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Bonhill Group PLC - Unaudited Preliminary Results

RNS Number : 2965H
Bonhill Group PLC
24 March 2020
 

24 March 2020

 

Bonhill Group plc

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

 

UNAUDITED PRELIMINARY RESULTS

 

Bonhill Group plc (AIM: BONH), a leading B2B media business specialising in three key areas: Business Information, Live Events and Data & Insight, today announces its unaudited preliminary results for the year ended 31 December 2019. The Company expects to publish its audited statutory accounts in late April 2020.

 

Financial Highlights

 

·

Revenue of £24.4 million (9 months ended 31 December 2018: £8.0 million)

·

InvestmentNews contributed £13.9 million of revenue, 6% down on the record same period last year with second half performance recovered to same levels

·

Adjusted EBITDA* of £2.3 million (9 months ended 31 December 2019: £0.9 million)

·

Acquisition of Last Word for £7.8m, together with £10m fundraising

·

Net assets of £29.9 million (31 December 2018: £22.9 million)

·

Cash of £1.9m at 31 December 2019 (31 December 2018: £4.4 million)

·

Payment of a maiden interim dividend of 0.28p per share with no final dividend recommended

 

*Adjusted EBITDA excludes adjusting items, acquisition costs and amortisation of intangible assets through business combinations as set out in note 4 below

 

Operational Highlights

 

·

Significant investment in new people at all levels to bring new skills and industry best practice to the Group

·

Continued success in the expansion of the 'Women in ...' Series with new events launched in Toronto, Berlin, Singapore and Bucharest

·

Significant investment in technology to provide common technology platform which enables the continued development of our data and product strategy

·

As previously announced COVID-19 having a material impact on our global event activities

 

Commenting on the outlook for the Group, Simon Stilwell, CEO of Bonhill, said:

"Bonhill saw strong organic growth in 2019 complemented by the acquisition of Last Word in April 2019, bringing exposure to fast growing international markets. There was also an important shift in the InvestmentNews business model with strong growth in its events portfolio and a manageable decline in advertising in its print title. We have seen continued progress developing our integrated business serving the key asset management/financial advisor market and also invested in our technology infrastructure to develop a robust global IT platform that will support our growth going forward."

 

"After a strong start to 2020, COVID-19 has had a significant impact on the business, with several events being postponed. The Board has taken swift action to protect shareholder value and will continue to mitigate the impact through a series of measures as appropriate. The need for businesses to communicate and connect with core communities remains and we will be well-positioned to support our clients and partners when the pandemic subsides."

 

                                                                                           -ends-

 

For further enquiries please contact:

 

Bonhill Group plc

+44 (0)20 7250 7035

Simon Stilwell, Chief Executive

David Brown, Group Finance Director

 

 

Shore Capital (Nominated Adviser and Joint Broker)

+44 (0)20 7408 4080

Tom Griffiths/David Coaten (Corporate Advisory)

Fiona Conroy (Corporate Broking)

 

 

Canaccord Genuity Limited (Joint Broker)

Bobbie Hilliam

Adam James

Georgina McCooke

 

+44 (0)20 7523 8000

Houston (PR Adviser)                                                                                         

Alexander Clelland

+44 (0)20 3701 7660

 

About Bonhill Group plc

 

Bonhill Group plc is a leading, AIM-quoted, B2B media company providing Business Insight, Events and Data & Analytics propositions to Financial Services, Diversity and Technology business communities in 25 countries. Bonhill operates fifteen information websites, publishes four regular print titles, hosts 120 events per annum, offers a portfolio of data & analytics propositions and provides a range of content marketing solutions.

The business creates content, sales and marketing opportunities, networking events and transactional opportunities for its audiences of entrepreneurs, business owners and managers, CTOs & technology leaders, asset & wealth managers, and professional women, in addition to its sponsors, advertising clients and customers. Flagship brands include: InvestmentNews, Portfolio Adviser, Fund Selector Asia, What Investment, SmallBusiness.co.uk, GrowthBusiness.co.uk, Information Age, Women in… events series, and DiversityQ.

 

For more information visit www.bonhillplc.com 

 

Chairman's Statement

 

The year to 31 December 2019 saw the Group make good progress with a combination of organic and acquisitive growth as well as the negative impact from some strong external factors which is ongoing with the impact of COVID-19 in the year to date.

 

The Group increased its revenue to £24.4 million from £8.0 million and adjusted profit to £2.3m from £0.9m. 2019 includes Last Word for 8½ months from point of ownership, and the prior period was a short 9-month period which included InvestmentNews for 4½ months. The 2019 numbers presented are preliminary and remain subject to audit.

 

We saw continued growth of 17% in the original UK Bonhill business with new events launched in new territories in our core Women in IT and Finance franchises, whilst UK media continued to see growth in our SME operations.

InvestmentNews in its first full year of ownership by the Group saw a modest decline in revenue as we invested in the business, changed the management team and began to transition the activities from print to digital and events. We are pleased with the progress we have made and continue to see great potential in this market-leading brand.

 

April 2019 saw the completion of the acquisition of Last Word, which in conjunction with InvestmentNews gives us a global footprint and a broad offering to our core financial adviser/asset management community.

 

The second half of the year saw particular challenges in Hong Kong, with the civil unrest in the region impacting our Events business and the well-documented issues in the UK fund management industry, coupled with the lack of fund flows in UK Active Equities, hampering our events and digital custom work in the UK.

 

Although this period impacted our revenue and profitability, we did take the opportunity to both invest in the business with a much-needed technology refresh across the Group to harmonise our technology offering as well as to combine the UK teams and streamline some of our operations. These changes have resulted in a much stronger technology platform and £1.5m of annualised savings.

 

The acquisition of Last Word provided a key component for our strategy of increasing recurring revenues, owning and developing market-leading brands and developing our international footprint.

