIBLE FIXED ASSETS (continued)
Information about the Right-of-Use assets is summarised below:
Net Book Value 2022 2021
£'000 £'000
Property - 31
===== =====
Depreciation charge in respect of the Right-of-Use asset is as follows:
2022 2021
£'000 £'000
Property - 27
===== =====
14. INTANGIBLE FIXED ASSETS Goodwill Arising on Consolidation Other Intangible Assets Development costs Total
GROUP
£'000 £'000 £'000 £'000
Cost
Balance at 1 January 2021 9,610 1,476 35 11,121
Additions - - 86 86
----------- ----------- ----------- ---------------
Balance at 1 January 2022 9,610 1,476 121 11,207
Additions - 18 171 189
Business combinations (note 24) - 202 - 202
----------- ----------- ----------- ---------------
Balance at 31 December 2022 9,610 1,696 292 11,598
----------- ----------- ----------- ---------------
Accumulated amortisation
Balance at 1 January 2021 - 247 35 282
Amortisation - 211 4 215
----------- ----------- ----------- ---------------
Balance at 1 January 2022 - 458 39 497
Amortisation - 159 32 191
Impairment 321 395 - 716
----------- ------------ ------------ ---------------
Balance at 31 December 2022 321 1,012 71 1,404
------------ ------------ ------------ ---------------
Net Book Value
At 31 December 2022 9,289 684 221 10,194
====== ====== ====== ======
At 31 December 2021 9,610 1,018 82 10,710
====== ====== ====== ======
At 31 December 2020 9,610 1,229 - 10,839
====== ====== ====== ======
14. INTANGIBLE FIXED ASSETS (continued)
The company acquired the intellectual property of The Poke in December 2022
for £202,000.
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 December
2022 2021
£'000 £'000
Digitalbox Publishing (Holdings) Limited 9,171 9,171
Mashed Productions Limited - 321
Tab Media Limited 118 118
------------- -------------
9,289 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 10% 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. The
key sensitivity is the discount rate which does not breach the outer
sensitivity of a 15 year useful economic lifetime until it reaches an
improbable 16%.
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 2020. Due to a change in the revenue model for this CGU the
recoverable amount has been deemed as £NIL in 2022 and therefore, a full
impairment of Mashed Productions Limited has been made.
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 10% 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
14. INTANGIBLE FIXED ASSETS (continued)
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. The key
sensitivity is the discount rate which does not breach the outer sensitivity
of a 15 year useful economic lifetime until it reaches an improbable 16%.
15. TRADE AND OTHER RECEIVABLES 31 December 31 December
2022 2021
£'000 £'000
Trade receivables 784 1,428
Prepayments and accrued income 100 104
Other receivables 68 238
------------- -------------
952 1,770
====== ======
16. CASH AND CASH EQUIVALENTS 31 December 31 December
2022 2021
£'000 £'000
Cash at bank and in hand 2,827 2,186
------------- -------------
2,827 2,186
====== ======
17. LIABILITIES 31 December 31 December
2022 2021
£'000 £'000
Current liabilities
Trade payables 124 86
Social security and other taxes 84 144
Accruals 76 508
Lease liabilities - 29
Other payables 4 1
Bank loans 112 112
Corporation tax payable 61 163
------------- -------------
461 1,043
====== ======
Non-current liabilities
Lease liabilities - 2
Bank loans 206 319
----------- ------------
206 321
====== ======
18. LOANS 31 December 31 December
2022 2021
£'000 £'000
Bank loans
Due in less than one year 112 112
Due in between one and two years 122 122
Due in between two and five years 84 197
------------- -------------
318 431
====== ======
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 2022 was £318k (2021: £431k).
19. DEFERRED TAX
Total
£'000
Balance at 1 January 2022 (275)
Deferred tax charge for the year 892
Balance at 31 December 2022 617
The deferred tax provision comprises: 31 December 2022 31 December
2021
£'000 £'000
Intangible asset timing differences (176) (275)
Tax losses 793 -
617 (275)
The expected net reversal of deferred tax in 2023 is £35k.
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.
20. FINANCIAL RISK MANAGEMENT (continued)
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 2022 31 December 2021
£'000 £'000
Current financial assets
Trade receivables 784 1,428
Other receivables 67 238
Cash and cash equivalents 2,827 2,186
------------- -------------
3,678 3,852
====== ======
The table below illustrates the due date of trade receivables:
31 December 2022 31 December 2021
£'000 £'000
Current 286 577
31 - 60 days 215 421
61 - 90 days 158 267
91 - 120 days 68 126
121 and over 57 37
------------- -----------
784 1,428
====== ======
The table below illustrates the geographical location of trade receivables:
31 December 2022 31 December 2021
£'000 £'000
United Kingdom 252 921
Europe 270 141
Rest of world 262 366
------------- -----------
784 1,428
====== ======
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 together based on similar credit risk and ageing. The average credit
period given on sales is 30 days. There are no receivable balances impaired at
the reporting date. In determining the provision for impairment of trade
receivables, the Group stratifies the receivables into one component being
corporate debtors. The expected credit loss allowance for impairment is
trivial and so no impairment has been recognised at the year-end.
