DIGITALBOX PLC
ANNUAL REPORT
AND ACCOUNTS
2020
DIGITALBOX PLC
CONTENTS
DIGITALBOX PLC
CHAIRMAN’S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2020
Chairman’s Statement
FOR THE YEAR ENDED 31 DECEMBER 2020
Contents
Chairman’s Statement
Chief Executive’s Statement
Strategic Report
Corporate and Social Responsibility Report
Corporate Governance Report
Audit Committee Report
Remuneration Committee Report
Directors’ Report
Directors’ Responsibilities Statement
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Statement of Financial Position
Page
3
5 - 9
10 - 17
18
20 - 24
25
26
27 - 28
29
30 - 33
36
37
38
Consolidated Statement of Cash Flows
39 - 40
Notes forming part of the Consolidated Financial Statements
41 - 66
Company Statement of Financial Position
Company Statement of Changes in Equity
Company Statement of Cash Flows
67
68
69
Notes forming part of Company Financial Statements
70 - 72
Directors, Secretary and Advisers
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I am delighted to report that
Digitalbox plc (‘Digitalbox’) has
successfully navigated its way
through the most challenging social
and economic period in recent history.
The business was confronted with
not just the sudden and dramatic
economic downturn in Q2 2020
caused by COVID-19, but also the
disruption created by the social media
Our mobile-
first business is in
excellent shape to
continue to grow.
giants in their efforts to combat misinformation in
the run-up to the US elections and their ongoing
difficulties combatting the same about COVID-19.
Thanks to swift decision-making by an alert
management team the business took immediate
action in ‘right-sizing’ the cost base in order to soften
the blow of the sudden and inevitable reduction
in revenues.
Further, management shored up the balance sheet
by availing itself of the Government-backed CBILS
scheme, taking on a loan of £450k in October and at
the same time securing an injection of £1.2m of fresh
capital from a new cornerstone investor Downing
Strategic Micro-Cap Investment Trust plc (“Downing”)
through the issue of shares.
Management did not let the prevailing challenging
economic conditions get in the way of progressing its
buy and build strategy. On 1st October 2020 Digitalbox
announced it had successfully acquired Tab Media
Limited (‘The Tab’) adding it to the portfolio alongside
Entertainment Daily and The Daily Mash. The Tab is
now profitable (being loss making under previous
ownership) and has benefitted from being integrated
onto the group’s proprietary tech platform Graphene.
This combination of mitigating activity and delivery
of strategy meant year-on-year revenue impact was
successfully contained at only a 2.4% reduction and
the business generated a robust £305k of adjusted
EBITDA compared to £525k in 2019.
Digitalbox begins 2021 with £1.9m cash reserves and
a stronger investor base. The three brands in our
portfolio are seeing the disruption in the ecosystems
of the social media giants beginning to dissipate and
we are successfully diversifying our traffic sources. In
addition, Group M industry forecasters are predicting
double-digit year-on-year advertising growth for the
UK led by programmatic display on mobile.
Whilst the impacts of the pandemic are far from
over, our mobile-first business is in excellent shape to
continue to grow.
We remain highly cash generative, have healthy
cash reserves and we see further opportunities for
both organic growth from the existing brands and
complementary acquisitions in 2021.
Our efficient and expert content creation married to
our cutting-edge technology creates value with The Tab
being a strong proof point for our buy and build plan.
Marcus Rich
Chairman
26 March 2021
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ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
CHIEF EXECUTIVE’S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
CHIEF EXECUTIVE’S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2020
Chief Executive’s Statement
FOR THE YEAR ENDED 31 DECEMBER 2020
Digitalbox delivered a very positive
performance in FY2020. Despite
challenging market conditions, we
thrived by taking advantage of the
changing landscape to deliver on our
strategy of building a leading mobile-
focused media business through
the acquisition of an additional asset
and integrating it with our operating
platform. This success has been greatly
aided by our agile approach, which
enables us to quickly adapt to opportunities and
challenges as they arise.
availing ourselves of a Government-backed loan under
the CBILS scheme during October and, importantly,
having continued our buy and build plan in acquiring
The Tab at the end of September.
We enter 2021 with £1.9m cash at the bank, an
expanded portfolio of assets, a stronger investor base,
a brighter advertising market and a re-invigorated
Board. We look forward to 2021 as a trading period that
will start to normalise and present more acquisition
opportunities as the reality of life begins to create
pressures on those businesses who were less able to
navigate the economy in 2020.
The year saw a massively disrupted economic
environment created by the COVID-19 pandemic
alongside some significant turbulence within social
media platforms as their algorithms struggled to
manage issues around misinformation, but I am
pleased to report we have been able to move the
business forwards, ending the year operating three
significant brands and in a much stronger position
than we started it.
Financial review
As with most businesses, Digitalbox suffered from
the economic impact created by the global COVID-19
pandemic. Advertising markets declined sharply, and
ongoing uncertainty meant recovery took time. This
heavily impacted our revenue expectation for Q2, and
it wasn’t until late into Q3 that advertising markets
started to return to normal.
2020 ended with the business having traded
profitably on an adjusted EBITDA basis, having
brought on board a cornerstone investor in Downing,
Further, the social media giants made changes
to their content algorithms in order to counter
misinformation attached to COVID-19, Black Lives
Matter campaigns and also the US presidential
We thrived by taking advantage
of the changing landscape to
deliver on our strategy.
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ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com DIGITALBOX PLC
CHIEF EXECUTIVE’S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
CHIEF EXECUTIVE’S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2020
Content and
technology are at the
core of the offering.
elections. Changes within some of the ecosystems
had some unforeseen negative impacts on legitimate
sites and content that the platforms continue to try
and rectify. The result of this saw a negative impact to
traffic and revenues in Q3 and a recovery beginning in
Q4 for Digitalbox.
Despite these dual challenges, thanks to swift and
decisive action, we quickly adapted the business to
mitigate the revenue shortfall as much as possible
and, more importantly, ensuring the business
maintained its cash reserves.
The Group therefore ended the year with virtually
flat revenues of £2.2m, which the Board consider a
significant achievement under the circumstances.
These revenues are for the full 12 months of trading
to 31st December 2020 versus 10 months of trading in
2019, but the outcome is a reassuring indicator of the
resilience of the Digitalbox business model.
Gross profit of £1.7m (2019: £1.8m) also suffered a
margin percentage decline due to the advertising
rates falling during the sudden and dramatic global
advertising market reduction, but still delivering
healthy gross margins of 76% (2019: 82%).
Adjusted EBITDA for the year was £305k (2019: £525k),
and our adjusted EBITDA margin was 13.9%
(2019: 23.4%).
Digitalbox has a low capital expenditure requirement
and is not working capital hungry. This, together
with the successful £1.2m placing in October to a
cornerstone investor and the securing of a CBILS
loan of £450k in the same month, ensured that the
business strengthened its balance sheet and cash
reserves, ending the year with £1.9m of cash
(2019: £0.5m).
Operating review
The Group’s three current trading brands are
Entertainment Daily, The Daily Mash and the newly
acquired site, The Tab. Entertainment Daily produces
and publishes online UK entertainment news covering
TV, showbiz and celebrities. The Daily Mash produces
and publishes online satirical news articles in its
own distinctive style, and The Tab is the UK’s largest
student and youth culture site fuelled by a network
of 33 local university sites. All three brands generate
revenue from the sale of advertising in and around the
content they publish.
Content and technology remain at the core of the
Digitalbox offering. Article length, page speed, server
set-up and advertising auctions are all refined for the
mobile journey as we obsess about delivering the
optimal user experience.
Our user base has grown 76% year-on-year as we have
been successful in broadening our horizons through
additional sites and content verticals and extended
our reach of UK adults. Our growth reflects our focus;
unlike many media companies we are not distracted
by the need to manage declining print assets but
instead are free to concentrate on consumer habits
and profitability. Mobile is the device of choice for
consumers and advertisers alike, and we know how
to engage audiences and monetise them better than
much of the UK market through this channel.
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As with many of the trends that have been accelerated
by COVID-19, we have clearly seen disproportionate
advertising market growth benefitting the mobile
audience segment.
Proprietary technology continues to evolve within
Digitalbox, and our Graphene technology stack now
powers Entertainment Daily, The Daily Mash and The
Tab, ensuring the fastest experience for users and
advertisers alike.
Our interest in making acquisitions remains strong,
and The Tab has proved to be a great success since
its acquisition at the end of September 2020. The
disruption brought to the market by the pandemic
created opportunities, and as time progresses we
envisage seeing more businesses increasingly
challenged and being made available to interested
parties. Overlaying our model on two acquisitions so
far has proved successful and we remain focused on
repeating this to grow the business.
The Digitalbox team and infrastructure maintain
capacity for further growth and acquisitions to deliver
further expansion while operational efficiencies
remain strong.
Mobile-first strategy
Our strategy to establish a mobile-first platform
business with diversified brands that engage
consumers at scale is clearly working with 88% of our
audience on Entertainment Daily, The Daily Mash
and The Tab being accessed through these devices.
Having grown to more than 12m monthly unique
users, we present a significant scale when compared
to the more traditional UK publishing houses and our
primary objective is to continue this expansion.
Mobile ad spending worldwide was growing well
ahead of the wider digital market prior to the
pandemic and the impact of COVID-19 only looks to
have accelerated this trend. As part of our technology
supporting our mobile-first strategy, we have built a
proprietary video player called BOB. The BOB player
is built to ensure optimal mobile performance and
efficiency. Both Entertainment Daily and The Tab are
presenting ‘must-see TV previews’ on their sites.
Portfolio expansion
Digitalbox is a highly cash-generative business
enabling us to continue with this strategy despite the
impact of COVID-19. As part of the development of our
acquisition strategy, the Group acquired Tab Media
Limited during the year.
Projected Global Digital / Mobile Ad Spend
507
466
438
397
348
318
73%
76%
79%
80%
78%
2019
2020
2021
2022
2023
2024
Global Digital Ad Spend $bn*
Mobile % of total**
*Group M Global End-of-Year Forecast 2020
**Pubmatic 2020 Global Ad Trends / eMarketer (excludes 2024)
Tab Media Limited operated the UK’s most successful
student and youth culture site, The Tab. The site was
founded by three students at Cambridge in 2009
as a reaction to out-of-touch student papers. Since
then it has exploded into one of the biggest youth
media sites in Britain, speaking directly to Generation
Z and engaging with over six million users a month.
Content is driven by a core team based in London who
work with student journalists on 33 subsites across UK
campuses. Not only is this an incredible opportunity
to engage with this influential demographic, it also
opens up a pool of smart journalist talent who may
well be interested in getting involved in the broader
Digitalbox business.
Growth from the existing portfolio
During the year, Entertainment Daily saw continued
growth of its user-base, averaging 4.5m unique users
per month which was up from 3.3m in 2019. The site
continues to diversify its traffic sources as it builds out
on other platforms, most notably Google. In addition
to the growth seen from Google search traffic, we have
experienced a continued rise in Google Discover traffic
that in many ways, provides a similar user experience
to Facebook Newsfeed. These channels combined saw
growth of more than 100% year-on-year.
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ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
CHIEF EXECUTIVE’S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
CHIEF EXECUTIVE’S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2020
to turn a loss-making site (The Tab) to profitability
within the first quarter of ownership.
COVID-19
Our main focus has been to protect our staff and
stakeholders and in keeping with our regular
operating model, we have used technology to best
navigate the challenges brought by the pandemic.
From the middle of March 2020, we took a strong
steer from Alphabet’s response to the developing
issue and moved all staff to working from home
ahead of the UK Government’s enforced lockdown.
Additionally, as a precaution, we acted quickly in
2020 to access a CBILS loan of £0.45m to enable us
to continue trading and delivering our strategy for
growth even if the outcomes of the pandemic
were more severe than expected, but this has yet
to be needed.
In fact, the Group has performed well during the
COVID-19 period; as detailed earlier in the report, after
a dramatic downturn in Q2, advertising session values
increased significantly as the year unfolded.
Culture and people
When we joined AIM, we said: ‘We work in the ways
that deliver the best results most efficiently. Rather
than harbouring traditional views of office culture
or adopting a one-size-fits-all approach, we mix
office-based roles and home working arrangements,
full-time and part-time positions, staff and freelance
contributor agreements to marry the needs of the
business with those of our people.’
