Digitalbox (LSE:DBOX) — FY 22 Full Year Results

0:01 Good morning and welcome to the DIGITALBOX PLC twenty twenty two Full Year Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated in the right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it receives in the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to

0:31 Marcus Rich, nonexecutive chairman. Good morning to you, sir. Good morning. Good morning, everyone, and welcome to the DIGITALBOX twenty twenty two annual results presentation. I am Marcus Rich, the nonexecutive chairman of DIGITALBOX. We're now gonna move to the slides.

0:57 So I will be joined by James Carter, CEO Jim Douglas, COO and David Joseph, CFO, who will take you through the 22 results in detail. I continue to see a business with a very strong competitive advantage. This being the quality of the team and who have a sharp eye for spotting new news driven content that gains strong reader engagement. Secondly, the creation of the graphene ad stack, which means they can monetize audiences far more efficiently than most sites. And thirdly, the the business being in the fastest growth sector in the media market, which is digital and specifically mobile.

1:45 I would add to this a proven acquisition plan whereby DIGITALBOX is able to run sites leaner and maximize ad revenue more efficiently. This leads to returns such as the tab, which is paid back in fourteen months and supports our buy and build strategy.

2:07 We will go through the results highlights, but DIGITALBOX has had a successful 2022, delivering profits of 1,100,000, which is up 5.1% and margin up from 28.1 to 30.2%. Net cash at the end of the year was 2,500,000, which is up 700,000 on the prior year.

2:34 And this, as you know, is against a difficult market backdrop. We highlighted midyear as did all media companies. Advertising in the second half would be disrupted by the war in Ukraine and the subsequent economic impact. In addition, the platforms continue to change search algorithms on a regular basis. Both of these have impacted the sector, but the team who have a proven and strong track record dealing with digital change delivered in line with guidance, and grew their audience by 7% to 293,000,000 unique users. Against the key results highlighted here that the team are gonna talk through, we continue to look for further acquisitions and have recently announced the acquisition of the Poke and soon to be acquired tvguide dot co dot u k.

3:32 All acquisitions are integrated onto Graphene as soon as possible, making immediate contributions to the existing strategy. The team are also very disciplined in their approach, and the second half have brought more targets into play. The combination of existing brands and acquisitions makes us The UK's biggest media company in the satire and humor vertical and a significant player in the women's market. In addition, we continue to see mobile advertising growing share of the growing digital market and will be up from 65% to 70% in 2024. And this reinforces our strategy to focus exclusively on mobile.

4:22 James will talk you through the initial trading this financial year, but DIGITALBOX is well placed to take advantage of the advertising rebound forecast in late twenty three and '24. I will now hand you over to CEO, James Carter.

4:45 Thank you, Marcus. For those uninitiated in the audience, then I'll just run through a few fundamentals about DIGITALBOX. So DIGITALBOX is a pure play digital media company. We have a pedigree in emerging publishing technologies, and really that's the base which the business has been grown from. We're a 100% digital and mobile focused, focused, and we have a strategy since we've been on aim to grow and transform the business through build and buy plan. We're market leading in the respects that our competitors in a mobile focus sense are behind the curve compared to DIGITALBOX.

5:40 So the fun the the basics of our business, we run websites, we own and operate a number of websites, we create content on these websites that attracts attracts valuable audiences. And we then monetize those audience visits to our websites through advertising and commercial solutions.

6:02 The four brands that we operate at the moment are Entertainment Daily, one of The UK's biggest TV showbiz celebrity news sites The Daily Mash, one of the biggest or the biggest news satire site in The UK The TAB that we bought in 2020, which is the biggest UK student entertainment stroke campus news site. And the POKE that we acquired in 2022, which is a humor aggregator really, which delivers the best on the web to its audiences on a daily basis.

6:49 The content of the presentation, I'll run through the front end briefly before handing over to the 2022 results, which David Joseph will take you through in detail. I'll then cover a few sort of headlines as far as the business and its performance in 2022 is concerned before Jim Douglas takes you through some detail on each of the brands, and I'll summarize about how the future looks for our business.

7:22 Just briefly, the leadership team. We have together some fairly significant experience across the media industry. So my background with within a company called EMAP PLC. I worked on a brand called FHM there that grew to fairly significant scale. Also worked for a company called Dennis Publishing, which was recent recently acquired by Future PLC. And also built or co built a business as one of the founding directors of Factory Media, where we bought a print business and transitioned it to a digital business and later sold it to Ford Internet Group. Jim Douglas joined us from EMAP PLC experience initially before becoming the future PLC editorial director.

