DIGITALBOX PLC
ANNUAL REPORT
AND ACCOUNTS
2019
02
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
CONTENTS
4
6
Chairman’s Statement
Chief Executive’s Report
12
Strategic Report
17 Corporate and Social Responsibility Statement
18 Highlights and Timeline
20 Corporate Governance
27 Audit Committee Report
28 Remuneration Committee Report
29 Directors’ Report
31 Directors’ Responsibility Statement
32 Independent Auditor’s Report
36 Consolidated Statement of Comprehensive Income
37 Consolidated Statement of Changes in Equity
38 Consolidated Statement of Financial Position
39 Consolidated Statement of Cash Flows
41 Notes forming part of the Consolidated Financial Statements
65 Company Statement of Financial Position
66 Company Statement of Changes in Equity
67 Company Statement of Cash Flows
68 Notes forming part of Company Financial Statements
70 Corporate Information & Advisers
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
03
DIGITALBOX PLC
CHAIRMAN’S STATEMENT
Chairman’s Statement
FOR THE YEAR ENDED 31 DECEMBER 2019
Digitalbox has had an impressive year.
Focused delivery of a clear strategy
has created a strong platform for
future growth.
It is gratifying to be able to report
on Digitalbox as a pure-play
digital media company which is
profitable (after adjusting for one
off costs of listing on AIM and
transaction costs), growing, debt-
free and with a clear strategy.
The past year has demonstrated
the ability of our management
and its team to deliver what
was promised in a volatile and
unpredictable market.
The continued growth of
Entertainment Daily and the successful bedding in of
the Daily Mash demonstrates the Group’s ability to
buy and build and having established a solid base we
are keen to accelerate the process.
Of course, the Coronavirus pandemic cannot
be ignored. It is already having a marked effect
on how people live their lives and on consumer
spending. While we see it having minimum impact
on audience numbers, indeed we may see increased
traffic, advertising has experienced a downturn.
Nevertheless, we are well placed to withstand any
downturn with flexible staff location and a strong
balance sheet.
Extraordinary growth comes from preparedness
meeting opportunity.
There are, of course, constraints; one being
the identification and execution of acquisition
opportunities. Finding the right opportunity (ideally,
underperforming assets where our expertise can add
value) at the right price is not easy but we believe
they are there.
Digitalbox is a mobile-first business and it is mobile
where advertising revenues continue to grow faster
than on any other media. As advertisers seek to reach
consumers via their device of choice, our highly
engaging content created by efficient, expert teams,
optimised for mobile and delivered via cutting edge
technology enables us to attract valuable audiences
at scale.
We remain confident of performing ahead of our
peers in the year ahead. Our nimbleness has served
us well in markets which, although unpredictable, are
growing and continue to provide opportunity.
We are certainly going to continue investing in our
current channels – there is more to come – and we
are combing the market place for further
acquisition targets.
Sir Robin Miller
Non Executive Chairman
1 April 2020
04
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
CORPORATE HIGHLIGHTS
Corporate Highlights
REVENUE
ADJUSTED EBITDA
£2.2m
£0.5m
ADJUSTED EBITDA MARGIN
ADJUSTED EBITDA PER SHARE
23.4%
0.7p
Notes
Adjusted EBITDA is Operating Profit before the deduction of depreciation, amortisation, share based payments, acquisition and
listing costs, profit on disposal of available for sale assets and impairments. Figures reflect 10 months of trading as Digitalbox plc.
See ‘Financial review’ in the Chief Executive Report on p. 7 for more detail and the Financial Statements beginning on p.35
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
05
DIGITALBOX PLC
CHIEF EXECUTIVE’S REPORT
06
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
CHIEF EXECUTIVE’S REPORT
Chief Executive’s Report
FOR THE YEAR ENDED 31 DECEMBER 2019
Our mobile-first execution
positions us well to benefit from
the advertising growth forecast in
the coming years.
The Board is pleased to
report the Group’s first set of
annual results following its
transformation from a cash
shell into a digital media group
following its acquisitions of
Digitalbox Publishing Holdings
Limited (“DBPH”) and Mashed
Productions Limited (together
the “Acquisitions”). To reflect
the Group’s new direction the
Group’s name was changed from
Polemos plc to Digitalbox plc on
27 February 2019.
The Group’s two current trading brands are
Entertainment Daily (acquired as part of the DBPH
acquisition) and the Daily Mash (acquired as part
of the Mashed Productions Limited acquisition).
Entertainment Daily produces and publishes online
UK entertainment news covering TV, showbiz and
celebrity news. The Daily Mash produces and publishes
online satirical news articles in its own distinctive
style. Both brands generate revenue from the sale of
advertising in and around the content they publish.
and ten months of trading as Digitalbox plc.
The Board is pleased to be able to report that
performance of the Group, since completion of the
Acquisitions, in terms of traffic, revenue generation
and EBITDA have all been in line or ahead of original
expectations.
Financial review
For the ten months since the Acquisitions reported
on the year, the Group traded well. Revenue was in
line and EBITDA ahead of management expectations
as direct costs were lower than anticipated.
All of the reported revenue and gross profit in
the year was generated in the ten months since
completion of the Acquisitions. Revenue for this ten
month period was £2.2m. Gross profit was £1.8m.
The adjusted EBITDA for the year was £525k and our
adjusted EBITDA margin was 23.4%. At the end of the
year the Company had £477k of cash and no debt.
Adjusted EBITDA per share for the year was 0.7p.
The year being reported on reflects approximately
two months of trading as Polemos plc, the cash shell,
Digitalbox remains a low capital intensity business
with capital expenditure representing 2.5% of
adjusted EBITDA.
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
07
DIGITALBOX PLC
CHIEF EXECUTIVE’S REPORT
The two media assets of the business, Entertainment
Daily and the Daily Mash, operate through a Group
subsidiary, Digitalbox Publishing Limited (DPL). The
performance of DPL has been encouraging; it saw
strong year-on-year revenue growth with revenues
of the year of £2.5m, up 19% on 2018. Profitability
increased with operating profit up 96% to £0.4m,
which was driven by a mixture of strong organic
audience growth on Entertainment Daily and an
advertising market increasingly seeking out higher
quality inventory, together with the acquisition of the
Daily Mash in March 2019.
Operating review
Content is at the core of the Digitalbox offering. Every
article is crafted to maximise its impact for its specific
user journey and as a mobile-first publisher we believe
we are firmly ahead of our competitors in execution.
Organic sessions have grown 36% year-on-year on
Entertainment Daily and the number of users has
increased by 10% as frequency of engagement
has grown.
Our organic growth reflects the fact that, unlike many
media companies, we are not distracted by the need
to manage declining print assets and instead are able
to look forwards towards both existing and future
consumer habits. We know that mobile is the device
of choice and we know how to engage audiences
and monetise them better than much of the market
through this channel.
Proprietary technology continues to evolve within
Digitalbox and our super-fast Graphene front end
now powers both Entertainment Daily and the Daily
Mash, ensuring the fastest experience for users and
advertisers alike.
Our interest in making acquisitions remains strong
with the Daily Mash having proved a great success. As
the market continues to offer significant opportunities
we will maintain our focus on seeking out businesses
with the potential to flourish on mobile – we firmly
believe this is where significant shareholder value can
be delivered as the advertising market rebalances
towards the mobile audience segment.
The expansion of our team and infrastructure to
deliver the reverse takeover of Polemos in February
has provided us with headroom to deliver
significant further growth while operational
efficiencies remain strong.
A mobile-first platform for media
consumption at scale
Our strategy to establish a mobile-first platform
business with diversified brands that engage
consumers at scale is reinforced by the performance
08
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
Global mobile ad
spending ($bn)
217
190
163
138
DIGITALBOX PLC
CHIEF EXECUTIVE’S REPORT
250
200
150
100
50
0
2021
2020
2019
2018
Source / Note: WARC Global Ad Trends Report 2019 /
Dentsu Aegis Network Global Ad Spend Forecasts January 2020. 2020 &
2021 forecast figures pre-date and do not reflect Coronavirus impact.
of Entertainment Daily and the Daily Mash during this
financial year. We continue to strengthen our revenues
with mobile ad spending worldwide growing well
ahead of the wider digital market and programmatic
spend also increasing.
We have seen particularly strong growth in mobile
video formats which are forecast to continue to out-
pace the market whilst new ‘premium’ mobile formats
gather pace and header bidding on mobile becomes
the norm.
Our ongoing focus on mobile optimisation and the
continued development of our mobile-first Graphene
front end gives us the ability to benefit from these
market trends and grow efficiently at scale.
Expanding the portfolio
In March 2019, Digitalbox acquired the leading
online satirical website, the Daily Mash. Following
its acquisition, the intention was to integrate the
Daily Mash onto the same technology platform
as Entertainment Daily. This integration has gone
well and shifting the brand to Digitalbox’s 100%
programmatic ad stack has improved the margin on
its revenue generation.
As well as growing the Group’s revenues, the
acquisition has enabled Digitalbox to explore other
channels, in particular television. The Daily Mash’s
associated show, The Mash Report, which airs on
BBC2 and provides a revenue stream through royalty
payments, received two BAFTA nominations and has
spun off a strong archive of short form pieces of video
content that is benefitting our social media presence.
The TV show audience rose to 800,000 weekly viewers
in 2019 and it returns for a new series in April 2020.
Growth of existing assets
During the period Entertainment Daily saw continued
growth of its user-base, averaging 3.4m unique
users per month and approximately 500k daily
sessions. Pleasingly there has been an increase in the
diversification of traffic to the site as a result of a 50%
increase in Google-sourced traffic via the Discover
feed; Google’s system that presents relevant content
to users based on their behaviour prior to them
performing a search on a mobile device.
Our audience insights and content analysis have led to
the expansion of our content offering; the introduction
of a food channel on Entertainment Daily in 2019
alongside the core entertainment news content is a
demonstration of how we can serve our audience in
more depth. We will continue to explore new content
opportunities over the next year as we look to broaden
our dialogue with 25-55 year old UK women.
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
09
DIGITALBOX PLC
CHIEF EXECUTIVE’S REPORT
Business culture and people
The digital media landscape is one of constant
change and opportunity which is why we encourage
flexibility in our business and our people. We work in
the ways that deliver the best results most efficiently.
Rather than harbouring traditional views of office
culture or adopting a one-size-fits-all approach,
we mix office-based roles and home working
arrangements, full-time and part-time positions, staff
and freelance contributor agreements to marry the
needs of the business with those of our people.
As a result of operating a fluid culture we are able
to quickly adapt our systems and processes to the
challenges faced by the hour – after all, the servers,
algorithms, platforms and audience are engaged
around the clock.
This all filters back to the technology used to make
the most of our team’s impact. Our approach allows
us to reach over eight million people every month
with a staff of 15 and a network of freelancers.
Recruiting and retaining the best people whatever
the role is crucial to our success and Digitalbox
focuses on ensuring our employees are rewarded
fairly, have opportunities to progress and share in the
success of the business, with the company operating
a share option scheme for senior staff. Further, we
are committed to developing young talent with a
successful apprentice scheme now in its third year.
I would like to thank all staff for their continued hard
work during the year and their valuable contribution
to these results.
The Group’s strategy remains unchanged, which is
to build a market-leading, mobile-first digital media
business for the 21st century through a buy and build
strategy. The successful integration of the Daily
Mash proves the potential of our model and gives
us confidence in our ability to build a portfolio of
successful, profitable digital brands. We therefore
remain focused on delivering our acquisition strategy
and firmly believe the market is rich with opportunity
as many publishers are struggling to keep pace
with the shift in consumer and advertiser behaviour
towards mobile.
2020 has started well with trading in line with the
Board’s expectations for the first quarter. With the
COVID-19 pandemic now affecting us all, it is clear
we face many more challenges than we anticipated
at the turn of the year. The extent to which COVID-19
will impact us is not yet clear. On the one hand the
changes in peoples’ lifestyles may provide more
opportunity for audience engagement, but on the
other we recognise that the advertising market
is going to be come much tougher. We believe
Digitalbox is well positioned to navigate its COVID-19
journey and with the seismic change it brings may also
come opportunity that with £1m of cash in the bank
at time of reporting we may be well placed to exploit.
Our business is naturally secod-half weighted and this
may become more pronounced given the likely impact
of COVID-19 on H1. Nevertheless we remain confident
that the Group can perform well in the year ahead.
Outlook
Digitalbox has established a profitable UK platform
business positioned directly in the mobile space.
James Carter
Chief Executive Officer
1 April 2020
010
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
CHIEF EXECUTIVE’S REPORT
Operational KPIs
ONLINE USERS
ONLINE SESSIONS
38million
(2018: 24.5M)
225million
(2018: 158M)
USERS WHO VISIT DIGITALBOX’S WEBSITES
NUMBER OF VISITS TO DIGITALBOX’S WEBSITES
PAGE VIEWS
MOBILE USERS
326million
(2018: 225M)
PAGES OF WEB CONTENT CONSUMED
35million
(2018: 23M)
NUMBERS OF USERS VISITING SITES ON
MOBILE AND TABLET DEVICES
UK AUDIENCE
SOCIAL FOLLOWERS
37million
(2018: 20M)
USERS OF DIGITALBOX’S WEBSITES BASED IN UK
3.5million
(2018: 2.5M)
FACEBOOK & TWITTER FOLLOWERS OF
DIGITALBOX’S PROPERTIES
Notes
2018 figures exclude the Daily Mash. 2019 figures include full year of both Entertainment Daily and
the Daily Mash. Social Followers shows total followers as at end 2019.
