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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Brave Bison Group Plc | LSE:BBSN | London | Ordinary Share | GB00BF8HJ774 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.035 | 1.38% | 2.575 | 2.50 | 2.65 | 2.575 | 2.575 | 2.575 | 40,479 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Communications Equip, Nec | 31.65M | 2.08M | 0.0016 | 16.06 | 33.08M |
From Apr 2019 to Apr 2024
TIDMBBSN
RNS Number : 0999U
Brave Bison Group PLC
27 March 2019
27 March 2019
Brave Bison Group plc
("Brave Bison" or "the Group" or "the Company")
Full year results for the twelve months ended 31 December 2018
Brave Bison Group plc (AIM: BBSN), the social video company today announces its audited full year results for the twelve months ended 31 December 2018.
2018 Highlights
Financial Highlights
Hot Features
Premium
-- 19% increase in revenue to GBP21.2 million (2017: GBP17.8
million(1) ), driven by growth in Facebook platform advertising,
in line with 2018 strategy
-- Gross profit has increased in absolute terms, by 33% to
GBP6.5 million (2017: GBP4.9 million) as a result of the
increase in revenue and margin mix
-- Maiden adjusted EBITDA(2) of GBP0.8 million (2017: GBP0.9
million loss)
-- Operating cash inflow for the first time - cash inflow
from operating activities of GBP0.9 million (2017: cash
outflow of GBP1.5 million) and the Group had GBP5.4 million
of cash at the year end
Operational Highlights
-- Secured multiple new brands and retained and expanded existing
customer relationships across APAC and UK
-- Ranked as the '7th Biggest Media and Entertainment Publisher
in the World 2018' by Tubular Labs Video Aces Award for
digital publishers
-- Ended 2018 as biggest Facebook publisher globally based
on views and has the single biggest page on Facebook in
Viral Trnd
-- Won the Digiday Award for best branded content campaign
for SEGA's Football Manager on Slash Football
-- Launched two new cross-platform channels, Mutha and Perk,
across a range of social channels
-- Partnership with United Nations Environment Programme secured
for Mutha
-- Grew APAC teams following appointment of new General Manager
APAC - new hires in Indonesia and South Korea
-- Featured in the London Stock Exchange's 1,000 Companies
to Inspire Britain report
Post Period
-- Top Facebook page in the world, Viral Trnd, re-branding
to V Trnd, to create a viable home for branded content
and dotcom launching in April
-- Miaow channel re-launched on Facebook
-- Engaged Ingenuity, a lead generation and marketing company
to drive new business in 2019 and beyond
-- BBC Instagram campaign won for 'Body Positive' season
-- Appointment of new Commercial Director, Brian Murnin -
ex Vice and Warner Music
-- APAC content wins include multiple Lego productions, Jaguar
Landrover projects and new work for SK-II in Japan
1. Revenues restated as a result of the adoption of IFRS 15 ("Revenues from Contracts with Customers"), see Note 2.3.
2. Adjusted EBITDA excludes restructuring costs and share-based payments
Claire Hungate, Chief Executive Officer, commented:
"2018 has been a transformative year for Brave Bison in terms of our financial results, our market positioning, and the value we have created for shareholders. I am delighted with what we achieved in the year, particularly becoming adjusted EBITDA positive and Tubular Labs listing us as the biggest publisher on Facebook based on views. Looking ahead, while there are challenges of running a digital media business, there are also a lot of opportunities to capitalise on, in a world increasingly dominated by social media and video content."
For further information please contact:
Brave Bison Group plc
Jack Bates, Communications Manager
Email: jackbates@bravebison.io
Allenby Capital Limited - AIM Nominated Adviser and Broker
Jeremy Porter / Asha Chotai
Tel: 020 3328 5656
Newgate Communications
Elisabeth Cowell / Robin Tozer/ Fiona Norman
bravebison@newgatecomms.com
Tel: 020 3757 6880
About Brave Bison:
Brave Bison is a social video company, proudly working with some of the biggest brands and most followed YouTube and Facebook talent in the world. Clients include P&G, Shell, PUMA and Hyundai.
Brave Bison makes it simple for content owners, creators, brands, publishers and platforms to unlock the value of online video, whether on a licensed, ad-funded, direct to consumer or paid placement basis.
The business is based in two regions - Europe, with headquarters in London; and APAC, with offices in Singapore.
Chairman's Report
For the first time in the Company's history, Brave Bison became adjusted EBITDA positive in 2018. It is always dangerous to claim that a corner has been turned, but I think we are entitled to express a degree of cautious optimism about the future.
Significant revenue growth via our Facebook channels, a solid performance from our APAC team and tight cost control all contributed to a turnaround from an adjusted EBITDA loss of GBP0.9 million in 2017 to positive adjusted EBITDA of GBP0.8 million for the year we now report on.
Whilst we remain optimistic about the years ahead, last year's statement ended with a warning that the business we are in, whilst providing growth and plenty of opportunity, was quite unpredictable. This remains the case but the management and staff deserve credit for managing this uncertainty in 2018 and we look forward to even greater stability and a more promising future.
Our strategy of owning channels continued in 2018 with the launch of Mutha and Perk. These are both underway and we have started to see some interest from brands and organisations alike. Mutha is focused on the environment and sustainability and has already secured the involvement of the United Nations. Perk is focused on career paths and jobs for young people.
We have been focused on YouTube partnerships, which mostly involve channel management for leading brands. Our partnership with golf's PGA Tour has recently been renewed following significant growth in YouTube subscribers and views. Client wins in 2018 include golf's European Tour and Hewlett Packard. Significant UK branded content deals include Marriot Courtyard and Puma, both on our Slash Football YouTube channel. Our licensing business has grown as a result of deals with Sky Q, Tencent and Snapchat.
The APAC region, which is centred in Singapore, produced another year of solid results ending the year with some good branded content contract wins with Lego and All Nippon Airlines as well as a contract renewal with SK-II, a luxury beauty brand owned by Procter & Gamble. The region has significant further growth potential.
We have been focused on growing other new revenue streams within our company. We are in the top 10 of Global Digital Media Publishers according to Tubular Labs and revenue from Facebook is the most significant contributor to the top line. Viral Trnd, is the biggest Facebook channel in the world in terms of views. Although, this is a great strength it is also a challenge in its unpredictability. A major aspect of our strategy, as illustrated above, is to focus on growing other revenue streams from businesses we have greater influence over.
In the year ahead, we will continue to grow and reshape the business with the confidence of having both more cash in the bank at the end of the year than we started with, and remaining debt free. I would like to thank our shareholders for their continued support.
Sir Robin Miller
Chairman, Brave Bison Group plc
CEO's Report
2018 has been a game-changing year for Brave Bison, both in terms of our financial results, our trade market positioning and the value we have created for shareholders.
It has been a year of highlights and firsts; the first year Brave Bison has declared a positive adjusted EBITDA or been operating cashflow generative; the first year Brave Bison has been able to call itself the biggest publisher on Facebook or to say we have the single biggest page on Facebook in Viral Trnd, and the first year we have won a Digiday award for our creative campaign content. We have also launched two new cross-platform channels, expanded our APAC office, undertaken business in China and Japan and been featured in the London Stock Exchange's 1,000 Companies to Inspire Britain report.
With revenue at GBP21.2 million we have achieved a 19% year on year revenue growth, a 31% gross margin, up from 27% in 2017 and a positive adjusted EBITDA of GBP0.8 million. This demonstrates the positive impact that our refined and expanding offering, revolving around the three pillars of Strategy, Origination and Distribution, has delivered.
All that said, there is still a lot to do; for instance, the skew of advertising revenue to fee-based services revenue is higher than I would like and it is my intention to address that in the year ahead. But in the fifteen months from me joining Brave Bison and the close of 2018 we have achieved a lot. Looking ahead, there are the challenges of running a digital media business but also a lot more opportunity to capitalise on, in a world dominated by social media and video content.
The Market Opportunity
As a social video studio which creates value through finding, building and engaging on-line audiences globally, digital penetration is of huge importance. In 2019 57% of the world's population are using the internet, 45% of the world's population are using social media, 67% have mobile phones and 42% are using social media on their mobile phone*. These numbers are all up on 2018.
According to Cisco, Smartphones will account for 44% of total internet traffic by 2022, up from 18% in 2017 and video will account for 80% of all web traffic by 2019, up from 64% in 2014. And wherever eye-balls go - ad revenue follows.
According to WARC, global ad growth will ease to 4.3% in 2019, compared to a 5.4% rise in 2018 (the strongest since 2011). This will push the value of global ad trade to over US$616 billion in 2019.
The Internet is the driving force in global advertising growth, with the vast majority of online trade now automated. Ancillary research by Zenith shows that programmatic buys will rise to account for almost two-thirds of online display ad-spend this year. This is in addition to paid search and social media, which are programmatic by design.
The ease of ad buying is, in part, a driver for an expected 12.1% rise in internet ad-spend in 2019, to $287.4 billion worldwide. This would give internet a 46.7% share of media spend globally, but in the US - the world's largest ad market - internet is expected to account for over half of all media spend for the first time.
Facebook and Google's ad income is forecast to rise 22.0% to US$176.5 billion in 2019, or 61.4% of global internet ad spend; it's gratifying to know we have built our audiences in the right place and our investment (cited in last year's report) in Facebook was correct.
*Hootsuite - Digital Media Report 2019
Our Business
Think Digital first. Social first. Video first. Audience first. That is our sweet spot.
As a social video studio, we find, build and engage audiences, making them opt-in to watching, sharing and discussing content in a world where we are saturated by it and opting out is all too easy.
Our model is part creative and production agency, part media owner, part strategic consultant. We are a distributed content business, building brands and creating content that travel across platforms and channels. This gives our business model and pipeline fault tolerance and a diverse revenue stream.