This nimble approach meant we were better placed
than many to adapt to the challenges of 2020. Our
teams fully shifted to remote-working early and have
been outstanding; adapting quickly and continuing to
deliver. Good communication and a sense of inclusion
are important to us, and so to adapt to the reduction
in contact time, we have increased communication
frequency through monthly newsletters and weekly
leadership meetings alongside daily team meetings.
We have also more recently introduced company-
wide discussion groups via Zoom.
Recruiting and retaining the best people is crucial
to the success of Digitalbox. We have had great
success hiring younger talent on Entertainment Daily
through its apprentice programme, we have recruited
a tranche of new contributing writers on The Daily
Mash, and the acquisition of The Tab brings an entirely
new opportunity. With the local network of University
sites having already proved a fantastic gateway to
great staff on The Tab, we aim to make broader
Corporate Highlights
REVENUE
ADJUSTED EBITDA
£2.2m vs £2.2m in 2019
£0.3m vs £0.5m in 2019
ADJUSTED EBITDA MARGIN
ADJUSTED EBITDA PER SHARE
13.9% vs 23.4% in 2019
0.3p vs 0.7p in 2019
opportunities across our growing portfolio available to
this amazing talent pool.
We aim to ensure our staff are rewarded fairly and
have opportunities to progress within the business.
All staff benefit from the company’s life assurance
scheme. All staff and their immediate families are
able to access a free wellbeing & support programme
including personalised healthy eating and exercise
plans, mental health support, legal and medical advice
and ways to prevent burnout. Senior staff also have
access to a share options scheme.
out globally, economies will bounce back. With the UK
set well with its vaccine program, we can look forward
to a more positive market than we have experienced
over the last 12 months. We firmly believe that with
advertising trends continuing to be accelerated by
the COVID-19 impact resulting in money moving into
the mobile sector at a rapid pace, combined with a
strengthening economy, we are perfectly placed to
grow over the coming years.
I would like to thank all staff for their fantastic
hard work during the last year and their valuable
contribution to these results and promise a summer
party for all in Bath when the law allows.
James Carter
Chief Executive
26 March 2021
Outlook
Digitalbox has continued to develop its profitable UK
platform business positioned directly in the mobile
space and our buy and build strategy is enabling us to
deliver our vision of creating a market-leading, mobile-
first digital media business for the 21st century.
Since joining the AIM, we have seen the successful
integration of The Daily Mash, and, more recently
The Tab. Both of these acquisitions have proved
the potential of our model, and give us continued
confidence in our ability to build a larger portfolio
of successful, profitable digital brands with this
approach. We are actively evaluating potential targets
on an ongoing basis and with cash at the bank and
the ability to raise funds via the market, we have the
flexibility to move on the right opportunities at speed.
We clearly all hope that the worst of the COVID-19
pandemic is now behind us, and as the vaccines roll
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The Daily Mash was impacted in the year by
Facebook’s increasingly sensitive ‘misinformation’
algorithms repeatedly failing to identify and
understand satirical content correctly and therefore
reducing reach on our articles. We have seen
consistently high levels of engagement when
users are presented with our content, and a high
proportion of The Daily Mash traffic comes from direct
visits which increasingly offsets the issue. Dialogue
continues with Facebook to help them understand
and address the issue.
Also, the Daily Mash saw a big increase in audience for
its TV show The Mash Report in Q2. With studio access
closed, the show was delivered from the homes of our
presenters through video conference facilities and
grew its weekly viewer levels from 800k to well over 1m.
Technology
Our proprietary tech stack, named Graphene, is a key
part of our success. As a mobile-first business, we have
shaped Graphene to ensure we deliver the fastest
page speeds across our sites along with the most
efficient advertising transactions.
Graphene allows audience scale to build rapidly with
the least resistance from the technology and is a
significant contributing factor as to why we were able
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ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
Strategic Report
DIGITALBOX PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
We set out to build a new digital media
The
Digitalbox
Vision
business; one driven by profit and
efficiency delivering high quality,
engaging content to users at scale.
Our aim continues to be to acquire
and transform digital media
assets with potential through the
application of the Digitalbox model.
Free from legacy issues, we have
a proven ability to grow at speed by
Whilst the tech duopoly continue to evolve their
models, consumers continue to support other
push media sources too, signing up to notifications,
subscriptions and emails from their favourite media
brands. We continue to see growth in all three of
these areas.
Relevance
Our business is currently built around a UK audience
focus which brings distinct benefits across our key
disciplines:
focusing on current and future trends;
Our editorial content resonates strongly with our
rapidly adapting to the habits of our audience
and the needs of our commercial partners.
audiences, keeping our readers coming back
again and again.
Our key advertiser relationships all have a
significant presence in our local market which
is one of the world’s most advanced marketing
economies and they place the greatest value on
high-quality UK traffic.
Consumer media habits
Our formative approach was informed by our
recognition of the growth of ‘push media’
consumption, especially on mobile – where the
most highly engaging and relevant content from
publishers is pushed into users’ feeds based on
trending topics, article performance and their own
behaviours and interests.
The content-surfacing algorithms will continue to
be refined, delivering better user experience and
higher rates of engagement and generating
further growth of this type of consumption.
The major platforms (chiefly Facebook
and Google) are continually competing for
consumer time, and it is publishers of the
most engaging content that will continue
to benefit. In the last couple of years
Google has developed its push content
strategy via its Discover feed which is now
making billions of content suggestions its
800m global mobile users.
Targeting consumers via an array of
distribution channels is one thing but
operating effectively enough to ensure
maximum engagement is where the real
skillset lies.
ACQUISITION TARGETS BY TYPE
BUSINESS TYPE
TYPICAL CHALLENGES
SOLUTION
LEGACY
PUBLISHER
FIRST-WAVE
DIGITAL
BEDROOM
START-UP
REVENUE DECLINE DISTRACTION
COST BASE
BUSINESS COMPLEXITY
LOW MARGIN DIRECT SALES
OVER-ESTIMATED PERFORMANCE
OVERLY DIVERSIFIED
LACK OF MARGIN CLARITY
SUB-SCALE
PLATFORM ISSUES
PRIMITIVE AD STACK
The addition of The Tab at the end of September 2020
with its hyper-local university sites adds even more
depth to this element of our strategy.
and technology performance which can be addressed
through the application of the Digitalbox model.
Growth through acquisition
On our admission to AIM in February 2019,
Digitalbox outlined a strategy to make investments
in acquisitions to grow the portfolio. In particular
we intended to identify targets from three distinct
categories; Legacy Publisher, First Wave Digital
and Bedroom Start-Ups. In our view, each of these
categories continue to face challenges around
monetisation, operating profitability, audience growth
The completion of The Tab acquisition marked our
second acquisition after The Daily Mash in 2019 as
part of this plan and we continue to evaluate further
potential targets.
In particular, we will identify assets that best align with
our processes and enhance our existing portfolio to
deliver the strategic vision. We will continue to seek
out content verticals that offer the opportunity to scale
against larger media organisations who are struggling
to operate profitably at scale.
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OUR APPROACH
We believe in order to be successful in today’s media environment a business, its brands and its people must be:
ENGAGING
The internet is dominated by
AGILE
The landscape is constantly
EFFICIENT
Efficiency matters because we
platforms that compete for
changing and we are always ready
regard profitable operation as
engagement and media brands
to adapt, to seize opportunities
the key to longevity. The digital
that deliver the highest levels
and address challenges, taking
market has seen many long bets
will prosper. Our teams’ passion
effective tactical steps to deliver
against models that fail the profit
for their subjects, understanding
on strategy.
of their audiences and expertise
in producing truly compelling
content consistently deliver
market-leading levels of
engagement.
test. Our teams use every tool
to maximise their impact and
efficiency.
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ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
MOBILE-OPTIMISED TECH PLATFORM
We are able to quickly on-board new brands and businesses onto our mobile-first
Graphene platform. This tech stack consists of a blend of technologies allowing
our websites to flourish through an efficient, light touch commercial
approach designed to maximise mobile profitability.
Graphene is a highly scalable and dynamic platform that assists content
delivery at the highest speeds. This brings significant advantages to how
our sites are experienced by users and also ranked by the key power brokers –
especially Google and Facebook – as they evaluate the preferred destinations
for users. Graphene also enables us to realise tech and serving costs on the
acquisitions we make.
Graphene will continue to evolve via our tech roadmap for 2021.
Growing valuable audiences
Entertainment Daily reaches a core demographic
of 25-55 year old UK women; the power brokers of
UK shopping. Being frequently in charge of the
household budget they are passionate about the
territory they control. They love brands that provide
status and are always on the look-out for great deals
they can share with their friends. Our audience has
evolved to more than 4m per month and our channel
diversification saw significant growth from
Google-sourced users.
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The Daily Mash is consumed by savvy UK independent
thinkers. These educated professionals respond to
the brand’s pitch-perfect skewering of the rich and
infamous and its inventive and surreal takes on the
absurdity of modern life. Influential among their peers
thanks to their own finely-tuned view of the world,
they are seen as selective and discerning. These 25-44
year olds are power-sharers of digital media who even
in these challenging times continue to spread a smile.
The Tab was founded by three students at Cambridge
in 2009 as a reaction to out-of-touch student papers.
Since then it has exploded into one of the biggest
youth media sites in Britain, speaking directly the
UK’s 15-24 year olds. They are the generation tasked
with more responsibility than any other in the
last 50 years. It will be their reinvention that
heals the planet, that creates new ways
of working and cares for our ageing
population. The leaders of tomorrow, the
global citizens who need to think in a
more measured and considered fashion.
The three audiences have further scope
for growth and cross-fertilisation as they
continue to demonstrate increasing
levels of engagement.
Product development
While profitability is key, we continue
to invest in the existing business. 2021
will see additional investment across
Entertainment Daily, The Tab and The
Daily Mash as we aim to deliver further
meaningful growth from diversification of our
key routes to audiences.
DIGITALBOX ACQUISITION PROCESS
STAGE ONE
STAGE TWO
STAGE THREE
WHOLE PROCESS
AT
M
AT
M
ACQUIRE
TARGET REVIEW
DUE DILIGENCE
CONTRACTING
INTEGRATE
OPERATIONAL REVIEW
OPTIMISE FOR MOBILE
IMPLEMENT AD STACK
IMPROVE
APPLY PROPRIETARY FRONT END
CONTENT ANALYSIS
PRODUCT DEVELOPMENT
Pandemic coverage
Our brands delivered coverage of the impacts of
the pandemic each in a unique tone tuned to their
respective audience. Entertainment Daily kept readers
abreast of the impact on production of their favourite
shows and popular celebrities personal struggles
with the virus. The Tab launched its You Matter
campaign highlighting mental health and loneliness
issues facing students caused by the pandemic and
The Daily Mash delivered winning satirical coverage
with stories including Five Smug Middle-Class Social
Isolation Activities and its take on panic buying
Waitrose Limits Food Sales To People With
Detached Houses.
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 5.
Operational KPIs
ONLINE USERS
MOBILE USERS
UK AUDIENCE
SOCIAL FOLLOWERS
67million
(2019: 38m)
(2018: 25m)
59million
(2019: 35m)
(2018: 23m)
51million
(2019: 37m)
(2018: 20m)
6.7million
(2019: 3.5m)
(2018: 2.5m)
Users who visit
Digitalbox’s websites
Numbers of users visiting
sites on mobile and
tablet devices
Users of Digitalbox’s
websites based in UK
Facebook, Twitter &
Instagram followers of
Digitalbox’s properties
Figures include full year Google Analytics audience figures for Entertainment Daily & The Daily Mash and post-acquisition
period Oct-Dec for The Tab and associated social channels. Social Followers shows total followers as at end 2020.