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
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DIGITALBOX PLC
STRATEGIC REPORT
Strategic Report
The
Digitalbox
Vision
We set out to build a new kind
of digital media business; one
capable of profitably delivering
high quality, engaging content to
users at scale.
Our aim is to acquire and
transform digital media assets
with potential through the
application of the
Digitalbox model.
Unencumbered by legacy, we
have a proven ability to grow
at speed by focusing on current and future trends;
rapidly adapting to the habits of our audience and
the needs of our commercial partners.
Push media
Our approach is informed by our recognition of the
growth of ‘push media’ consumption, especially
on mobile – where the most highly engaging and
relevant content from publishers is pushed into users’
feeds based on trending topics, article performance
and their own behaviours and interests.
We believe that content-surfacing algorithms
will continue to be refined, delivering better user
experience and higher rates of engagement and
generating further growth of this type
of consumption.
Specifically, as Facebook and Google continually
seek to command more user attention to increase
time spent on their platforms, publishers of the
most engaging content will benefit. In the last year
Google has developed its push content activity
via its Discover feed which is now making content
suggestions to billions of its global mobile users.
Targeting consumers via an array of distribution
channels is one thing but operating effectively
enough to ensure maximum engagement is where
the real skillset lies.
Whilst the tech duopoly continue to evolve their
models, consumers continue to support other
012
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
STRATEGIC REPORT
Our aim is to find digital brands
with profit potential that can thrive
in our lean, mobile-first model
Digitalbox Acquisition Process
STAGE ONE
STAGE TWO
STAGE THREE
Acquire
TARGET REVIEW
DUE DILIGENCE
CONTRACTING
Integrate
Improve
OPERATIONAL REVIEW
OPTIMISE FOR MOBILE
IMPLEMENT AD STACK
APPLY PROPRIETARY FRONT END
CONTENT ANALYSIS
PRODUCT DEVELOPMENT
push media sources too, signing up to notifications
and emails from their favourite media brands. We
continue to see growth in both of these areas.
Our approach
We believe in order to be successful in this new 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
teams obsess about getting the best stories to their
audience 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.
Local 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
audience, keeping our readers coming back again
and again and reducing wasted output.
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
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DIGITALBOX PLC
STRATEGIC REPORT
Our key advertiser
relationships all have a
significant presence in our
local market which is one of
the world’s most advanced
marketing economies and
they place the greatest value
on high-quality UK traffic.
Growth through
acquisition
The completion of the Daily Mash acquisition in
March 2019 marked the beginning of this acquisition
plan and we continue to evaluate potential targets.
In particular, we will identify assets that best
align with our processes and enhance our existing
portfolio to deliver the strategic vision. We will seek
out content verticals that offer the opportunity to
scale against larger media organisations who are
struggling to operate profitably through the
mobile channel.
On our re-admission to AIM in
Growing valuable audiences
February 2019, Digitalbox outlined a strategy to
make significant investments in acquisitions to grow
the portfolio. In particular we intend to identify
targets from three distinct categories; Legacy
Publisher, First Wave Digital and Bedroom Start-Ups.
In our view, each of these categories face particular
challenges around monetisation, operating
profitability, audience growth and technology
performance which can be addressed through the
application of the Digitalbox model.
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 share of this
audience has grown over the last year from c.2m per
month to now over 6m per month and the launch of
014
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
STRATEGIC REPORT
The UK media market
remains rich with acquisition
opportunities
Acquisiton Targets By Type
BUSINESS TYPE
TYPICAL CHALLENGES
SOLUTION
Legacy
Publisher
REVENUE DECLINE DISTRACTION
COST BASE
BUSINESS COMPLEXITY
LOW MARGIN DIRECT SALES
First-Wave
Digital
OVER-ESTIMATED PERFORMANCE
OVERLY DIVERSIFIED
LACK OF MARGIN CLARITY
Bedroom
Start-up
SUB-SCALE
PLATFORM ISSUES
PRIMITIVE AD STACK
a new food channel on the site has given us a new
content strand to engage these new readers.
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. They are power-
sharers of digital media and we have seen the
number of sessions grow by 12.5% over the last
12 months.
touch commercial approach designed to maximise
mobile profitability. Our website front-end platform
Graphene is a highly scalable and dynamic platform
that assists content delivery at the highest speeds.
This brings huge advantages to how our sites are
experienced by users and ranked by the key power
brokers – especially Google and Facebook – as they
evaluate the preferred destinations for users.
Our tech roadmap for 2020 will deliver further site
improvements.
Product development
Both audiences have plenty of scope for growth as
they continue to demonstrate increasing levels of
engagement with the respective brands.
Mobile-optimised tech platform
While profitability is key, we continue to invest
in the existing business. 2020 will see additional
investment across Entertainment Daily and the
Daily Mash as we aim to deliver further
meaningful growth.
We are primed to rapidly on-board new brands and
businesses onto our mobile-first platform. Our tech
stack consists of a blend of technologies allowing
our websites to flourish through an efficient, light
Further detail on business performance can be
found in the Financial Review and Operating
Review sections of the Chief Executive’s Report
beginning on page 6.
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
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DIGITALBOX PLC
STRATEGIC REPORT
Risks and uncertainties
The Board considers risk on an ongoing basis
and feels it is important to identify risks, form an
objective view on the impact of these risks, consider
mitigation plans to counterbalance them and to keep
them under constant review.
These risks are those which the Board considers, as
at the date of this report, are the most critical to the
continued operation of the Group. The risks described
do not represent the totality of the risks facing the
Group and should not be relied on as such by any
person considering any investment decision in
relation to the Company’s ordinary shares.
Risk
Potential Impact
Mitigation and control
Deviation from
strategy
Reliance on key
online media
platforms
Competition
A failure to implement the Group’s strategy is likely to lead to the
business missing its trading targets which will have an adverse
knock on effect on its cash flow prospects. Further, its growth
prospects could be impacted with a consequent negative impact
on shareholder value.
The Board meets regularly to monitor the path of the business
with the non-executive directors objectively challenging
the executives over the performance of the business and its
adherence to the agreed plan.
In common with all media businesses globally, the Group uses
online media platforms to market and distribute its content
which, in turn, drives consumers to its sites which enables
monetisation. Changes to the algorithms used by these Platforms
can impact on how much of the Group’s content is seen and this
will affect the eventual monetisation.
The Group has transitioned from an arbitrage model to an
organic model, reducing its reliance on the need to “boost” traffic.
In addition, it has begun to broaden its traffic sourcing more
evenly between the two largest platforms rather than being solely
reliant on one.
A new entrant into the Group’s market could divert our share
of the time our audience has to consume its content, reducing
session numbers. This would have an adverse effect on the
number of adverts the business can serve, hence reducing the
revenues the business would generate.
There is nothing the Group can do to stop new entrants. However,
it can continue to provide highly engaging content at speed
encouraging its consumers to remain engaged and loyal.
Cash flow
A significant downturn in the trading performance of the Group
would have an adverse effect on the Group’s cash reserves.
The business is very profitable, has a very low capital expenditure
requirement and pays close attention to its cash flow forecasts.
Downturn in
advertising
spending
A material decline in UK mobile digital advertising spend
would have a significant impact on the Group’s revenues and
profitability. Also, technologies which may limit the Group’s ability
to effectively monetise the audience it attracts, including but
not limited to brand-safety tools and ad blockers could impact
revenue and profitability.
The Board stays abreast of market trends and advertising forecasts
and through close relationships with advertising partners is well
informed through close relationships wth advertising partners
is well informed about current and coming developments. It
has demonstrated an ability to grow revenues during periods of
significant change (including the introduction of GDPR)
Coronavirus/
Covid-19
The Covid-19 pandemic is highly likely to impact consumer
spending and therefore impact advertising spending. Staff may
become unwell.
The Board will monitor revenue impact closely. As a digital
publisher, the Group’s ability to reach its audiences should not
be affected and its sites may see increased traffic, offsetting a
proportion of any downturn. The Group has extended its pre-
existing Working from Home policies to increase social distancing.
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ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
CORPORATE AND SOCIAL RESPONSIBILITY STATEMENT
Corporate and Social
Responsibility Statement
he Group aims to operate ethically and be
socially responsible in its actions. Below
are a number of the approaches through
which this is achieved.
Details of the Group’s performance are shared with
all employees at appropriate times via face-to-face
meetings, email updates and the Group’s
corporate website.
The Group expects a high standard from its staff and
provides support to achieve this. Where possible, as
new roles in the organisation arise, the Group aims to
promote from within.
The Group is committed to fostering new talent and
runs a successful apprenticeship programme, often
hiring candidates into full-time roles on completion
of their apprenticeship.
The Group offers flexible working arrangements for
its staff including remote working and
part-time contracts.
Business Conduct, Ethics and
Anti-Corruption
The Group is committed to ensuring high standards
of business conduct and has adopted policies in
support of this including an Anti-Bribery &
Anti-Corruption policy and an Equal Opportunities &
Anti-Harassment policy.
Safeguarding Consumers’ Data
The Group is committed to safeguarding its
consumers’ data and only use this information where
express permission is granted and solely for the
purpose specified. The Group holds registrations
with the ICO and follows its guidelines to ensure it
remains fully compliant with GDPR.
Relationship with Employees
The Group encourages an environment of openness
and debate and welcomes all feedback from within.
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T
DIGITALBOX PLC
IN NUMBERS
At a
Glance
DIGITALBOX IN NUMBERS
Some highlights from 2019
and significant moments
on our journey
TIMELINE
JAN 2018
ENTERTAINMENT DAILY
PUBLISHING FREQUENCY
PASSES 1,000 ARTICLES
PER MONTH
JUL 2018
ACQUISITION TARGET
EVALUATION BEGINS
FEB 2019
DIGITALBOX ENTERS
AIM MARKET
APR 2019
DAILY MASH
PHASE 1 ARTICLE
OPTIMISATIONS
MAY 2018
DECISION TO LIST ON AIM
VIA RTO TO ACCELERATE
GROWTH PLAN
SEP 2018
HEADS OF TERMS
AGREED FOR RTO TO
ENTER AIM MARKET
MAR 2019
DAILY MASH
ACQUISITION
COMPLETES
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ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
IN NUMBERS
500k
daily sessions for
Entertainment
Daily
Users by device
90% Mobile
10% Desktoop
Entertainment Daily
The Daily Mash
1,100+
news stories
per month
145k
daily
sessions
Social followers
1m
2.5m
2 BAFTA
nominations for
The Mash Report TV Show
6.8m
total monthly users
1.8m monthly
users
150
MILLION
total monthly
ad impressions
for Digitalbox
5m
monthly
users
The Daily Mash
12.5% increase in sessions
per user
OCT 2019
DAILY MASH BAFTA-
NOMINATED SPIN-OFF
TV SHOW THE MASH
REPORT RENEWED
NOV 2019
GRAPHENE FRONT-
END DEPLOYED ON
DAILY MASH
DEC 2019
ENTERTAINMENT
DAILY BREAKS RECORD
WITH 8 X 1M ORGANIC
SESSION DAYS
AUG 2019
DAILY MASH
PARTNERSHIP WITH
NEXTUP COMEDY
OCT 2019
ENTERTAINMENT
DAILY FOOD CHANNEL
LAUNCHED
DEC 2019
DAILY MASH PASSES
1M SOCIAL MEDIA
FOLLOWERS
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
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020
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
CORPORATE GOVERNANCE
Corporate
Governance
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
21
DIGITALBOX PLC
CORPORATE GOVERNANCE
Corporate Governance
DIGITALBOX AND THE QCA CODE
D
igitalbox PLC is committed to good
corporate governance and has adopted
the corporate governance guidelines of the
Quoted Companies Alliance (QCA).
This section outlines the ways in which the Group
applies the QCA’s ten principles of corporate
governance.
1. Establish a strategy and business model which
promote long-term value for shareholders
Digitalbox aims to become a leading publisher of
digital media. The Group intends to achieve this
through a buy-and-build strategy with a focus on
profitable publishing on mobile devices. This strategy
is aligned with consumer behaviour and
commercial trends.
The Group will create and deliver compelling content
for its audiences via the web properties it owns now
and will own in the future. This content will engage
audiences and in turn create valuable environments
for advertisers to reach them.
James Carter
Chief Executive Officer
Jim Douglas
Chief Operating Officer
David Joseph
Chief Financial Officer &
Company Secretary
James joined Digitalbox in 2016 and is
Jim oversees editorial operations at Digitalbox
responsible for the strategy, direction and
and has previously held strategic and profit
David is a law graduate and Chartered
day-to-day running of the business. He has
responsibility for successful media brands in
Accountant, starting his career and qualifying
a proven track record in building value in
sectors including film, music, games, sport
with Price Waterhouse, moving into industry
the media industry, within both public and
and automotive. He has led creative teams
in steel stockholding (ASD plc) then into
limited companies. As part of the founding
in both UK and US. He started his career at
FMCG (Unilever plc) before entering the media
executive team at Factory Media, he drove
EMAP plc as a journalist and in the early 90s
industry in 1995 when he joined Emap plc.
the business to achieve a significant exit to
he joined start-up business Future Publishing,
Here he occupied several senior financial roles
Forward Internet Group. Prior to the creation
which eventually became and remains a listed
within its operating companies, including
of Factory Media, James was NPD Director at
company. At Future, Jim held the position of
Chief Financial Officer of Emap Metro, the
Dennis Publishing and Publishing Director at
Editorial Director for 10 years with ultimate
men’s and music publications business and
EMAP plc where he had responsibility for FHM.
responsibility for product development.