 

Last Word is 15 years old in 2020 and has developed a range of brands serving the asset management community in the UK, Europe, Middle East, Africa and Asia. It has a strong events portfolio as well as a growing digital and custom content offering. The combination of Last Word and InvestmentNews is extremely exciting and despite all of the challenges in the year we have progressed the plans to launch a number of the core UK brands into the US market.

 

InvestmentNews has seen a pleasing shift in business with strong growth in its events portfolio and a manageable decline in sales in its print title offset by a successful size change and new distribution strategy. 2020 has already seen a rebrand of the business and a relaunch of the core website. The changes throughout 2019 put the business on a strong footing with an enhanced offering to its core client base.

 

We have expanded our geographic reach with the Last Word acquisition but also in our events portfolio, where we have taken Women in IT to Singapore, Berlin, Bucharest and Toronto and Women in Finance to Toronto. We also launched Women in Asset Management in the US. The core awards offering has been supplemented by a successful day summit enabling an in-depth look at the specific industry challenges. Our wider international diversity activities are now some 15% of Group revenues.

 

We have continued to invest in our people during a difficult year of change and we appreciate the effort the team have put-in to make the necessary changes to the business.  We have invested in our offering and the improved technology will enable us to develop both our digital offering and data and product strategy. The wider Group offers a range of career opportunities for our employees and we continually strive to provide a dynamic working environment. I would like to thank all of our team for their hard work during the recent period of change and challenging conditions and for their positive and flexible approach to remote working in the current COVID-19 environment.

 

At the year end, the Group had £1.9m of cash, a new technology platform, an improved business mix with events running at 40% of Group revenues, business information at 55% and Data and Insights at 5%. I am excited about the opportunities ahead of us with the introduction of existing products into new geographies, continued expansion of our core event offerings and new product and data offerings and multimedia opportunities. I fully recognise the challenges we faced in the year and the impact on performance and I know the team are fully focused on delivering a better performance in 2020. Like every other business we will be impacted by COVID-19. However we will take the opportunity to further develop our business so that we can return with a stronger franchise and improved offerings for our core communities.

 

Neil Sachdev,

Non-executive Chairman

24 March 2020

 

Chief Executive's Review

 

Introduction

It has been an extremely busy, productive, but in many ways frustrating reporting year. We saw good organic growth from the core Bonhill business, as well as through acquisition with Last Word and the continued development of InvestmentNews. We have, however, had to contend with the political instability in the Asian market, which has impacted our events revenue. The UK saw difficult trading conditions in the second half with the well-documented issues in the active UK fund management industry that hampered fund flows in the second half of the year. However, these conditions, which improved markedly post the UK General Election and into the first quarter of 2020, have been superseded by the impact of the COVID-19 pandemic. This impact has been felt in all of our operations and currently our workforce is working remotely. We have also seen delay, postponement and cancellation in our events business.  We have largely completed our technology infrastructure spend to give us the necessary global IT platform going forward and thankfully this timely investment has enabled us to continue operationally during the pandemic. We have made operational progress, but there is still much to be done to develop on the market position we have. Approximately 80% of the current business sits in the prime position as a key partner to the global asset management/financial adviser market and our events, business information and increasing research and data products help facilitate business in that arena and we seek to enhance our offering to clients with new products. Our core 'Women In…' series expanded internationally to four new countries in 2019 and the new Diversity and Inclusion Summit series, alongside our growing Women Adviser Summit brand in the USA, gives us a strong platform going forward.

 

I am pleased that we now have a profitable business of scale. The current international situation has created a business hiatus that will need careful handling, but when we emerge the next step will be to enhance the opportunities, revenue and margin of the Group by building on our technology investment and new product initiatives, as well as expanding the geographic footprint of our existing product set. I believe that we have the platform, people and resources to do so. Our brands serve communities and play an important role in distributing information, educating participants and most importantly, connecting people and enabling business.  We are using all appropriate methods to continue this engagement and help our clients stay close to their communities. Like others, we do not know how long this crisis will last.  However, we are positioning ourselves to respond quickly when the end is in sight, for there will be no greater need by business for community events, forums, meetings and business networks, than when we emerge from this global crisis.

 

Financial information

For the year ended 31 December 2019, we reported revenues of £24.4 million (9 months to 31 December 2018: £8.0 million) and adjusted EBITDA of £2.3 million (9 months ended 31 December 2018: £0.9 million). The increased revenues are partly as a result of the acquisition of Last Word in April 2019 and a full year of InvestmentNews, which was acquired in August 2018.  We ended the year with £1.9 million of cash (31 December 2018: £4.4 million). During the year, the Company paid its maiden interim dividend of 0.28p for the six months ended 30 June 2019. Our revenues comprise 40% Live Events, 55% Business Information and 5% Data & Insights. Geographically we are split 59% US, 2% Asia and 39% EMEA.

 

Strategic review

We will continue with our strategy to focus on the provision of Business Information, Live Events and Data & Insight in our three chosen sectors and with a growing geographic reach. We aspire to build, manage and own market-leading brands with 'must have' products, that provide greater financial visibility via recurring revenue streams and strong cash generation. We operate in three clearly defined global business sectors: Technology, Financial Services and Diversity, all of which are growing, constantly evolving and are extremely complementary. Increasingly we have seen a focus on ESG both in the investment community but also within operating businesses. We believe this theme will be a core element of our offering across all of our communities and so we will develop products and offerings to reflect that change.

 

Acquisition of Last Word

In April 2019, we completed the acquisition of Last Word for a total net consideration of £7.8m. The transaction was in line with our strategy to own market-leading brands, it is complementary to InvestmentNews and brought us exposure to fast growing international markets. It is expected that no deferred consideration will be payable for the acquisition of Last Word.

 

Last Word operates seven investor-facing brands. These include seven news and information websites, two of which have associated print titles. In 2019, the brands collectively hosted 98 live events, all designed to connect asset managers with their core discretionary fund manager clients. Last Word operates a further three brands targeting asset managers with event services, content marketing solutions and research data products. We have already taken steps to further develop these offerings. The overall business creates content, sales and marketing opportunities, networking events and transactional opportunities for its clients and audiences with the key objective to assist asset managers with increasing assets under management, as well as brand positioning and delivering pre-agreed marketing objectives.