20. FINANCIAL RISK MANAGEMENT (continued)
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 2022 31 December
2021
£'000 £'000
At the year end the Group had the following cash balances: 2,827 2,186
====== ======
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 2021
£'000
£'000
Financial liabilities at amortised cost
Trade payables 124 86
Accruals 76 508
Lease liabilities - 31
Bank loans 318 431
Other payables 4 1
------------- -------------
522 1,057
======= =======
Financial liabilities at amortised cost
Trade payables
124
86
Accruals
76
508
Lease liabilities
-
31
Bank loans
318
431
Other payables
4
1
-------------
-------------
522
1,057
=======
=======
The table below illustrates the maturities of trade payables:
31 December 2022 31 December
2021
£'000 £'000
Current 93 45
31 - 60 days 21 28
61 - 90 days - 12
91 - 120 days - -
121 and over 10 1
---------------- ---------------
124 86
======== ========
20. FINANCIAL RISK MANAGEMENT (continued)
The table below shows the maturities of financial liabilities:
2022 Carrying amount 6 months or less 6-12 months 1 or more year
£'000 £'000 £'000 £'000
Trade payables 124 114 - 10
Accruals 76 76 - -
Loans 318 56 56 206
Other payables 4 4 - -
---------------- ---------------
--------------- ---------------
522 250 56 216
======== ======== ======== ========
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
======== ======== ======== ========
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 reliance on US Dollar
denominated annual revenues which amounted to $1.8m (2021: $1.9m) with a trade
debtor balance at the year-end of $11k (2021: $214k). The Group mitigates
foreign exchange risk by selling forward US Dollars on a quarterly basis.
21. SHARE CAPITAL No. Value No. Value
31 December 2022 £'000 31 December 2021 £'000
Called up share capital
Allotted, called up and fully paid
Ordinary shares of £0.01 each 117,923,393 1,179 116,332,457 1,163
--------------------------- ------------ --------------------------- ------------
117,923,393 1,179 116,332,457 1,163
============= ====== ============== ======
No. £'000
As at 1 January 2022 116,332,457 1,163
Issue of shares 1,590,936 16
---------------------------- --------------
As at 31 December 2022 117,923,393 1,179
============== =======
On 16 February 2022, 1,590,936 shares were issued pursuant to the exercise of
warrants for consideration of £0.0228 per share, resulting in share premium
of £20k.
22. SHARE BASED PAYMENTS
During the year, the Group incurred a £62k share based payment charge (2021:
£143k). Of this total, £17k (2021: £100k) was recorded as an expense in
Digitalbox plc and £45k (2021: £43k) was recorded as an expense in
Digitalbox Publishing Limited.
2022 Weighted average exercise price 2021 Weighted average exercise price
No. of No. of
share
share
options
options
Outstanding at beginning of year 9,141,663 7.74p 8,298,757 8.19p
Granted during the year - - 1,002,906 6.00p
Exercised during the year (1,590,936) 2.28p - -
Expired during the year (3,008,808) 14.0p (160,000) 20.00p
Outstanding at the end of the year 4,541,919 5.51p 9,141,663 7.74p
3,008,718 options are exercisable after 3 years (see page 23), or an exit
event.
169,285 options are exercisable immediately.
1,363,916 options relates 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.
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.
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. ACQUISITION OF A BUSINESS
On 30 November 2022 the company acquired an unincorporated business,
thepoke.co.uk, for consideration of £204,000.
Book Value Fair Value
£'000 £'000
Intangible assets (Brand) - 202
Property, plant & equipment 2 2
------------- -------------
Total consideration 2 204
====== =======
Satisfied by: £'000
Cash 204
=======
Contribution by the acquired business for the reporting period included in the
group statement of comprehensive income since acquisition:
£'000
Revenue 15
Profit after tax 5
=======
25. LEASING COMMITMENTS
Group as a lessee
In 2022, the group exited their head office lease.
Lease liabilities are due as follows:
31 December 2022 31 December
2021
£'000 £'000
Current - 29
Non-current - 2
------------- -------------
- 31
===== =====
Contractual undiscounted cash flows are due as follows:
31 December 2022 31 December
2021
£'000 £'000
Current - 30
Non-current - 3
------------- -------------
- 33
===== =====
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 2022 31 December
2021
£'000 £'000
Interest expense on lease liabilities - 2
Expenses relating to short-term leases - 29
------------- -------------
- 31
======= ======
26. CAPITAL COMMITMENTS
At 31 December 2022 and 31 December 2021 there were no capital commitments.
27. RELATED PARTY TRANSACTIONS
At 31 December 2022, the Group was due £nil (2021: £171k) from James Carter
and Jim Douglas, two Directors of the company, both having used the net
proceeds of the 2021 bonus payment to repay their Director loans in full.
During the year, Integral2 Limited billed £65k (2021: £53k) 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 2022, £6k (2021:
£5k) was owed to Integral2 Limited. During the year, David Joseph acquired
600,000 shares in Digitalbox plc at 8 pence per share through Integral 2
Limited.
During the year, M Capital Investment Properties Limited billed £25k (2021:
£25k) to the Group, a company related by virtue of Martin Higginson, a member
of key management personnel, having control over the entity. As at 31 December
2022, £2.5k (2021: £2.5k), was accrued as owing to M Capital Investment
Properties Limited.
During the prior year, Robin Miller Consultants Limited billed £11k to the
Group, a company related by virtue of Robin Miller, a member of key management
personnel for part of the prior year, having control over the entity. As at 31
December 2022, £nil (2021: £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 £406k in the year ended 31 December 2022 (2021: £715k).
The key management personnel have been provided with a total of 1,363,916
effective share options resulting in a charge of £17k in the period (2021:
£100k).
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