Emap Advertising, the then central cross
FHM grew from a fledgling fashion focused
During this time Future was named UK Digital
platform advertising sale business. On leaving
magazine to a global network of 32 editions
Publisher of the Year five times.
and a value at its peak of over £250m.
Board of Directors
in 2001 David has since worked exclusively
within the media industry on many projects
including start up, MBI, MBO, turnaround,
distressed and buy and build across a wide
spectrum of enterprise values (£1 million
to £50 million) and funding structures,
internationally, both in the Far East and in
the USA.
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ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
CORPORATE GOVERNANCE
The Group intends to deliver long-term value for
shareholders through its understanding of consumer
media consumption, the arising revenue opportunities
including advertising and a continued focus on the
operating profitability of its brands.
For more detail, see the Strategic Report on page 12.
2. Seek to understand and meet shareholder
needs and expectations
The Group is committed to building and maintaining
strong relationships with its shareholders and
considers the understanding of shareholder’s needs
fundamental to its success.
The Chief Executive Officer and Chief Financial Officer/
Company Secretary are active in meeting with and
preparing presentations for institutional investors and
engage in regular dialogue with the Group’s brokers in
order to gauge shareholder sentiment.
The Group’s Annual General Meeting (AGM) is the
main forum for discussing matters with shareholders,
addressing shareholder queries and understanding
their needs and expectations. Notice of the AGM and
Sir Robin Miller
Non Executive Chairman
Martin Higginson
Non Executive Director
Nigel Burton
Non Executive Director
Sir Robin Miller was formerly Chief Executive
Martin is recognised as a seasoned
Nigel has over 25 years’ experience in
(1985-98 and 2001-03) and Chairman (1998-2001)
Technology, Media and Telecoms (TMT)
operational and financial management,
of Emap plc, one of the UK’s leading media
entrepreneur. He has started, sold, and listed
debt and equity financing, acquisition and
groups with businesses including consumer
numerous businesses. His first business was
integration of businesses, disposals, IPOs
and trade publishing, commercial radio and
sold to IPC Magazines in 1982. Following
and trade sales. Following over 14 years as an
music TV channels and events. In 2003, Sir Robin
three years with IPC he left to set up his
investment banker at leading City institutions
became senior media adviser to HgCapital,
own publishing and telecoms business, this
including UBS Warburg and Deutsche
and was involved in the successful disposals of
was subsequently sold to Scottish Power
Bank, including as the managing director
Boosey & Hawkes and Clarion Events Limited.
plc. During his time with Scottish Power he
responsible for the energy and utilities
He was previously a non-executive director
joined their subsidiary Scottish Telecom,
industries, Nigel spent 15 years as chief
of Channel 4 Television (1999-2006), and was
as Managing Director of their Internet and
financial officer of a number of private and
Chairman of their New Business Board, was
Interactive division, including Internet ISP
public companies, including Navig8 Product
Non-Executive Chairman of the HMV Group
Demon Internet. Following the flotation of
Tankers Inc, PetroSaudi Oil Services Limited,
(2004-2005), Senior Non-Executive Director at
Thus plc (formerly Scottish Telecom) he left
Advanced Power AG, and Granby Oil and Gas
Mecom Group plc (2005-2009), and Chairman
to start Monstermob, a company he went on
plc, followed by three years as Chief Executive
of Entertainment Rights plc (2008-2009) and
to list on AIM in 2003; growing it to a Top 50
Officer of Nu-Oil and Gas plc. Nigel is currently
Setanta Sports Holdings Limited in 2009.
AIM listed business. Monstermob Group plc
Non-Executive Chairman of AIM-listed
He is currently Non-Executive Chairman of
was sold to Zed Worldwide in 2006. Martin has
Remote Monitored Systems plc and Mobile
Immotion Group plc, a director of Premier
subsequently founded Cityblock plc, a luxury
Streams plc.
Education plc, a director of Crash Media Group
student accommodation business, NetPlayTV
plc, a director of Robin Miller Consultants Ltd, a
plc, an interactive TV gaming business,
director of Edge Performance VCT and a Trustee
Digitalbox and Immotion plc. He is currently
of Two Wheels for Life.
CEO of Immotion Group plc.
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
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DIGITALBOX PLC
CORPORATE GOVERNANCE
proposed resolutions are sent to shareholders at
least 21 days prior to the AGM. Shareholders and their
representatives are invited to fully participate and vote
in the AGM and are also given the opportunity to vote
by proxy. Voting results are published after the AGM.
Outside the AGM the Group will convene general
meetings where shareholder approval is required or
appropriate on Group matters and may seek input
from major institutional investors from time to time in
relation to Group policy.
3. Take into account wider stakeholder and social
responsibilities and their implications for
long-term success
The Group seeks to engage with its wider group of
stakeholders via:
Face-to-face briefings for staff to update on the
Group’s progress and developments
Email updates for staff regarding developments
Releasing public updates via the RNS service
Stakeholder feedback being passed to Senior
Management via the relevant team member at
Digitalbox as appropriate.
The Group’s Corporate and Social Responsibility
statement can be found on page 17.
4. Embed effective risk management,
considering both opportunities and threats,
through the organisation
The Board considers the risks facing the business on
an ongoing basis and ensures mitigation strategies
are in place wherever possible. The Executive Directors
regularly keep the Board updated on current trading,
wider market trends and other developments as a
means of identifying existing and potential future
opportunities and risks.
Key risks and uncertainties facing the business are
noted on page 16.
5. Maintain the Board as a well-functioning,
balanced team led by the Chair
The Board comprises three Executive Directors and
three Non-Executive Directors. The Board considers all
three Non-Executive Directors to be independent.
The Board will operate in a collaborative and
constructive manner with a clear focus on the delivery
of the strategy and increasing shareholder value.
The appointment of Directors will be in accordance
with the Articles of Association.
6. Ensure that between them the Directors have
necessary up-to-date experience, skills
and capabilities
The Group considers the skills and experience of the
Board to be appropriate and this is kept under review.
The Executive Directors have each worked in
24
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
CORPORATE GOVERNANCE
Board
Audit
Remuneration
Nomination
Disclosure
James Carter
Jim Douglas
David Joseph
Martin Higginson
Nigel Burton
Robin Miller
7/7
7/7
7/7
5/7
6/7
7/7
-
-
-
1/1
1/1
1/1
-
-
-
1/1
1/1
1/1
-
-
-
-
-
-
-
-
-
-
-
-
standards and behaviour when conducting its
business, with integrity, fairness and equality being
high priorities.
The Corporate and Social Responsibility statement is
found on page 17.
consumer media for more than twenty years, and as
a group have experience at senior management level
in respected PLC media businesses. Their specific
media expertise includes editorial management, new
product development, commercial management,
strategic planning, international expansion, financial
management, corporate restructuring, digital
transition, brand development, acquisitions
and disposals.
The Group’s non-executive Directors have extensive
successful track records in the fields of technology,
telecoms, publishing, investment banking
and television.
7. Evaluate Board performance based on clear
and relevant objectives, seeking continuous
improvement
The Board’s process of evaluating its own
performance, that of its Committees and the
individual Directors, is led by the Chairman.
The process is conducted by the Remuneration
Committee. The Remuneration Committee will
evaluate Board performance against targets.
Targets are aligned with the delivery of the Group’s
strategy.
The Board may utilise the results of the evaluation
process when considering the adequacy of the
composition of the Board and for succession planning.
8. Promote a culture that is based on ethical
values and behaviours
The Group aims to achieve the highest ethical
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
25
DIGITALBOX PLC
CORPORATE GOVERNANCE
9. Maintain governance structures and processes
that are fit for purpose and support good
decision-making by the Board
The roles of the Chairman and the Chief Executive
Officer are separated and clearly defined. The
Chairman provides impartial leadership and guidance
to the Board. Working with the Executive Directors,
the Chairman is responsible for setting the agenda for
Board meetings and ensuring Board members receive
the information they need to properly participate in a
timely fashion.
The Chief Executive Officer is responsible for the
execution of Group strategy approved by the Board,
the leadership of the Group’s senior management
team and its employees on a day-to-day basis.
The Chief Operating Officer supports the Chief
Executive in the delivery of the strategy with a specific
remit over editorial matters.
The Board has established four committees with
clearly defined responsibilities. These are as follows:
The Audit Committee’s principal functions include
ensuring that the appropriate accounting systems and
financial controls are in place, monitoring the integrity
of the financial statements of the Group, reviewing
the effectiveness of the Group’s accounting and
internal control systems, reviewing reports from the
Group’s auditors relating to the Group’s accounting
and internal controls, and reviewing the interim and
annual results and reports to Shareholders, in all cases
having due regard to the interests of Shareholders. The
Audit Committee will meet as necessary, informed by
the reporting and audit cycle or other requirements.
Nigel Burton, who has recent and relevant financial
experience through his role as chief financial officer
of other UK listed companies acts as chairman. Martin
Higginson and Sir Robin Miller are the other members
of the Audit Committee.
The Audit Committee report is found on page 27.
The Remuneration Committee is responsible for
determining and agreeing with the Board the
framework for the remuneration packages for
each of the Executive Directors. The Remuneration
Committee considers all aspects of the Executive
Directors’ remuneration, including pensions, bonus
arrangements, benefits, incentive payments and
26
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
share option awards, and the policy for, and scope of
any termination payments. The remuneration of the
Non-Executive Directors is a matter for the Board. The
Remuneration Committee will meet when necessary
and generates an annual remuneration report to
be approved by the members of the Company
at the annual general meeting. No Director may
determine their own remuneration. Nigel Burton acts
as chairman of the Remuneration Committee and
Sir Robin Miller and Martin Higginson are the other
members of the Remuneration Committee.
The Remuneration Report is found on page 28.
The Nomination Committee is responsible for
reviewing the structure, size and composition of
the Board based upon the skills, knowledge and
experience required to ensure the Board operates
effectively. The Nomination Committee meets when
necessary to do so. The Nomination Committee
also identifies and nominates suitable candidates
to join the Board when vacancies arise and
makes recommendations to the Board for the re-
appointment of any Non-Executive Directors. Sir Robin
Miller acts as chairman of the Nomination Committee
and Nigel Burton and Martin Higginson are the other
members of the Nomination Committee.
The Disclosure Committee is responsible for
ensuring compliance with the AIM rules and MAR
concerning disclosure of inside information and works
closely with the Board to ensure that the Group’s
nominated adviser is provided with any information it
reasonably requests or requires in order for it to carry
out its responsibilities under the AIM Rules and the
Aim Rules for Nominated Advisers. The Disclosure
Committee approves all RNS and other significant
announcements, normally via email and will meet
as required. Sir Robin Miller acts as Chairman of the
Disclosure Committee. Nigel Burton and Martin
Higginson are the other members of the Disclosure
Committee.
10. Communicate how the Group is governed
and is performing by maintaining a dialogue
with shareholders and other relevant stakeholders.
The Group communicates with shareholders
and other stakeholders through its Annual and
Interim Reports, regulatory and non-regulatory
announcements, its investor relations website, Annual
General Meetings and face-to-face meetings.
DIGITALBOX PLC
AUDIT COMMITTEE REPORT
Audit Committee Report
SIGNIFICANT ACCOUNTING ISSUES
T
he main accounting issues which the Audit
Committee focused their attention on during
the period were:
1. Revenue recognition – the Committee considered
the Group’s approach to revenue recognition and its
compliance with IFRS, and concluded that the very
nature of programmatic advertising revenue ensured
clarity on the allocation of revenue across each distinct
accounting period and a clean cut off.
2. Ongoing compliance with AIM rules – the
Committee considered the Group’s ability to comply
with AIM rules and concluded that the Non-Executive
directors’ combined skills and experience, together
with the appointment of WH Ireland as NOMAD
ensured for comfortable compliance by the
Executive directors.
3. The carrying value of goodwill and other intangible
assets – the Committee considered the Group’s
approach to evaluation of the carrying value of
goodwill and other intangible assets and were assured
by the discounted cash flow modelling demonstrating
that no impairment charge was required.
4. Whether the going concern basis of accounting
was appropriate, especially in the light of COVID-19 –
the Committee were assured that the business has a
strong balance sheet, is trading profitably and that,
whilst consumer advertising revenues are expected
to be under pressure throughout the current crisis,
the Group’s core business may well benefit from
large volumes of people finding themselves with
more time on their hands to consume the Group’s
digital only content. Further, being a digital media
business, operations will be largely uninterrupted and
unaffected by home working.
The Group’s Chief Financial Officer and the external
auditors attend meetings of the Audit Committee
by invitation. The Committee also holds separate
meetings with the auditors as appropriate.
The Audit Committee met once during the year to
approve the interim financial statements. The Audit
Committee has also met with the Group’s external
auditors since the period end to approve the
2019 accounts.
The Group does not have an internal audit function as
this is not considered appropriate given the scale of
the Group’s operations, however the Group operates
internal peer review with the scope of evaluating
and testing the Group’s internal control procedures
to standardise processes around best practice. Any
significant issues are reported to the Chair of the Audit
Committee and shared with the external auditors
as appropriate.
Internal Controls
The Board has overall responsibility for the Group’s
system of internal financial control and for reviewing
its effectiveness. The purpose of the system of control
is to manage rather than eliminate the risk of failure
to achieve business objectives and can only provide
reasonable, but not absolute, assurance against
misstatement or loss.
The Audit Committee keeps the effectiveness of the
Company’s internal controls and risk management
systems under review.
The Chief Financial Officer is the executive within
the Group responsible for day-to-day financial
management of the Group’s affairs and its
internal accounting.