8:18 And David Joseph, again, has EMAP PLC experience alongside PWC and Unilever. And we're backed up by the nonexecutive directors with Marcus obviously leading with his experience at TI Media and Phil on Reach PLC. And the lozenge of 20% plus is really just to demonstrate that the executive team are well invested in the business and committed to growing the business. And as a measure of that then, David Joseph grew his shareholding in the past six months to approaching 1%.

9:08 So looking at the backdrop that we had to deal with in 2022, this chart is how The UK digital advertising market indexed over four years. The peaks that you see in each year are Black Friday. So this is when the advertising prices in The UK market reach their optimum level in a year. And you can see looking at the chart to the left, typically, a year will run from relatively low position in 2019 to its peak in Q4 at the back end of the year.

9:56 You can see in 2020, the market had quite a crater in it. Really, was caused from everything that happened in COVID over those first three to four months before the market grew back to normality. You can see 2021 was a fairly representative year to a typical advertising market, and it had a strong first half and grew back again in the second half with record levels of spend in around Black Friday in 2021. Well, so if you look at the fourth area in 2022, fourth part of the chart, you could see that the trend was almost in reverse.

10:45 So there was some fairly significant changes happening in The UK market, and we're all aware of what those were in the sense that the Ukraine war, energy prices, the Queen's death. You can see the Queen's death in around September where advertising spending stopped pretty much across all media for a couple of weeks at least. And you could see what kind of impact that created for anyone trading in The UK media market. So it's a challenging year, which had buoyancy in the first half, significant challenges in the second half.

11:26 Nonetheless, we delivered on strategy, delivering a digital mobile first business that is ahead of the curve in terms of profitability compared to its peers. And we believe we're playing in a really, really positive place. And there are strong tailwinds still flowing into the market where advertising spend is playing catch up on mobile devices against desktop devices. So this we're seeing disproportionate uplifts in revenue as we move forward over over coming years. And our tech up overlay process, graphene or our technology suite graphene has proved a great success on more than one occasion.

12:16 The tab, we managed to convert that business very quickly and the trends on the POKE are looking very similar at the same time. So the business highlights were that we managed to grow our cash position. Our gross cash position in 2022 went up from GBP 2,200,000 the previous year to GBP 2,800,000, whilst we also delivered the acquisition of the Pope in December 2022, growing our adjusted EBITDA to over 30% and growing our overall session volumes across the business to a record of two ninety three million visits. David Joseph will now take you through the financial detail.

13:06 Thank you, James. Good morning, all. I've just got four slides for us today. The first one is income statement. This slide shows extracts of the income statements to '21 and '22, and both years include the results of Entertainment Daily, the Daily Mash, the TAB for the whole year. The '22 also included one month of the poke. '22 will be remembered for its particularly challenging trading conditions as consumer spend still recovering from the pandemic was hit hard by the cost of living crisis brought about by the war in Europe. This led consumer brand owners to rein in their advertising spend sharply during the course of the year and this inevitably affected the performance of the group. And whilst we always compare performance of any given period to the prior period, under such hostile market conditions, a more suitable comparator is how the business fared against the market.

14:01 The advertising markets in the second half of twenty two contracted by around 30% and this kind of market shock was the reason why the global digital platforms were in the news for massive staff layoffs. You know there's a global advertising downturn when Meta and Google have to react so dramatically. Given this, the business delivered a solid result with revenues of £3,600,000, which were only 2.4% down the prior year. Inflationary pressures amongst other factors increased direct costs. But this was contained to an uplift of 0.9%, leaving a gross profit of £3,000,000, which is a margin of 85.1%.

14:48 And that's only a half a percentage point lower than the prior year.

14:54 Pleasingly, we managed to cut administration costs by 7.4%, leaving us with an adjusted EBITDA of £1,100,000, which is 5.1% up on the prior year. Further good news is that the adjusted EBITDA margin increased 2.1 percentage points to an enviable 30.2. So despite all the market turmoil, the business delivered increased profits and increased profitability. And finally, as to EPS, EPS doubled, but this was largely due to the booking of a deferred tax asset, which I'll explain a little more further shortly.

15:40 A more suitable proxy for EPS is the adjusted EBITDA EPS, which we managed to hold at 0.9p per share. The next slide, please, James. Segmental. So the headline here in the table on the left is that like for like revenues declined by only 2.8% and overall revenues declined by only 2.4. But this masks the turbulence within the markets as the year unfolded. Seasoned DIGITALBOX followers will recall that we reported first half revenues up 40% on the prior year in the interims. But we also flagged that we were witnessing strong economic headwinds in the second half, and the table on the right demonstrates this perfectly.