 

During the summer and second half of the year, the business suffered challenging trading conditions as a result of the political situation in Hong Kong and domestically with the well-documented issues in UK active fund management. These challenges led to a worse than expected performance, such that it fell below its earn out targets. As a result, we made some key changes to the senior management which led to the cost base being reduced by £1.0m. Following the UK General Election in December 2019, there has been an early flow of funds back into the UK active equity market and we have also launched a series of other initiatives that broaden our asset class offering, including our first fixed income congress and events around alternative investments and specific ESG activities. Looking to 2020, we will invest more into our ESG brands as we see tremendous demand for our product in this key area, as well as develop our nascent content marketing offering. Within Last Word, there is a developing asset class research business that in time should provide greater insight and direction not only to our clients but to the business itself.

 

In the coming year, it is the Board's intention to launch two of Last Word's brands in the US, including ESG Clarity and Future Flows USA. These established brands will help broaden the InvestmentNews offering and align us more to the trends we are seeing in the US.

 

Despite the challenges of the second half of 2019, and the current situation, I am greatly encouraged by the support from clients and the value they see in our core financial services offering.

 

Diversity and the Women in… Series

I am delighted that we have continued to see growth in our 'Women in…' series. We have had successful launches in Berlin, Bucharest, Singapore and Toronto and we now operate in 8 cities in three continents. Women in Finance has also seen good growth and launched in Toronto and this franchise now operates in four cities in Europe and North America. During the year, we also successfully launched Women in Asset Management in New York and four Diversity and Inclusion summits alongside dramatically growing our DiversityQ brand in key geographies. Within InvestmentNews, we have expanded our successful Women Advisor Summit series to six cities and this key educational day for the growing female financial advisor market will be enhanced with greater network opportunities and continued learning modules in 2020. There is still much to be done to address diversity, especially in the finance and technology industries, and the scope of our activities will increase in 2020.

 

UK media assets

2019 was a breakthrough year for our UK media assets. We now have these titles working effectively under their new leadership and clearer assessment of the audience needs. It is in this area that we have seen the most change in the customer base and our developing new product area. With an increased focus on the audience and a tailored editorial approach, we have seen a greatly improved readership, up 17%, and successful trials for three different new products that have allowed us to broaden the customer base and better fulfil client needs. The year also saw the successful launch of 'the venturers club' a community for entrepreneurs and advisers and this initiative will provide an ongoing range of events and products for this group. During the recent turmoil in the UK market, www.smallbusiness.co.uk has seen a five-fold increase in its audience as the UK SME seeks answers to the many issues they currently face. It highlights to me that the new team approach to sales, marketing, editorial and investment in technology and SEO capabilities is working.

 

Investment News

We acquired InvestmentNews in late summer 2018, a 21-year old US title that is the market-leading provider of news and information to the growing US financial advisor community. It is a key partner for both advisers and asset managers. On acquisition, it was our ambition to invest in the business to further develop the events and data propositions, which we believe had been under exploited previously. 2018 was a record year for the company and although we saw a modest revenue decline in 2019, we made a lot of the structural progress required to further develop the business.

 

We have largely completed our first phase technology investment and we now have a modern effective digital platform and a recently relaunched core website. The print revenues have declined as predicted and we have resized our print offering and distribution to protect its contribution, whilst continuing to make it an effective route to market for our clients. InvestmentNews sits strategically between the key constituents of the large US professional investment market, an industry that continues to change through regulation, acquisition, product launches, changing demographics, ESG, evolving technology and the changing nature of advice. This complex and dynamic environment provides a strong backdrop for InvestmentNews' services. In 2019, we saw the launch of new events around the 'future of advice' and also the hugely successful Impact forum in conjunction with the United Nations. The restructuring of the sales and senior leadership teams has brought fresh thinking and a broadening product offering to better reflect client needs. We have successfully transitioned from a 'print first' mentality to a much broader business- to- business service provider.

 

In August 2019, Christine Shaw joined as the company's new CEO and has rebuilt the leadership team to bring a broader range of skills and outside industry specialisms.  This change will also see the launch of a broader financial services portal in 2020 so that we can play a fuller part in the core US financial advisor market and InvestmentNews will be part of a broader offering. In a year that has seen many changes and challenges, I would like to thank the wider InvestmentNews team for their commitment in both helping this transition, but also handling it during a major technology overhaul.

 

The best evidence of our strategy in action post-acquisition has been the greatly expanded events portfolio. On acquisition, there was a small two-person team and $1.6m of historic revenues. In 2019, it had a team of six and $3.6m of revenues. Despite the current environment, we continue to see good growth potential in this area and look forward to building out the team and the offering to serve the industry needs. In that regard, the highly successful Impact forums, held in December 2019 at, and in conjunction with, the United Nations epitomises our focus on key industry areas as well as bringing our own data, research, creativity and outstanding multimedia skills together in one unique event.

 

There is a new energy and new skills in the InvestmentNews brand and a renewed purpose, all of which bodes well. We take great comfort from the feedback and support from major clients especially during a year of change and look forward to bringing them a host of new products and opportunities in the coming years.

 

Data

We have highlighted our ambition to build a much stronger data business out of our titles and audience. 2019 saw the first meaningful steps in executing this part of our strategy. The keys steps were twofold - firstly invest in a common technology platform that enables us to effectively capture and analyse our data and second, the recruitment of a Chief Product Officer in the summer to give us to a dedicated resource to look at product development. As previously mentioned, we have been running new product trials in financial services, small business and diversity and we have had success in all areas. We will continue to develop these trials as well as continue to assess with key customers where we can best apply our audience knowledge.

 

We have also looked at enhancing our existing data and product sets with ongoing investment and enhancement to our research studies in the US and our Future Flows product in the UK, Europe and Asia. We expect to roll out a US version in 2020 and to develop our internal asset class research offering.