External Auditors
The Audit Committee has reviewed the independence
and effectiveness of Haysmacintyre LLP, the Group’s
external auditors, and are satisfied in both respects.
Haysmacintyre LLP’s fees in the year in respect of
audit services were £36k (2018: £14k) and in respect of
non-audit services were £138k (2018: £1k) as detailed in
note 8.
Haysmacintyre LLP have signified their willingness
to continue in office and a resolution to reappoint
Haysmacintyre LLP as auditor to the Company will be
proposed at the AGM.
Nigel Burton
Chairman of the Audit Committee
1 April 2020
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
27
DIGITALBOX PLC
REMUNERATION COMMITTEE REPORT
Remuneration
Committee Report
T
he Remuneration Committee determines
the remuneration packages for Executive
Directors and other senior employees and
keeps the Group’s policy on pay and benefits under
review generally.
The Remuneration Committee will keep under review
the long-term incentivisation of Executive Directors
and senior employees, balancing the need to control
costs while ensuring that pay and benefits offered by
the Group are appropriate for attracting and retaining
high-calibre staff.
The Committee will continue to have due regard to
remuneration reports from independent sources, to
the guidance of its professional advisers and to good
practice generally.
Directors’ remuneration for the year of 2019 are shown
on page 49.
Nigel Burton
Chairman of the Remuneration Committee
1 April 2020
Director
James Carter
Jim Douglas
David Joseph
Robin Miller
Martin Higginson (Via M
Capital Ventures Ltd)
Nigel Burton
Number of
1p Ordinary Shares as at
31st December 2019
10,908,078
10,908,078
-
775,465
1,740,475
238,095
Number of
1p Ordinary Shares as at
31st December 2018
-
-
-
-
%
-
-
-
-
-
11,830,835
-
0.2%
%
12.1%
12.1%
-
0.9%
1.9%
0.3%
24,570,191
27.2%
11,830,835
0.2%
Total ordinary shares
90,251,726
118,079,093
Options have been granted to certain key employees under an approved EMI scheme, as below:
Option holder
James Carter
Jim Douglas
Nick Clough
Karen Hyland
Unallocated
Number
of shares
1,504,441
1,504,441
1,002,960
1,002,960
3,008,882
Vesting Period
Year 1
Year 2
Year 3
501,480
501,480
-
-
-
501,480
501,480
-
-
-
501,481
501,481
1,002,960
1,002,960
-
8,023,684
1,002,960
1,002,960
3,008,882
28
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
DIRECTORS’ REPORT
Directors’ Report
T
he Directors present their report and audited
financial statements for the year ended 31
December 2019.
Principal Activities
The principal activities of the Group are the
publication of consumer media through the
digital mobile channel, with revenues derived from
programmatic advertising.
The principal activity of the Company is as a
holding company.
Board of Directors
The Directors who served during the year were:
(appointed 28 February 2019)
James Carter
(appointed 28 February 2019)
Jim Douglas
David Joseph
(appointed 28 February 2019)
Martin Higginson (appointed 28 February 2019)
Sir Robin Miller
(appointed 28 February 2019)
Nigel Burton
John Treacy
(resigned 28 February 2019)
Future Developments
The Company has chosen in accordance with section
414C(11) of the Companies Act 2006 to include the
disclosure of likely future developments in the Chief
Executive’s Report beginning on page 6.
Dividends
future. In reaching this conclusion the Directors have
considered the financial position of the Group, taking
into consideration the recent placing, together with
its forecasts and projections for two years from the
reporting date that take into account reasonably
possible changes in trading performance that the
Coronavirus may cause. The going concern basis of
accounting has therefore been adopted in preparing
the financial statements.
Treasury Operations & Financial
Instruments
The Group operates a centralised treasury function
which is responsible for managing liquidity, interest
and foreign currency risks associated with the
Group’s activities.
The Group’s principal financial instrument is cash,
the main purpose of which is to fund the
Group’s operations.
The Group has various other financial assets and
liabilities such as trade receivables and trade payables
naturally arising through from its operations.
The Group’s exposure and approach to capital and
financial risk, and approach to managing these is
set out in note 21 to the consolidated
financial statements.
Employee Engagements
The Group engages with its employees regularly
through face to face communication, during which
details of the Group’s performance is shared.
No dividends were paid during the year (2018: £Nil).
The Board is not recommending the payment of
a final dividend in respect of the year ended 31
December 2019.
Further information regarding employee
engagement can be found in the Corporate and Social
Responsibility Report on page 20.
Earnings per Share
Employee Policies
Loss per share in the period from continuing
operations was 0.00571p (2018: 0.00262p) and diluted
loss per share from continuing operations in the
period was 0.00571p (2018: 0.00262p).
The Group has established employment policies
which are compliant with current legislation and
codes of practice. The Group is an equal
opportunities employer.
Going Concern
Payment of Suppliers
At the time of approving the financial statements,
the Directors have a reasonable expectation that the
Company and the Group have adequate resources to
continue in operational existence for the foreseeable
The Group’s policy is to pay suppliers in accordance
with the relevant contractual terms between the
Group and the supplier. Where no specific terms are
agreed, the Group’s standard policy is 30 days.
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
29
DIGITALBOX PLC
DIRECTORS’ REPORT
Directors’ Indemnity
Political Donations
The Company’s Articles of Association provide, subject
to the provisions of UK legislation, an indemnity for
Directors and officers of the Company in respect of
liabilities they may incur in the discharge of their
duties or in the exercise of their powers, including any
liabilities relating to the defence of any proceedings
brought against them which relate to anything done
or omitted, or alleged to have been done or omitted,
by them as officers or employees of the Company.
Appropriate directors’ and officers’ liability insurance
cover is in place in respect of all the Directors.
Directors’ Conflicts of Interest
In the event that a Director becomes aware that they,
or their connected parties, have an interest in an
existing or proposed transaction involving the Group,
they will notify the Board in writing or at the next
Board meeting.
Significant Shareholdings
As at 31 December 2019, the following shareholders
owned 3% or more of the Company:
Shareholder
Mr James Alexander Carter
Number of shares
10,908,078
Mr James Robert Douglas
10,908,078
Mr Samuel Higginson
Mrs Leonie Dobbie
JIM Nominees Ltd
Napier Brown Holdings Ltd
Perseus International
Investments Limited
9,787,549
7,583,709
4,398,123
3,342,447
%
12.1
12.1
10.8
8.4
4.9
3.7
2,978,241
3.3
As at 1 April 2020, the following shareholders owned
3% or more of the Company:
Shareholder
Mr James Alexander Carter
Number of shares
10,908,078
Mr James Robert Douglas
10,908,078
Mr Samuel Higginson
Mrs Leonie Dobbie
Jim Nominees Limited
Napier Brown Holdings
Limited
Perseus International
Investments Limited
9,787,549
7,583,709
4,398,123
3,342,447
2,978,241
%
11.9
11.9
10.7
8.3
4.8
3.7
3.3
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ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
The Group did not make any political donations
during 2019 (2018: £Nil).
Matters Covered in the Chairman’s
Statement & Financial Statements
Certain matters which are required to be disclosed in
the Directors’ Report (such as review of the business
and future developments) have been omitted as they
are included within the Chief Executive’s Statement,
the Strategic Report and within the notes to the
Financial Statements.
Annual General Meeting
The Company’s Annual General Meeting will be held
later in the year.
Statement as to Disclosure of
Information to the Auditor
As far as the Directors are aware they have each taken
all necessary steps to make themselves aware of any
relevant audit information and to establish that the
auditor is aware of that information.
This confirmation is given and should be interpreted
in accordance with the provisions of section 418 of the
Companies Act 2006.
Auditors
Haysmacintyre LLP have signified their willingness
to continue in office and a resolution to reappoint
Haysmacintyre LLP as auditor to the Company will be
proposed at the AGM.
Approved by the Board on 1st April 2020 and signed
on its behalf.
James Carter
Chief Executive Officer
DIGITALBOX PLC
DIRECTORS' RESPONSIBILITY STATEMENT
Financial statements are published on the Group’s
website in accordance with the rules and legislation
in the United Kingdom governing the preparation
and dissemination of financial statements, which
may vary from legislation in other jurisdictions.
The maintenance and integrity of the corporate
and financial information on the Group’s website
is the responsibility of the Directors. The Directors’
responsibility also extends to the ongoing integrity of
the financial statements contained therein.
The work carried out by the auditors does not include
consideration of the maintenance and the integrity of
the website and accordingly the auditor accepts no
responsibility for any changes that have occurred to
the financial statements when they are presented on
the website.
Directors' Responsibility
Statement
T
he Directors are responsible for preparing
the Strategic Report, Directors’ Report and
the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare
financial statements for each financial year.
Under that law the Directors have elected to
prepare the financial statements in accordance with
International Financial Reporting Standards (“IFRS”) as
adopted by the European Union and applicable law.
Under company law the Directors must not approve
the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of
the Company and the Group and of the profit or loss
of the Company and the Group for that period.
In preparing these financial statements, the Directors
are required to:
select suitable accounting policies and then apply
them consistently;
make judgments and accounting estimates that
are reasonable and prudent;
state whether IFRS as adopted by the European
Union have been followed subject to any material
departures disclosed and explained in the financial
statements;
provide additional disclosures when compliance
with specific requirements in IFRS is insufficient to
enable users to understand the impact of particular
transactions, other events and conditions on the
Company’s and the Group’s financial position and
financial performance; and
prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Company and the Group will continue in
business.
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
31
DIGITALBOX PLC
INDEPENDENT AUDITORS’ REPORT
Independent
Auditors’ Report
Opinion
We have audited the financial statements of
Digitalbox Plc (the ‘parent company’) and its
subsidiaries (the ‘group’) for the year ended 31
December 2019 which comprise the Consolidated
Statement of Comprehensive Income, the
Consolidated and Parent Company Statement of
Financial Position, the Consolidated and Parent
Company Statement of Changes in Equity, the
Consolidated and Parent Company Cash Flow
Statements and notes to the financial statements,
including a summary of significant accounting
policies. The financial reporting framework that has
been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as
adopted by the European Union.
In our opinion, the financial statements:
give a true and fair view of the state of the group’s
and of the parent company’s affairs as at 31
December 2019 and of the group’s loss for the year
then ended;
have been properly prepared in accordance with
IFRSs as adopted by the European Union; and
have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities
under those standards are further described in
the Auditor’s responsibilities for the audit of the
financial statements section of our report. We are
independent of the group in accordance with the
ethical requirements that are relevant to our audit
of the financial statements in the UK, including the
FRC’s Ethical Standard as applied to listed entities, and
we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
the directors’ use of the going concern basis of
accounting in the preparation of the financial
statements is not appropriate; or
the directors have not disclosed in the financial
statements any identified material uncertainties
that may cast significant doubt about the group’s
or the parent company’s ability to continue to
adopt the going concern basis of accounting for
a period of at least twelve months from the date
when the financial statements are authorised
for issue.
Key audit matters
Key audit matters are those matters that, in our
professional judgment, were of most significance in
our audit of the financial statements of the current
period and include the most significant assessed
risks of material misstatement (whether or not due
to fraud) we identified, including those which had
the greatest effect on: the overall audit strategy, the
allocation of resources in the audit; and directing the
efforts of the engagement team. These matters were
addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on
these matters.
We determined the matters described below to be the
key audit matters to be communicated in our report.
Key audit matter: Revenue recognition
Group revenue comprises the sale of digital
advertising space. Revenue is recognised in line with
the accounting policies in note 4. During the year,
the newly acquired subsidiary, Digitalbox Publishing
Limited, transitioned to IFRS and as such adopted
IFRS 15 for the first time. We therefore identified a risk
that revenue is not recognised in accordance with
IFRS 15.
How the matter was addressed in the audit
Our audit work included, but was not restricted to:
Conclusions relating to going concern
Considering the stated accounting policies in
We have nothing to report in respect of the following
matters in relation to which the ISAs (UK) require us to
report to you where:
respect of revenue recognition and whether these
are consistent with IFRS 15;
A detailed review of how revenue is recognised;
A review of the judgements made;
A reconciliation from the revenue database to the
financial statements; and
32
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DIGITALBOX PLC
INDEPENDENT AUDITORS’ REPORT
Testing a sample of transactions recorded
either side of the balance sheet date for correct
application of cut-off.
£23,250, being 75% of materiality. This was considered
an appropriate level of materiality given the focus on
revenue generating activities.
Key audit matter: Acquisition of
subsidiaries and valuation of goodwill
and other intangibles
There is a risk that the goodwill arising on acquisitions
has been incorrectly calculated and not split across
the other intangible assets acquired. There is also a
risk as to the valuation of goodwill at 31 December
2019 and the need for impairment.
How the matter was addressed in the audit
Our audit work included, but was not restricted to:
Reviewing the Share Purchase Agreements for the
entities acquired 28 February 2019 ascertain the
consideration included in the goodwill calculation;
Reviewing and assessing the goodwill calculations
prepared by management including a review of
the IFRS calculations apportioning the goodwill
across other intangible assets acquired;
Reviewing and assessing future budgets and cash
flow forecasts as well as managements impairment
review of goodwill;
Reviewing the recognition of fundraising costs
to ensure these had been correctly apportioned
between administrative expenditure and share
premium; and
Reviewing treatment of acquisition costs to
ensure that these had been expensed within
the Statement of Comprehensive Income in
accordance with IFRS 3.
