NOTES TO THE FINANCIAL STATEMENTS

 

1          Basis of preparation

 

The figures for the year ended 31 December 2020 have been extracted from the audited statutory financial statements for the year on which the auditors have issued an unqualified opinion. The financial information attached has been prepared in accordance with the recognition and measurement requirements of international financial reporting standards (IFRS) as adopted by the EU and international financial reporting interpretations committee (IFRIC) interpretations issued and effective at the time of preparing those financial statements.

 

The financial information for the year ended 31 December 2020 and 31 December 2019 does not constitute statutory financial information as defined in Section 434 of the Companies Act 2006 and does not contain all of the information required to be disclosed in a full set of IFRS financial statements. This announcement was approved by the Board of Directors and authorised for issue on 27 April 2021. The auditor's report on the financial statements for 31 December 2020 was unqualified, and did not include reference to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and did not contain a statement under either Section 498 (2) or 498 (3) of the Companies Act 2006.

 

1.1.     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, and at least for 12 months from the date of approval of the financial statements. The Group is dependent for its working capital requirements on cash generated from operations, and cash holdings. The cash holdings of the Group at 31 December 2020 were £2.8 million (2019: £4.2 million). The Group made a loss before tax of £2.3 million for the year ended 31 December 2020 (2019: £3.3 million), and generated a decrease in cash and cash equivalents in 2020 of £1.5 million (2019: £1.1 million).  The Group has net assets of £0.8 million (2019: £2.8 million).

 

The Directors have prepared detailed cash flow projections ("the Projections") for the period to 31 December 2021 and for the following 4 month period to 30 April 2022 which are based on their current expectations of trading prospects. The Group achieved positive cashflow of £0.6 million in H2 2020, after restructuring the business, and the Board forecasts that the Group will continue to achieve positive cash inflows in 2021 due to both the cost savings that have already been made, and the expected revenue growth.

 

The Directors are confident that the Group's cash flow projections are achievable, and are committed to taking any actions available to them to ensure that any shortfall in forecast revenues receipts is mitigated by cost savings.

 

The Directors also continue to monitor the impact of the COVID-19 pandemic, and maintain rolling forecasts which are regularly updated.  While the pandemic did have an impact on revenue in the first half of 2020 as clients cut advertising budgets, advertising revenue recovered faster than anticipated in the second half of the year, and the Directors expect this to continue throughout 2021. 

 

The Directors remain confident that the Group has sufficient cash resources for a period of at least twelve months from the date of approval of these financial statements despite the impact of the pandemic and accordingly, the Directors have concluded that it is appropriate to continue to adopt the going concern basis in preparing these financial statements. 

 

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 2020, with comparative information presented for the year ended 31 December 2019. 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.

 

1.2.     Adoption of new and revised standards

 

The Group has chosen to adopt the amendment to IFRS 16 "Leases" early, and has applied this during the year:

 

Update to IFRS 16 "Leases"        

 

The changes in COVID-19-Related Rent Concessions (Amendment to IFRS 16) amend IFRS 16 to:-

 

·    provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification; 

·    require lessees that apply the exemption to account for COVID-19-related rent concessions as if they were not lease modifications; 

·    require lessees that apply the exemption to disclose that fact; and 

·    require lessees to apply the exemption retrospectively in accordance with IAS 8, but not require them to restate prior period figures.

 

Other Standards and amendments that are not yet effective and have not been adopted early by the Group include:

·    IFRS 17 Insurance Contracts

·    Amendments to IAS 1 - Classification of Liabilities as Current or Non-current;

·    Amendments to IAS 16 - Property, Plant and Equipment: Proceeds before intended use;

·    Amendments to IFRS 3 - Reference to the Conceptual Framework;

·    Amendments to IAS 37 - Onerous Contracts - Cost of Fulfilling a Contract;

·    Annual Improvements to IFRS Standards 2018-2020;

·    Amendments to IFRS 10 and IAS 28 - Sale or contribution of assets between an investor and its associate or joint venture; and

·    Amendments to IFRS 4, IFRS 7, IFRS 9, IFRS 16 & IAS 39 - Interest Rate Benchmark Reform - Phase 2.

