Bidstack Group Plc
Annual Report and Accounts
Registered number 04466195
For the year ended 31 December 2019
COMPANY INFORMATION
DIRECTORS
D Stewart
J Draper
F Petruzzelli
J McIntosh
M Hayes
D Wise
COMPANY SECRETARY
L O’Donoghue
REGISTERED NUMBER
04466195
REGISTERED OFFICE
NOMINATED ADVISER
BROKERS
INDEPENDENT AUDITORS
SOLICITORS
REGISTRARS
201 Temple Chambers
3-7 Temple Avenue
London
EC4Y 0DT
Spark Advisory Partners Limited
5 St John’s Lane
London
EC1M 4BH
Stifel Nicolaus Europe Limited
150 Cheapside
London
EC2V 6ET
Haysmacintyre LLP
10 Queen Street Place
London
EC4R 1AG
Kepstorn Solicitors
7 St James Terrace
Lochwinnoch Road
Kilmacolm
PA13 4HB
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen
B62 8HD
COMPANY WEBSITE
www.bidstackgroup.com
Contents
Chairman’s statement
Strategic report
Directors’ report
Statements of Directors’ responsibilities
Independent Auditor’s report
Consolidated statement of comprehensive income
Consolidated statement of financial position
Company statement of financial position
Consolidated statement of changes in equity
Company statement of changes in equity
Consolidated statement of cash flows
Company statement of cash flows
Notes to the financial statements
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5
15
23
24
27
28
29
30
31
32
33
34
Chairman’s statement
Introduction
2019 was a year of considerable progress towards Bidstack’s goal of becoming a leading platform to deliver in-
game advertising in video games. Some of the highlights of the year included Mike Hayes, former CEO of SEGA
Europe and America, joining the board in April, an oversubscribed placing to raise £5 million in May, Derek
Wise, former CTO of Grapeshot and VP of Contextual Intelligence with Oracle Data Cloud, joining the Board in
July, our first acquisition in August, on-line brand safety business Minimised Media Limited, (trading as
Pubguard), signing our first significant engagement with a major global advertising agency in September and
ending the year with a two year advertising trading agreement.
Although the Company failed to meet its revenue targets for the year, 2019 has been spent ensuring the foundations
of the business are sufficiently robust to achieve meaningful future growth. With the strength of our Board and
Advisory Committee, the engagement we have achieved with leading international advertising agencies and their
clients, our ability to provide end-to-end programmatic advertising with some of the world’s largest demand-side
platform (“DSP”) and the growth of our team from 17 on 31 December 2018 to 49 at the period end, the Board is
content with Bidstack’s evolution through the period under review.
During the current period the unprecedented Covid-19 global pandemic has caused some disruption to the
business, primarily due to a number of trade shows having been cancelled. This has clearly had an impact on the
face to face meetings that had been scheduled to take place during those events. Despite this, the systems and
procedures we have in place, along with our technology-based platform, are ensuring that, from an operational
standpoint, Bidstack’s business is largely able to proceed as normally as possible with our staff working remotely.
Background
Bidstack and its partners are in the forefront of the creation of in-game advertising as a new advertising category
which comes with many technical, regulatory and commercial hurdles.
Bidstack’s software facilitates the insertion of adverts into natural advertising space (e.g. billboards) in video
games. The advertising is dynamic, targeted and automated, and works globally across multiple platforms (PC,
mobile and console). The key benefit of native in-game advertising over non-native variants (e.g. video rolls and
banner ads) is that it appears authentic and “natural” to the environment of the game and does not impact the
gamer’s experience and cannot be excluded with ad-blocking software.
Advertisers can target the users they want to reach based on age, gender and location and the software is able to
display different advertisements to different users playing the same game so that adverts can be delivered to the
players most relevant to a particular brand.
Progress during 2019
As we stated in our unaudited interim results for the six months ended 30 June 2019, during 2019 we made the
strategic decision not to prioritise the acquisition of new games and additional advertising inventory in order to
give our technical development and product teams the freedom they needed to carry out significant development
work. In addition, we were not disappointing major video games developers and publishers by having to hold off
filling their advertising inventory while necessary development work took place.
In early August 2019, Bidstack completed its purchase of Minimised Media Limited, trading as “Pubguard” for
£300,000 satisfied by the issue of Bidstack shares. Pubguard reviews in-app and mobile advertisements and
desktop web content for offensive, malicious, illegal ad content and malware. This software is being used to
protect Bidstack's gaming inventory and to enhance its Software Development Kit (“SDK”).
In late August we appointed Stifel Nicolaus Europe Limited (“Stifel”) as our corporate broker to support our
growth. Stifel is an NYSE-listed full-service investment bank with a 100-person global technology & internet
banking team and offices across the US, Europe and Asia. Stifel commenced research coverage of the Company
in March 2020.
2
Chairman’s statement (continued)
In late September we entered into a strategic partnership agreement with Dentsu Aegis Network (“DAN”)
encompassing a partnership framework allowing DAN to scale access to Bidstack's in-game inventory on a
programmatic basis globally, giving video game publishers frictionless access to one of the world's largest agency
holding groups.
On 18 December, following several months’ work by the team, we signed a two-year trading agreement with a
global marketing services group to assist brands embrace the full potential of Bidstack's disruptive technology.
The Board believes this level of engagement represents a significant shift in approach from a major advertiser
looking to engage with an affluent, diverse and growing gaming and esports audience on a larger scale.
For more information on the Group’s technical and commercial progress in 2019 please refer to the Chief
Executive’s Statement set out below.
Board Appointments and Advisory Committee
During 2019 we added two talented and well connected new Non-Executive Directors, Mike Hayes (formerly of
SEGA, Codemasters and Nintendo) and Derek Wise (Oracle Data Cloud, formerly of Grapeshot and Jagex) who
are bringing their skills and experience to the business and are making a considerable impact.
During the period we also established an Advisory Committee which has allowed Bidstack to engage with leading
individuals in the video games and programmatic advertising industries. More information about the Advisory
Committee is set out in the Chief Executive’s Statement below.
Financial Summary
The summary income results for the Company for the year under review are as follows:
12 months ended 31 December
Sales
Gross profit
Total overheads
Adjusted (loss) before tax
2019
£000
140
34
5,353
(5,319)
2018
£000
316
76
1,263
(1,187)*
*Adjusted for transaction costs (2019: £0.04m) and (2018: RTO charges (£0.7 million) and the deemed cost of
acquisition (2018: £1.4 million)
The Company raised £5.0m in May 2019 as a result of a placing of 40 million new ordinary shares with
institutional and other investors at 12.5 pence per share. In addition, the Company received a further £0.7m
following the exercise of 4,375,616 warrants issued in November 2017 at an exercise price of 20 pence per
warrant.
The Company ended 2019 with cash reserves of £3.1 million (2018: £2.1 million). Cash management is a key
focus within the business. We expect to continue to have negative cash flows in 2020, as our strategic focus
remains on the development of our software platform alongside our product offering.
Outlook and Prospects
Although the Company has achieved significant engagement with major global advertising agencies, including
Dentsu Aegis, giving the world’s leading advertising agencies the comfort to buy and report on native in-game
advertising takes time and the Board believes further building blocks are still required before those revenues can
be fully exploited.
3
Chairman’s statement (continued)
The Board believes that the addressable market for video game advertising will go through a period of substantial
change over the next three to five years which Bidstack is well placed to take advantage of. We believe that new
console launches, the growth of cloud-gaming and e-sports, coupled with legislative restrictions affecting
targeting via app and web-based advertising, should all work in Bidstack’s favour.
2020 will see a new generation of hardware launched into the gaming market not least because both Microsoft
and Sony have announced plans to launch new consoles this year. The next generation of Xbox, codenamed
"Project Scarlett," is scheduled to arrive this year, as is the Sony PlayStation 5.
The Company continues to work with some of the largest game publishers in the world to make more inventory
available to advertisers and some of these games are currently at integration or beta testing phase. However, in
order to maximise advertisers’ access to targeted demographics the Company’s focus is on games with higher
user statistics rather than on sheer numbers of games. The Board will update the market on significant new games
when it is able to do so.
Bidstack is also continuing its work with the Internet Advertising Bureau (“IAB”), the trade group which sets
technical standards and best practices for the digital advertising industry, to create a recognised advertising
category for native in-game advertising. When this work is completed, programmatic advertisers will be able to
use “in-game advertising” on a self-serve basis in the same way they currently access display and video inventory.
With the connections Bidstack has made through the Advisory Committee and Board members, the Directors
believe the Company is well positioned strategically to capitalise on the commercial and technical opportunities
ahead. Bidstack will continue to add high calibre individuals to the Advisory Committee to assist the Company
and the team on its stated goals.
As a result of the experience gained in 2019, the Board believes that Bidstack’s medium and longer term interests
require the Company to continue with its strategy of prioritising technical investment over seeking short term
revenues in order to take full advantage of the potentially significant shifts in technology and media planning
capabilities which are underway. While we are working hard to increase the breadth of our inventory of games in
H1 2020 and with some success, the Board continues to expect that revenues in H1 2020, although higher than
total revenues for 2019, will continue to be minor and that material revenues for 2020 will start to occur only in
the second half.
On 6 April we were pleased to confirm that, as announced by the Department for Digital, Culture, Media and
Sport (“DCMS”), Bidstack provided its technology to insert the important message “Stay Home Save Lives”
within Codemasters DiRT Rally 2.
The video games industry is currently witnessing record numbers of daily active users and hours played and
Bidstack is currently experiencing high levels of inbound demand from advertising agencies and others.
Nevertheless, in its planning for 2020 the Board has taken a highly conservative view on revenue prospects and
believes it is right to do so, particularly given the currently unknown duration and impact of Covid-19 related
restrictions on movement and face to face meetings. For 2020 Bidstack’s focus remains on securing significant
commercial and technological deals that will position the Company well for growth in the medium term.
In the meantime we remain focussed on careful management of our existing cash resources and expected trading
a non-trading cash receipts as we continue to grow the business.
Donald Stewart
Chairman
4 May 2020
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Strategic Report
Chief Executive’s Report
This is my second, report as Chief Executive of Bidstack Group Plc.
In the current period COVID-19 has created an unprecedented economic and social climate. Our first concern
has been to ensure the safety and wellbeing of all our staff, who are now working safely from home.
That said, I would like to thank all my other directors and staff at Bidstack for having driven the business forward
and achieved so much during 2019. I would also like to thank our shareholders and investors.
Progress during 2019
2019 was a year in which Bidstack laid many of the foundations which will enable us to progress towards our
goal of becoming one of the world's foremost advertising networks for video games, leading with our native in-
game advertising platform. If an advertiser wants to place their brand in front of an engaged gamer in a non-
intrusive, contextual manner (we call it the native in-game environment), our technology enables them to do so.
The Company undertook significant strides throughout 2019 in terms of personnel, infrastructure, market
positioning, demand and supply interest.
As a result, Bidstack's inventory is now available to buy on The Trade Desk, a huge technological accomplishment
which has been made possible by our impressive technical teams in Riga and London.
Native in-game advertising remains new territory and the work we've achieved with our launch partners, SEGA
and Codemasters, enabled us, at the tail end of 2019, to secure our first trading agreement with a global advertising
agency group. Not only is this a huge step for Bidstack and this new industry sector, it is also a significant third-
party endorsement of our technology and strategy.
While still on a small scale, by the end of 2019 we were running fully programmatic campaigns on our inventory
of games.
As the Company also focused on advancing towards frictionless scalability during the period under review, we
also invested heavily in our AdConsole, our proprietary adserver and centralised platform, which allows
campaigns to be monitored and reported on seamlessly to our advertising agency and game developer clientele.
More detail on our developments in specific areas of the business are set out below:
Games
We have worked hand in glove with our friends at Codemasters in 2019 to deliver native in-game advertising into
their DiRT Rally 2 and Grid titles.
In addition we extended our multi-year partnership with Sports Interactive, Sega's world leading developer of
football management simulations, by a further three years giving Bidstack exclusive rights to serve native in-game
advertising within Football Manager 2020 with Bidstack's Software Development Kit ("SDK"), which was
released in November 2019.
A SDK is a sophisticated set of software tools, libraries, code samples, processes and components built to
incorporate features and drive user behaviours.
This is the first title on which Bidstack's SDK is running live. The SDK's functionality includes added brand safety
and security measures and allows game publishers to track the real-time performance of their in-game inventory
through our AdConsole.
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Strategic Report (continued)
Programmatic Advertising
The ability to provide programmatic advertising with related reporting and analysis is critical to our business
because it unlocks digital advertising spend from the major advertising agency groups.
During 2019 we delivered on our initial challenge to provide a working end-to-end programmatic digital
advertising platform, first with demand side platform ("DSP") Avocet Systems Limited, a significant technical
milestone in our development, and then with Platform 161. DSPs enable advertisers to target advertising
inventory, either direct or via an agency that fits their campaign demographics (e.g. age, gender, location etc.) and
allows media buyers to trade and optimise campaigns with real‐time reporting.
Our subsequent relationships with Xandr Invest (formerly known as AppNexus) and The Trade Desk (Nasdaq:
TTO), the operators of two of the world’s largest DSPs, have proven that native in-game advertising can be traded
programmatically. However, as we stated in our interim results in September 2019, the roll-out of this new ad
format is a complex process, but we are pleased we have already started the journey.
Proof of our evolution in this area came in September 2019 in the form of a pioneering agreement with global
advertising giant Dentsu Aegis and, in December, a two-year advertising trading agreement for 2020 and 2021.
Other Technology
In early August 2019, we bought Minimised Media Limited. Under the trading name “Pubguard” it reviews in-
app and mobile advertisements and desktop web content for offensive, malicious, illegal ad content and malware.