16:30 This shows that revenue growth rates year on year split by first and second half and reveals that the significant growth in h one contrasted sharply with the performance in h two as the market caught up with the significant fall off in consumer spend and brands pulled back sharply on their marketing budgets. This led to an underlying h two decline of 27%, which is better than the market. Fortunately, 2023 sees the ad market stabilizing. The next slide. Cash generation. One of the most impressive features of this business is its ability to generate cash, and this slide illustrates this perfectly.

17:17 I've restated the statements of cash flows in order to highlight the cash generated from operations because this is what is really going on in the business, the conversion of adjusted EBITDA into an increase in cash at the bank. You'll notice significant volatility in the movement on working capital in '22, but this is driven by two significant factors. Trade debtors and other receivables, an inflow of £818,000. The revenues in the last two months of '22 were £600,000 lower than the prior year. This will reduce the trade debtor balance by £600,000 and therefore present as an inflow. Director loans of a £171,000 were repaid in March '22 after the proceeds of bonuses, and this will also present as an inflow.

18:09 The second feature, trade creditors and other payables, an outflow of £451,000. The bonuses accrued in 2021 were paid in March 2022, and the net amounts were used to clear down the loans, hence, present as a large outflow. So 2022 saw the business generate £1,400,000 from operations, operations, and this amounted to a 134% of adjusted EBITDA. Now this is an anomaly, of course, as was heavily skewed by the large working capital inflow. So in order to get a true fix on the, cash conversion rates, a good proxy is to look at the aggregate of the last two years, and the column on the right does this.

18:56 This aggregation goes some way to smooth the working capital swings, which distort the underlying cash performance. After adding back the £30,000 loss from property, plant and equipment disposal in 2022, we can see that the adjusted EBITDA conversion aggregates to 96% over the last two years. Last year, this figure was 90% and I would expect this to be between 9095% ongoing.

19:26 So we end the year with £2,800,000 of gross cash in the bank and the balance on the loan of £300,000. Final slide, please. Statement of financial position. I draw your attention to eight points of note here. The largest item in the balance sheet is intangibles, largely goodwill. Due to a change in the revenue model on the daily mash, we were obliged to fully impair the carrying value of this asset. Accordingly, 716,000 was written off during the year. To test the remaining carrying values in the balance sheet, we used benign growth assumptions at 3%, a weighted average cost of capital of 10% and limits the brand lifetime to only fifteen years.

20:16 We apply further sensitivities before satisfying ourselves that we are comfortable with the carrying values currently in the balance sheet. The second item is a new feature, deferred tax asset. When we acquired TAP Media Limited, we also inherited significant tax losses and these are available for use in the ongoing business as qualifying losses. As we've been operating the tab for over two years now, our experience with this asset leads us to believe we have virtual certainty of generating enough profits over the near term to take the benefits of the £3,200,000 of tax losses available. Given this, we're obliged to reflect the tax asset in our accounts.

21:02 The tax losses have already yielded a £73,000 reduction in corporation tax to date and will generate a further £793,000 in the years to come. The third item, trade debtors and other receivables, an £818,000 decrease as explained before. Revenues in the last two months of 2022, £600,000 lower than the prior year. Direct loan repayments, £171,000. The fourth item, trade and other payables, £451,000 decrease. Again, as explained before, the bonuses accrued in '21 paid in March '22. The fifth item, cash at the bank, £2,800,000 bolstered by underlying trading is 27% upon the prior year figure of 2,200,000.

21:58 The sixth item net cash, 2,500,000 is 39% upon the prior year figure of £1,800,000. Seventh item, this business is highly liquid having GBP 3,300,000 in net current assets, which for a business of this size is very, very substantial. This is up from GBP 2,900,000 in the prior year.

22:22 And finally, eight, a suite of positive numbers in the capital and reserve section with £1,400,000 of distributable reserves. That's it for me. Back to you, James. Thank you, DJ. Okay. So that's the detail from David. And here are a few sort of broad themes that we can pull out of the year. So some business headlines. Graphene, our technology suite, has continued to evolve. And graphene, quite simply, is how we deliver

23:04 the fastest content experience on a mobile device and also the fastest transaction experience on a mobile device. So it's pretty key to our overall performance within the business. Specifically, as a demonstration of that, the graphene ad stack here is an example of how it's delivered for us on the poke. So you can see the revenues generated prior to switching on the graphene ad stack on the December 15. To the left, it's the previous ad stack, which is in the brighter orange color. And as you can see to the right, there's an almost instant uplift in performance as we move to gas.