 

Personnel

We have continued to see change in our people resulting in an abnormally high level of staff turnover during the year, especially in the US and in Last Word. Although in the short-term it will see some disruption, it is entirely necessary as we align group roles and skills and continue to develop and enhance the product. We will continue to attract fresh talent that can have a material impact on our business areas. We are working hard to improve our culture with some good results from our initial staff survey and recently implemented initiatives around internal communication and collaboration. The latter part of 2019 saw a much higher level of interaction between sales, marketing and multimedia and research between the US and the UK operations. The period also saw the majority of the UK operations combine in one location, a process that was completed in early 2020.

 

We continue to evolve our internal and external processes to ensure we can deliver the highest levels of customer service and efficient internal working. We always strive for best practice and believe that we have now built a solid foundation in order to uphold the highest standards of governance and process in every aspect of our business. We have with our technology platform and greater focus begun to work on improving the key operating metrics within the business to drive efficiencies and service levels. 

 

As the wider B2B market has developed, we have evolved our thinking. We remain attracted by the long-term prospects of the wider B2B arena. We have learnt more about our customer needs and this has highlighted the potential to build a global solutions provider in our chosen areas with a more rounded partnership offering. Our sectors are rapidly evolving and the constant need for information and insight ensures we have a role to play with our high quality, content led solutions across Business Information, Live Events and Data & Insight.

 

Technology

The additional VCT and EIS funds raised in 2018, to invest in the Company's infrastructure and technology platform, have now been utilised. 2019 saw the implementation of our technology plans to deliver a broad open extensible technology platform across the whole business. We now have a common content management system and the recently launched improved InvestmentNews website will allow an improved experience now and in the future. We are excited that we now have an excellent platform for us to communicate with our audiences, undertake greater analysis of our business and deliver better solutions for our clients. The technology refresh was much needed for all the business and we can now look to develop it further in the latter part of the year with "phase two" enhancements. One simple demonstration of this change has been the ability of the Company to move seamlessly to remote working very recently. Having conducted team trials in the early days of the virus, and having experienced the early impact of widespread office closure in Asia, we moved quickly to protect our staff and enable them to work remotely.

 

Outlook

The COVID-19 crisis began at the start of the Company's financial year and its impact is only now being fully felt.  It is still too early to judge its impact on the year ending 31 December 2020 with any degree of certainty. As a result, it is no longer possible for the Board to provide financial guidance for the year ending 31 December 2020.  Across the Group, costs are being tightly managed, and we are taking actions to conserve cash balances. Given the lack of certainty on the outcome of the year ending 31 December 2020, the Board is not recommending a final dividend payment for the year ended 31 December 2019 and suspending dividend payments until the outlook is clearer and more normal trading conditions have resumed. 

 

Notwithstanding these challenges, the underlying business has better people, processes, structure, technology, products and a strong client base from which to progress. We are confident that over time we can rebuild investor confidence in the Group by demonstrating that we can obtain the required returns from our acquisitions and continue to grow the business.

 

The integration and collaboration of Last Word with InvestmentNews is a clear path to creating new incremental revenues for the Group and establishing ourselves as the partner of choice in our key markets.  There are clearly major opportunities to develop and broaden the brands further, which we will do in the years ahead.  We are also looking to further develop our product and data strategy and also our diversity events portfolio as there are clear opportunities in both those areas.  Subject to a clearer outlook, we will continue to invest across the business in the latter part of the year to further enhance our technology which we believe will help generate the required returns.

 

 

Simon Stilwell

Chief Executive

24 March 2020

 

 

Group Finance Director's Review

 

Income statement

In the same way as last year, the Group has prepared adjusted results to provide a clear indication of the Group's core business performance. This removes the impact of certain items which the Group classifies as exceptional due to their materiality and non-recurring nature, and also other separately reported items.

 

The adjusted results are shown in the statement of consolidated income and below, with further details given in notes 3 and 4 of the financial statements. The Group chooses to measure and present its performance in various other non-GAAP measures such as underlying revenue growth, adjusted cash flow, adjusted EBITDA and net assets.

 

These measures and the adjusted statement of consolidated income are not intended to replace statutory results and measures. The Group feels that they give a clearer indication of the underlying results and are consistent with how the Board monitors results. In note 4 of the financial statements is a reconciliation of the numbers to their statutory equivalents.

 

 

31 Dec 2019

12 months

(unaudited)

£'000

31 Dec 2018

9 months

 

£'000

Revenue

24,429

7,991

 

 

 

Adjusted EBITDA profit

2,312

889

Depreciation / amortisation of internally generated intangibles

(776)

(155)

Share option charge

(149)

(68)

Adjusted operating profit

1,387

666

Finance costs

(491)

(146)

Adjusted profit before tax

896

520

Adjusted tax

106

-

Adjusted profit

1,002

520

Adjusting items (after tax)

(5,004)

(2,360)

Statutory loss

(4,002)

(1,840)

Adjusted profit per share

2.24p

2.69p

Statutory loss per share

(8.96)p

(9.51)p

 

Last Word generated £6.7 million of revenue in the eight and a half months since it was acquired on 10 April 2019. Looking at the calendar year for 2019, including pre-acquisition revenue, Last Word delivered 3% revenue growth in the first half, before a particularly tough second half due to the well documented issues in UK fund management and the political unrest in Hong Kong in the latter part of 2019 led to overall revenue for the calendar year being down 5% on 2018.

 

InvestmentNews generated £13.9 million of revenue in the year which was down 6% on the record revenue of £14.7 million for the calendar year 2018. There has been significant change within the business during the year - a new CEO and sales team, investment in technology and a move to more custom offerings and consultative selling. This has led to the planned shift in mix away from traditional print and digital towards events and research.  For 2019, EBITDA was £3.2m compared to £3.8m in the prior year, with a healthy 23% margin.

 

The UK based Events business generated total sales of £3.0 million which is 11% higher than the sales in the corresponding 12-month period in 2018 of £2.7 million (unaudited).

