Digitalbox Regulatory News (DBOX)

27 September 2022

Digitalbox plc

("Digitalbox", the "Group" or the "Company")

Unaudited interim results for the six months ended 30 June 2022

FY2022 outlook broadly in line with market expectations

Digitalbox plc, the mobile-first digital media business, which owns leading websites Entertainment Daily, The Daily Mash and The Tab today publishes its interim results for six months to 30 June 2022 (the "First Half", the "Period", or "H1 2022").

Financial Highlights

*Adjusted operating profit is stated before depreciation, amortization, impairment of goodwill and intangible assets and share based payment charges.

Operational Highlights

· Increased advertiser demand for high-quality audiences on mobile continues to fuel strong session values.

· Entertainment Daily session volumes (traffic) up 46%.

· The Tab session values up 57%.

· The Daily Mash Premium content offering introduced to drive direct consumer revenues.

· The Tab, benefiting from Digitalbox's Graphene platform, continued to deliver operating profit every month in the period and has now fully repaid its acquisition cost.

· The acquisition of the web and mobile platform assets of TVGuide.co.uk Limited, announced in May 2022, is expected to complete in the second half of FY 2022 as scheduled.

· Administration costs excluding the non-cash charges of depreciation, impairment and share based payment costs are up 17% due to investments in technical, commercial and content resources.

Outlook

· Full year results to 31 December 2022 will be broadly in line with market expectations.

James Carter, CEO, Digitalbox plc, said: "We are pleased with the performance of the business in the first six months of the year. This was achieved in part due to the commercial transformation of The Tab, our focus on mobile publishing, and Entertainment Daily's editorial team successfully maximising user engagement across all channels. This strong first-half performance and our optimised operating model, mean we are confident that we can cope with the economic headwinds expected to impact global advertising revenues in the second half. We believe we can strengthen the Company's position as we plan to bring TV Guide on board and we are confident that trading for the full year 2022 will be broadly in line with market expectations."

Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of Regulation (EU) No 596/2014) ("MAR") prior to its release as part of this announcement and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

Enquiries:

About Digitalbox plc

Based in Bath, UK, Digitalbox is a 'pure-play' digital media business with the aim of profitable publishing at scale on mobile platforms.

Digitalbox operates three trading brands, "Entertainment Daily", "The Tab" and "The Daily Mash". Entertainment Daily produces and publishes online UK entertainment news covering TV, showbiz and celebrity news. The Daily Mash produces and publishes satirical news content. The Tab is the UK's biggest youth culture site fueled by students.

Digitalbox generates revenue from the sale of advertising in and around the content it publishes. The Group's optimisation for mobile enables it to achieve revenues per session significantly ahead of market norms for publishers on mobile.

InteriM Statement

Overview

The performance of the Group in the first six months of the year has been strong and exceeded our expectations. As a result of the high volumes of traffic on Entertainment Daily and the continued improvement in the monetisation of The Tab, revenues have increased 40% period on period to £1.9 million. More importantly, Digitalbox reports adjusted operating profit of £0.7 million which is significantly ahead of management expectations. Furthermore, the gross cash balance has increased from £2.2 million as at 31 December 2021 to £2.8 million as at 30 June 2022.

Operating Review

The two factors that drive revenue are the volume and value of advertising. The volume is reflected in the number of visits (or sessions) that the Group's websites receive from users that come to read our content. The value is the price advertisers pay to reach these users during these sessions. The number of visits to the Group's websites increased significantly in H1, predominantly due to solid editorial success through our biggest brand, Entertainment Daily. While we anticipated advertiser demand softening due to the energy and cost of living crisis, combined with the Ukraine war, competition for high-quality mobile inventory continued to deliver strong session values across the period.

The delivery of the Group's strategy has progressed considerably year on year as the total audience across the business has again grown significantly. Entertainment Daily, which is focused on TV and show business news, had an exceptionally strong six months, with the number of visits up 46% on the same period last year.