During 2019 we developed both our proprietary lightweight SDK and our proprietary adserver and centralised
platform, AdConsole which, as previously noted, enables automatic monitoring and reporting on digital
advertising campaigns. As I mentioned above, Bidstack’s SDK facilitates game publishers to track the real-time
performance of their in-game inventory through our AdConsole and includes additional functionality for brand
safety and security enhanced by the integration of Pubguard's advertising verification software.
As we announced in August, Epic Games, the creator of Fortnite, Unreal, Gears of War, Shadow Complex, and
the Infinity Blade series of games, has agreed to make our SDK available for games built using their Unreal Games
Engine.
Commercial Developments
We have completely revised and rebuilt our web-site, www.bidstack.com in 2019 to provide a much more
informative and attractive shop window for our industry profile and marketing and adopted and installed a new
CRM system.
During the period we commissioned Lumen Research Limited to carry out studies using their eye tracking
attention technology to measure and predict visual engagement with advertisements across several of our gaming
titles. We were pleased to announce on 24 June 2019 that our ads outperformed online browsing norms across all
the titles tested, in some cases by more than double. In particular our ads performed well above industry standards
with gamers who play every day. We believe the findings of this study demonstrate that Bidstack’s in-game format
is a powerful way for brands to reach their target audience and to reach the “unreachables” in a demonstrable way.
The Digital Trading Standards Group awarded us a Brand Safety Seal which reassures our clients that we are
taking the strongest possible proactive steps to protect the integrity of the digital advertising supply chain.
6
Strategic Report (continued)
Staffing
Our rapid hiring programme has taken us from 17 employees on 31 December 2018 to 49 at 31 December 2019.
The Bidstack team now comprises many extremely talented and capable people with impressive backgrounds and
experience in related businesses. Senior hires such as Lewis Sherlock from Verizon, Moritz Natalini from King,
Grace Cooke from Kargo, Adam Fisher from Unity and former Ubisoft, Sony and Atari sales professional John
Koronaios, to name but a few, have strengthened the core group during the year.
We constituted our Advisory Committee to enable our team to obtain assistance from an impressive array of
industry stalwarts from the video games and digital marketing industries in relation to technical and commercial
questions. I am grateful to all those who have agreed to participate and slightly in awe that some of the biggest
names in the world of video games and adtech have publicly and clearly chosen to associate themselves with
Bidstack. With the committee members we have been able to brainstorm and access major gaming studios,
advertising agency groups, leading technology companies and gaming and advertising governing bodies. The
Advisory Committee includes luminaries such as Will Kassoy (former SVP of Publishing at Activision Blizzard
and CEO of AdColony) Ian Hetherington ("Development Legend"), Jon Epstein (former CEO of GameSpot and
Double Fusion), Bryan Neider (former SVP of Electronic Arts) and, most recently, Andrew House (former Global
CEO of Sony PlayStation).
We believe Bidstack can now access almost any significant individual in the gaming and advertising worlds
through our Board and Advisory Board members and our management teams are fully supported by decades worth
of experience.
Industry Initiatives
Unlike in-app, TV, digital audio, out of home etc. native in-game advertising hasn't been a recognised advertising
category. We are working with our partners from game developers, advertising agencies, researchers and
independent third-party verifiers to assist the Internet Advertising Bureau (IAB) to standardise this category.
For instance, setting the parameters for how “viewability” is defined in video games, whether racing, stadium or
open world environment games, is crucial to how agencies can report on their ad spend and verify impression
numbers within an in-game. This has been a significant technical challenge for our team to overcome.
The establishment of sector wide standards should unlock significant revenues. Bidstack has taken huge strides
in the process of standardising definitions for the in-game advertising category and we will continue to do so
through 2020 and beyond.
Other Developments
We are now open for business in the US following the opening of an office in San Francisco in August and an
office in New York in October. We now have a full-time employee in each location.
Strategy
The Company pushes into 2020 with a clear team management and organisational structure across the UK, Riga
and the US. The technological, governance, demand and supply teams are working cohesively and are fully
focused on ensuring the Company makes continued significant strides.
7
Strategic Report (continued)
Major technological and governance challenges are being overcome as we bring the in-game advertising medium
to the advertising community. The Company is in advanced conversations with a number of AAA game studios
and we expect to add further advertising agency trading agreements to our existing agreement, signed in 2019.
Covid-19 disruption to the advertising industry, particularly in the out of home and live sports segments, is leading
media buyers to seek digital alternatives for their brands. It’s no longer “business as usual” in these significant
areas. Agencies need to innovate to assist their brand clients to reach targeted audiences. Bidstack’s technology
enables them to do that and our team is working closely with agency groups to help them test, report and activate
larger campaigns across our growing portfolio of titles through this period.
With 2020 expected to see the launch of the PlayStation 5 and Xbox's Series X, the focus now is for the Company
to position itself to capitalise on the next generation of hardware and the new business models these will bring to
the video gaming industry. This approach continues to be the strategy during the current Covid-19 related macro-
economic upheaval. As we set out in our update to the market on 30 March 2020, the gaming sector now provides
an opportunity for brands and advertisers, including governmental agencies, to target audiences, which are
currently not reachable through other mediums due to the restrictions in place across multiple markets.
In summary, I believe that, while revenues for the first half of 2020 will be better than last year, they will remain
low. The impact of Covid-19 remains impossible to predict and we are taking a highly conservative view on our
revenues for the full year. That said the work we have done in 2019 positions the business well to build a highly
scalable native in-game platform that can carve out a significant position within the evolving video game
advertising and communications sector.
I look forward to updating you on further developments in this exciting journey we find ourselves on as they arise.
James Draper
Chief Executive
4 May 2020
8
Strategic Report (continued)
Principal Activity
Bidstack is an advertising technology company which provides dynamic, targeted and automated native in-game
advertising for the global video games industry across multiple platforms. Its proprietary technology is capable of
inserting adverts into natural advertising space within video games across multiple video games platforms
(mobile, PC and console).
Going concern
The Board continues to adopt the going concern basis to the preparation of the financial statements as is confident
of the Company continuing operations into the foreseeable future. This assessment has been arrived at after the
Board has considered various alternative operating strategies should these be necessary in the light of actual
trading performance not matching the Group’s forecasts given the current macro-economic conditions, and are
satisfied that such revised operating strategies could be adopted, if and when necessary. Specific attention needs
to drawn to the comments made in respect of the impact the COVID-19 pandemic on Going Concern and the
approaches being taken by the Group to manage and mitigate the additional operational and financial challenges
the environment presents.
The financial statements at 31 December 2019 show that the Group generated an operating loss for the year of
£5.2 million (2018: £3.3 million) after accounting for acquisition related costs of £0.045 million (2018: £2.1
million); with cash used in operating activities of £4.5 million (2018: £2.0 million) and a net increase in cash and
cash equivalents of £1.04 million in the year (2018: increase of £2.1 million). Group balance sheet also showed
cash reserves at 31 December 2019 of £3.1 million (2018: £2.1 million). The Group is dependent on further equity
fundraising in order to operate as a going concern for at least twelve months from the date of approval of the
financial statements. Although the entity has had past success in fundraising and continues to attract interest from
investors, making the Board confident that such fundraising will be available to provide the required capital, there
can be no guarantee that such fundraising will be available. Accordingly, this constitutes a material uncertainty
over going concern.
Key Performance Indicators
The Board’s focus for 2020 is on expanding the number of games in which its technology is employed, increasing
its network of advertising agency trading agreements and addressing definitional issues in the sector including
viewability and associated third party verification issues.
The Group’s KPIs will provide a critical measure of the Group’s revenue potential and are evolving to reflect the
Group’s progressing business model. Available advertising space, our pipeline of additional future games, the
installed base and active user statistics for individual games and technological developments with programmatic
advertising platforms are all valuable indicators of potential revenue. Content drives players, who can view our
brand safe advertising in an increasing theatre of distribution, which ultimately generates advertising revenue.
For forward looking performance measurement, the Board will seek to assess the Group’s various engagements
with new business prospects, and the level and speed of their progress.
9
Strategic Report (continued)
Principal risks and uncertainties
The Board places a high emphasis on being risk aware. The model for the future development of the Group is
reliant on its ability to achieve a critical mass of quality native in-game advertising inventory and its ability to
derive revenue from brand and advertising agencies who want to access the audience for Bidstack’s inventory.
We track risks and uncertainties that can impact the performance of the Group, some of which are beyond the
control of the Group. These are reviewed at monthly board meetings where the Company’s performance is
assessed against budget. This enables the board to determine and mitigate the Company’s risk environment, which
includes:
team. Their
Risk: Retention of key staff
The Group is dependent on key members of its
management
services cannot be
guaranteed, and the loss of their services may have a
near-term material effect on the Group’s performance.
There can be no assurance that the Group will be able
to attract and retain all personnel necessary for the
future development and operation of the business.
Risk: Competition
The Group’s investment in technology may be
affected by the development of more successful
technology or applications by competitors who may
have greater financial, marketing, operational and
technological resources than the Group.
Risk: IT services and infrastructure
Like every other business dependent on the internet,
the Group cannot guarantee that there will be no
disruption in the availability or performance of the
Bidstack platform, or the terms on which it is made
available, which could have a material adverse effect
on the business.
Risk: Liquidity
The Group’s future cash position remains subject to
the availability of funding and continued shareholder
support. Until the Group reaches a positive cash
generative position, the funding of its costs together
with future growth, place sustained demand on the
Group’s overall cash resources. The Group relies on
to arrange and maintain sufficient
being able
financing.
Mitigation
Bidstack’s founders are significant shareholders. In
addition, the Group operates a share option scheme to
incentivise employees and enable them and to benefit
from growth in the business. The Board will continue
to ensure that key personnel are appropriately sourced,
engaged and incentivised where required.
Mitigation
The Directors believe that Bidstack has a significant
advantage in terms of its technology, products and
services over its currently known competitors. We
focus on development progress and the strength of our
IT team in order to maintain this advantage as far as
practicable.
Mitigation
The Group’s IT infrastructure is distributed across a
multiple server network. This ensures that if one
were to fail, then the Group’s architecture and
content could still be accessed by users via other
access points.
the working
Mitigation
Management monitors
capital
requirements of the business to finance its growth
plans as part of its day to day control procedures.
The board regularly assesses cash flow projections to
ensure that appropriate resources are available to be
drawn on, when necessary.
10
Strategic Report (continued)
Principal risks and uncertainties (continued)
Risk: Business Interruption
Ability to appropriately prepare for and respond to a
crisis or major disruption to key operations either
across the Group, in a key region/location, or via a
critical supplier - such as the Group’s business
environment being subject to the conditions presented
by the global impact of the Coronavirus pandemic.
Risk: Publishing partner growth
Success of the Group’s strategy relies on its on-going
ability to secure additional games with appropriate
advertising opportunities. There can be no assurance
that the Group will maintain its success in this area.
from
revenues
Risk: Converting client opportunities
Success of the Group’s strategy depends on its ability
to generate
impressions of
advertisements seen by video game players and other
observers of the gaming environment. The major
advertising agencies operating in the programmatic
space have built up revenues from brands over a long
period and may have some discretion as to where
advertising budgets are spent. There can be no
assurance that the Group will be successful in
persuading brands and agencies that native in-game
advertising is an attractive avenue for advertising in
competition to better understood and more traditional
alternatives.
other
inappropriate
Risk: Brand Safe Advertising space
It is imperative to established brands and their
agencies that their ads do not appear on a screen
alongside
and
advertisements. In addition, certain products and
product types may not be shown to game players
based on age or product type restrictions. The
appearance of ads by quality brands alongside
offensive content could result in a loss of trust by
brands and agencies which would have an adverse
effect on the perception of the Group.
content
Mitigation
We acknowledge the importance of proactively
ensuring a consistent and effective business continuity
management process across the Group. The shut-
down of parts of the global business world due to the
virus pandemic presents an environment which can
increase audiences in the Gaming sector, mitigating
certain demand-side risks the Group faces.
Mitigation
The Group is in advanced conversations with number
of AAA game studios in relation to the provision of
additional games. Games developers and publishers
are incentivised to provide advertising in their games
by the potential to generate significant additional
revenues from advertising.
Mitigation
Bidstack has already secured a partnership agreement
with Dentsu Aegis, a leading global advertising
agency and has signed an advertising framework
agreement for 2020 and 2021. The growth of the
popularity of video gaming should ensure that
appropriate brands will want to use native in-game
advertising to reach an active audience which, by and
large, does not watch television or engage with other
more traditional media outlets. The group continues
to work with other leading advertising agencies to
create additional advertising trading agreements and
frameworks.
Mitigation
Native in-game advertising is possibly the most brand
safe advertising environment there is. Bidstack’s
platform can ensure that content is filtered so as not to
be seen by those who are too young or are resident in
territories where relevant products are restricted. In
addition, Bidstack has copy clearance procedures with
the games publishers to ensure restricted content can
be removed. Furthermore, with its acquisition of
Pubguard, Bidstack has enhanced its brand safety and
security features.
.
11
Strategic Report (continued)
Employment without discrimination
The Company is committed to employ on the basis of aptitude and ability. We hire and promote our people
regardless of gender, orientation, origin, creed, disability or any other inappropriate discrimination.
Environmental and social
In our day-to-day business, we commit to comply with applicable environmental laws, and the direct impact of
our operations is low. We also look to tread lightly through good housekeeping practices such as reducing energy
consumption, using sustainable resources and recycling waste
Directors, senior managers and employees
At 31 December 2019, there were six male directors of the Company and the Company had twenty-two other
employees. Please see pages 19 to 20 for details of the biographies of the directors.
Section 172 Statement
Under section 172 of the Companies Act 2006 (“Section 172”), a director of a company must act in a way that
they consider, in good faith, and would most likely promote the success of the company for the benefit of its
members as a whole, taking into account the non-exhaustive list of factors set out in Section 172.
Section 172 also requires directors to take into consideration the interests of other stakeholders set out in Section
172(1) in their decision making.