Our application of materiality
The scope and focus of our audit was influenced by
our risk assessment and application of materiality. We
define materiality as the magnitude of misstatement
that could reasonably be expected to influence the
economic decisions of the users of the financial
statements. We use materiality to determine the
scope of our audit and the nature, timing and extent
of our audit procedures and to evaluate the effect of
misstatements, both individually and on the financial
statements as a whole.
Materiality for the Financial Statements as a whole
was set at £31,000, determined by reference to
Group revenue. We report to the Audit Committee
any corrected or uncorrected misstatements arising
exceeding £1,550. Performance materiality was set at
An overview of the scope of our audit
Our audit scope included the statutory audit of each
of the subsidiaries for the year ended 31 December
2019 except Digitalbox Publishing Inc. Our audit work
for the audited subsidiaries therefore covered revenue,
loss and assets and liabilities. The subsidiary audits
were performed to subsidiary level materiality which
was calculated for each subsidiary with reference to
their respective turnover and was lower than Group
materiality in each case. Digitalbox Publishing Inc
was audited to Group materiality given they are not
required to have a statutory audit in the US.
Other information
The directors are responsible for the other information.
The other information comprises the information
included in the annual report, other than the financial
statements and our auditor’s report thereon. Our
opinion on the financial statements does not cover
the other information and, except to the extent
otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial
statements, our responsibility is to read the other
information and, in doing so, consider whether the
other information is materially inconsistent with the
financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or
apparent material misstatements, we are required to
determine whether there is a material misstatement
in the financial statements or a material misstatement
of the other information. If, based on the work we
have performed, we conclude that there is a material
misstatement of this other information, we are
required to report that fact. We have nothing to report
in this regard.
Opinions on other matters prescribed
by the Companies Act 2006
In our opinion, based on the work undertaken in the
course of the audit:
the information given in the strategic report and
the directors’ report for the financial year for which
the financial statements are prepared is consistent
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
33
DIGITALBOX PLC
INDEPENDENT AUDITORS’ REPORT
with the financial statements; and
the strategic report and the directors’ report have
been prepared in accordance with applicable legal
requirements.
Matters on which we are required to
report by exception
In the light of the knowledge and understanding
of the group and the parent company and its
environment obtained in the course of the audit, we
have not identified material misstatements in the
strategic report or the directors’ report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
adequate accounting records have not been kept
by the parent company, or returns adequate for our
audit have not been received from branches not
visited by us; or
the parent company financial statements are not
in agreement with the accounting records and
returns; or
certain disclosures of directors’ remuneration
specified by law are not made; or
we have not received all the information and
explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities
statement, set out on page XX, the directors are
responsible for the preparation of the financial
statements and for being satisfied that they give a
true and fair view, and for such internal control as
the directors determine is necessary to enable the
preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors
are responsible for assessing the group’s and the
parent company’s ability to continue as a going
concern, disclosing, as applicable, matters related to
going concern and using the going concern basis
of accounting unless the directors either intend to
liquidate the group or the parent company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit
of the financial statements
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for the
audit of the financial statements is located on the
Financial Reporting Council’s website at: www.frc.org.
uk/auditorsresponsibilities. This description forms part
of our auditor’s report.
Use of our report
This report is made solely to the company's members,
as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's
members those matters we are required to state to
them in an Auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than
the company and the company's members as a body,
for our audit work, for this report, or for the opinions
we have formed.
Laura Mott
(Senior Statutory Auditor)
For and on behalf of Haysmacintyre LLP,
Statutory Auditors
10 Queen Street Place
London
EC4R 1AG
1 April 2020
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DIGITALBOX PLC
FINANCIAL STATEMENTS
Financial
Statements
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
35
DIGITALBOX PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2019
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Revenue
Cost of sales
Gross profit
Note
7
Administrative expenses
Realised profit on available for sale assets
Impairment reversal
Operating loss
8
Memorandum:
Adjusted EBITDA 1
Depreciation
Amortisation
Share based payments
Acquisition & listing costs
Realised profit on available for sale assets
Impairment reversal
Loss from Operations
Finance costs
Loss before taxation and attributable
to equity holders of the parent
Taxation
Loss after tax
10
11
Year ended
31 December
2019
£’000
Year ended
31 December
2018
£’000
2,240
(394)
1,846
(2,303)
-
-
(457)
525
(11)
(133)
(149)
(689)
-
-
(457)
(3)
(460)
23
(437)
-
-
-
(354)
65
39
(250)
(354)
-
-
-
-
65
39
(250)
-
(250)
-
(250)
All losses after taxation arise from continuing operations.
There was no other comprehensive income for 2019 (2018: £NIL).
1Adjusted EBITDA is after deducting depreciation, amortisation, share based payments, acquisition and listing costs, profit on
disposal of available for sale assets and impairments.
Loss per share
Basic (continuing)
Earnings/(Loss) per share
Diluted (continuing)
12
12
£
(0.00571)
(0.00571)
£
(0.00262)
(0.00262)
36
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
capital
£’000
Share
premium
£’000
Share
based
payment
£’000
Retained
(deficit)/
earnings
£’000
Balance at 1 January 2018
19,823
19,181
62
(39,179)
Shares issued
Share issue costs
Share options cancelled
Loss after tax
665
-
-
-
25
(42)
-
-
Balance at 31 December 2018
20,488
19,164
Shares issued
Share issue costs
Loss after tax
Equity settled share-based payments
843
-
-
-
10,710
(117)
-
-
-
-
(30)
-
32
-
-
-
149
-
-
30
(250)
(39,399)
-
-
(437)
-
Total
equity
£’000
(113)
690
(42)
-
(250)
285
11,553
(117)
(437)
149
Balance at 31 December 2019
21,331
29,757
181
(39,836)
11,433
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
37
DIGITALBOX PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
ASSETS
Non-current assets
Property, plant and equipment
Intangible fixed assets
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Lease liabilities
Corporation tax
Bank overdraft and loans
Total current liabilities
Non-current liabilities
Other payables
Lease liabilities
Deferred tax liability
Total liabilities
Total net current assets
Total net assets
Capital and reserves attributable
to owners of the parent
Share capital
Share premium
Share based payment reserve
Retained (deficit)
Total equity
Note
31 December 2019
£’000
31 December 2018
£’000
14
15
16
17
18
18
18
19
18
18
20
22
22
24
24
49
10,248
10,297
1,407
477
1,884
12,181
(488)
(24)
(98)
-
(610)
(8)
(2)
(128)
(138)
(748)
1,274
11,433
-
-
-
437
231
668
668
(163)
-
-
(220)
(383)
-
-
-
(383)
305
285
21,331
29,757
181
(39,836)
------------------
11,433
20,488
19,164
32
(39,399)
------------------
285
The financial statements were approved by the Board and authorised for issue on 1 April 2020
James Carter
CEO
David Joseph
CFO
38
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
CONSOLIDATED STATEMENT OF CASHFLOWS
Cash flows from operating activities
Loss from ordinary activities
Adjustments for:
Realised profit on available for sale assets
Impairment reversal
Share based payments
Depreciation on property plant and equipment
Amortisation of intangible assets
Finance costs
Cash flows from operating activities
before changes in working capital
(Increase) in trade and other receivables
(Decrease) in trade and other payables
Cash (used)/generated in operations
Investing activities
Purchase of property, plant and equipment
Disposals of available-for-sale financial assets
Acquisition of subsidiary
Cash on acquisition
Net cash (used in)/generated from investing activities
Financing activities
Finance costs
New loans and finance leases
Loan repayments
Issue of new share capital
Costs on issue of shares
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
DIGITALBOX PLC
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
Year ended
31 December 2019
£’000
Year ended
31 December 2018
£’000
(437)
-
-
149
11
133
22
(122)
(86)
(100)
(186)
(13)
-
(993)
433
(573)
(22)
33
(7)
1,240
(117)
1,127
246
231
477
(250)
(65)
(39)
-
-
-
-
(354)
(163)
4
(159)
-
50
-
50
-
-
-
690
(42)
648
185
46
231
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
39
DIGITALBOX PLC
CONDOLIDATED STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
CONDOLIDATED STATEMENT OF CASHFLOWS (continued)
Reconciliation of net cashflow to movement in net debt:
Year ended
31 December 2019
£000
Year ended
31 December 2018
£000
Net (decrease)/increase in cash and cash equivalents
New loans and finance leases
Repayment of loans
Movement in net funds in the year
Net funds at 1 January
Net funds at 31 December
Breakdown of net funds
Cash and cash equivalents
Lease liabilities
Net funds at 31 December
246
(33)
7
220
231
451
477
(26)
451
185
-
-
185
46
231
231
-
231
40
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Digitalbox Plc is a public limited company incorporated and domiciled in the United Kingdom. The address of the registered
office 2-4 Henry Street, Bath, England, BA1 1JT. The Company is listed on AIM of the London Stock Exchange.
The principal activity of the Group during the year was the production of publishing content and the sale of advertising space.
These financial statements are presented in pounds sterling because that is the currency of the primary economic environment
in which the Group operates. Foreign operations are included in accordance with the policies set out in note 4.
2. STANDARDS, AMENDMENTS AND INTERPRETATIONS ADOPTED IN
THE CURRENT FINANCIAL YEAR ENDED 31 DECEMBER 2019
The accounting policies adopted are consistent with those of the previous financial year except for the following new and
amended standards and interpretations during the year that are applicable to the Group.
IFRS 16 is effective from 1 January 2019. The standard eliminates the classification of leases as either operating or finance leases
and introduces a single accounting model. Lessees are required to recognise a right-of-use asset and related lease liability for
their operating leases and show depreciation of leased assets and interest on lease liabilities separately in their income statement.
IFRS 16 requires the Group to recognise substantially all of its operating leases on the balance sheet.
The Group adopted IFRS 16 effective 1 January 2019 on a modified retrospective basis. Accordingly, prior year financial information
has not been restated and will continue to be reported under IAS 17: Leases. The right-of-use asset and lease liability have
initially been measured at the present value of remaining lease payments, with the right-of-use asset being subject to certain
adjustments.
When applying IFRS 16, the Group has applied the following practical expedients, on transition date:
•
•
•
Reliance on the previous identification of a lease (as provided by IAS 17) for all contracts that existed on the date of initial
application;
Exclusion of initial direct costs from the measurement of the right-of-use asset at the date of initial application;
The accounting for operating leases with a remaining term of less than 12 months as at 1 January 2019 as short-term leases.
The Group had no leases in the 2018 financial year. The impact had IFRS 16 not been adopted is shown below.
Loss for period to 31 December 2019
Add back: depreciation on Right-of-Use asset
Add back: notional interest charge on finance leases
Less: rent which would have been charged before transition
Revised loss for period to 31 December 2019
The impact had IFRS 16 not been adopted would be an increase to net assets of £1k.
£’000
(386)
8
1
(8)
(385)
3. NEW AND REVISED IFRS STANDARDS IN ISSUE BUT NOT YET EFFECTIVE
Definition of Material – Amendments to IAS 1 and IAS 8 (effective 1 January 2020)
The IASB has made amendments to IAS 1, ‘Presentation of Financial Statements’, and IAS 8, ‘Accounting Policies, Changes in
Accounting Estimates and Errors’, which use a consistent definition of materiality throughout International Financial Reporting
Standards and the Conceptual Framework for Financial Reporting, clarify when information is material and incorporate some of
the guidance in IAS 1 about immaterial information.
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
41
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
3. NEW AND REVISED IFRS STANDARDS IN ISSUE BUT NOT YET EFFECTIVE (continued)
In particular, the amendments clarify:
a) That the reference to obscuring information addresses situations in which the effect is similar to omitting or misstating
that information, and that an entity assesses materiality in the context of the financial statements as a whole, and;
b) The meaning of ‘primary users of general-purpose financial statements’ to whom those financial statements are directed,
by defining them as ‘existing and potential investors, lenders and other creditors’ that must rely on general purpose
financial statements for much of the financial information they need.
The amendment is not expected to have a material impact on the Group.
4. ACCOUNTING POLICIES
Principal accounting policies
The Group is a public Group incorporated and domiciled in the United Kingdom. The principal accounting policies applied in the
preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the
periods presented, unless otherwise stated.
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards, International
Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB)
as adopted by the European Union (“adopted IFRSs”) and those parts of the Companies Act 2006 which apply to companies
preparing their financial statements under IFRSs. The financial statements are presented to the nearest round thousand (£’000)
except where otherwise indicated.
Basis of Consolidation
The Group comprises a holding company, dormant subsidiaries and a trading company. All of these have been included in the
consolidated financial statements in accordance with the principles of acquisition accounting as laid out by IFRS 3 Business
Combinations.
Going concern
The directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group
have adequate resources to continue in operational existence for the foreseeable future. In reaching this conclusion the directors
have considered the financial position of the Group, it’s cash, liquidity position and borrowing facilities together with its forecasts
and projections for 18 months from the reporting date that take into account possible changes in trading performance. The
going concern basis of accounting has therefore been adopted 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.
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be
reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates,
value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the
customer and payment exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the
time value of money.
The Group monitors the performance obligations in accordance with IFRS 15 considering that the performance obligations are
met upon the Group delivering the advertisement to the customer.
A receivable is recognised when the services are delivered at this is the point in time that the consideration is unconditional
because only the passage of time is required before the payment is due.
42
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Rendering of services
Revenue from providing services is recognised in the accounting period in which the services are rendered.
Revenue from the sale of advertising space is recognised upon the advertisement being generated and the Group delivering
the advertisement to the customer. The Group recognises revenue when the amount of revenue can be reliably measured, it is
probable future economic benefits will flow to the entity and the Group has satisfied the performance obligations. Revenue is not
received in advance and therefore the Group does not account for contract liabilities.