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ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
Highlights
AS NOTED, 2020 SAW ENCOURAGING PROGRESS ACROSS THE PORTFOLIO, INCLUDING:
DIGITALBOX GROUP
12 million
monthly users in Dec 2020
USERS
BY
DEVICE
250 million+ Ad impressions in Dec 2020
88%
MOBILE
12%
DESKTOP
ENTERTAINMENT DAILY
THE DAILY MASH
THE TAB
112% growth in Google/
Direct traffic
1100+ stories per month
1.6 million
reader comments Q1
14% growth in
visits per user
1 million
weekly viewers for The
Mash Report TV show
in traffic*
42% growth
236,000
followers
of new Netflix channel
12% growth in
session duration
94% growth in
new users*
* Q4 2020 post-acquisition vs Q4 2019
Key dates in 2020
Oct 2020
Nov 2020
The Tab acquisition completes
The Daily Mash beer launches
Feb 2020
May 2020
Jul 2020
Oct 2020
Nov 2020
Entertainment Daily content
investment to build search traffic
The Mash Report TV show
achieves record viewing figures
Entertainment Daily monthly
search traffic grows 86%
Downing £1.2m subscription
BOB video player deployed
on Entertainment Daily
Mar 2020
Teams switch to 100%
remote working
Jun 2020
Oct 2020
Early conversations with
potential 2020 acquisition targets
Panmure Gordon appointed as
Financial Adviser and Joint Broker
Dec 2020
The Tab Q4 traffic
up 42% y.o.y
14
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ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
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.
The 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.
Section 172 of the Companies Act 2006 requires that the Directors act in a way that they
consider, in good faith, would most likely promote the long-term success of the business
taking into consideration the interests of its shareholders and other stakeholders. The table
sets out our key stakeholder groups, their interests and how the Group engages with them.
RISK
POTENTIAL IMPACT
MITIGATION AND CONTROL
STAKEHOLDER
WHY WE ENGAGE
HOW WE ENGAGE
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 across the two largest platforms and driven more direct
traffic rather than being overly reliant on one source.
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.
Our shareholders
We maintain and value regular dialogue with our shareholders throughout the
year and place great importance on our relationship with them. We know that
our investors expect a comprehensive insight into the financial performance of
the Group, and awareness of long-term strategy and direction. As such, we aim to
provide high levels of transparency and clarity of our results and long-term strategy
and to build trust in our future plans.
• Regular reports and analysis on investors
and shareholders
• Annual Report
• Company website
• Shareholder circulars
• AGM
• RNS announcements
• Press releases
Our employees
Without our employees we wouldn’t have a business. Effective employee
engagement leads to a happier, healthier workforce who are invested in the success
of the Group. We strive to address any employee concerns regarding working
conditions, health and safety, training and development, as well as workforce
diversity. Engagement with our employees starts from the top and is driven
effectively throughout the Group.
• Evaluation and feedback processes for
employees and management
• Competitive rewards packages
• Encouraging employee training and
development
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 has substantial cash reserves, is very profitable,
has a very low capital expenditure requirement and pays close
attention to its cash flow forecasts.
Regulatory bodies
The Group’s operations are subject to a wide range of laws, regulations, and listing
requirements including data protection, tax, employment, environmental and
health and safety legislation, along with contractual terms.
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 I and
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 still not behind us and therefore
may impact advertising spending. There is the risk of staff may
become unwell and being unable to continue to work.
The Board will monitor revenue impact closely. As a digital
publisher, the Group’s ability to reach its audiences may not be
as heavily affected as other media properties 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.
Our customers
Our relationship with our partners is collaborative and we are in constant dialogue
to provide support and analytics as required. We listen to and engage with our
customers on a regular basis to ensure that we understand their needs and can
provide solutions that address them. We work hard to ensure that customer
concerns are dealt with in a timely and professional manner.
Our suppliers
We have a number of key suppliers with whom we have built strong relationships.
We establish effective engagement channels to ensure our relationships remain
collaborative and forward focused, and to foster relationships of mutual trust
and loyalty.
• Company website
• RNS announcements
• Annual Report
• Direct contact with regulators
• Compliance updates at Board Meetings
• Consistent risk review
• Continual dialogue and review of feedback
from customers to ensure satisfaction
• Taking a collaborative approach to problem
solving with our suppliers.
• Clear parameters are given, backed-up
by written agreements where required, to
ensure the Group and supplier’s actions are
co-ordinated.
16
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ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
CORPORATE AND SOCIAL RESPONSIBILITY REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
Corporate and Social Responsibility Report
The Group aims to operate ethically and be socially
responsible in its actions. Below are a number of the
approaches through which this is achieved.
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.
Details of the Group’s performance are shared with
all employees at appropriate times via face-to-face
meetings where safe to do so, virtual 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.
Corporate
Governance
18
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ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
Corporate Governance Report
DIGITALBOX PLC
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX AND THE QCA CODE
Digitalbox 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.
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.
More detail on strategy can be found in the Strategic
Report starting on page 10.
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 shareholders’ needs
fundamental to its success.
The Chief Executive Officer and Chief Financial
Officer 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 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.
James Carter
Chief Executive Officer
Jim Douglas
Chief Operating Officer
David Joseph
Chief Financial Officer
Martin Higginson
Non-Executive Director
Matthew Armitage
Non-Executive Director
Marcus Rich
Non-Executive Chairman
James joined Digitalbox in 2016 and is
Jim oversees editorial operations at Digitalbox
David is a law graduate and Chartered
Martin is recognised as a seasoned
Matt has over thirty years’ experience in the
Marcus joined Digitalbox as Chairman in
responsible for the strategy, direction and
and has previously held strategic and profit
Accountant, starting his career and qualifying
Technology, Media and Telecoms (TMT)
media, technology, and consumer goods
February 2021. Before this he was the CEO of
day-to-day running of the business. He has
responsibility for successful media brands in
with Price Waterhouse, moving into industry
entrepreneur. He has started, sold, and listed
sectors. He has held senior positions in
TI Media for six years where he led the MBO
a proven track record in building value in
sectors including film, music, games, sport
in steel stockholding (ASD plc) then into
numerous businesses. His first business was
global organisations, such as Unilever, and in
of Time Inc. UK backed by private equity firm
the media industry, within both public and
and automotive. He has led creative teams
FMCG (Unilever plc) before entering the
sold to IPC Magazines in 1982. Following
privately funded start-ups. Latterly, Matt was
Epiris in March 2018, and then the subsequent
limited companies. As part of the founding
in both UK and US. He started his career at
media industry in 1995 when he joined
three years with IPC he left to set up his
an executive board member at St Ives plc,
successful £140m sale of the now-named TI
executive team at Factory Media, he drove
EMAP plc as a journalist and in the early 90s
Emap plc. Here he occupied several senior
own publishing and telecoms business, this
initially as Group CFO and subsequently as
Media to Future plc in April 2020. Previously
the business to achieve a significant exit to
he joined start-up business Future Publishing,
financial roles within its operating companies,
was subsequently sold to Scottish Power
Group CEO, where he led the transformation
he worked for Associated Newspapers in the
Forward Internet Group. Prior to the creation
which eventually became and remains a listed
including Chief Financial Officer of Emap
plc. During his time with Scottish Power he
of the Group into a digitally focussed,
roles of Commercial Director and Managing
of Factory Media, James was NPD Director at
company. At Future, Jim held the position of
Metro, the men’s and music publications
joined their subsidiary Scottish Telecom,
international, marketing services network.
Director Mail On Sunday. He has held several
Dennis Publishing and Publishing Director
Editorial Director for 10 years with ultimate
business and Emap Advertising, the then
as Managing Director of their Internet and
Matt is a qualified accountant.
senior Managing Director positions for sizable
at EMAP plc where he had responsibility for
responsibility for product development.
central cross platform advertising sale
FHM. FHM grew from a fledgling fashion
During this time Future was named UK Digital
business. On leaving in 2001 David has since
focused magazine to a global network of 32
Publisher of the Year five times.
worked exclusively within the media industry
editions and a value at its peak of over £250m.
Board of Directors
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.
Interactive division, including Internet ISP
Demon Internet. Following the flotation of
Thus plc (formerly Scottish Telecom) he left to
start Monstermob, a company he went on to
list on AIM in 2003; growing it to a Top 50 AIM
listed business. Monstermob Group plc was
sold to Zed Worldwide in 2006. Martin has
subsequently founded Cityblock plc, a luxury
student accommodation business, NetPlayTV
plc, an interactive TV gaming business,
Digitalbox and Immotion plc. He is currently
CEO of Immotion Group plc.
businesses in the 16 years he worked for Emap
plc in Publishing, TV and Advertising in the
UK and both the USA and Australia. Marcus
has created significant shareholder value in
the businesses he has run across the
media landscape.
20
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ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com DIGITALBOX PLC
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
Outside the AGM will Group 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 / virtual 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 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
found 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.
Board
Audit
Remuneration
Nomination
Disclosure
James Carter
Jim Douglas
David Joseph
Martin Higginson
Nigel Burton
(resigned 17/02/2021)
Robin Miller
(resigned 17/02/2021)
Matthew Armitage
(appointed 17/02/2021)
Marcus Rich
(appointed 17/02/2021)
8/8
8/8
8/8
8/8
8/8
8/8
n/a
n/a
-
-
-
1/1
1/1
1/1
n/a
n/a
-
-
-
1/1
1/1
1/1
n/a
n/a
-
-
-
1/1
1/1
1/1
n/a
n/a
-
-
-
-
-
-
n/a
n/a
The Group’s approach to this can be found on page 17.
The appointment of Directors will be in accordance
with the Articles of Association.
4. Embed effective risk management,
considering both opportunities and threats,
through the organisation
The Board met eight times in 2020.
Details of the Board members, their roles and their
attendance at meetings can be found on pages 20, 21
and 23.
6. Ensure that between them the Directors have
necessary up-to-date experience, skills and
capabilities
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.
The Group considers the skills and experience of the
Board to be appropriate and this is kept under review.
Targets are aligned with the delivery of the
Group’s strategy.
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.
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The Executive Directors have each worked in 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.
The Board may utilise the results of the evaluation
process when considering the adequacy of the
composition of the Board and for succession planning.
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.
8. Promote a culture that is based on ethical
values and behaviours
The Group aims to achieve the highest ethical
standards and behaviour when conducting its
business, with integrity, fairness and equality being
high priorities.
The Corporate and Social Responsibility report is found
on page 18.
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
23
ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
AUDIT COMMITTEE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
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24
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. Matthew Armitage, who has recent and
relevant financial experience acts as chairman. Martin
Higginson and Marcus Rich are the other members of
the Audit Committee.
The Audit Committee report is found on page 25.
.
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
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. Marcus Rich acts as chairman
of the Remuneration Committee and Matthew
Armitage and Martin Higginson are the other
members of the Remuneration Committee.
The Remuneration Committee report is found on
page 26.
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. Marcus
Rich acts as chairman of the Nomination Committee
and Matthew Armitage 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. Marcus Rich acts as Chairman of the
Disclosure Committee. Matthew Armitage 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.
Further details of this can be found on page 17.
Audit Committee Report
Significant Accounting Issues
The 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 that of our NOMAD,
WH Ireland, throughout 2020 and now Panmure
Gordon, 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 model
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 on 23 March 2021 prior to approving the
2020 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 £51k (2019: £36k) and in respect of
non-audit services were £25k (2019: £138k) 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.
Matthew Armitage
Chairman of the Audit Committee
26 March 2021
25
ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
REMUNERATION COMMITTEE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
Remuneration Committee Report
Directors’ Report
The 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 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 2020 are shown
on page 51.
Directors’ shareholdings are set out below:
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.
Director
Number of
1p Ordinary Shares as at
31st December 2020
James Carter
Jim Douglas
David Joseph
Robin Miller
Martin Higginson
(via M Capital Ventures Ltd)
Nigel Burton
%
9.4%
9.4%
-
0.7%
-
Number of 1p
Ordinary Shares as at
31st December 2019
10,908,078
10,908,078
-
775,465
1,740,475
10,908,078
10,908,078
-
775,465
-
238,095
0.2%
238,095
%
12.1%
12.1%
-
0.9%
1.9%
0.3%
24,570,191
19.6%
24,570,191
27.2%
Total ordinary shares
116,332,457
90,251,726
Options have been granted to certain key employees under an approved EMI scheme, as below:
Option Holder
Number of Shares
Year 1
James Carter
Jim Douglas
Nick Clough
Karen Hyland
Unallocated
1,504,441
1,504,441
1,002,960
1,002,960
3,008,882
501,480
501,480
-
-
-
Vesting Period
Year 2
501,480
501,480
-
-
-
Year 3
501,481
501,481
1,002,960
1,002,960
-
8,023,684
1,002,960
1,002,960
3,008,882
Marcus Rich
Chairman of the Remuneration Committee
26 March 2021
T he Directors present their report and audited
financial statements for the year ended 31
December 2020.