The Daily Mash saw its content offering strengthen with the launch of 'Mash Premium', the new paid subscriber-only area, which has already gained 1,000 members so far with limited promotion, hence we are excited about the prospects for growth of the subscription model. As well as the introduction of the Mash Premium channel, the production of a new series of The Daily Mash's successful spin-off TV show Late Night Mash has commenced, with Rachel Parris confirmed as the new host. The first episode aired on Dave on 1 September 2022, with a further seven episodes released in the season.

The Tab has continued to deliver, contributing a profit each month since we acquired it in October 2020, and has now successfully repaid all the acquisition costs. With the site holding its position at around 50m visits for the period, we continued to see significant year-on-year revenue growth of 52% for the period as a result of the Graphene ad stack being deployed; a model of the Company's approach to acquisition identification and integration.

Looking ahead, the acquisition of the web and mobile platform assets of TVGuide.co.uk Limited, announced in May 2022, is expected to complete in the second half of FY 2022 as scheduled. The Company then intends to focus on integrating these assets onto the Company's Graphene technology platform. As with The Tab, the Board expects this to enhance the site's revenue performance and profitability.

Financial review

The Directors are pleased to report strong absolute growth in revenues with a period-on-period uplift of 40% to £1.9 million, driven by high volumes of traffic on Entertainment Daily and the continued improvement in the monetisation of The Tab.

Further, gross margins are up from 84% last period to 87% this period serving to highlight the high efficiency of successful digital media businesses like Digitalbox. This efficiency is growing due to the continued improvement to the monetisation on The Tab and the low scaling costs of servicing the increased traffic on Entertainment Daily.

With adjusted operating profit of £0.7 million, which is the true cash generating indicator for the business, gross cash has grown from £2.2 million at the end of December 2021 to £2.8 million at the end of June 2022. For context, gross cash at bank on 23 September 2022 was £3.2m, up 45% since 31 December 2021.

Given the development of The Daily Mash from a straight advertising-funded model to a hybrid subscription and advertising model, we have taken the cautious step of writing off the carrying value of goodwill and intangible asset associated with this brand. As a non-cash, one-off financial accounting adjustment, this does not affect the strong cash generating characteristics of the business. 

DIGITALBOX PLC 

INTERIM CONSOLIDATED INCOME STATEMENT

for the six months ended 30 June 2022

DIGITALBOX PLCINTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITYfor the six months ended 30 June 2022

DIGITALBOX PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 30 June 2022

DIGITALBOX PLC

CONSOLIDATED CASH FLOW STATEMENT

for the six months ended 30 June 2022

DIGITALBOX PLC

NOTES TO THE INTERIM REPORT

for the six months ended 30 June 2022

1. Corporate information

The interim consolidated financial statements of the group for the period ended 30 June 2022 were authorised for issue in accordance with a resolution of the directors on 26 September 2022. Digitalbox plc ("the company") is a Public Limited Company listed on AIM, incorporated in England and Wales. The interim consolidated financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006.

2. Statement of Accounting policies

2.1 Basis of Preparation

The entities consolidated in the half year financial statements of the company for the six months to 30 June 2022 comprise the company and its subsidiaries (together referred to as "the group").

The interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements.

The directors are satisfied that, at the time of approving the consolidated interim financial statements, it is appropriate to adopt a going concern basis of accounting and in accordance with the recognition and measurement principles of International Financial Reporting Standards adopted for use in the United Kingdom ("IFRS"). In reaching this conclusion the directors have considered the financial position of the Group, its cash, liquidity position and borrowing facilities together with its forecasts and projections for a period in excess of 12 months from the date of approval. At the reporting date the Group had £2.8m of cash at bank and in hand providing a strong position to support the continued and future success of the Group.

2.2 Accounting Policies

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.

The interim results announcement has been prepared in accordance with International Financial Reporting Standards ("IFRS"), International Accounting Standards and Interpretations issued by the International Accounting Standards Board as adopted by the United Kingdom ("IFRSs") and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRSs. The consolidated financial statements have been prepared under the historical cost convention.