Leases
The Company assesses whether a contract is or contains a lease, at inception of a contract. The Company recognises a right-of-
use asset and a corresponding lease liability with respect to all lease agreements in which it is the lessee, except for short-term
leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Company
recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another
systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental
borrowing rate. The Group assesses its discount rate using its incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise:
a) Fixed lease payments (including in-substance fixed payments), less any lease incentives.
The lease liability is included in Payables in the Statement of Financial Position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the
effective interest method) and by reducing the carrying amount to reflect the payments made.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before
the commencement day and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and
impairment losses.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers
ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase
option, the related right-of-use asset is depreciation over the useful life of the underlying asset. The depreciation starts at the
commencement date of the lease.
The right-of-use assets are included in the tangible fixed assets in the Statement of Financial Position.
The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts any identified impairment losses.
Foreign currency
The individual financial statements of each group company are presented in the currency of the primary economic environment
in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial
position of each group company are expressed in pound sterling, which is the functional currency of the Group, and the
presentational currency for the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the Group Company’s
functional currency (foreign currencies) are recorded at rates of exchange prevailing on the dates of the transactions. At the
reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing
on the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the
rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical
cost in foreign currency are not retranslated. Exchange differences arising on the settlement of monetary items, and on the
retranslation of monetary items, are included in profit or loss for the period. Exchange differences arising on the retranslation
of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the
retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-
monetary items, any exchange component of the gain or loss is also recognised directly in equity.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are
translated at exchange rates prevailing on the reporting date. Income and expense items are translated at the average exchange
rates for the period, unless exchange rates fluctuate significantly during the period, in which case the exchange rates at the date of
transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the Group’s translation reserve.
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
43
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
4. ACCOUNTING POLICIES (continued)
Such translation differences are recognised as income and expense in the period in which the operation is disposed of. Goodwill
and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and
translated at the closing rates.
Intangible assets
Intangible assets include goodwill arising on the acquisition of subsidiaries and represents the difference between the fair value
of the consideration payable and the fair value of the net assets that have been acquired. The residual element of Goodwill is not
being amortised but is subject to an annual impairment review.
Also included within intangible assets are various assets separately identified in business combinations (such as brand value) to
which the Directors have ascribed a commercial value and a useful economic life. The ascribed value of these intangible assets is
being amortised on a straight-line basis over their estimated useful economic life, which is considered to be 7 years.
Other intangible assets purchased by the Group are initially recognised at cost. After recognition, under the cost model,
intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses. Amortisation
is recognised so as to write off the cost less their residual values over their useful lives, which is considered to be 3 years straight
line.
Financial instruments
The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability
or an equity instrument.
Contract liabilities
Contract liabilities comprise payments in advance of revenue recognition and revenue deferred due to contract performance
obligation not being completed. They are classified as current liabilities if the contract performance obligations payments are due
to be completed within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as
non-current liabilities. Contract liabilities are recognised initially at fair value and subsequently at amortised cost.
Trade and other receivables
Trade and other receivables are measured at initial recognition at fair value, and subsequently measured at amortised cost using
the effective interest method. A provision is established when there is objective evidence that the Group will not be able to collect
all amounts due. The amount of any provision is recognised in profit or loss.
The Group always recognises lifetime expected credit losses (ECL) for trade receivables and amounts due on contracts with
customers. The expected credit losses on these financial assets are estimated based on the Group’s historical credit loss
experience, adjusted for facts that are specific to the debtors, general economic conditions and an assessment of both the
current as well as the forecast director of conditions at the reporting date, including time value of money where appropriate.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a
financial instrument.
Cash and cash equivalents
Cash and cash equivalents are recognised as financial assets. They comprise cash held by the Group and short-term bank
deposits with an original maturity date of three months or less. Loss recognised previously in equity is included in profit or loss for
the period.
Trade payables
Trade payables are initially recognised as financial liabilities measured at fair value, and subsequent to initial recognition
measured at amortised cost.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deduction of all its liabilities.
Equity instruments issued by the Group are recorded at the proceeds received net of direct issue costs.
Share based payments
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the statement of
comprehensive income on a straight-line basis over the vesting period.
44
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Non-market vesting conditions are taken into account by adjusting the number of options expected to vest at each statement
of financial position date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number
of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative
expense is not adjusted for failure to achieve a market vesting condition.
Fair value is calculated using the Black-Scholes model, details of which are given in note 23.
Pensions
The pension schemes operated by the Group are defined contribution schemes. The pension cost charge represents the
contributions payable by the Group.
Property, plant and equipment
Property, plant and equipment are stated at cost net of accumulated depreciation and provision for impairment. Depreciation is
provided on all property plant and equipment, at rates calculated to write off the cost less estimated residual value, of each asset
on a straight-line basis over its expected useful life. The residual value is the estimated amount that would currently be obtained
from disposal of the asset if the asset were already of the age and in the condition expected at the end of its useful economic life.
The method of depreciation for each class of depreciable asset is:
Fixtures and fittings
Office equipment
Right-of-Use asset
- 25% straight line
- 25% reducing balance
- 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. 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; an
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.
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
45
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
4. ACCOUNTING POLICIES (continued)
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Executive Directors, who are
responsible for allocating resources and assessing performance of the operating segments.
A business segment is a group of assets and operations, engaged in providing products or services that are subject to risks and
returns that are different from those of other operating segments.
A geographical segment is engaged in providing products or services within a particular economic environment that are subject
to risks and returns that are different from those of segments operating in other economic environments. The Executive Directors
assess the performance of the operating segments based on the measures of revenue, profit before taxation (PBT) and profit
after taxation (PAT). Central overheads are not allocated to business segments.
5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
In the application of the Group’s accounting policies, which are described in note 4, the Directors are required to make
judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from
other sources. The estimates and associated assumptions are based on experience and other factors considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.
The following are the critical judgements and estimations that the Directors have made in the process of applying the Company’s
accounting policies and that have the most significant effect on the amounts recognised in the financial statements.
Critical accounting judgements
Impairment of goodwill
Impairment of the valuation of the goodwill relating to the acquisition of subsidiaries is considered annually for indicators of
impairment to ensure that the asset is not overstated within the financial statements. The annual impairment assessment in
respect of goodwill requires estimates of the value in use (or fair value less costs to sell) of subsidiaries to which goodwill has been
allocated. As a result, estimates of future cash flows are required, together with an appropriate discount factor for the purpose of
determining the present value of those cash flows.
Critical accounting Estimates
Amortisation of intangible assets
The periods of amortisation adopted to write down capitalised intangible assets requires judgments to be made in respect of
estimating the useful lives of the intangible assets to determine an appropriate amortisation rate. Domain names and website
costs are being amortised on a straight-line basis over the period during economic benefits are expected to be received, which
has been estimated at 3 years. Intangible assets recognised on consolidation in relation to the brand names are being amortised
straight-line over 7 years.
Depreciation
The useful economic lives of tangible fixed assets are based on management’s judgement and experience. When management
identifies that actual useful economic lives differ materially from the estimates used to calculate depreciation, that charge is
adjusted retrospectively.
Share based payments expense
Non-market performance and service conditions are included in the assumptions about the number of options that are expected
to vest. At the end of each reporting period the Group revises its estimates of the number of options that are expected to vest
based on the non-market vesting conditions. It recognises the impact of the revision to the original estimates, if any, in the
consolidated statement of comprehensive income, with a corresponding adjustment to equity.
This requires a judgement as to how many options will meet the future vesting criteria as well as the judgements required in
estimating the fair value of the options.
IFRS 16 discount rates
The Group estimates an appropriate discount rate based on an incremental rate of borrowing for the calculation of the IFRS 16
right-of-use assets. This requires judgement as to an appropriate discount rate.
46
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
6. SEGMENTAL INFORMATION
A segmental analysis of revenue and expenditure for the period is:
Revenue
Cost of sales
Administrative expenses*
Operating profit/(loss)
Amortisation
Depreciation
Acquisition and listing costs
Share based payments
Finance costs
Tax
Entertainment
Daily
£'000
Mashed
Productions
£'000
1,864
(263)
(288)
1,313
-
-
-
-
-
-
358
(131)
(60)
167
-
-
-
-
-
-
Head
Office
£'000
18
-
(973)
(955)
(133)
(11)
(689)
(149)
(3)
23
(Loss)/Profit for the year
1,313
167
(1,917)
Total
2019
£'000
2,240
(394)
(1,321)
525
(133)
(11)
(689)
(149)
(3)
23
(437)
*Administrative expenses exclude depreciation, amortisation, share based payments and acquisition and listing costs.
For the period to 31 December 2018, all costs were head office costs.
The segmental analysis above reflects the parameters applied by the Board when considering the Group’s monthly management
accounts. For the period to 31 December 2018, no revenue was generated.
External revenue by
location of customer
Total assets by location
Net tangible capital
expenditure by location
31 December
31 December
2019 Continuing 2018 Continuing
£'000
£'000
31 December
2019
£'000
31 December
2018
£'000
31 December
2019
£'000
31 December
2018
£'000
United Kingdom
Europe
Rest of World
1,434
612
194
2,240
-
-
-
-
11,953
135
93
12,181
668
-
-
668
13
-
-
13
-
-
-
-
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
47
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
7. REVENUE
Revenue by stream is split:
Advertising space
Revenue by location is split:
United Kingdom
Europe
Rest of world
2019
£’000
2,240
2,240
1,434
612
194
2,240
2018
£’000
-
-
-
-
-
-
The Group had four customers whose revenue individually represented 10% or more of the Group’s total revenue,
being being 20%, 18%, 17% and 10% respectively.
8. LOSS FROM OPERATIONS
This is arrived at after charging:
Continuing operations
Staff costs (see note 9)
Acquisition and listing costs
Depreciation of property, plant & equipment
Amortisation of intangible fixed assets
Operating lease expense – property
Foreign exchange differences
Auditors’ remuneration in respect of the Company
Audit of the Group and subsidiary undertakings
Auditors’ remuneration – non-audit services – accounting service fees
Auditors’ remuneration – non-audit services –taxation fees
Auditors’ remuneration – corporate finance fees
2019
£’000
2018
£’000
953
689
11
133
17
19
13
23
9
5
124
174
67
-
-
-
-
(1)
14
-
-
1
-
15
48
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
9. STAFF COSTS
Staff costs for all employees, including Directors consist of:
Wages and salaries
Social security costs
Pensions
Share based payment charge
The average number of employees of the group during the year was as follows:
Directors
Management and administration
Content
2019
£’000
716
79
9
804
149
953
2018
£’000
63
4
-
67
-
67
2019
Number
2018
Number
6
4
9
19
2
-
-
2
Directors’ Detailed Emoluments
Details of individual Directors’ emoluments for the year are as follows:
Salary
2019
£’000
Consultancy
2019
£’000
Bonus
2019
£’000
Pension
2019
£’000
Total
2019
£’000
Total
2018
£’000
N Burton (appointed 15 May 2018)
J Carter (appointed 28 February 2019)
J Douglas (appointed 28 February 2019)
M Higginson (appointed 28 February 2019)
D Joseph (appointed 28 February 2019)
R Miller (appointed 28 February 2019)
J Treacy (resigned 28 February 2019)
H Harris (resigned 15 May 2018)
S Wilson (resigned 15 May 2018)
D Maling (resigned 15 May 2018)
N Lee (resigned 31 January 2018)
Total
22
120
120
-
33
12
22
-
-
-
-
329
-
-
-
12
-
15
-
-
-
-
-
27
-
54
54
-
-
-
-
-
-
-
-
108
-
1
1
-
-
-
-
-
-
-
-
2
22
175
175
12
33
27
22
-
-
-
-
466
15
-
-
-
-
-
15
20
8
8
1
67
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
49
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
9. STAFF COSTS (continued)
All pension contributions represent payments into defined contribution schemes.
£93k of the share-based payment expense relates to the directors (2018: £NIL).
The Executive Directors have service contracts with the Company which are terminable by the Company or relevant director after a
fixed term of 12 months followed by 6 months’ notice.
The Directors’ interest in the issued ordinary share capital of the Company on 24 March 2020 and as at 31 December 2019 were as
follows:
Shares of £0.01
Shares of £0.01
24/3/2020
31/12/2019
31/12/2018
James Carter
James Douglas
Nigel Burton
Sir Robin Miller
10,908,078
10,908,078
238,100
775,500
11.88%
11.88%
0.26%
0.84%
10,908,078
10,908,078
238,100
775,500
12.09%
12.09%
0.26%
0.86%
-
-
11,830,835
-
-
-
10%
-
Details of the options over the Company’s shares held by the directors are as follows:
Type
of Option
James Carter
James Douglas
EMI option
EMI option
Options
held at 31
December
2019
1,504,404
1,504,404
Further information on share options is included in note 23.
Exercise
price £
Date of
grant
Exercise
period
0.14
0.14
28 February 2019
28 February 2019
28 July 2022
28 July 2022
The market price of the shares at 31 December 2019 was 6.63p with a quoted range from date of admission to AIM on 28 February
2019 of 4.88p to 13.00p. The options at 2019 vest as above based on performance criteria detailed in note 23.
50
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
10. FINANCE COSTS
Interest charges paid for lease liabilities
Bank charges
11. TAXATION ON LOSS FROM ORDINARY ACTIVITIES
Corporation tax
Adjustment in respect of prior periods
Deferred tax movement
Tax credit for the year
2019
£’000
2018
£’000
1
2
3
-
-
-
2019
£’000
2018
£’000
51
(58)
(16)
(23)
-
-
-
-
The tax assessed for the year differs from the standard rate of corporation tax in the UK applied to loss before tax.