Bidstack Group Plc’s (“Bidstack”, “Group” or the “Company”) key stakeholders include its investors, employees,
regulatory bodies, suppliers and customers.
The Company’s strategy is to expand and further monetise its digital media platform and/or its associated
complementary technologies. Upon the successful implementation of the Company’s strategy, the Company will
have an expanded range of internal and external stakeholders, relations with which the Board will take into
consideration when making decisions on Company strategy.
Engagement with our members plays an essential role throughout our business. We are cognisant of fostering an
effective and mutually beneficial relationship with our members. Our understanding of our members is factored
into boardroom discussions regarding the potential long-term impacts of our strategic decisions.
Post the reporting period end, the directors of the Company (“Directors”) have continued to have regard to the
interests of the Company’s stakeholders, including the potential impact of its future activities on the community,
the environment and the Company’s reputation when making decisions. The Directors also continue to take all
necessary measures to ensure the Company is acting in good faith and fairly between members and is promoting
the success of the Company for its members in the long term.
12
Strategic Report (continued)
Section 172 Statement (continued)
The table below acts as our Section 172 statement by setting out the key stakeholder groups, their interests and
how the Company engages with them. Given the importance of stakeholder focus, long-term strategy and
reputation to the Company, these themes are also discussed throughout this Annual Report.
Stakeholder
Our Investors
Our Employees
Why we engage
We maintain and value regular dialogue
with our financial stakeholders throughout
the year and place great importance on our
relationship with them. We know that our
investors expect a comprehensive insight
into the financial performance of the
Company, and awareness of long-term
strategy and direction. As such, we aim to
provide high levels of transparency and
clarity about our results and long-term
strategy and to build trust in our future
plans.
Our people are at the heart of our business.
Effective employee engagement leads to a
happier, healthier workforce who are
invested in the success of the Group and
who are all pulling in the same direction.
Our engagement seeks to address any
employee concerns
regarding working
conditions, health and safety, training and
development, as well as workforce
diversity. Engagement with our employees
starts from the top and is driven effectively
throughout the Group.
How we engage
• Regular reports and analysis on
investors and shareholders
• Annual Report
• Company website
• Shareholder circulars
• AGM
• RNS announcements
• Press releases
•
•
•
•
Evaluation and feedback
processes for employees and
management
Competitive rewards packages
Encouraging employee training
and development
Flat structure communication
with Board
13
Strategic Report (continued)
Section 172 Statement (continued)
Our Customers
Our Suppliers
Our customers have unique requirements
that require diligence and trust in our
offering. We aim to listen to and engage
with our customers on a regular basis to
ensure that we understand their needs and
can provide solutions that address them. We
ensure that information is easily accessible
and customer concerns are dealt with in a
timely and professional manner.
We have a number of key partners and
suppliers with whom we have built strong
relationships with and strongly value. We
establish effective engagement channels to
ensure
remain
collaborative and forward focused, and to
foster relationships of mutual trust and
loyalty.
relationships
our
•
•
Continual review of feedback
from customers to ensure
satisfaction
• Dedicated team for Client
•
•
•
•
Services and Operations to ensure
consumer concerns are addressed
Face to face meetings with
customers to further develop
relationships.
Investment in content control and
consumer safety through
acquisition.
Building strong partnerships with
suppliers through open two-way
dialogue and regular face to face
meetings.
Relationships with suppliers
allow the ongoing review and
monitoring of their performance
levels
The above statement should be read in conjunction with the Strategic Report and the Company’s Corporate
Governance Statement.
The Strategic Report was approved by the Board of Directors on 30 April 2020 and was signed on its behalf by:
James Draper
Chief Executive
4 May 2020
14
Directors’ report
The directors present their report together with the audited financial statements for the year ended 31 December
2019.
Principal activity
The principal activity of the Group is the provision of native in-game advertising.
Results and dividends
The results of the Group for the year ended 31 December 2019 are set out on page 27 and show a loss before tax
and acquisition related costs for the year of £5,319,681 (2018: loss of £1,187,291). The accounting loss after tax
and acquisition related costs was £5,364,514 (2018: loss of £3,262,725). The directors do not recommend the
payment of a dividend (2018: £Nil).
Financial instruments
Details of the use of financial instruments by the Company are contained in note 23 of the financial statements.
Substantial shareholders
On 31 December 2019 the following shareholders held an interest of 3% or more of the ordinary share capital of
the Company:
James Draper
Optiva Securities
Simon Mitchell
Courtney Investments Limited
Ordinary shares of 0.5p % of issued share capital
16.24
6.13
4.08
3.13
39,760,562
15,000,000
9,979,298
7,666,667
As at 31 December 2019 no other person had reported an interest of 3% or more in the Company’s ordinary shares.
Directors
The directors who held office during the year were as follows:
D Stewart
J Draper
F Petruzzelli
J McIntosh
L Mair
J Taylor
M Hayes
D Wise
Chairman
Executive
Executive
Executive
Non-Executive
Non-Executive
Non-Executive
Non-Executive
Appointed
-
Resigned
-
-
-
-
-
-
10 April 2019
2 July 2019
-
-
-
2 July 2019
2 July 2019
-
-
15
Directors’ report (continued)
Directors’ emoluments
Directors during the year
D Stewart1
J Draper
F Petruzzelli
J McIntosh2
L Mair
J Taylor3
M Hayes
D Wise
Chairman
Executive
Executive
Executive
Non-Executive
Non-Executive
Non-Executive
Non-Executive
Salary/Fees/
Benefits
£
40,000
135,000
135,000
95,000
17,500
17,500
21,818
15,125
476,943
Share-
based
payment
£
6,921
-
178,905
14,667
-
-
32,366
25,901
258,760
Total
Emoluments
2018
£
46,961
135,000
313,905
109,667
17,500
17,500
54,184
41,026
735,743
£
24,233
129,440
330,477
12,161
30,600
54,871
-
-
581,782
1 Donald Stewart, Chairman, is also a consultant to Kepstorn Solicitors. Fees for corporate and legal services of
£79,186 (2018: £77,370) were charged by Kepstorn during the year ended 31 December 2019, of which £24,000
related to Kepstorn’s fees for acting as the Company’s solicitors on the corporate transaction for the acquisition
of Minimised Media Limited (2018: £60,000). As at 31 December 2019, £Nil was owed to Kepstorn Solicitors
(2018: £19,080).
2 John McIntosh, Finance Director, is also a Director of C P Limited. Fees for consultancy services of £Nil (2018:
£9,000) were charged by C P Limited during the year ended 31 December 2019. As at 31 December 2019, £Nil
was owing to C P Limited (2018: £Nil).
3 John Taylor, Non-Executive Director, is also a Partner of Ugly Panda LLP. Fees for consultancy services to
Bidstack Ltd of £Nil (2018: £26,471) were charged by Ugly Panda LLP during the year ended 31 December
2019. As at 31 December 2019, £Nil was owing to Ugly Panda LLP (2018: £409).
16
Directors’ report (continued)
Statement of compliance with the Corporate Governance Code
The Group complies with the Quoted Companies Alliance’s Corporate Governance Code (the “QCA Code”) as
revised and reissued in May 2018.
Donald Stewart, in his capacity as Non-Executive Chairman, has assumed responsibility for leading the Board
effectively and ensuring that the Group has appropriate corporate governance standards in place and that these
standards are observed and applied within the Group as a whole.
The corporate governance arrangements that the Board has adopted are intended to ensure that the Group delivers
medium and long-term value to its shareholders. The Board maintains a regular dialogue with its major investors
and other professional investors, providing them with such information on the Group’s progress as is permitted
by the AIM rules, MAR and the requirements of the relevant legislation.
It should be noted that all the Directors are shareholders and/or option holders in the Group and that both Mr
Draper and Mr Petruzzelli are founders and significant shareholders. The Directors therefore view their own
medium and long-term interests to be integrally linked to the medium and long-term value of the Group and, as
such, the interests of the Directors are directly aligned with those of the shareholders.
The Board currently consists of three Independent Non-Executives, Donald Stewart, Mike Hayes and Derek Wise,
and three Executive Directors, James Draper, Francesco Petruzzelli and John McIntosh.
Since the period end, as outlined in the Chairman’s statement on pages 2 to 4 above, the Company has constituted
an advisory committee of selected individuals with experience in areas relevant to the business growth, whose
remit is to provide strategic input and direction to the Board and to assist with introductions to key counterparties.
The QCA Code sets out 10 principles that should be applied. These are listed on the Company’s website at
www.bidstackgroup.com together with an explanation of how the Company applies each of the principles.
Set out below are further disclosures on certain of these principles.
Principle 1 – Business Model and Strategy
Bidstack is a provider of native in-game advertising that is dynamic, targeted and automated, serving the global
video games industry across multiple platforms. Its proprietary technology is capable of inserting adverts into
natural advertising space within video games.
Bidstack has two sets of customers. On the demand side are advertising agencies, buyers for specific brands and
operators of programmatic advertising platforms. On the supply side are games publishers, owners and developers.
As set out in the Chairman’s statement on pages 2 to 4 above, the Board has concluded that the highest medium
and long-term value can be delivered to its shareholders by focusing the Group’s resources during the first half of
2019 on technical development.
For further information on the market, the future strategy of the Group and the risks the Board consider to be the
most significant for potential investors, Shareholders are referred to the Strategic Report set out on pages 5 to 14
above.
17
Directors’ report (continued)
Principle 4 – Risk Management
The Board has overall responsibility for the determination of the Company’s risk management objectives and
policies and recognises the need for an effective and well-defined risk management process. The overall objective
of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company’s
competitiveness and flexibility. The Board is responsible for the monitoring of financial performance against
budget and forecast and the formulation of the Group’s risk appetite including the identification, assessment and
monitoring of the Group’s principal risks.
For further information on the risks the Board consider to be the most significant for potential investors,
Shareholders are referred to in the section headed “Principal risks and uncertainties” set out on pages 10 to 11
above.
The Board has delegated certain authorities to committees, each with formal terms of reference. As part of its
terms of reference, the Audit Committee is obliged, inter alia, to keep under review the Group’s internal financial
controls systems that identify, assess, manage and monitor financial risks, and other internal control and risk
management systems, review the adequacy and security of the Group’s arrangements for its employees and
contractors to raise concerns, in confidence, about possible wrongdoing in financial reporting or other matters and
ensure that these arrangements allow proportionate and independent investigation of such matters and appropriate
follow up action, review the Group’s procedures for detecting fraud and review the Group’s systems and controls
for the prevention of bribery.
Principle 5 – A Well-functioning Board of Directors
The Board is responsible for the management of the business of the Group, setting the strategic direction of the
Group and establishing the policies of the Group. It is the Board’s responsibility to oversee the financial position
of the Group and monitor the business and affairs of the Group on behalf of Shareholders, to whom the Directors
are accountable. The primary duty of the Board is to act in the best interests of the Group at all times. The Board
also addresses issues relating to internal control and the Group’s approach to risk management.
The Board consists of three Executive Directors, comprising the Chief Executive Officer, Finance Director and
Chief Technology Officer, and three Non-Executive Directors.
Donald Stewart chairs the Board. The Executive Directors have industry and technical knowledge and expertise
(James Draper and Fran Petruzzelli) and financial expertise (John McIntosh). The Non-Executive Directors have
legal, accounting, public market, leadership and people management experience (Donald Stewart, Mike Hayes
and Derek Wise).
Liam O’Donoghue, who is a qualified corporate lawyer and an experienced Company Secretary, is the Company
Secretary.
The Board holds board meetings monthly and whenever issues arise which require the urgent attention of the
Board. The Executive Directors are full time employees, and the Non-Executive Directors are expected to devote
at least two days per month to the affairs of the Company and such additional time as may be necessary to fulfil
their roles.
The Board has also established an Audit Committee and a Remuneration Committee. The Company considers that,
at this stage of its development, and given the current size of its Board, it is not necessary to establish a formal
Nominations Committee and nominations to the Board will be dealt with by the whole Board. This position will
be reviewed on a regular basis by the Directors.
18
Directors’ report (continued)
All three Non-Executive Directors (Donald Stewart, Mike Hayes and Derek Wise) are considered to be
independent. The three Non-Executive Directors sit on the Audit Committee, which is chaired by Mike Hayes
(who is a chartered accountant) and on the Remuneration Committee, which is chaired by Derek Wise.
During the year under review the Board held ten regular board meetings, at which all the members of the Board
attended. In addition, the Board met formally a further eighteen times for specific purposes including in relation
to the exercise of warrants, to approve the Company’s fundraise, to approve publication of the Report and
Accounts for 2018 and to approve publication of the Interim Accounts for the period to 30 June 2019. In addition
to the Company’s formal board meetings, all of the directors regularly discuss matters affecting the business and
the strategy of the Group.
Principle 6 – Appropriate Skills and Experience of the Directors
The Group believes that the current balance of skills within the Board as a whole reflects a broad and appropriate
range of commercial, technical and professional skills relevant to the sector in which the Group operates and its
status as an AIM listed company.
Biographical details of each of the Directors and officers are set out below:
Donald Stewart - Non-Executive Chairman
Appointed to the Board on 1 December 2015, Donald is a solicitor and has practiced corporate law, particularly
focused on smaller quoted companies, for almost 30 years. Between April 2013 and July 2015, he was on the
board of AIM quoted Progility Plc and, before that, had been a corporate partner in the London office of a global
law firm. He is a former director (and past chairman) of the Quoted Companies Alliance. Donald brings extensive
experience of quoted companies, legal and regulatory issues, corporate governance and of the role of chairman.
As a practicing solicitor, Donald is required to keep his skills up to date through continuing professional
development.
James Draper - Chief Executive Officer
James is the co-founder and Chief Executive Officer of Bidstack. He initiated Bidstack's move into the gaming
space in 2017 and led the negotiations to secure the three-year contract with SEGA's Football Manager title. He
has been responsible for the day to day management of Bidstack, as well as overseeing its strategic direction. Prior
to Bidstack, James spent several years working within marketing and advertising with a range of clients in the
sports and b2b space. James brings core management, marketing and strategic vision and an intimate knowledge
of all aspects of the Bidstack business to the Board.