We have two main revenue streams, advertising and fee-based services:
Advertising revenue
-- Advertising revenue from our own portfolio of channels and owned and operated web sites and across third party channels we manage for our clients
Fee-based services
-- Fees for consultancy services around social media strategy, content creation and audience development
-- Fees for content creation, be that from brands or other clients for social video content or from platforms for more narratively driven content
-- Licence fees from licensing our own and third-party content to publishers, broadcast services, production companies and advertising agencies
Moving forward, we plan to further diversify our revenue streams by charging distribution fees to clients who wish to utilise our powerful owned and operated ("O+O") distribution network and by selling merchandise and products direct to consumers.
Rebel FC
It was a fascinating first full year for our You Tube football team Rebel FC, in which we own a 30% stake. Brave Bison represents the commercial rights in Rebel FC and we closed deals with Under Armour for kit and Utilita for front of shirt sponsorship.
Post period end, Rebel FC has announced a Rebel FC e-sports venture, signing top players Tom Stokes and Tom Painter. They've also hosted their first Rebel football skills academy for young players. Rebel FC has strong brand equity and we will be leveraging this and selling Rebel FC merchandise in the near future. I look forward to providing further updates on this.
The creator football space is still in its infancy and we shall wait to see how it progresses, but we are pleased to have our foothold in the market with a quality offering like Rebel FC together with Calfreezy (Callum Airey).
APAC
APAC continues to be an exciting region for Brave Bison; a region where we can find exponential growth largely from our creative production services but also more generally from our social video services. In last year's statement I said we would invest in APAC and that investment is paying off.
In February 2018, we brought in a new General Manager, Caroline Troman, who has a background in digital sales and digital media, having worked at Yahoo and AOL. Her challenge was both to diversify the revenue streams for the APAC office and to extend our customer base as we had become overly dependent on a number of large clients, which had a tendency to make our revenue 'lumpy'.
Not only has our APAC office succeeded in finding new revenue streams, having signed distribution deals with Tencent in China and Oona in Indonesia, but they have also successfully won new retained clients in LEGO and others and doubled down on existing clients like P&G's luxury beauty brand SK-II and Japanese airline All Nippon Airlines. The team have also won new clients such as Accor Hotels, Jaguar Landrover and Hewlett Packard.
In order to service these clients to the required standard and take advantage of the opportunities, we have significantly increased the size of the team here, putting people on the ground in Indonesia and South Korea. For 2019 we are looking at new territories: Japan, China, Thailand - all fascinating growth opportunities.
Our one P&L approach enables us to work across territories and exercise flexibility and agility in servicing clients who have needs in multiple regions; as their businesses change, so can we. APAC continues to be an advertising hot spot.
At Ad Week Asia in May 2018, we announced a partnership with News Corp-owned Unruly, a data driven video marketplace. We can now offer clients a strategic end-to-end service in the APAC region covering both social media distribution and publisher distribution. Both Brave Bison and Unruly share a vision for advocating audience-first brand storytelling via engaging creative video content that users choose to watch and share. This partnership has already borne fruit in Singapore and is soon to be tested in the South Korean market.
Developing greater in-house production capability is a 2019 priority for our APAC business.
UK Operations
Social Platforms and Owned & Operated
The UK branded content or social video space is crowded and competitive. We firmly believe it will be won by those who can balance data-driven, audience-first creativity with strategic distribution.
Our channels provide a targeted, quality and brand-safe audience for advertisers. New channel launches are never straightforward and we were particularly ambitious in launching Mutha and Perk across multiple platforms (Instagram, You Tube, Facebook and Snapchat).
The reception from brands and agencies has been positive and our partnership with the United Nations on Mutha is a strong endorsement of our mission. It will take a while longer to build an audience that is material enough to interest brands and that was always part of the business plan. However, we also believe in smaller but highly engaged communities built around passion points; brand loyalty from these audiences is highly valuable.
Brave Bison prides itself in being audience experts and our increasing success is testament to our focus on putting the audience first, rather than the concept. Our belief is that blindly placing paid media behind social video campaigns is ineffective. Brave Bison's sell is around organic views - building an audience which watches and shares content because it is genuinely engaged by it, on channels where they want to be part of the community.
Having built some huge channels on Facebook, we now need to develop and hone our portfolio to ensure that each of them have a strong base of fans and followers which are engaged and passionate enough to matter to brands. This is a major project for us and will be key to securing more branded content sales in 2019 and beyond. We have started with Viral Trnd, which we are re-branding to V Trnd and we are launching a website to complement the brand. Pushing to a website enables us to take that huge audience to a platform where we actually own the audience and the data on that audience as well as the ad inventory, so we will be able to serve that audience products and services that might interest them. Other channel re-brands will follow and this O&O portfolio will be at the centre of our offering to brands, agencies and platforms, as well as being a gateway to direct to consumer sales.
We have made personnel investments in research, strategy and insights in 2018 and that has added real depth and value to our brand offering. In 2019 we will be investing more in data analysis, using the rich audience data we have access to and the data we will create via our web sites.
Our Commercial Director left half way through 2018 and we hired a new one at the start of January 2019. Undoubtedly this has adversely affected our growth in this area but our new hire, Brian Murnin, is already making an impact on our business and I have faith in his ability to contribute meaningfully to Brave Bison's business going forward.
YouTube
Our YouTube network, though much smaller than when we were a multi-channel network ("MCN"), is now building nicely. This is due to our advanced skills in developing audiences and our business outreach to sign new channels. Both these initiatives are key parts of our YouTube growth plan. Our reputation as YouTube channel growth experts is building and as we are able to circulate successful case studies, such as the PGA Tour, we are able to reach out to new clients.
Sports federations have been particularly successful for us; PGA Tour was renewed post period end, with services extended into Facebook and a two year contract. We also signed the European Tour during the period and have helped drive increases in views and followers. Significant channel signings in 2018 include specialist sports reporting agency Hayters Teamwork and World Chase Tag. Alongside these new signings, Brave Bison has helped build the biggest Grime You Tube network in the world with the combined numbers of Link Up TV, Press Play and P110. Other clients include Alofoke Play, the leading Latino Urban Music group created to target young latino diaspora throughout the U.S., Caribbean, South America & Europe and Ethiopian movie and TV channel Sodere.
In last year's report I referenced our burgeoning Facebook network and the new revenue stream offered to us by Facebook 'Ad Breaks' monetisation. The strategy of building this network of channels and optimising them to benefit from Ad Breaks has proved fruitful and in December 2018 we sat as the biggest publisher on Facebook in terms of views at 5.4 billion, beating the newly combined LadBible and Unilad at 4.8 billion views (source: Tubular Labs - Media and Entertainment properties).
We also have the single biggest Facebook page in the world in Viral Trnd, the home of trending content on-line. Our portfolio of owned and operated channels has increased from 11 pages in my report this time last year to 20 today. Those channels span DIY, entertainment, food, arts, to our newly launched Mutha (Fashion, Food, Travel, Fitness, Lifestyle and Beauty through the lense of sustainable and conscious living) and Perk (work and careers for Gen Z). As I have referenced elsewhere, we will continue to grow our Facebook network and build on the audiences we have established and are engaging and the communities we have built in 2018. Ad Breaks have been and will continue to be a hugely important source of revenue and cash generation for us.
We will be launching new channels in 2019 and growing our existing channels. We will also be diversifying our revenue from the audiences we have built on Facebook by developing a Viral Trnd website where we will direct traffic from many of our sites. That will be a truly owned audience where we can collect and analyse data, own 100% of the ad revenue and potentially create other commercial opportunities for that audience; selling products, events, even podcasts and other media services.
Reports about Facebook's demise are inaccurate; Facebook is still the biggest and most valuable social network on the planet and that isn't changing any time soon. But of course, recent events will have some impact on the Company's operations and direction of travel. However, as a material partner we are in a position to know and understand any changes before they impact our business and we are constantly changing and developing to meet the demands of our partners. Should Facebook's business model change, we will adapt to change with it. The key to our success in this market is understanding and being close to platforms, understanding the audiences that inhabit those platforms and seeing the commercial opportunities ahead of time.
Additionally, we are now offering our Facebook monetisation and growth building services to third parties. Growing the biggest Facebook network in the world in less than 12 months is a big achievement and one the market is hard pushed to ignore. Thus, we have signed legendary YouTuber KSI as a Facebook partner and have extended our channel management service offering to the PGA to encompass Facebook as well. Some of these relationships will be fee based and some will be on a shared advertising revenue model but all offer additional pipeline revenue opportunities.
Other platform growth
Brave Bison's platform growth has always been driven by monetisation opportunities. As those opportunities materialise and develop so we strategically grow our presence. Snapchat was a new venture for us in 2018; we launched Mutha and Perk Shows on Snapchat's 'Discover' page, part of Snapchat's strategy to bring more UK creators and UK content to the site. As a platform entertaining 90% of UK social network users aged 18-24, it was important for us to have a presence to showcase the Mutha and Perk brands.
Instagram will be a focus for us in 2019. We have a burgeoning presence on the platform but we will be super-charging this, moving our bigger brands on to the Instagram platform and growing audiences around them. The opportunity here is both around our brand work and distribution of branded content campaigns but also advertising revenue, which we expect to launch in some form on the platform this year. Additionally, as an expert in engaging and marketing to Gen Z and Millennial audiences, Instagram is a prime platform.
Needless to say we are in conversations with numerous other platforms and it's always our intention to be a leader in the industry in this regard.
Licensing, Distribution & Production
With a background in intellectual property ("IP") production and exploitation I was always going to push the agenda for distribution of our owned IP and media brands. Developing our owned and operated brand portfolio will also drive our distribution business, giving us known consumer brands under which to distribute our content to new platforms and services. Our policy of owning the IP in the content we produce has really paid off and enables us flexibility with our licensing and distribution as well as an ability to fully leverage our brand deals. Our deal with Tencent was ground breaking and our relationship with them continues to expand into interesting territory. Distribution globally is a rich source of revenue and relationships for us going forward and we will continue to challenge ourselves in this regard.