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:
James Carter
Jim Douglas
David Joseph
Martin Higginson
Sir Robin Miller (resigned 17 February 2021)
Nigel Burton (resigned 17 February 2021)
have considered the financial position of the Group,
together with its forecasts and projections for two
years from the reporting date that take into account
severe but 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.
Marcus Rich and Matthew Armitage were appointed
to the Board on 17 February 2021.
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.
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 4.
Dividends
No dividends were paid during the year (2019: £Nil).
The Board is not recommending the payment of
a final dividend in respect of the year ended 31
December 2020.
Earnings per Share
Loss per share in the period from continuing
operations was 0.00198p (2019: 0.00571p) and diluted
loss per share from continuing operations in the
period was 0.00198p (2019: 0.00571p).
Going Concern
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
future. In reaching this conclusion the Directors
Employee Engagements
The Group engages with its employees regularly
through face-to-face communication where
permitted, and virtual meeting where not during
which details of the Group’s performance is shared.
Further information regarding employee
engagement can be found in the Corporate and Social
Responsibility Report on page 18.
Employee Policies
The Group has established employment policies
which are compliant with current legislation and
codes of practice. The Group is an equal opportunities
employer.
Payment of Suppliers
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.
26
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DIGITALBOX PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
Directors’ Report
DIGITALBOX PLC
DIRECTORS’ RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2020
Directors’ Responsibilities Statement
Directors’ Indemnity
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 2020, the following shareholders
owned 3% or more of the Company:
Name
Shares
%
Nortrust Nominees Limited
Mr James Alexander Carter
Mr James Robert Douglas
Vidacos Nominees Limited
JIM Nominees Limited
Pershing Nominees Limited
Lawshare Nominees Limited
24,489,795
10,908,078
10,908,078
8,243,000
6,630,516
5,570,213
4,149,850
21.1%
9.4%
9.4%
7.1%
5.7%
4.8%
3.6%
As at 25 March 2021, the following shareholders owned
3% or more of the Company:
Name
Shares
%
Nortrust Nominees Limited
Mr James Alexander Carter
Mr James Robert Douglas
JIM Nominees Limited
Vidacos Nominees Limited
Pershing Nominees Limited
Lawshare Nominees Limited
Lawshare Nominees Limited
24,489,795
10,908,078
10,908,078
8,734,092
8,243,000
4,840,213
3,905,964
3,515,697
21.1%
9.4%
9.4%
7.5%
7.1%
4.2%
3.4%
3.0%
Political Donations
The Group did not make any political donations
during 2020 (2019: £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
announced in due course.
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 26 March 2021 and
signed on its behalf
James Carter
Chief Executive Officer
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.
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 judgements 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.
28
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DIGITALBOX PLC
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF DIGITALBOX PLC
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF DIGITALBOX PLC
FOR THE YEAR ENDED 31 DECEMBER 2020
Independent Auditor’s 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 2020 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 2020 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.
Conclusions relating to going concern
In auditing the financial statements, we have
concluded that the directors’ use of the going concern
basis of accounting in the preparation of the financial
statements is appropriate. In our evaluation of the
directors’ conclusions, we considered the inherent
risks to the group and the company’s business
model and reviewed the directors’ assessment of
how those risks affect the group and the company’s
financial resources or ability to continue operations
over the going concern period. We considered the
likely cash inflows and outflows over the going
concern period and assessed the risk that the
group and the company would be unable to meet
their liabilities as they fall due. We scrutinised the
reasonableness of assumptions applied to the cash
flow forecasts and sensitised such forecasts against
various scenarios which could come to realisation. We
reviewed management’s going concern memo and
discussed with the Board. We considered post balance
sheet date performance and other wider factors in
concluding our assessment.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the group and the company’s
ability to continue as a going concern for a period
of at least twelve months from when the financial
statements are authorised for issue.
Our responsibilities and the responsibilities of the
directors with respect to going concern are described
in the relevant sections of this report.
An overview of the scope of our audit
Our audit scope included obtaining an understanding
of the group and its environment, including the
group’s system of internal control, and assessing the
risks of material misstatement at the group level. Audit
work to respond to the assessed risks was performed
directly by the audit engagement team who
performed full scope audit procedures on the parent
company and the group as a whole.
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
KEY AUDIT MATTER
HOW OUR SCOPE ADDRESSED THIS MATTER
Acquisition of subsidiary and valuation of goodwill
Our audit work included, but was not restricted to, the following:
and other intangibles
During the year, the group acquired a new subsidiary.
There is a risk that the goodwill arising on the
acquisition has been incorrectly calculated and not split
Reviewing the Share Purchase Agreement for the entity
acquired ascertaining the consideration included in the
goodwill calculation;
across other intangible assets acquired.
Reviewing and assessing the goodwill calculations prepared by
management including a review of the calculation apportioning
the goodwill across other intangible assets acquired;
Reviewing treatment of acquisition costs to ensure that these
had been expensed within the Statement of Comprehensive
Income in accordance with IFRS 3.
Impairment of goodwill and other intangibles
Our audit work included, but was not restricted to, the following:
The group has goodwill arising on previous acquisitions
of £9,492k in the balance sheet, as well as £1,229k of
Reviewing and assessing the impairment reviews prepared by
other intangible assets arising on acquisition. There is a
management and challenging the assumptions;
risk as to the valuation of goodwill and other separately
Reviewing and assessing future budgets and cash flow forecasts
identifiable intangibles arising during previous
including considering sensitivities;
acquisitions and the new acquisition during the year.
Making enquiries of management and assessing expected future
performance and potential growth in the business.
Investment in subsidiaries
Our audit work included, but was not restricted to, the following:
The parent company has investments in subsidiaries
of £11,229k. Due to its materiality in the context of the
Reviewing and assessing the impairment reviews prepared by
parent company financial statements, this is considered
management and challenging the assumptions;
to be an area that has a significant impact on our audit.
Reviewing and assessing future budgets and cash flow forecasts
including considering sensitivities;
Making enquiries of management and assessing expected future
performance and potential growth in the business.
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.
Our application of materiality
The scope and focus of our audit were 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 £30,000, determined by reference to 10%
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DIGITALBOX PLC
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF DIGITALBOX PLC
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF DIGITALBOX PLC
FOR THE YEAR ENDED 31 DECEMBER 2020
of group Adjusted EBITDA. We have reported to
the audit committee any corrected or uncorrected
misstatements arising exceeding £1,500. Performance
materiality was set at £22,500, being 75% of materiality.
Component materiality for the trading Subsidiary
was set at £12,200, with reference to a benchmark of
the company’s Adjusted EBITDA. Materiality for the
parent company was set at £16,800, determined with
reference to a benchmark of the company’s assets, but
capped such that the sum of parent and subsidiary
materiality did not exceed group materiality.
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
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 29, 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.
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect
of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities,
including fraud is detailed below:
Explanation as to what extent the audit
was considered capable of detecting
irregularities, including fraud.
Based on our understanding of the company and
industry, we identified that the principal risks of
non-compliance with laws and regulations related to
regulatory requirements for the Investment advisory
business and trade regulations, and we considered
the extent to which non-compliance might have a
material effect on the financial statements. We also
considered those laws and regulations that have
a direct impact on the preparation of the financial
statements such as the Companies Act 2006, income
tax, payroll tax and sales tax.
We evaluated management’s incentives and
opportunities for fraudulent manipulation of the
financial statements (including the risk of override
of controls) and determined that the principal risks
were related to posting inappropriate journal entries
to revenue and management bias in accounting
estimates. Audit procedures performed by the
engagement team included:
Inspecting correspondence with regulators
and tax authorities;
Discussions with management including
consideration of known or suspected instances of
non-compliance with laws and regulation
and fraud;
Evaluating management’s controls designed to
prevent and detect irregularities;
Identifying and testing journals, in particular journal
entries posted with unusual account combinations,
postings by unusual users or with unusual
descriptions; and
Challenging assumptions and judgements made
by management in their critical accounting
estimates
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.
Jon Dawson
(Senior Statutory Auditor)
For and on behalf of Haysmacintyre LLP, Statutory
Auditors
10 Queen Street Place
London
EC4R 1AG
Date: 26 March 2021
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DIGITALBOX PLC
FINANCIAL STATEMENTS
DIGITALBOX PLC
FINANCIAL STATEMENTS
Financial
Statements
34
35
ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com DIGITALBOX PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Balance at 1 January 2019
Shares issued
Share issue costs
Equity settled share-based payments
Loss after tax
Share
capital
£’000
20,488
843
-
-
-
Share
premium
£’000
19,164
10,710
(117)
-
-
Balance at 31 December 2019
21,331
29,757
Shares issued
Share issue costs
260
-
976
(84)
Capital reduction
(20,428)
(19,500)
Equity settled share-based payments
Loss after tax
-
-
-
-
Balance at 31 December 2020
1,163
11,149
The notes on pages 41 to 66 form part of the group financial statements.
Revenue
Cost of sales
Gross profit
Administrative expenses
Other operating income
Operating loss
Memorandum:
Adjusted EBITDA1
Depreciation
Amortisation
Share based payments
Acquisition & listing costs
Direct costs of business combinations
Capital restructure costs
Loss from Operations
Finance costs
Loss before taxation and attributable
to equity holders of the parent
Taxation
Loss after tax
Note
7
8
8
10
11
Year ended
31 December
2020
£’000
Year ended
31 December
2019
£’000
2,187
(529)
1,658
(1,823)
24
(141)
305
(30)
(149)
(140)
-
(98)
(29)
(141)
(2)
(143)
(48)
(191)
2,240
(394)
1,846
(2,303)
-
(457)
525
(11)
(133)
(149)
(689)
-
-
(457)
(3)
(460)
23
(437)
All losses after taxation arise from continuing operations.
There was no other comprehensive income for 2020 (2019: £NIL).
1Adjusted EBITDA is defined as the loss from operations after deducting depreciation,
amortisation, share based payments, acquisition and listing costs, direct costs associated with
business combinations and capital restructure costs.
Loss per share
Basic (continuing)
Loss per share
Diluted (continuing)
£
£
(0.00198)
(0.00571)
(0.00198)
(0.00571)
12
12
The notes on pages 41 to 66 form part of the group financial statements.
Share
based
payment
£’000
Retained
(deficit) /
earning
£’000
32
(39,399)
-
-
-
(437)
(39,836)
-
-
39,928
-
(191)
-
-
149
-
181
-
-
-
140
-
321
Total
equity
£’000
285
11,553
(117)
149
(437)
11,433
1,236
(84)
-
140
(191)
(99)
12,534
36
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DIGITALBOX PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CASH FLOWS
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
Bank loans
Corporation tax
Total current liabilities
Non-current liabilities
Other payables
Lease liabilities
Bank loans
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
31 December
2020
£’000
Note
31 December
2019
£’000
14
15
16
17
18
18
18
18
18
18
19
20
22
24
24
24
19
10,839
10,858
1,047
1,853
2,900
13,758
(449)
(2)
(25)
(51)
(527)
-
-
(465)
(232)
(697)
(1,224)
2,373
12,534
1,163
11,149
321
(99)
12,534
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
21,331
29,757
181
(39,836)
11,433
The financial statements were approved by the Board and authorised for issue on 26 March 2021
James Carter
CEO
David Joseph
CFO
The notes on pages 41 to 66 form part
of the group financial statements.
Year ended
Year ended
31 December 2020 31 December 2019
£’000
£’000
Cash flows from operating activities
Loss from ordinary activities
(191)
(437)
Adjustments for:
Income tax expense
Share based payments
Depreciation on property plant and equipment
Amortisation of intangible assets
Finance costs
Income tax paid
Cash flows from operating activities before
changes in working capital
Decrease / (increase) in trade and other receivables
Decrease in trade and other payables
Cash generated/(used in) in operations
Investing activities
Purchase of property, plant and equipment
Acquisition of subsidiary
Cash on acquisition
48
140
30
149
2
(109)
69
518
(205)
382
-
(841)
269
Net cash (used in)/generated from investing activities
(572)
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 increase in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
(2)
440
(24)
1,236
(84)
1,566
1,376
477
1,853
The notes on pages 41 to 66 form part of the group financial statements.