 

UK Media sales also saw improved performance year on year, with sales of £0.8 million compared to £0.6 million in the 2018 calendar year (unaudited).

 

Adjusted earnings before interest, tax, depreciation and amortisation ("EBITDA") is a measure of earnings and cash generative capacity. A reconciliation of adjusted EBITDA to statutory earnings is set out in note 4 of the financial statements. An adjusted EBITDA profit of £2.3 million (9 months ended 31 December 2018: £0.9 million profit) comprised a £3.2 million contribution from InvestmentNews, £0.9m from Last Word and a £1.8m loss from the UK business which carries the central overheads for the Group.

 

Reflecting the scale of the investments we have made in the business, and the magnitude of the changes we have made to the teams, adjusting items comprised £0.8 million (31 December 2018: £1.9 million) of acquisition related costs, £1.6 million of integration costs (31 December 2018: £0.3 million), £1.2 million of restructuring costs (31 December 2018: £nil) and £1.4 million (31 December 2018: £0.5 million) relating to amortisation or write off of intangible assets acquired, together with tax relief on these items of £nil (31 December 2018: £0.3 million). 

 

On an adjusted basis, the retained profit was £1.0 million (31 December 2018: loss of £0.5 million), equivalent to 2.24p per share (31 December 2018: 2.69 per share). The statutory loss for the period was £4.0 million (31 December 2018: £1.8 million), equivalent to 8.96p per share (31 December 2018: 9.51p per share).

 

Cash flow

 

31 Dec 2019

12 months

(unaudited)

£'000

31 Dec 2018

9 months

 

£'000

Adjusted EBITDA

2,312

889

Working capital movement

(1,087)

(1,290)

Interest paid

(345)

(267)

Tax

(107)

-

Foreign exchange gains or losses

(29)

8

Purchases of property, plant and equipment and intangible assets

(946)

(134)

Free cash outflow

(202)

(794)

Acquisition of Subsidiary

(5,840)

(12,867)

Adjusting items

(3,646)

(1,774)

Dividends paid

(136)

-

Proceeds from issue of ordinary shares

9,484

19,247

Repayment of borrowings

(2,136)

(449)

Net cash (outflow)/inflow

(2,476)

3,363

 

 

Net of £0.5 million of costs, £9.5 million of share placing proceeds were raised in the year (31 December 2018: £19.2 million), of which £5.8 million was used as part consideration for the acquisition of Last Word (after the cash acquired of £0.7 million) and £0.8 million paid out relating to acquisition costs.  We continued to invest in building the right team and infrastructure, with £1.2 million relating to restructuring and £1.6 million relating to the integration of the acquired businesses, which together with the acquisition costs, brought total cash adjusting items to £3.6 million.

 

After repaying outstanding loan note commitments and lease payments, the net cash outflow for the period was £2.5 million.

 

 

Balance sheet

 

31 Dec 2019

(unaudited)

£'000

31 Dec 2018

 

£'000

Intangibles

29,868

23,416

Tangible fixed assets

343

125

Working capital

2,805

1,554

Lease asset

1,493

968

Lease liability

(1,600)

(1,018)

Deferred and current tax

(2,307)

(2,163)

Cash

1,891

4,367

Debt

(2,614)

(4,323)

Net assets

29,879

22,926

 

At 31 December 2019, the business had a cash balance of £1.9 million (31 December 2018: £4.4 million).

 

Last Word was acquired for a net £7.8 million which comprised £6.5 million in cash, £2.0 million in shares less £0.7 million cash acquired with the business.  No deferred consideration will be paid in respect of the 2019 performance.  Deferred consideration is due at 5.63 times any 2020 EBITDA in excess of £3.5m, which the Board considers to be extremely unlikely to be reached.

 

The borrowings are a vendor loan from the acquisition of InvestmentNews of £4.7 million, which had been reduced to £2.6 million by the balance sheet date.  The loan is repayable in equal monthly instalments until 31 August 2021 and attracts interest at 8% per annum.

 

COVID-19 and Current Trading

 

As announced in its trading update released on 20 January 2020, the Company started 2020 well with particularly strong forward bookings in the UK and US following the decisive UK General Election result, greater clarity on Brexit and the well-publicised issues in UK fund management caused by a high-profile fund failure.

 

As announced in the update released on 23 March 2020, COVID-19 is having a material impact on all parts of our business.

 

In 2020, we have run 16 events, but as the impact of COVID-19 has increased this has scaled down, particularly in March, and we have no events scheduled until May 2020 at the earliest. 

 

The vast majority of our UK, US, European and Asian events have been postponed until May 2020 at the earliest or more commonly to the third and fourth quarters of 2020; specifically the events deferred to the second half were expected to generate total revenues of £5.0 million, comprising approximately £1.8m in the US, £1.7 million in the UK, £1.2 million in Europe and £0.3 million in Asia.  A very small number of events generating a total revenue of approximately £0.2m have been cancelled but are expected to return in 2021. The impact of the various postponed and cancelled events will vary by geography, but the Company will incur one-off cancellation fees of approximately £0.3m.

 

The combined impact of COVID-19 on our events business will be to lower expected revenue by £5.2 million and gross profit by £3.1 million for the first half of the Company's financial year ending 31 December 2020 ("FY2020"). As previously described, revenues of £5.0 million have been postponed until the second half of FY2020.

 

Last year, we made annualised cost savings of £1.5 million and in response to COVID-19 we have had to undertake further significant cost savings across the Group resulting in a 15 per cent. reduction in roles in the UK and European businesses. This will result in further annualised savings of £1.5 million.

 

Across the Group, costs are being tightly managed, and we are taking actions to conserve cash. As at 20 March 2020, the Group had a total cash balance of £1.6 million and a vendor loan of $3.1 million repayable in monthly instalments until August 2021.

 

Other than those referred to above, all of our remaining events are currently expected to go ahead as planned in Q3 or Q4 2020.  The situation is evolving on a daily basis, and we will continue to work hard to mitigate the impact that the outbreak is having on the Company. We would like to thank all of our sponsors, suppliers and delegates for their support.