We will also continue to grow our investment in our licensing business. I referred in last year's statement to the historical Viral Spiral licensing business. It's now re branded Viral Vault and performed as forecast this year. We believe that with further investment we can unlock new partners and markets with this business, at a time when so many platforms are dependent on and driven by video content. This is particularly interesting at time when producing original content is outside the budget and business model of many digital publishers and brands.
Two years ago we were a company who aspired to create content. We are now a fully-fledged IP owning production and distribution studio which can provide an end-to-end data driven strategic solution for a brand or platform. We are in some interesting commissioned production conversations currently and we will continue to develop this area of the business. Moving up the value chain by creating premium content which drives audiences is a key part of our evolution and our understanding of younger audiences (how, when and why they consume content for instance) gives us a head start in this regard. Most linear TV networks have given up on the younger audiences but we know where to find them and how to engage them in discussion and move them around digital platforms.
Marketing & PR
Marketing and PR have been a major emphasis for Brave Bison in 2018 and will continue to be so through 2019 and beyond. With a name change (from Rightster to Brave Bison) such recent history, we were having difficulty with brand awareness and in such a crowded market, visibility and brand equity are key. Last year saw us sponsoring Ad Week Europe and Ad Week Asia, Spikes in Asia, Futur in Singapore, and speaking at IBC in Amsterdam, and Luxe in London among others. We've also been building our LinkedIn network and now stand at almost 18,000 followers; LinkedIn is an effective communication method for us both with our shareholders and with the trade marketplace. It is also increasingly effective for recruitment. In 2019 we'll be building on these efforts with more conferences and more investment in video for our corporate social pages and more thought pieces to talk as much about how we do things and what we believe in, as what we do.
The Future/What's next
Rightster was a company built on bespoke technology. That technology became outmoded and investment and development were unable to keep up with market demand or competition. However, we still have an understanding of where technology can give us an edge at our core. In the Uploader (our bespoke and unique You Tube upload software) we have a piece of software that offers utility to our clients; it cuts the time they will need to spend uploading content to You Tube. We are now building tools that will automatically sift through content at scale and advise on optimisation, firstly on You Tube, but latterly on other platforms. This will enable us to deliver huge value to our existing and future clients at scale and almost instantaneously.
As we move toward an owned audience model, we will have more access to more meaningful data about our audiences. In 2019 we will be investing more in analysing this data, both in order to inform our investment and creative production decisions but also in order to inform our clients' spending decisions. With data comes insight and performance is another important aspect to add to our existing focus on Strategy - Origination - Distribution; we must constantly be measuring performance and iterating strategy and insight to optimise our. work.
As a player in the distributed media space we must develop and brand our portfolio of owned and operated channels to ensure that they represent engaging consumer facing brands fit for a digital world. We will be investing in new channels, across platforms in new verticals. This extends our reach from social platforms to owned websites and gives us real ownership of audiences and is central to most of our products and strategy moving forwards; branded content, distribution, channel management services, commissioned content production, licensing and ecommerce and merchandising.
We will be experimenting further with our direct-to-consumer offering; this could be ecommerce, podcasting and/or merchandising. Whichever it is, we are certain that we must take full advantage of our huge reach with consumers; six billion views a month is a good starting point for a direct-to-consumer marketing campaign.
Our media inventory is gaining scale and becoming more interesting to advertisers, especially with the launch of our web sites. This allows us the opportunity to re-think this part of our business which we stopped selling ourselves a couple of years ago. We are strategically reviewing our media and inventory sales potential with expert advice but, as Facebook begins to open up ad sales to partners, this must be an opportunity.
Summary of strategy
In conclusion, as a distributed media company we must develop and brand our portfolio of owned and operated channels to ensure that they represent engaging consumer facing brands fit for a digital world. This expertise in building and engaging audiences is at the centre of everything we do, the service we offer clients and the way we drive revenue. As well as honing existing brands we will be investing in new channels, across platforms in new verticals. This extends our reach from social platforms to owned websites and gives us real ownership of audiences, IP and ad inventory and is central to most of our products and strategy moving forwards; creative & production services, branded content, distribution, channel management services, commissioned content production, licensing, distribution, media/inventory, ecommerce and merchandising. Layered over this we will be looking at growth in the APAC region and other territories where we see organic growth opportunities. I've always said that in order to find material growth in this market we will need to look at acquisitions or joint ventures or partnerships and this also is firmly on the road map for 2019.
CSR
We will continue to pursue our 'content with purpose' mission. It is important to Brave Bison, our employees, our shareholders and stakeholders that we take our obligation to contribute something positive to the world and to society seriously. Our CSR work, our signature of the UN Global Compact, our work with and for the UN, our channels Perk, Mutha and Slash Football, all show our commitment in this regard.
I also wanted to take this opportunity to update you on my commitment to more gender equality across the Company, as referenced in last year's CEO statement. I'm happy to report that our gender balance has improved significantly which is pleasing and I have no doubt we will see the benefit of such balance in our company performance. I would like to thank the team for their hard work in delivering the performance we have delivered this year.
A remarkable year, but there is lots still to achieve; the team and I are looking forward to the tackling the challenges and exploiting the opportunities ahead of us.
Claire Hungate
Chief Executive Officer, Brave Bison Group plc
CFO's Report
Trading Results
Revenue increased by 19% to GBP21.2 million (2017: GBP17.8 million), the growth driven by platform advertising from its owned and operated channels. 2017 revenues have been restated as a result of the adoption of IFRS15 "Revenues from Contracts with Customers", (see Note 2.3). This adjustment is a gross up of revenue and cost of sales and does not impact operating profit or taxation.
The Group continues to carry out, as its primary activity, the monetisation of online video content which, can be sub-divided into two main underlying revenue streams, namely Advertising and Fee Based Services.
Advertising revenue increased by GBP5.3 million to GBP17.8 million (2017: GBP12.5 million). This is despite a GBP1.6 million decline due to ceasing a low margin revenue product in the first quarter of 2017. The advertising growth has primarily been from Facebook platform advertising as a result of a significant increase in views across our portfolio of 20 owned and operated social media communities. Brave Bison's properties, including Slash Football, Viral Vault, Rebel FC, Canvas, Viral Trnd and Superviral TV, reach over 1 billion people a week. According to the global leaderboard of "Most Views by Media and Entertainment Properties" produced by Tubular Labs, the leading global video measurement and analytics platform, Brave Bison was in the Top 10 of Global Media Publishers in 2018. Facebook continues to experiment with video content resulting in algorithm changes and Brave Bison will adapt to experiment alongside them. We are continually reviewing monetisation opportunities and invest accordingly.
Fee Based Services revenue decreased by GBP1.9 million to GBP3.4 million (2017: GBP5.3 million). This is partly due the loss of a significant contract with a major Hollywood movie studio that ended in Q1 2017. Branded content revenues were also down year-on-year in APAC and UK, although the APAC business has performed well since Q3 2018 following the recruitment of a new General Manager and has a strong sales pipeline for 2019. These fee based revenue declines have been partly offset by growth in consultancy fees for audience development and rights management services from clients such as Shell and Hewlett Packard.
Gross profit has increased in absolute terms, by 33% or GBP1.6 million to GBP6.5 million (2017: GBP4.9 million) as a result of the increase in revenue and margin mix. Advertising gross profit increased by GBP2.2 million to GBP4.7 million (2017: GBP2.5 million) primarily due to growth in Facebook revenue with a 2018 gross margin of 26% (2017: 20%). Fee based services gross profit decreased by GBP0.6 million to GBP1.8 million (2017: GBP2.3 million) as result of the revenue reduction with a 2018 gross margin of 53% (2017: 44%). This increase in gross margin percentages is due to growth in our owned and operating channels leading to an increased share of advertising revenues and providing higher value fee based services such as consulting to brands around social media strategy and audience development.
Operating loss has improved significantly having been reduced to GBP0.1 million in 2018 from GBP4.9 million in 2017. This is due to a GBP1.6 million increase in gross profit, a GBP2.1 million decrease in administrative expenses to GBP6.6 million (2017: GBP8.7 million) and a GBP1.1 million reduction in restructuring costs to GBP28,000 credit (2017: GBP1.0 million). The GBP2.1 million decrease in administrative expenses was primarily due to a reduction in amortisation of intangible assets.
Headcount at year-end including contractors has increased by 13% to 62 (2017: 55). This is as a result of investment in our owned and operated channels, business development in the UK and expansion in our APAC office.
The Group has offices in London (to service the EMEA region) and Singapore (to service the APAC region) and has a dedicated studio space, Yellowstone Studios in London, enabling us to create more content, more quickly and much more cost-effectively.
The Group stock option charge for the year was GBP0.2 million (2017: GBP0.2 million credit). The 2017 credit was due to the number of senior management leavers. The Group will continue to use stock options as a means of incentivising and retaining key talent going forward. In November 2017 a new long-term share incentive plan was adopted in replacement of the Company's existing share option scheme.
Restructuring costs associated with headcount decreases, departure of senior management, closure of foreign offices and associated legal costs is GBPnil (2017: GBP1.0 million charge).
Adjusted EBITDA (excluding restructuring costs and share-based payments) increased by GBP1.7 million to GBP0.8 million (2017: GBP0.9 million loss).