 

 

2          Summary of accounting policies

 

The Group's presentation and functional currency is £ (Sterling). The financial statements are presented in thousands of pounds (£000's) unless otherwise stated.

 

2.1.     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:

 

·    Ad-funded YouTube channel management of third party content owners' videos.  Revenue is recognised at the point in time when the performance obligation of delivering monetised views occurs; and

·    Monetisation of the Group's owned and operated brands and videos via platforms such as Facebook and Snapchat.  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; and

·    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.

 

2.2.     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.

 

2.3.     Government grants

 

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

 

A grant that specifies performance conditions is recognised in income when the performance conditions are met.  Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability. Government grants are presented as a deduction from the related expense.

 

2.4.     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.

 

2.5.     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 a digital media and marketing group, 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 a geographical split. The Group will also be providing a split between the Advertising and Fee based services. Segmental information is presented in accordance with IFRS 8 for all periods presented within Note 4.

 

2.6.     Leasing

 

For any new contracts entered into on or after 1 January 2019, the Group considers whether a contract is, or contains a lease. A lease is defined as 'a contract, or part of a contract, that conveys the right to use an assed (the underlying asset) for a period of time in exchange for consideration'. To apply this definition the Group assesses whether the contract meets three key evaluations which are whether:

 

·    The contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group;

·    The Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract; and

·    The Group has the right to direct the use of the identified asset throughout the period of use. The Group assess whether it has the right to direct 'how and for what purpose' the asset is used throughout the period of use.

 

At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received).

 

The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist.

 

At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group's incremental borrowing rate.

 

Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised.

 

Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments.

 

When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use is already reduced to zero.

 

The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in the profit or loss on a straight-line basis over the lease term.

 

On the statement of financial position, right-of-use assets have been included in property, plant and equipment and lease liabilities have been included in trade and other payables.

 

2.7.     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.

 

The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist.

 

2.8.     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.

 

2.9.     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  years

·    Online channel content - 3 to 5 years

·    Brands - 3 years

·    Technology - 1 to 5 years

 

For customer relationships the estimate of useful economic life was revised from 10 years to 5 years during the year as the Directors felt this was a more accurate reflection of the average length of a customer relationship in our industry.

 

2.10.   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. 

 

2.11.   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.

 

2.12.   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.

 

2.13.   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.

 

2.14.   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 derecognised 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.

 

Contract assets and liabilities

The Group does not adjust the promised amount of consideration for the effects of a significant financing component if the entity expects, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

 

2.15.   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.

 

2.16.   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.

 

2.17.   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.

 

2.18.   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.

 

2.19.   Restructuring Costs

 

Restructuring costs relate to corporate re-organisation activities previously undertaken or announced, as detailed in note 6.

 

2.20.   Prior year adjustment

 

The prior period financial statements have been restated to correct the loss on disposal of foreign subsidiaries and the translation reserve. Details of the restatement can be found in note 19.

 

3          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.

 

3.1.     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. These assets were fully amortised during the period, as detailed in note 11. During the year the Group capitalised the costs associated with the acquisition of certain assets of The Hook, which it has estimated have a useful economic life of 5 years.

 

Trade debtors' recovery

Within trade debtors there is a balance of £0.7 million (2019: £0.7 million) which is over one year in age which the Group has judged it not necessary to provide for.  This is because it believes it is recoverable, since there is a trade creditor balance of £0.8 million (2019: £0.7 million) with the same company, and the Group is anticipating reaching agreement that these balances may be set off against each other.

 

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.  Revenue relating to Snapchat was assessed and it was determined that the Group was acting as a principal, therefore the revenue was recognised on a gross basis.  This increased the revenue by £1.3 million.  In 2019 Snapchat revenue was recognised on a net basis and if it had been recognised on a gross basis then the revenue would have increased by £0.3 million. The directors consider that this 2019 adjustment would not influence the users of the financial statements and on this basis the comparatives were not restated.