-
149
11
133
22
-
(122)
(86)
(100)
(308)
(13)
(993)
433
(573)
(22)
33
(7)
1,240
(117)
1,127
246
231
477
38
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ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
Reconciliation of net cash flow to movement in net funds:
1. GENERAL INFORMATION
Year ended
Year ended
31 December 2020 31 December 2019
£’000
£’000
Net increase in cash and cash equivalents
New loans and finance leases
Loans acquired in business combinations
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
Bank loans
Net funds at 31 December
1,376
(440)
(50)
24
910
451
1,361
1,853
(2)
(490)
1,361
246
(33)
-
7
220
231
451
477
(26)
-
451
The notes on pages 41 to 66 form part of the group financial statements.
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 2020
The accounting policies adopted are consistent with those of the previous financial year except for the
following new and amended standards and interpretations during the year that are applicable to the Group.
Definition of a Business (Amendments to IFRS 3)
Amendments to IFRS 3 were mandatorily effective for reporting periods beginning on or after 1 January 2020.
The Group has applied the revised definition of a business for acquisitions occurring on or after 1 January 2020
in determining whether an acquisition is accounted for in accordance with IFRS 3 Business Combinations.
The amendments do not permit the Group to reassess whether acquisitions occurring prior to 1 January
2020 met the revised definition of a business. See note 13 for disclosures relating to the Group’s business
combination occurring during the year ended 31 December 2020.
Other standards
New standards that have been adopted in the annual financial statements for the year ended 31 December
2020, but have not had a significant effect on the Group are:
IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors (Amendment – Disclosure Initiative - Definition of Material); and
Revisions to the Conceptual Framework for Financial Reporting.
3. NEW AND REVISED IFRS STANDARDS IN ISSUE BUT NOT YET EFFECTIVE
There are a number of standards, amendments to standards, and interpretations which have been issued by
the IASB that are effective in future accounting periods that the group has decided not to adopt early.
The following amendments are effective for the period beginning 1 January 2022:
Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41);
and References to Conceptual Framework (Amendments to IFRS 3).
In January 2020, the IASB issued amendments to IAS 1, which clarify the criteria used to determine whether
liabilities are classified as current or non-current. These amendments clarify that current or non-current
classification is based on whether an entity has a right at the end of the reporting period to defer settlement
of the liability for at least twelve months after the reporting period. The amendments also clarify that
‘settlement’ includes the transfer of cash, goods, services, or equity instruments unless the obligation to
40
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ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
3. NEW AND REVISED IFRS STANDARDS IN ISSUE BUT
NOT YET EFFECTIVE (continued)
transfer equity instruments arises from a conversion feature classified as an equity instrument separately
from the liability component of a compound financial instrument. The amendments were originally effective
for annual reporting periods beginning on or after 1 January 2022. However, in May 2020, the effective date
was deferred to annual reporting periods beginning on or after 1 January 2023.
The Group does not expect any of the standards issued by the IASB, but not yet effective, to have a material
impact on the group.
4. ACCOUNTING POLICIES
Principal accounting policies
The Group is a public Group incorporated and domiciled in the United Kingdom. The principal accounting
policies applied in the preparation of these consolidated financial statements are set out below. These policies
have been consistently applied to all the periods presented, unless otherwise stated.
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards,
International Accounting Standards and Interpretations (collectively IFRS) issued by the International
Accounting Standards Board (IASB) as adopted by the European Union (“adopted IFRSs”) and those parts of
the Companies Act 2006 which apply to companies preparing their financial statements under IFRSs. The
financial statements are presented to the nearest round thousand (£’000) except where otherwise indicated.
Basis of Consolidation
The Group comprises a holding company, dormant subsidiaries and a trading company. All of
these have been included in the consolidated financial statements in accordance with the principles of
acquisition accounting as laid out by IFRS 3 Business Combinations.
Going concern
Notwithstanding the loss generated during the year of £191k (2019: £437k), the Group had closing net assets of
£12,534k (2019: £11,433k), net current assets of £2,373k (2019: £1,274k) and cash at bank and in hand of £1,853k
(2019: £477k).
The Group generated cash inflows from operating activities of £382k during the year, also benefitting from
net cash flows from share issues amounting to £1,152k. The Group has remained cash generative during a
difficult economic period which saw the profound impact of COVID-19.
In considering going concern, the Directors consider the current financial position and performance of
the business, as well as reviewing financial information for a period of at least 12 months from the date of
approval of the financial statements. Given the financial performance of the Group, the successful acquisition
and integration of Tab Media and the expectations from forecast financial information, the Directors have a
reasonable expectation that the Group has adequate resources to continue in operational existence for the
foreseeable future.
The Directors believe that they can continue to mitigate the impact of COVID-19 as has been demonstrably
achieved in the year ended 31 December 2020, and accordingly continue to adopt the going concern basis in
preparing the financial statements.
Business combinations and goodwill
Acquisitions of subsidiaries and business are accounted for using the acquisition method. The assets and
liabilities and contingent liabilities of the subsidiaries are measured at their fair value at the date of acquisition.
Any excess of acquisition over fair values of the identifiable net assets acquired is recognised as goodwill.
Goodwill arising on consolidation is recognised as an asset and reviewed for impairment at least annually. Any
impairment is recognised immediately in profit or loss accounts and is not subsequently reversed. Acquisition
related costs are recognised in the income statement as incurred.
Transactions between wholly owned group members involving the hive-up or hive-across of trade and / or
assets and liabilities are outside the scope of IFRS 3 on the grounds that they represent common control
business combinations. The group has elected to apply IFRS 3 in accounting for all such transactions, which
involves a full fair value exercise at the date of the transaction. This accounting policy has been consistently
applied to all such transactions and has been chosen on the grounds that the nature of these transactions
is the amalgamation of acquired businesses into the existing trading business, which generally takes place
shortly after the original acquisition.
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and
the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or
receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also
be met before revenue is recognised:
The Group does not expect to have any contracts where the period between the transfer of the promised
goods or services to the customer and payment exceeds one year. As a consequence, the Company does not
adjust any of the transaction prices for the time value of money.
The Group monitors the performance obligations in accordance with IFRS 15 considering that the
performance obligations are met upon the Group delivering the advertisement to the customer.
A receivable is recognised when the services are delivered at this is the point in time that the consideration is
unconditional because only the passage of time is required before the payment is due.
Rendering of services
Revenue from providing services is recognised in the accounting period in which the services are rendered.
Revenue from the sale of advertising space is recognised upon the advertisement being generated and
the Group delivering the advertisement to the customer. The Group recognises revenue when the amount
of revenue can be reliably measured, it is probable future economic benefits will flow to the entity and the
Group has satisfied the performance obligations. Revenue is not received in advance and therefore the Group
does not account for contract liabilities.
Leases
The Company assesses whether a contract is or contains a lease, at inception of a contract. The Company
recognises a right-of-use asset and a corresponding lease liability with respect to all lease agreements
in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or
less) and leases of low value assets. For these leases, the Company recognises the lease payments as an
operating expense on a straight-line basis over the term of the lease unless another systematic basis is more
representative of the time pattern in which economic benefits from the leased asset are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily
determined, the Group uses its incremental borrowing rate. The Group assesses its discount rate using its
incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise:
(a) Fixed lease payments (including in-substance fixed payments), less any lease incentives.
The lease liability is included in Payables in the Statement of Financial Position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease
liability (using the effective interest method) and by reducing the carrying amount to reflect the payments
made.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments
made at or before the commencement day and any initial direct costs. They are subsequently measured at
cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying
asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that
the Group expects to exercise a purchase option, the related right-of-use asset is depreciation over the useful
life of the underlying asset. The depreciation starts at the commencement date of the lease.
42
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ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
4. ACCOUNTING POLICIES (continued)
The right-of-use assets are included in the tangible fixed assets in the Statement of Financial Position.
The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts any identified
impairment losses.
Foreign currency
The individual financial statements of each group company are presented in the currency of the primary
economic environment in which it operates (its functional currency). For the purpose of the consolidated
financial statements, the results and financial position of each group company are expressed in pound
sterling, which is the functional currency of the Group, and the presentational currency for the consolidated
financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the
Group Company’s functional currency (foreign currencies) are recorded at rates of exchange prevailing on
the dates of the transactions. At the reporting date, monetary assets and liabilities that are denominated in
foreign currencies are retranslated at the rates prevailing on the reporting date. Non-monetary items carried
at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when
the fair value was determined. Non-monetary items that are measured in terms of historical cost in foreign
currency are not retranslated. Exchange differences arising on the settlement of monetary items, and on the
retranslation of monetary items, are included in profit or loss for the period. Exchange differences arising on
the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except
for differences arising on the retranslation of non-monetary items in respect of which gains and losses are
recognised directly in equity. For such non-monetary items, any exchange component of the gain or loss is
also recognised directly in equity.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s
foreign operations are translated at exchange rates prevailing on the reporting date. Income and expense
items are translated at the average exchange rates for the period, unless exchange rates fluctuate
significantly during the period, in which case the exchange rates at the date of transactions are used.
Exchange differences arising, if any, are classified as equity and transferred to the Group’s translation reserve.
Such translation differences are recognised as income and expense in the period in which the operation is
disposed of. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as
assets and liabilities of the foreign entity and translated at the closing rates.
Intangible assets
Intangible assets include goodwill arising on the acquisition of subsidiaries and represents the difference
between the fair value of the consideration payable and the fair value of the net assets that have been
acquired. The residual element of Goodwill is not being amortised but is subject to an annual impairment
review.
Also included within intangible assets are various assets separately identified in business combinations (such
as brand value) to which the Directors have ascribed a commercial value and a useful economic life. The
ascribed value of these intangible assets is being amortised on a straight-line basis over their estimated useful
economic life, which is considered to be 7 years.
Other intangible assets purchased by the Group are initially recognised at cost. After recognition, under the
cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated
impairment losses. Amortisation is recognised so as to write off the cost less their residual values over their
useful lives, which is considered to be 3 years straight line.
Financial instruments
The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset,
a financial liability or an equity instrument.
Contract liabilities
Contract liabilities comprise payments in advance of revenue recognition and revenue deferred due to
contract performance obligation not being completed. They are classified as current liabilities if the contract
performance obligations payments are due to be completed within one year or less (or in the normal
operating cycle of the business if longer). If not, they are presented as non-current liabilities. Contract liabilities
are recognised initially at fair value and subsequently at amortised cost.
Trade and other receivables
Trade and other receivables are measured at initial recognition at fair value, and subsequently measured at
amortised cost using the effective interest method. A provision is established when there is objective evidence
that the Group will not be able to collect all amounts due. The amount of any provision is recognised in profit
or loss.
The Group always recognises lifetime expected credit losses (ECL) for trade receivables and amounts due
on contracts with customers. The expected credit losses on these financial assets are estimated based
on the Group’s historical credit loss experience, adjusted for facts that are specific to the debtors, general
economic conditions and an assessment of both the current as well as the forecast director of conditions at
the reporting date, including time value of money where appropriate. Lifetime ECL represents the expected
credit losses that will result from all possible default events over the expected life of a financial instrument.
Cash and cash equivalents
Cash and cash equivalents are recognised as financial assets. They comprise cash held by the Group and
short-term bank deposits with an original maturity date of three months or less. Loss recognised previously in
equity is included in profit or loss for the period.
Trade payables
Trade payables are initially recognised as financial liabilities measured at fair value, and subsequent to initial
recognition measured at amortised cost.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after
deduction of all its liabilities. Equity instruments issued by the Group are recorded at the proceeds received
net of direct issue costs.
Share based payments
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to
the statement of comprehensive income on a straight-line basis over the vesting period.
Non-market vesting conditions are taken into account by adjusting the number of options expected to vest
at each statement of financial position date so that, ultimately, the cumulative amount recognised over the
vesting period is based on the number of options that eventually vest. Market vesting conditions are factored
into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a
market vesting condition.
Fair value is calculated using the Black-Scholes model, details of which are given in note 23.
Pensions
The pension schemes operated by the Group are defined contribution schemes. The pension cost charge
represents the contributions payable by the Group.
Property, plant and equipment
Property, plant and equipment are stated at cost net of accumulated depreciation and provision for
impairment. Depreciation is provided on all property plant and equipment, at rates calculated to write off
the cost less estimated residual value, of each asset on a straight-line basis over its expected useful life. The
residual value is the estimated amount that would currently be obtained from disposal of the asset if the
asset were already of the age and in the condition expected at the end of its useful economic life.
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ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
4. ACCOUNTING POLICIES (continued)
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. This is computed by applying an appropriate discount rate to the
estimated value of future cashflows. When value in use is less than the book value, an impairment is recorded
and is irreversible.