The Loss before tax for the year was GBP0.1 million versus a GBP17.2 million loss for the prior year. This consists of the following main items:
2018 2017
GBP000's GBP000's
Adjusted EBITDA 802 (907)
Restructuring costs - (1,049)
Equity settled share based payments (204) 209
-------- --------
EBITDA 598 (1,747)
Finance costs - (38)
Finance income 28 -
Impairment charge - (12,181)
Depreciation (80) (121)
Amortisation (649) (3,070)
-------- --------
Loss before tax (103) (17,157)
Impairment charge of GBPnil million (2017: GBP12.2 million) is from the impairment of technology and customer relationship intangible assets. The technology software assets were deemed to be obsolete and so had no value resulting in a GBP1.6 million impairment charge. Customer relationship intangible assets were impaired due to declining licensing revenues (from Viral Management Ltd acquisition) and a continuing decrease in platform revenues (from Base 79 Ltd acquisition) resulting in a GBP10.6 million impairment charge.
Acquisitions
The Group made no acquisitions in 2018 but will be actively seeking out acquisitions and other partnership opportunities in 2019.
Statement of Financial Position
The Group ended the year with GBP5.4 million in cash and cash equivalents (2017: GBP4.8 million) and no overdraft or other borrowings. The Group generated GBP0.5 million in cash and cash equivalents in 2018 (2017: GBP2.2 million outflow) as result of GBP0.9 million cash inflow from operating activities (2017: GBP1.5 million outflow). The increase in operating cashflows was primarily due to higher platform advertising revenues. The Group forecasts to remain cashflow positive in 2019 despite further investment in strategic initiatives.
The Group is carrying Intangible Assets of GBP1.9 million (2017: GBP2.3 million). The Group capitalised R&D spend of GBP0.3 million (2017: GBP0.5 million) on the development of owned and operated intellectual property in 2018. The 2018 spend is on the new multiplatform channels Mutha and Perk. The Intangibles continue to be amortised over their useful lives.
Key performance indicators
2018 2017
GBP000's GBP000's
Revenue 21,171 17,792
Adjusted EBITDA 802 (907)
Cash and cash equivalents 5,362 4,821
Non-financial KPIs include headcount numbers and multi-platform views (ie Facebook, YouTube).
Environmental matters
As far as the directors of the Group are aware the Group's business does not cause a disproportionately adverse impact on the environment.
Employees
At 31 December 2018, the Group had 62 FTE's (including contractors) of whom 36 were male and 26 were female. Of the senior members of management, 5 were male and 2 were female.
Paul Campbell-White
Chief Financial Officer, Brave Bison Group plc
CONSOLIDATED INCOME STATEMENT AND CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2018
Restated
31 31
December December
Note 2018 2017
GBP000's GBP000's
Revenue 6 21,171 17,792
Cost of sales (14,709) (12,934)
-------- ---------
Gross profit 6,462 4,858
Administration expenses (6,574) (8,747)
Restructuring costs 8 - (1,049)
-------- ---------
Operating loss 7 (112) (4,938)
Share of loss from equity accounted investment 15 (19) -
Impairment charge 13 - (12,181)
Finance income 28 -
Finance costs 9 - (38)
-------- ---------
Loss before tax 7 (103) (17,157)
Analysed as
Operating profit/(loss) before tax adjusted for
restructuring costs and share based payments
(Adjusted EBITDA) 802 (907)
Restructuring costs 8 - (1,049)
Equity settled share based payments 21 (204) 209
-------- ---------
EBITDA 598 (1,747)
Finance costs - (38)
Finance income 28 -
Impairment charge - (12,181)
Depreciation 14 (80) (121)
Amortisation 13 (649) (3,070)
-------- ---------
Loss before tax (103) (17,157)
--------------------------------------------------- ---- -------- ---------
Income tax credit 10 33 2,308
-------- ---------
Loss attributable to equity holders of
the parent (70) (14,849)
======== =========
Statement of Comprehensive Income
Loss for the year (70) (14,849)
Items that may be reclassified subsequently
to profit or loss
Exchange loss on translation of foreign
subsidiaries (1) (26)
-------- ---------
Total comprehensive loss for the year attributable
to owners of the parent (71) (14,875)
======== =========
Loss per share (basic and diluted)
Basic and diluted loss per ordinary share
(pence) 11 (0.01p) (2.59p)
All transactions arise from continuing operations.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2018
At 31 At 31
December December
Note 2018 2017
GBP000's GBP000's
Non-current assets
Intangible assets 13 1,928 2,268
Property, plant and equipment 14 60 88
Investment in associates 15 56 75
--------- ---------
2,044 2,431
Current assets
Trade and other receivables 17 5,766 4,345
Cash and cash equivalents 5,362 4,821
--------- ---------
11,128 9,166
Current liabilities
Trade and other payables 18 (7,684) (6,201)
Non-current Liabilities
Deferred tax 16 (183) (226)
Net Assets 5,305 5,170
--------- ---------
Equity
Share capital 19 576 574
Share premium 78,762 78,762
Capital redemption reserve 6,660 6,660
Merger reserve (24,060) (24,060)
Merger relief reserve 62,624 62,624
Retained deficit (118,507) (118,641)
Translation reserve (750) (749)
--------- ---------
Total equity 5,305 5,170
--------- ---------
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2018
2018 2017
GBP000's GBP000's
Operating activities
Loss before tax (103) (17,157)
Adjustments:
Depreciation, amortisation and impairment 729 15,372
Finance income (28) -
Finance costs - 38
Share based payment charges/(credit) 204 (209)
(Increase)/decrease in trade and other receivables (1,373) 2,111
Increase/(decrease) in trade and other payables 1,439 (1,673)
Tax paid (10) (10)
-------- --------
Cash inflow/(outflow) from operating activities 858 (1,528)
Investing activities
Purchase of property plant and equipment (52) (86)
Purchase of intangible assets (309) (500)
Investments - (75)
Interest received 28 -
-------- --------
Cash outflow from investing activities (333) (661)
Cash flows from financing activities
Issue of share capital 2 2
Interest paid - (38)
Cash inflow/(outflow) from financing activities 2 (36)
Net change in cash and cash equivalents 527 (2,225)
======== ========
Movement in net cash
Cash and cash equivalents, beginning of year 4,821 7,051
Increase/(decrease) in cash and cash equivalents 527 (2,225)
Movement in foreign exchange 14 (5)
Cash and cash equivalents, end of year 5,362 4,821
======== ========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2018
Capital Convertible Merger
Share Share redemption Loan Merger relief Translation Retained Total
Capital premium Reserve Note Reserve Reserve Reserve deficit Equity
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
At 1 January 2017 572 78,312 6,660 68 (24,060) 62,624 (723) (103,583) (19,870)
-------- -------- ----------- ------------ -------- -------- ------------ --------- --------
Equity settled
share based
payments - - - - - - - (209) (209)
Conversion of loan
note 2 450 - (68) - - - - 384
Transactions with
owners 2 450 - (68) - - - (209) 175
-------- -------- ----------- ------------ -------- -------- ------------ --------- --------
Other Comprehensive
income
Loss and total
comprehensive
income
for the year - - - - - (26) (14,849) (14,875)
At 31 December
2017 574 78,762 6,660 - (24,060) 62,624 (749) (118,641) 5,170
-------- -------- ----------- ------------ -------- -------- ------------ --------- --------
Shares issued
during
the year 2 - - - - - - - 2
Equity settled
share based
payments - - - - - - - 204 204
Transactions with
owners 2 - - - - - - 204 206
-------- -------- ----------- ------------ -------- -------- ------------ --------- --------
Other Comprehensive
income
Loss and total
comprehensive
income
for the year - - - - - (1) (70) (71)
At 31 December
2018 576 78,762 6,660 - (24,060) 62,624 (750) (118,507) 5,305
-------- -------- ----------- ------------ -------- -------- ------------ --------- --------
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2018
1. Brave Bison
BRAVE BISON GROUP PLC ("the Company") (formerly Rightster Group plc) was incorporated in England and Wales on 30 October 2013 under the Companies Act 2006 (registration number 08754680) and its registered address is 3(rd) Floor, 1 Neal Street, London, WC2H 9QL. On 12 November 2013 the Company entered into share exchange agreements to acquire 100% of the issued share capital of Brave Bison Limited, a company incorporated in England and Wales on 16 May 2011 and registered at the same address. On 12 November 2013 the Company was admitted to the Alternative Investment Market (AIM) where its ordinary shares are traded.
The consolidated financial statements of the Group for the year ended 31 December 2018 comprise the Company and its subsidiaries (together referred to as the "Group"). The Group provides an online video distribution and marketing network, providing rights holders, online publishers and advertisers with the tools and expertise required to engage audiences and optimise digital revenues. The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the CFO's Report on page 12 and Risks and Uncertainties in page 15. In addition, Note 23 to the financial statements includes the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and its exposure to credit risk and liquidity risk.
The Board of Brave Bison Group plc approved the release of this preliminary announcement on 26 March 2019.
The preliminary financial information does not constitute statutory financial statements for the year ended 31 December 2018 within the meaning of section 435 of the Companies Act 2006, but is extracted from those Financial Statements. Statutory accounts for Brave Bison Group plc for the year ended 31 December 2017 have been delivered to the Registrar of Companies. Statutory accounts for the year ended 31 December 2018 will be delivered to the Registrar of Companies following the Group's Annual General Meeting. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and (iii) did not contain statements under section 498(2) or (3) of the Companies Act 2006.
2. Basis of preparation
2.1 Going Concern
The financial statements have been prepared on a going concern basis, which assumes that the Group will be able to meet its liabilities as they fall due for the foreseeable future. The Group is dependent for its working capital requirements on cash generated from operations, cash holdings and from equity markets. The cash holdings of the Group at 31 December 2018 were GBP5.4 million (2017: GBP4.8 million).
The Group made a loss before tax of GBP0.1 million for the year ended 31 December 2018 (2017: GBP17.2 million), however generated an increase in cash and cash equivalents in 2018 of GBP0.5 million (2017: GBP2.2 million decrease).