 

Given the lack of certainty on the outcome of FY2020 and our actions to conserve cash, the Board is suspending dividend payments until the outlook is clearer and more normal trading conditions have resumed. In the short term, the Board will consult with and update shareholders and seek to explore the various support measures recently proposed by the UK Government.

 

 

David Brown

Group Finance Director

24 March 2020

 

 

Unaudited consolidated statement of comprehensive income

for the twelve month period ended 31 December 2019

 

 

 

12 month period ended

31 December 2019

(unaudited)

 

9 month period ended

31 December 2018

 

Note

Adjusted

results

£'000

Adjusting items

£'000

Total results

£'000

Adjusted results

£'000

Adjusting items

£'000

Total results

£'000

 

 

 

 

 

 

 

 

Revenue

2

24,429

-

24,429

7,991

-

7,991

Net operating expenses

3

(22,233)

(3,637)

(25,870)

(7,149)

(2,184)

(9,333)

Impairment related to expected credit losses

 

(33)

-

(33)

(21)

-

(21)

Depreciation

 

(104)

-

(104)

(20)

-

(20)

Amortisation and impairment

3

(672)

(1,405)

(2,077)

(135)

(456)

(591)

Net operating profit/(loss)

 

1,387

(5,042)

(3,655)

666

(2,640)

(1,974)

Finance costs

 

(491)

-

(491)

(146)

-

(146)

Loss before tax

 

896

(5,042)

(4,146)

520

(2,640)

(2,120)

Tax

 

106

38

144

-

280

280

Profit/(loss) for the period

 

1,002

(5,004)

(4,002)

520

(2,360)

(1,840)

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

Items that may be reclassified subsequently to profit or loss:

 

 

 

 

 

 

 

Exchange differences on translating foreign operations

 

(534)

-

(534)

35

-

35

 

 

 

 

 

 

 

 

Total comprehensive income/(loss) for the year

 

468

(5,004)

(4,536)

555

(2,360)

(1,805)

 

 

 

 

 

 

 

 

Basic loss per share attributable to the owners of the parent

5

2.24p

 

(8.96p)

2.69p

 

(9.51p)

Diluted loss per share attributable to the owners of the parent

5

 

 

(8.96p)

 

 

(9.51p)

 

 

Unaudited consolidated statement of financial position

at 31 December 2019

 

Note

31 December 2019

(unaudited)

£'000

31 December 2018

 

£'000

NON-CURRENT ASSETS

 

 

 

Goodwill

 

19,476

13,955

Other intangible assets

 

10,392

9,461

Property, plant and equipment

 

343

125

Deferred tax asset

 

356

333

Right-of-use asset

7

1,493

968

 

 

32,060

24,842

 

 

 

 

CURRENT ASSETS

 

 

 

Trade and other receivables

 

8,070

5,278

Cash and cash equivalents

 

1,891

4,367

 

 

9,961

9,645

TOTAL ASSETS

 

42,021

34,487

 

 

 

 

NON-CURRENT LIABILITIES

 

 

 

Deferred tax liability

 

(2,640)

(2,423)

Borrowings

 

(1,046)

(2,701)

Financial lease liability

7

(712)

(733)

 

 

(4,398)

(5,857)

 

 

 

 

CURRENT LIABILITIES

 

 

 

Trade and other payables

 

(5,265)

(3,724)

Borrowings

 

(1,568)

(1,622)

Financial lease liability

7

(888)

(285)

Current tax liability

 

(23)

(73)

 

 

(7,744)

(5,704)

TOTAL LIABILITIES

 

(12,142)

(11,561)

NET ASSETS

 

29,879

22,926

 

 

 

 

EQUITY

 

 

 

Share capital

6

486

343

Share premium

 

-

26,715

Share option reserve

 

217

68

Merger reserve

 

1,976

-

Other reserves

 

104

4,086

Retained earnings

 

27,595

(8,321)

Foreign exchange reserve

 

(499)

35

TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT

 

29,879

22,926

 

 

Unaudited consolidated statement of changes in equity

for the twelve month period ended 31 December 2019

 

 

Share capital

£'000

Share premium

£'000

Share option reserve

£'000

 

Merger reserve

£'000

Other reserves

£'000

Retained earnings

£'000

Foreign exchange reserve

£'000

Total

£'000

 

 

 

 

 

 

 

 

 

Balance as at 31 March 2018

4,025

4,315

118

-

104

(6,599)

-

1,963

 

 

 

 

 

 

 

 

 

Loss for the period

-

-

-

-

-

(1,840)

-

(1,840)

Other comprehensive income

-

-

-

-

-

-

35

35

Total comprehensive loss for the period

-

-

-

-

-

(1,840)

35

(1,805)

Issue of share capital

300

23,699

-

-

-

-

-

23,999

Share issue costs

-

(1,299)

-

-

-

-

-

(1,299)

Removal of share option scheme

-

-

(118)

-

-

118

-

-

Share option charge

-

-

68

-

-

-

-

68

Cancellation of deferred shares

(3,982)

-

-

-

3,982

-

-

-

 

 

 

 

 

 

 

 

 

Balance as at 31 December 2018

343

26,715

68

-

4,086

(8,321)

35

22,926

 

 

 

 

 

 

 

 

 

Loss for the period

-

-

-

-

-

(4,002)

-

(4,002)

Other comprehensive loss

-

-

-

-

-

-

(534)

(534)

Total comprehensive loss for the period

-

-

-

-

-

(4,002)

(534)

(4,536)

 

 

 

 

 

 

 

 

 

Issue of share capital

143

9,881

-

1,976

-

-

-

12,000

Share issue costs

-

(524)

-

-

-

-

-

(524)

Share option charge

-

-

149

-

-

-

-

149

Dividend paid

-

-

-

-

-

(136)

-

(136)

Capital reduction

-

(36,072)

-

-

(3,982)

40,054

-

-

 

 

 

 