Total loss on ordinary activities before tax
Loss on ordinary activities at the standard
rate of corporation tax in the UK of 19% (2018: 19%)
Effects of:
Expenses not deductible for tax purposes
Adjustments to prior periods
Deferred tax not recognised
Tax credit for the year
2019
£’000
(460)
2018
£’000
(250)
(87)
(48)
191
(58)
(69)
(23)
3
-
45
-
Changes to the UK corporation tax rate were substantively enacted as part of the Finance Bill 2016 (on 6
September 2016). These include reductions to the main rate to reduce the rate to 17% from 1 April 2020. Deferred
tax at the balance sheet date have been measured using these enacted tax rates and reflected in these financial
statements.
In November 2019, and the March 2020 budget, the Prime Minister announced the intention to cancel the future
reduction in corporation tax rate from 19% to 17%. This announcement does not constitute substantive enactment
and therefore deferred taxes at the balance sheet date continue to be measured at the enacted rate of 17%.
There were unused tax losses of £4.5m at the 31 December 2019 which the majority restricted for use within
Digitalbox Plc. No deferred tax asset has been recognised due to the uncertainty surrounding future profits.
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
51
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
12. EARNINGS PER SHARE
The earnings per share is based on the following:
2019
£’000
Continuing earnings post tax loss attributable to shareholders
(437)
Basic weighted average number of shares
Diluted weighted average number of shares
Basic earnings per share
Diluted earnings per share
76,597,859
76,597,859
(0.00571)
(0.00571)
2018
£’000
(250)
95,458,229
95,458,229
(0.00262)
(0.00262)
Earnings/(Loss) per ordinary share has been calculated using the weighted average number of shares in issue
during the relevant financial periods. IAS 33 requires presentation of diluted EPS when a company could be
called upon to issue shares that would decrease earnings per share or increase the loss per share. The exercise
price of the outstanding share options is significantly more than the average and closing share price. Therefore,
as per IAS33 the potential ordinary shares are disregarded in the calculation of diluted EPS.
Underlying loss is the loss after taxation, adjusted for share based payments, acquisition and listing costs, and
impairment of intangible assets relating to discontinuing operations.
52
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
13. BUSINESS COMBINATIONS
On 28 February 2019 the Group acquired 100% of the ordinary shares in Digitalbox Publishing (Holdings) Ltd for a consideration of
£9,999,048. This investment is included in the Parent company’s balance sheet at its fair value at the date of acquisition.
The completion accounts show a breakdown of the assets and liabilities of the acquired company to be as follows:
Book value
£’000
Fair value
adjustment
£’000
Fair value
to Group
£’000
Intangible fixed assets
Tangible fixed assets
Receivables
Cash and cash equivalents
Payables
Deferred tax
Net assets on acquisition
Goodwill on acquisition
Total consideration
Discharged by:
Shares in Digitalbox plc
36
14
735
245
(285)
-
745
100
-
-
-
-
(17)
83
136
14
735
245
(285)
(17)
828
9,171
9,999
£’000
9,999
9,999
The revenue and loss included in the Consolidated Statement of Comprehensive Income for the 10 months to 31 December 2019 was
£2,240k and £394k pre-tax respectively.
The intangible fixed asset fair value adjustment is in relation to brand asset.
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
53
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
13. BUSINESS COMBINATIONS (continued)
On 5 March 2019, the Group acquired 100% of the ordinary shares Mashed Productions Limited for a consideration
of £1,193,237. This investment is included in the Parent company’s balance sheet at its fair value at the date of
acquisition.
The completion accounts show a breakdown of the assets and liabilities of the acquired company to be as follows:
Book value
£’000
Fair value
adjustment
£’000
Fair value
to Group
£’000
-
3
149
188
(94)
-
246
754
-
-
-
-
(128)
626
Intangible fixed assets
Tangible fixed assets
Receivables
Cash and cash equivalents
Payables
Deferred tax
Net assets on acquisition
Goodwill on acquisition
Total consideration
Discharged by:
Cash
Shares in Digitalbox plc
754
3
149
188
(94)
(128)
872
321
1,193
£’000
993
200
1,193
The trade and assets of Mashed Productions Limited have been hived up to Digitalbox Publishing Ltd from
5 March 2019.
The intangible fixed asset fair value adjustment is in relation to brand asset.
54
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
14. TANGIBLE FIXED ASSETS
Cost
Balance at 1 January 2018
Balance at 1 January 2019
Impact of change in accounting policy
Balance at 1 January 2019 (adjusted)
Additions on acquisition of subsidiary
Additions
Balance at 31 December 2019
Accumulated depreciation
Balance at 1 January 2018
Balance at 1 January 2019
Depreciation charge on owned assets
Depreciation charge on financed assets
Balance at 31 December 2019
Net Book Value
At 31 December 2019
At 31 December 2018
At 31 December 2017
IFRS 16
Right-of-Use
Asset
£’000
Equipment
£’000
Fixtures
and Fittings
£’000
Total
£’000
-
-
33
33
-
-
33
-
-
-
8
8
25
-
-
-
-
-
-
12
13
25
-
-
2
-
2
23
-
-
-
-
-
-
2
-
2
-
-
1
-
1
1
-
-
-
-
33
33
14
13
60
-
-
3
8
11
49
-
-
The net book value of owned and leased assets included as “Tangible fixed assets” in the Statement of Financial Position is as follows:
Tangible fixed assets owned
Right-of-Use tangible fixed assets
Information about the Right-of-Use assets is summarised below:
Property
Depreciation charge in respect of the Right-of-Use asset is as follows:
Property
8
2019
£’000
24
25
49
2019
£’000
25
25
2019
£’000
8
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
55
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
15. INTANGIBLE ASSETS GROUP
Cost
Balance at 1 January 2018
Balance at 1 January 2019
Additions on acquisition of subsidiary
Additions
Balance at 31 December 2019
Accumulated amortisation
Balance at 1 January 2018
Balance at 1 January 2019
Amortisation
Impairment
Balance at 31 December 2019
Net Book Value
At 31 December 2019
At 31 December 2018
At 31 December 2017
Goodwill
Arising on
Consolidation
£’000
Other
Intangible
Assets
£’000
Development
costs
£’000
-
-
-
9,492
9,492
-
-
-
-
-
9,492
-
-
-
-
-
854
854
-
-
102
-
102
752
-
-
-
-
35
-
35
-
-
31
-
31
4
-
-
Total
£’000
-
-
35
10,346
10,381
-
-
133
-
133
10,248
-
-
The cost of other intangible assets comprises the net present value of £854k of brand value at the date of acquisition. The other
intangible assets are being amortised over a period of 7 years. Amortisation is charged to administrative costs in the Statement of
Comprehensive Income.
GOODWILL AND IMPAIRMENT
The carrying value of goodwill in respect of each cash generating unit is as follows:
Digitalbox Publishing (Holdings) Limited
Mashed Productions Limited
31 December
2019
£’000
31 December
2018
£’000
9,171
321
9,492
-
-
-
56
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
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 has been determined from a review of the
current and anticipated performance of this unit. In preparing this projection, a discount rate of 7% has been
used based on the weighted average cost of capital and a future growth rate of 3% has been assumed. It has
been assumed investment in capital equipment will equate to depreciation over the year. The discount rate was
based on the Company’s cost of capital as estimated by management.
Mashed Productions Limited
The recoverable amount of Mashed Productions Limited has been determined through the trade and
assets being hived up to Digitalbox Publishing Limited and will continue to benefit from cash inflows through
Mashed Productions.
16. TRADE AND OTHER RECEIVABLES
Due after more than one year
Prepayments and accrued income
Trade receivables
Prepayments and accrued income
Other receivables
Convertible loan note
17. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
31 December
2019
£’000
31 December
2018
£’000
18
18
1,037
77
275
-
1,407
-
-
203
14
220
437
31 December
2019
£’000
31 December
2018
£’000
477
477
231
231
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
57
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
18. LIABILITIES
Current liabilities
Trade payables
Social security and other taxes
Accruals
Lease liabilities
Other payables
Corporation tax payable
Non-current liabilities
Other payables
Lease liabilities
31 December
2019
£’000
31 December
2018
£’000
54
143
237
24
54
98
610
8
2
10
1
-
162
-
-
-
163
-
-
-
19. LOANS
The Group had no loan arrangements in place as at 31 December 2019.
The Group had the following loan arrangements in place as at 31 December 2018:
Convertible loan loans
On 9 November 2018, the Company issued a conditional Placing of £220,000 via Convertible Unsecured Loan
Notes (“CLNs”).
The CLNs had an initial term of 3 months, subsequently extended to 31 March 2019, and no coupon.
The issue of the CLNs was conditional on the Company completing a Reverse Takeover and on the Admission of
the enlarged ordinary share capital to trading on a Recognise Investment Exchange. When issued, the CLNs had
a conversion price of 25% discount to the price on Re-admission.
The Company considered the accounting treatment of the CLNs in accordance with IAS 32. Based on
management’s review of the loan agreement and the applicable standard it was deemed appropriate not to split
the instrument between debt and equity components but to treat the convertible loan entirely as debt.
Following the Reverse Takeover on 28 February 2019, £220,000 of share capital was issued in relation to the
convertible loan.
Liability component at 1 January
Liability component at date of issue
Loan notes converted to shares (including interest)
Liability component at 31 December
31 December
2019
£’000
31 December
2018
£’000
220
-
(220)
-
-
220
-
220
58
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
20. DEFERRED TAX
Balance at 1 January 2019
Deferred tax on acquisition of subsidiaries
Deferred tax charge for the year
Balance at 31 December 2019
The deferred tax provision comprises:
Deferred tax on intangibles
The expected net reversal of deferred tax in 2019 is £21k.
21. FINANCIAL RISK MANAGEMENT
Total
£’000
-
144
(16)
128
31 December
2019
£’000
31 December
2018
£’000
128
128
-
-
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 as shown in note 18.
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.
Current financial assets
Trade receivables
Other receivables
Cash and cash equivalents
The table below illustrates the due date of trade receivables:
Current
31 – 60 days
61 – 90 days
91 – 120 days
121 and over
31 December
2019
£’000
31 December
2018
£’000
1,037
275
477
1,789
-
437
231
668
31 December
2019
£’000
31 December
2018
£’000
390
327
172
65
83
1,037
-
-
-
-
-
-
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
59
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
21. FINANCIAL RISK MANAGEMENT (continued)
The table below illustrates the geographical location of trade receivables:
United Kingdom
Europe
Rest of world
Liquidity risk
31 December
2019
£’000
31 December
2018
£’000
809
135
93
1,037
-
-
-
-
Liquidity risk arises from the Group’s management of working capital and the finance charges and repayments
of its liabilities.
The Group’s policy is to ensure that it will have sufficient cash to allow it to meet its liabilities when they become
due and so cash holdings may be high during certain periods throughout the period.
The Group currently has no bank borrowing or overdraft facilities.
The Group’s policy in respect of cash and cash equivalents is to limit its exposure by reducing cash holding in the
operating units and investing amounts that are not immediately required in funds that have low risk and are
placed with a reputable bank.
Cash at bank and cash equivalents
31 December
2019
£’000
31 December
2018
£’000
At the year end the Group had the following cash balances:
477
231
Cash at bank comprises Sterling and US Dollar cash deposits held within National Westminster.
All monetary assets and liabilities within the group are denominated in the functional currency of the operating
unit in which they are held. All amounts stated at carrying value equate to fair value.
Financial liabilities at amortised cost
Trade payables
Accruals
Lease liabilities
Loans
Other payables
31 December
2019
£’000
31 December
2018
£’000
54
237
26
-
4
321
1
162
-
220
-
383
60
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
The table below illustrates the maturities of trade payables:
Current
31 – 60 days
61 – 90 days
91 – 120 days
121 and over
The table below shows the maturities of financial liabilities:
Trade payables
Accruals
Lease liabilities
Other payables
31 December
2019
£’000
31 December
2018
£’000
39
11
3
-
1
54
1
-
-
-
-
1
Carrying
amount
£’000
6 months
or less
£’000
6-12
months
£’000
1 or more
year
£’000
54
237
26
4
321
54
237
12
4
307
-
-
12
-
12
-
-
2
-
2
Capital Disclosures and Risk Management
The Group’s management define capital as the Group’s equity share capital and reserves.
The Group’s objective when maintaining capital is to safeguard its ability to continue as a going concern, so that in due course it can
provide returns for shareholders and benefits for other stakeholders.
The Group manages its capital structure and makes adjustments to it in the light of changes in the business and in economic
conditions. In order to maintain or adjust the capital structure, the Group may from time to time issue new shares, based on working
capital and product development requirements and current and future expectations of the Company’s share price.
Share capital is used to raise cash and as direct payments to third parties for assets or services acquired.
Market risk
Interest rate risk
Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Group
considers the interest rates available when deciding where to place cash balances.
Foreign currency risk
Foreign exchange transaction risk arises when individual Group operations enter into transactions denominated in a currency other
than the functional currency. The principal risk arises from the Group’s US based subsidiary, Digitalbox Inc. The general policy for the
Group is to sell to customers in the same currency that services or goods are purchased in, reducing the transactional risk.
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
61
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
22. SHARE CAPITAL
Called up share capital Allotted, called up and fully paid
No.
31 December
2019
Value
£’000
No.