The Directors have prepared detailed cash flow projections ("the Projections") which are based on their current expectations of trading prospects. The board forecasts that the Group will continue to achieve positive cash inflows in 2019 and has sufficient cash on hand to reach that goal. Accordingly, the Directors have concluded that it is appropriate to continue to adopt the going concern basis in preparing these financial statements.
The Directors are confident that the Group's forecasts are achievable, and are committed to taking any actions available to them to ensure that any shortfall in forecast revenues is mitigated by cost savings. Accordingly the going concern basis of accounting has been adopted in preparing these consolidated financial statements.
In February 2018 the Group cancelled its GBP2.0 million overdraft facility with Barclays Bank as it had not been drawn down since it was taken out in 2016 and cash flow forecasts indicated that it will not be required.
2.2 Basis of consolidation
The consolidated financial statements consolidate the financial statements of Brave Bison Group plc and all its subsidiary undertakings up to 31 December 2018, with comparative information presented for the year ended 31 December 2017. No profit and loss account is presented for Brave Bison Group plc as permitted by section 408 of the Companies Act 2006.
Subsidiaries are all entities over which the Group has the power to control the financial and operating policies and is exposed to or has rights over variable returns from its involvements with the investee and has the power to affect returns. Brave Bison Group plc obtains and exercises control through more than half of the voting rights for all its subsidiaries. All subsidiaries have a reporting date of 31 December and are consolidated from the acquisition date, which is the date from which control passes to Brave Bison Group plc.
Entities other than subsidiaries or joint ventures, in which the Group has a participating interest and over whose operating and financial policies the Group exercises significant influence, are treated as associates. The results of associate undertakings are consolidated under the equity method of accounting. The Group applies uniform accounting policies and all intra-group transactions, balances, income and expenses are eliminated on consolidation.
Unrealised gains and losses on transactions between Group companies are eliminated. Where recognised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a Group perspective.
Business combinations are dealt with by the acquisition method. The acquisition method involves the recognition at fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiary are included in the consolidated statement of financial position at their fair values, which are also used as the basis for subsequent measurement in accordance with the Group accounting policies. Goodwill is stated after separating out identifiable intangible assets. Goodwill represents the excess of acquisition cost over the fair value of the Group's share of the identifiable net assets of the acquired subsidiary at the date of acquisition.
Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable.
2.3 Adoption of new and revised standards
The only new and amended standard issued in the year that had a significant impact on the financial statements is IFRS 15 'Revenue from Contracts with Customers'. At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published by the IASB and adopted by the EU but are not yet effective, and have not been adopted early by the Group. Management anticipates that all of the relevant pronouncements will be adopted in the Group's accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Group's financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Group's financial statements.
The Group has adopted the new accounting pronouncements which have become effective this year, and are as follows:
IFRS 15 "Revenue from Contracts with Customers" and the related "Clarifications to IFRS 15 Revenue from Contracts with Customers" (hereinafter referred to as "IFRS 15") replaces IAS 18 "Revenue", IAS 11 "Construction Contracts" and several revenue-related Interpretations. The new standard has been applied retrospectively and with restatement to aid comparability.
The adoption of IFRS 15 has resulted in the change in determination of certain revenues streams from a net to a gross basis as the Group is now deemed to be acting as the principal in the transaction. The determination of whether the Group is acting as a principal or an agent in a transaction involves judgment and is based on an evaluation of the terms of an arrangement. Due to the change of the principal versus agent indicators within IFRS 15 versus IAS 18, the judgment of principal versus agent for the Group's contracts changed as a result of the implementation of the new standard. This adjustment is a gross up of revenue and costs of sales and does not impact operating profit or taxation. The table below sets out the impact on revenue and cost of sales on 2017.
2017
GBP000's
Revenue per financial statements 9,140
Gross up for content costs 8,652
Restated revenue 17,792
========
2017
GBP000's
Cost of sales per financial statements 4,282
Gross up for content costs 8,652
Restated cost of sales 12,934
========
IFRS 9, 'Financial Instruments' (effective 1 January 2018). This standard is based on the concept that financial assets should be classified and measured at fair value, with changes in fair value recognised in the profit and loss account as they arise ("FVPL"), unless restrictive criteria are met for classifying and measuring the asset at either Amortised Cost or Fair Value through Other Comprehensive Income ("FVOCI"). The financial assets which the Group holds are loan and other receivables for which changes to the fair value are posted to the income statements. The introduction of the 'expected credit loss' model has not significantly impacted the Group's accounting as it does not have any complex financial instruments or material credit risks.
IFRS 16, 'Leases' (effective 1 January 2019). This standard will change lease accounting for lessees under operating leases. Based on the Group's current lease structure (see Note 24) it is not expected that this new standard will have a significant impact on the presentation of the Group's assets and liabilities. None of the leases are over 12 months so the Group is able to apply the recognition exemption for short-term leases.
3. Statement of compliance
The financial statements have been prepared in accordance with the accounting policies and presentation required by International Financial Reporting Standards (IFRS), and International Financial Reporting Interpretations Committee ("IFRIC") Interpretations as endorsed by the European Union. They are presented in pounds sterling. The financial statements have also been prepared in accordance with those parts of the Companies Act 2006 that are relevant to companies that prepare financial statements in accordance with IFRS.
4. Summary of accounting policies
The Group's presentation and functional currency is GBP (Sterling). The financial statements are presented in thousands of pounds (GBP000's) unless otherwise stated.
4.1 Revenue
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business, net of discounts and sales related taxes.
Revenue is recognised when the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity, the costs incurred or to be incurred can be measured reliably, and when the criteria for each of the Group's different activities has been met.
The determination of whether the Group is acting as a principal or an agent in a transaction involves judgment and is based on an assessment of who controls a specified good or service before it is transferred to a customer. Significant contracts are reviewed for the indicators of control. The Group is deemed to be acting as a principal in all significant contracts.
Where the Group's contractual performance obligations have been satisfied in advance of invoicing the client then unbilled income is recognised on the balance sheet. Where the Group's contractual performance obligations have been satisfied less than amounts invoiced then a contract liability is recognised.
The accounting policies specific to the Group's key operating revenue categories are outlined below:
Advertising revenue:
-- Platform Advertising. Monetisation of the Group's and third party content owners' videos via platforms such as Facebook and YouTube. Revenue is recognised at the point in time when the performance obligation of delivering monetised views occurs;
Fee Based Service revenue:
-- Branded Content. Managing the creation of commissioned content and being responsible for procuring the talent and the associated production costs. The Group recognises revenue in line with the contractual obligation to deliver a completed episode. Revenue is recognised at the point in time when each completed episode is delivered. Production costs are deferred on the balance sheet as contract assets until each completed episode is delivered;
-- Managing customer content on platforms such as Facebook and YouTube including rights management and audience development. Revenue from providing these services is recognised over the time that the performance obligation to provide services are satisfied;
-- License fee revenues for the Group's own content and third parties' content are recognised at the point in time when the performance obligation of delivering the content is satisfied.
4.2 Interest and dividend income
Interest income and expenses are reported on an accrual basis using the effective interest method. Dividend income, other than from investments in associates, is recognised at the time the right to receive payment is established.
4.3 Foreign currency translation
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. Non-monetary items that are measured at historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.
Any exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were initially recorded are recognised in the profit or loss in the period in which they arise.
The assets and liabilities in the financial statements of foreign subsidiaries and related goodwill are translated at the rate of exchange ruling at the balance sheet date. Income and expenses are translated at the actual rate on the date of transaction. The exchange differences arising from the retranslation of the opening net investment in subsidiaries and on income and expenses during the year are recognised in other comprehensive income and taken to the "translation reserve" in equity. On disposal of a foreign operation the cumulative translation differences (including, if applicable, gains and losses on related hedges) are transferred to the income statement as part of the gain or loss on disposal.
4.4 Segment reporting
IFRS 8 Operating Segments requires operating segments to be identified on the same basis as is used internally for the review of performance and allocation of resources by the Group Chief Executive (chief operating decision maker - CODM).
The board has reviewed the Group and all revenues are functional activities of monetising online video content and these activities take place on an integrated basis. The senior executive team review the financial information on an integrated basis for the Group as a whole, with respective heads of business who are geographically located and in accordance with IFRS 8 Operating Segments, the Group will be providing only a geographical split as it considers that all activities fall within one segment of business which is monetising online video content. Segmental information is presented in accordance with IFRS 8 for all periods presented within Note 6.
4.5 Leasing
Rentals payable under operating leases are charged to the income statement on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.
4.6 Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment. Depreciation is calculated to write down the cost less estimated residual value of all property, plant and equipment by equal annual instalments over their expected useful lives less estimated residual values, using the straight line method. The rates generally applicable are:
-- Fixtures & Fittings - 3 years or over remaining lease term -- Computer Equipment - 3 years
The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
The assets' residual value and useful lives are reviewed, and adjusted if required, at each balance sheet date. The carrying amount of an asset is written down immediately to its recoverable amount if the carrying amount is greater than its estimated recoverable amount.
4.7 Impairment of property, plant and equipment
At each balance sheet date, the Group reviews the carrying amounts of its property, plant and equipment to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
4.8 Intangible assets
An intangible asset, which is an identifiable non-monetary asset without physical substance, is recognised to the extent that it is probable that the expected future economic benefits attributable to the asset will flow to the Group and that its cost can be measured reliably. The asset is deemed to be identifiable when it is separable or when it arises from contractual or other legal rights.