 

 

 

 

 

Balance as at 31 December 2019

486

-

217

1,976

104

27,595

(499)

29,879

 

 

 

 

 

 

 

 

 

 

 

Unaudited consolidated statement of cash flows

for the twelve month period ended 31 December 2019

 

 

 

12 month period ended

31 December 2019

(unaudited)

£'000

9 month period ended

31 December 2018

 

£'000

 

 

 

 

CASH USED IN OPERATIONS

 

1,225

(401)

Interest paid

 

(345)

(129)

Taxation paid

 

(107)

-

NET CASH USED IN OPERATING ACTIVITIES

 

773

(530)

 

 

 

 

INVESTING ACTIVITIES

 

 

 

Purchases of property, plant and equipment

 

(257)

(90)

Purchases of intangible assets

 

(689)

(44)

Cash paid for acquisition

 

(6,496)

(12,867)

Cash acquired on acquisition

 

656

-

Exceptional costs

 

(3,646)

(1,774)

NET CASH USED IN INVESTING ACTIVITIES

 

(10,432)

(14,775)

 

 

 

 

FINANCING ACTIVITIES

 

 

 

Proceeds from issue of ordinary shares

 

9,484

19,247

Repayment of invoice discount facility and other borrowings

 

(2,136)

(449)

Dividends paid

 

(136)

-

Payment of vendor loan fees

 

-

(138)

NET CASH GENERATED FROM FINANCING ACTIVITIES

 

7,212

18,660

 

 

 

 

FOREIGN EXCHANGE MOVEMENT

 

(29)

8

 

 

 

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

 

(2,476)

3,363

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD

 

4,367

1,004

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD

 

1,891

4,367

 

 

Notes to the cashflow

 

12 month period ended

31 December 2019

(unaudited)

£'000

9 month period ended

31 December 2018

 

£'000

 

 

 

Loss after tax

(4,002)

(1,840)

Adjustments for:

 

 

Tax

(144)

(280)

Finance costs

491

146

Amortisation and impairment

2,077

591

Depreciation of property, plant and equipment

104

20

Share option charge

149

68

Other exceptional costs

3,637

2,184

Operating cash flows before movements in working capital

2,312

889

Movement in receivables

213

(2,520)

Movement in payables

(1,300)

1,230

CASH FLOWS (USED IN) / GENERATED FROM OPERATIONS

1,225

(401)

         
 

 

Notes to the accounts

 

1.      Basis of preparation

The financial information contained in this unaudited preliminary announcement does not constitute accounts as defined by section 434 of the Companies Act 2006.  The financial information for the period ended 31 December 2018 is derived from the statutory accounts for that period which have been delivered to the Registrar of Companies.  The auditors reported on those accounts; their report was unmodified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.

 

The audit of the statutory accounts for the year ended 31 December 2019 is not yet complete.  The statutory accounts for the year ended 31 December 2019 will be finalised based on the information in this unaudited preliminary announcement and will be delivered to the Registrar of Companies in due course.

 

The Group has prepared its consolidated financial statements for the year ended 31 December 2019 in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union.  The accounting policies applied are consistent with those included in the financial statements of the Group for the period ended 31 December 2018.

 

2.      Segmental analysis

For executive management purposes, the business has three reportable segments being Bonhill UK, InvestmentNews and Last Word. Further analysis of revenue has been performed by core proposition and country.

 

 

12 month period ended 31 December 2019

(unaudited)

£'000

9 month period ended 31 December 2018

 

£'000

Analysis of revenue by core propositions

 

 

Business information

13,564

5,433

Live events

9,605

2,080

Data and insight

1,260

478

Total

24,429

7,991

 

Analysis of revenue by country

 

 

United Kingdom

8,205

1,507

Europe, Middle East and Africa

1,344

264

North America

14,337

6,220

Asia Pacific

543

-

Total

24,429

7,991

 

 

12 months ended 31 December 2019

(unaudited)

Bonhill UK

£'000

InvestmentNews

£'000

Last Word

£'000

Total

£'000

Reportable segmental income statement

 

 

 

 

Revenue

3,822

13,897

6,710

24,429

Adjusted EBITDA

(1,815)

3,220

907

2,312

Adjusted operating (loss)/profit

(2,085)

2,921

551

1,387

Statutory operating (loss)/profit

(4,312)

591

66

(3,655)

Statutory (loss)/profit before tax

(4,368)

178

44

(4,146)

 

 

 

 

 

 

9 months ended 31 December 2018

Bonhill UK

£'000

InvestmentNews

£'000

Last Word

£'000

Total

£'000

Reportable segmental income statement

 

 

 

 

Revenue

1,988

6,003

-

7,991

Adjusted EBITDA

(662)

1,551

-

889

Adjusted operating (loss)/profit

(786)

1,452

-

666

Statutory operating (loss)/profit

(2,353)

379

-

(1,974)

Statutory (loss)/profit before tax

(2,352)

232

-

(2,120)

 

3.      Operating loss

 

(a)     Operating loss for the year has been arrived at after charging the following items:

 

12 month period ended

31 December 2019

(unaudited)

£'000

9 month period ended

31 December 2018

 

£'000

Depreciation of property, plant and equipment

104

20

Amortisation of purchased or internally generated intangible assets

79

37

Lease amortisation

593

98

Share based payment charge

149

68

Foreign exchange (gain) or loss

54

(149)

Operating lease rentals in respect of land and buildings

73

6

Staff costs

10,698

3,192

Directors' remuneration

516

385

Events costs

4,853

930

Impairment relating to expected credit losses

1,420

21

Print related costs

-

832

Other costs

4,470

1,885

 

23,009

7,325

 

(b)    Adjusting items

The Group incurred certain costs in the 12 months ended 31 December 2019 and the 9 month period ended 31 December 2018 which the Directors believe should be disclosed as adjusting items as set out below. Adjusted results are prepared to provide additional relevant information on our future or past performance where equivalent information cannot be presented using financial measures under IFRS.