23:59 And we're looking there over 100% to 200% on some of those days. But the important thing really is the longer term trend. And as you look forward into Q1 of twenty twenty three, you can see that by the back end of February, the average session values were already exceeding those in December. So that's a really, really positive sign and a really, really clear demonstration of how we can transform a site by putting it onto graphing.

24:41 Other areas of focus for us over the past year has been, obviously, growing audiences. Now growing audiences is key to our business. It's equivalent to growing revenues.

24:55 So to come out of the year with 293,000,000 sessions was a fantastic result by any measure. And as you can see, over the past four years, we've gone from around two twenty five million sessions in 2019 to approaching 300,000,000 in 2022. So real progress. Just to break down how those sessions have compared year on year. This chart breaks out the sourcing of the traffic. And you can see we had a really good year of growth on social, which is the lighter yellow part of the chart.

25:47 The direct traffic towards the top of each bar held fairly strong, and the referral traffic held fairly strong. Also, we had a much more challenging year on Google source traffic where we're subject to an algorithm change that affected us via the Google Discover feed. But nonetheless, in the mix, we managed to grow audiences by 7%. So it's really positive overall result for the year, But we still have work to do to fix the Google algorithm impacts that it had on our business, but we're positive that that should be turning around fairly soon.

26:29 Number of social followers that we had, social is still pretty key to our business across all of our brands, The Daily Mash, The Poke, The Tab and Entertainment Daily all benefit from really strong social following. And it was great to see in the past year, we managed to grow from over 7,000,000 followers to around 8,000,000 at the tail end of the year.

26:58 Diversification across the business is important theme that we often discuss as a management team. And really, the more diversified we are, really the more

27:13 the business is able to cope with changes within the market. And one of the key things we've been expanding in the past year has been the premium subscription drive on the daily mash. And the premium subs channel was set up at the beginning of last year with much, let's just say, stronger content. You don't have to look for yourselves, but stronger content within the premium channel and an ad free experience. And the very fact that we've managed to grow that from 400 to now a little over 1,400 gives us a great belief that we can expand that into the future. And it certainly seems to be the strategy of choice for people that are operating in the area that the Daily Match operates.

28:08 Another key focus, obviously, given its parts of our strategy is to acquire assets. We've had a really disciplined approach to m and a, and that has delivered fantastic results. Here is the example of the tab. The tab we paid around £650,000 for in the back end of twenty twenty. Since then, to the end of December twenty twenty two, it had delivered a contribution of 1,060,000. And in addition to that, as David Joseph had mentioned, we acquired tax losses, which give us the equivalent cash value now of approaching 2,000,000 in total as we come out of 2022.

29:00 So almost a threefold extraction of value from something we bought in October 2020. We've continued to be very disciplined on that front. And the poke is another example of that that has been road tested. And the poke has shown very positive results in the early stages that I mentioned on the first slide. We hold great ambitions for that over this year as we move forwards. And it would be obviously great if we could beat the fourteen month target that the tab set, but time will tell. It's early days, but it is very positive. Now all of that acquiring assets that are immediately accretive has put us in a great position, where you can see our net cash has grown since we listed in 2019 from £500,000 to £1,400,000 in 2020, 2021 of 1,800,000 and then CHF 2,500,000 in cash in the bank in 2022.

30:13 So really positive position to be in, especially in a market where some of some of the targets we're looking at acquiring are short of cash, and we can move quite quickly if the opportunity is right. Now over to Jim Douglas to talk through the brand highlights. Yes. Thanks, James. I'll run through our portfolio of sites and draw out a few highlights from 2022 as we go. And I'll start, as you can see, with the most recent addition to the stable, the DIGITALBOX stable, the POKE. As James mentioned, we acquired this brand in December, and we think it's a great addition for us. There's obviously a good portfolio fit with the Daily Mash.

31:05 But beyond that, we think it's also got a great potential in and of itself for the future. For those of you who may not be familiar with the site, it's a curation of the funniest stuff on the Internet, whether that be reaction to breaking news, the best Twitter takedowns, or the team unearthing hidden gems from the weird and wonderful depths of Reddit. The brand was already in growth and saw a 7% uplift as you can see here in UK users across the full year. But as we found with the tab prior to our acquisition, monetization on the poke was lagging behind. So as James mentioned, our priority really was to improve the commercial performance, get it into a profitable position so we can then look to invest and develop the brand. So we've seen that improvement in pretty short order with the application of our graphene ad stack, and that has really been the thing that's driven session values 200%.

32:15 We also had a nice uptick in December in terms of really strong traffic in the first month of our ownership with new users up 32%. So our next steps for the poke really now we've been through this period of acquisition and very rapid successful integration is thinking about where we go where we go next. I think it's fair to say that the monetization issues in the past led the previous owners really to try and need to rein in some of their ambitions. But now we've improved the commercial performance. We've really got an appetite to see where we can expand in the second half of this year.