Intangible assets acquired as part of a business combination, are shown at fair value at the date of the acquisition less accumulated amortisation. Amortisation is charged on a straight line basis through the profit or loss. The rates applicable, which represent the Directors' best estimate of the useful economic life, are:
-- Customer relationships - 5 to 10 years -- Online channel content - 3 years -- Brands - 3 years -- Technology - 1 to 5 years
4.9 Impairment of intangible assets
At each balance sheet date, the Group reviews the carrying amounts of its intangible assets and goodwill to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
4.10 Development costs
Expenditure on the research phase of an internal project is recognised as an expense in the period in which it is incurred. Development costs incurred on specific projects are capitalised when all the following conditions are satisfied:
-- Completion of the asset is technically feasible so that it will be available for use or sale;
-- The Group intends to complete the asset and use or sell it;
-- The Group has the ability to use or sell the asset and the asset will generate probable future economic benefits (over and above cost);
-- There are adequate technical, financial and other resources to complete the development and to use or sell the asset; and
-- The expenditure attributable to the asset during its development can be measured reliably.
Development costs not meeting the criteria for capitalisation are expensed as incurred. The cost of an internally generated asset comprises all directly attributable costs necessary to create, produce and prepare the asset to be capable of operating in the manner intended by management. Directly attributable costs include employee (other than Director) costs incurred along with third party costs.
Judgement by the Directors is applied when deciding whether the recognition requirements for development costs have been met. Judgements are based on the information available at the time when costs are incurred. In addition, all internal activities related to the research and development of new projects is continuously monitored by the Directors.
4.11 Investments in associates and joint ventures
Investments in associates and joint ventures are accounted for using the equity method. The carrying amount of the investment in associates and joint ventures is increased or decreased to recognise the Group's share of the profit or loss and other comprehensive income of the associate or joint venture, adjusted where necessary to ensure consistency with the accounting policies of the Group.
4.12 Taxation
Tax expenses recognised in profit or loss comprise the sum of the tax currently payable and deferred tax not recognised in other comprehensive income or directly in equity.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and are accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be recognised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to recognise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset recognised based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
4.13 Financial Instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised with the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is deregognised when it is extinguished, discharged, cancelled or expires.
Loan and other receivables
The Group accounts for loan and other receivables by recording the loss allowance as lifetime expected credit losses. These are shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. The Group uses its historical experience, external indicators and forward-looking information to calculate expected credit losses.
Trade and other payables
Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest method.
4.14 Equity, reserves and dividend payments
Share capital
Share capital represents the nominal value of shares that have been issued.
Share premium
Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium arising on those shares, net of any related income tax benefits.
Retained deficits
Retained deficits include all current and prior period retained profits or losses. It also includes credits arising from share based payment charges.
Translation reserve
Translation reserve represents the differences arising from translation of investments in overseas subsidiaries.
Merger reserve
The merger reserve is utilised when group reconstruction accounting is applied. The difference between the cost of investment and the nominal value of the share capital acquired is recognised in a merger reserve.
Merger relief reserve
Where the following conditions are met, any excess consideration received over the nominal value of the shares issued is recognised in the merger relief reserve:
-- the consideration for shares in another company includes issued shares;
-- on completion of the transaction, the company issuing the shares will have secured at least a 90% equity holding in the other company.
Capital redemption reserve
Where the Company purchases its own equity share capital, on cancellation, the nominal value of the shares cancelled is deducted from share capital and the amount is transferred to the capital redemption reserve.
Dividend distributions payable to equity shareholders are included in 'other liabilities' when the dividends have been approved in a general meeting prior to the reporting date.
4.15 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, together with other short-term highly liquid investments that are readily convertible into known amounts of cash having maturities of 3 months or less from inception and which are subject to an insignificant risk of change in value, and bank overdrafts.
4.16 Employee benefits
The Group operates two schemes on behalf of its employees, private healthcare and a defined contribution pension plan and amounts due are expensed as they fall due.
4.17 Share based payments
Employees (including Directors) of the Group received remuneration in the form of share-based payment transactions, whereby employees render services in exchange for rights over shares ('equity-settled transactions'). The Group has applied the requirements of IFRS 2 share-based payments to all grants of equity instruments. The transactions have been treated as equity settled.
The cost of equity settled transactions with employees is measured by reference to the fair value at the grant date of the equity instrument granted. The fair value is determined by using the Black-Scholes method. The cost of equity-settled transactions are recognised, together with a corresponding charge to equity, over the period between the date of grant and the end of a vesting period, where relevant employees become fully entitled to the award. The total value of the options has been pro-rated and allocated on a weighted average basis.
4.18 Restructuring Costs
Restructuring costs relate to corporate re-organisation activities previously undertaken or announced.
5. Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements under IFRS requires the Group to make estimates and assumptions that affect the application of policies and reported amounts. Estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and assumptions which have a risk of causing a material adjustment to the carrying amount of assets and liabilities are discussed below.
5.1 Critical accounting judgements
Intangible assets and impairment
The Group recognises the intangible assets acquired as part of business combinations at fair value at the date of acquisition. The determination of these fair values is determined by experts engaged by management and based upon management's and the Directors' judgement and includes assumptions on the timing and amount of future incremental cash flows generated by the assets and selection of an appropriate discount rate. Furthermore management must estimate the expected useful lives of intangible assets and charge amortisation on these assets accordingly.
Included within intangible assets are capitalised customer relationships. These were acquired as part of the acquisitions of Viral Management Limited and Base79 Limited. The Group continues to recognise revenue from these customer relationships through revenue share and licensing agreements. These assets are amortised over a period between 5 to 10 years on a straight line basis and were deemed to be impaired during the year (see Note 13).
Also included within intangible assets are capitalised costs for online channel content associated with the development of Slash Football, Mutha and Perk. These assets are amortised over a 3 year period on a straight line basis.
Development of Online Channel Content
Costs associated with the development of Slash Football, Mutha and Perk, networks of social media channels and content that is owned and operated by Brave Bison, that are directly attributable to the design and building of the channels controlled by the Group are recognised as intangible assets when the following criteria are met:
-- It is technically feasible to complete the online channel content so that it will be available for use;
-- Management intends to complete the online channel content and use or sell it; -- There is an ability to use or sell the online channel content;
-- It can be demonstrated how the online channel content will generate probable future economic benefits;
-- Adequate technical, financial and other resources to complete the development and to use or sell the online channel content are available;
-- The expenditure attributable to the online channel content during its development can be reliably measured.
Furthermore management must estimate the expected useful lives of intangible assets and charge amortisation on these assets accordingly. Judgement is exercised as to when the channels are deemed to be ready to be monetized and hence the assets start to be amortised. This is when the audience is at a significant enough scale to be attractive to brands.
Developing new social media channels involves a variety of risks. These include the risk that the content will not be engaging enough to attract sufficient views and that these views are not monetized to their full potential by revenues such as platform advertising, branded content, licensing and distribution.
Treatment of revenue as agent or principal
The determination of whether the Group is acting as a principal or an agent in a transaction involves judgment and is based on an assessment of who controls a specified good or service before it is transferred to a customer. Significant contracts are reviewed for the indicators of control. These include if the Group is primarily responsible for fulfilling the promise to provide the good or service, if the Group has inventory risk before the good or services has been transferred to the customer and if the Group has discretion in establishing the price for the good or service.
Deferred taxation
Deferred tax assets and liabilities have been recognised which are contingent and dependent upon future trading performance.
5.2 Estimates
Share based payment charges
The Group is required to measure the fair value of its share based payments. The fair value is determined using the Black-Scholes method which requires assumptions regarding exchange rate volatility, the risk free rate, share price volatility and the expected life of the share based payment. Exchange rate volatility is calculated using historic data over the past three years. The volatility of the Group's share price has been calculated as the average of similar listed companies over the preceding periods. The risk-free rate range used is between 0.82% to 1.10% and management, including the Directors, have estimated the expected life of most share based payments to be 4 years.
Bad debt provision
Recoverability of some receivables may be doubtful although not definitely irrecoverable. Where management feel recoverability is in doubt an appropriate provision is made for the possibility that the amounts may not be recovered in full. Provisions are made using past experience however subjectivity is involved when assessing the level of provision required.
6. Segment Reporting
As explained in the summary of Accounting Policies, management identify only one operating segment in the business, being monetising online video content. This single operating segment is monitored and strategic decisions are made on the basis of this segment alone.
As a result only the geographic reporting of revenue analysis has been included in this note. Two customers in 2018 (2017: Four) represented over 10% of the Group's total revenue.
Geographic reporting
Brave Bison has identified three geographic areas (United Kingdom & Europe, Asia Pacific and Rest of the world) and the information is presented based on the customers' location.
Restated
2018 2017
Revenue GBP000's GBP000's
United Kingdom & Europe 18,910 14,391
Asia Pacific 1,956 2,739
Rest of the world 305 662
-------- --------
Total revenue 21,171 17,792
======== ========
The Group identifies two revenue streams, Advertising and Fee based services. The analysis of revenue by each stream is detailed below, a detailed overview can be found in the Strategic Report.
Restated
Revenue 2018 2017
GBP000's GBP000's
Advertising 17,800 12,456
Fee based services 3,371 5,336
Total revenue 21,171 17,792
======== ========
Gross profit 2018 2017
GBP000's GBP000's
Advertising 4,705 2,517
Fee based services 1,757 2,341
Total gross profit 6,462 4,858
========= ========
Timing of revenue recognition
The following table includes revenue from contracts disaggregated
by the timing of recognition.
2018 2017
GBP000's GBP000's
Products and services transferred at a point
in time 20,312 16,549
Products and services transferred over time 859 1,243
--------- --------
Total revenue 21,171 17,792
========= ========
7. Operating loss and loss before taxation
The operating loss and the loss before taxation are stated after:
2018 2017
GBP000's GBP000's
Auditor's remuneration:
* Audit services 70 83
* Audit related services 10 10
* Tax advisory 17 -
* Tax compliance 11 16
Operating lease rentals - land and buildings 449 461
Depreciation: property, plant and equipment 80 121
Impairment of intangible assets - 12,181
Amortisation 649 3,070
Foreign exchange (gain)/loss (114) 394
8. Restructuring
2018 2017
GBP000's GBP000's
Restructuring costs - 1,049
======== =========
Restructuring costs relate to corporate re-organisation activities previously undertaken or announced.