 

 

12 month period ended

31 December 2019

(unaudited)

£'000

9 month period ended

31 December 2018

 

£'000

M&A costs (including legal fees)

808

1,932

Integration costs

1,621

252

Restructuring

1,208

-

Amortisation of intangibles acquired through business combination

1,295

456

Write off of intangible assets

110

-

 

5,042

2,640

 

The tax effect of the adjusting items is a credit of £0.038m.

 

 

4.      Reconciliation of adjusted EBITDA to statutory earnings

Earnings before interest, tax, depreciation and amortisation ("EBITDA") is a measure of earnings and cash generative capacity. Adjusted EBITDA, which excludes non-recurring items, facilitates an understanding of underlying earnings and cash generative capacity. A reconciliation of Adjusted EBITDA to statutory earnings is set out below.

 

 

12 month period ended

31 December 2019

(unaudited)

£'000

9 month period ended

31 December 2018

 

£'000

Adjusted EBITDA

2,312

889

Adjusting items

(3,637)

(2,184)

EBITDA

(1,325)

(1,295)

Depreciation

(104)

(20)

Amortisation and impairment

(2,077)

(591)

Share option charge

(149)

(68)

Operating loss

(3,655)

(1,974)

Net finance costs

(491)

(146)

Loss before tax

(4,146)

(2,120)

Taxation

144

280

Loss after tax

(4,002)

(1,840)

 

5.      Earnings per share

 

(a)        Basic earnings per share

Basic loss per share is calculated by dividing the loss attributable to owners of the parent by the weighted average number of ordinary shares in issue during the year.

 

Based on statutory earnings

12 month period ended

31 December 2019

(unaudited) £'000

9 month period ended

31 December 2018

£'000

Loss attributable to owners of the parent

(4,002)

(1,840)

Weighted average number of ordinary shares in issue

44,671,798

19,355,302

Basic earnings per share (pence per share)

(8.96p)

(9.51p)

 

 

 

Based on adjusted earnings

12 month period ended

31 December 2019

(unaudited) £'000

9 month period ended

31 December 2018

£'000

Profit attributable to owners of the parent

1,002

520

Weighted average number of ordinary shares in issue

44,671,798

19,355,302

Basic earnings per share (pence per share)

2.24p

2.69p

 

(b)    Diluted earnings per share

Based on statutory earnings

12 month period ended

31 December 2019

(unaudited) £'000

9 month period ended

31 December 2018

£'000

Loss attributable to owners of the parent

(4,002)

(1,840)

Weighted average number of ordinary shares in issue

44,671,798

19,355,302

Dilutive effect of "in the money" share options

-

-

Diluted ordinary shares

44,671,798

19,355,302

Basic earnings per share (pence per share)

(8.96p)

(9.51p)

 

 

6.      Called up share capital

Issued and fully paid ordinary shares of 1p each.

 

Number

£'000

As at 31 March 2018

172,061,632

1,721

Shares issued during the 9 month period

29,998,437

300

Administrative issue of shares

8

-

Impact of 40:1 share re-organisation

(167,760,099)

(1,678)

As at 31 December 2018

34,299,978

343

Shares issued during the 12 month period

14,285,714

143

As at 31 December 2019

48,585,692

486

Deferred shares of 9p each.

 

Number

£'000

As at 1 April 2018

25,603,787

2,304

Impact of 40:1 share re-organisation

18,640,011

1,678

Cancellation of deferred shares

(44,243,798)

(3,982)

As at 1 January 2019 and 31 December 2019

-

-

 

 

7.      Leases

The Group chose to early adopt IFRS 16 in the prior year and therefore recognised a right-of-use asset and lease liability at that time.

 

2019

2018

Right-of-use asset

(unaudited)

£'000

 

£'000

Carrying value as at start of the period

968

-

Additions to right-of-use assets

1,139

1,066

Amortisation charged

(593)

(98)

Foreign exchange impact of revaluation

(21)

-

Carrying value as at the end of the period

1,493

968

 

 

 

Lease liability

2019

£'000

2018

£'000

Carrying value as at 1 April 2018

1,018

-

Additions to lease liability

1,139

1,066

Interest charged

60

15

Repayments made

(583)

(65)

Foreign exchange impact of revaluation

(34)

2

Carrying value as at 31 December 2018

1,600

1,018

 

 

8.      Acquisition of Last Word

On 10 April 2019 the Group completed the acquisition of Last Word.

Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:

 

 

 

Book value

Fair value adjustments

 

Total

Fair value of assets acquired

 

£'000

£'000

£'000

Property, plant and equipment

 

65

-

65

Intangibles

 

47

1,826

1,873

Lease right of use asset

 

-

849

849

Cash and cash equivalents

 

656

-

656

Trade and other receivables

 

3,128

(78)

3,050

Trade and other payables

 

(2,431)

(409)

(2,840)

Lease financial liability

 

-

(849)

(849)

Deferred and current tax

 

(48)

(313)

(361)

Fair value of net assets acquired

 

1,417

1,026

2,443

Goodwill

 

 

 

6,053

Consideration

 

 

 

8,496

Goodwill is attributable to the synergies expected to arise in integrating the operations into the wider Group. Intangibles includes brands and customer relationships which will be amortised over a period of 12 and 10 years respectively.

Consideration consists of cash consideration, contingent deferred consideration and consideration taken as equity.

 

£'000

Cash consideration

6,496

Shares

2,000

 

8,496

 

Included within the Group's results for the 12 month period are contributions of £6.710m to revenue, £0.907m to adjusted EBITDA (excluding deal fees, associated integration costs and acquired intangible amortisation as detailed in note 4) and £0.044m statutory profit before tax. If the acquisition had been completed on the first day of the financial period, it would have contributed £9.745m to revenue and £1.197m to adjusted EBITDA (excluding deal fees, associated integration costs, acquired intangible amortisation and overheads allocated by the vendor company) and £0.015 to statutory loss before tax.


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 [email protected] or visit www.rns.com.
 
END
 
 
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