33:01 Moving on to the next slide. Excuse me. So I think as Entertainment Daily is our longest standing brand, most of us are pretty familiar with it. But just as a reminder, the brand's editorial remit is the delivery of fast paced TV and showbiz news with a strong UK focus. In terms of traffic, we saw a significant uplift in direct sessions, which grew 38% year on year. And in particular, we had a storm in January with 22,000,000 organic sessions, which was a record for the site. Thanks largely to the team's ongoing hugely strong delivery of news in this space. We've also previously talked about finding ways to raise the profile of the brand.

33:52 And there was an excellent example here where in q four, we ran the first ever Entertainment Daily Awards, which was a reader voted digital event. The team did brilliant work to make this a success. We saw fantastic engagement considering this was the first year that we'd that we'd run the awards. We saw more than a 150,000 votes from readers across 17 categories. Just in case anyone on the call wasn't following the coverage, Emma Dale swept the board with four wins in the soap categories. Bradley Walsh was named the best quiz show host, and Jane McDonald was the readers' national treasure. As well as great user engagement, an army of TV stars took to their socials to announce their nominations and wins, which is obviously great for the brand profile of Entertainment Daily.

34:47 And the biggest coup, I think, was that Alison Hammond from this morning won best loved presenter. She was presented with her award live on air by Dermot O'Leary at the start of the show. So it was a considering it was the first year of the awards, we think we've had a really strong impact, and the team are looking to see how they can build that success for 2023. Moving on to The Daily Mesh. So The Daily Mesh is The UK's favorite satirical news site. And as James mentioned, we've seen continued growth in its subscription business. We're now at 1,400 Mash premium subscribers, and we're seeing really strong conversions from our thirty day free trial, into paid, more than, 80% touch more than 80% as you can see here.

35:40 This year, we're also exploring gift subscriptions. So we ran a Christmas gift campaign this year in keeping with the brand's attitudes as you can as you can see here on the right hand side. And we've also actually just completed some reader research to understand what readers, what subscribers like best about Mashed Premium. The very early results are really encouraging. So ninety percent of responders feel like they get good value. And as well as liking the ad free experience and loving the exclusive premium features, 80% of responders also said they simply wanted to support the Mash. So there's that obviously points to real affection for the brand, and that gives us confidence that we've got an opportunity to push paid subs growth further this year.

36:29 And earlier, I mentioned there's a good portfolio fit with our incoming brand, The Poke. We see cross promoting as an opportunity here, and we've been cross publishing content across the two brands on a daily basis. We're seeing an early encouraging uptick in traffic across both sites, and, obviously, that uptick comes with no additional content creation costs. So that's a nice additional benefit of bringing the poke into the portfolio. And then rounding out the the the stable, we have the TAB, which is The UK's largest student and youth culture site. We have our London hub of journalists, and they work with and lead student journalists working at 30 campuses all across The UK.

37:18 In terms of highlights for 2022, this year, as a result of our investment in our social team, we seen a 53% growth in sessions from Instagram as we expand that channel. Also, to help inspire and guide our local teams. The London editors had a real held a really successful TAB talks session in the spring, and the purpose of that was really to induct those local teams because, obviously, there's quite a lot of churns. The teams move through their university life. That session was to induct them in the tab way. And in October, we tapped into those teams' competitive spirit. We ran a challenge to drive more content.

38:04 And as a result of that, as you can see here, we saw a 38% increase in page views in the local content area as a result. And as I've mentioned previously, one of the tab's strengths is its blend of entertaining and campaigning journalism. So we have strong coverage of TV shows like Love Island and hits from the big streaming platforms. We also have original content like the tabs unique take on trending topics. So as you can see in the bottom left here, I think, this is one of our writers using chat GPT to see if he can get a 2.1 pass from a Russell Group University. Spoiler alert. The answer is he got pretty close. And as well as that kind of content also this year, we continued to run strong stories on student issues.

38:54 So as a student housing crisis in Glasgow and issues to do with toxic university culture. And I it's often it's these reports which raise the brand profile because these are the ones that are regularly picked up by the likes of The Independent, The Guardian, The Times, and more. So we also think in the light of this and the success we've seen this year, this the tabs, tonal kind of voice y opinion content can work in other content verticals, and we're starting some testing, which James will mention shortly. That's it from me. Thank you, Jim. So looking to the future.