9. Finance cost
2018 2017
GBP000's GBP000's
Interest payable - 38
======== =========
Interest payable is from a convertible loan note which converted to equity on 21 September 2017.
10. Tax expense
Major components of tax credit:
2018 2017
GBP000's GBP000's
Current tax:
UK corporation tax at 19.00% (2017: 19.25%) - -
Overseas tax 10 10
Total current tax 10 10
---------- -----------
Deferred Tax:
Originations and reversal of temporary differences
(Note 16) (43) (2,318)
---------- -----------
Tax credit on loss on ordinary activities (33) (2,308)
========== ===========
UK corporation tax is calculated at 19.00% (2017: 19.25%) of the estimated assessable loss for the year. Taxation for other jurisdictions is calculated at the rates prevailing in those jurisdictions.
The credit for the year can be reconciled to the loss per the income statement as follows:
Reconciliation of effective tax rate:
2018 2017
GBP000's GBP000's
Loss on ordinary activities before tax (103) (17,157)
---------- ----------
Income tax using the Company's domestic
tax rate 19.00% (2017: 19.25%) (20) (3,303)
Effect of:
Expenses not deductible for tax purposes 65 18
Deferred tax asset not recognised on timing
differences 62 86
Unutilised tax losses carried forward - 891
Other movements (140) -
---------- ----------
Total tax credit for period (33) (2,308)
========== ==========
11. Loss per share
Both the basic and diluted loss per share have been calculated using the loss after tax attributable to shareholders of Brave Bison Group plc as the numerator, i.e. no adjustments to losses were necessary in 2017 or 2018. The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. All share options have been excluded when calculating the basic diluted EPS as they were antidilutive.
2018 2017
GBP000's GBP000's
Loss for the year attributable to ordinary
shareholders (70) (14,849)
Equity settled share based payments 204 (209)
Amortisation, depreciation and impairment 729 15,372
Adjusted profit for the period attributable
to the equity shareholders 863 314
=========== ===========
Weighted average number of ordinary shares 574,794,591 572,349,420
Dilution due to share options 75,035,564 -
----------- -----------
Total weighted average number of ordinary
shares 649,830,155 572,349,420
=========== ===========
Basic and diluted (loss) per ordinary share
(pence) (0.01p) (2.59p)
=========== ===========
Adjusted basic profit per ordinary share
(pence) 0.15p 0.05p
=========== ===========
Adjusted diluted profit per ordinary share
(pence) 0.13p 0.05p
=========== ===========
12. Directors and employees
The average number of persons (including Director's) employed by the Group during the year was:
2018 2017
Number Number
Sales, production and operations 48 45
Support services and senior executives 12 16
------ ------
60 61
====== ======
The aggregate cost of these employees was:
2018 2017
GBP000's GBP000's
Wages and salaries 3,644 3,005
Payroll taxes 338 364
Pension contributions 105 72
4,087 3,441
======== ========
Director's emoluments paid during the period and included in the above figures were:
2018 2017
GBP000's GBP000's
Emoluments (including compensation for loss
of office) 763 737
======== ========
The highest paid Director received emoluments totalling GBP0.4 million (2017: GBP0.2 million). The amount of share based payments charge (see Note 21) which relates to the Directors was GBP0.1 million charge (2017: GBP0.1 million credit). The key management of the Group are the executive members of Brave Bison Group plc's Board of Directors. Key management personnel remuneration includes the following expenses:
2018 2017
GBP000's GBP000's
Salaries including bonuses 650 617
Social security costs 90 86
-------- --------
Total Emoluments 740 703
======== ========
13. Intangible assets
Online Channel Customer
Goodwill Content Technology Brands Relation-ships Total
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
Cost
At 31 December
2016 35,075 793 5,213 273 19,332 60,686
Additions - 500 - - - 500
-------- -------------- ---------- -------- --------------- --------
At 31 December
2017 35,075 1,293 5,213 273 19,332 61,186
-------- -------------- ---------- -------- --------------- --------
Additions - 309 - - - 309
-------- -------------- ---------- -------- --------------- --------
At 31 December
2018 35,075 1,602 5,213 273 19,332 61,495
-------- -------------- ---------- -------- --------------- --------
Amortisation and impairment
At 31 December
2016 35,075 - 2,759 228 5,605 43,667
Charge for the
year - 287 843 45 1,895 3,070
Impairment charge - - 1,611 - 10,570 12,181
At 31 December
2017 35,075 287 5,213 273 18,070 58,918
-------- -------------- ---------- -------- --------------- --------
Charge for the
year - 431 - - 218 649
-------- -------------- ---------- -------- --------------- --------
At 31 December
2018 35,075 718 5,213 273 18,288 59,567
-------- -------------- ---------- -------- --------------- --------
Net Book Value
At 31 December
2016 - 793 2,454 45 13,727 17,019
======== ============== ========== ======== =============== ========
At 31 December
2017 - 1,006 - - 1,262 2,268
======== ============== ========== ======== =============== ========
At 31 December
2018 - 884 - - 1,044 1,928
======== ============== ========== ======== =============== ========
During the year Brave Bison had capitalised costs of GBPnil (2017: GBP0.5 million) relating to the development of Slash Football, a network of social media channels and content that is owned and operated by Brave Bison. The Company capitalised further costs of GBP0.3 million relating to the development of Mutha and Perk, two new social media channels and content that are owned and operated by Brave Bison.
Brave Bison considers that the capitalised costs fall under IAS 38 as the Company intends to retain all intellectual property relating to the channel and has no intention to sell the content. The Directors consider that the capitalised costs meet the requirements of IAS 38 in that Brave Bison has the intention and the technical knowledge to complete the Mutha and Perk online channels and that they demonstrate the potential to derive future economic benefits.
Goodwill is not amortised, but tested annually for impairment with the recoverable amount being determined from value in use calculations.
The recoverable amount of the intangible asset has been determined based on value in use. Value in use has been determined based on future cash flows after considering current economic conditions and trends, estimated future operating results, growth rates and anticipated future economic conditions.
As at 31 December 2018, the intangible assets were assessed for impairment. The impairment charge was nil (2017: GBP12.2 million). As at 31 December 2017, the intangible assets were assessed for impairment. The newly appointed management team have adopted a new strategy and have re-assessed projected cash flows relating to technology and customer relationship intangible assets. The technology software assets are now deemed to be obsolete and so have no value in use nor any fair value (less cost of sale). Customer relationship intangible assets have been impaired due to declining licensing revenues (from Viral Management Ltd acquisition) and a decrease in platform revenues (from Base 79 Ltd acquisition).
The estimated cash flows for a period of 5 years were developed using internal forecasts, and a pre-tax discount rate of 15%. The cash flows beyond 5 years have been extrapolated assuming nil growth rates. The key assumptions are based on growth of existing and new customers and forecasts, which are determined through a combination of management's views, market estimates and forecasts and other sector information.
14. Property, plant and equipment
Fixtures &
Computer Equipment Fittings Total
GBP000's GBP000's GBP000's
At 31 December 2016 863 112 975
Additions 35 51 86
At 31 December 2017 898 163 1,061
Additions 4 48 52
------------------ ---------- --------
At 31 December 2018 902 211 1,113
------------------ ---------- --------
Depreciation and impairment
At 31 December 2016 805 47 852
Charge for the year 41 80 121
At 31 December 2017 846 127 973
Charge for the year 28 52 80
At 31 December 2018 874 179 1,053
Net Book Value
At 31 December 2016 58 65 123
================== ========== ========
At 31 December 2017 52 36 88
================== ========== ========
At 31 December 2018 28 32 60
================== ========== ========
15. Investment in associates
2018 2017
GBP000's GBP000's
Investment in associates 56 75
======== ========
During 2018 the Group continued to hold a 30% stake in Rebel FC Limited. The Company made a loss in 2018 of GBP62,777 (2017: GBP,1,195). This investment has been accounted for as an associate as the Group has significant control over this entity.
16. Deferred taxation assets and liabilities
Deferred tax recognised:
2018 2017
GBP000's GBP000's
Deferred tax liabilities
Deferred tax on intangible assets (183) (226)
(183) (226)
======== ========
Unutilised tax losses carried forward which have not been recognised as a deferred tax asset at 31 December 2018 were GBP49.1 million (2017: GBP54.0 million).
Reconciliation of movement in deferred tax
Deferred tax on intangible
assets
GBP000's
As at 31 December 2016 (2,554)
Recognised in the income statement 2,319
-------------------------------------------------------------------
As at 31 December 2017 (226)
Recognised in the income statement 43
As at 31 December 2018 (183)
===================================================================
The increase in the amount of deferred tax recognised during 2017 was due to the GBP12.2 million intangible asset impairment.
17. Trade and other receivables
2018 2017
GBP000's GBP000's
Trade receivables 4,819 3,497
Less allowance for credit losses (139) (211)
-------- --------
Net trade receivables 4,680 3,286
Unbilled income 379 556
Contract assets 405 122
Other receivables 302 381
5,766 4,345
======== ========
The contractual value of trade receivables is GBP4.8 million (2017: GBP3.5 million). Their carrying value is assessed to be GBP4.7 million (2017: GBP3.3 million) after assessing recoverability. The contractual value and the carrying value of other receivables are considered to be the same. The Group's management considers that all financial assets that are not impaired or past due are of good credit quality.
The aging analysis of these trade receivables showing fully performing and past due but not impaired is as follows:
2018 2017
GBP000's GBP000's
Not overdue 3,678 2,261
Not more than three
months 207 313
More than three months but not more than
six months 34 4
More than six months but not more than one
year 37 175
More than one year 724 533
4,680 3,286
======== ========
The movement in provision for impairment of trade receivables can be reconciled as follows:
2018 2017
GBP000's GBP000's
Opening provision (211) (393)
Receivables provided for during period (10) (132)
Reversal of previous provisions 82 314
(139) (211)
======== ========
Provisions are created and released on a specific customer level on a monthly basis when management assesses for possible impairment. At each half year and year end, management will assess for further impairment based upon expected credit loss over and above the specific impairments noted throughout the year.