 

Deferred taxation

Deferred tax assets are recognised in respect of tax loss carry forwards only to the extent that the realisation of the related tax benefit through future taxable profits is probable.

 

3.2.     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% and 2.74% 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.

 

4          Segment Reporting

 

Geographic reporting

The Group 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.

 

		2020	2019
Revenue		£000's	£000's
United Kingdom & Europe		10,022	12,135
Asia Pacific		881	3,835
Rest of the world		3,583	843
Total revenue		14,486	16,813

 

The Group identifies two revenue streams, advertising and fee based services. The analysis of revenue by each stream is detailed below.

 

Revenue		2020	2019
		£000's	£000's
Advertising		13,092	12,396
Fee based services		1,394	4,417
Total revenue		14,486	16,813

 

Gross profit		2020	2019
		£000's	£000's
Advertising		2,962	2,831
Fee based services		1,014	2,350
Total gross profit		3,976	5,181
Timing of revenue recognition
The following table includes revenue from contracts disaggregated by the timing of recognition.
		2020	2019
		£000's	£000's
Products and services transferred at a point in time		13,437	16,079
Products and services transferred over time		1,049	734
Total revenue		14,486	16,813

 

 

5          Operating loss and loss before taxation

 

The operating loss and the loss before taxation are stated after:

	2020	2019
		as restated
	£000's	£000's
Auditor's remuneration:
-      Audit services	69	84
-      Audit related services	5	10
-      Tax advisory	-	1
-      Tax compliance	6	12
Operating lease rentals - land and buildings on short term leases	(97)	311
Depreciation: property, plant and equipment	527	178
Impairment of intangible assets	-	719
Impairment of right-of-use asset	248	-
Impairment of associate	-	38
Amortisation	848	649
Foreign exchange loss	54	69
Loss on disposal of foreign subsidiary	-	509

 

6          Restructuring costs

	2020	2019
	£000's	£000's
Restructuring costs	718	649

 

Restructuring costs in 2020 relate to redundancy payments and associated costs in relation to the Board refresh and corporate re-organisation activities undertaken as a result.  Restructuring costs in 2019 related to redundancy payments and associated costs in relation to restructuring as a result of the significant changes required due to the change in the Facebook algorithm and monetisation policy.

 

7          Finance income and costs

 

	2020	2019
	£000's	£000's
Bank interest received	4	85
	2020	2019
	£000's	£000's
Interest expense for leasing arrangements	61	22

 

8          Income tax credit

 

Major components of tax credit:
	2020	2019
	£000's	£000's
Current tax:
UK corporation tax at 19.00% (2019: 19.00%)	-	-
Research and development tax credits	(90)	-
Overseas tax	5	6
Total current tax	(85)	6

 

 

UK corporation tax is calculated at 19.00% (2019: 19.00%) 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:

	2020	2019
		as restated
	£000's	£000's
Loss on ordinary activities before tax	(2,258)	(3,254)
Income tax using the Company's domestic tax rate 19.00% (2019: 19.00%)	(429)	(618)
Effect of:
Expenses not deductible for tax purposes	302	314
Fixed asset depreciation allowed under SP3/91	(145)	-
Capital allowances	(11)	-
Share scheme deduction under Part 12 CTA 2009	(2)	-
Research & development tax credits	(90)	-
Deferred tax movement	(142)	60
Unutilised tax losses carried forward	290	209
Total tax credit for period	(227)	(35)

 

9          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 2019 or 2020. 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.  Share options are currently antidilutive, but are potentially dilutive.

 

	2020	2019
		as restated
Weighted average number of ordinary shares	612,667,036	605,510,566
Dilution due to share options	41,367,914	41,488,760
Total weighted average number of ordinary shares	654,034,950	646,999,326
Basic and diluted loss per ordinary share (pence)	(0.33p)	(0.53p)
Adjusted basic loss per ordinary share (pence)	(0.07p)	(0.24p)
Adjusted diluted loss per ordinary share (pence)	(0.06p)	(0.23p)

 