39:43 The market conditions for growth, whilst we've had clearly a tricky time in 2022, the overall market forecast look pretty positive. The chart to the right shows that digital advertising spend on a global basis is destined to go over 800,000,000,000 by 2026. And as you can see from the orange bars alongside the yellow bars, you can see the percentage of that global digital advertising spend is increasing. So by 2026, it will be 70% being delivered to mobile devices.

40:33 So over 600,000,000,000 just on mobile in 2026 compared to a mobile only element of around $370,000,000,000 in 2022. So we're playing into a space that's gonna generate disproportionate growth over the next few years. We're gonna increase investment in our portfolio. So we're about to release the TV listings mechanism on Entertainment Daily that will be out in the next few weeks.

41:18 We're looking at further investment as Jim alluded to, and one of the areas we're considering on the tab is expansion into gaming. And that is something that we are testing as we speak. We plan to scale our premium content model and go with a much more aggressive subscription drive to grow that as we've seen absolute evidence that there's an opportunity there to exploit. And there's a possibility of the poke moving into new territories. It's not a decision we've made yet, but it's something that we can consider. And it's something that in the past, it's performed very well at specifically specifically around the US elections and and the opportunities around Trump over previous years.

42:12 And we'll continue to evolve our graphene tech suite. First and foremost, the graphene ad stack is something that we're looking to get to the next stage to make it even quicker for us to onboard acquisitions and convert those acquisitions. And we're also spending a lot of time looking at optimizing the front end of our sites, which potentially will lead us to a new front end setup being released in the middle of this year. Our female focus has delivered amazing success. We think there's a shortage or certainly feedback from the market suggests there's a shortage of sites in the open market with significant scale of female audiences.

43:03 And given Entertainment Daily is around 70 or 80% female and the tab around 60% female, it's really brought us disproportionate growth on the value of our inventory that we're serving. So that's been a real benefit that we'll continue to focus on and evolve as we move forwards. In terms of M and A, the most success we have had has really been targeting first wave digital media businesses. And typically, these businesses are entities that are challenged by the fact that they once were created for a desktop experience. So many of them immersed in in the year two thousand nine, ten, around that kind of time, of which was the case for the TAB and the POKE and the Daily Mash, in fact.

44:02 And these assets typically have been modeled around a fee a a desktop delivery channel. And they've struggled in many ways a bit like magazine businesses have struggled to transform to a different commercial model. And this really brings opportunity and that has been seen obviously on what we've bought to date. But we're obviously open to opportunities elsewhere and and they're looking at other or have looked to other legacy opportunities, which are predominantly sort of print publishers that have not yet transitioned their brands. So in summary, we've got a profitable business that's grown through the execution of the strategy, year on year growth against all key measures, profit margin and PBT.

44:56 Ad demand for for quality quality mobile audiences is destined to increase. I don't think we can argue with those charts looking towards 2026, but we think that will improve revenues per session as we move forward over the coming years. Our growing audience base is something obviously we want to continue at two ninety three million in the past year. We're going to combat the Google Discover challenges that we've had and continue the growth of the business as we move forward over coming years. And make acquisitions easier and more seamless. The poke has been easier than the tab, and the poke is delivering better than the tab in the early stages. So we're full of promise around how that may shape up over the coming twelve months.

45:52 But we'll continue to be disciplined. It's not a case of buying anything. We need things that will fit our model, things that can demonstrate growth and things that can contribute to our cash position quite quickly. The business overall is set for a bright future. We've got a strong balance sheet, an expanding portfolio that we hope will soon be five with the acquisition of TV Guide, and momentum continues. Thank you. That's the end of the presentation. James, David, Jim, Marcus, thank you very much for your presentation. What I'll do is I'll just bring your cameras back up. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab, which is situated on the top right hand corner of your screen.

46:42 But just while the company take a few moments to review those questions submitted today, I'd like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed by your investor dashboard. As you can see, we received a number of questions throughout today's presentation. And, James, if I could just ask you to share the q and a reading out the questions where appropriate to do so, I'll pick up from you at the end. Okay. Shall I start off with the first question? So what's causing the delay on completion? This is from Alastair L, completion of TV Guide. Quite simply, we're waiting for the technology to be And as is often the case, these things take longer than expected.

47:33 I don't think I've come across a technology project that has failed on that level to take longer. We are getting close, and we're hopeful it will complete in h '1. So hopefully, that should be positive. There's a question maybe for you here, Jim, which is what are your thoughts on AI? It looks like a big disruptive force coming your way. You do you wanna Yeah. Hang on that? Yeah. Yes. I can. Actually, there was a I think people may have seen there was an article in the Feet this morning reporting Goldman Sachs research that was suggesting that generative AI was gonna potentially increase global GDP by 7% over the next ten years, but at the same time impacting 300,000,000 jobs. So it's clearly a very significant factor.