Francesco Petruzzelli - Chief Technology Officer
Fran is the co-founder and Chief Technology Officer of Bidstack. He created Bidstack's core artificial intelligence
engine, heads its development studio and oversees its team of developers and programmers. Prior to Bidstack,
Francesco founded Whaleslide, a privacy conscious search engine allowing users to control all aspects of their
online lives from one webpage. Fran brings to the Board software technical and developmental expertise and a
comprehensive understanding of the Bidstack product.
John McIntosh CA - Finance Director
After qualifying with Deloitte in 1994, John worked with Sony, global advertising agency DMB&B (acquired by
Publicis) and the BBC before concentrating on online, multi-media businesses. He was CFO and COO of DCD
Media plc for five years until May 2012 then CFO of Progility Plc to April 2015, growing the business from a £12
million to £60 million turnover. John has worked as a consultant CFO for a number of entities in UK, Europe and
Hong Kong, and since October 2016 as CFO for McLaren GT , a joint venture with McLaren Automotive. John
brings significant experience of CFO and COO roles in AIM quoted companies. As a member of the Institute of
Chartered Accountants of Scotland John is required to keep his skills up to date through the ICAS Professional
Development Process.
19
Directors’ report (continued)
Michael (“Mike”) Hayes – Non-Executive Director
Mike has a wealth of experience in the video games industry having spent eight years at SEGA, latterly as CEO
of SEGA Europe and America. During his tenure, SEGA became established as a top 10 worldwide publisher of
video games. Prior to SEGA, Mike spent five years as Sales and Marketing Director on the Board of Codemasters,
the award-winning British developer and publisher of high quality racing games. For over five years, Mike was
Sales and Marketing Director at Nintendo, responsible for hardware and software. Mike is a former Investment
Director at AIM listed Mercia Technologies PLC, where he was Head of Digital and Digital Entertainment.
Derek Wise – Non-Executive Director
Derek, a highly experienced software technologist, became Chief Technology Officer of Grapeshot in January
2017 responsible for software development, product, support and operations globally. Following Oracle’s
acquisition of Grapeshot in August 2018, Derek is now VP of Contextual Intelligence with Oracle Data Cloud,
responsible globally for all products related to the contextual understanding of data. Starting his technical career
in 2000 with Enron Broadband, in 2001 Derek founded GNi, turning it into one of the fastest growing technology
companies in the US. He then held a series of Technical Director and CTO roles with CCP, TRC Family
Entertainment, Jagex and Benevolent AI.
Liam O’Donoghue from ONE Advisory Group acts as the Company Secretary and is responsible for ensuring that
Board procedures are followed and that the Company complies with all applicable rules, regulations and
obligations governing its operation, as well as helping the Chairman maintain good standards of corporate
governance. Liam is an ICSA Chartered Company Secretary.
The Directors have access to the Company’s external advisers e.g. Nomad, lawyers and auditors as and when
required and are able to obtain advice from other external advisers when necessary.
All Directors have access to independent legal advice at the Company’s expense.
The Board will seek to take into account Board imbalances for future nominations, with areas to take into account
including gender balance.
Principle 7 – Evaluation of Board Performance
The first internal evaluation of the Board, its Committees and individual Directors and officers is due to be
undertaken in Q3 of 2019 and thereafter such evaluations will be undertaken on an annual basis to ensure the
Board is performing effectively as a whole. Such evaluations will be undertaken with reference to how the Director
or officer has performed in fulfilling his/her specific functions, attendance at Board and Committee meetings as
appropriate, and overall contribution to the Group as a whole.
The Board is aware that succession planning is a vital task and the management of succession planning represents
a key responsibility of the Board. The balance of skills required of the Board as a whole is under constant review
as the business develops. As a result the composition of the Board will change over time. The Board is likely to
appoint additional directors in the event that outstanding people with relevant skills are able to make the necessary
commitment to drive the business forward.
Principle 8 – Corporate Culture
The Company recognises the importance of promoting an ethical corporate culture, interacting responsibly with
all stakeholders and the communities and environments in which the Group operates. The Board considers this to
be essential if medium and long term value is to be delivered.
20
Directors’ report (continued)
The Directors consider that at present the Group has an open culture facilitating comprehensive dialogue and
feedback, particularly with regard to providing a safe and enjoyable working environment for employees and
seeking to ensure they are remunerated and incentivised appropriately.
The Group also works directly with games publishers and developers to understand their unique requirements,
participates in gaming conferences and sponsors e-sport tournaments to get direct feedback from the players and
viewers of video games and seeks to be regarded as a good corporate citizen by all its stakeholders within its
sphere of operation.
The Directors view their own medium and long-term interests to be integrally linked to the medium and long-term
value of the Group, and, as such, the interests of the Directors are directly aligned with those of the shareholders.
The Group has adopted policies to deal with corruption and bribery and to comply with the UK Bribery Act.
Principle 10 – Shareholder Communication
The Board delegates authority to two Committees to assist in meeting its business objectives, and the Committees
meet independently of Board meetings.
Audit Committee Report
The Audit Committee comprises Mike Hayes as Chairman, Derek Wise and Donald Stewart and meets not less
than twice a year. The committee is responsible for making recommendations to the Board on the appointment of
auditors and the audit fee and for ensuring that the financial performance of the Group is properly monitored and
reported. In addition, the Audit Committee receives and reviews reports from management and the auditors
relating to the interim report, the annual report and accounts and the internal control systems of the Group.
As noted above the Audit Committee is also responsible for reviewing the Group’s internal financial controls
systems that identify, assess, manage and monitor financial risks, other internal control and risk management
systems and other aspects of risk management.
During the year under review, the Audit Committee was responsible for adopting a new Financial Reporting
Procedures Manual which was adopted by the Company on 31 August 2018. In addition, the Audit Committee
has worked with and reviewed the work of the Company’s auditors in the production of the Report and Accounts
of the Company for the year ended 31 December 2019 set out in this document.
Remuneration Committee Report
The Remuneration Committee comprises Derek Wise as Chairman, Mike Hayes and Donald Stewart meets not
less than twice each year. The committee is responsible for the review and recommendation of the scale and
structure of remuneration for senior management, including any bonus arrangements or the award of share options
with due regard to the interests of the Shareholders and the performance of the Enlarged Group.
During the year under review, the Remuneration Committee made recommendations to the board in relation to
the salaries and bonuses of the Chief Executive, the Chief Technical Officer and the Finance Director and,
separately, in relation to the issue of share options to certain employees of the Group. The amounts of
remuneration for each Director are set out on page 16 above. These include basic salary, bonus and the estimated
monetary value of benefits in kind.
21
Directors’ report (continued)
Director’s interests
The beneficial interests of the directors of the Company in the ordinary share capital of the Company and options
and warrants to purchase such shares were:
31 December 2019
Warrants
Options
Director
D Stewart
J Draper
F Petruzzelli
J McIntosh
M Hayes
D Wise
Ordinary
Shares
Ex. Price
5p
Ex. Price
1.14p
Ex. Price
6p
Ex. Price
14.4p
Ex. Price
20p
Ex. Price
31.75p
Ex. Price
50p
1,149,773
39,760,562
5,750,000
200,000
-
-
-
-
250,103
-
-
-
- 4,799,500 7,500,000
- 1,000,000
-
-
-
-
-
-
-
1,000,000
-
-
5,000,000
- 10,000,000
500,000
-
300,000
700,000
-
-
-
-
-
-
-
700,000
-
-
-
-
-
300,000
31 December 2018
Director
D Stewart
J Draper
F Petruzzelli
J McIntosh
J Taylor
L Mair
Going concern
Warrants
Ordinary
Shares
Ex. Price
5p
Ex. Price
20p
Ex. Price
20p
989,733
41,260,562
7,250,000
-
560,000
1,041,666
250,103
-
-
-
500,205
250,103
25,000
-
-
-
15,000
62,500
-
5,000,000
10,000,000
-
-
-
Options
Ex. Price
6p
-
-
7,500,000
1,000,000
-
-
Ex. Price
1.14p
-
-
4,799,500
-
-
-
The Group is dependent on further equity fundraising in order to operate as a going concern for at least twelve
months from the date of approval of the financial statements. Although the entity has had past success in
fundraising and continues to attract interest from investors, making the Board confident that such fundraising will
be available to provide the required capital, there can be no guarantee that such fundraising will be
available. Accordingly, this constitutes a material uncertainty over going concern.
Auditors
All of the current Directors have taken all the steps that they ought to have taken to make themselves aware
of any information needed by the Group’s auditors for the purposes of their audit and to establish that the
auditors are aware of that information.
The directors are not aware of any relevant audit information of which the auditors are unaware.
By order of the Board
Donald Stewart
Chairman
4 May 2020
22
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Strategic Report, the Directors’ Report and the financial statements
in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law, the
Directors have elected to prepare the Group and Company financial statements in accordance with International
Financial Reporting Standards (“IFRSs”) as adopted by the European Union. Under company law, the directors
must not approve the financial statements unless they are satisfied that they give a true and fair view of the state
of affairs of the Group and Company and of the profit or loss of the Group and Company for that period. The
Directors are also required to prepare financial statements in accordance with the rules of the London Stock
Exchange for companies trading securities on AIM.
In preparing these financial statements, the Directors are required to:
-
select suitable accounting policies and then apply them consistently;
- make judgments and accounting estimates that are reasonable and prudent;
-
state whether the financial statements have been prepared in accordance with IFRSs as adopted by the
European Union subject to any material departures disclosed and explained in the financial statement period;
and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
company will continue in business.
-
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company
and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included
on the company’s website. Legislation in the United Kingdom governing the preparation and dissemination of the
financial statements and other information included in annual reports may differ from legislation in other
jurisdictions.
23
Independent auditor’s report to the members of Bidstack Group Plc
Opinion
We have audited the financial statements of Bidstack Group plc (the ‘parent company’) and its subsidiaries (the
‘group’) for the year ended 31 December 2019 which comprise a consolidated statement of comprehensive
income, a consolidated statement of financial position, a company statement of financial position, a consolidated
statement of changes in equity, a company statement of changes in equity, a consolidated statement of cash flows
and a company statement of cash flows and notes to the financial statements, including a summary of significant
accounting policies. The financial reporting framework that has been applied in their preparation is applicable law
and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion, the financial statements:
• give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2019
and of the group’s loss for the year then ended;
• have been properly prepared in accordance with IFRSs as adopted by the European Union; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We are independent of the group in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Material Uncertainty Related to Going Concern
Note 2 of these financial statements describes how the business is dependent on further equity funding to sustain
itself over the following year. This condition indicates that a material uncertainty exists that may cast significant
doubt on the entity's ability to continue as a going concern. The auditor's opinion is not modified in respect of
this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
24
Independent auditor’s report to the members of Bidstack Group Plc (continued)
Going concern
Due to the continued losses made (£5.2 million in
2019) there is a risk that the Group may not have
sufficient resources to continue trading for the
foreseeable future.
Our audit work included, but was not restricted to the
following:
We reviewed the cash flow forecasts and budgets. We
scrutinized these and challenged the assumptions
made by management.
We reviewed the forecasts against post year-end
actuals and management accounts in order to assess if
the Group has sufficient resources to continue trading
for the foreseeable future.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could
influence the economic decisions of reasonable users that are taken based on the financial statements. Importantly,
misstatements below these levels will not necessarily be evaluated as immaterial as we also take into account the
nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
We consider total assets to be the financial metric of most interest to shareholders and other users of the financial
statements.
We determined materiality for the Group to be £84,000 which is 2% of total assets.
Performance materiality is the application of materiality at the individual account or balance level set at an amount
to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the financial statements as a whole. Performance materiality for the Group
was set at £63,000.
We agreed with the audit committee that we would report to the committee all individual audit differences
identified during the course of our audit in excess of £4,200. We also agreed to report differences below these
thresholds that, in our view warranted reporting on qualitative grounds.
An overview of the scope of our audit
We performed a full scope audit of Bidstack Group plc and its two subsidiaries – Bidstack Limited and Minimised
Media Limited.
Other information
The directors are responsible for the other information. The other information comprises the information included
in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the
financial statements does not cover the other information and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the other information. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.
25
Independent auditor’s report to the members of Bidstack Group Plc (continued)
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment obtained
in the course of the audit, we have not identified material misstatements in the strategic report or the directors’
report.
We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 23, the directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for
such internal control as the directors determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent
company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those
matters we are required to state to them in an Auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's
members as a body, for our audit work, for this report, or for the opinions we have formed.
Ian Cliffe (Senior Statutory Auditor)
for and on behalf of Haysmacintyre LLP, Statutory Auditors
10 Queen Street Place
London
EC4R 1AG
Date: 4 May 2020
26
Consolidated statement of comprehensive income
for the year ended 31 December 2019
Note
Year ended
31 December 2019
£
Year ended
31 December 2018
£
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating loss before acquisition related costs
Transaction costs
Share based payment on reverse acquisition
Operating (loss)
Finance income
Finance costs
(Loss) before taxation
Taxation
(Loss) for the year
5
8
8
9
140,391
(106,697)
33,694
(5,353,375)
(5,319,681)
(44,833)
-
(5,364,514)
8,060
(967)
(5,357,421)
148,141
(5,209,280)
316,906
(240,849)
76,057
(1,263,348)
(1,187,291)
(713,744)
(1,411,478)
(3,312,513)
-
(729)
(3,313,242)
50,517
(3,262,725)
Other comprehensive income
Total other comprehensive income
Total comprehensive (loss) for the year
-
(5,209,280)
-
(3,262,725)
Loss per share – basic and diluted (pence)
10
(2.26)
(4.23)
The notes on pages 34 to 57 form part of these financial statements.