	2020	2019
		as restated
	£000's	£000's
Loss for the year attributable to ordinary shareholders	(2,031)	(3,219)
Equity settled share based payments	(7)	165
Amortisation, depreciation and impairment	1,623	1,584
Adjusted profit for the period attributable to the equity shareholders	(415)	(1,470)

 

10        Directors and employees

 

The average number of persons (including Director's) employed by the Group during the year was:

	2020	2019
	Number	Number
Sales, production and operations	47	55
Support services and senior executives	11	15
	58	70

The aggregate cost of these employees was:

	2020	2019
	£000's	£000's
Wages and salaries	2,276	2,989
Payroll taxes	185	372
Pension contributions	172	208
	2,633	3,569

11        Intangible assets

 

	Goodwill		Online Channel Content		Technology		Brands	Customer Relation-ships	Total
	£000's		£000's		£000's		£000's	£000's	£000's
Cost
At 31 December 2018	35,075		1,602		5,213		273	19,332	61,495
Additions	-		266		-		-	-	266
At 31 December 2019	35,075		1,868		5,213		273	19,332	61,761
Additions	-		166		-		-	-	166
At 31 December 2020	35,075		2,034		5,213		273	19,332	61,927
Amortisation and impairment
At 31 December 2018	35,075		718		5,213		273	18,288	59,567
Charge for the year	-		431		-		-	218	649
Impairment charge	-		719		-		-	-	719
At 31 December 2019	35,075		1,868		5,213		273	18,506	60,935
Charge for the year	-		22		-		-	826	848
At 31 December 2020	35,075		1,890		5,213		273	19,332	61,783
Net Book Value
At 31 December 2018	-		884		-		-	1,044	1,928
At 31 December 2019	-		-		-		-	826	826
At 31 December 2020	-		144		-		-	-	144

                                                                                                                                                        

During the year the Company acquired certain assets from The Hook and capitalised costs of £0.2 million. This is included above in Online Channel Content and is being amortised over five years with represents the Directors best estimate of the useful economic life.

 

Goodwill is not amortised, but tested annually for impairment with the recoverable amount being determined from value in use calculations.

 

The Company accelerated amortisation relating to customer relationships by £0.6m as the estimate of the useful economic life of these assets was reduced to 5 years rather than 10 years as the Directors felt this was a more accurate reflection of the average length of client relationship in our industry.

 

The recoverable amount of the intangible assets have 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 2020, the intangible assets were assessed for impairment. The impairment charge was £0.0 million (2019: £0.7 million).   

 

The estimated cash flows for a period of 5 years were developed using internal forecasts, and a pre-tax discount rate of 10%. 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.

 

12.       Property, plant and equipment

 

	Right of Use asset	Computer Equipment	Fixtures &  Fittings	Total
	£000's	£000's	£000's	£000's
Cost
At 31 December 2018	-	902	211	1,113
Additions	1,018	-	9	1,027
At 31 December 2019	1,018	902	220	2,140
Additions	17	-	-	17
At 31 December 2020	1,035	902	220	2,157
Depreciation and impairment
At 31 December 2018	-	874	179	1,053
Charge for the year	127	22	29	178
At 31 December 2019	127	896	208	1,231
Charge for the year	514	3	10	527
Impairment charge	248	-	-	248
At 31 December 2020	889	899	218	2,006
Net Book Value
At 31 December 2018	-	28	32	60
At 31 December 2019	891	6	12	909
At 31 December 2020	146	3	2	151

 

During the year the Company impaired the value of the right-of-use asset by £0.2 million. The pandemic and national lockdown has meant that the Company has not been able to make full use of the office space.