Other non-financial assets are subject to impairment tests whenever circumstances indicate that their
carrying amount may not be recoverable. Where the carrying value of an asset exceeds its estimated
recoverable value (i.e. the higher of value in use and fair value less costs to sell), the asset is written down
accordingly. Where it is not possible to estimate the recoverable value of an individual asset, the impairment
test is carried out on the asset's cash-generating unit. The carrying value of property, plant and equipment
is assessed in order to determine if there is an indication of impairment. Any impairment is charged to the
statement of comprehensive income. Impairment charges are included under administrative expenses
within the consolidated statement of comprehensive income.
on the measures of revenue, profit before taxation (PBT) and profit after taxation (PAT). Central overheads are
not allocated to business segments.
Government grants
Government grants are recognised when there is reasonable assurance that the grant conditions will be met
and the grants will be received, and are recognised as a separate component of other operating income,
rather than being offset against the costs to which they relate.
5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
In the application of the Group’s accounting policies, which are described in note 4, the Directors are required
to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are
not readily apparent from other sources. The estimates and associated assumptions are based on experience
and other factors considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects only that period,
or in the period of the revision and future periods if the revision affects both current and future periods.
The following are the critical judgements and estimations that the Directors have made in the process of
applying the Company’s accounting policies and that have the most significant effect on the amounts
recognised in the financial statements.
Taxation and deferred taxation
Corporation tax payable is provided on taxable profits at prevailing rates.
Critical accounting judgements
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the
balance sheet differs from its tax base, except for differences arising on:
the initial recognition of goodwill; and
the initial recognition of an asset or liability in a transaction which is not a business combination and at the
time of the transaction affects neither accounting nor taxable profit.
Recognition of deferred tax assets is restricted to those instances where it is probable that future taxable
profit will be available against which the asset can be utilised. The amount of the asset or liability is
determined using tax rates that have been enacted or substantively enacted by the balance sheet date and
are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax
assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority
on either:
the same taxable Group company; or
different Group entities which intend either to settle current tax assets and liabilities on a net basis, or
to realise the assets and settle the liabilities simultaneously, in each future period in which significant
amounts of deferred tax assets or liabilities are expected to be settled or recovered.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the
Executive Directors, who are responsible for allocating resources and assessing performance of the
operating segments.
A business segment is a group of assets and operations, engaged in providing products or services that are
subject to risks and returns that are different from those of other operating segments.
A geographical segment is engaged in providing products or services within a particular economic
environment that are subject to risks and returns that are different from those of segments operating in other
economic environments. The Executive Directors assess the performance of the operating segments based
Impairment of goodwill
Impairment of the valuation of the goodwill relating to the acquisition of subsidiaries is considered annually
for indicators of impairment to ensure that the asset is not overstated within the financial statements. The
annual impairment assessment in respect of goodwill requires estimates of the value in use (or fair value less
costs to sell) of subsidiaries to which goodwill has been allocated. This requires the Directors to estimate the
future cash flows and an appropriate discount factor, in order that the net present value of those cash flows
can be determined. Discounted cash flow forecasts give due consideration to the impact of COVID-19 on the
future cash flows, and are stress tested under a range of scenarios. In all instances, the headroom is sufficient
to satisfy the Directors that there are no indicators of impairment based on circumstances that were present
or could be reasonably foreseen at the reporting date.
Critical accounting Estimates
Amortisation of intangible assets
The periods of amortisation adopted to write down capitalised intangible assets requires judgements to
be made in respect of estimating the useful lives of the intangible assets to determine an appropriate
amortisation rate. Domain names and website costs are being amortised on a straight-line basis over the
period during which the economic benefits are expected to be received, which has been estimated at 3 years.
Intangible assets recognised in relation to the brand names are being amortised straight-line over 7 years.
Depreciation
The useful economic lives of tangible fixed assets are based on management's judgement and experience.
When management identifies that actual useful economic lives differ materially from the estimates used to
calculate depreciation, that charge is adjusted retrospectively.
Share based payments expense
Non-market performance and service conditions are included in the assumptions about the number of
options that are expected to vest. At the end of each reporting period the Group revises its estimates of the
number of options that are expected to vest based on the non-market vesting conditions. It recognises
the impact of the revision to the original estimates, if any, in the consolidated statement of comprehensive
income, with a corresponding adjustment to equity.
This requires a judgement as to how many options will meet the future vesting criteria as well as the
judgements required in estimating the fair value of the options.
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ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
2019
IFRS 16 discount rates
The Group estimates an appropriate discount rate based on an incremental rate of borrowing for the
calculation of the IFRS 16 right-of-use assets. This requires judgement as to an appropriate discount rate.
Provision for bad and doubtful debts
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime
expected credit loss provision for trade receivables. To measure expected credit losses on a collective basis,
trade receivables are grouped based on similar ageing. The expected loss rates are based on the Group’s
historical credit losses experience over the twelve month period prior to the period end. Forward looking
issues have been considered, including in relation to the ongoing impact of the COVID-19 pandemic. This has
had an immaterial effect on the expected credit loss rate.
6. SEGMENTAL INFORMATION
Entertainment
Daily
£'000
The Daily
Mash
£'000
Revenue
Cost of sales
Administrative expenses*
Other operating income
Adjusted EBITDA
Amortisation
Depreciation
Acquisition and listing costs
Share based payments
Finance costs
Finance income
Tax
1,864
(263)
(288)
-
1,313
-
-
-
-
-
-
358
(131)
(60)
-
167
-
-
-
-
-
-
Head
Office
£'000
18
-
(973)
-
(955)
(133)
(11)
(689)
(149)
(3)
-
23
Total
2019
£'000
2,240
(394)
(1,321)
-
525
(133)
(11)
(689)
(149)
(3)
-
23
(437)
A segmental analysis of revenue and expenditure is as follows:
Profit/(loss) for the year
1,313
167
(1,917)
2020
Entertainment
Daily
£'000
The Daily
Mash
£'000
The
Tab
£'000
Head
Office
£'000
Revenue
Cost of sales
Administrative expenses*
Other operating income
Adjusted EBITDA
Amortisation
Depreciation
Acquisition costs
Capital restructure costs
Share based payments
Finance costs
Tax
1,641
(307)
(447)
-
887
-
-
-
-
-
-
-
334
(192)
(40)
-
102
-
-
-
-
-
-
-
208
(30)
(71)
-
107
-
-
-
-
-
-
-
4
-
(819)
24
(791)
(149)
(30)
(98)
(29)
(140)
(2)
(48)
Profit/(loss) for the year
887
102
107
(1,287)
Total
2020
£'000
2,187
(529)
(1,377)
24
305
(149)
(30)
(98)
(29)
(140)
(2)
(48)
(191)
*Administrative expenses exclude depreciation, amortisation, share based payments
and acquisition and listing costs.
The segmental analysis above reflects the parameters applied by the Board when
considering the Group’s monthly management accounts.
External revenue by location
of customer
Total assets by location
Net tangible capital
expenditure by location
31 December
2020
Continuing
£'000
31 December
2019
Continuing
£'000
31 December
2020
31 December
2019
31 December
2020
31 December
2019
£'000
£'000
£'000
£'000
United Kingdom
Europe
Rest of World
1,024
704
459
2,187
1,434
612
194
2,240
13,475
103
180
13,758
11,953
135
93
12,181
-
-
-
-
13
-
-
13
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ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
7. REVENUE
Revenue by stream is split:
Advertising space
Revenue by location is split:
United Kingdom
Europe
Rest of world
The Group had three customers whose revenue individually represented 10% or
more of the Group’s total revenue, being 23.3%, 17.5% and 10.0% respectively.
8.LOSS FROM OPERATIONS
This is arrived at after charging/(crediting): Continuing operations
Staff costs (see note 9)
Acquisition and listing costs
Direct costs of business combinations
Depreciation of property, plant & equipment
Amortisation of intangible fixed assets
Operating lease expense – property
Foreign exchange differences
Government grants
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 – transaction related services
2020
£’000
2,187
2,187
1,024
594
569
2,187
2020
£’000
1,078
-
98
30
149
24
(27)
(24)
18
33
-
-
25
76
2019
£’000
2,240
2,240
1,434
612
194
2,240
2019
£’000
953
689
-
11
133
17
19
-
13
23
9
5
124
174
In 2020, government grants of £24k were received as part of the Government’s initiatives to provide immediate
financial support as a result of the COVID-19 pandemic. There are no future related costs associated with these
grants which were received solely as compensation for costs incurred in the year.
9. STAFF COSTS
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
2020
£’000
838
90
10
938
140
1,078
2019
£’000
716
79
9
804
149
953
2020
Number
2019
Number
6
3
11
20
6
4
9
19
Directors’ Detailed Emoluments
Details of individual Directors’ emoluments for the year are as follows:
Salary
2020
£’000
Consultancy
2020
£’000
Bonus
2020
£’000
Pension
2020
£’000
N Burton
(resigned 17 February 2021)
J Carter
J Douglas
M Higginson
D Joseph
R Miller
(resigned 17 February 2021)
J Treacy
(resigned 28 February 2019)
Total
25
127
127
-
41
18
-
338
-
-
-
25
-
17
-
42
-
-
-
-
-
-
-
-
-
1
1
-
-
-
-
2
Total
2020
£’000
25
128
128
25
41
35
-
Total
2019
£’000
22
175
175
12
33
27
22
382
466
50
51
ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
9. STAFF COSTS (continued)
11. TAXATION ON LOSS FROM ORDINARY ACTIVITIES
All pension contributions represent payments into defined contribution schemes.
The Executive Directors have service contracts with the Company which are terminable by the Company or
relevant director after a fixed term of 12 months followed by 6 months’ notice.
The Directors’ interest in the issued ordinary share capital of the Company was as follows:
Shares of £0.01
31/12/2020
Shares of £0.01
31/12/2019
James Carter
James Douglas
Nigel Burton
Sir Robin Miller
10,908,078
10,908,078
238,095
775,465
9.4%
9.4%
0.2%
0.7%
10,908,078
10,908,078
238,095
775,465
12.1%
12.1%
0.3%
0.9%
Details of the options over the Company’s shares held by the directors are as follows:
Type of Option
Options held at 31
December 2020
Exercise price £
Date of grant
Exercise period
James Carter
James Douglas
EMI option
EMI option
1,504,404
1,504,404
0.14
0.14
28 February 2019 28 February 2022
28 February 2019 28 February 2022
Further information on share options is included in note 23.
The market price of the shares at 31 December 2020 was 6.35p with a quoted range from throughout 2020 of 4.75p to 7.35p. The
options vest based on performance criteria detailed in note 23.
10. FINANCE COSTS
Interest charges paid for lease liabilities
Bank charges and interest payable
2020
£’000
1
1
2
2019
£’000
1
2
3
Corporation tax
Adjustment in respect of prior periods
Deferred tax movement
Tax credit for the year
2020
£’000
50
12
(14)
48
2019
£’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% (2019: 19%)
Effects of:
Expenses not deductible for tax purposes
Income not taxable
Adjustments to prior periods
Deferred tax not recognised
Effect of changes in tax rates on deferred tax
Tax credit for the year
2020
£’000
(143)
(27)
46
(1)
15
-
15
48
2019
£’000
(460)
(87)
191
-
(58)
(69)
(23)
In the Budget on 3 March 2021, the Chancellor announced the intention to increase the main rate of UK
corporation tax to 25% for the financial year beginning 1 April 2023. This was not substantively enacted at the
balance sheet date.
Deferred tax at the balance sheet date has been measured using the newly enacted tax rate of 19% (2019: 17%) in
these financial statements.
There were unused tax losses of £4.5m at the 31 December 2020, with the majority restricted for use within
Digitalbox plc. No deferred tax asset has been recognised on these losses due to the uncertainty surrounding
future profits and the restrictions on the application of the losses.