27
Consolidated statement of financial position
as at 31 December 2019
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Right of use asset
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Share capital
Share premium account
Share-based payment reserve
Merger relief reserve
Reverse acquisition reserve
Warrant reserve
Retained losses
Total equity
Non-current liabilities
Lease liability
Total non-current liabilities
Current liabilities
Trade and other payables
Lease liability
Total current liabilities
Total equity and liabilities
Note
31 December
2019
£
31 December
2018
£
12
13
15
17
18
20
20
20
20
20
20
20
14
19
14
310,960
22,377
26,710
360,047
43,842
15,752
-
59,594
533,207
3,148,540
3,681,747
807,691
2,106,557
2,914,248
4,041,794
2,973,842
5,516,759
23,283,880
734,365
6,508,673
(23,320,632)
71,480
(9,183,725)
3,610,800
5,286,429
18,000,247
258,060
6,213,021
(23,320,632)
71,480
(3,974,445)
2,534,160
8,300
8,300
406,672
16,022
422,694
-
-
439,682
-
439,682
4,041,794
2,973,842
The financial statements on pages 27 to 33 were approved by the board of Directors on 4 May 2020 and signed
on its behalf by:
Donald Stewart
Chairman of Bidstack Group Plc
The notes on pages 34 to 57 form part of these financial statements.
28
Company statement of financial position
as at 31 December 2019
ASSETS
Non-current assets
Right of use asset
Investments
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Share capital
Share premium account
Share-based payment reserve
Merger relief reserve
Warrant reserve
Retained losses
Total equity
Non-current liabilities
Lease liability
Total non-current assets
Current liabilities
Trade and other payables
Lease liability
Total current liabilities
Note
31 December
2019
£
31 December
2018
£
15
16
17
18
20
20
20
20
20
20
14
19
14
26,710
7,477,841
7,504,551
-
7,177,841
7,177,841
4,638,373
3,040,326
7,678,699
846,654
2,087,120
2,933,774
15,183,250
10,111,615
5,516,759
23,283,880
734,365
6,508,673
76,457
(21,036,180)
15,083,954
5,286,429
18,000,247
258,060
6,213,021
76,457
(19,849,761)
9,984,453
8,300
8,300
74,974
16,022
90,996
-
-
127,162
-
127,162
Total equity and liabilities
15,183,250
10,111,615
As permitted by Section 408 of the Companies Act 2006, the income statement of the parent Company is
not presented as part of these financial statements. The parent Company’s loss for the financial year was
£1,186,419 (2018: loss of £1,231,774).
The financial statements on pages 27 to 33 were approved by the board of Directors on 4 May 2020 and signed
on its behalf by:
Donald Stewart
Chairman of Bidstack Group Plc
The notes on pages 34 to 57 form part of these financial statements.
29
Consolidated statement of changes in equity
for the year ended 31 December 2019
Share capital Share premium
£
£
Share-based
payment
reserve
£
Merger relief
reserve
£
Reverse
acquisition
reserve
£
Capital
redemption
reserve
£
Balance as at 1 January 2018
137
669,674
17,435
Parent company reflected on
reverse acquisition
Issue of Bidstack Ltd shares prior
to acquisition
Issue of Bidstack Ltd shares to
Bidstack Group prior to acquisition
Reverse acquisition adjustment
Issue of shares
Issue of consideration shares
Issue of adviser shares
Costs of raising equity
Share-based payments
Loss and total comprehensive
income for the year
Balance as at 31 December 2018
Issue of shares
Issue of consideration shares
Costs of raising equity
Share-based payments
Loss and
income for the year
total comprehensive
4,417,442
15,009,243
19
445,968
13
(169)
291,667
564,820
12,500
-
-
-
5,286,429
225,982
4,348
-
-
399,987
(1,515,629)
3,208,334
-
137,500
(307,297)
(47,533)
-
18,000,247
5,541,549
-
(257,916)
-
-
-
-
(17,435)
-
-
-
-
258,060
-
258,060
-
-
-
476,305
-
-
-
-
-
-
-
-
-
6,213,021
-
-
-
-
6,213,021
-
295,652
-
-
(400,000)
(16,142,791)
-
(6,777,841)
-
-
-
-
(23,320,632)
-
-
-
-
-
-
-
-
-
Balance as at 31 December 2019
5,516,759
23,283,880
734,365
6,508,673
(23,320,632)
The notes on pages 34 to 57 form part of these financial statements.
30
Warrant
reserve
£
Retained
losses
£
Total equity
£
-
(711,720)
(24,451)
-
-
-
-
-
-
-
-
71,480
-
71,480
-
-
-
-
-
-
-
-
-
-
-
-
-
19,426,685
445,987
-
(17,676,047)
3,500,001
-
150,000
(307,297)
282,007
(3,262,725)
(3,974,445)
-
-
-
-
(3,262,725)
2,534,160
5,767,531
300,000
(257,916)
476,305
-
(5,209,280)
(5,209,280)
71,480
(9,183,725)
3,610,800
23
-
-
-
(23)
-
-
-
-
-
-
-
-
-
-
-
-
-
Company statement of changes in equity
for the year ended 31 December 2019
Share capital Share premium
£
£
Share-based
payment
reserve
£
Merger relief
reserve
£
Warrant
reserve Retained losses
£
£
Total equity
£
Balance as at 1 January 2018
4,417,442
15,009,243
-
-
4,977
(18,617,987)
813,675
Issue of shares
Issue of consideration shares
Issue of adviser shares
Costs of raising funds
Share-based payments
Loss and total comprehensive income for the year
Balance as at 31 December 2018
Issue of shares
Issue of consideration shares
Costs of raising funds
Share-based payments
Loss and total comprehensive income for the year
291,667
564,820
12,500
-
-
-
5,286,429
225,982
4,348
-
-
-
3,208,334
-
137,500
(307,297)
(47,533)
-
18,000,247
5,541,549
-
(257,916)
-
-
-
-
-
-
258,060
-
258,060
-
-
-
476,305
-
-
6,213,021
-
-
-
6,213,021
-
295,652
-
-
-
-
-
-
-
71,480
-
76,457
-
-
-
-
-
(1,231,774)
(19,849,761)
-
-
-
-
-
-
-
-
-
(1,186,419)
3,500,001
6,777,841
150,000
(307,297)
282,007
(1,231,774)
9,984,453
5,767,531
300,000
(257,916)
476,305
(1,186,419)
Balance as at 31 December 2019
5,516,759
23,283,880
734,365
6,508,673
76,457
(21,036,180)
15,083,954
The notes on pages 34 to 57 form part of these financial statements.
31
Consolidated statement of cash flows
for the year ended 31 December 2019
Cash flows from operating activities
(Loss) before taxation
Adjustments for:
Amortisation – Intangibles
Amortisation – Right of use asset
Depreciation
Share based payment on reverse acquisition
Equity settled share-based payments
Doubtful debts expenses
Interest received
Interest paid
Changes in working capital
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Cash used in operations
Taxation received
Net cash used in operations
Cash flow from investing activities
Investment in intangible assets
Cash acquired with subsidiary
Investment in property, plant and equipment
Net cash flow (used in)/generated from investing activities
Cash flow from financing activities
Proceeds from issue of share capital
Cost of issue
Interest paid
Principal paid on finance leases
Interest received
Net cash generated from financing activities
31 December
2019
31 December
2018
£
£
(5,357,421)
(3,313,242)
18,859
5,337
8,330
-
476,305
325,200
(8,060)
967
(4,530,483)
4,407
-
3,134
1,411,478
282,007
-
-
729
(1,611,487)
151,646
(80,204)
(602,523)
208,715
(4,459,041
(2,005,295)
-
(4,459,041)
27,623
(1,977,672)
(370)
6,683
(14,272)
(7,959)
5,767,531
(257,916)
(967)
(7,725)
8,060
5,508,983
(46,687)
208,817
(17,524)
144,606
4,245,988
(307,297)
(729)
-
-
3,937,962
Increase in cash and cash equivalents in the year
1,041,983
2,104,896
Cash and cash equivalents at beginning of year
2,106,557
1,661
Cash and cash equivalents at the end of the year
3,148,540
2,106,557
The notes on pages 34 to 57 form part of these financial statements.
32
Company statement of cash flows
for the year ended 31 December 2019
Cash flows from operating activities
(Loss) before taxation
Adjustments for:
Amortisation – Right of use asset
Expenses financed by shares
Share-based payments
Interest received
Interest paid
Changes in working capital
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Net cash (used in) operations
Cash flow from investing activities
Change in intercompany
Investment in subsidiary undertakings
Net cash flow used in investing activities
Cash flow from financing activities
Issue of ordinary shares for cash
Costs directly related to issue of shares
Interest paid on lease liabilities
Principal paid on finance leases
Interest received
Net cash generated from financing activities
31 December
2019
31 December
2018
£
£
(1,186,419)
(1,231,774)
5,337
-
476,305
(8,060)
967
(711,870)
-
150,000
282,007
-
-
(799,767)
36,524
(52,187)
(15,663)
(764,540)
22,865
(1,541,442)
(3,828,244)
-
(3,828,244)
-
(400,000)
(400,000)
5,767,531
(257,916)
(967)
(7,725)
8,060
5,808,983
3,500,000
(307,297)
-
-
-
3,192,703
Increase in cash and cash equivalents in the year
953,206
1,251,261
Cash and cash equivalents at beginning of year
2,087,120
835,859
Cash and cash equivalents at the end of the year
3,040,326
2,087,120
The notes on pages 34 to 57 form part of these financial statements.
33
Notes to the financial statements
1 General information
Bidstack Group Plc (the “Company”) is a public limited company and is incorporated and domiciled in the UK.
The address of the registered office is 201 Temple Chambers, 3-7 Temple Avenue, London, EC4Y 0DT. The
registered number of the company is 04466195.
2 Summary of significant accounting policies
Basis of preparation
The consolidated financial statements consolidate those of the Company and its subsidiary (together the
“Group”). The financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRSs) and International Financial Reporting Interpretation Committee (IFRIC) interpretations as
endorsed by the European Union ("IFRS-EU"), and those parts of the Companies Act 2006 applicable to
companies reporting under IFRS.
Management has implemented logistical and organisational changes to underpin the Group’s resilience to the
impact felt by the COVID-19 pandemic, with the key focus being protecting all personnel, minimising the impact
on critical work streams and ensuring business continuity. The effect on the economy may impact the Group in
varying ways, which could lead to a direct bearing on the Group’s ability to generate future cash flows for
working capital purposes. The inability to gauge the length of such disruption further adds to this uncertainty.
For these reasons the generation of sufficient operating cash flows remain a risk. Management is closely
monitoring commercial and technical aspects of the Group’s operations to mitigate risk, and believes the Group
will have access to sufficient working capital to continue operations for the foreseeable future.
Consolidation
The consolidated financial statements consolidate the financial statements of the Company and the results of its
subsidiary undertakings Bidstack Limited and Minimised Media ‘Pubguard’ made up to 31 December 2019.
Subsidiaries are entities over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control ceases.
Although the consolidated financial information has been issued in the name of Bidstack Group Plc, the legal
parent, it represents in substance continuation of the financial information of the legal subsidiary, Bidstack Ltd.
Going concern
The financial statements have been prepared on a going concern basis which assumes that the Group will be able
to continue trading for the foreseeable future. The Group’s business activities, together with the factors likely to
affect its future development, performance and position are set out in the Chairman’s statement on pages 2 to 4.
The financial statements at 31 December 2019 show that the Group generated an operating loss for the year of
£5.2 million (2018: £3.3 million) after accounting for acquisition related costs of £0.045 million (2018: £2.1
million); with cash used in operating activities of £4.5 million (2018: £2.0 million) and a net increase in cash and
cash equivalents of £1.04 million in the year (2018: increase of £2.1 million). Group balance sheet also showed
cash reserves at 31 December 2019 of £3.1 million (2018: £2.1 million). The Group is dependent on further equity
fundraising in order to operate as a going concern for at least twelve months from the date of approval of the
financial statements. Although the entity has had past success in fundraising and continues to attract interest from
investors, making the Board confident that such fundraising will be available to provide the required capital, there
can be no guarantee that such fundraising will be available. Accordingly, this constitutes a material uncertainty
over going concern.
34
Notes to the financial statements (continued)
2 Summary of significant accounting policies (continued)
The Board has considered various alternative operating strategies should these be necessary in the light of actual
trading performance not matching the Group’s forecasts given the current macro-economic conditions, and are
satisfied that such revised operating strategies could be adopted, if and when necessary. Specific attention needs
to drawn to the comments made in respect of the impact the COVID-19 pandemic on Going Concern and the
approaches being taken by the Group to manage and mitigate the additional operational and financial challenges
the environment presents.
New standards, interpretations and amendments not yet effective
There are several standards, amendments to standards, and interpretations which have been issued by the IASB
that are effective in future accounting periods that the group has decided not to adopt early. The most significant
of these is are as follows, which are all effective for the period beginning 1 January 2020:
•
IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors (Amendment – Definition of Material)
IFRS 3 Business Combinations (Amendment – Definition of Business)
•
• Revised Conceptual Framework for Financial Reporting
•
Interest Rate Benchmark Reform (IBOR) reform Phase 1 (Amendments to IFRS 9, IAS 39 and IFRS 7)
Bidstack Group Plc is currently assessing the impact of these new accounting standards and amendments.
35
Notes to the financial statements (continued)
2 Summary of significant accounting policies (continued)
Revenue Recognition
Revenue represents amounts receivable for goods and services provided in the normal course of business, and
excludes intragroup sales, Value Added Tax and trade discounts. Revenue comprises:
• Sale of advertising space: the value of goods and services is recognised across the period of use.
• Sale of reseller rights: the value of goods and services is recognised upon agreement.