The preparation of these consolidated half year financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates in preparing these consolidated half year financial statements.

3. Segment Information

The Group's primary reporting format for segment information is business segments which reflect the management reporting structure in the Group and of its two core media assets.

Unaudited six months to 30 June 2022

Unaudited six months to 30 June 2021

3. Segment Information (continued)

12 months to 31 December 2021

* Admin expenses exclude share based payment charges, amortisation, depreciation, impairment charges and acquisition and listing costs.

External revenue by location of customer

4. Earnings per share

The calculation of the group basic and diluted loss per ordinary share is based on the following data:

Earnings per ordinary share has been calculated using the weighted average number of shares in issue during the relevant financial periods. IAS 33 requires presentation of diluted EPS when a company could be called upon to issue shares that would decrease earnings per share or increase the loss per share.

5. Tangible Assets

6. Intangible Assets

The other intangible assets are being amortised over a period of 7 years and development costs are being amortised over 3 years on completion of the project.

Amortisation is charged to administrative costs in the Statement of Comprehensive Income.

The impairment losses relate to The Daily Mash. The Directors have taken a cautious view and written off the carrying value of goodwill and intangible asset of this brand as the underlying revenue model is changing from purely advertising based to a hybrid advertising and subscription based model.

7. Share capital

1,590,936 shares were issued in the 6-month period to 30 June 2022 for cash consideration of £36k giving rise to an increase in share premium of £20k.

8. Related party transactions

At 30 June 2022, the Group was due £nil (30 June 2021: £171k, 31 December 2021: 171k) from James Carter and Jim Douglas, two Directors of the company, the loans having been repaid in full on 31 March 2022.

During the period, Integral 2 Limited charged £37k (6 months to 30 June 2021: £26k, 12 months to 31 December 2021: £53k) to the Group, a company related by virtue of David Joseph, a member of key management personnel, having control over the entity. As at 30 June 2022, £5k (30 June 2021: £5k, 31 December 2021: £5k) was owed to Integral 2 Limited. On 22 June 2022 David Joseph acquired 600,000 shares in the company through an investment vehicle.

During the period, M Capital Investment Partners (Holdings) Limited billed £12.5k (6 months to 30 June 2021: £12.5k, 12 months to 31 December 2021: £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 30 June 2022, £nil (30 June 2021: £nil, 31 December 2021: £2.5k) was owed to M Capital Investment Partners (Holdings) Limited. On 16 February 2022 Martin Higginson exercised his warrants in a subsidiary company which triggered an issue of 1,590,936 new ordinary shares of 1p each in the capital of the company by way of consideration for the exercise of warrants in that subsidiary. The effective exercise price of the warrants was 2.28p per share. He subsequently disposed of these shares on 21 February 2022.

Sir Robin Miller resigned as a Director of Digitalbox plc on the 17 February 2021. During the period, Robin Miller Consultants Limited billed £5k (6 months to 30 June 2021: £6k, 12 months to 31 December 2021: £11k) to the Group, a company related by virtue of Robin Miller, a former member of key management personnel, having control over the entity. As at 30 June 2022, £1k (30 June 2021: £nil, 31 December 2021: £1.7k) was owed to Robin Miller Consultants Limited.

The key management personnel are considered to be the Board of Directors, and were remunerated £192k in the period (6 months to 30 June 2021: £196k, 12 months to 31 December 2021: £715k).

The key management personnel hold 3,008,808 share options all of which vested on the 28 February 2022 resulting in a charge of £17k in the period (6 months to 30 June 2021: £50k, 12 months to 31 December 2021: £100k). Other personnel that are not considered to be key management hold 3,008,718 share options resulting in a charge of £22k in the period (6 months to 30 June 2021: £21k, 12 months to 31 December 2021: £43k).

9. Seasonality

The Group's activities are not subject to significant seasonal variation outside the normal parameters of a consumer media business.

10. Events after the interim period

There were no reportable events after the interim period.