52
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ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
12. EARNINGS PER SHARE
14. TANGIBLE FIXED ASSETS
The earnings per share is based on the following:
Continuing earnings post tax loss attributable to shareholders
(191)
(437)
2020
£’000
2019
£’000
Basic weighted average number of shares
Diluted weighted average number of shares
96,425,598
96,425,598
76,597,859
76,597,859
Cost
IFRS 16
Right-of-Use
Asset
£’000
Office
equipment
Fixtures and
Fittings
Total
£’000
£’000
£’000
Balance at 1 January 2019
Additions on acquisition of subsidiary
Additions
Balance at 31 December 2019
Balance at 31 December 2020
Accumulated depreciation
Balance at 1 January 2019
Depreciation charge on owned assets
Depreciation charge on financed assets
Balance at 31 December 2019
Depreciation charge on owned assets
Depreciation charge on financed assets
Balance at 31 December 2020
Net Book Value
At 31 December 2020
At 31 December 2019
At 31 December 2018
33
-
-
33
33
-
-
8
8
-
23
31
2
25
33
-
12
13
25
25
-
2
-
2
6
-
8
17
23
-
-
2
-
2
2
-
1
-
1
1
-
2
-
1
-
33
14
13
60
60
-
3
8
11
7
23
41
19
49
33
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
2020
£’000
17
2
19
2019
£’000
24
25
49
Basic earnings per share
Diluted earnings per share
(0.00198)
(0.00198)
(0.00571)
(0.00571)
Earnings/(Loss) per ordinary share has been calculated using the weighted average number of shares in issue
during the relevant financial periods. IAS 33 requires presentation of diluted EPS when a company could be
called upon to issue shares that would decrease earnings per share or increase the loss per share. The exercise
price of the outstanding share options is significantly more than the average and closing share price. Therefore,
as per IAS33 the potential ordinary shares are disregarded in the calculation of diluted EPS.
13. BUSINESS COMBINATIONS
On 30 September 2020 the Group acquired 100% of the ordinary shares in Tab Media Limited for a total
consideration of £841,464. This investment is included in Digitalbox Publishing Ltd company’s balance sheet at its
fair value at the date of acquisition.
The completion accounts show a breakdown of the assets and liabilities of the acquired company to be as follows:
Intangible fixed assets
Receivables
Cash and cash equivalents
Payables
Borrowings
Deferred tax arising on intangible adjustment
Net assets on acquisition
Goodwill on acquisition
Total consideration
Discharged by:
Cash
Book
value
£’000
-
158
269
(158)
(50)
-
Fair value
adjustment
£’000
Fair value
to Group
£’000
622
-
-
-
-
(118)
622
158
269
(158)
(50)
(118)
723
118
841
841
841
Acquisition related costs (included in administrative expenses) amount to £98k.
The revenue and loss included in the Consolidated Statement of Comprehensive Income for the 3 months to 31
December 2020 was £208k and £107k pre-tax respectively.
The intangible fixed asset fair value adjustment is in relation to a brand asset.
54
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ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
14. TANGIBLE FIXED ASSETS (continued)
Information about the Right-of-Use assets is summarised below:
Net Book Value
Property
2020
£’000
2
2
Depreciation charge in respect of the Right-of-Use asset is as follows:
Property
15. INTANGIBLE FIXED ASSETS
2020
£’000
23
23
2019
£’000
25
25
2019
£’000
8
8
GROUP
Cost
Balance at 1 January 2019
Arising on acquisition of subsidiary
Additions
Balance at 31 December 2019
Arising on acquisition of subsidiary
Balance at 31 December 2020
Accumulated amortisation
Balance at 1 January 2019
Amortisation
Balance at 1 January 2020
Amortisation
Balance at 31 December 2020
Net Book Value
At 31 December 2020
At 31 December 2019
At 31 December 2018
Goodwill
Arising on
Consolidation
£’000
Other
Intangible
Assets
£’000
Development
Costs
£’000
-
-
9,492
9,492
118
9,610
-
-
-
-
-
9,610
9,492
-
-
-
854
854
622
1,476
-
102
102
145
247
1,229
752
-
-
35
-
35
-
35
-
31
31
4
35
-
4
-
Amortisation is charged to administrative costs in the Statement of Comprehensive Income.
Total
£’000
-
35
10,346
10,381
740
11,121
-
133
133
149
282
10,839
10,248
-
GOODWILL AND IMPAIRMENT
The carrying value of goodwill in respect of each cash generating unit is as follows:
Entertainment Daily
The Daily Mash
The Tab
31 December
2020
£’000
9,171
321
118
9,610
31 December
2019
£’000
9,171
321
9,492
The Group is obliged to test goodwill annually for impairment, or more frequently if there are indications that
goodwill and indefinite life intangibles might be impaired, due to the goodwill deemed to have an indefinite
useful life. In order to perform this test, management is required to compare the carrying value of the relevant
cash generating unit (“CGU”) including the goodwill with its recoverable amount. The recoverable amount of the
CGU is determined from a value in use calculation. It is considered that any reasonably possible changes in the
key assumptions would not result in an impairment of the present carrying value of the goodwill.
Entertainment Daily
The recoverable amount of Entertainment Daily has been determined from a review of the current and
anticipated performance of this unit. In preparing this projection, a discount rate of 7% has been used based on
the weighted average cost of capital and a future growth rate of 3% has been assumed. It has been assumed
investment in capital equipment will equate to depreciation over the year. The discount rate was based on
the Company’s cost of capital as estimated by management. After applying sensitivity analysis in respect of
the results and future cash flows, in particular for presumed growth rates and discount rates, management is
satisfied that it is highly improbable that such a change in key assumptions that the recoverable amount would
be reduced below book value.
The Daily Mash
The recoverable amount of The Daily Mash has been determined from a review of the current and anticipated
performance of this unit. In preparing this projection, a discount rate of 7% has been used based on the weighted
average cost of capital and a future growth rate of 3% has been assumed. It has been assumed investment in capital
equipment will equate to depreciation over the year. The discount rate was based on the Company’s cost of capital
as estimated by management. After applying sensitivity analysis in respect of the results and future cash flows, in
particular for presumed growth rates and discount rates, management is satisfied that it is highly improbable that
such a change in key assumptions that the recoverable amount would be reduced below book value.
The Tab
The recoverable amount of The Tab has been determined from a review of the current and anticipated performance
of this unit. In preparing this projection, a discount rate of 7% has been used based on the weighted average cost
of capital and a future growth rate of 3% has been assumed. It has been assumed investment in capital equipment
will equate to depreciation over the year. The discount rate was based on the Company’s cost of capital as estimated
by management. After applying sensitivity analysis in respect of the results and future cash flows, in particular for
presumed growth rates and discount rates, management is satisfied that it is highly improbable that such a change
in key assumptions that the recoverable amount would be reduced below book value
56
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ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
16. TRADE AND OTHER RECEIVABLES
19. LOANS
Due after more than one year
Prepayments and accrued income
Trade receivables
Prepayments and accrued income
Other receivables
17. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
18. LIABILITIES
Current liabilities
Trade payables
Social security and other taxes
Accruals
Lease liabilities
Other payables
Bank loans
Corporation tax payable
Non-current liabilities
Other payables
Lease liabilities
Bank loans
31 December 2020 31 December 2019
£’000
£’000
-
-
758
42
247
1,047
18
18
1,037
77
275
1,407
31 December 2020 31 December 2019
£’000
£’000
1,853
1,853
477
477
31 December 2020 31 December 2019
£’000
£’000
84
209
147
2
10
25
50
527
-
-
465
465
54
143
237
24
54
-
98
610
8
2
-
10
Bank loans
Due in less than one year
Due in between one and two years
Due in between two and five years
31 December
2020
£’000
25
122
343
490
31 December
2019
£’000
-
-
-
-
On 7 October 2020, Digitalbox Publishing Limited drew down a loan facility amounting to £450k under the CBILS
scheme. The present value of the loan at inception discounted at a market rate of interest was £440k. The loan is
for a term of five years and is repayable in equal monthly instalments commencing in November 2021. Interest
is charged at a fixed rate of 2.43% per annum, with the cost being fully subsidised by central Government for the
first 12 months. The loan is secured by a debenture over the assets of the Digitalbox Publishing Limited and a
£450k guarantee granted by Digitalbox plc.
Tab Media Limited; a business acquired by the group during the year, has an outstanding loan amounting to
£50k. The loan is for a term of 6 years and is repayable in equal monthly instalments commencing in May 2021.
Interest is charged at a fixed rate of 2.5% per annum, with the cost being fully subsidised by central Government
for the first 12 months. The loan is unsecured.
20. DEFERRED TAX
Balance at 1 January 2020
Deferred tax on acquisition of subsidiaries
Deferred tax (credit) for the year
Balance at 31 December 2020
The deferred tax provision comprises:
Deferred tax on intangibles
The expected net reversal of deferred tax in 2020 is £40k.
Total
£’000
128
118
(14)
232
31 December
2020
£’000
31 December
2019
£’000
232
232
128
128
58
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ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
21. FINANCIAL RISK MANAGEMENT
Liquidity risk
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:
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.
Credit risk
The Group is exposed to credit risk primarily on its trade receivables. The Group maintains its cash reserves at
a reputable bank. It is group policy to assess the credit risk of each new customer before entering into binding
contracts.
The maximum exposure to credit risk is represented by the carrying value in the statement of financial position.
The credit risk on liquid funds is low as the funds are held at a bank with a high credit rating assigned by
international credit agencies.
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
The table below illustrates the geographical location of trade receivables:
United Kingdom
Europe
Rest of world
31 December
2020
£’000
31 December
2019
£’000
758
247
1,853
2,858
1,037
275
477
1,789
31 December
2020
£’000
31 December
2019
£’000
278
265
202
10
3
758
390
327
172
65
83
1,037
31 December
2020
£’000
31 December
2019
£’000
475
180
103
758
809
135
93
1,037
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
2020
£’000
31 December
2019
£’000
At the year end the Group had the following cash balances:
1,853
477
Cash at bank comprises Sterling and US Dollar cash deposits held within National Westminster. All monetary
assets and liabilities within the group are denominated in the functional currency of the operating unit in which
they are held. All amounts stated at carrying value equate to fair value.
Financial liabilities at amortised cost
Trade payables
Accruals
Lease liabilities
Bank loans
Other payables
The table below illustrates the maturities of trade payables:
Current
31 – 60 days
61 – 90 days
91 – 120 days
121 and over
31 December
2020
£’000
31 December
2019
£’000
84
147
2
490
10
733
54
237
26
-
4
321
31 December
2020
£’000
31 December
2019
£’000
69
5
-
-
10
84
39
11
3
-
1
54
The Directors have considered expected credit losses under IFRS9 and have adopted the simplified approach to
their evaluation as the Group has limited exposure to them. The Directors have provided for expected credit losses
on a specific basis and this has led to the Group carrying a provision against trade debtors of £21k (£25k in 2019).
60
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ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
21. FINANCIAL RISK MANAGEMENT (continued)
22. SHARE CAPITAL
The table below shows the maturities of financial liabilities:
2020
Trade payables
Accruals
Lease liabilities
Loans
Other payables
2019
Trade payables
Accruals
Lease liabilities
Loans
Other payables
Carrying amount
£’000
6 months or less
£’000
6-12 months
£’000
1 or more year
£’000
84
147
2
490
10
733
84
142
2
-
10
238
-
5
-
25
-
30
-
-
-
465
-
465
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.
No.
31 December
2020
£’000
Value
£’000
No.
31 December
2019
£’000
Called up share capital
Allotted, called up and fully paid
Ordinary shares of £0.01 each
116,332,457
1,163
90,251,726
Deferred shares of £0.0499 each
Deferred shares of £0.01 each
-
-
-
-
386,907,464
112,176,000
116,332,457
1,163
589,335,190
Value
£’000
903
19,306
1,122
21,331
On 20 May 2020 the shareholders resolved to cancel all of the Company’s deferred shares as set out above,
reducing share capital by £20.4m, and to reduce the share premium account by £19.5m. The Court approved this
capital restructure on 30 July 2020, and this was subsequently certified at Companies House on 31 July 2020.
Shares issued and cancelled in the year to 31 December 2020:
Date
Description
No shares
Price/share
Pence
24.02.20
31.07.20
31.07.20
21.10.20
Issue of 1p shares
Cancellation of 4.99p shares
Cancellation of 1p shares
Issue of 1p shares
1,590,931
(386,907,464)
(112,176,000)
24,489,800
1
4.99
1
1
Gross share
value
£’000
15
(19,306)
(1,122)
245
Cash
received
£’000
36
-
-
1,200
(473,002,733)
(20,168)
1,236
Shares
issued
-
-
-
-
-
Total
consideration
£’000
36
-
-
1,200
1,236
As at 31 December 2020
116,332,457
As at 31 December 2019
589,335,190
1,163
21,331
Cash received does not included costs relating to share issues. In the year to 31 December 2020, costs of £84k 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.