• Sale of development programmes and content creation: the value of goods and services supplied is
recognised on delivery of content and accepted by customers.
• Sponsorship income: the value of goods and services is recognised over the time period to which it
relates.
Net finance costs
Finance costs comprise interest on bank loans and other interest payable. Interest on bank loans and other interest
is charged to the Statement of Comprehensive Income over the term of the debt using the effective interest rate
method so that the amount charged is at a constant rate on the carrying amount.
Finance income comprises interest receivable on loans to related parties. Interest income is recognised in the
Statement of Comprehensive Income as it accrues using the effective interest method.
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the Statement of
Comprehensive Income except to the extent that it relates to items recognised directly in equity, in which case it
is recognised in equity.
Taxation
Current tax is recognised as the amount of corporation tax payable in respect of taxable profit for the current
or past reporting periods using tax rates and laws that have been enacted or substantively enacted by the
reporting date.
Deferred tax is recognised in respect of all timing differences at the reporting date, except as otherwise
indicated.
Deferred tax assets are only recognised to the extent that it is probable that they will be recovered against
the reversal of deferred tax liabilities or other future taxable profits.
Deferred tax is calculated using the tax rates and laws that have been enacted or substantively enacted by the
reporting date that are expected to apply to the reversal of the timing difference.
With the exception of changes arising on initial recognition of a business combination, the tax
expense/(income) is presented either in the income statement, other comprehensive income or equity
depending on the transaction that resulted in the tax expense/(income).
Deferred tax liabilities are presented within provisions for liabilities and deferred tax assets within debtors.
Deferred tax assets and deferred tax liabilities are offset only if:
- the company has a legally enforceable right to set off current tax assets against current tax liabilities, and
- the deferred tax assets and deferred tax liabilities relate to corporation tax levied by the same taxation
authority on either the same taxable entity or different taxable entities which intend either to settle current
tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously.
36
Notes to the financial statements (continued)
2 Summary of significant accounting policies (continued)
Research and Development tax credits are not recognised as receivables until the claims have been
submitted and agreed by HMRC.
Valuation of investments
Investment in subsidiary undertakings are accounted for at cost less impairment. Advances to subsidiaries are
initially recorded at fair value based on a market rate of interest and subsequently at amortised cost. The difference
between funds advanced and fair value is recorded in investments.
Impairment of fixed asset investments
An impairment review of fixed asset investments is conducted annually, and any resulting impairment loss is
measured and recognised on a consistent basis.
Leased assets
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
- Leases of low value assets; and
- Leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease
term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the
case) this is not readily determinable, in which case the incremental borrowing rate on commencement of the lease
is used.
On initial recognition, the carrying value of the lease liability also includes:
-
-
amounts expected to be payable under any residual value guarantee;
any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of the
termination option being exercised.
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives
received, and increased for:
-
-
-
lease payments made at or before commencement of the lease;
initial direct costs incurred; and
the amount of any provision recognised where the Group is contractually required to dismantle, remove or
restore the leased asset.
Subsequent to initial measurement, lease liabilities increase as a result of interest charged at a constant rate on the
balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line
basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged
to be shorter than the lease term. When the Group revises its estimate of the term of any lease (because, for
example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the
carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted
at the same discount rate that applied on lease commencement.
37
Notes to the financial statements (continued)
2 Summary of significant accounting policies (continued)
An equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount
being amortised over the remaining (revised) lease term.
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the fair value
of Bidstack Group's share of the identifiable assets and liabilities of the acquiree at the date of acquisition.
Subsequent to initial recognition, goodwill is measured at cost less accumulated impairment losses.
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.
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:
- Website costs – 5 years
- Trademarks – 10 years
- Brand – 5 years
-
Software – 5 years
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes
directly attributable costs. Depreciation is provided on all items of property, plant and equipment, so as to write
off their carrying value over their expected useful economic lives. It is provided at the following rates:
- Computer equipment – 33.33% straight line
- Office equipment – 20% straight line
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid
investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk
of changes in value.
Financial assets
The Group classifies all of its financial assets as loans and other receivables. Financial assets do not comprise
prepayments. Management determines the classification of its financial assets at initial recognition.
Loans and receivables are non-derivative financial assets with fixed or determinable payments. They are initially
recognised at fair value and are subsequently stated at amortised cost using the effective interest method, less any
impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables
when the recognition of interest would be immaterial.
38
Notes to the financial statements (continued)
2 Summary of significant accounting policies (continued)
The Group’s financial assets held at amortised cost comprise trade and other receivables and cash and cash
equivalents in the Statement of Financial Position.
Financial liabilities
Trade and other payables are recognised initially at fair value and are subsequently measured at amortised cost,
using the effective interest method.
Share Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new share or options
are shown in equity as deduction net of tax, before proceeds.
Share-based payments
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the
income statement over the vesting period. Non-market vesting conditions are taken into account by adjusting the
number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the number of options that eventually vest. Market vesting
conditions are factored into the fair value of the options granted.
As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting
conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the
options, measured immediately before and after the modification, is also charged to the income statement over
the remaining vesting period. Where equity instruments are granted to persons other than employees, the income
statement is charged with fair value of goods and services received.
Functional and presentation currency
Items included in the financial statements of the Group are measured using the currency of the primary economic
environment in which the Group operates (“the functional currency”). The financial statements are presented in
Pounds Sterling (£) which is also the Group’s functional currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting
from the settlement of transactions and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income.
39
Notes to the financial statements (continued)
3 Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are
continually evaluated on historical experience and other factors, including expectations of future events that are
believed to be reasonable. In the future, actual experience may differ from these estimates and assumptions. The
estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of
assets and liabilities within the next financial year are discussed below.
Share-based payments
In order to calculate the charge for share-based compensation as required by IFRS 2, the Group makes estimates
principally relating to the assumptions used in its option-pricing model as set out in note 22.
Impairment review
Impairment testing is carried out for all non-current assets at the year-end date or where there is an indication that
impairment exists. For the purposes of impairment testing, the carrying amounts of the non-current assets are
reviewed and an impairment loss is recognised where the carrying amounts exceed the assets recoverable amount.
Expected credit losses (ECLs)
Expected credit losses are shown in note 17. ECLs are determined based on historical data available to
management in addition to forward looking information utilising management knowledge. Adequate information
exists to support the recoverability of the net receivables balance.
4 Segmental information
During the year ended 31 December 2019 and the year ended 31 December 2018, the Group operated one business
segment, that of the provision of native in-game advertising.
Given that there is only one continuing class of business, operating within the UK, no further segmental
information has been provided.
40
Notes to the financial statements (continued)
5 Loss for the year
The loss for the year has been arrived at after charging:
Depreciation of property, plant and equipment
Amortisation of Right of use assets
Amortisation of intangible assets
Equity settled share-based payments
Premises costs payments
Auditors’ remuneration (note 6)
6 Auditors’ remuneration
Fees payable to the Group’s auditors in respect of:
Audit of the financial statements of the Company
Audit of the financial statements of the Company’s subsidiary
Other services in relation to the audit
Other services in relation to taxation
7 Employees and directors
Staff costs, including directors, comprise:
Wages and salaries
Redundancy costs
Social security costs
Share-based payment expense
Other benefits
31 December
2019
£
31 December
2018
£
8,330
5,337
18,859
476,305
195,491
26,750
3,134
-
4,407
282,007
82,090
29,500
31 December
2019
£
31 December
2018
£
15,000
10,000
-
1,750
26,750
15,000
10,000
2,750
1,750
29,500
31 December
2019
£
31 December
2018
£
1,480,614
19,506
169,593
303,885
-
1,973,598
719,246
-
73,385
258,060
88
1,050,779
41
Notes to the financial statements (continued)
7 Employees and directors (continued)
Directors’ remuneration is as follows:
Salaries and fees
Bonus
Pension
Share-based payments
Gain on exercise of share options
Other benefits
Total
Average number of directors
Average number of employees
Key management compensation
31 December
2019
£
476,943
-
1,554
258,760
-
-
737,257
31 December
2018
£
224,454
100,000
-
257,240
117,190
88
698,972
2019
6
20
2018
4
9
The directors consider that the key management comprises the directors of the Group and the heads of sales, their
emoluments are set out below:
31 December
2019
£
31 December
2018
£
597,854
-
16,364
287,252
-
-
901,470
416,136
100,000
-
257,240
117,190
88
890,654
31 December
2019
£
31 December
2018
£
135,000
1,188
-
178,905
315,093
40,000
-
50,000
240,477
330,447
Salaries and fees
Bonus
Pension
Share-based payments
Gain on exercise of options
Other benefits
Total
Highest paid director
Salaries and fees
Post-retirement benefit
Bonus
Share-based payments
Total
42
Notes to the financial statements (continued)
8 Finance income and finance costs
Other interest receivable and similar income
Total finance income
Other interest payable
Total finance costs
9 Taxation
Reconciliation of effective tax rate
31 December
2019
£
31 December
2018
£
8,060
8,060
-
-
31 December
2019
£
31 December
2018
£
967
967
729
729
Tax assessed for the year is lower than (2018: lower than) the standard rate corporation tax of 19% (2018: 19%).
The differences are explained below:
Loss before tax
Tax using the UK corporation tax rate of 19% (2018: 19%)
Unrelieved tax losses and other deductions in the period
Surrender of tax losses for Research and Development tax credit refund
Research and development tax credit
Expenses not deductible for tax purposes other than goodwill amortisation
and impairment
Adjustment for prior period
Deferred tax not recognised
Other reconciling items
31 December
2019
£
31 December
2018
£
(5,357,421)
(3,313,242)
(1,017,910)
-
22,045
(52,611)
145,615
(77,106)
831,826
-
(629,516)
13,873
(33,109)
369,670
(5,813)
234,376
2
Total tax charge
(148,141)
(50,517)
The Group has tax losses of approximately £9,490,506 (2018: loss of £3,738,890) to carry forward against future
taxable profits.
No deferred tax asset has been recognised in relation to the trading losses available for offset against future taxable
profits. The Company has not recognised deferred tax asset due to there being insufficient evidence of short-term
recoverability.
43
Notes to the financial statements (continued)
10 Loss per share
The loss per share is based upon the loss of £5,209,280 (2018: loss of £3,262,725) and the weighted average
number of ordinary shares in issue for the year of 230,957,900 (2018: 77,234,073).
The loss incurred by the Group means that the effect of any outstanding warrants and options would be considered
anti-dilutive and is ignored for the purposes of the loss per share calculation.
11 Business combination
Summary of acquisition
On 1 August 2019 the parent entity acquired 100% of the issued share capital of Minimised Media Limited
(Pubguard), a security systems service company. The acquisition was intended to maintain and utilise the
Pubguard platform to enhance its current technical and commercial offering as part of its Software Development
Kit. Details of the purchase consideration, the net assets acquired, and goodwill are as follows:
Purchase consideration
Ordinary consideration shares issued at fair value (869,565 @ 34.5 pence)
£
300,000
Acquisition costs of £44,833 have been expensed to the Statement of Comprehensive Income and are within
Transaction costs.
The assets and liabilities recognised as a result of the acquisition are as follows:
Cash and cash equivalents
Trade receivables and other receivables
Property, plant and equipment
Intangible assets – Brand
Intangible asset – Software platform
Trade and other payables
Loans and borrowings
Net identifiable assets acquired
Fair value of consideration paid
Goodwill
Carrying
value
£
Fair value
adjustments
£
6,683
54,221
682
-
-
(36,613)
(10,580)
14,393
-
-
29,402
88,205
-
-
117,607
Fair value
£
6,683
54,221
682
29,402
88,205
(36,613)
(10,580)
132,000
300,000
168,000
The provisional fair values include recognition of intangible assets brand and the software, which will be
amortised over a 5 year and 5 months period on a straight-line basis.
Regarding the acquired trade receivables in the transaction of £45,380 the amount estimated to be potentially
uncollectible at the acquisition date was £nil. At 31 December 2019, all of this balance has been collected.
Since the acquisition date, Minimised Media Limited has contributed £17,477 to Group revenues and a loss of
£117,817 to the Group’s comprehensive income. If the acquisition had occurred on 1 January 2019, Group revenue
would have increased by £122,286, however, the Group loss would have also increased by £187,797.
44
Notes to the financial statements (continued)
11 Business combination (continued)
The net cash sum expended on acquisition is as follows:
Cash paid on consideration on acquisition
Less cash acquired at acquisition
Net cash movement
12 Intangible assets - Group
£
-
6,683
(6,683)
Website costs Trademarks
£ £
Software
£
Brand
£
Goodwill
£
Total
£
2,451
46,687
49,138
889
4,407
5,296
-
-
-
-
-
-
-
-
-
-
-
-
-
29,402
29,402
-
168,000
168,000
49,138
285,977
335,115
-
2,262
2,262
-
-
-
5,296
18,859
24,155
-
-
-
-
-
-
-
88,205
88,205
-
6,785
6,785
81,420
27,140
168,000
310,960
-
-
-
43,842
Cost
At 1 January 2018
Additions
At 31 December 2018
Amortisation
At 1 January 2018
Charge
At 31 December 2018
Cost
At 1 January 2019
Additions
At 31 December 2019
Amortisation
At 1 January 2019
Charge
At 31 December 2019
Net book value
At 31 December 2019
1,931
46,687
48,618
837
4,355
5,192
48,618
-
48,618
5,192
9,723
14,915
33,703
At 31 December 2018
43,426
520
-
520
52
52
104
520
370
890
104
89
193
697
416
45
Notes to the financial statements (continued)
13 Property, plant and equipment - Group
Cost
At 1 January 2018
Additions
At 31 December 2018
Depreciation
At 1 January 2018
Charge
At 31 December 2018
Cost
At 1 January 2019
Additions
Business combinations
At 31 December 2019
Depreciation
At 1 January 2019
Charge
At 31 December 2019
Net book value
At 31 December 2019
At 31 December 2018
Office
equipment
£
Computer
equipment
£
-
4,819
4,819
-
161
161
4,819
2,906
682
8,407
161
1,056
1,217
4,904
12,705
17,609
3,542
2,973
6,515
17,609
11,367
-
28,976
6,515
7,274
13,789
Total
£
4,904
17,524
22,428
3,542
3,134
6,676
22,428
14,273
682
37,383
6,676
8,330
15,006
7,190
15,187
22,377
4,658
11,094
15,752
46
Notes to the financial statements (continued)
14 Lease liability
Nature of leasing activities
Bidstack Group Plc leases several computer equipment assets for its office space. Lease terms are negotiated on
an individual basis and contains separate terms and conditions.