48:38 In terms of DIGITALBOX, we have done some private unpublished testing using chat GBT itself and also the new Bing. We've looked at list of based platforms using the same core technology. There's a platform called Jasper that we've looked at, video and audio and text to video, a number of different platforms. And, obviously, they've all got different pros and cons. Clearly, also, they're all improving at a pretty much exponential rate. So I think in the hands of expert writing teams, our view is that that kind of writing assistant or research as assistant or creative assistant is really helpful. But at the moment, we know we can't just let the AI go off and generate content because what you end up with is that that very, very confident but frequently wrong, not very well fact checked content that have been recently reported. Although, clearly, that will that will improve in short order. So I think coming next, we've got Google rolling out Bard, rolling out GT AI in into Bard, and I think that's gonna make a big difference in terms of the way writers work. I think that's gonna be pretty significant.

49:52 I think what we are going to see is us pretty much a kind of you can imagine a tsunami of AI generated quite same y content flooding the Internet, which ironically is not at all what Google or Microsoft want, but I think that's possibly likely. I think the the real value for us is when you partner AI with an expert writer, and that's where you start to see some gains in terms of being able to create high quality content more quickly and efficiently. So I think we'll look to embrace those tools and possibly look to have more to announce in the second half of this year. Okay. Thanks, Jim. Marcus, there's a question here that you might like to answer.

50:40 Mean, a number of us could probably answer it, but where do you see the greatest potential in the business? Yes. Good one. Thanks, James. It's quite a broad one. Yeah. I think there's continued potential in the buy and build strategy. Since I've been the chairman, I can see that this is a team who are capable of taking businesses that have been overstaffed, particularly around cost, not particularly well focused, immediately create a lean business. And within graphene, they've got one of the best monetizations platforms beyond, say, what future use, for example.

51:30 So I actually see the build and the growth opportunities as a continuation of the buy and build plan, I think there's more opportunities, and I think there'll be more opportunities particularly that come up in the current market. I then think the second thing that the business has done very well is it started to migrate its revenue streams. So it's not purely ad facing with the paid for content model on the mesh. And I think given the nature of some of the potential targets, we can also broaden out to build out potential affiliate revenues alongside advertising revenues. I actually see no deviation from strategy, but an opportunity to accelerate the buy and build plan.

52:16 Okay. Thank you. Question from Jonathan B. Can you give a feel for the demand outlook from agencies and advertisers? Guess the best barometer of that, a lot a lot of our business is done in the open market, but probably a third of it is dealt business through partners. So we work with a premium provider called InSkin, which has recently been acquired by Zerion. There were some pretty difficult comparators in q four, and it began the year in a pretty difficult position.

53:04 But it appears that they are really strengthening as we move into the back end of q one. And the outlook really for the rest of the year, I think, is much, much stronger. So we're really quite positive on that front. So we're looking towards the direct or agency business strengthening definitely as we move forwards from March and into April. So hopefully, that will be positive going forwards. Another question on acquisitions, are you looking to widen audience reach or deepen it within similar cohorts?

53:50 I don't know. Jim, do you want to answer that one? We're we're looking I suppose I I could answer it, but we we are looking to do both. We are open to the the opportunity. Yeah. We've we've said I think as we've as we've said before, we'll try and identify, as James says, we'll try and identify where there's a fit, and it might be that an acquisition looks like a credible prospect because it is absolutely very comfortably aligned with a vertical that we're already operating in. So you could see the poke is a good example of that. But, also, the reason that the poke was appealing was that it would there was a very clear route to enhanced monetization. So it didn't have to be a human site. It just so happened that it had ticks in both boxes. So I think we've we've I I I don't think that we'd pretend we'd really be looking to acquire something that was very significantly further away, had a had a very high proportion of non mobile users, for example, unless we felt there was an opportunity to all of a sudden transform transform the site. But we think that if we can see a route either through improved monetization or a portfolio fit or the way we can unlock some value, I think we're relatively open in terms of the kind of targets that we might be looking at.

55:11 Okay. Thank you. I'm not sure if you might wanna pick this one up, Jim, as well, but can you explain the graphene platform in layman's terms? Thank you. You don't want that one. I won't well, you you I I I can I can try? Well, first first of all, let let let me explain. Graphene is the name that we give to overarching technology suite. So it consists of a number of elements. Do you wanna expand, Jim, on maybe what those elements are? I mean, the graphene ad stack Yeah. Is one of them. Yeah. I mean, yeah, we've talked we've talked about the ad stack which really which which really is around improving monetization.