 

13.       Impairment charge

 

	2020	2019
	£000's	£000's
Intangible assets	-	719
Property, plant and equipment	248	-
Investment in associates	-	38
Total impairment charge	248	757

 

 

14.       Trade and other receivables

 

	2020	2019
	£000's	£000's
Trade receivables	914	1,687
Less allowance for credit losses	(40)	(59)
Net trade receivables	874	1,628
Unbilled income	1,716	545
Contract assets	-	16
Other receivables	446	422
	3,036	2,611

 

The contractual value of trade receivables is £0.9 million (2019: £1.7 million). Their carrying value is assessed to be £0.9 million (2019: £1.6 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 ageing analysis of these trade receivables showing fully performing and past due but not impaired is as follows:

 

	2020	2019
	£000's	£000's
Not overdue	156	807
Not more than three months	3	10
More than three months but not more than six months	2	-
More than six months but not more than one year	2	2
More than one year	711	809
	874	1,628

 

The movement in provision for impairment of trade receivables can be reconciled as follows:

 

	2020	2019
	£000's	£000's
Opening provision	(59)	(139)
Receivables provided for during period	(40)	-
Reversal of previous provisions	59	80
	(40)	(59)

 

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. Within trade debtors there is a balance which is over one year in age which the Group has judged it not necessary to provide for.  This is because it believes it is recoverable, since there is a similar trade creditor balance with the same company, and the Group is anticipating reaching agreement that these balances may be set off against each other.

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 2019 contract asset of £16,000 was recognised within cost of sales during 2020 upon satisfaction of the associated performance obligation.

               

15        Trade and other payables

 

	2020	2019
	£000's	£000's
Trade payables	926	1,209
Other payables	68	72
Other taxation and social security	60	20
Contract liabilities	144	88
Accruals and deferred income	3,661	3,369
	4,859	4,758

 

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 32 days (2019: 39 days).

 

Contract liabilities are utilised upon satisfaction of the associated contract performance obligations. The 2020 contract liability of £144,000 is expected to be utilised in the next reporting periods upon satisfaction of the associated performance obligation. The 2019 contract liability of £88,000 was recognised within revenue during 2020 upon satisfaction of the associated performance obligation.

 

16        Leases

 

Lease liabilities are presented in the statement of financial position as follows:

	2020	2019
	£000's	£000's
Current	416	497
Non-current	-	403
	416	900

 

The Group entered into a two year lease for an office on 1 October 2019. With the exception of short-term leases and leases of low-value underlying assets, each lease is reflected on the balance sheet as a right-of-use asset and a corresponding lease liability.

 

The table below describes the nature of the Group's leasing activities by type of right-of-use asset recognised in the statement of financial position:

 

	No. of right-of-use assets leased	Range of remaining term	Average remaining lease term	No. of leases with extension options	No. of leases with termination options
Office building	1	1 year	1 year	-	-

 

The lease liabilities are secured by the related underlying assets. Future minimum lease payments at 31 December 2020 were as follows:

 

		Within one year	One to two years	Total
		£000's	£000's	£000's
Lease payments		432	-	432
Finance charges		(16)	-	(16)
Net present values		416	-	416

 

The Group has elected not to recognise a lease liability for short terms leases (leases with an expected term of 12 months or less). Payments made under such leases are expensed on a straight-line basis.

 

The expense relating to payments not included in the measurement of the lease liability is as follows:

 

	2020	2019
	£000's	£000's
Short-term leases	28	55
	28	55

 

The Group received a COVID-19 related rent concession during the period of £140,400.  It has applied the exemption granted by the COVID-19 Related Rent Concessions (Amendment to IFRS 16) and has therefore not assessed this as a lease modification but has included it within administration expenses.

 

At 31 December 2020 the Group had not committed to any leases which had not yet commenced excluding those recognised as a lease liability.

 

17        Bank loan

	2020	2019
	£000's	£000's
Loan	50	-
	50	-

 

During the year the Company entered into a Bounce Back Loan Agreement which is due to be fully repaid in 2026. The repayment amount and timing of each instalment is based on a fixed interest rate of 2.5% payable on the outstanding principal amount of the loan and applicable until the final repayment date. The Company has been granted an interest and capital holiday for twelve months from the date of drawdown. The loan is unsecured.       