Number of active leases
Lease liability at year end
Non-current
Lease liability
Current
Lease liability
Total lease liability
Analysis of lease liability
At 1 January 2019
Additions
Interest expense
Lease payments
At 31 December 2019
Analysis of gross value of lease liabilities
Maturity of the lease liabilities is analysed as follows:
Within 1 year
Later than 1 year and less than 5 years
After 5 years
At 31 December 2019
31 Dec
2019
No.
3
31 Dec
2019
£
8,300
8,300
16,022
16,022
24,322
Lease
liability
£
-
32,047
967
(8,692)
24,322
31 Dec
2019
£
8,300
16,022
-
24,322
The total cash outflow for leases in 2019 was £17,950, which includes insurance, bank fees, VAT and a lease
advance payment to align the quarter with the year.
47
Notes to the financial statements (continued)
15
Right of use assets
Cost
At 1 January 2019
Additions
At 31 December 2019
Amortisation
At 1 January 2019
Charge
At 31 December 2019
Net book value
At 31 December 2019
16 Investments - Company
Cost
At 1 January 2019
Additions
At 31 December 2019
Impairment
At 1 January 2019
Charge
At 31 December 2019
Net book value
At 31 December 2019
Computer
equipment
-
32,047
32,047
-
5,337
5,337
26,710
Investments
in
subsidiaries
£
7,177,841
300,000
7,477,841
-
-
-
7,477,841
Principal subsidiary undertakings of the Company
On 1 August 2019, the Company acquired the entire issued share capital of Minimised Media Limited
(“Pubguard”) for a consideration of £300,000, satisfied by the issue of 869,565 shares.
The subsidiary undertaking of the Company is presented below:
Subsidiary
Bidstack Limited
Minimised Media Limited
Country of
incorporation
England and Wales
England and Wales
Proportion of ordinary
shares held
100%
100%
The principal activity of the Bidstack Limited is the provision of native in-game advertising. The principal activity
of Minimised Media Limited is to provide content security and assurance to cross platform advertisers.
48
Notes to the financial statements (continued)
17
Trade and other receivables
Group
Company
31 December
2019
31 December
2018
31 December
2019
31 December
2018
£
131,525
48,916
204,625
148,141
£
380,227
183,515
221,055
22,894
£
-
17,229
4,621,144
-
£
-
15,745
830,909
-
533,207
807,691
4,638,373
846,654
Trade receivables
Prepayments and accrued income
Other receivables
Corporation tax
Analysis of trade receivables
Days
<30 31 – 60
£
£
61 -90
£
> 90 Total Gross
£
£
ECL
£
2019
2018
39,556
81,901
199
9,869
131,525
380,277
-
-
-
380,227
-
-
Total Net
£
131,525
380,227
The Group applies the IFRS 9 simplified approach to measuring expected credit losses (ECL) which uses a lifetime
expected loss allowance for all trade receivables. The Group measures ECL based on historical data available to
management in addition to current and forward-looking information utilising managements knowledge of their
customers. The Directors consider that the carrying amount of trade and other receivables is approximately equal
to their fair value.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses (ECL) which uses a lifetime
expected loss allowance for all trade receivables. The ECL balance has been determined based on historical data
available to management in addition to forward looking information utilising management knowledge. Based on
the analyses performed, management expect that all balances will be recovered, thus there is no material impact
on the transition to ECL.
Trade receivables are amounts due from customers for services performed in the ordinary course of business.
They are generally due for settlement within 30 days and therefore are all classified as current. All trade and other
receivables are non-interest bearing. The carrying amount of trade and other receivables approximates fair value.
49
Notes to the financial statements (continued)
18
Cash and cash equivalents
Cash and cash equivalents
19
Trade and other payables
Trade payables
Taxation and social security
Other payables
Accruals
Group
Company
31 December
2019
£
3,148,540
31 December
2018
£
2,106,557
31 December
2019
£
3,040,326
31 December
2018
£
2,087,120
Group
Company
31 December
2019
£
163,696
73,278
7,858
161,840
31 December
2018
£
315,238
32,778
8,793
82,873
31 December
2019
£
5,550
8,098
-
61,326
31 December
2018
£
71,989
3,802
-
51,371
406,672
439,682
74,974
127,162
50
Notes to the financial statements (continued)
20
Share capital and reserves
Allotted, called up and fully paid
At 1 January 2019
Exercised warrants
Exercised options
Issue of consideration shares
Issue of placing shares
As at 31 December 2019
Ordinary
0.5p shares
Share capital
No.
£
198,807,631
5,286,429
4,863,116
333,334
869,565
40,000,000
24,315
1,667
4,348
200,000
244,873,646
5,516,759
On 31 August 2019, the Company announced that it had agreed to acquire the entire issued share capital of
Minimised Media Limited. The consideration for the acquisition was £300,000 comprising the issue on 1 August
2019, of 869,565 shares at £0.345 per share. The Company also raised £5 million by a placing of 40 million shares
at £0.125 per share.
All ordinary shares are equally eligible to receive dividends and the repayment of capital and represent equal votes
at meetings of shareholders.
The following describes the nature and purpose of each reserve within owner’s equity:
Share capital: Amount subscribed for shares at nominal value.
Share premium: Amount subscribed for share capital in excess of nominal value, less costs of share issue.
Share-based payment reserve: The share-based payment reserve comprises the cumulative expense representing
the extent to which the vesting period of share options has passed and management’s best estimate of the
achievement or otherwise of non-market conditions and the number of equity instruments that will ultimately vest.
Merger relief reserve: Effect on equity of the consideration shares issued over their nominal value.
Reverse acquisition reserve: Effect on equity of the reverse acquisition of Bidstack Limited.
Warrant reserve: The warrant reserve comprises the cumulative expense representing the extent to which the
vesting period of warrants has passed and management’s best estimate of the achievement or otherwise of non-
market conditions and the number of equity instruments that will ultimately vest.
Retained losses: Cumulative realised profits less cumulative realised losses and distributions made, attributable
to the equity shareholders of the Company.
51
Notes to the financial statements (continued)
21
Share options and warrants
Options
The Company operates two equity-settled share-based remuneration schemes for employees, one being the
Enterprise Management Inventive (“EMI”) Scheme and the other is an unapproved scheme for executive directors
and certain senior management.
A condition attached to both schemes is for the option holder to remain in employment until exercised otherwise
the options become forfeited.
Outstanding at the beginning of the year
Granted during the year
Forfeited/waived during the year
Exercised during the year
Total outstanding
Total exercisable
2019
2018
Weighted
Average
Exercise Price
£
0.122
0.09
-
0.06
Weighted
Average
Exercise Price
£
0.095
0.122
0.087
0.115
Number
2,295,390
30,132,837
(1,662,000)
(633,390)
0.09
0.13
30,132,837
22,500,000
0.122
0.153
Number
30,132,837
8,750,000
-
(333,334)
38,549,503
27,299,500
On 10 May 2019, M Hayes was granted 700,000 and 300,000 options under the unapproved schemes for 14.43p
and 20p respectively. The options vest on the 1st anniversary of their grant date, subject to remaining an employee
and expire on the 10th anniversary of the grant date.
On 10 May 2019, the Company granted 1,500,000 and 1,000,000 options under the unapproved scheme. The
options are exercisable at 8p (1,500,000) and 12p (1,000,000), vest on the 1st anniversary of their grant date and
expire on the 10th anniversary of the grant date.
On 13 May 2019, the Company granted 1,500,000 options under the EMI scheme. The options are exercisable at
12.5p per share, vest on the 3rd anniversary of their grant date subject to remaining an employee and expire on the
10th anniversary of the grant date.
On 2 July 2019, D Wise was granted 700,000 and 300,000 options under the unapproved scheme. The options are
exercisable at 31.75p (700,000) and 50.0p (300,000) per share, vest on the 1st anniversary of their grant date
subject to remaining an employee and expire on the 10th anniversary of the grant date.
On 2 October 2019, the Company granted 850,000 options under the unapproved scheme. The options are
exercisable at 30p (100,000), 32.25p (500,000) and 25.25p (250,000) per share, vest on the 1st anniversary of their
grant date and expire on the 10th anniversary of the grant date.
On 20 October 2019, the Company granted 400,000 options under the unapproved scheme. The options are
exercisable at 18.5p per share, vest on the 1st anniversary of their grant date and expire on the 10th anniversary of
the grant date.
On 30 October 2019, D Stewart and J McIntosh were granted 1,000,000 and 500,000 options under the unapproved
and EMI scheme respectively. The options are exercisable at 20p per share, vest on the 3rd anniversary from their
grant date, subject to remaining an employee and expire on the 10th anniversary of the grant date.
52
Notes to the financial statements (continued)
Share options and warrants (continued)
Options (continued)
The Black-Scholes model was used for calculating the cost of options. The model inputs for each of the options
issued were:
Grant date (all 2019)
Share price at grant date
Exercise prices
Expected volatility
Contractual life
Grant date (all 2019)
Share price at grant date
Exercise prices
Expected volatility
Contractual life
10 May
18p
8p
56.35%
10 years
2 July
30.75p
31.75p
55.58%
10 years
10 May
18p
12p
56.35%
10 years
2 July
30.75p
50p
55.58%
10 years
10 May
18p
14.4p
56.35%
10 years
10 May
18p
20p
56.35%
10 years
13 May
18p
12.5p
55.70%
10 years
2 October
27p
30p
92.83%
10 years
20 October
23.75p
18.50p
93.32%
10 years
30 October
20.5p
20p
94.59%
10 years
The weighted average contractual life of the options is 4 years and 188 days (2018: 4 years and 186 days)
Warrants
Outstanding at the beginning of the year
Issued during the year
Exercised during the year
Total outstanding and exercisable
2019
2018
Weighted
Average
Exercise Price
£
13.7p
-
15.37p
9.71p
Number
8,751,028
-
(4,863,116)
3,887,912
Weighted
Average
Exercise Price
£
15p
6p
-
13.7p
Number
7,501,028
1,250,000
-
8,751,028
The Company granted no warrants during the year ended 31 December 19.
The charge for the year for warrants and options amounted to £540,488 (2018: £329,540), charged to the statement
of comprehensive income.
53
Notes to the financial statements (continued)
22
Premises costs commitments
Group
Company
31 December
2019
£
87,540
87,540
31 December
2018
£
152,640
152,640
31 December
2019
£
-
-
31 December
2018
£
-
-
Within one year
23
Financial instruments
In common with other businesses, the Company is exposed to risks that arise from its use of financial instruments.
This note describes the Company’s objectives policies and processes for managing those risks and the methods
used to measure them. Further quantitative information in respect of these risks is presented throughout these
financial statements.
The significant accounting policies regarding financial instruments are disclosed in note 2.
Financial assets
Financial assets measured at amortised cost comprise trade receivables, other receivables and cash, as follows:
Trade receivables
Other receivables
Cash and cash equivalents
Total financial assets
Financial liabilities
31 December
2019
£
31 December
2018
£
131,525
116,256
3,148,540
380,227
221,055
2,106,557
3,396,321
2,707,839
Financial liabilities measured at amortised cost comprise trade payables, other payables and accruals, as follows:
Trade payables
Other payables
Accruals
31 December
2019
£
31 December
2018
£
163,696
6,873
161,840
315,238
8,793
82,873
Total financial liabilities
332,409
406,904
There is no significant difference between the fair value and the carrying value of financial instruments.
54
Notes to the financial statements (continued)
Financial instruments (continued)
Risk management
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies
and, while retaining ultimate responsibility for them, it has delegated the authority for designing and operating
processes that ensure the effective implementation of the objectives and policies to the Group’s finance function.
The Board receives regular reports through which it reviews the effectiveness of the processes put in place and
the appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly
affecting the Group’s competitiveness and flexibility. The Group’s operations expose it to some financial risks
arising from its use of financial instruments, the most significant ones being capital risk, credit risk and liquidity
risk
Further details regarding these policies are set out below:
Capital risk management
The capital structure of the business consists of cash and cash equivalents, debt and equity. Equity comprises
share capital, share premium and retained losses and is equal to the amount shown as ‘Equity’ in the balance
sheet. Debt comprises various items which are set out in further detail above and in note 19.
The Group’s current objectives when maintaining capital are to:
-
-
-
Safeguard the Group’s ability to operate as a going concern so that it can continue to pursue its growth
plans.
Provide a reasonable expectation of future returns to shareholders.
Maintain adequate financial flexibility to preserve its ability to meet financial obligations, both current
and long term.
The Group sets the amount of capital it requires in proportion to risk. The Group manages its capital structure
and adjusts it in the light of changes in economic conditions and the risk characteristics of underlying assets.
Credit risk and impairment
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss
to the Group. In order to minimise the risk, the endeavours only to deal with companies which are demonstrably
creditworthy and this, together with the aggregate financial exposure, is continuously monitored. The maximum
exposure to credit risk is the carrying value of its, trade and other receivables and cash and cash equivalents as
disclosed in the notes.
The Board recognises that having a focus of revenue within one or few clients represents a concentration of risk
and is incentivised to diversify the Group’s customer base to mitigate this.. The Group seeks to obtain credit
insurance, or obtain advance payment on trade receivables, where appropriate. The receivables’ age analysis is
also evaluated on a regular basis for potential doubtful debts, considering historic, current and forward-looking
information.