The other classes within trade and other receivables do not contain impaired assets.
Contract assets are utilised upon satisfaction of the associated contract performance obligations. The 2018 contract asset of GBP405,000 is expected to be utilised in the next reporting periods upon satisfaction of the associated performance obligation. The 2017 contract asset of GBP122,000 was recognised within cost of sales during 2018 upon satisfaction of the associated performance obligation.
18. Trade and other payables
2018 2017
GBP000's GBP000's
Trade payables 836 993
Other payables 76 90
Other taxation and social security 174 90
Contract liabilities 1,098 343
Accruals 5,500 4,685
7,684 6,201
======== ========
All amounts are short term and the Directors consider that the carrying value of trade and other payables are considered to be a reasonable approximation of fair value.
The average credit period taken for trade purchases was 21 days (2017: 28 days).
Contract liabilities are utilised upon satisfaction of the associated contract performance obligations. The 2018 contract liability of GBP1,098,000 is expected to be utilised in the next reporting periods upon satisfaction of the associated performance obligation. The 2017 contract liability of GBP343,000 was recognised within revenue during 2018 upon satisfaction of the associated performance obligation.
19. Share capital
1 Ordinary share
capital At 31 December 2018 At 31 December 2017
Number GBP000's Number GBP000's
Ordinary shares of GBP0.001 576,140,030 576 573,909,229 574
Total ordinary share capital
of the Company 576 574
======== ========
Rights attributable to ordinary shares
The holders of ordinary shares are entitled to receive notice of and attend and vote at any general meeting of the Company.
A reconciliation of the movement in share capital during the year is detailed in Note 20.
20. Reconciliation of share capital
2018 2017
Ordinary Ordinary Share Ordinary Ordinary Share
Shares Capital Shares Capital
Number GBP000's Number GBP000's
GBP0.0000001 GBP0.0000001
Opening balance 573,909,229 574 571,628,125 572
Issue of ordinary
shares 2,230,801 2 2,281,104 2
Closing balance 576,140,030 576 573,909,229 574
============ ============== ============ ==============
21. Share options
In September 2013 Brave Bison Limited introduced an approved EMI share option scheme for employees. The first options were granted in September and October 2013, where options were issued in replacement for options issued under the original Brave Bison Limited unapproved scheme, vesting periods were deemed to have commenced from 30 May 2013. The replacement share options issued by Brave Bison Group plc were treated as modification of the original scheme, in accordance with IFRS 2.
Options vest as follows:
-- 25% 12 months from grant date
-- 2.08% each month commencing 13 months from grant date until the options are fully vested at the end of the four year vesting period.
In November 2017 Brave Bison Limited introduced a new Restricted Share Unit ("RSU") plan under the existing EMI share option scheme. RSUs were granted at nominal value in 2017 which vest monthly on a straight-line basis between 2 and 3 years. During 2018 RSU's were granted which vest annually over a 3 years period.
The options were valued using the Black-Scholes valuation model, using the following assumptions.
2018 2017 and prior
Expected option life 4 years 4 years
Expected volatility 50% 50%
Weighted average volatility 50% 50%
Risk-free interest rate 0.82% - 1.10% 0.73% - 2.74%
Expected dividend yield 0% 0%
Within the assumptions above, a 50% share price volatility has been used, the assumption is based on the average volatility of similar listed companies over the preceding periods.
The charge included within the financial statements for share options for the year to 31 December 2018 is GBP0.2 million (2017: GBP0.2 million credit). The credit for 2017 is due to the number of senior management leavers.
Details of the options issued under Weighted average the approved scheme are as follows: Number exercise price Outstanding at the beginning of the year 62,142,488 5.5p Granted during the year 34,437,589 0.1p Exercised during the year (2,230,802) (0.1)p Cancelled during the year (18,120,852) (3.9)p Outstanding at the end of the year 76,228,423 2.1p Exercisable at the end of the year 47,432,084 3.4p
The weighted average share price on the date options were exercised was 1.56p.
Share options expire after 10 years, the options above expiring between August 2024 and June 2028.
22. Undertakings included in the financial statements
The consolidated financial statements include:
Class
of
share Country of Proportion
held incorporation held Nature of business
Subsidiaries
Brave Bison Limited Ordinary UK 100% Online video distribution
Rightster Inc. Ordinary USA 100% Non-trading
Rightster India LLP Ordinary India 100% Non-trading
Viral Management
Limited Ordinary UK 100% Non-trading
Base 79 Limited Ordinary UK 100% Non-trading
Base 79 Inc. Ordinary USA 100% Non-trading
Base 79 SL Ordinary Spain 100% Non-trading
Base 79 GMBH Ordinary Germany 100% Non-trading
Brave Bison Asia
Pacific Pte Ordinary Singapore 100% Online video distribution
Associates
Influencer football
Rebel FC Limited Ordinary UK 30% team
23. Financial Instruments
Categories of financial instruments As at 31 As at 31
December December
2018 2017
GBP000's GBP000's
Financial assets
Loans and other receivables 5,766 4,345
Cash and bank balances 5,362 4,821
---------- ---------
11,128 9,166
Financial liabilities at amortised cost
Trade and other payables (7,684) (6,201)
---------- ---------
(7,684) (6,201)
Financial risk management
The Group's financial instruments comprise cash and liquid resources and various items, such as trade receivables and trade payables that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the Group's operations. The principal financial risks faced by the Group are liquidity, foreign currency and credit risks. The policies and strategies for managing these risks are summarised as follows:
Foreign currency risk
Transactional foreign currency exposures arise from both the export of services from the UK to overseas clients, and from the import of services directly sourced from overseas suppliers. The Group is primarily exposed to foreign exchange in relation to movements in sterling against the US Dollar, the Euro and the Singapore Dollar.
The Group does not use derivatives to hedge translation exposures. All gains and losses are recognised in profit or loss on translation at the reporting date. The Group's current exposures in respect of currency risk are as follows:
Sterling US Dollar Singapore Euro Other Total
Dollar
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
Financial assets 24,906 1 5 63 208 25,183
Financial liabilities (8,281) - (12) (56) (118) (8,467)
Total exposure
at
31 December 2017 16,625 1 (7) 7 90 16,716
======== ========= ========= ======== ======== ========
Financial assets 4,455 6,407 142 72 52 11,128
Financial liabilities (3,853) (3,716) (134) 20 (1) (7,684)
Total exposure
at
31 December 2018 602 2,691 8 92 51 3,444
======== ========= ========= ======== ======== ========
Sensitivity analysis
The table below illustrates the estimated impact on profit or loss as a result of market movements in the Indian Rupee, US Dollar, Euro and Sterling exchange rate.
10% 10% 10% 10% 10% 10%
Increase Decrease Increase Decrease Increase Decrease
US Dollars US Dollars Singapore Singapore Euro Euro
Impact on loss and equity Dollars Dollars
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
For the year to 31 December
2017 10 (10) 2 (2) 5 (5)
=========== =========== ========== ========== ======== ========
For the year to 31 December
2018 269 (269) 1 (1) 9 (9)
=========== =========== ========== ========== ======== ========
Credit risk
The Group's principal financial assets are cash and cash equivalents and trade and other receivables. The Group has no significant concentration of credit risk. The maximum exposure to credit risk is that shown within the balance sheet. All amounts are short term and management consider the amounts to be of good credit quality.
Liquidity/funding risk
The Group's funding strategy is to ensure a mix of funding sources offering flexibility and cost effectiveness to match the requirements of the Group. Operating subsidiaries are financed by retained profits.
Contractual maturities
The Group manages liquidity risk by maintaining adequate reserves.
Interest rate risk
The Group holds the majority of its cash and cash equivalents in corporate current accounts. These accounts offer a competitive interest rate with the advantage of quick access to the funds.
Capital policy
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain a capital structure that optimises the cost of capital.
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of cash and cash equivalents as disclosed in the statement of financial position and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in the consolidated statement of changes in equity.
Debt is defined as long and short-term borrowings (excluding derivatives). Equity includes all capital and reserves of the Group that are managed as capital.
Financial instruments measured at fair value
Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three levels of fair value hierarchy. This grouping is determined based on the lowest level of significant inputs used in fair value measurement, as follows:
-- level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities
-- level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
-- level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Brave Bison categorises all financial assets and liabilities as level 1.
Maturity analysis
Set out below is a maturity analysis for non-derivative financial liabilities. The amounts disclosed are based on contractual undiscounted cash flows. The table includes both interest and principal cash flows. The Group had no derivative financial liabilities at either reporting date.
Less than 1-3 3-5
Total 1 Year Years Years
GBP000's GBP000's GBP000's GBP000's
As at 31 December 2017
Trade and other payables 6,201 6,201 - -
As at 31 December 2018
Trade and other payables 7,684 7,684 - -
24. Financial commitments
The present value of future minimum rentals payable under non-cancellable operating leases is as follows:
At 31 At 31
December December
2018 2017
GBP000's GBP000's
Less than 1 year 305 333
Between 1 and 5 years 40 47
More than 5 years - -
345 380
========= =========
The Group entered into a new 12 month rental lease agreement commencing on 1 March 2019.
25. Transactions with Directors and other related parties
Transactions with associates during the year were:
2018 2017
GBP000's GBP000's
Associates revenue share 77 67
At 31 At 31
December December
2018 2017
GBP000's GBP000's
Amounts owed to associates 31 52
26. Post balance sheet events
No adjusting or significant events have occurred between the reporting date and the date of authorisation
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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