55:57 But the way that the way that we are able or the way the graphene is able to achieve that is really by optimizing, as James says, optimizing along every step of the way. So whether that be the way our articles present and ensuring that those articles contain, again, in the graph terms of graphing ads that contain ads that have market leading levels of viewability right down to the placement of the ads in an article or how many paragraphs there are to ensure that the ads are as viewable as possible. That's that's one that's one component of of graphing. And then on the other side, it's about serving out the content. So when you have a story that is performing very, very well, the way that graphing is is is is set up to deliver those pages to users as quickly as possible because of where the pages get cached and where they get served out incredibly quickly. That's a key component to do with its performance.

56:57 And that speed of delivery enables, in turn, enables the real time advertising auctions, which determine which ads actually get shown in those slots. It enables those auctions to happen very quickly and very efficiently with the maximum yield being derived from every every advertising unit. So I think as as James maybe showed on on one of the early slides, it's really woven through all parts of our operation to try and make sure that we're driving the maximum possible performance from every every step of the way, whether that be publishing the content, delivering the content to readers, showing those advertising opportunities to advertisers, and then driving the maximum benefit from that advertising auction.

57:50 That's that's about as good as I can do. Okay. Thanks, Jim. DJ, there's a question you might like to answer from Alastair L. Note 24 gives trading information for the Pope for December 2022, open brackets revenue 15,000, profit after tax 5,000. A one third post tax margin sounds lovely for an acquisition at one time sales. What would those figures be if you owned it for the whole year? And how do you see those figures for 2023, I think? Yeah. So yeah. A lovely question. Very inviting. But we we can't give that answer in this forum.

58:35 We can't give those forward views. What we can say is on a contribution level, we would expect contribution to be well over the 50%. So this is just the start. The PLC is settling in nicely. It's adapting to the graphene ad stack really well and the way we do things. So I think I'd rather answer that by saying we're very pleased with the acquisition and how it's settling in, and it's got a very good future for us in '23 and beyond. Thank you, DJ. There's a question from Robert w.

59:21 How exactly can you unlock value from TV Guide? And how does it fit into your stable of businesses? I think Jim and I could probably cover that one together. But TV Guide, first of all, is in a fairly primitive place at the moment from a technology point of view. We believe we can improve its delivery without question. Otherwise, we wouldn't be planning to complete the acquisition of it. We believe we can improve its monetization processes without doubts. We're really confident about that. But we also think there's another benefit about having it within our stable alongside Entertainment Daily that has obviously got a great deal of TV focus.

1:00:16 And, Jim, you've you've you've looked obviously at how we may build connections and build relationships between the two brands, which will sit very closely together in the business Yeah. I mean, the the the function the function of TV the TV Guide acquisition, it's it's it it is very functional. It is a guide to what's on TV. And, obviously, there's a great partnership there because the entertainment daily audience are huge TV watches and so and so there seems to be a very natural very natural fit in the in the one audience may well like to enjoy the other brand. So we think that there's a pretty good natural fit.

1:01:04 We also think from a from a planning perspective, the editorial resource on TV Guide can fit very nicely inside the wider entertainment daily team because visible further visibility on upcoming shows that we get as a result of having TV guides can help Entertainment Daily's planning process too. So I suppose a little bit like the poke and the mash, we see this good portfolio fit, but that will play out in different ways. Some of it will be editorial planning. Some of it will be possibly some kind of content connection, and then there will also be the ability to point users from one site to another. Okay. Thanks, Jim.

1:01:50 I think we're all out of questions. There's no fresh questions coming through. James, thank you very much for that. I think you have addressed those questions you can from investors. And of course, the company will review all the questions submitted today and will publish those responses on the investor meet company platform. But just before redirecting investors to provide you with their feedback, which you know is particularly important to the company, James, could I just ask you for a few closing comments? Yeah. Sure. I think the business is in a really great position looking forwards. I mean, clearly, 2022 had its challenges. There's no doubt about that. Yeah. The Queen's death was fairly significant within the mix of major global challenges that were thrown up in the year.

1:02:38 But looking forwards, if we can make a margin of 30% in a year like that, and looking forwards, if the revenues which are forecast to grow at the rates that we all believe, I. E, by 40% on mobile devices over the next three years, we think we're in a fantastic place. So further acquisitions, building the business as the strategy has been detailed will put us in a brilliant position in in two to three years' time. Thank you. James, David, Jim, Marcus, thank you very much for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team could better understand your views and expectations.

1:03:31 This will only take a few moments to to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of DIGITALBOX PLC, we'd like to thank you for attending today's presentation, and good morning to you all.