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DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
23. SHARE BASED PAYMENTS
24. RESERVES
During the year, the Company incurred a £140k share based payment charge (2019: £149k).
During the year, 2,005,812 share options were cancelled and re-issued with a lower strike price. Owing to the
reduction in strike price, the fair value of the new instruments is higher than those they replaced. These have
been identified as replacement equity instruments and have been accounted for as a modification of the original
instrument. As this modification was prior to the vesting date, the incremental amount is recognised over the
remaining vesting period.
2020
No. of
share
options
Weighted
average
exercise
price
Outstanding at beginning of year
Granted during the year
Cancelled during the year
Expired during the year
5,343,905
2,005,812
(2,005,812)
-
Outstanding at the end of the year
5,343,905
Exercisable at the end of the year
329,285
14p
6.75p
14p
11p
17p
329,285 options are exercisable 1 year after admission.
5,343,905 options are exercisable after 3 years, or an exit event.
2019
No. of
share
options
160,000
6,186,811
(1,002,906)
-
5,343,905
160,000
Weighted
average
exercise
price
20p
14p
14p
-
14p
20p
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:
17 April 2020
0.10%
Risk free rate
Share price
volatility
65.00%
Share price at
date of grant
6.75p
Expected volatility was determined by calculating the historical volatility of the Company’s share price for 12
months prior to the date of grant. The expected life used in the model is the term of the options.
The vesting conditions in relation to the share options are 3 years, or an exit event.
The vesting condition in relation to the warrants is 1 year from admission.
Full details of movements in reserves are set out in the consolidated statement of changes in
equity. The following describes the nature and purpose of each reserve within owners’ equity:
Share premium: Amount subscribed for share capital in excess of nominal value.
Retained earnings: Cumulative net gains and losses recognised in the consolidated
statement of comprehensive income.
Share based payment reserve: Cumulative charges recognised in the consolidated statement
of comprehensive income in relation to share based payments.
25. LEASING COMMITMENTS
Group as a lessee
The Group leasing arrangements for their head office.
Lease liabilities are due as follows:
Current
Non-current
Contractual undiscounted cash flows are due as follows:
Current
Non-current
31 December
2020
£’000
31 December
2019
£’000
2
-
2
24
2
26
31 December
2020
£’000
31 December
2019
£’000
2
-
2
8
27
35
There is not considered to be any significant liquidity risk by the Group in respect of leases.
The following amounts in respect of leases, where the Group is a lessee, have been recognised in the profit or loss:
Interest expense on lease liabilities
Expenses relating to short-term leases
31 December
2020
£’000
31 December
2019
£’000
1
24
25
1
17
18
64
65
ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
COMPANY STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2020
26. CAPITAL COMMITMENTS
At 31 December 2020 and 31 December 2019 there were no capital commitments.
27.RELATED PARTY TRANSACTIONS
At 31 December 2020, the Group was due £171k (31 December 2020: £171k) from James Carter and Jim Douglas,
two Directors of the company. The outstanding balance is split equally between the directors and is included
within trade and other receivables. The amounts are repayable either on sale of shares by the Directors, by prior
charge over the proceeds of dividends or distributions due to the directors’ net of tax or by prior charge over
remuneration payments in excess of a pre-determined level. Interest is charged at 0.75% per annum.
Prior to the readmission of Digitalbox plc (formerly Polemos plc) onto AIM, and its subsequent acquisition of
Digitalbox Publishing Holdings Ltd, James Carter and Jim Douglas each held shares in Digitalbox Publishing
Holdings Ltd. It was agreed by the then board that these shares would form the basis for their physical
shareholding in Digitalbox plc once the acquisition had completed and that the loans would transfer to the
plc. The loan facility from the Company was part of a package to ensure key management were sufficiently
incentivised and locked into the success of the business. Where any individuals’ personal bonus payment exceeds
£100,000 in a calendar year, the excess will be used pay down these loans. The current board of Directors view this
arrangement as satisfactory and believe it has served well to incentivise management.
During the year, Integral2 Limited billed £57k (2019: £43k) to the Group, a company related by virtue of David
Joseph, a member of key management personnel, having control over the entity. As at 31 December 2020, £5k
(2019: £5k) was owed to Integral2 Limited.
During the year, the Group received revenue of £1.5k (2019: £17k) from Immotion Group plc, a company related by
virtue of Martin Higginson being a member of key management personnel of both entities. As at 31 December
2020, £nil (2019: £2k) was owed to the Group.
During the year, M Capital Investment Partners (Holdings) Limited billed £25k (2019: £23k) to the Group, a
company related by virtue of Martin Higginson, a member of key management personnel, having control over
the entity. As at 31 December 2020, £2.5k (2019: £nil), was owed to M Capital Investment Partners (Holdings)
Limited.
During the year, Robin Miller Consultants Limited billed £17k (2019: £10k) to the Group, a company related by
virtue of Robin Miller, a member of key management personnel, having control over the entity. As at 31 December
2020, £1.7k (2019: £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 £382k in the year ended 31 December 2020 (2019: £444k).
The key management personnel were provided 3,008,808 share options resulting in a charge of £99k in the
period (2019: £93k)
Fixed assets
Investments
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Total current liabilities
Non-current liabilities
Other payables
Total liabilities
Net current assets/(liabilities)
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
2020
£’000
At 31 December
2019
£’000
10,990
10,990
1,244
99
1,343
(68)
(68)
-
(68)
1,275
12,265
1,163
11,149
321
(368)
11,192
11,192
155
22
177
(214)
(214)
(8)
(222)
(37)
11,147
21,331
29,757
181
(40,122)
12,265
11,147
The Company has taken advantage of the exemptions allowed under section 408 of the Companies Act 2006
and has not presented its income statement in these financial statements. The Group loss for the year included a
loss on ordinary activities after tax of £174k (2019: £723k loss) in respect of the Company which is dealt with in the
financial statements of the Parent Company.
The financial statements were approved by the Board and authorised for issue on 26 March 2021
James Carter
CEO
David Joseph
CFO
The notes on pages 70-72 form part of the company financial statements.
66
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DIGITALBOX PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
COMPANY STATEMENT OF CHANGES IN EQUITY
COMPANY STATEMENT OF CASH FLOWS
1 January 2019
Issue of shares
Share issue costs
Loss after tax
Equity settled share-based payments
Share
Capital
£’000
20,488
843
-
-
-
Share
Premium
£’000
19,164
10,710
(117)
-
-
31 December 2019
21,331
29,757
Issue of shares
Share issue costs
Capital reduction
Profit after tax
Equity settled share-based payments
260
-
(20,428)
-
-
976
(84)
(19,500)
-
-
31 December 2020
1,163
11,149
Share
based
payment
£’000
32
-
-
-
149
181
-
-
-
-
140
321
Retained
reserves
£’000
(39,399)
-
-
(723)
-
(40,122)
-
-
39,928
(174)
-
Retained
reserves
£’000
285
11,553
(117)
(723)
149
11,147
1,236
(84)
-
(174)
140
(368)
12,265
Cash flows from operating activities
Loss from ordinary activities
Adjustments for:
Dividend income
Impairment of fixed asset investments
Share based payments
Cash flows from operating activities before changes in working capital
(Increase)/Decrease in trade and other receivables
Decrease in trade and other payables
Cash used in operations
Investing activities
Acquisition of subsidiaries
Cash on acquisition
Dividend income
Net cash absorbed from investing activities
Financing activities
Issue of new share capital
Costs on issue of shares
Net cash from financing activities
Net increase/(decrease) 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 cash flow to movement in net debt:
Net increase/(decrease) in cash and cash equivalents
New loans and finance leases
Repayment of loans
Movement in net debt in the year
Net funds at 1 January
Net funds at 31 December
Year ended
31 December
2020
£’000
Year ended
31 December
2019
£’000
(174)
(723)
(238)
238
140
(34)
(1,089)
(154)
(1,277)
(36)
-
238
202
1,236
(84)
1,152
77
22
99
77
-
-
77
22
99
-
149
(574)
62
(260)
(772)
(993)
433
-
(560)
1,240
(117)
1,123
(209)
231
22
(209)
-
-
(209)
231
22
68
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DIGITALBOX PLC
NOTES FORMING PART OF THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
NOTES FORMING PART OF THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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 (2019: 6) and total staff costs were
£408k (2019: £466k). Directors remuneration is disclosed in note 9 to the consolidated financial statements.
The operating loss is stated after charging an impairment loss on the investment in Mashed Productions
Limited amounting to £238k (2019: £nil). This impairment loss is reflective of the receipt of dividend income
from this subsidiary amounting to £238k, which was subsequently dissolved on 10 March 2020 following an
earlier hive across of trade to Digitalbox Publishing Limited. The impairment arose owing to the realisation of
the distributable reserves, and these two transactions have had a net £nil effect on the result for the year.
At the year end the Company had the following subsidiaries:
Subsidiary name
Class
of shares
Proportion of
ownership
Registered office
Digitalbox Publishing Limited
Digitalbox Inc
Digitalbox Publishing (Holdings) Limited
Tab Media Limited
Ordinary
Ordinary
Ordinary
Ordinary
100% Indirect
100% Direct
100% Direct
100% Indirect
2-4 Henry Street, Bath, BA1 1JT
19 Courtland Drive, Hudson, MA 01749
2-4 Henry Street, Bath, BA1 1JT
Jubilee House, 92 Lincoln Road,
Peterborough, PE1 2SN
Subsidiary name
Digitalbox Publishing Limited
Digitalbox Inc
Digitalbox Publishing (Holdings) Limited
Tab Media Limited
Principal activity
Sale of digital advertising space
Sale of digital advertising space
Dormant subsidiary
Publishing activities
IV. RECEIVABLES: due within one year
III. FIXED ASSET INVESTMENTS
Subsidiary undertakings
Cost
Balance at 1 January 2020
Additions
Disposals
Balance at 31 December 2020
Provisions
Balance at 1 January 2020
Charge for the year
Balance at 31 December 2020
Carrying value of investments
31 December
2020
£’000
Amounts owed by group undertakings
Other receivables
Prepayments and accrued income
11,192
36
-
11,228
-
238
238
10,990
V. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
31 December
2020
£’000
31 December
2019
£’000
1,213
10
21
1,244
136
10
9
155
31 December
2020
£’000
31 December
2019
£’000
99
99
22
22
70
71
ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
DIGITALBOX PLC
NOTES FORMING PART OF THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
DIGITALBOX PLC
DIRECTORS, SECRETARY AND ADVISERS
VI. PAYABLES: amounts falling due within one year
Trade payables
Accruals
Other tax and social security
Other payables
31 December
2020
£’000
31 December
2019
£’000
5
38
16
9
68
3
148
13
50
214
Directors
Company Secretary and Registered Office
Marcus Rich
James Carter
James Douglas
Martin Higginson
David Joseph
Matthew Armitage
David Joseph
2-4 Henry Street
Bath
England
BA1 1JT
Company Number
04606754
VII. SHARE CAPITAL
Registrars
Details of the Company’s share capital and the movements in the period can be found in Note 22 to the
consolidated financial statements.
VIII. SHARE OPTIONS
Share Option Scheme
Details of the share options outstanding at 31 December 2020 can be found in Note 23 to the Consolidated
financial statements.
IX.
RESERVES
Details of the reserves can be found in Note 24 to the Consolidated financial statements.
Nominated Adviser and Broker
Joint Broker
X.
RELATED PARTY TRANSACTIONS
Independent Auditors
Details of the Company’s related party transactions can be found in Note 27 to the consolidated
financial statements.
Solicitors
Share Registrars Limited
The Courtyard
17 West Street
Farnham
GU9 7DR
Panmure Gordon
One New Change
London
EC4M 9AF
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
Country of Incorporation of Parent Company
England and Wales
Legal Form
Public Limited Company
Domicile
United Kingdom
72
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ANNUAL REPORT & ACCOUNTS 2020 | digitalbox.comANNUAL REPORT & ACCOUNTS 2020 | digitalbox.com
Digitalbox PLC
2-4 Henry Street
Bath
BA1 1JT
United Kingdom
Co Reg No. 04606754
+44 (0)1225 430 091
digitalbox.com
© 2021