The Company has made unsecured interest free loans to Bidstack Limited which stood at £4,405,090 at 31
December 2019 (2018: £718,774). Although it is repayable on demand, it is unlikely to be repaid until the
subsidiary is sufficiently cash generating.
55
Notes to the financial statements (continued)
Financial instruments (continued)
Liquidity risk
The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they
become due. However, the Group continues to absorb cash in its operations for the time being and management
recognises the risk of insufficient cash and capital to carry on its activities and safeguard the Group's ability to
continue as a going concern.
The Board receives cash flow projections on a regular basis, which are monitored regularly. The Board will not
commit to material expenditure in respect of its ongoing development programme prior to being satisfied that
sufficient funding is available to the Group to finance the planned programmes. Regular reviews will ensure that
further steps will be taken if necessary.
The COVID-19 pandemic resulted in a significant fall in the value of global stock markets during March 2020.
The pandemic has created a unique environment, which adds additional challenges for any companies seeking
future funding from the capital markets.
25
Related parties
Transactions with subsidiaries
During the year, cash advances of £3,510,001 (2018: £625,000) were made to Bidstack Ltd and incurred net costs
of £176,314 that were paid on behalf by the Company (2018: £93,774). The advances are held on an interest free
inter-group loan which has no terms for repayment. At the year end the inter-Group loan amounted to £4,405,090
(2018: £718,774).
During the year, cash advances of £66,000 (2018: £Nil) were made to Minimised Media Ltd and incurred net costs
of £75,928 that were paid on behalf by the Company (2018: £Nil). The advances are held on an interest free inter-
group loan which has no terms for repayment. At the year end the inter-Group loan amounted to £141,928 (2018:
£Nil).
Transactions with other related parties
During the year the Group paid £85,399 to Kepstorn Solicitors, of which Donald Stewart is a director and
shareholder (2018: £77,370). The invoices were for legal work during the year. All transactions have been
conducted at arm’s length. At the year end, the balance due to Kepstorn Solicitors was £23,941 (2018: £19,080).
During the year the Company paid £25,000 to CP Limited, of which John McIntosh is a director and shareholder
(2018: £9,000). The invoices were for consulting work during the year. All transactions have been conducted at
arm’s length. At the year end, the balance due to CP Limited was £Nil (2018: £Nil).
During the year the Company paid £Nil to Barletta Media, of which Francesco Petruzzelli is a director and
shareholder (2018: £44,687). The invoices were for development work performed on the platform. All transactions
have been conducted at arm’s length. At the year end, the balance due to Barletta Media was £Nil (2018: £Nil).
During the year the Company paid £Nil to Ugly Panda LLP, of which John Taylor is a partner (2018: £26,471).
At the year end, the balance due to Ugly Panda LLP was £Nil (2018: £409).
Lindsay Mair, a former Director who served during the year until his resignation, received £250 (2018: £Nil) from
the Company for reimbursement of expenses for the year. As at 31 December 2019, £Nil (2018: £Nil) was owing
to Mr Mair.
John McIntosh, Finance Director invoiced £10,076 (2018: £Nil) to the Company for reimbursement of expenses
for the year. As at 31 December 2019, £2,278 (2018: £Nil) was owing to Mr McIntosh.
Donald Stewart, Chairman, received £987 (2018: £Nil) from the Company for reimbursement of expenses for his
2018 expenses. As at 31 December 2019, £Nil (2018: £Nil) was owing to Mr Stewart.
56
Notes to the financial statements (continued)
25
Related parties (continued)
Francesco Petruzzelli, Director, claimed £120,788 (2018: £Nil) from the Company for reimbursement of
departmental IT and team travel expenses for the year. As at 31 December 2019, £20,537 (2018: £Nil) was owing
to Mr Petruzzelli.
James Draper, Director and Chief Executive Officer, claimed £1,837 from the Company for reimbursement of
expenses for the year (2018: £6,284). As at 31 December 2019, £Nil (2018: £Nil) was owing to Mr Draper.
David Payne, a former Director of the Company’s subsidiary Bidstack Ltd, made a gain of £29,954 on options he
exercised on 28 August 2018. The options exercised were issued in June 2016 and had an exercise price of 8.256p.
As at 31 December 2019, £7,917 (2018: £7,917) was owing to Mr Payne.
26
Post balance sheet events
COVID-19
The outbreak of COVID-19 creates a new and highly unpredictable challenge. We have tested our business
continuity plans which have been successfully activated.
The investment in technology over recent years has resulted in the business being well placed to continue
delivering services to our clients without disruption and with no increase in operational risk.
Management do not consider it possible to quantify the true impact of COVID-19 on the business at this time but
remain confident that the business can adjust to the challenges it presents.
27 Transition to IFRS 16
In the current year, the Group, for the first time, has applied IFRS 16 Leases (as issued by the IASB in January
2016). IFRS 16 introduces new or amended requirements with respect to lease accounting. It introduces significant
changes to the lessee accounting by removing the distinction between operating and finance leases and requiring
the recognition of a right-of-use asset and a lease liability at the lease commencement for all leases, except for
short-term leases and leases of low value assets.
The date of initial application of IFRS 16 for the Group is 1 January 2019. The Group has applied IFRS 16 using
the prospective approach since the leases that the Group entered commenced within the year ended 31 December
2019.
The impact of the adoption of IFRS 16 on the Group’s consolidated financial statements is described below.
Operating lease commitments 31 December 18
Reclassified as Premises costs following assessment under IFRS 16
Operating lease commitments 1 January 19
152,640
(152,640)
-
57
Bidstack Group Plc
(Incorporated in England and Wales with registered number 04466195)
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the annual general meeting of Bidstack Group Plc (“the
Company”) will be held at Plexal, 14 East Bay Lane, The Press Centre, Here East, Queen Elizabeth
Olympic Park, Stratford, London, E20 3BS on 28 May 2020 at 11:00 a.m.
Due to the impact of COVID-19 related UK governmental guidance as it affects travel to and
attendance at the annual general meeting in person, you are strongly advised to complete, sign and
return the enclosed form of proxy to the Company’s Registrars, Neville Registrars Limited,
Neville House, Steelpark Road, Halesowen B62 8HD as soon as possible and, in any event, so as
to be received by 11.00 a.m. on 26 May 2020. Completion and return of a form of proxy is likely
to be the only way your vote will be counted at the annual General Meeting as, based on current
UK government guidance, you will be precluded from travelling to and attending the General
Meeting in person. The vote on each of the resolutions to be put to the annual general meeting will
be conducted on a poll. In the event that the situation changes, the Board will inform shareholders of
any change in these arrangements by way of a regulatory news service announcement.
At the annual general meeting the following business will be transacted:
Ordinary Business
To consider, and, if thought fit, pass the following resolutions which will be proposed as Ordinary
Resolutions:
1.
2.
3.
4.
5.
6.
To receive and adopt the report of the Directors of the Company and the audited accounts for the
Company for the year ended 31 December 2019.
To re-appoint Donald Stewart as a Director of the Company who, pursuant to Article 24.1 of the
Company’s Articles of Association, retires by rotation and, being eligible, offers himself for re-
election.
To re-appoint John MacIntosh as a Director of the Company who, pursuant to Article 24.1 of the
Company’s Articles of Association, retires by rotation and, being eligible, offers himself for re-
election.
To re-appoint Michael Hayes as a Director of the Company who, having been appointed as a
Director pursuant to Article 21.2 of the Company’s Articles of Association and, being eligible,
offers himself for re-election.
To re-appoint Derek Wise as a Director of the Company who, having been appointed as a Director
pursuant to Article 21.2 of the Company’s Articles of Association and, being eligible, offers
himself for re-election.
To re-appoint haysmacintyre LLP as auditors of the Company and to authorise the Directors to
fix their remuneration.
To consider, and, if thought fit, pass the following Resolutions of which, Resolution 7 will be
proposed as an Ordinary Resolution and Resolution 8 will be proposed as a Special Resolution:
Special Business
1
7.
THAT, in accordance with section 551 of the Companies Act 2006 (the “Act”), the Directors be
generally and unconditionally authorised to exercise all of the powers of the Company to allot
shares in the Company and to grant rights to subscribe for, or to convert any security into shares
in the Company (“Rights”) up to an aggregate nominal amount of £1,224,368, provided that the
authority granted by this Resolution shall, unless renewed, varied or revoked by the Company,
expire at the Company’s next annual general meeting, except that the Company may, before it
expires make an offer or agreement which would or might require shares to be allotted or Rights
to be granted and the Directors may allot shares or grant Rights in pursuance of that offer or
agreement. This authority is in substitution for all previous authorities conferred on the directors
in accordance with section 551 of the Act to the extent not utilised at the date it is passed.
8.
THAT, subject to and conditional upon the passing of Resolution 7, in accordance with sections
570 and 571 of the Act, the Directors be generally empowered to allot equity securities (as
defined in section 560 of the Act) pursuant to the authority conferred by Resolution 7, as if section
561(1) of the Act did not apply to such allotment provided that this power shall be limited to:
(a) the allotment of equity securities in connection with an offer of, or invitation to apply for,
equity securities made (i) to holders of ordinary shares in the Company in proportion (as
nearly as may be practicable) to the respective numbers of ordinary shares held by them on
the record date for such offer and (ii) to holders of other equity securities as may be required
by the rights attached to those securities or, if the directors consider it desirable, as may be
permitted by such rights, but subject in each case to such exclusions or other arrangements
as the directors may deem necessary or expedient in relation to treasury shares, fractional
entitlements, record dates or legal or practical problems in or under the laws of any territory
or the requirements of any regulatory body or stock exchange; and
(b) otherwise than in connection with sub-paragraph (a), up to an aggregate nominal amount of
£734,620,
provided that this authority shall expire at the Company’s next annual general meeting. The
Company may, before this authority expires, make an offer or agreement which would or might
require equity securities to be allotted after it expires and the directors may allot equity
securities pursuant to that offer or agreement.
By order of the Board
Liam O'Donoghue
Company Secretary
Registered office:
201 Temple Chambers,
3-7 Temple Avenue,
London
EC4Y 0DT
Dated: 4 May 2020
Notes
1.
2.
3.
A member entitled to vote at the above meeting is entitled to appoint a proxy or proxies to attend, speak and vote instead of him. A
proxy may demand, or join in demanding, a poll. A proxy need not be a member of the Company.
A Form of Proxy is enclosed for your use if desired. To be valid, your proxy form and any power of attorney or other authority under
which it is signed or a notarially certified copy of that power of attorney or authority must reach the Company’s Registrars, Neville
Registrars Limited, Neville House, Steelpark Road, Halesowen B62 8HD not less than 48 hours, excluding non-working days, before
the time of holding of the meeting.
Shareholders are strongly advised to appoint the chair of the meeting as their proxy as, under current COVID-19 related UK
governmental guidance, public gatherings of more than two people are currently not permitted and any proxy (other than the
chair of the meeting) will not be allowed to attend the meeting unless it is for the purpose of forming the quorum.
2
4.
5.
6.
7.
8.
9.
Shareholders should note that, due to the impact of current COVID-19 related UK governmental guidance as it affects travel
to and attendance at the meeting in person, completion and return of a Form of Proxy is likely to be the only way shareholders
will be able to exercise their right to vote at the meeting as they will be precluded from travelling to and attending the meeting
in person.
Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that only those shareholders of the
Company on the register of members of the Company at 11.00 a.m. on 26 May 2020 shall be entitled to attend or vote at the meeting
in respect of the number of shares registered in their name at the time. Changes to the register of members after that time will be
disregarded in determining the rights of any person to attend or vote at the meeting.
In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by
the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the
Company's register of members in respect of the joint holding (the first-named being the most senior).
You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not
appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy, you should contact Neville
Registrars Limited, Neville House, Steelpark Road, Halesowen B62 8HD.
In the case of a member which is a company, the proxy form must be executed under its common seal or signed on its behalf by an
officer of the company or an attorney for the company. Any power of attorney or any other authority under which the proxy form is
signed (or a duly certified copy of such power or authority) must be included with the proxy form.
CREST members who wish to appoint a proxy or proxies through the CREST Electronic Proxy Appointment Service may do so for the
meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual. CREST personal members or other
CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST
sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment
or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be
properly authenticated in accordance with the specifications of Euroclear UK & Ireland Limited (“EUI”) and must contain the
information required for such instructions, as described in the CREST Manual (available via www.euroclear.com/CREST). The
message, regardless of whether it relates to the appointment of a proxy or to an amendment to the instruction given to a previously
appointed proxy, must, in order to be valid, be transmitted so as to be received by the Company’s agent (ID 7RA11) by 11.00 a.m. on
26 May 2020. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message
by the CREST Application Host) from which the Company’s agent is able to retrieve the message by enquiry to CREST in the manner
prescribed by CREST.
10. CREST members and, where applicable, their CREST sponsors or voting services provider(s) should note that EUI does not make
available special procedures in EUI for any particular messages. Normal system timings and limitations will therefore apply in relation
to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member
is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor
or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST
system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service
provider(s) are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system
and timings.
11. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001.
12. Except as provided above, members who have general queries about the meeting should contact Neville Registrars Limited, Neville
House, Steelpark Road, Halesowen B62 8HD. You may not use any electronic address provided either in this notice of annual general
meeting or any related documents (including the chairman's letter, the form of proxy and the Directors’ letter and explanatory note in
respect of electronic communications) to communicate with the Company for any purposes other than those expressly stated.
13. A copy of the Register of Directors’ interests in shares in the Company and copies of the Directors’ service contracts will be available
for inspection at the registered office of the Company during business hours only on any weekday (excluding Saturdays, Sundays and
public holidays) from the date of this notice until the date of the meeting and at the place of the meeting for at least 15 minutes prior to
and during the meeting.
3