31 December
2018
Value
£’000
Ordinary shares of 0.01p each
90,251,726
903
118,079,093
1,181
Deferred shares of 0.0499p each
386,907,464
19,306
386,907,464
19,306
Deferred shares of 0.01p each
112,176,000
1,122
-
-
589,335,190
21,331
504,986,557
20,487
Shares issued in the year to 31 December 2019:
Date
Description
No shares
Price/
share
Pence
Gross share
value
£
28.02.19
28.02.19
28.02.19
28.02.19
28.02.19
Issue of 1p shares
Issue of 1p shares
Issue of 1p shares
Issue of 1p shares
Issue of 1p shares
907
2,095,238
72,720,346
8,103,571
1,428,571
1
1
1
1
1
9
20,952
727,203
81,036
14,286
Cash
received
£
9
219,999
-
1,020,001
-
Shares
issued
Total
consideration
£
-
-
9,999,047
114,501
200,000
9
219,999
9,999,047
1,134,502
200,000
84,348,633
843,486
1,240,009
10,313,546
11,553,557
As at 31 December 2019
589,335,190
21,330,959
As at 31 December 2018
504,986,557
20,487,473
Cash received does not included costs relating to share issues. In the year to 31 December 2019, costs of £117k were incurred relating
to share issues and these costs were charged against share premium.
Share premium represents the total consideration received on each share issue less the gross share value.
23. SHARE BASED PAYMENTS
During the year, the Company incurred £149k share based payment charge (2018: £nil). £99,929 options were cancelled (2018: £nil)
and £nil options expired (2018: £30k), which was transferred through equity to retained earnings on the expiration of options during
the year.
Outstanding at beginning of year
Granted during the year
Cancelled during the year
Expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
2019
No. of share
options
Weighted average
exercise price
2018
No. of share
options
Weighted average
exercise price
160,000
6,017,526
(1,002,906)
-
5,174,620
5,174,620
20p
14p
14p
-
14p
14p
1,360,000
-
-
(1,200,000)
160,000
160,000
6.3p
-
-
4.5p
20p
20p
62
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
160,000 options are exercisable at 20.0p and expire on 31 December 2020.
5,014,620 options are exercisable after 3 years, or an exit event.
A Black-Scholes model has been used to determine the fair value of the share options on the date of grant. The fair value is expensed
to the income statement on a straight-line basis over the vesting period, which is determined annually. The model assesses a
number of factors in calculating the fair value. These include the market price on the date of grant, the exercise price of the share
options, the expected share price volatility of the Company’s share price, the expected life of the options, the risk-free rate of interest
and the expected level of dividends in future periods.
For those options granted where IFRS 2 "Share-Based Payment" is applicable, the fair values were calculated using the Black-Scholes
model. The inputs into the model were as follows:
28 February 2019
Risk free rate
0.75%
Share price
volatility
65%
Share price at
date of grant
£0.0004
Expected volatility was determined by calculating the historical volatility of the Company's share price for 12 months prior to the date
of grant. The expected life used in the model is the term of the options.
The vesting conditions in relation to the share options are 3 years, or an exit event.
The vesting condition in relation to the warrants is 1 year from admission.
24. RESERVES
Full details of movements in reserves are set out in the consolidated statement of changes in equity. The following describes the
nature and purpose of each reserve within owners’ equity:
Share premium: Amount subscribed for share capital in excess of nominal value.
Retained earnings: Cumulative net gains and losses recognised in the consolidated statement of comprehensive income.
Share based payment reserve: Cumulative charges recognised in the consolidated statement of comprehensive income in relation to
share based payments.
25. LEASING COMMITMENTS
Group as a lessee
The Group leasing arrangements for their head office.
Lease liabilities due
31 December 2019
£’000
Contractual undiscounted cash flow due
31 December 2019
£’000
Current
Non-current
24
2
26
8
27
35
There is not considered to be any significant liquidity risk by the Group in respect of leases.
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
63
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
25. LEASING COMMITMENTS (continued)
The following amounts in respect of leases, where the Group is a lessee, have been recognised in the profit or loss:
Interest expense on lease liabilities
Expenses relating to short-term leases
26. CAPITAL COMMITMENTS
At 31 December 2019 and 31 December 2018 there were no capital commitments.
31 December 2019
£’000
1
17
18
27. RELATED PARTY TRANSACTIONS
During the year, Integral2 Limited billed £43k (2018: £nil) to the Group, a company related by virtue of David Joseph being a
common director. As at 31 December 2019, £5k (2018: £nil) was owed to Integral2 Limited.
During the year, the Group received revenue of £17k (2018: £nil) from Immotion Group plc, a company related by virtue of Martin
Higginson being a common director. As at 31 December 2019, £2k (2018: £nil) was owed to the Group.
During the year, M Capital Investment Partners (Holdings) Limited billed £23k (2018: £nil) to the Group, a company related by
virtue of Martin Higginson being a common director. As at 31 December 2019, £nil (2018: £nil), was owed to M Capital
Investment Partners (Holdings) Limited.
During the year, Robin Miller Consultants Limited billed £10k (2018: £nil) to the Group, a company related by virtue of Robin Miller
being a common director. As at 31 December 2019, £nil (2018: £nil), was owed to Robin Miller Consultants Limited.
The key management personnel are considered to be the Board of Directors. Their remuneration is disclosed in detail in note 9. Key
management were remunerated £444k (2018: £67k) in the year ended 31 December 2019.
The key management were provided 3,008,808 of share options realising a charge of £93k in the year.
28. SUBSEQUENT EVENTS
The worldwide outbreak of the COVID-19 virus represents a significant event since the end of the financial period. In light of the
impact of the virus upon supply chain and consumer demand, the Group has reviewed its cash flow forecasts and considered the
impact on going concern, concluding that the going concern basis remains an appropriate basis of preparation for these financial
statements given the likely cash flow impact of operations 12 months from the date of signing this report. Please refer to note 4 for
further detail on the Group’s going concern basis of preparation.
COVID-19 is considered to be a non-adjusting post balance sheet event and therefore has been taken into account in preparing the
statement of financial position but the Directors don’t consider there to be any impact as at 31 December 2019. Please refer to note 5
and 15 for further details on the Group’s assessment of the impact of COVID-19 on the impairment of goodwill.
64
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DIGITALBOX PLC
COMPANY STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2019
COMPANY STATEMENT OF FINANCIAL POSITION
Fixed assets
Investments
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Borrowings
Total current liabilities
Non-current liabilities
Other payables
Total liabilities
Net current (liabilities)/assets
Total assets less total liabilities
Capital and reserves
Called up share capital
Share premium account
Share based payment reserve
Retained reserves
Shareholders’ funds
III
IV
V
VI
VII
At 31
December
2019
£’000
At 31
December
2018
£’000
11,192
11,192
155
22
177
(214)
-
(214)
(8)
(222)
(37)
11,147
-
-
437
231
668
(163)
(220)
(383)
-
(383)
285
285
21,331
29,757
181
(40,122)
20,488
19,164
32
(39,399)
11,147
285
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 £723k (2018: £250k loss) in respect of the Company which is dealt with in the
financial statements of the Parent Company.
The financial statements were approved by the Board and authorised for issue on 1 April 2020.
James Carter
CEO
David Joseph
CFO
The notes on pages 59 to 69 form part of the Company financial statements.
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
65
DIGITALBOX PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
COMPANY STATEMENT OF CHANGES IN EQUITY
Share
Premium
£’000
Share
based
payment
£’000
1 January 2018
Issue of shares
Share issue costs
Share options cancelled
Loss after tax
Share
Capital
£’000
19,823
665
-
-
-
19,181
25
(42)
-
-
31 December 2018
20,488
19,164
Issue of shares
Issue costs deducted from equity
Loss after tax
Equity settled share-based payments
843
-
-
-
10,710
(117)
-
-
Retained
reserves
£’000
(39,179)
-
-
30
(250)
(39,399)
-
-
(723)
-
Retained
reserves
£’000
(113)
690
(42)
-
(250)
285
11,553
(117)
(723)
149
62
-
-
(30)
-
32
-
-
-
149
31 December 2019
21,331
29,757
181
(40,122)
11,147
66
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
COMPANY STATEMENT OF CASH FLOWS
Cash flows from operating activities
Operating loss before tax
Adjustments for:Share based payments
Cash flows from operating activities before changes in working capital
(Increase)/Decrease in trade and other receivables
Increase/(Decrease) in trade and other payables
Cash generated/used in operations
Investing activities
Disposals of available-for-sale financial assets
Acquisition of subsidiaries
Cash on acquisition
Net cash absorbed from investing activities
Financing activities
Issue of new share capital (net of costs)
Costs on issue of shares
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
Reconciliation of net cashflow to movement in net debt:
Net (decrease) / increase in cash and cash equivalents
New loans and finance leases
Repayment of loans
Movement in net debt in the year
Net debt at 1 January
Net debt at 31 December
DIGITALBOX PLC
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
Year ended
31 December
2019
£’000
Year ended
31 December
2018
£’000
(723)
149
(574)
62
(260)
(198)
-
(993)
433
(560)
1,240
(117)
1,123
(209)
231
22
(209)
-
-
(209)
231
22
(354)
-
(354)
(163)
4
(159)
50
-
50
690
(42)
648
185
46
231
185
-
-
185
46
231
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
67
DIGITALBOX PLC
NOTES FORMING PART OF THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES FORMING PART OF THE COMPANY FINANCIAL STATEMENTS
I. ACCOUNTING POLICIES
The separate financial statements of the Company are presented as required by the Companies Act 2006. As permitted by the Act
the separate financial statements have been prepared in accordance with International Financial Reporting Standards as adopted
by the European Union. The principal accounting policies adopted are the same as those set out in note 4 to the consolidated
financial statements except as noted below:
Valuation of investments
Investments in subsidiaries are stated at cost less any provision for impairment in value.
II. OPERATING LOSS
The auditor remuneration for audit and other services is disclosed in note 8 to the consolidated financial statements.
The average number of employees of the company during the year was 6 (2018: 2) and total staff costs were £466k (2018: £67k).
Directors remuneration is disclosed in note 9 to the consolidated financial statements.
III. FIXED ASSET INVESTMENTS
Subsidiary undertakings
Cost
Balance at 1 January 2019
Additions
Disposals
Balance at 31 December 2019
Provisions
Balance at 1 January 2019
Balance at 31 December 2019
Carrying value of investments
31 December 2019
£’000
-
11,192
-
11,192
-
-
11,192
At the year end the Company had the following subsidiaries:
Subsidiary name
Class of shares
Proportion
of ownership
Registered office
Digitalbox Publishing Limited
Mashed Productions Limited
Digitalbox Inc
Digitalbox Publishing (Holdings) Limited
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
2-4 Henry Street, Bath, BA1 1JT
No.2 Lochrin Square, 96
Fountainbridge, Scotland, EH3 9QA
19 Courtland Drive, Hudson, MA 01749
2-4 Henry Street, Bath, BA1 1JT
Subsidiary name
Digitalbox Publishing Limited
Digitalbox Inc
Digitalbox Publishing (Holdings) Limited
Principal activity
Sale of digital advertising space
Dormant subsidiary
Dormant subsidiary
68
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
IV. RECEIVABLES: due within one year
Amounts owed by group undertakings
Other receivables
Prepayments and accrued income
Convertible loan note
V. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
31 December 2019
£’000
136
10
9
-
31 December 2018
£’000
-
14
203
220
155
437
31 December 2019
£’000
31 December 2018
£’000
22
22
231
231
VI. PAYABLES: amounts falling due within one year
Trade payables
Accruals
Other tax and social security
Other payables
VII. SHARE CAPITAL
31 December 2019
£’000
31 December 2018
£’000
3
148
13
50
214
1
162
-
-
163
Details of the Company’s share capital and the movements in the period can be found in Note 22 to the consolidated financial
statements.
VIII. SHARE OPTIONS
Share Option Scheme
Details of the share options outstanding at 31 December 2019 can be found in Note 23.
IX.RESERVES
Details of the reserves can be found in Note 24.
X. RELATED PARTY TRANSACTIONS
Details of the Company’s related party transactions can be found in Note 27 to the consolidated financial statements.
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
69
DIGITALBOX PLC
DIRECTORS, SECRETARY
AND ADVISERS
Directors, Secretary
and Advisers
Directors
Company Secretary
and Registered Office
Nigel Burton
James Carter (appointed 28 February 2019)
James Douglas (appointed 28 February 2019)
Martin Higginson (appointed 28 February 2019)
David Joseph (appointed 28 February 2019)
Sir Robin Miller (appointed 28 February 2019)
David Joseph
2-4 Henry Street
Bath
England
BA1 1JT
Company Number
04606754
Registrars
Nominated Adviser and Broker
Joint Broker
Independent Auditors
Solicitors
Country of Incorporation
of Parent Company
Legal Form
Domicile
Share Registrars Limited
The Courtyard
17 West Street
Farnham
GU9 7DR
WH Ireland Limited
24 Martin Lane
London
EC4R 0DR
Alvarium Capital Partners
10 Old Burlington Street
London
W1S 3AG
Haysmacintyre LLP
10 Queen Street Place
London
EC4R 1AG
DWF LLP
Central Square South
Orchard Street
Newcastle upon Tyne
NE1 3AZ
England and Wales
Public Limited Company
United Kingdom
70
ANNUAL REPORT & ACCOUNTS 2019 | digitalbox.com
Digitalbox PLC
2-4 Henry Street
Bath
BA1 1JT
United Kingdom
Co Reg No. 04606754
+44 (0)1225 430 091
digitalbox.com
© 2020