 

18        Financial Instruments

 

Categories of financial instruments	As at 31 December  2020	As at 31 December  2019
	£000's	£000's
Financial assets
Loans and other receivables	2,872	2,611
Cash and bank balances	2,754	4,249
	5,626	6,860
Financial liabilities at amortised cost
Trade and other payables	(4,715)	(4,758)
Lease liabilities	(416)	(900)
	(5,131)	(5,658)

 

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 Dollar	Euro	Other	Total
		£000's	£000's	£000's	£000's	£000's	£000's
Financial assets		4,556	2,172	45	86	1	6,860
Financial liabilities		(2,568)	(2,857)	(134)	(26)	(73)	(5,658)
Total exposure at 31 December 2019		1,988	(685)	(89)	60	(72)	1,202
Financial assets		4,452	1,091	21	62	0	5,626
Financial liabilities		(2,419)	(2,552)	(50)	(39)	(71)	(5,131)
Total exposure at 31 December 2020		2,033	(1,461)	(29)	23	(71)	495

 

Sensitivity analysis

The table below illustrates the estimated impact on profit or loss as a result of market movements in the US Dollar, Singapore Dollar, Euro and Sterling exchange rate.

 

	10%	10%	10%	10%	10%	10%
Impact on loss and equity	Increase US Dollars	Decrease US Dollars	Increase Singapore Dollars	Decrease Singapore Dollars	Increase Euro	Decrease Euro
	£000's	£000's	£000's	£000's	£000's	£000's
For the year to 31 December 2019	(69)	69	(9)	9	6	(6)
For the year to 31 December 2020	(146)	146	(3)	3	2	(2)

 

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.

 

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); and

·    level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).

 

The Group 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.

 

	Total	Less than 1 Year	1-3 Years	3-5 Years
	£000's	£000's	£000's	£000's
As at 31 December 2019
Trade and other payables	4,758	4,758	-	-
Leases liabilities	900	497	403	-
As at 31 December 2020
Trade and other payables	4,715	4,715	-	-
Lease liabilities	416	416	-	-

 

 

19        Prior year adjustment

 

During the period the Group made a loss on the disposal of foreign subsidiaries of £nil (2019: £0.5 million). There has been a prior year adjustment of £0.5m relating to foreign subsidiaries which were liquidated in 2019.  This represents a correction of the treatment of the balance in the retranslation reserve of these entities which IAS 21 states needs to be moved to the face of the income statement upon liquidation.  There was also an adjustment of £0.3 million to opening reserves in 2019 relating to subsidiaries liquidated in 2018.

 

The amendment to the profit and loss account for the year ended 31 December 2019 was as follows:

 

	As previously reported	Adjustment	As restated
	£000's	£000's	£000's
Revenue	16,813	-	16,813
Cost of sales	(11,632)	-	(11,632)
Gross profit	5,181	-	5,181
Administration expenses	(6,565)	-	(6,565)
Restructuring costs	(649)	-	(649)
Impairment charge	(757)	-	(757)
Operating loss	(2,790)	-	(2,790)
Share of loss from equity accounted investment	(18)	-	(18)
Loss on disposal of foreign subsidiary	-	(509)	(509)
Finance income	85	-	85
Finance costs	(22)	-	(22)
Loss before tax	(2,745)	(509)	(3,254)
Income tax credit	35	-	35
Loss after tax	(2,710)	(509)	(3,219)

 

The amendment to the balance sheet as at 31 December 2019 was as follows:

 

	As previously reported	Adjustment	As restated
	£000's	£000's	£000's
Non-current assets
Intangible assets	826	-	826
Property, plant and equipment	909	-	909
Investment in associates	-	-	-
	1,735	-	1,735
Current assets
Trade and other receivables	2,611	-	2,611
Cash and cash equivalents	4,249	-	4,249
	6,860	-	6,860
Current liabilities
Trade and other payables	(4,758)	-	(4,758)
Lease liabilities	(497)	-	(497)
	(5,255)	-	(5,255)
Non-current liabilities
Deferred tax	(142)	-	(142)
Lease liabilities	(403)	-	(403)
Bank loan	-	-	-
	(545)	-	(545)
Net Assets	2,795	-	2,795

 

Equity
Share capital	612	-	612
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	(121,052)	(898)	(121,950)
Translation reserve	(751)	898	147
Total equity	2,795	-	2,795

 

20.                Post balance sheet events

 

There have been no significant post balance sheet events to be disclosed.